Agriculture Committee on April 29th, 2010

[The Chair, Conservative, Larry Miller]

We're going to call the meeting to order.

A witness and a couple of members will be joining us shortly.

I'd like to welcome our witnesses here. Thank you very much for taking time out of your busy days to be here. I know what it's like; as farmers, it's never nice to take off, especially when it's a nice day out there, but this study we're doing on the future of agriculture is very important, and I'm glad you feel the same.

We're going to open with presentations and then go into questioning.

We're going to start with you, Ms. Storey, for five to seven minutes, if you could. Thank you.

[Katharine Storey, As an Individual]

My name is Kate Storey. I'm a co-manager of my family's beef and grain farm here in Manitoba.

I'm speaking on behalf of my son, who is a typical young farmer. He's 23 years old. He's built up some equity. He's engaged to be married, and he wants to farm. He'll be good at it, too, because he's conscientious. He's a problem solver, and he has the dedication to work those long farmer hours.

Unfortunately, my son, like so many other young and aspiring farmers, can't afford to invest his time into any business that does not return a fair wage.

I don't need to go into the details about the cost/price squeeze that faces farmers. I'm sure you understand that when the commodity price falls below the cost of production, the farmer does not get paid for his labour. We older folk can manage on poor wages for quite a while, but the young farmer needs the income to start his business and to raise his family.

You here are the policy-makers, and you have the opportunity to make agriculture work--for the young farmer or against the young farmer. Your decisions can provide the tools young farmers need or you can create barriers to discourage them.

Do you want young farmers? Do you want food to be produced by families or by employees? Is there value in family farms?

The family farm is not just a feel-good symbol of the past. The family farm is a structure that delivers key economic benefits. Simply put, family farms are adaptable, and that adaptability is important to Canada. We're talking about food production here. Banks can fail, carmakers can go bankrupt, but food production must remain stable.

Canada has experimented with the agribusiness model long enough now to recognize its benefits and its shortcomings. Agribusiness has an administrative efficiency and a profit advantage over the family farm. It can seek shareholder investment and can source low-cost inputs. Agribusiness can out-compete the young farmer, but agribusiness is not innovative. The true value of a family farm lies in the brains behind the farm's success and in its ability to innovate. Family farms are more productive, more stable, and produce a higher quality product than any employee-managed agribusiness ever can.

We know that the world population is rising, trade patterns are shifting, and crop disease is on the rise. I believe Canadians want to keep the family on the farm because it makes sense for our economy, our health, and our country's stability. The family farm offers productive efficiency from the personal investment. Family farms are owner-operated, which means the owner is right there to solve the little problems before they become serious. Forty per cent of the world's food supply goes to waste. The farm owner has a vested interest in checking that grain bin to prevent overheating, or making that 2 a.m. trip out to check the calving cow.

Absentee shareholder agribusiness simply doesn't work that way. Agribusiness is notoriously wasteful, and the growing population of the world is better served by the commitment and the efficiency of the family farmer. The family farm offers integrity from the personal connection. The trend to cheap food is reversing into a public demand for quality and accountability. The family farm is ideally suited to deliver on quality. Governments can try to legislate quality and can pay for endless inspectors, but agribusiness is not built to deliver quality. Quality comes from integrity, and integrity comes from that personal connection. Integrity is built right into the structure of the family farm.

This distinction between owner-operated and employee-operated has nothing to do with size. Large farms, small farms; the key is that the operator must be invested in the farm's success. The family farm offers stability from diversity. The role of government should be to promote an economically stable food economy. Stability is derived from diversity. You here have the responsibility to maintain a diverse food economy, which can handle trade disruptions, drought, crop disease, interest rate increases, and energy price challenges.

That means we need our farm decision-makers to be on the ground ready to respond to changes with innovative solutions. It also means that we need variety in farm sizes, variety in crops, variety in production methods, and variety in markets, so that disruptions can't bring down the whole food economy.

Support for young farmers brings variety into agriculture. If you decide to help the young farmer, you must first recognize that they are competing for land and markets against the equity of established operations. Help for the young farmer means levelling the playing field to allow the young farmer to exist.

Parliament can help young farmers by lowering the payment cap on business risk management programs, or by putting a cap on the size of supply management quotas, opening the door to new farms rather than simply growing the old operations. Canadian taxpayers would rather see their subsidy money go to new farm families than to shareholder corporations.

You can strengthen and enforce Canada's competition laws to keep diversity in the fertilizer industry, in fuel, in transport, among grain buyers, and among the meat packers. The free market only works if it is diversified.

You can make international trade work for Canada's farm families by focusing on Canadian quality and by raising the value of the Canada brand.

You can make long-term, low-interest loans available to young farmers so that they can compete against investor dollars.

You can build farm succession programs so that the equity built by the family stays in the family.

Our young farmers are the key to the continuation of the family farm. Canadian agriculture is now at a turning point. Canadians want to know that their food comes from Canadian farm families.

Your policy decisions will determine who is going to be growing our food in the future. Will you invest in our young farmers?

Thank you.

[The Chair, Conservative, Larry Miller]

We'll now move to Mr. Drew Baker.

[Drew Baker, As an Individual]

Hi. I'd like to first of all thank you for the opportunity to talk to you today.

I just started farming in the last five years, owning my own land. I'm 23 years old, so I can identify with Kate's son.

The issue of young farmers leaving farming has a lot to do with what they see their parents going through now. A lot of young farmers see the quality of life that their parents have and the income they generate by working really just night and day, and that doesn't appeal to a lot of young men and women. For instance, some of the young men I know in my area have left farming for trades, because they can live in the city, where, obviously, the action is. That's where a lot of young people want to be. They make a lot more money and do a lot less work for it.

Another thing I see concerns, as Kate said, the loans for land. It's hard for a young farmer such as me to come by capital to buy land. When I bought my first piece of land, I required a 30% down payment on that land. There aren't many banks that want to take a risk on an 18-year-old for about $25,000, an 18-year-old with no credit rating and no steady source of income. It's hard for us to raise capital to buy land. Right now, the way farming's going you have to get big or you die. It's not easy for us to start out, when you need that kind of money to make down payments on land.

Another thing I see that worries me especially is the tax burden that's placed on young farmers when they're taking over the family farm. To ask a farm family to pay these kinds of taxes on succession every 20 to 30 years is, I think, pretty unfair, especially when the family is already taking out a large loan just to pay for that land and that farm. Then you have to take out another loan, in some cases, just to pay the taxes on that farm. It seems a little bit unreasonable to me.

That being said, I understand the need for taxes on succession, but to ask a farm family to do that multiple times over the generations is, I think, quite unfair.

Another issue I see is just the costs that are facing us, all farmers. The cost of inputs is rising, and the cost of our crops, and of livestock. It's not going anywhere, and our margins are shrinking. In a lot of cases, we're losing money year after year. We're having to look at getting out of farming. If we don't have some young farmers soon, we're going to be in big trouble, because we're losing farmers quickly. It's not just the number of farmers, but the size of the farms. We're losing small farms. There are a lot of guys in our area who either don't have kids or their kids just don't want to farm, because they see what goes on, and their parents warn them against farming because they don't want that kind of lifestyle for their kids. My dad's the same way. He has warned me about it repeatedly, but I guess I'm a little more stubborn that he thought I'd be.

Having said all of that, there's a side note I'd like to mention. With regard to the current government spending our tax dollars fighting a battle against farm groups on the Canadian Wheat Board, it's frustrating to see them spend our money in both the media and the courts when we already have a mechanism in place; if the majority of farmers wanted to, we could get rid of the Wheat Board. We elect the board of directors to do what we want. We elected eight of the ten that we are given to elect as pro-Wheat Board. We already have a way of taking care of this, so maybe those dollars would be better spent somewhere else. It's not for me to say where, but I think this money could be better spent, since we already have that mechanism available to us.

Having said all of that, I would like to thank you for this opportunity.

Have a good day.

[The Chair, Conservative, Larry Miller]

Thanks very much, Drew.

We'll now move to Kyle Foster.

[Kyle Foster, As an Individual]

Thank you for the opportunity to speak to you today.

I'm Kyle Foster. I'm 34. I'm a young farmer from Arborg. I also sit on the KAP executive—that is the Keystone Agricultural Producers. I farm along with my dad, who is 65 this year, and my brother, who is 39. Our farm is a family farm that was established 107 years ago. We crop about 5,000 acres of canola, wheat, oats, and some forages. We also have a small elk herd and we are former hog producers.

We went through an ownership change in 1999, when we bought out my uncle's share of the farm. His kids weren't interested in farming. I think the biggest reason his kids weren't interested in farming was because he kept telling them, “You don't want to farm. There's no future in farming.”

In preparing to come here today, I asked my dad last night how many farms our operation has taken over since he started. He came up with the number of 15 farms, and those farms have taken other farms over. We're not in a big area and we're not a big farm. It's scary and alarming to see how many farms just one operation can take over.

We're definitely losing ground on our neighbours. There would be nothing better than to have a good, healthy community, but the bottom line is that guys aren't making money at 600 acres anymore. They all of a sudden think that they need to have 2,500 acres plus to make a living.

Here are a couple of the issues I see explaining why we aren't getting a lot of the young farmers.

One is stability. Right now we're coming off the wettest two years we've ever had. Last year, in 2009, probably fewer than half of the acres were seeded in our area. In 2008, half the crop got burnt. If you can go without an income for two years at a time, it's not bad, but it's pretty tough when you're mortgaged to the hilt as a young farmer.

There are programs out here such as AgriStability and AgriRecovery. Well, it's May 2010, and I haven't gotten an AgriStability cheque yet for the crop we lost in the 2008 crop year. The reason for that is that my year-end is February 28, so I couldn't apply for my AgriStability payment until the 2009 application came out, which was a year later. The corporation accounting said we should have our year-end separate from the fiscal year end, so now we're getting punished for that.

Now we're two years down the road and we still haven't gotten any cheque for 2008. Of course, I can't apply for 2009's until next year, so there's definitely a big draw here that we're missing. Coming into seeding time, we could really use any kind of support we can get.

AgriRecovery seems to be a program that works under certain conditions. Right now we have a provincial government that is mostly urban MLAs, an NDP government with no money. They have to get along and agree with a federal Conservative government, and so far we have had not much luck.

These programs have to be predictable and bankable. I have a neighbour, for example, one of the guys whose land we had to rent about three years ago. He invested in the hog industry. He had to rent his land out and sell a bunch of land off, and he got his AgriStability cheque about 11 months later. Had he gotten his AgriStability cheque on time, he would probably still be farming.

Another issue I have, and I guess maybe this is the wrong crowd to talk to, is that we're getting constant regulations put on us. When we bought our farm—we have a small hog operation—it was a family operation. We have concrete pits and we had to put down winter spread; that was the only way we could do it.

Right now, they're putting a ban on winter spreading. For us to go out and spend half a million dollars to have slurry stores and keep that manure over the winter, we'd have to expand our hog operation probably three times. But we're also in a hog moratorium area where we're not allowed to add on to our hog barn or build any other hog barns. So officially, they have just shut down our hog operation.

We have other issues. They have come in and regulated fuel tank storage. They're in the process of regulating on-site wastewater management. There are buffer zones around secondary drains. Minimum wages are going up. We always had private insurance for our employees, and now we're forced to go with workers' compensation, which is more money for less coverage. This is another problem.

These are all expenses that have been thrown on us in the last few years. As young farmers, we just can't handle these extra costs.

The biggest reason I can see for young farmers not getting into the industry is the fact that there's no money. That's what my uncle told his kids, and I hear this constantly. They're just not making enough money, and it's not worth the time and the effort to farm.

We are getting such a small share of the food dollar. Through Keystone Agricultural Producers, we did a project called Farmers’ Share on what percentage of the food dollar goes back to the farm gate for one week for a farm family. From 2008 to 2009, the cost of groceries went up by 3.2%. Farmers received 1.7% less than they did in the previous year. The customer paid $6.01 more per week. Farmers got 86¢ less per week. And the middleman got $6.87 more. For our grain products, we got about 5% on bread, and on oatmeal the farmers' share was 2%.

We take the biggest risks. We have to bank on the weather. We input a lot. And unless something changes where we can see more dollars coming back to the farmers, I think you're going to see more and more of a decline.

I've often thought the only way we can make this work is with a food tax. That's the only way we can get some control over what comes back to the farmers. I think about Kellogg and what Kellogg's boardroom table must look like when they're deciding what they're going to charge for a box of Frosted Flakes. They don't sit back and say they're going to pay the farmers this much and they've got to get this much for the box so they'll take a 15% markup and they'll send it out the door. They sit back and think about the most the consumer is going to pay for this product--how much they can get for it.

So why can't we try to get into their profits a bit? They're still going to charge the most they can charge, but maybe we could get a couple of percent back. A lot of people think it's going to cost the consumer more, but the fact is they're already charging the most they can possibly charge. So maybe it's time we got some of that share back.

I have a couple of other things. There's definitely a need for some succession planning, some financial planning, some training, interest-free loans, and low-interest loans. But still, the bottom line is this: do you want to take all this risk and borrow all this money when you're not going to get the payment back? It's tough.

I have a couple of other things I would like to talk about. We have an elk herd. And when we started with elk, this was something we started before we separated with my uncle, because we thought it would be a good opportunity for a young farmer to start with something small. You could run an elk ranch off of a quarter of land, which wasn't a huge investment. Unfortunately, with the chronic wasting disease and not a lot of producers, we've lost most of the elk farms. The ones that are still around have no money, and they haven't made any money. It's something we really have to work on through government, to open up some of these borders again, to get some of this trade going in the elk industry. To me, it is one industry that would work really well to get young farmers back on the farm with minimal expense.

Some revamping definitely needs to be done in terms of the Canadian Wheat Board, but the fact is that everybody in this industry, in agriculture, is trying to get a monopoly. Whether it's Viterra, whether it's the canola crushers, the fertilizer plants--everybody is after a monopoly. We have a monopoly on our wheat and we're trying to get rid of it? This doesn't make sense. This is a company we need. We need the pool.

About 1995 we had single-desk selling for hogs in this province. Things were going consistently well. We had five or six packing plants. Since we lost our single-desk selling, we basically have one guy dictating the price they're going to pay us. So we have to keep the Wheat Board intact. They're looking out for our best interests. It's a farmer-elected board. I would hate to see it disappear.

Lastly, in terms of the mergers we see in the agricultural industry, like Viterra, right now if we want to get anhydrous for our farms, the only place we can buy it is Viterra. The competition branch has done nothing to stop them. They keep on buying up more and more. Just this week they bought up a couple more independents. And if we want anhydrous, we have to go an hour away to get it from the next competitor. That's a big issue for us. I hope somewhere along the line the competition branch will slow this down a little bit.

Other than that, thank you.

[The Chair, Conservative, Larry Miller]

Thank you, Kyle.

Now we'll move to Mr. Ian Robson.

[Ian Robson, As an Individual]

Thank you very much for this chance to attend these federal committee hearings.

My name is Ian Robson. I farm at Deleau, Manitoba. I got into farming with my dad and my grandfather and my brother. We have done a bit of organic farming. We raise breeding livestock, and do grain and mixed farming. We're what you would call a smaller-scale farm these days compared with what would be around the neighbourhood. We have only 60 cows and a section and a half of land.

I'm 55, and I heard the other day that the average farmer is 52, so that makes me one of the guys who makes the lower half of the farming age possible. We definitely need to get more younger people involved and interested in farming. We pray that you, who hold the ultimate power, will listen to us today and decide for and help Canadians in useful ways in farm policy.

Why should we show up and speak with you about the need to get youth interested in farming, especially today when we could be seeding? It's simply because the number of youth willing to become farmers is very low. The opportunity for youth to become farmers, like our parents and grandparents, is much reduced. The need for Canadian society to have our youth involved in the future of our food supply is surely very important. So you have a job to do that requires some homework to get it right.

What vision does Canadian society hold for our farmers? What vision does Canada have for our environment? Farming activity--and supply of the farming needs--is changing our environment, and even our climate. Climate change is really caused by the burning of fossil fuels as humans conduct their activities. Weather volatility is making farming more challenging. Mother Nature always bats last, but there are two-legged corporate and government policies that also bat on farmers.

I am elected as a Manitoba director of the National Farmers Union. For 40 years, the NFU has given many recommendations on farming to society, through our requests for government to take its responsibility seriously. The NFU has always held that farmers need more market strength to bargain for better prices. We exist because there have been and continue to be very tough times in the farm economy, caused by cost/price squeezes. We could say that we have already explained that such would happen if society followed a certain policy. Our track record has been good, but the uptake of our recommendations has been mixed.

I invite you to please obtain a copy of the National Farmers Union's policy statement, where you will find our objectives for a society that can continue to improve itself and our environment. I have a copy of the policy statement here.

We are pleased to say that the farmers economy gained from things like the restrictions that the NFU helped to place on the rBGH milk growth hormone. But the farm economy is overpaying for patented seeds for very little benefit to us. The yield increases to date in many crops come from natural selection and inputs, not from genetically modified organisms or patents. With these yield increases, the record shows that farm gate prices have dropped, on the excuse of oversupply.

This country was developed by people who were willing to organize and work together. During much harder economic times, great things were accomplished. The co-ops, the Canadian Grain Commission, the Canadian Wheat Board, food inspection, grading, orderly marketing, and Canada's Seeds Act were all achieved through struggles, and continue to be of great benefit to farmers.

Ironically, many of these achievements are being slagged by the federal government in its zeal to chase export markets at all costs and by investment rackets that seek only profit through mergers and integration. We must understand where we have been to get to where we wish to arrive. It's important; the low returns that have been mentioned don't seem to have been an accident. There have been many technological advances in farming; farming has become easier over the years. The buyers then decide you're advanced, so they won't pay as much for your product.

This is where bargaining comes into the picture. As mentioned, the share of the food dollar has been declining for farmers. It's no accident. We're basic producers, and the corporate buyers on the other side of the table have more power than we do when it comes to setting prices. This is a responsibility of the government, to look at this issue and make use of the Competition Act that was put in place many years ago. It's been diminished time and time again through various changes. Foreign investment review and foreign ownership have been part of that relaxation in regulation.

As was mentioned by the first speaker, when you have local ownership, you have local control. You have a local economy that works. When you have an investment from outside the country, you don't have local concern in play. You have only a profit motive in play. You have less concern for the environment and for the health and the local culture of the community.

It's important that the government take full responsibility in regulating corporate economies. That extends into the realm of input suppliers. We've made gains in things like this as was mentioned with the Wheat Board and in bargaining for prices on our products. Those are things we need to keep. We lost single-desk selling in pigs, with the resultant loss of farmers involved in pigs. We have tons of pigs, but we have no profitability in pigs. It wasn't hard to figure out that if you overproduce pigs, they'll soon cut the price.

That problem is happening in cattle. I think that as a cattle producer you understand very well the squeeze we're in in the cattle business. That's because we have fewer buyers in the processing and the distribution of our products. We've allowed the concentration in only a few hands, and they're able to set prices that suit them but don't suit us as raw producers.

I invite you to think more clearly on a few policies in this regard. I have noticed the tax policy, and this comes from having talked to some neighbours and preparing for today. They want to incorporate the farm. Once you do that you get a tax benefit. I'm an unincorporated farm, so my tax benefit is at a disadvantage compared to that of an incorporated farm.

The problem with tradespeople is that they'll give a volume discount if you're a larger-scale farm. I'm a smaller-scale farm, so I'm at a disadvantage on the buying of my inputs. Again, the Competition Act comes into play. A land-banking system would be good. Long-term loans would be good. Education and off-farm jobs have been a problem.

Anyway, thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

We're now going to Mr. Joe Bouchard.

[Joe Bouchard, As an Individual]

Good morning, ladies and gentlemen.

First of all, I'd like to thank you for the opportunity to speak with you today on the current state of young farmers. It's nice to see again a few of you I've met over the last few years.

My name is Joe Bouchard, and I am a 30-year-old, third-generation farmer from the Fisher Branch area. Along with my wife, who is a teacher in town, my father and I operate a mixed beef cattle and grain farm. It consists of about 1,100 acres of hay land production, and 900 acres of cultivated land, which are sown to oats, wheat, and canola. Those are the crops we choose because they're really the only crops that can grow up there--some other producers are in forage seed production--because of our climate and our land. We also have about 2,000 acres of pasture land. We calve out about 300 cows. We background the calves to the 750- to 900-pound range before marketing.

So we keep ourselves fairly busy. My belief has always been that everyone else has to work 40 hours at least per week to put food on the table to provide for themselves and their family, and I don't think agriculture should be any different. But when we're working 80 to 100 hours a week and fighting tooth and nail to make a living to provide for our families, and we're doing everything right, producing a top-quality product and yet having trouble, there's something wrong.

Today I'm going to talk about the current state, opportunities, challenges, and possible solutions for young farmers today.

Also, part of this is that Kyle and I, who came up here together, are in James Bezan's riding, and as quite a few of you know, we have been absolutely swimming these last two years. It has been a real struggle for anyone to survive up there these last few years. Our area is probably hurt harder than the average area in the country right now.

The current state for young farmers is not very good. It's a very tough business to survive in, not to mention to succeed in. Very few are coming back, because there are easier ways to make a living with fewer hours and less risk.

For example, I have a brother-in-law who works as a heavy-equipment operator, which I did at one time. He works on the pipeline, maybe works seven to eight months a year, puts in long hours, and makes triple digits.

I'm the oldest in the family. My next-youngest brother has been working with the fuel industry in Calgary, doing tech support with computers. He just took a new job; he's making triple figures. He has holiday time and he has flex days. In case any of you don't know what “flex days” are, they're days off on top of your holidays, which you get paid for.

When you're out fighting to make a living and you hear this, it gets your blood to boil a little bit.

We have an aging demographic in our area. In our RM, the RM of Fisher, there are four of us young guys who came back roughly around the same time. One had older parents, and he never left, but there are about four of us; we're all roughly the same age.

One of them is done already. He pulled the pin because he just couldn't do it. He quit, sold off what he could to try get out of debt, and he has a job at Manitoba Hydro. So there are three of us left in the whole RM, and just recently another young fellow graduated from university, and he has come back. But four young people in a whole RM is not very good.

We're an agriculture-based community. The RM that I'm in and Kyle is in is what runs the area. Agriculture is the economy; it fuels everything. Our communities are under pressure: the farmers don't have money; the businesses don't have money. If you walk into some of the businesses, especially the ag businesses, it's just like bees to honey. They haven't seen anyone in days, it seems. They're just happy to see someone in the doors.

Let me turn to the programs, including AgriStability for young farmers. Quite a few of us have been calling it “AgriUncertainty”, because no one can seem to figure out if it's bankable, if it's going to work. There's a lot of frustration.

When you go to your accountant—they seem to be the only ones making money on this program, for what they're charging to fill it out—it's very frustrating. They can figure out your income tax and know almost to the penny what you have to pay or what you're getting back. With this AgriStability, they hopefully have a rough idea and they send it off to the office, but sometimes they're way out. That's tough when you're banking on that program in a tough year.

With AgriStability, you need a margin for it work. For the young guys who are expanding, the formula keeps pushing the reference margin up. Even though they're not having good years, but they're expanding, it keeps pushing the reference margin up. I guess it's good to have a margin, but when it keeps pushing you out even when you need help, there's a flaw in the program.

As I said, it's not bankable. There have been many guys, as Kyle said, who got a cheque when it was already too late.

My biggest beef with AgriStability is that mixed farms are discriminated against. The people who are going full out in one sector—grains, or livestock—have a program like this to help level things out. The mixed farms are doing it on their own operation. It doesn't encourage people to have mixed farms to mitigate their own risk, and that's not fair.

On our mixed farm, we go year-round. We work long hours year-round, and it's pretty hard to even get a day off.

I understand the design around the program, why the coverage is such that you guys can only go up to 85%. But our margins as young farmers are so tight that we need that 15%. I know this is where AgriInvest comes in, but when you're fighting to put groceries on the table and you don't have money to put into AgriInvest, that program's not of much value to you either. For young farmers, this is a huge concern.

With AgriInsurance...and I know that in some of this I may be barking up the wrong tree, because I understand that there are federal and provincial responsibilities, but AgriInsurance up in our area was just an absolute train wreck these last few years. It's amazing that more guys didn't go under, the way the insurance was handled.

We're not getting enough coverage for our premiums charged, and there's no insurance in a lot of the livestock sectors. The other thing is that it seems they're calculating 80% of the value of your crop, but also you can only get 80% coverage. I'm not that bright, but I know that 80% times 80% is 64% coverage, not 80% coverage. So you need a real crop failure to even get a payout, but you are still going to be losing more than you're putting into the land. And if you're not putting proper inputs into the land, there's not a hope in the world of your making a dollar.

AgriInvest, as I said, only works if you have money to invest in it. If you do have money, it is a good program, but for young farmers.... As I said, when you're fighting just to survive, you don't have the money even to put in there.

As for AgriRecovery, up in the Interlake we have cattle, and that was a good program. It saved a lot of guys' bacon up there. If it were not for that, I don't think there would be many guys left, to be quite honest. It could have come a little quicker—that's my only complaint—and it has to be bankable. It took quite a bit before it was announced, and there's quite a bit of hurt. Had that money come earlier, it would have helped quite a few more people.

I think the most important one, which we need, is AgriRecovery. When we have an absolute disaster, that's when you need a program that comes out and comes out quickly. Some of our AgriInsurance people were saying last year “Well, you guys have unseeded acres.” Well, unseeded acres or excess moisture works when you have 5% or 10% that you can't seed. When you have 90% to 95% that you can't seed, that doesn't cut it. You're just covering your fixed costs, your land rent. There's nothing left at the end. You don't even have money to make your machinery payments.

On opportunities for young farmers, despite what I've said, there is huge opportunity, because there are not many people coming back. There is a growing population and an increasing demand for food. I still believe a rural community is a great place to raise a family and to live.

On the challenges, I for one am a little sick of hearing about these niche markets in which people are willing to pay more. I want to know where they are. People want the best quality for the cheapest price. We have what I feel is a cheap food policy, a free food policy. We have six companies controlling 85% of the North American food retail business. There are huge margins on the retail side. There was a study done on beef that showed retailers were making 54% of the price. That is huge. Walmart wouldn't exist if the mentality wasn't to have the best quality for the cheapest price. I've never heard of anyone advertising how expensive their food is.

Cashflow is the biggest problem for young farmers. We need it to operate, and sometimes you're making poor marketing decisions because you don't have the cashflow. If there is one thing you guys can do for young farmers, it's to keep that cash advance going. That is absolutely huge.

Rents are huge. Weather and marketing are always huge factors. If interest rates increase, that's going to be a huge challenge for young farmers as well.

If farms aren't pretty much given to young people by their parents, there is no hope that they'll make it. They can't afford to operate and pay for the farm at the same time. Previous generations are subsidizing food production in this country, and the regulations and extra costs have to be watched, because the other people are margin operators and we're price-takers. They take it off what they're paying.

Lack of markets, whether it be domestically or internationally, is a challenge, and companies with complete vertical integration are starting to be pretty scary.

On the lack of infrastructure, it's the same thing. It's probably more provincial, but our roads and drainage systems are a mess, and it's an extra cost. Our communities are dying, partly because there are fewer services.

On solutions, we need a better environment--meaning tax breaks for more production of our products--and creation of more markets. For young farmers, maybe we could have higher rates on the interest-free part of the cash advance.

On interest rates and breaks on loans and mortgages, we need them to be more than five years and with higher caps so that our parents can perhaps be paid for their farms. That would be huge. MASC is doing that, but it's only for a couple of years on a small interest rate. If we could do that for 10 years for young guys whose payments are almost all interest, that would be huge.

On trade and markets, more trade and more markets are important. If our people won't pay for our product, let's get it to someone who will.

There has been talk of the cost of production, and they talk about supply management. I'm not here to pick on that, but in Manitoba our dairy herd has shrunk in 10 years from 800 producers to under 400. They're consolidating just as quickly as the others, so that's not a perfect system either.

I do like Kyle's idea. Maybe we need a food tax, and that money could be used to help young farmers out.

Thank you.

[The Chair, Conservative, Larry Miller]

Thanks very much, Joe.

I was up into your area two years ago this coming July, and I saw the water. I've never seen anything like it in my life. I can't imagine having to work through that.

We'll now move to questioning.

Go ahead, Mr. Valeriote, for five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

First of all, I would like to thank each of you for taking time out of your day to be here. I know you probably have more important chores to be attending to. The quality of your presentations is terrific, it really is. Each of you has given a lot of thought to this, and it's extremely important for us to hear what you have to say.

Yesterday in Saskatchewan somebody said that we wouldn't be here if we didn't have a crisis on our hands, and the impression I am being left with listening to the witnesses over the last four days is that we are at a crisis stage. We have heard a large slate of options and changes and tweakings that could be made to farm loans and AgriStability, but my impression is that it's at the stage where we have to think beyond tweaking some of these current programs; tweaking some of the current programs may not be enough. On the other hand, I may be wrong. Maybe the solutions that you're proposing are enough.

If we could think out of the box for a moment, what might you propose--any one of you--as a program that would help bring in and hold a young farmer in the industry?

[Ian Robson]

Land banking is a possibility. There is a huge capital requirement to get into the land system or to get available land for a young farmer, and he has to make that outlay.

Loan programs have been used, but they still require repayment. The older generation, as was mentioned, has been financing a lot of the transfers. The older generation wanted to get some value because they looked at their land as a pension system, but for some reason land values continue to increase. It has just been reported that even though there has been decreased farm income, somehow the land values are increasing. It doesn't make much sense.

There has to be innovative programming in land transfer from one generation to the other. Land banking is one possibility; in the United States some communities have looked at land trusts in order to set up a system to transfer land, so there's one idea.

[Joe Bouchard]

I think you've got to have something that gives the young farmers an advantage over everyone else, whether that's help on their mortgages if they're under 40 or a higher rate on these cash advances that the established guys can't get. I think that's the only way the young guys are going to be able to get that bit of advantage they need so that they can compete against that equity that they just don't have.

[Frank Valeriote, Liberal, Guelph, ON]

Drew, you mentioned the Wheat Board and the farmers being able to decide for themselves. Those of us on this side of the table hear you and are extremely supportive of the Wheat Board, as you know, but I do hear from some that there are some problems that need to be fixed, and I think you mentioned it.

You might have heard this week that maybe it's an issue of transparency or something. Can you identify some of the problems you see that could be fixed in the Wheat Board?

[Drew Baker]

Some of the PPOs that they offer now are fixing a lot of the problems that farmers traditionally had with the Wheat Board. That said, are you ever going to have a system that everyone is completely happy with? No. Personally I'm pretty biased, so I don't want to say that everything is working well, but I would say they're doing the best they can. They are trying to be flexible and meet farmers' needs.

I think cashflow was mentioned. Waiting for a cheque from the Wheat Board is hard on a young farmer who needs that cash to pay the bills, but all in all I think they're really working as hard as they can to meet the needs of the farmers. In my personal opinion, they're doing a very good job.

[Frank Valeriote, Liberal, Guelph, ON]

Joe, you talked about vertical integration and a problem existing there. The Competition Act is designed just to prohibit people from collaborating and setting prices; it's not like the United States, where they come in and break up companies if they think they're going to have a monopoly.

Could any of you recommend changes to the Competition Act so that we can keep power from being so concentrated at the top?

[Joe Bouchard]

My thinking is that we need the right environment so more businesses will want to set up and there'd be more competition. That was my train of thought on it.

[Ian Robson]

That's what's needed. We do look at that U.S. model that allowed them to break up control by packer concentration. That was years ago. Since then they've been weakening their competition acts too, but there is a definite need for the government to exercise its powers in the economy. It's not unreasonable to do this.

If you look at why corporations exist in the first place--this is a history lecture--it's a group of people who come together to accomplish a purpose; mainly that has been a profit, but it can be more than that, and it is the government that grants a corporate charter. You have to apply to government to get it. The government can set reasonable rules on that, and it should do so.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance is next. Everyone should get their headsets on for translation.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you very much.

Mr. Foster, before I forget, you gave us some statistics on the cost of groceries and farmers' incomes. Would it be possible for you to provide that information to the committee clerk, please? It does not have to be today, but it is important for us to be able to include those statistics when we prepare our report.

You talked about the percentage of the profit that retailers were making at the same time as farm income kept dropping. Do you understand what I mean? Could you provide the clerk with that information?

[Kyle Foster]

Absolutely. Keystone Agricultural Producers, I think along with APAS and Wild Rose, put this study together. It's on their website, but I think I have a copy of it here too that I can leave with you.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Bouchard and Mr. Foster, I was pleased to be listening to you this morning although what you were telling us about the problems you face is not happy news. Since we got back from the 2008 election, I have been trying to make my committee colleagues aware of the importance of overhauling these programs. I even managed to get a motion passed to that effect. I am not the only member of this committee and I respect the fact that other members have other priorities. This tour we are on today is very important. For me, it confirms that all programs specifically designed for agricultural producers must be overhauled regularly.

You had a suggestion, Mr. Bouchard. You were talking about the AgriStability program, which you called the “Agri-uncertainty” program. That is not unlike a lot of other testimony that we have heard since we began this tour and as long as the program has been in existence. You also talked about the AgriRecovery program. There are a lot of programs. They are not all bad, nor were they all established in bad faith. I am sure that the government and its officials do not put programs in place knowing that they are not going to work. I am sure that the basic idea is to try to provide assistance, whatever the government is. I am a member of the opposition, but I can acknowledge that.

On the other hand, the government must acknowledge that, when a program is established, it is possible for it not to work as intended. It is possible for it not to meet producers' real needs. That is what you demonstrated this morning in just a few minutes. I would like to come back to that.

Your area was flooded. Have disaster relief programs been of any use to you? Do you feel that you may be able to recover because of those programs? If so, is there anything you would improve? If not, what should be done to help you in situations like that?

[Joe Bouchard]

Well, as I said, it could have come more quickly. We knew in September that we were facing a train wreck up there. We knew in August that we were in big trouble. There was assurance that something was coming, and for all sectors. A lot of the grain producers got some excess moisture insurance, but that didn't cut the mustard for the mess they made on their fields trying to take the crop off—the ruts, and then all the money to level them out. They were left out. I didn't feel that was very fair

But for the cattle industry up there, it was huge. It really saved the cattle industry up there. My only complaint--as I said, we knew we were in trouble earlier, and we were pounding on doors all summer--is that it could have come a little quicker. But also, AgriRecovery is a provincial-federal program, so we also had to get the province on side. It's not fair to point fingers just at one side.

That was my only complaint. There is a need for a disaster program, and when disaster happens the program has to be quick, because these other programs, which come up later, work in normal years, but not in disasters.

[The Chair, Conservative, Larry Miller]

You are almost out of time. If you have a closing comment, I'll allow it.