Agriculture Committee on April 29th, 2010

[The Chair, Conservative, Larry Miller]

Very quickly, Larry.

[Larry Black]

Okay, thank you; sorry.

I think we first need to consult the farm organizations and then develop a vision for agriculture and make sure that vision is public and transparent. Measure all future policies against that vision. Does this new policy take us closer or further away? Then I would enact policy that puts farmer interest ahead of the corporate interest.

There are a lot of other recommendations in the Wayne Easter report, which I think are very viable. It's going to take courage and resolve to see this through. The longer you wait before you take a bull by the horns, the more expensive the solutions become. The last thing we need is a half-hearted, symptom-based solution like loan guarantees and any number of underfunded programs that we've become used to. Tackle the real problem of low net returns to farmers and the symptoms like declining young farmer numbers will look after themselves.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you.

I hear you're from Deloraine. I'll get you to say hi to my good friend Vern Gilson down there.

[Larry Black]

I know Vern.

[The Chair, Conservative, Larry Miller]

I haven't seen Vern in years.

Ian Wishart from Keystone Agricultural Producers, you have five to seven minutes, please.

[Ian Wishart, President, Keystone Agricultural Producers]

Thank you very much, Mr. Chairman.

It's obvious I'm not a young farmer. We had every intention of having a young farmer here today to do this presentation, but he wouldn't leave his air seeder, which is probably the right thing for him to do.

You've already heard from at least one of our young farmers earlier today. Kyle Foster is involved in our organization as well. We do have a very strong and active young farmers group within our organization, and we strive to include them in all our policy development. In fact our current executive of 12 includes four young farmers. So we're certainly very engaged with them.

Our biggest concern, I guess, is the decline in the farming population in general, but particularly the sharp decline in young farmers. We need to get more young people involved within the sector in whatever way. Sometimes it's going to be with existing farm operations and traditional farm styles or new ones entirely.

One of the barriers that the sector faces to new entrants--and not just young farmers from existing farms, but bringing people in from the outside--is the very negative image and very negative message that we continue to get of agriculture. We as farm organizations have been attempting to be more proactive in recognizing our success stories and getting those back in view of the public.

There are clearly some problems of limitation and equity issues. The cost of getting into agriculture is quite large. Even the programs we do have--and we do have several here in Manitoba through Manitoba Ag Services--have very severe limitations on the equity situation, which makes them difficult to use.

In the area of business risk management, there are certainly problems. Some of them have been mentioned, such as the lack of initial margin in AgriStability. The same thing applies for crop insurance coverage for young farmers and new entrants. It also applies to AgriInvest. You simply do not have the numbers to start. These are the most vulnerable entrants to the sector and we give them the least amount of protection. Clearly we have our policies mixed up on that one.

We need some programs to be in place, and we are going to suggest some here. We've been working with our young farmers group and we have roughed out a program. Basically they fall into three areas: addressing leadership and skills development, providing some mentorship opportunities that draw on the experience that is in the industry, and of course allowing some access to capital.

One of the big changes, though, and it's been referenced all the way through, is the profitability in the sector. We have seen a significant shift in the value chains and that has led to a serious lack of profitability. Even your own farm income numbers, which just came out this week, are actually going to back up that statement in a sizeable way.

So there's a significant drop in farm income, which is going to be a crisis in the next year that's just emerging. It is even more evident in the value-added sectors where the income has dropped even more sharply. So clearly we have shifted this.

The farmer's share has been referenced by Mr. Black. A document that we have been tracking for some time has shown a continued decline in the farmer's share of the consumer dollar. That is really the basis of the problem: no matter how efficient we've become as farmers, someone else in the sector has been taking that. We have actually been subsidizing inefficiency in the value-chain sector. It's something we clearly can't afford to do in the future.

Now, getting back to our concept paper, which we don't have completed.... We're in the development stage, so I'll give you some of the points. We named it “AgriStart”, to fit it in the current models that are used, the lexicon of the day.

In the area of leadership and skills development, we think we should start with a grant program with a limit of about $10,000 per person during the first three years. It will help people get properly trained to provide the necessary skills these days to run a large farm. It will be aimed at increasing access to planning tools and resources whether they include financial planning, business planning, marketing, or whatever.

It will offer participation in leadership training because I think we're going to need leaders in the future in the farm community and these are where they'll have to come from. It will also offer participation in an applied mentorship program. We'll talk a little bit about that shortly. And there will be increased participation in farm organizations because we have to have a strong voice in the future.

In the area of internship or mentorship programs, we will have on-farm training for interested individuals and hands-on training in production and management. The employer would get a tax incentive based on the number of hours mentoring, and the employee would be paid a percentage by the producer that would be supplemented by a leadership development program.

So it would be the same as in other sectors. We'd divide the cost of having a new person in the workplace, they would get some education, and the owner of the operation would get some benefits as well.

For non-agricultural recipients--those without current agricultural background, or the non-farm people--the applied program would be required for any further loans or whatever under other programs. Mentorship farms would have to be approved for each commodity, and that would be done by commodity organizations at the provincial level. An example would be dairy farmers.

We're also putting forward a concept we call the “AgriFoundation”. AgriStart funding would be available at low interest rates, maybe even down to zero. The source of that funding could be from companies like Farm Credit, or we could set up a mutual pool of retiring farmers who want to invest in that--maybe not so direct. There might be a need for some guarantees in that area.

Non-agricultural recipients would be required to go through an applied internship/mentorship program so we would know they got the experience. We would also have funding incentives for alternate energy and green technology users. Frankly, we're finding it very difficult to get new farmers, young farmers, or even existing farmers to apply some of those new greener technologies, particularly in alternate energy. Maybe we'll have to import them from elsewhere to get at least the initial one started.

That's our concept paper, and I'd be happy to answer any questions.

[The Chair, Conservative, Larry Miller]

Thank you very much, Ian.

Now we have Mr. Ted Eastley and Ms. Gwen Donohoe from the Manitoba Rural Adaptation Council.

I understand, Ms. Donohoe, you're going to speak, so you have five to seven minutes, please.

Thank you.

[Gwen Donohoe, Youth Director, Manitoba Rural Adaptation Council]

Thank you.

Good morning, committee members, committee staff, and members of the audience.

I am Gwen Donohoe. I am the youth director of the Manitoba Rural Adaptation Council. To my right is Ted Eastley, who is our executive director.

As well as being the youth director of the Manitoba Rural Adaptation Council, also known as MRAC, I am a young producer and I am in the process of completing a master of science degree at the University of Manitoba. I own and manage a herd of commercial beef cows and participate in the management and daily operation of my family's mixed farm, which is a 300-head commercial cow-calf operation as well as grain and oilseed crops. We are located near Le Pas, Manitoba, which is 600 kilometres northwest of Winnipeg. This is where I am also the vice-chair of my local conservation district.

It is very encouraging for young producers like me to know that you are interested in hearing what I have to say about the future of young farmers and the agriculture industry in Canada. Today I am here to tell you how you can help me provide a future for the Canadian agri-food industry, because I believe the solution lies here, with the young producers in this room. We are the solutions you seek. We just need the support and opportunity to provide them.

The MRAC human resource and infrastructure committee, chaired by a young producer named Colin Hudon, has recognized the need to find these solutions, to find a way to attract and retain young farmers. This has resulted in the development of the vibrant rural communities project, a young producer-led initiative with the goal of identifying problems and solutions for rural agricultural production and community succession planning, as young producers see it.

The discussion paper delivered in our brief was also developed by the committee as a means of encouraging discussion with the objective of offering you some solutions. And this is what I am going to be discussing today.

Meetings like this one will be one of the first steps to help us provide these solutions for agriculture, which is to share information. But we need to ensure that this process does not stop here. As young producers, we need to have more opportunities to share our ideas and solutions with you because we do have different ideas, not only different from yours, but different from the senior members in our own industry. And we have our own vision for what the future of agriculture will look like.

We also need, as an industry, to share more information with our consumers and with Canadian society, something that we may have been lacking. We need to provide information so they can make decisions to purchase healthy, safe, and environmentally sustainable food, with what we like to refer to as consumer confidence.

These actions are necessary to promote the farming industry and profession as positive, important, and successful. I am tired of being told that I am too smart or too educated to return to my family farm and that I am stupid to return to the farm. Considering the important public goods and services that I provide to all of you every day, you should be encouraging me to return.

Sharing information can also be used to start removing the current intergovernmental and interprovincial barriers to change that exist right now. There needs to be a breaking down of silos when it comes to agriculture issues. Agriculture is not just about farming, it is about rural communities, transportation, food safety, healthy living, economic development, and the environment. These are top issues for all Canadians, and agriculture and young producers can provide solutions for all of them.

Government departments and provinces need to recognize this interconnectedness and we need to work together in order to allow us to develop a financially stable industry and maintain vibrant rural communities.

Young producers need to have the skills and support to provide these solutions through programs to develop leadership skills, to build confidence in ourselves and our industry, and to provide mentorship, which is all accessible at the farm gate. We may have the solutions, but we do need government support to help us develop into leaders and solution-providers.

These actions have been identified in the rural communities discussion document. Other actions that we have identified include programs to encourage diversification and value-added activities in rural communities and to help us identify areas of rural opportunities that are non-agriculture related, such as tourism or telecommunications, environmental industries, and value-added processing.

We do need financial support, but we need a different form of support, a support system that will provide us with access to capital and short-term credit, and a system that will recognize the importance of agriculture to maintaining a healthy environment, one that supports the agriculture activities that are already in process that are providing everybody with clean water, clean air, and maintaining ecosystem function. This financial support needs to encourage risky ventures with risk mitigation instead of the status quo, risk-aversion approach.

These solutions need to be delivered in a timely, transparent, efficient, and effective manner, free of bureaucracy and political agendas, to ensure our long-term stability. These delivery agencies already exist in the form of non-profit, arm's-length agencies, such as MRAC and Manitoba's conservation districts program. We need to take advantage of them. These programs can turn national funding into a regional reality.

This is my favourite quote from the discussion document:

The entrepreneurial rural person does not want to be looking for regular support for a maintained level of existence. They wish to be provided the tools and overall support and faith that they can have ownership in creating their own destiny rather than having someone hovering over them (the “helicopter generation”) to protect them from making mistakes.

In other words, give us responsibility and teach us to lead, and we will deliver.

We believe these tools are some of the actions the human resource and infrastructure task force committee has identified. We believe they are necessary so that young producers can provide the solutions to improve the profitability of farming and so that young producers can stay on the farm.

I hope we can continue this process of sharing information, and I hope we can establish some action items that are reasonable, timely, measurable, and accountable to ensure the future survival and growth of primary agriculture and rural communities.

Thank you.

[The Chair, Conservative, Larry Miller]

Gwen, you made the comment that you were sick and tired of being told not to return to the farm. By whom?

[Gwen Donohoe]

I was told by members of my family, the community, and the education community.

They encourage us to move on to regular paying jobs.

[The Chair, Conservative, Larry Miller]

Thank you. I just wanted to clarify that.

We'll now move into questions.

Mr. Valeriote, you have five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

First of all, I want to thank you all for taking time out of your schedules to inform us. What's important is that what we learn from you is turned into policy and law and that this is not just an exercise in public relations on the part of politicians to give the impression that they're listening, when they're not going to do something about it.

Gwen, we've heard the same from many people: young farmers are discouraged by their parents from getting into farming. I have heard some compelling statements over the last week.

I come from a corporate background, but I am now convinced that we're living in denial if we don't think these programs are designed to ultimately force some form of consolidation into bigger and bigger monopolies. We're heading in that direction to the point where rural Canada, as was said the other day, is going to becoming a ghost town. We have to change it, as Fred has said, from the ground up and not just deal with the symptoms.

The Competition Act is designed to prohibit companies from collaborating and setting prices. It's not designed to keep monopolization in the sector. It's not like in the United States.

I'm wondering if you would say, those of you who are willing to speak, that the big corporations, the processors, and the grocers are controlling the amount of revenue getting down to the actual producers. Are you of the opinion that it's at the point where the Competition Act needs to be amended to break up these monopolies and break up these two or three larger corporations that are controlling this?

Would anyone like to comment on that?

I see Ian and Fred...all of you.

Okay, go ahead.

[Ian Wishart]

Thank you very much.

We actually had some direct experience with the Competition Bureau. Three years ago, we had Pricewaterhouse do a study on competition in fertilizer pricing, back and forth, between Manitoba prices and North Dakota prices. We found a 60% difference, which was in the wrong direction, obviously.

It was a very credible study. We farmed it out to a large consulting firm to make sure that there were no questions about it. We tried to get the Competition Bureau interested in this. They basically told us that the only way they would get involved would be if we could find someone on the inside who was prepared to testify that there was collusion. We provided them with lots of external information. We continued to monitor those prices, and they have come together better, simply because of the publicity that these types of programs develop. But they were not prepared to take action unless we basically did it all for them, handed it to them, and said, “Okay, here you go.”

[Frank Valeriote, Liberal, Guelph, ON]

Right.

Can we move over to Fred?

[Fred Tait]

I too have had some experience dealing with the Competition Bureau. One experience was in regard to the consolidation in the hog slaughter industry. At the time, the Competition Bureau in its wisdom found that of course there was competition in Manitoba because we could deliver our hogs to Sioux Falls, South Dakota, which is only 800 or so miles away. That was their version of competition in that case. I've also had some exposure to consolidations in the grain industry, and I've watched the rulings there.

When one looks at the Competition Bureau, one shouldn't look at it in isolation. When one hears rhetoric coming out from time to time that they're going to remove the restrictions on foreign investment, that means concentration; they're removing the barriers on concentration of ownership.

We also have to be very sensitive to the capacity of people in the farm community to criticize what's taken place, because in so doing, you're criticizing the entity that may be supplying you with your trade credit and your imports, and the entity that you may be, in the end, delivering your product to.

This situation should not exist. This is a very unhealthy situation.

As it's functioning today, it's there for name only.

[Larry Black]

Thank you, Mr. Chairman.

The example I think of when I think about the competition is the post-BSE, roughly $2-a-hundredweight, feeder cattle program announced some time ago; I think it was probably three or four years after BSE. Within a day or two after that program was announced, the price at the auction mart was down by the equivalent amount.

Now, if that's not a staggering statistic, I don't know what is. That's an example of competition at its finest.

[The Chair, Conservative, Larry Miller]

Does somebody else want to comment?

Luke.

[Luke Lelond]

I find it really hard to fathom how I can take a steer to a local abattoir who charges me $440 to process it. I take it out and I sell it to people at a 30% or 40% discount and end up with more money in my pocket. It's just....

That should be the most inefficient way of doing it. They kill them for $150 out west. Like, where does all this money go? And then they sell it at the actual retail price, not at a 40% discount.

[Beverly Stow]

If you look at a map of the composition of one of the two major packing companies left in western Canada, you find there's ownership of just about every conceivable sort of company by the same family, right down to the auction marts. I don't know how far they go toward the grocery stores on the other side, but there are a number of auction marts on this company's list of ownership.

The other thing I was going to mention was that someone stated that the Competition Bureau's purpose was to see that there was no price collusion. Well, wasn't there an episode a year or two ago about them investigating the amount of seaweed in Lululemon T-shirts? How does that fit?

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, for five minutes.

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

Ms. Donohoe, for me, what you said is deeply troubling and shocking. It is normal for your family and those close to you to say that it is difficult to farm these days and that, given your education, you could go into something else. You often hear that kind of discussion in families. But I am astounded when you say that educators and others in the community are urging you do something other than farming. It is one of the noblest of occupations. Farmers feed the world. There is nothing complicated about it: food, clothing and shelter are basic human needs.

As a country, a society or a community, we can decide that our food will come from elsewhere. That is a choice the society makes. But those who make that choice may well find themselves in a situation where some food items are in short supply or where prices are fluctuating wildly. Supply management will no longer exist. People will no longer be able to buy milk from New Zealand or the United States for their children because the Chicago Exchange has caused the price to fluctuate. Then they will come running to you, telling you what they need and saying that farming may have been a good choice after all.

Personally, I think it takes courage, after receiving an education, to decide to go into farming in the current context and with all its pitfalls. I am grateful that you have made that decision. All the young people we have heard from have told us that it is not easy. Some have decided to get out. Others have told us that they will leave if things do not get better in two, three, four or five years. This is a message that, as parliamentarians, we have to hear. We also have to make the government open its eyes, wake up. In a way, that is what we are doing in these sessions. Bureaucracy does not move quickly, it is true, but we are trying to push it along. Progress is never as quick as we would like, but we have managed to do some things, I must say. Programs have been established, thanks to you who come to testify. It is important for you to keep up the struggle. I just wanted to tell you that.

In one part of the very interesting document that you have provided to us, the part called “Call to Action”, your organization—which I am not familiar with, because, as you have no doubt gathered, I am from Quebec—suggests the following:

6. Financial support to encourage, explore and nurture risky ventures with a risk mitigation approach versus a risk reduction or aversion approach.

Could you give us some details on what you mean by that and explain to us the distinction between a risk mitigation approach and a risk reduction or aversion approach?

[Gwen Donohoe]

If it's okay, I think I'll ask my colleague Ted to take this question.

[Ted Eastley, Executive Director, Manitoba Rural Adaptation Council Inc. (MRAC)]

Okay, put me on the spot, Gwen.

[Voices]

Oh, oh!

[Ted Eastley]

Our organization receives funding from the federal government. We sponsor a lot of development of new and innovative ideas that do push the envelope and encourage risk but in a manageable way. I think our organization and our directors and our vibrant rural communities speak from the need to have risk mitigation in place without it acting as a barrier. Let these young people be risk-takers and provide some options and discussions as to how they can maybe avoid some catastrophes, but at the same time, so many of the programs we see implemented are very much averse to taking risks. We need to encourage the fact that new and innovative ideas are going to come from our youth, and from some of our experienced people, too. I don't want to discredit my generation in that ability, but I think we really need to encourage more opportunities for risk-taking and provide a parachute when they're less than successful. We're not always looking for complete success; we are just providing that opportunity.

That's where we're coming from.