Agriculture Committee on Feb. 8th, 2007

[The Chair, Conservative, James Bezan]

Mr. Anderson has a couple of follow-up questions.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'd like to follow up on that same kind of theme.

Have you done any talking with the provinces about apprenticeship programs? I don't know about the mechanics program, but I do know that in the carpentry programs Saskatchewan requires 1,800 hours more to be a certified journeyman carpenter than Alberta. There's some reason behind the scenes for that, but have you done any work on this? A young person can't stay, if it's going to take them a full year longer to get certified; they can be certified, licensed, come back, and work for a year in the same time. There are no standards across Canada that are equal.

Do you have any comment on that?

[John Schmeiser]

Yes. One change that was made because of this very issue by SIAST at Kelsey campus in Saskatoon was that they moved their agricultural technician program from a two-year program to a one-year program with the idea that they could provide the training needed to get these folks into a dealership more quickly. We do have those discussions from time to time.

Manitoba is also on a one-year program at Assiniboine Community College. Alberta, however, at Olds College, still has a two-year program.

Each college is having varying levels of success as to whether or not they're filling the program, so we're not exactly sure which is the right way to go.

[Duane Smith]

We have to be careful there, though. Because of the skills we need in the industry, we don't want to diminish the value of the programs, either, by shortening them.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

What's interesting is that in the carpentry thing, the educational components are the same length, but the requirement in terms of hours is not. That makes a huge difference for young people, and it makes it difficult to keep them.

On a different note, do you have any position on right-to-repair legislation? We've talked about that at different places here. We've had independent mechanics come in and say they would like to have right-to-repair legislation in Canada, as they have in the States. This is mainly with motor vehicles. People have the right to repair another company's vehicles; they have the right to the technical information and the computer codes they need in order to do analysis and repair.

Do you have any position on that? I would think that in small rural areas you'd probably be in favour of it, because you'd have an opportunity to work on other people's machinery and that kind of thing.

[John Schmeiser]

We have never taken a position on that question. We're at the point now that our equipment is so sophisticated that dealers have to purchase special tools to service it. Those individuals doing that type of repair wouldn't even have access to purchase those tools.

As an organization we haven't really touched it, but from the way the market is going, it appears that the amount of new equipment those guys could work on is getting smaller and smaller.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

In the States I think you're just required to provide access to the information and the tools. If people want to spend the money to buy them, then that's their choice.

[Doug Tibben]

The danger is that we're trying to encourage apprentices to come into our field and we want to create and allow an environment in which we can pay them well for their services. The training costs we have are astronomical. What we have to commit right now to specialized training for individuals is something that.... We really want to keep the people once we get them trained. We can commit literally one week every two months to training for an individual, and we want to guard that a little more ourselves, because it's part of our business; that's who we are as dealers.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Duane, you had a comment.

[Duane Smith]

I was just going to say that I think it would be very difficult for one particular dealer to try to know all three brands. I know I spend about $150,000 a year for training just on John Deere equipment, and to expect my people to know all the new changes to Caterpillar, Case, and New Holland would be extremely difficult. Potentially it would create some safety issues if we tried to be all things to all pieces of equipment.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I have a question on the chart and then I'm done. I found it interesting that there's a huge drop in the four-wheel-drives and the combines from 1997 to 1999. I was farming then. I don't remember what the reason for that would be.

I don't think our finances changed that much from 1998 to 1999. There is half the number of four-wheel tractors, and it's the same with the combines. Do you know why that is?

[Howard Mains]

No, and I was actually trying to figure it out myself when I was looking at these numbers this morning. I was thinking about going back and seeing if I could get a ten-year chart on the price of wheat. That might help.

I'm wondering as well if an investment tax credit may have ended at some point, which would have affected it. Obviously something occurred in the market, and I couldn't figure it out myself.

[John Schmeiser]

There was a bump-up in our equipment sales because of the money that came out with the elimination of the Crow rate. There were some dollars that were distributed to consumers, so what you're probably seeing is just the rebound after the run-up that we had in years previous.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I actually would suggest you've had something like that in the past year and a half with NISA money, but we'll see.

[The Chair, Conservative, James Bezan]

Thanks, Mr. Anderson.

We've got both Mr. Steckle and Mr. Bouchard. You can have one short question each, because we have other business that we want to carry on afterward.

[Paul Steckle, Liberal, Huron—Bruce, ON]

For the benefit of those around the table who perhaps don't understand this industry as well as these gentlemen do, from my fairly close knowledge of the industry I can tell you that it's a tough industry and it's getting tougher. The profitability levels are not what they should be. If anybody thinks they're making a whole bunch of money, you'd go away from this meeting knowing that they are not, unless they had a business different from the one I ran, and I think we ran a pretty good business.

We haven't had any questions to you, Mr. Frazee, and I think you shouldn't leave this room thinking we don't want to speak to our American neighbours.

I should just like to ask you a question reflective of government policy in the United States, where the subsidies are considerably larger than they are in Canada. While no one wants to farm in the mailbox, including Americans, the reality is that American farmers generally have received more money from the mailbox than they have in Canada.

How is that reflected in farm machinery sales, relative to the numbers expressed here in Canada? Have they been higher? Have they been relative to what we have here? How do you see that?

[Bob Frazee]

I really can't answer how farm machinery sales are impacted by our subsidies.

One thing I think is important for you to understand is that, as an organization, we do have a policy position on subsidies. There are certain things we would like to see, for example, in the 2007 Farm Bill. I had an opportunity to appear before the House agriculture committee a few months ago to talk to that issue. We avoid trying to get involved with specific commodities and what should or should not be subsidized. I think it's fair to say that in the States we're probably going to see a lower level of commodity subsidies in the new Farm Bill.

Our position in relation to the Farm Bill is also asking for language that looks to better trade agreements, which are beneficial to all of North America.

There are times when the interests of the American components of the North American Equipment Dealers Association and the Canadian components aren't necessarily 100% aligned. I certainly wouldn't deny that. But we are trying to work for the good of all.

In terms of how subsidies affect machinery sales, I can try to get back to you with some details on that.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Maybe I should have framed my question in terms of farm income, because whether it's subsidy or from the actual commodity itself—

[Bob Frazee]

There's certainly a correlation between net farm income and equipment sales. If farmers in the States--and I'm sure it's true here--are making money, they tend to reinvest it in their enterprise. In relatively short order that circulates through the community--five times, I guess--where they do business. So there's certainly a correlation there.

In most of our agricultural segments in the States right now we're also faced with strong commodity prices. My region of the country is pretty heavy on the dairy industry. I'm also a John Deere dealer. I'm from near Syracuse in upstate New York. It's about a three and a half to four hour drive almost due south of here.

Our particular segment of the economy hasn't rebounded to the extent we would like to see it and that our neighbours to the west, who are in row crop areas, have.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Thank you.

[The Chair, Conservative, James Bezan]

Thank you.

Monsieur Bouchard, a short question, please.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

You're seeking an increase in the capital cost allowance. That represents a loss of tax revenue for the government.

Have you estimated those tax revenue losses?

[Howard Mains]

I've done some preliminary research into that, and I actually do have some numbers I can share with the committee. I'd be pleased to do that. I can't recall exactly what the number is, but I've done some research into that.

[The Chair, Conservative, James Bezan]

Okay.

I appreciate your presentation today. Part of it was in English and some was in French. I'd ask you to get everything into us in both official languages so we can distribute it to the committee. We'd appreciate that very much.

We will consider the recommendations you've made here. I think it was a good discussion today.

We're going to suspend briefly and allow you to leave the table so we can get down to some of the committee business we have to deal with before we adjourn.

We'll suspend for a couple of minutes.

[The Chair, Conservative, James Bezan]

Let's call the meeting back to order.

Wayne had tabled a motion, but he has now sent a letter asking us to delay that motion until Tuesday. We will deal with that at that time.

Do you want to talk about future business?

First of all, based on the testimony we heard today, how do you want to deal with this? They are requesting that we ask the Minister of Finance to consider their capital cost allowance and their other recommendations. We've heard the industry committee and the finance committee have made those recommendations on the CCA. How do you wish to deal with it, by letter or report? I'm at the pleasure of the committee.