Evidence of meeting #16 for Agriculture and Agri-Food in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farmers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Gregory Aziz  Chairman and Chief Executive Officer, National Steel Car Limited
Michael Hugh Nicholson  Executive Vice-President, Marketing, Sales and Quality, National Steel Car Limited
Marion Wrobel  Vice-President, Policy and Operations, Canadian Bankers Association
Greg Stewart  President and Chief Executive Officer, Farm Credit Canada
Bertrand Montel  Market Segment Manager, Agriculture, National Bank, Canadian Bankers Association
David Rinneard  National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association
Peter Brown  Director, Agriculture, Scotiabank, Canadian Bankers Association
Lyndon Carlson  Senior Vice-President, Marketing, Farm Credit Canada
George Da Pont  President, Canadian Food Inspection Agency

4:15 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thank you.

What recourse would a farmer have if he felt that this had happened to him?

4:15 p.m.

National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association

David Rinneard

Farmers should be perpetually in consultation with their respective lenders on this issue. If they see that they're not getting the necessary receptivity at that level, there is certainly a conduit for them to talk to people in the Department of Agriculture. That's what I would encourage those folks to do.

4:15 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

In there any recourse through the Bankers Association instead of Agriculture?

4:15 p.m.

National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association

David Rinneard

I know that all of our organizations have ombudsmen. There is also an ombudsman representative for the industry. These two may be ideal conduits for them to pursue any material issues they foresee.

4:15 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Very quickly, my last question is whether you have a role to play in any of that. If this were to happen to more than one farmer and you detected that, does the Bankers Association have a role to play?

4:15 p.m.

National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association

David Rinneard

Speaking for my organization, I'm the national manager of agriculture, so I would certainly like to be apprised of those developments. I would encourage anybody at this table to contact me to share any findings, or even rumblings of anything like this transpiring.

4:15 p.m.

Conservative

Pierre Lemieux Conservative Glengarry—Prescott—Russell, ON

Thank you.

4:15 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you, Mr. Lemieux.

We'll now move to Ms. Raynault for five minutes.

4:15 p.m.

NDP

Francine Raynault NDP Joliette, QC

Thank you, Mr. Chair.

My question is for the people from the Canadian Bankers Association.

How do you propose to encourage the next generation to get into agriculture, given the major investments needed for an agricultural operation?

4:15 p.m.

Peter Brown Director, Agriculture, Scotiabank, Canadian Bankers Association

Thank you very much for raising that question; it's certainly one we're interested in. I can say that all of the Canadian banks have activity and interest in this area, and I can speak specifically on Scotiabank's involvement.

About six or seven years ago, we brought forward a program called Scotia farm legacy services to address this very issue of transition from one generation to the next. The purpose behind that program is to take a look at the whole situation of the farm client, not just one-silo investments or the soft issues or the accounting issues, but the whole picture of the farm clients. And we bring in the specialists of the farm client.

When it comes to the next generation and financing them, that's part of our program as well. We certainly want the business to continue. We have to look at how we can do that. We have some financing programs in place to involve the retiring generation in a vendor take-back approach, and I'm sure the other banks have mechanisms that they bring to bear.

We do not want to saddle that next generation with so much debt that there is no ability to withstand any bump in the economy or in their situation. We have to walk that very fine line of finding a solution that is long term in nature, that probably involves the retiring generation, but that continues the operation. We're very serious and very interested in that.

4:20 p.m.

NDP

Francine Raynault NDP Joliette, QC

People retiring could then live comfortably, not in poverty because they sell their farm for a song to their children so that they will not be in debt when they take over. Your goal too is to avoid situations where parents selling the farm do not spend the rest of their days in poverty.

4:20 p.m.

Director, Agriculture, Scotiabank, Canadian Bankers Association

Peter Brown

Absolutely. That's the whole purpose for working with the client and looking at their whole situation: you can work out a plan where you can see what the needs are for the retiring generation. To see how we can get that retiring generation to have a satisfactory retirement is always our first position going in.

The first question we always get from the retiring generation is whether the business can continue for the next generation. We need to answer that, so we do both sides of it. It's very, very important that we work with the customer's accountant and lawyer to make sure we have all of those issues covered off.

I think the holistic approach in understanding the whole situation is really the key here to helping that next generation.

4:20 p.m.

NDP

Francine Raynault NDP Joliette, QC

Thank you.

4:20 p.m.

Conservative

The Chair Conservative Larry Miller

Ms. Raynault.

4:20 p.m.

NDP

Francine Raynault NDP Joliette, QC

Okay; I have a little time left.

My next question is for the people from Farm Credit Canada.

The banks and the Desjardins Group are critical of Farm Credit Canada's lending policies that allow payment holidays on the principal that can last as long as an entire year in cases of real difficulty. Does the practice not encourage farmers to get into even more debt? Doesn't it make them more vulnerable?

4:20 p.m.

Lyndon Carlson Senior Vice-President, Marketing, Farm Credit Canada

Well, I would say that one of our key efforts is to support our customers through all types of situations as we go through the cycle, such that a lot of our mortgage loans do provide the facility for the customer to take a principal payment holiday for up to one year. That money will all be repaid in full by that customer. We've just let them put on the pause button on a principal payment in a challenging year so they can regroup and make sure that farm and that business are financially viable on an ongoing basis, versus the alternative of falling into arrears, finding themselves behind, and also finding themselves in a difficult time to recover.

So we don't have a program such that there's a reimbursement of principal. We do have a program that allows a customer to press the pause button on a principal payment during a difficult year, and it has been very successful over a number of years.

4:20 p.m.

Conservative

The Chair Conservative Larry Miller

Okay. Thank you very much.

Now we'll move to our last questioner.

Mr. Payne, I understand you're splitting your time with Mr. Lobb.

December 1st, 2011 / 4:20 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Yes, I am. Thank you, Chair.

4:20 p.m.

Conservative

The Chair Conservative Larry Miller

Go ahead.

4:20 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

I thank the witnesses for coming today.

My questions really follow up on what Mr. Rinneard said in terms of young farmers. I guess I have some curiosity—and this is for both the Canadian Bankers Association and Farm Credit—about young farmers who decide they want to go into farming.

Let's say I am 20 years old, I've gone through agriculture school, and I want to get into it, but my folks don't have a farm. What are you doing for those young people who want to get into it? Are you able to help them out on a financial basis?

Secondly, what do you do for organic farms, which are definitely totally different in terms of the nature of general farming?

4:25 p.m.

President and Chief Executive Officer, Farm Credit Canada

Greg Stewart

I'll happily go first.

As you know, farming is a capital-intensive business, and like any other big business, whether it's a car dealership or whatever it is, typically your parents are in it if you go in it.

We have a couple of loan products. One is the transition loan that helps with the intergenerational transfer, but we also have specifically a first-step loan, which is for young producers starting out. We try to give them an advantage to start out, and we're actually working on expanding that loan going forward.

Just in terms of young farmers who are interested, we did over $1.6 billion of our lending last year—over 25%—to young farmers. So there are a lot of young people interested in agriculture, and we think that's a great thing. We are also out there educating and talking to universities, trying to get people involved in the industry, I would say.

Dave.

4:25 p.m.

National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association

David Rinneard

Yes, I'm happy to continue with that.

One thing that's actually been quite innovative in the last little while is a new program that a lot of the commodity boards have issued. One that we just participated in earlier this week was for a poultry producer who is a new entrant.

They're mostly called new entrant programs. The new entrants come into the program on a rented quota program, whereby the quota actually is allocated to them for a temporary amount of time. Through that period, they are then afforded the opportunity to achieve the necessary economies of scale to be successful in those respective industries. We've worked extensively with many of those commodity boards to see those new programs come through to fruition.

4:25 p.m.

Conservative

LaVar Payne Conservative Medicine Hat, AB

Okay. I'll turn this over to my colleague.

4:25 p.m.

Conservative

Ben Lobb Conservative Huron—Bruce, ON

My question is for Mr. Stewart.

Mr. Stewart, if I walked into an FCC facility and wanted to buy a farm for the first time—that's one scenario—or Farmer X walked in, who has been a farmer and had a relationship with you for, say, two decades, and wanted to buy, would I have the same interest rate that he would? Or would he have a lower rate?

4:25 p.m.

President and Chief Executive Officer, Farm Credit Canada

Greg Stewart

If you came in off the street and your asset base, repayment history, and all of that were much less than somebody else's, your rate would be higher, for sure—