House of Commons Hansard #158 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was farm.

Topics

The House resumed from October 20 consideration of the motion.

Intergenerational Transfer of Farms
Private Members' Business

November 25th, 2005 / 1 p.m.

Yukon
Yukon

Liberal

Larry Bagnell Parliamentary Secretary to the Minister of Natural Resources

Mr. Speaker, I welcome the opportunity to speak to the motion put forward by the hon. member for Châteauguay—Saint-Constant. The motion proposes that the government take action to make a number of amendments to the Income Tax Act to support the transfer of family farms from one generation to another and facilitate retirement savings by farmers.

In addition, the motion asks the government to take action to transfer a recurring envelope of funds to the Government of Quebec and other provinces to encourage young people to take up farming.

Let me begin by commending the member for her efforts on this file. She has undertaken extensive consultations with various stakeholders in the industry with the goal of improving the lives of farmers and encouraging future generations to enter into farms. She has also demonstrated a spirit of cooperation by agreeing to meet with the Parliamentary Secretary to the Minister of Finance in an effort to better understand the Government of Canada's position and the policy implications for her proposals. The member should be applauded for what she is trying to accomplish.

That being said, while I and all members of the House share the hon. member of Châteauguay—Saint-Constant's goal of supporting family farms in Canada, I cannot support the motion. The hon. members of the House should also reject the motion because the Government of Canada already provides significant assistance to farmers, including assistance to facilitate the intergenerational transfer of farms as well as the federal-provincial-territorial cost shared program that delivers the major component of government support for agriculture. This substantial support for farmers, delivered by the Government of Canada, the provinces and the territories, explains why these measures are unnecessary.

Support for agriculture comes in three different types of measures: tax measures, loan support measures and direct support programs. Today, I would like to outline the scope of existing Government of Canada direct support for farmers for the hon. members of the House.

I am confident that when hon. members understand the extent of these existing programs, they will concur that they also cannot support the motion. With all the provinces and territories as full partners, a recurring envelope of funds already exists for cost shared programs that provide support for farm families and beginning farmers through programs under the agricultural policy framework, the APF. The APF is a multi-billion dollar, multi-year program.

Under the APF, the Canadian agricultural income stabilization program provides protection for farmers in need based on the decline in their production margin which is their farm income minus eligible expenses. Beginning farmer margins are also being used to provide support to farmers who do not have a financial history. This means that beginning farmers can access income stabilization and disaster coverage under this program at the start of their careers.

Another component of the APF is the renewal program. It is one of the major programs that the Government of Canada, along with the provinces and territories, uses to support farmers and to ensure that young people, especially young people from farm families, are able to get started in farming.

The APF's renewal component offers a suite of programs to provide farmers with business advisory and skills development services that are available for new or beginning farmers. These programs include: the Canadian farm business advisory services, the planning and assessment for value added enterprises program, and the Canadian agricultural skills services which has been launched in two provinces and will be available across Canada during 2005.

The Canadian farm business advisory services, CFBAS, provide eligible producers with access to financial consultants to help them set goals for their business and to develop plans to meet these goals. The farm business assessment component of this service consists of the development of a farm financial assessment and action plan. The service, valued at up to $2,000, is available to producers for a $100 consultant fee. In the program, established producers receive a one day follow up to assist in their progress while beginning farmers receive up to three days of follow up.

The Specialized Business Planning Services, another component of the Canadian Farm Business Advisory Services, provides participating producers with specialized business plans in areas such as diversification, marketing, human resources, expansion, risk management or succession. It provides up to $8,000 in matching funds to an individual producer.

In addition, Planning and Assessment for Value-Added Enterprises provides up to $10,000 in matching funds to an individual producer to develop a comprehensive business plan for establishing or expanding a value-added enterprise.

Finally, the Canadian Agricultural Skills Service provides assistance to producers and their spouse for a skills assessment, development of an individual learning plan and financial assistance to access training.

While only established producers with a net family income of under $45,000 are eligible for training benefits, all beginning farmers, regardless of income, will receive a skills assessment and an individual learning plan.

These programs are strong evidence that the Government of Canada and the provinces and territories are already working together and will continue to work together to ensure appropriate levels of support for family farms and to encourage young people to go into farming, in particular, through the existing joint federal-provincial-territorial agricultural policy framework.

Farm policy is a matter of profound importance to this government and to Canadians in general. The hon. member for Châteauguay--Saint-Constant's motion has provided an excellent opportunity to consider the excellent existing support that the Government of Canada, along with its provincial and territorial colleagues, provides to the vital farming sector.

When hon. members of the House consider that all measures in support of farmers, whether tax measures or spending programs, are paid for with tax dollars of other hard-working Canadians, I am sure they will recognize that not every measure can be supported.

I am also sure that when hon. members consider these comprehensive programs that I have just described and consider as well the existing tax measures and loan support programs, which I did not have the opportunity to describe in detail today, it will be clear to them that adding new tax and program measures to the generous support that is already available to Canadian farmers is not something that the House should endorse at this time.

Intergenerational Transfer of Farms
Private Members' Business

1:10 p.m.

Conservative

Diane Finley Haldimand—Norfolk, ON

Mr. Speaker, it is my pleasure to rise in the House to speak to the motion that seeks to make the intergenerational transfer of farms easier for everyone.

The statistics do not lie. In the past decade the number of farms has drastically declined. This is not because farm couples are not having children. It is because increasingly it is financially impossible for those couples to pass the farm on to their children.

For many families, the farm assets are the only savings they have. They do not have a pension plan. They do not have RRSPs. Their life savings are tied up in the farm. In order to retire, as most Canadians do and deserve to do, sadly, they must sell the farm and its assets to an outside party.

This motion addresses only one of the many challenges that face rural Canada. These challenges are only made worse by the Liberal urban-minded government. Ordinary goods and services that urban Canadians do not think about twice have become luxuries for too many rural Canadians. I am speaking of the availability of such things as health care, postal services, infrastructure and protection from crime.

Our rural communities are finding it tough to attract doctors and even tougher to attract specialists, especially when we do not have the sophisticated diagnostic tools to which these doctors have ready access in the big cities.

Postal service is something that most Canadians do not think twice about. This is not the case in my riding however where I am fighting to maintain or restore rural postal service in not one but three of our communities. Despite the government's pledge in 1994 not to close rural post offices, 50 of them have been closed in the last four years.

The minister responsible for Canada Post tried to convince the House on February 23 of this year that there was no such plan to close 750 rural post offices. However, as we know, they are being closed in Atlantic Canada, British Columbia, Saskatchewan, Alberta and they are being closed in Haldimand--Norfolk.

We should not be fooled. The same minister has been quoted defending the closures, the ones he says are not happening, because, as he sees it, “even grandmothers send birthday messages electronically”. Perhaps it is difficult for that urban member to understand that there are many homes in Canada that do not even have access to the Internet much less the skills to use it.

The government claims that there is a moratorium on post office closures while Canada Post says that it is in fact closing them. I am not going to stand by and believe the Liberal government when it says that something is not happening and it is in fact happening right before my very eyes.

It is no wonder that our farm families are having a hard time convincing their children to take over the farm. Aside from the fact that they cannot afford to, the quality of life in many of these communities is being degraded to the point where we have to wonder if the government is doing it on purpose.

When we talk about defending rural Canada, I am not talking just about the sustainability of individual farms and the succession of those farms to future generations. I am talking about the sustainability of the communities of which these farms are part. It is a task that the federal government must be willing to take on, one that a Conservative government will make a priority and achieve.

Rural Canadians deserve basics and necessities just like any other Canadian. They deserve infrastructure, safe communities and a healthy way of life. Anything less is a sign of inequality in this country and, in effect, is an insult to all Canadians.

Good roads are something that we see everywhere in the cities. They are, however, becoming a luxury in my neck of the woods. My rural riding of Haldimand--Norfolk is home to hard-working, innovative entrepreneurs but they need roads. They need four lane highways that will allow companies to bring in materials for manufacture or processing. They need those roads to ship out their finished goods. They need communications networks and adequate hydro transmission lines.

My constituents need an environment that is friendly toward business, not one that forces them to close up shop and move to Mexico, as my area is about to face with the withdrawal from this country of Imperial Tobacco.

Jobs are being lost and this is only the tip of the iceberg. The real challenge for my constituents will be the loss of the farms that this closure by Imperial Tobacco will result in and the negative spinoffs that will be created.

The tobacco farmers of Haldimand—Norfolk have only one more harvest assured to them and then they may be left without a buyer. Canadian smokers will not be smoking Canadian cigarettes. They will be smoking offshore tobacco with who knows what chemicals in it. Canadian tobacco farmers will be left with nothing but non-transferrable, heavily financed equipment.

There are crops that can be grown in this sandy soil but there is no assistance for these producers to transition into specialty crops or to transfer their farms to the children so that they may do so. For this reason and for other farmers across Canada facing similar challenges, I welcome this motion today and I support the goal it intends to achieve.

The average age of farmers is increasing and our young people cannot afford to get into this business. Many of them are having to leave the farm and our rural communities. Existing large farms and farming corporations are in much better financial positions to purchase the farm assets and quotas of retiring farmers.

Do not get me wrong, there is nothing wrong with efficiency resulting from large economies of scale, but I do have some concerns about this bill. It is the family farm, not the corporate one, that will preserve traditions and values. It is the family farm, not the corporate one, that will participate in our communities and improve them for future generations.

While technology improves the efficiency of our farms, it is still a very labour intensive industry in many cases. Regardless of the size or ownership of a farm, our communities need the basics that I have talked about to sustain the workers needed to produce our food. After all, without our farmers who is going to feed us? Who in the world would Canadians trust to feed us if not our farmers, and I mean our farmers. We must do everything we can to help our farmers stay in business, especially our family farms.

Today's motion seeks to make the transfer of farm assets more affordable for our farm families. The Conservative Party of Canada supports some of the specifics of this motion. We recognize the need for the federal government to take concrete steps to promote the intergenerational transfer of farms. However, that being said, any actions taken by the federal government in this regard must be fiscally responsible and within the federal government's capacity.

I would now like to address the issue of RRSPs and farmers. It is known that most farmers do not have RRSPs for, as I mentioned earlier, the bulk of their savings are tied up on the farm. However there are some producers who do.

The Canadian home buyers' plan provides an option of using RRSPs to purchase a house if it is a first time buy. However farmers cannot use their RRSPs to acquire ownership of a residence on a farm because the residence is considered to be a farm asset and is part of an agricultural business.

This motion today seeks to give farmers the same option that other Canadians have, that is, using the capital that they have invested in their RRSPs to acquire a home that is now classified as a farm asset. This is only fair. For those producers who do not have RRSPs, the establishment of an agricultural savings plan is a novel idea, a tax friendly concept that a Conservative government would welcome discussion on.

Enabling farmers to accumulate tax sheltered retirement funds could have the greatest effect on farm successions. By promoting the accumulation of farmers' retirement savings in a fund that is independent of farm capital, farmers may have the ability to accumulate enough savings to retire.This would allow them to enter into more favourable financial arrangements with potential young successors without compromising their own financial security.

In regard to transferring funds to the provinces to promote the transfer of farms, we in the Conservative Party understand that agriculture is a shared jurisdiction of the federal government and the provinces. This section may require an amendment to the agricultural policy framework. Such amendments require the agreement of two-thirds of the provinces representing 50% of Canadian agricultural production.

I close by assuring all of Canada's hard-working resilient farm families that their next government, a Conservative government, will welcome discussion with the provinces to improve rural Canada and its way of life.

Intergenerational Transfer of Farms
Private Members' Business

1:20 p.m.

Bloc

Paul Crête Rivière-Du-Loup—Montmagny, QC

Mr. Speaker, I am pleased to speak today to this motion presented by the hon. member for Châteauguay—Saint-Constant. She has been an hon. member in this House for a year and a half and has made an interesting, important and concrete contribution both with her experience in agriculture and her ability to bring people together on ideas like the one we are discussing today. We know in this House that the motion she is proposing has support from a number of members. Furthermore, she is responding to a very serious concern of the entire agricultural sector in Quebec and Canada and even the world's entire rural population.

Agriculture is the cornerstone of our regional economies. Programs like supply management have helped our villages to develop in interesting ways and have assured them some degree of financial security. Now, if we want to be sure that the supply management system is maintained, then we must also talk about the problem of succession.

Even though our farms have increased in value over the years, they now employ fewer people than they did 50 or 60 years ago. However, their economic impact is still just as significant.

Since today's families are smaller, there is now a problem when parents want to transfer their farm either to their children or, if the latter are unable to buy the farm or have no interest in it, to other potential buyers. Since the parents put a lot into these farms—which have often been handed down from one generation to the next—the latter are now worth a great deal of money.

The most eloquent example is someone who wants to work in agriculture but who is not from a farming family. The financial requirements that need to be met in order to buy a farm are significant. Purchasing a farm is almost impossible. That is why we need to find solutions to this problem.

We also need to find a way to help the children of farmers who want to purchase the family farm but who, given its considerable value, are forced to accept a compromise. Temporarily, the parents have to make a significant concession with regard to the value of the farm they are transferring to their children. For their part, the children have to accept what almost amounts to co-management, so that their parents can transfer them the farm and still feel good about it.

At the same time, human aspects are not the only major factors that need to be considered. There are also tax implications.

The Bloc Québécois held a forum on this subject in fall 2004 at the agricultural technology institute in La Pocatière, in cooperation with the UPA, which has agreed to look at this issue with us during the election campaign.

This is the kind of issue on which the member for Châteauguay—Saint-Constant has worked hard. She has worked to develop ideas and turn them into concrete plans that could be considered in the House. That is an interesting and smart approach. I hope that it will produce results in the short term. I hope that, in the next legislature, we will be able to ensure that the government elected will again implement measures that reflect the work done by the member for Châteauguay—Saint-Constant.

I want to mention, among the motions we hope to make, the one to enhance rather than destroy the financial advantages associated with transferring a farm. The Bloc is proposing the following:

(a) increasing the allowable capital gains deduction for agricultural property from $500,000 to $1 million, exclusively for transactions as a result of which a farm remains in operation—

We would like to provide greater incentive for transfers, provided that such transfers ensure that the farms remain in operation. In fact, we want to prevent situations where farms are bought and immediately sold, in an attempt to control the market based on initial production. We want to prevent such business practices which are sheer capitalism. In connection with agriculture, we have to try to find somewhat different approaches.

We are also asking that the federal government extend the rollover rule to transfers other than those between parent and child. We are proposing “extending application of the rules governing rollovers to all members of the immediate family under 40 years of age”, to brothers, sisters, nephews and nieces, for example. This would better reflect today's reality. There are children who want to take over their parents' farm. But there are also many who do not. That is why we have to provide for the possibility of transferring a farm to relatives of the family that owns the farm, such as brothers, sisters, nephews and nieces.

In addition, we would like the following idea to be considered:

(c) setting up a farm transfer savings plan that would enable farmers to accumulate a tax-sheltered retirement fund;—

Governments could contribute to this plan as they do to registered education savings plans. This contribution would be conditional upon the farm remaining in operation following its transfer.

It has become apparent that parents were reinvesting all their money, all their profits, in their farm and that, when it was sold, that was their retirement fund. With a farm transfer savings plan, they could put money into this plan. This way, when the farm was transferred, the money amount transferred would be smaller. The burden on the young people taking over would be smaller, while the parents could rely on a decent income.

We are proposing that the possibility of putting this kind of measure in place be considered, to ensure the survival of our farms and meet one of the UPA's very ambitious primary objectives: preserving the 32,000 farms on all of Quebec's agricultural land by giving access to the farming profession to any young person who demonstrates the abilities, capabilities and skills required.

This body of taxation measures—the list of which I will complete shortly— would be the foundation for this system's operation. They would ensure a tangible result in ten years. The next generation of farmers would be assured. Children wishing to acquire farms would have been able to do so, and otherwise the continuity of the farm could have been ensured through more distant relatives or others interested in agriculture but lacking the means to make a start in it. Thus we would be spared from being left with nothing but vertical integration in agriculture.

This is important and is something that worries people, young farmers in particular. People in my riding have suggested having a national commission on agriculture which would hold general assemblies on agriculture, obtain a clear picture of the situation and propose solutions. That could certainly be part of this framework.

The fiscal plan would be complemented by what I consider a fourth proposal:

(d) make the rules governing property ownership more flexible so that young farmers can obtain a larger share of a residence held by a company and use their registered retirement savings plan to acquire an agricultural enterprise;

Let us take the case of a young man or woman out in the work force, perhaps a graduate of an institute of agricultural technology. The parents are still of an age to run the farm for a few more years, so the young man, let us say, works as a salesman for agricultural implements or feed or that sort of thing. He is able to put a bit away into an RRSP. When the time comes for the parents to want to retire, he would have to be able to transfer his money out of the RRSP in order to buy the farm without a penalty, rather than have to leave it there until he retired. The way things are at present, if he cashes out his RRSP, he will have to pay tax on it, so that is a disincentive to buy the parents' farm. We would like to see a measure along those lines adopted.

Then there is this fifth constructive proposal we are making to the federal government:...

(e) transfer a recurring envelope to the government of Quebec...for encouraging young people to go into farming

For example, the Government of Quebec could extend access to the start-up subsidy, improve interest rate protection and raise eligibility limits, introduce a start-up subsidy for young people starting up in agriculture part time and gradually moving into full time, and create a single-window approach to match farms with no succession and young aspiring farmers without farms.

This last proposal essentially comes back to the fact that agriculture is more of a provincial responsibility because of the tax system. I do not want to get into a debate over it, but the fiscal imbalance is the reality faced by the provinces, which do not have enough money to provide realistic, satisfactory help to their agricultural sector. Money transferred from the federal government to the provinces and Quebec would help them implement this type of program.

Given the tax framework we are working with, we may contribute to solidifying the topic for discussion at next year's UPA meeting on agricultural succession in La Pocatière, a topic firmly raised in the House by the hon. member for Châteauguay—Saint-Constant.

I hope that when we come back to the House, she can continue to work hard. Her arguments are very convincing and she knows the agricultural world in her riding quite well. I hope that we can continue to rely on her services in the years to come.

I invite all the hon. members of this House to support this bill.

Intergenerational Transfer of Farms
Private Members' Business

1:30 p.m.

NDP

Tony Martin Sault Ste. Marie, ON

Mr. Speaker, I am pleased to rise and speak again about farming in this country, particularly in my own region of Sault Ste. Marie and East Algoma, because there is a crisis. I would say that as a result of that crisis what we are speaking to here today is trying to put in place some small measure that would help save the future of the family farm.

However, even though we can support this motion and we will, I do not think it goes far enough to really restructure the whole farm industry so that it becomes a viable economic sector in our country once more.

I think that we have to look at our own experiences of meeting with farmers in our particular constituencies and our regions. When we sit down with them and hear from them, we hear the desperation and the pain in their voices today as they speak about their future, the investments they have made, the investments they have lost and the hopelessness they feel. In turn, they are passing that hopelessness on to their children. It is not often done by direct conversation, but the children look at the hard work that goes into farming, at the 24/7 commitment and at the investment made, for so little return anymore.

If there is anything we can do in this place to make it more profitable to move the farm on from one generation to the other, we certainly should be doing it. That is why I will support any initiative here which will move in that direction.

In the few minutes I have today, I want to talk about the situation that confronts farmers out there, both in my own region of East Algoma and across this country. The fact is that farming today, like so many of our other economic sectors, is being taken over by fewer and fewer corporate interests, which have seemingly no interest--and I do not understand this--in the profitability or the success of the small family producer. They are more interested in the bigger operations where they can squeeze every ounce of profit out of everybody and everything and every resource that is involved in farming, for their own profit margin but certainly not for the profit margin of the farmers themselves.

I want to speak for just a few minutes and put into the context of this discussion an article that was in Straight Goods magazine just recently, written by Dennis Gruending, a member of this place at one time. He titled his article this way: “Agri-food industry very profitable, but producers have to find day jobs”. That is the conundrum that farmers find themselves in.

Today we are talking about passing on the family farm to the next generation, to our children who, more and more, are going to school so they can better themselves and take a more learned approach to that which they do for a livelihood and an income. They look at what their parents are doing and see their parents working as much as they can in the early morning and late evening to keep the farm going, and then they see them going off to someplace else in the town or the city during the day to earn a little money so they can keep bread on the table, continue to pay for the energy to heat the house in the winter, and clothe themselves. All of that does not look very attractive.

What Dennis Gruending focused on in his article was a report that this government should actually be very interested in, although he says in this article that this report has actually been archived. It is the report written by one of the Liberals, the Parliamentary Secretary to the Minister of Agriculture and Agri-food (Rural Development), a person who at one point was a farmer and thus knows this industry very intimately. To give him as much credit as possible, let me note that he travelled this country to sit in farmers' kitchens and community centres to talk to farmers across this country. I would say that what he found was very disappointing and alarming.

After looking at the situation that confronts many farmers, he said that food processing, for example, earned a 12% average return between 1990 and 1998 and was more profitable than the manufacturing sector, with an 8% rate of return, and food retailers averaged a return of 12% between 1990 and 1998. Yet the average farmer was losing between $10,000 and $20,000 a year in that time period.

I have spoken to some of the farmers in my area of East Algoma. They tell me, particularly with the impact of the closing of the border on beef farming and BSE, that they have lost about three generations of equity in their operations. I talked to another farmer who said that he had now probably lost between $150,000 and $200,000 over the last three years.

How long can farmers continue like that? How can we expect children to be interested in the family farm if that is the reality confronting them? Who wants to take on a losing enterprise or operation? I do not think many people are lining up for that.

What recommendations has the parliamentary secretary's report made, and Dennis Gruending through his article? He says that we need to limit the market power of corporations in concentrated industries by restructuring the Competition Bureau and strengthening the Competition Act. The impact of corporate consolidation on the producer can be taken into account. He also says that Ottawa should take a balanced approach to international trade negotiations, recognizing the legitimacy of some subsidies while stressing the importance of free trade. He says that we should defend the interests of Canadian producers.

I remember talking about supply management in the House just a few months ago. Dairy farmers were in attendance in the visitors gallery. They told us that they felt very much abandoned and alone in this fight. They want the government to recognize and understand the challenges they face and to stand with them shoulder to shoulder in trade disputes, discussions and negotiations. They want the government to defend the interests of those in the country who simply want to make a living by working hard and investing that which is necessary to be successful. They have been confronting this growing wall. There is a concentration of corporate ownership and an international trade regime that does not seem to understand the challenges of Canadian farmers, and the government does not want to stand shoulder to shoulder with them.

The parliamentary secretary's report says that we need to defend the interests of Canadian producers, including an aggressive defence of supply management and the Canadian Wheat Board. It also goes on to say that government should encourage and support the intergenerational transfer of farms as a key factor in maintaining the viability of rural communities, which is what we are talking about today. We are talking about putting in place vehicles and support mechanisms that will make it more viable and lucrative when a farm is passed on so children do not have to suffer because of the difficult times and challenges of parents.

To put a fine point on the reality of the whole issue of the concentration of ownership and control of the agriculture industry in Canada, let us take a look at what the parliamentary secretary found and reported in his report. For example, Cargill controls about 50% of the Canadian beef packing capacity. Just two companies, Cargill and Tyson, control 80% of capacity. We need to do something about that. We need to reorganize and restructure the way the food business works so more money stays in the hands of the person who produces it in the first place, which is the farmer. If we did that, it would be easier to pass the farm on to the next generation.

Three companies retail and distribute the bulk of Canadian oil, gasoline and diesel. I spoke about the concentration in the Canadian oil business and how the price of oil from time to time goes through the roof, which impacts on sectors like farming. Three companies dominate the farm machinery sector, four companies mill most of our flour, three make our soft drinks and six control food retail.

If the government is serious about the future of the family farm and wants to see it passed on from one generation to another, it has to stand shoulder to shoulder with the small producer and challenge the powers that be and restructure it in a way that gives back some of the profitable returns made by others in the industry to the farmers themselves.

Intergenerational Transfer of Farms
Private Members' Business

1:40 p.m.

Bloc

Roger Gaudet Montcalm, QC

Mr. Speaker, first, I want to congratulate the hon. member for Châteauguay—Saint-Constant on her motion. I hope it will be adopted.

I would like to discuss the issue of the next generation of farmers. This is a major problem that requires some serious thinking and some solutions.

People in the farming business are getting older. Today, for one young producer, there are two who are aged 55 or more. Nevertheless, there is a keen interest among young people to take over their parents' farms. They would like to become farmers. However that interest dwindles when they find out about prices for farm property. Theirs is a particular situation in that they must buy land, buildings, quotas and various pieces of equipment. They must also think about improvements, and about the fact that they have to invest $6 to generate a profit of $1.

These young people have the skills, but they do not have the money to buy at a high price, and their parents cannot give them their property, because they must continue to make a living. In order to have an integrated approach, the state has to provide more support to these young people, so that the number of family farms can be maintained.

In 2004, the UPA, the union of agricultural producers in Quebec, published a report on young people in agriculture. This document includes 16 recommendations, including: launching an awareness campaign on the importance of female aspiring farmers; establishing tax leverages to promote financial security for retired producers; maintaining and developing a network of advisors on how to transfer and start a farm; implementing various measures to help train young people; improving financial assistance; and reviewing the quota transfer mechanisms to limit price increases.

Quebec has set up a system of bonuses to encourage young people to take over farm operations and become producers. Start up costs are very high for someone who wants to buy a business. This small amount of $20,000 or $40,000 that can be obtained from the Quebec government may make a big difference between deciding to make the sacrifices and efforts required to take over the business, or giving up because of insufficient funds to buy the operation.

It is not very complicated, but there must be a political will on the part of the various levels of government. That is essential. The federal government must set up a program, otherwise it will be the end of family farms for Canadian and Quebec producers.

The danger is close at hand, because the small and medium sized businesses with no one to take them over will close down. It is predicted that, by 2025, the number of farmers is liable to drop considerably. The big agribusinesses will get bigger, and others will sell off by dismantling their holding, because it is more tempting to accept a big offer than to sell to one's children. Some will prefer selling at a lower price, but may have a hard time in their retirement or may even be destitute. Fewer and fewer people are making this choice. If things continue this way, there will no longer be family farms, because the big businesses that buy them out will specialize.

Because of the mad cow crisis and the low prices in effect since 2001, a number of farms that are up for sale are not finding any takers. The people who are still there have enough on their plates already, and the people who want to buy have to try to bring the price down. Young people who want to take over from parents who have had enough do not have the money to do so, because agricultural products are not selling at a price that compensates for the cost of production.

So who will be taking over our family farms? The Mexicans? The Americans? How can we restore status to this profession, when the situation is so complicated and the government does not provide as much support to agriculture as other countries do? This is an obstacle for our farmers.

A low birth rate, low farm revenues, the need for an extremely high initial investment and an uncertain future mean that the succession problem is always one of the most important issues. This is the case in agriculture. Furthermore, environmental conditions, people's unhappiness with farm odours, and consumers who do not want to pay higher prices are among the most important reasons young people give for refusing to take over the family farm. The prices of agricultural products are lower than they were 20 years ago, but the cost of gas, electricity and other things is significantly higher.

Farmers are sending out an S.O.S. asking the government to help transfer farms to the next generation, our farmers of tomorrow.

Small farms need tax advantages in order to survive the battles caused by free trade and competition invading our markets, often due to the lower labour costs, warmer climates and less rigorous environments elsewhere.

We need all our farms. When we look at where farm families live, we see well kept buildings. When farms merge, are sold or dismantled, these buildings quickly fall into ruin.

Nowadays, thanks to the work done by farmers, Canada's capital assets may appear to be proof that we are rich. Nowadays, the next generation does not have the means, as they start out, to pay the asking price.

“We need to find the means to help the next generation take over, otherwise we will lose what we have and become poor and maybe suffer as much as the Norbourg investors”.

“We need a program to ensure that the government will be a major ally for the next generation. Our young people need to know that we have faith in the next generation responsible for feeding our planet, as our ancestors showed us”.

This comes from a brief written by a farmer and her husband whose four children had left the land because of the very high costs involved.

Intergenerational Transfer of Farms
Private Members' Business

1:45 p.m.

The Acting Speaker (Mr. Marcel Proulx)

The mover of the motion now has the floor for five minutes to reply and close the debate.

The hon. member for Châteauguay—Saint-Constant.

Intergenerational Transfer of Farms
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1:50 p.m.

Bloc

Denise Poirier-Rivard Châteauguay—Saint-Constant, QC

Mr. Speaker, I am pleased to close the debate on this motion in what could possibly be the last hours of the 38th Parliament. Although the vote on this motion may never happen, the debate on the future of agriculture in Quebec and Canada will have begun.

In the next few minutes, I want to come back to the origins of this motion and the fundamental reasons why I moved it.

This motion is the result of a broad consultation that my colleagues from the Bloc and I had a year ago and which brought us to the La Pocatière convention. Farmers made it imperative: if we want local agriculture to continue to be part of the Quebec and Canadian landscape, if we want young people to become interested in agriculture enough to spend their lives in it, we must propose innovative measures that will get convincing results in the next few years. Time is of the essence and if the governments do not soon commit to revitalizing farm life, then the family farm will soon become a thing of the past.

During its 2004 annual convention, the UPA set a goal to keep the 32,000 farms in Quebec in operation. This historic minimum of farms still in operation is indicative of a strong trend in the current global economy, which is to create mega-farms that utterly disregard the realities of local life and land use. As far as agriculture is concerned, our autonomy to feed Quebeckers is also at stake. Standing idly by would be giving in to the brute force of a market that considers only words like profit and efficiency.

What can we do to revitalize an essential occupation in our society? At the La Pocatière convention, politicians and farmers came up with ideas for improving the increasingly difficult situation farmers are in, especially when at the end of their career they want to leave their farming business and hand it over to a new generation of farmers.

First, in order to ensure that it is more profitable for a farmer to transfer or sell his farm to the next generation, rather than dismantling it, the allowable capital gains deduction for agricultural property should be increased substantially. We are proposing to increase it from $500,000 to $1 million, this exclusively for transactions as a result of which a farm remains in operation. Since taxes paid on transactions would decrease, this measure would allow the seller to dispose of his assets at a lower price, while guaranteeing him the same amount of money and encouraging young people to go into farming.

We are also proposing that the federal government extend the application of the rules governing rollovers to transfers other than those from parents to children. These would include transfers to brothers, sisters, nephews and nieces, provided they are under 40 years of age. The government would then be assured that the agricultural heritage remains in the family, and that the farm operation has long-term development potential.

Moreover, savings are often considered to be the Achilles heel of farm transfers. It will be much easier for a farmer to transfer his farm to the next generation if he has a retirement fund other than his farm as such. The sale of the farm's equipment and land is often the main source of money for a farmer's retirement fund. If we want to reduce the number of farms going out of business, we should have a mechanism that encourages selling to the next generation. We are proposing that the government make a contribution to a kind of “registered farm savings plan” that would be conditional on keeping the farm in operation at the end of the farmer's career.

Finally, the federal government should transfer an envelope to the provinces for encouraging agricultural succession. This envelope could be used for the following: extending eligibility for the start-up subsidy; improving interest rate protection and increasing eligibility ceilings; providing grants for young people who are starting up a farm; and improving local sources of information on farms available for transfer in the short and middle terms.

I want to conclude by thanking colleagues from all parties who have asked me questions and contributed to the debate. We must quickly find solutions that will allow the next generation of farmers to take over. Time is of the essence. There is no longer any reason to avoid debating this issue. We have launched that debate, and now the time has come to take action.

Intergenerational Transfer of Farms
Private Members' Business

1:55 p.m.

The Acting Speaker (Mr. Marcel Proulx)

The question is on the motion. Is it the pleasure of the House to adopt the motion?

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1:55 p.m.

Some hon. members

Agreed.

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1:55 p.m.

Some hon. members

No.

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1:55 p.m.

The Acting Speaker (Mr. Marcel Proulx)

All those in favour of the motion will please say yea.

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1:55 p.m.

Some hon. members

Yea.

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1:55 p.m.

The Acting Speaker (Mr. Marcel Proulx)

All those opposed will please say nay.

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1:55 p.m.

Some hon. members

Nay.