Agriculture Committee on Nov. 17th, 2011
A recording is available from Parliament.
On the agenda
- Richard Robert Chair, Canadian Farm Business Management Council
- Heather Watson General Manager, Canadian Farm Business Management Council
- Ted Zettel General Manager, Organic Meadow Co-operative
- Bob Seguin Excutive Director, George Morris Centre
- Johanne Van Rossum President, Fédération des groupes conseils agricoles du Québec
- Mathieu Pelletier Management Agronomist, Réseau d'expertise en gestion agricole, Fédération des groupes conseils agricoles du Québec
The Chair Larry Miller
I call our meeting to order. I'd like to thank all of our witnesses for being here. We do have one group that hasn't made it yet, but we'll start with the presentations and they can join us in the middle somewhere.
First of all, from the Canadian Farm Business Management Council, we have Heather Watson and Richard Robert, for 10 minutes or less, please.
Richard Robert Chair, Canadian Farm Business Management Council
Good afternoon, everyone.
I am going to speak in French to provide the French part of the meeting.
First, I would like to thank you, Mr. Chair, for giving the Canadian Farm Business Management Council the opportunity to share its opinion and its vision for the future of agriculture in Canada, as well as the future of phase 2 of the Growing Forward program, which is of course ongoing.
Let me introduce myself. I am the chair of the Canadian Farm Business Management Council. I am first and foremost a farmer, a dairy farmer and grain producer in Quebec.
I would like to introduce Ms. Watson, who is the general manager. She will continue our presentation.
Heather Watson General Manager, Canadian Farm Business Management Council
I'm going to do the English portion of the presentation.
Much of the solution to dealing with our intensifying realities lies in applying proven business practices and fostering innovative business thinking.
Merriam-Webster defines management as the “judicious use of means to accomplish an end”. Farm business management cannot be taken for granted. It is not defined by everyday operations, but rather a vital part thereof. Failing to plan is planning to fail. With increased farm business management skills comes the ability to seek out, assess, and take advantage of market opportunities for the ongoing sustainability, competitiveness, and profitability of the agricultural sector.
However, it is not enough to have the facts and figures; rather, appropriate delivery mechanisms for information resources become equally essential to rendering information meaningful, and more importantly, applicable. Effective communication of proven business practices and their tangible benefits will motivate the sector and empower managers to reach for new heights.
While only 20% of Canadian producers have a written business plan, of these farmers, 71% have used these plans to secure financing. Thus we can demonstrate a direct financial benefit to creating and following formal business plans. Perhaps the problem is not the information, but rather the delivery thereof. The question becomes not what information is needed, but rather, how do we communicate the information to maximize its reach and impact. It is essential to have information collection and dissemination mechanisms to facilitate effective response. This is knowledge management. It applies to all stakeholders at all levels.
The decline of formal extension services signalled a gap in training delivery that has been filled by private industry and not-for-profit organizations. Within the last two years, we have seen a return of government extension offices. It is our hope that the emerging governmental initiatives will take existing extension mechanisms into consideration in favour of collaboration and partnership, as opposed to isolated efforts.
It is often said that producers are “show me” types. When farmers see themselves as part of the equation, they will be more apt to play meaningful roles. Effective knowledge transfer addresses the unique learning needs, preferences, and practices of farmers and industry stakeholders. Information can be transferred in such a way that it can be applied. Knowledge transfer must be promoted at all levels and between all stakeholders to leverage the collective intelligence of the industry to move forward. All stakeholders must be invited to participate in the conversation. Knowledge transfer is not a one-way street.
Online technologies are a critical enabler for accelerating the pace of information transfer into agricultural practice and commercialization. However, we must not lose sight of traditional learning formats. Workshops, conferences, and other in-person training also have their place in the culture of agriculture, including kitchen table discussions, coffee shop talks, and opportunities to network and socialize.
We must help farmers to help themselves while at the same time promoting a business management mentality to source outside expertise where it is needed. We cannot be all things at all times.
Performance measurement is essential to determining beneficial—and unsustainable—business ventures. An open channel for lessons learned and for replicating success will reap exponential benefits as stakeholders leverage one another's successes to advance the industry as a whole. Coordinated efforts will promote efficiency and effectiveness, allowing stakeholders to measure their performance against themselves and each other.
In summary, the challenges to competitive enterprises are information overload, a disconnected industry, duplication of efforts, the isolation of farm business management, communication and messaging, the programs available and their eligibility criteria, and the risk-management mentality.
In developing Growing Forward 2, it is our hope that stakeholders, including industry and organizations, will be given an opportunity to be part of policy development, that they will be given access to the new framework in time to adapt practices and programs, and that they will have an opportunity to be integrated into programs and initiatives using the established organizations and bodies capable of doing the work.
Chair, Canadian Farm Business Management Council
On the farmers' side of things, our specific recommendations with respect to producer needs for competitive businesses are the following.
First, concerning segmentation, we think that it is important to adopt a "place for everyone" approach in place of a "one size fits all" mentality. There is no room for the smaller or larger businesses. I think each business has its place in agriculture in Canada and each one must compete. The industry must have good data collection and must truly be aware of what is happening on the ground. We sometimes have the impression that this is not entirely the case.
It has to remain simple. As we know, farmers are people who do not like paperwork very much. We need programs that are easy to manage, both for the governments and the organizations. Basically, it needs to be kept simple and the paperwork kept to a minimum.
As for motivation, it is important to develop and promote measures that will lead to competitive management practices on the farms. As we know, building a management culture is important. It is what will enable businesses to pull through and become competitive globally.
As for personification, knowledge transfer, translation, and professional development, they are important for farmers, but not too available right now. It is difficult for farmers to leave the farm for training. More emphasis needs to be put on comparative analysis, professional development and knowledge transfer.
General Manager, Canadian Farm Business Management Council
The following are our specific recommendations with respect to the industry's needs to facilitate competitive enterprises.
On messaging and promotion, we need support for continuing education and lifelong learning and to help build a culture of business management. We also need to promote business management as an investment, not a cost; and as an essential element to industry and individual success; and in relation to risk management, business development, and production management. Here, we need to redefine risk management to include personal, business, social, and environmental risk. We should also refine business risk management programming for disaster relief and investment. Moreover, we should promote whole farm and cost of production analysis, and communicate the infrastructure and associated parties required, that is, the team.
On the topic of consensus, we need collaborative consultation and assessment. This will help reap exponential benefit from collective intelligence. We should establish a consensus on performance measures and segmentation for national coordination.
On connectivity and collaboration, we need open communication channels between government, industry, and organizations. We should work with and promote existing programs, organizations, and industry groups, and should leverage the strengths, resources, successes, and lessons learned by each other. Furthermore, we need to establish and support a national round table for farm business management, giving stakeholders a voice and a stage, and re-examine procedures and processes to facilitate national coordination and mitigate abuse.
On sustainability, we should integrate programming into existing institutions and allow cross-funding of complementary initiatives with greater eligibility and flexibility. We should also Support long-term projects and programming, such as longitudinal studies to measure performance and replicate successes. We need to establish a planning cycle for scheduled stakeholder engagement and consultation, and also to enforce sustainability models and performance management for projects and program delivery.
On effective response, we should establish and promote mechanisms to access timely, relevant information, or a knowledge management mechanism for situation analysis as well as effective response.
The Chair Larry Miller
General Manager, Canadian Farm Business Management Council
Do I have time for more?
The Chair Larry Miller
Yes, you have a minute left.
General Manager, Canadian Farm Business Management Council
To be successful, on our part, we must adopt best management practices, including planning, feasibility, collaboration, management, benchmarking, innovation, adaptation, knowledge transfer, and performance measurement. We must identify the critical pieces of the puzzle to surround ourselves with those by whom we can leverage our strengths for greatest reach and impact. Efforts to improve business management practices are the smartest investment for the sector, for without superior management skills at the base, no amount of smart regulation, generous support programs, or international trade opportunities will ensure agriculture's vitality and success.
Thank you Mr. Chairman, members, and guests.
The Chair Larry Miller
Thank you very much.
Now we have Ted Zettel from the Organic Meadow Co-operative. Welcome again, Ted. I think you've been here once or twice. You have 10 minutes or less, please.
November 17th, 2011 / 3:40 p.m.
Ted Zettel General Manager, Organic Meadow Co-operative
Thank you, Mr. Chair, and thank you for the invitation to speak to the committee.
I am also representing the Organic Federation of Canada, as I have in the past.
First of all, by way of some background, the organic food sector in Canada is one of the fastest growing opportunities in agriculture at this time, as the committee is well aware. Organic Meadow Co-operative is a pioneer and leader in this sector, representing over 100 medium-size organic farms and selling products from coast to coast under our own brand and supplying ingredients for other brands, including a small export business.
In 2010, we invested in our own dairy processing facility in Guelph, Ontario, to better service the domestic market. With over 20 years' experience in cooperation with our farmer-owners; in brand development at the national level; in innovation toward meeting emerging consumer demand; and now in manufacturing, we are well positioned to comment on the Growing Forward 2 policy proposal, and welcome the opportunity.
Organic farmers approach the production challenge from a perspective radically different from their mainstream neighbours. I can speak to this from personal experience, since I began my farming career using the technologies that were available in 1977 and switched to organic production in 1983, when organic methodology was still in its infancy and the market for organic foods was confined to a very small health food niche.
We had very little organization at that time, no regulation or legal definition of “organic”, and marketing channels such as Organic Meadow did not exist. The organic milk from my farm could not be designated and sold as organic until 1995, when we finally broke through the restrictions imposed by the Ontario Milk Marketing Board and received permission to segregate the milk from six organic farms, including my own. That was the beginning of the organic dairy industry in Canada, which is now estimated to have $100 million in annual sales.
We now have well-established marketing organizations across this country in practically all commodities, resulting in total industry revenue of over $2 billion in organic food. We have a national standard for organic production, bilateral trade agreements with the U.S. and the EU, and our own organic science cluster to research organic production methodology.
While the commercial opportunities for organic farmers have expanded tremendously in 30 years, the underlying approach to farming is constant. Organic farmers still rely mainly on resources from within their own farms, striving to establish a self-sufficient, sustainable ecosystem. The health of the soil is paramount, and it is maintained using complex, diverse crop rotations; composted animal manures; cover crops; and plow-downs to enrich soil biology. Organic farmers manage weeds and pests without agricultural chemicals. They avoid antibiotic and hormone therapies in livestock husbandry, and focus on prevention of disease by optimizing housing and nutrition according to the natural preference of the animal.
Organic farms tend to be smaller, more management- and labour-intensive, and often more directly linked to the market through individual initiatives or collectives like Organic Meadow. They use far less energy per unit of production than conventional agriculture does, largely due to the absence of imported nitrogen fertilizers.
As a farmer who has lived within both paradigms, I can tell you that organic farming is much more complicated and more difficult to scale up. We need more farmers to produce organic food. We see that as a good thing, and wonder why government policies seem to be intent on making farms bigger and farmers fewer, to the detriment of rural communities.
The mission of Organic Meadow Co-operative is to provide a link to the market that will sustain those family farms that are swimming against the stream of larger scale, input-dependent industrial agribusiness. We hold a vision for the future of a diverse, resilient farming sector primarily responsive to the needs of our own people.
Having given this general introduction, I'll move on to the specific ways in which we believe government could assist.
Firstly, a Growing Forward 2 policy proposal has identified, as a key driver, institutional and physical infrastructure, stating that “Effective rules, regulations, standards, organizations, and physical infrastructure allow firms to operate and markets to function efficiently for a profitable sector and the well-being of Canadians.”
While there has been significant cooperation between the organic sector and government in establishing a regulatory framework for organics, I would draw the committee's attention to the following urgent needs.
First, there is no funding mechanism for the maintenance of the Canadian organic standard, resulting in a situation where we are unable to fulfill the commitments under the Canadian General Standards Board's policies, and could see the standard lapse, threatening our trade agreements and rendering us helpless to act on necessary revisions. This matter has been raised with officials at both AAFC and CFIA over the past two years, but remains unresolved.
Second, the approval of GE alfalfa—which is awaiting commercialization—poses a serious threat to organic operators' ability to comply with the standard. We have argued very reasonably to this committee, during the special hearings on biotechnology, in favour of a suspension of this approval, but have received no assurances.
The organic sector has worked cooperatively with our mainstream neighbours to accomplish, at great expense to our farmers, the needed segregation to comply with the Canadian organic standard, and to prevent contamination with GE materials in organic corn and soybean production. It is widely accepted that the biology of alfalfa will make managing a GE variety in the same way impossible.
The commercialization of Roundup Ready alfalfa will eventually make it impossible to grow organic crops. We plead with the committee to assist us in this regulatory matter.
Third, the ability of organic producers to serve local and regional markets is dependent upon a small- to medium-scale processing infrastructure, which is sadly lacking in most parts of the country, especially in the area of livestock products. The large-scale processing facilities that dominate the industry are not generally adaptable to the innovation needed for diversification into specialties such as organic foods, functional foods, or ethnic cuisine. We believe that government dollars to assist in the flourishing of smaller-scale, local processing infrastructure pays off in stimulating a vibrant, sustainable regional economy.
Fourth, regulatory burdens imposed in a one-size-fits-all manner often discriminate against smaller processors. Regulations must be appropriate to the scale of the operation. An example of regulatory excess resulting in the disappearance of processing capacity is the local abattoir situation across Canada. An example of the successful encouragement of small-scale processing is the artisan cheese industry in Quebec. Government should learn from these examples.
Fifth, funding of agricultural organizations in Canada is accomplished mainly through commodity check-offs, with some voluntary GFO memberships often tied to tax incentives or other government programs. Organic farmers find themselves overtaxed and under-represented through the existing system.
The cooperation of FPT governments is required to extract a portion of the funding already collected from producers and to channel it back to meet the specific needs of our federal and provincial organic organizations, which are presently volunteer driven and not sustainable.
In general, we in the organic sector believe that meeting the food needs of our own population should have a higher priority in the policy.
Our experience in the market indicates that Canadians want to eat food that is grown here. They are ready to support Canadian agriculture, but find the supermarket shelves full of imported product. Government policy focused on the lowering of production costs to compete in the export market, without sufficient attention to the desires of our own consumers, is at least partly responsible for this outcome. We applaud the current investment undertaken by the government through the organic science cluster, and look forward to round two.
In completion, I would just like to say that as a successful co-operative, we would look forward to the government's continued support for the growth of agricultural co-operatives, which have played such a part in the history of farming here in Canada. I would refer the committee to the excellent paper submitted by the Canadian Co-operative Association on agricultural co-operatives with regard to the Growing Forward 2 policy.
The Chair Larry Miller
Thanks very much, Mr. Zettel.
Now we'll move to Mr. Bob Seguin from the George Morris Centre.
Go ahead for 10 minutes or less, please.
Bob Seguin Excutive Director, George Morris Centre
Thank you, Mr. Chairman. Thank you for the invitation.
The George Morris Centre is a national, non-profit agriculture and food policy think tank. We're in our twenty-first year of operation. We're located in Guelph, and we have a national mandate, as I said. We provide economic and policy analysis, market analysis, and educational programs for more advanced farm management and food-sector-level management, and we have a value-chain management centre for both research and educational programming.
I provided the committee with a presentation in both French and English. I'm not going to go through it, Mr. Chairman. I'll just focus in on the last couple of pages.
As we and Macdonald-Laurier Institute see it—as expounded in a recent report by that institute—the challenge for Growing Forward 2 is that the situation of Canadian agriculture has eased considerably compared to the history of structural surpluses facing many parts of the Canadian agriculture and the Canadian food system. We have tighter supply-demand balances. Unless there's dramatic change in some of the emerging markets, we should stay that way. Policy based on trying to remove product from the marketplace may not be as advantageous to Canadian agriculture as that based on where we're going to be in a very volatile, very competitive agrifood system, with competitors here and outside Canada. It's very competitive.
There has been a long-term trend up in agriculture and the food trade, albeit with a small glitch during the recession. However, Canada's position has actually dropped slightly even though our agriculture and food trade have increased. The competition is there, and the competition is not weakening. We see demand growth in the emerging markets as their incomes go up. Their patterns are shifting more and more to the North American or western European style, though not dramatically or not overnight. They are looking for opportunities for North American, Australian, Brazilian, or other nations' agriculture, to feed that kind of opportunity. But we also have to be aware that we must have high standards and be sustainable. My colleagues raised the point that we have to be watchful of consumer patterns and trends. It's going to be a very volatile market, but also a very competitive one.
As for competition, my colleagues were referring to the organic food movement and the expansion there. There is competition--other nations are looking at their opportunities--but the competition is already here. One of the slides I have in the presentation will look at imports and exports. Imports have consistently gone up, which is not unknown in a highly developed market like Canada's. With high wages and relatively high incomes, you're going to be demanding great produce from across the world. I will tell the committee, the competitors from across the world are not sending us the worst product they have; they're sending us the best product, which means that we have to be extremely competitive, even in our home markets, across the wide range of those opportunities. On the other hand, the opportunities for organics, for different products to go with the shifting demographics or with the ethnic markets, open up new opportunities. But, again, you have to be competitive.
The response we see and encourage is that industry and governments must take a look at the programming activities. They have to look at investing more in skills, talent, and technology. They have to meet standards, understand consumers, and be innovative. They need improved management up and down the supply chain, so they can meet the demands of the market, both here and overseas.
Our view is that Canada needs to raise its game on competitiveness and innovation and be prepared to compete globally. A large part of Canadian agriculture has to compete at that level, unless we want to see dramatic restructuring. A number of processors have that capacity. We have a good opportunity here to compete locally. How do we do this? How do we raise our game to match the competition that's already inside Canada and will continue to be here?
We see a need for Growing Forward 2 to realign its policy functions, to shift its focus over time away from business risk management and towards improved competitiveness and improved innovation. Where the consumers demand it and the farm and food community can do it, they need to improve sustainability.
Our one key criticism--and it's not just of the current government but has been a long-standing issue with any support programs in Canada--is that we don't make very good decisions on, or analysis of, measures. What do we really want to achieve from these programs? How are they really affecting the farm or food community? What changes would we see result from a better understanding of the impacts? From our base case, where do we want to go?
We see this as a challenge and have taken a look and commented on the Saint Andrews statement on the discussions held by the federal-provincial-territorial ministers. There is a need to develop measures and to have greater transparency in our analysis and in how the programs are working, and a need to restructure and realign.
Our view is that it's not necessary to add money; it's time to reallocate money and possibly even reduce it over time. You need to look at investments in people and investments in technology and encourage those investments in technology by the private sector.
If we need to see a shift in the direction, the Saint Andrews statement had the right general goals. But there are major challenges in all decisions. What are the end results that we want from these efforts? What are the trade-offs? I mentioned sustainability, as did the Saint Andrews statement.
We're going to be as sustainable as possible. What does that mean for competitiveness both locally and globally? If we are as hard-hitting as possible in reducing costs, how does that affect our sustainability? And how well can we be innovative and yet still meet the other goals? There are trade-offs here. With limited dollars and greater wants, how do you make these shifts?
We also have to involve a wider part of the food industry, the farm industry, and suppliers in this process. Governments have been doing more. They should be complimented on that and supported in it, but they need to do more.
As for Ted's comment on organic agriculture, how do we bring them and other parts of agriculture more into the discussion so that we have a better sense of all the trade-offs and all the options that are necessary and of what the programs are really doing now?
Finally, concerning our census, we need to invest both public and private dollars in people, in talent, through management programs and improved capacity to handle the technology and the marketplace. We need to invest in newer technology, wherever it's appropriate, and be ready to move.
We also need to have a capacity to invest in scale. This may offend a few members of this committee. While it's good and nice to have a lot of small operations, to feed the population we have here and to feed the population in the world that we may want to access, we have to have a sufficient scale to compete at that level, either provincially, nationally, or globally. That takes a number of policies, a number of efforts geared towards it, and Growing Forward can assist us in reaching that scale.
Thank you very much, Mr. Chairman.
The Chair Larry Miller
Thank you very much, Mr. Seguin.
Welcome to our witnesses from the Quebec federation of agriculture groups. We have Ms. Johanne Van Rossum and Mathieu Pelletier.
You are welcome to present for 10 minutes or less, please.
Johanne Van Rossum President, Fédération des groupes conseils agricoles du Québec
I will give my presentation in French.
First, I would like to thank the committee for this opportunity to present our point of view on consultations on the Growing Forward 2 program. I am the president of the Fédération des groupes conseils agricoles du Québec, and I am an agricultural producer in large-scale farming in the Montérégie area in southern Quebec. I am joined by Mathieu Pelletier, a management agronomist and also an agricultural producer.
One of the objectives that we recommended for Growing Forward 2 was to strengthen the competencies to make businesses competitive. But we want to get there one business at a time, because our vision for managing consultant groups is that each business must be competitive.
What is farm management, which we've called "techno-economic management"? To properly manage their business, producers must make a wide range of decisions. Among other things, there are decisions concerning feeding the herd, purchasing equipment, carrying out projects requiring significant investments and transferring their business. To make these decisions, some producers will talk to their accountant, their financial advisor or their farm management consultant. So financial management is very different from techno-economic management, which uses a global approach, including both the financial aspect and the production cost.
With respect to our opinion on Growing Forward 2, we are more specific when it comes to management. So our comments relate mainly to the PADEA, the Programme d'appui au développement des entreprises agricoles.
What is the federation? It's a network and an NPO, a non-profit organization, that has been around for 30 years. It is run by a board of directors of eight producers. The federation includes 24 groups of producers from across the province and one group from Ontario. The groups are themselves non-profit organizations set up and run by producers. This movement was created about 40 years ago for producers who wanted to develop a position on management to define the strengths and weaknesses of their business. The groups take a collective approach, meaning that this is where ideas and knowledge are shared. So, once the study is done for each of the farms, a comparative techno-economic analysis is done among the farms, on a regional or provincial basis. This is called benchmarking.
I invite Mathieu to explain how these groups work.