Thank you very much for the invite.
Good afternoon, ladies and gentlemen. My name is Stuart Person. I'm a grain farmer in the Prince Albert area and I'm also an agriculture business advisor. For today I'm here as a grain farmer and not representing my organization.
The topic I was told we were going to discuss today is challenges and issues facing young Canadian farmers, so I've come up with a few things I thought it would be interesting to note.
One thing with the industry is public awareness. How do we get the general public behind agriculture in Canada? I've spent some time in the United States in the past, and it seems they rally around their farmers a lot more, and there's a lot more hype about it, so I think in the United States it attracts more people to agriculture. I think that's one of our challenges, to make the industry more attractive to young people, maybe give it some more positive attention, and make sure the public understands the importance of this industry to our country.
The second thing is profitability. In order to attract young people, the industry has to be profitable. This new generation is very mobile. They're no longer content just staying at home. They're becoming very educated. There's lots of competition out there for careers.
We have to ask ourselves how important food supply security is to Canada, and also to the world, as exporters. We need to consider things like markets for our products. International trade is a very political issue, and the cost of trade barriers is felt right down to the producer level here in Canada. Canada is a large exporter of ag commodities, so we have to keep those things in mind when we're talking about agriculture. In addition to the markets for products, we need to consider continuing to invest in more value-added here in the west. We need to be exporting finished products more than raw products.
Access to capital for new young farmers is a big issue. I'll just throw out some quick numbers here. When you're looking at a new farm, in the west anyway, you're looking at a machinery investment of $250 to $300 an acre. Land prices are on the rise, $500 to $1,000 an acre for farmland, and annual cashflow requirements could be anywhere from $225 to $300 an acre for a grain farmer. I should step back for a second here and say that I'm talking more from a grain farming perspective because that's what I do.
So when you look at those kinds of numbers, you know, the farms need to be larger to be sustainable, and you're talking three-quarters of a million for equipment, three-quarters of a million for cashflow for a 3,000-acre grain farm, which is just an average to below average size of farm now. So how does a young person really go into this industry and tackle it with that kind of cashflow requirement?
It's the same thing if you're a successor farmer as well, taking over from a parent. Your parents need to retire. They need their cash out of their business. Most of them have their entire retirement tied up in the farm, so how do we get these young people transitioned into the farms to take over and be successful?
I'll quickly touch on farm programs. Growing Forward is a very good program the government has come out with. It encourages education and innovation. It assists with succession, and it's assisting with the new start-ups by helping farmers be better businesspeople. It could use some more money. I'm not sure $4,000 is enough per farmer right now. These guys could probably use a lot more to get themselves going. We should watch how much red tape it actually takes to put these programs through, because there is a lot of cost to administering them. Maybe we can take a look at trying to make that a little more efficient.
AgriStability is an excellent concept. It still needs some adjusting. It's working really well for grain farmers at the moment, but not so well for livestock producers. It kind of penalizes mixed farmers who are diversified on their own, but it does provide the stability for the young farmers who are coming into the marketplace by giving them a little additional insurance.
AgriInvest is a very good program as well, but it's not overly effective for large farms right now. With the cap in place at $22,000, it's a little bit too low. We should consider maybe a cap based on the reference margin so we make sure these farms are able to cover that 15% of the margin they're supposed to be able to cover. Possibly a preferential interest rate if they're going to leave the money invested in their accounts would encourage more of them to leave it there. Right now, the accounts aren't paying very much interest at all, which encourages most of them to just take it out when they have the opportunity.
Saskatchewan crop insurance, I'll just touch briefly on. I know it's not a federal program, but it's a good program. For young farmers, it just needs to be tweaked a little bit, for new farmers to get proper averages.
The cash advance program is a very good program, but it might be a little bit outdated for western Canada. The limits are a little bit too small now. We're starting to see farms in that 5,000- to 10,000- to 15,000-acre range, and the cash advance limit of $400,000 isn't enough for these guys, especially when they're dealing with restrictions on when they can market their product due to the Canadian Wheat Board. Possibly a per acre basis for the cash advance would be beneficial; let's say, $150 an acre.
On the Canadian Wheat Board monopoly as well, I think we need to continue to look at this and make sure it's right for us. Personally I don't see it as an accountable enough organization to allow farmers to maximize their profits going forward.
Infrastructure is something we need to consider in this country. Especially in western Canada, we've had our rail lines taken away and it's having an effect on our profitability. It's also having an effect on our road infrastructure big time in this province. It's something we need to consider how to handle. We also need to look at maybe making it more competitive in Canada in terms of what other rail companies would be allowed to operate here and what other ports we can make use of in North America.
Lastly, research and development is a great place for funding to be directed. Everybody benefits from research and development, and I would encourage investment to continue to go there in terms of new grains and new products for our farmers to grow and market.
My closing comment is in terms of who is subsidizing agriculture in Canada. All the young farmers I deal with—or a lot of them, I should say—have off-farm jobs. They go out and work their butts off all winter long to bring home the money to invest back in the farm. They wouldn't have to do that. A lot of them could live quite well off the money they earn all winter, but they bring their money back and they invest it. So when we talk about who is subsidizing who in agriculture, farmers are definitely putting a lot of external money into this industry. They obviously love it and want to do it, myself included. It's too bad it's that way, but maybe in the future we can get away from that.