Agriculture Committee on April 24th, 2007

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

I like to hear that.

Are you looking at rendered product as part of your input source?

[Ray Carmichael]

No.

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

Okay, that's fine.

Now I'll go to Mr. Bettle. You talked about succession and transitional, intergenerational transfer of farm land. Has anyone in the farm community looked at the model, which hasn't been used that I'm aware of in the farm community but has been used in business transactions, whereby a business owner...? I want to transfer my business to you, Mr. Bettle, and the business is worth $1 million. I'm 55 years old and I decide, for capital gains.... Let's call it a farming operation, because the capital gains would apply perhaps in a more appropriate way. But $750,000 would be capital gains-exempt. I transfer that farm to you over 20 years. You pay me $50,000 a year for 20 years and you own the farm. I pay the taxes based on that, so I have a lesser tax bracket to pay on. You basically don't have to worry about Farm Credit or other lending agencies, but at the end of 20 years, providing you do a good job, you own the farm.

Is that a model—I know it's being used in corporations such as State Farm and corporations like it—that we haven't looked at and perhaps should? Or do you have a different model that you might want to propose?

[Don Bettle]

It's been used by individual farmers in between farms, but according to my accountant, you pay the tax up front. That's what he's saying.

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

I know some say that, but my point is that in State Farm and the example I'm using, they don't. They pay on the $50,000.

[Don Bettle]

Well, that's the way I bought my farm when I bought it. That's the way it worked then. But according to several accountants I've talked to, now I have to pay the taxes up front on the total amount, even though I wasn't paid for it up front.

And I'm not the only farmer who's done this. Because of the high investment and younger guys getting in, a lot of farmers getting out have spread that over the long term to ease the burden on the new entrant.

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

I'm glad you made the argument about that being the case. If that is the case, then perhaps it's something we as a committee need to address in terms of transitional land transfers as we move forward. Perhaps that's something we can do to help future young farmers who want to move on.

You made the point, Robert, about knowledge and research, and that we continue to give this kind of information to our young people. Would you agree that given the current status of agriculture in Canada, if we were to give the information as correctly and as accurately as we can—perhaps an example would be someone who's in the business of farming showing the bottom line--could we expect a new generation of farmers, based on the information that's out there today?

[Robert Speer]

I think you have to decide which farmers you're going to profile. If you profile the farmer who has been losing money for 20 years, no, they're not very interested, but if you profile a farmer who is reasonably profitable and has a very good lifestyle besides, then I think you'll have young farmers interested in getting in. You have to show what the potential is, and not necessarily what some people are doing.

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

The argument could be made that Robert Speer would be a good advocate to go into the school system, because your system is supply managed. I'm a big supporter of supply management, so we would find a supply-managed farmer to be a model. But it would not reflect accurately if we put a hog farmer in the same situation, or perhaps a beef farmer in the past five years. There might be a different story told.

I'm trying to be realistic, because ultimately there's a real story out there, and I'm not sure that story is being told. Obviously when we look at the number of young people who are interested in going into actual on-farm farming rather than the business of agriculture, there's quite a difference.

[The Chair, Conservative, James Bezan]

Mr. Steckle, your time has expired.

So please give just a very short response.

[Robert Speer]

I think you can choose certain, say, hog farmers who are profitable or at least have a good lifestyle and have the potential to be profitable over the long term.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Miller is next.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Mr. Chairman.

Ladies and gentlemen, thank you very much for coming here today before the committee. It's nice to be in New Brunswick.

Mr. Speer, I found your comments interesting. We're here to talk about BRM—business risk management—and after a week and a half, you're actually the first witness we've had who says to keep the money away from that and put it in another angle. I think that for all intents and purposes, whatever we do is still business risk management, but you're suggesting doing it in a different way, and I find that interesting.

I have a comment that carries on from what Mr. Steckle was asking about. You're suggesting that government pick and choose farmers to get behind, and I think you're meaning to help train them further and make them better managers. As much as there may be some good points in that, are you not suggesting that?

[Robert Speer]

No.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Well, you correct me on that, then, because that's where I thought you were leading.

[Robert Speer]

I'm sorry if I misled on that. My interpretation was that he was asking who we would hold up to show the potential of the industry if we were to ask somebody to be modelled to present the idea for new farmers. Then I would say that you would choose who you would--

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

That was my mistake, then. I thought you were referring to other—

[Robert Speer]

No, no.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

I'm glad to hear that's not the case.

[Robert Speer]

No. The program should be available to all farmers.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Okay.

Let's take this a little bit further on the education side. You mentioned helping farmers by spending money to make them better managers and hopefully more profitable. What exactly do you have in mind? Today farming is no longer just family farms, but business. Farms are big business. Today most of our young people who farm—not all, but most—take some kind of agricultural course. Are you suggesting we or the industry should be promoting something over and above that?

[Robert Speer]

I feel we should be promoting more the fact that they are businesses. If you're going to be the owner of the farm, you need to be able to manage a business, so you need your business management skills. Put more emphasis on those, because you need them. That really will separate a lot of the farmers. If you are a really good business manager, you may not need to actually know how to milk the cow; you can hire a person to do that. It's in that area that I see a number of farms not doing as well, and it's in that area that they probably could use the most help too.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

I think, being a farmer myself, that sometimes what we're guilty of, the reason we're farming, is that we love to do those things. At the same time, it can be more profitable to have someone else and you going and doing the things that make your business a little more profitable.

I'm going to move on to another topic that's been pretty general across the country, but specifically the last couple of days here in the Maritimes, and it's getting the profit out of the marketplace. I asked this question yesterday and last night and never really got a straight answer out of it. And no offence meant to anyone from yesterday; it's a complicated thing.

To get out of the marketplace, first of all, I think the idea of it is food security. Food security, to me, is having a safe, long-term, lots-of-it domestic supply. The problem we have, not just as government but as industry, is that we are by and large an exporting nation. We have a large land mass with a low population. So if you're going to drive at something that government and the industries can agree on, do you cut off that guaranteed, whether it's floor prices or something along that line, do you cut it off once you've basically achieved what you need for domestic supply, and then just let what goes on the export market go out there and do it? To run it right through to the end, you're going to run into trade issues big time around the world.

Have you any thoughts there? It's a very complex thing, and it's a big problem.

[The Chair, Conservative, James Bezan]

That's open to everybody?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Yes, just whoever has any comments.