Agriculture Committee on May 26th, 2010

[The Chair, Conservative, Larry Miller]

Carry on, Mr. Wiseman.

[Chan Wiseman]

So it's very difficult to get into agriculture today. I talked about that in my opening remarks. I went to university and I also went to college. I have a Bachelor of Arts degree and I also have a business diploma. I had to pay money to get that education, and I'm still paying it off. I own part of my farming operation with my parents. I certainly got a lot of help from my parents to get into that farming operation in terms of land, infrastructure, and so forth.

It's very difficult to get into farming today. I imagine that it might have been a little bit easier back then, but it was still very challenging as well, because you didn't have a business plan. Today people are advocating that, and you need that business plan, really, if you want to go through a commercial bank or to the government to receive funding and so forth. But at the end of the day, it's very difficult to get into agriculture because of the high costs, and there are a lot of barriers preventing young people from getting involved.

If you have a student debt of $30,000, $40,000, $50,000, or $60,000--I have friends who are $60,000 in debt after university--and walk into a commercial bank, I'll tell you, they're not going to look at you with a business plan of half a million dollars to get into the farming industry. That's basically what it's going to cost to get into farming. That's a major problem. It certainly differs from what getting into farming would have been like in Newfoundland and Labrador in the seventies and the eighties.

On your first question, I think I sort of addressed it when Mr. Easter asked about some of the outreach programs. I certainly believe that it starts at the elementary or primary school level. You have to educate young people about where their food comes from. That can happen through a number of different measures and certainly by exposing young people to agriculture and having classroom initiatives on agriculture. That is very important. Young people in Newfoundland and Labrador today have really no understanding of where their food comes from. That's a generic issue right across the country.

I've been in Australia and New Zealand as well, and they have a lot of the same challenges down there, but they have certainly come up with a lot of good programs to help young farmers get into the industry. New Zealand could be a real model, even for Newfoundland and Labrador. They have quite an extensive primary agriculture industry, but they also have a very developed secondary processing industry. I believe that's very important as well.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Valeriote for five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

Your comments brought me back a bit to my practice as a lawyer when I was doing wills and a lot of farmers from around Guelph would come in to see me. We were always in that predicament of having to leave the farm to one child, while all the other children were deprived, really, of inheriting in the estate or would be owed monumental amounts of money by the one child you leave the farm to. It seemed to me that you had to be in a family that had one child in order to go into farming or you were out of luck.

This theme was repeated over the last several weeks when we were travelling across Canada. I think none of us can deny that it's an issue. And while some may be enthusiastic about farming, I have to tell you I came off that tour almost depressed when it comes to the future of farming in Canada and the inability to deal with the lack of harmonization of regulations, etc., etc.

Some people out there said that if we're not careful rural areas will become ghost towns. I'm really worried about our ability to maintain food sovereignty in this country. I'm seriously worried about it. I think all of us around this committee want to work together to stop that from happening, to stop us losing our food sovereignty. It doesn't matter what your political party is.

Chan, we do work together on a lot of things, believe me.

Having said that, Jill, I met with the Canadian Livestock Genetics Association last week. I was surprised when they said that very few farmers actually take advantage of genetics, and that it's possibly because of a lack of understanding in improving their beef and dairy herd and their productivity, and, in some cases, it's the cost of farm genetics.

I'm wondering if you can enlighten me on that briefly, because I do have another question.

[Jill Harvie]

Okay. I'm fortunate to have been in the genetics industry all of my life, from my parents, and now married into a family farm. It's a risky business, but we find that it's a niche for us where we're able to have some profit in years when our live cattle sales might be in somewhat of a deficit.

As far as genetic sales are concerned, there's a huge opportunity to deal with 70 or more countries. Of course, it's a very differentiated marketplace, where we have several breeds in Canada, and each market is looking for something different. There's a huge opportunity.

I've been fortunate to work with the Canadian Beef Breeds Council and some of these genetic companies to get our genetics out there, of course. Now, the costs have been extremely high, and there are several different reasons, because there are different protocols in each country. But what I'm wanting to do is work with CFIA and have them more as a partner, being able to have them facilitate. Currently, we do have some barriers in some markets, whether that be that we've accepted those terms and then they stayed that way....

I'd like to have more focus. Yes, the key priority markets are extremely important, but what about the remainder that are on the fringe and will benefit our industry in the long term? That's definitely where I see a huge potential for our operation and for many other young producers around my area and throughout this country.

[Frank Valeriote, Liberal, Guelph, ON]

You've said that you worked for Cargill at one point, and Cargill is in Guelph. I don't want you to diss the processors at all, but one of the themes that we heard while going across Canada was about the concentration of power in input suppliers--like fertilizers--and in the processors at the other end, and we heard that in many cases the profit wasn't getting down to the farmer. You might have feedlots that were close to the processor that were making money, but it wasn't always the case. It depended on your location and the size of your farm. Sometimes, the large industrial farms, whether they were family owned or not, were clearly more profitable, and the larger ones were probably more likely to survive.

I'm just wondering how you feel about that. I know you're in a tough position, having worked for them, but do any of you see too large a concentration of power in the processors and the input providers, such that we need to take some form of action as opposed to just letting it run rampant?

[Travis Toews]

You're absolutely right. At this point in time, we've seen packer consolidation within North America as a trend for decades. Of course, there are economic reasons for that. I think if you looked around North America you'd probably conclude, based on who's still in the game, that the most efficient and productive cattle processors handle between 5,000 and 7,000 head per day--hence the economies of scale and fewer processors.

As an industry, as producers, we're concerned about future packer consolidation. For us, it's critical that we have access to U.S. processing capacity as a third, fourth, and fifth bidder on Canadian cattle. We see that as critical to ensure that we have transparent price discovery in Canada.

I'll leave it at that.

[Frank Valeriote, Liberal, Guelph, ON]

Do we take action? Should we be taking some form of action in Canada to reduce the size of these processors or input providers?

[Travis Toews]

Well, I'll speak on the processors. At this point, we're certainly not recommending that the government take action. We're expressing, as we have for years, concern about continued packer consolidation, but we're not recommending that the government take action.

We continue to monitor the situation. CanFax, at this point, has initiated a study again. There have been several studies over the years on market power within the industry. We're going to be interested in the results of that study, but we're not advocating for action.

[The Chair, Conservative, Larry Miller]

Thank you. Your time is up.

Mr. Storseth, you have five minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you, Mr. Chair.

I'm surprised to hear the member for Guelph, being a former Co-operators guy, not emphasizing estate planning.

I want to thank you all for coming.

Travis, it's good to see you, as always. I hope to be able to visit with a few of you afterwards.

I think it's important that we continue to share some positive ideas on moving forward on agriculture, because as somebody who still helps on my father's farm, I do believe we have great opportunities ahead of us when it comes to agriculture, particularly in our home province of Alberta, but I'm a little biased when it comes to that.

I can assure you that Blake does eat Alberta beef all the time; he just sticks me with the tab, that's the problem.

You've all mentioned something, and Travis, you did in particular, so I'll direct my question to you: you talked about access to the Asian markets. Can you tell us how important that access is, and not only to the Asian markets, but to the European markets and in some of the South American agreements that we have? Do you feel that it's important that we have quick implementation and ratification of these agreements once we make them?

[Travis Toews]

The importance of the various markets to the beef industry is summed up in the fact that different cultures have different appetites and different preferences. So in a sense, regardless of how large or how small the Canadian cattle industry is, in order to maximize carcass value, our industry is going to have to sell the various components of a carcass to the highest value points in the world in order to maximize that value.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Such as South Korea....

[Travis Toews]

Yes, such as Korea and their short ribs and their demand for long-cut feet and--

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

But obviously after the government signs these, they're not done. They still have to be ratified by the House of Commons. I assume you agree that these agreements need to be ratified quickly, once they happen, for the betterment of Canadian agriculture.

[Travis Toews]

Absolutely. We advocate for further trade opportunities and further market access opportunities. At this time, our largest market access challenges outside of the EU FTA, which we're very supportive of, are still related to BSE prohibitions.

South Korea has continued in an intransigent way in terms of providing Canada any beef access at all; hence, our recommendation to this government to proceed with a WTO case. We continue to advocate to keep the pedal to the metal on that case. That's our first issue with Korea, beyond any FTA.

Japan is a critically important market for Canada. We have access for beef only under 21 months of age. It's critical that we get bone-in access under 30 months of age.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Because we only have limited time, I'm going to go quickly through a few of these points.

Jill, you mentioned CFIA and how important they should be as a partner for our industry moving forward. I think that's a very good point. I was dealing with some of the Alberta agriculture guys and some of their frustration, the disconnect they feel between Ottawa and even the CFIA guys on the ground in Alberta. It's important to bring that together and close the gap. I'd definitely like to talk about that later. I think it's something on which we could show a little bit of leadership.

But being an Alberta guy, I want to bring up a couple of Alberta issues. On AgriRecovery, I want to know from the Canadian Cattlemen's Association, the cattle point of view, how important it is to you. Jill, how important do you feel that AgriRecovery is for us, given the drought we've had recently in Alberta, and also in any action towards the grasshopper problem that we continue to have in my part of northeast Alberta?

Also, I've heard--and he's going to cut me off soon, so I'll give it to you guys because he won't cut you off--concerns from our local abattoirs, from the smaller guys, clearly, on the problems between the province and some of the changes they've been making between going from Agriculture Alberta to Alberta Health, and the differences in regulatory environment, even in our local abattoirs, between the federally regulated ones and the provincially regulated ones. That goes into the regulatory issues we have all across the country.

Could you just comment on number one issues such as AgriRecovery and then on some of these other things?

[Travis Toews]

AgriRecovery is an important program to the industry in times of disaster, and certainly, last summer and fall, many parts of the Prairies were very dry. There were severe economic hardships experienced within the industry as a result of that drought. At the time, we advocated for AgriRecovery to be implemented. We believed that we had a circumstance that would fit the criteria of that program.

In regard to recent rains, we've seen some relief at this point, but that affects this current year. That doesn't affect the losses and economic hardship producers faced last fall and last winter and that probably even this spring they continue to face as they're purchasing feed they weren't able to put up last fall.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I agree. If anything, we should have had signals of it even earlier, but it would be very important moving forward.

[The Chair, Conservative, Larry Miller]

Thank you.

Ms. Bonsant.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Mr. Legge, I do not know if I understood you correctly earlier, when you talked about supply management. Are you for or against supply management?

[Eugene Legge]

I am for supply management.

[France Bonsant, Bloc, Compton—Stanstead, QC]

We visited the east coast, and young farmers still tend to have the same problems. Mr. Wiseman, the committee travelled to Prince Edward Island three years ago. I have been an MP for six years, and 60% of my constituency is farmland. Has something changed? Have things improved since that time? Is the situation the same as it was three years ago, or is it even worse when it comes to farming, programs, and so on? From one province to the next, farming appears to be mismanaged, and it does not look like anything is going to change.

My question is for everyone.

[Eugene Legge]

In our province, you have to look at the makeup of the industry. We have 80% supply managed in our province; agriculture is doing well. We also have huge amounts of growth in all other commodities. It doesn't mean.... If you're at the bottom of the heap, you have nowhere else to go but up, to say the least.

On the problems in the last number of years under Growing Forward and APF, they put huge sums, millions of dollars, into the program. Plus, they had their own programs to help new people buy equipment and clear land, and those are the two major expenses that you have in getting into agriculture. They're even talking about now putting in a proposal--and it's gone in to the government on the AgriFlex program--of developing huge tracts of land, of clearing the land. It's probably costing them about $2,800 an acre to clear land in our province.

This proposal is about getting it ready for production, about clearing vast tracts of land and then saying to a young person, “Here's a hundred acres, or a hundred and fifty acres, it's clear land, ready to go into production, and you will sign some type of an agreement to go forward”. That's what we're seeing in our province, to say the least, so you are seeing opportunities for younger people to get in and stay there.

But you're also seeing hindrances like those you hear about the input costs, and that's there for everybody. The fact is that we only have one federally inspected plant, which is the chicken plant in our province. Most of the beef that's killed is in local production and is killed under the local regulations, so you can't ship it outside the province. That's another issue you have to deal with.

You also have the fact that we're getting down to three major buyers, the supermarkets, if you want to call them that: the Dominions, the Sobeys, and the Colemans of the world. Fourth, there's Wal-Mart. So we end up being price-takers; we're not price-setters. They'll give you what they figure is fair, whether they get it from south of the border or any other place in this country. You have to deal with those issues.

When it comes from south of the border, those farmers south of the border don't have to pay for all the things that we have to endure here; we need to have free education in our country and free medical services in our country. We look at the fact that we have to endure the costs of food safety and all of these other programs that the governments and the public deem to be necessary to grow food in this country, so that puts hardship on the older people and on the young people trying to get into farming.

I don't know if that answered your question or not.

[France Bonsant, Bloc, Compton—Stanstead, QC]

Did you want to answer? Go ahead.