Agriculture Committee on April 25th, 2007

[The Chair, Conservative, James Bezan]

Thank you very much.

Mr. Devolin, you have five minutes.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you.

Thank you for being here today.

On the issue of food safety and imported food, on the TV, both last night and today, as I went past CNN there were stories about concerns in the United States about food safety. The great irony, of course, is that a pet food problem has brought this issue to light.

I want to talk about access to capital for young farmers and this challenge of how we get another generation of farmers on the land and into the business.

My riding is about an hour north of Toronto. The challenge there is that when a farm comes up for sale, farmers are competing with non-farmers—I always say lawyers from Toronto—people who are looking for a recreational property. That has driven the price up.

When you were trying to figure out how a young person could afford a farm in this area that is worth $1 million—just to pick a number—if the young person is not buying it, who else is buying that farm? Is it another farmer who's buying that farm for $1 million? I'm getting a head nod. That means there must be a business model—an existing farmer feels it's worthwhile to pay $1 million to buy another farm because they can make it go.

For young farmers, is it the availability of capital? As you were saying, if you have to have 30% or 40% down, that is $300,000 or $400,000, and then you borrow the balance from a bank. In the housing market we went to high-ratio mortgages 15 years ago, where you could borrow more than 75%. Is part of the solution figuring out a way to help young people finance that farm? Is that the challenge?

[The Chair, Conservative, James Bezan]

Mr. Martin.

[Benoit Martin]

When you buy the farm from a stranger, you often have to invest 100% of its market value. In the dairy industry, for example, young people who enter the sector often succeed more than those who have been there for a number of years. Young people are excellent producers. In all types of production, they are dynamic and manage to make their production profitable. On the other hand, they are unable to repay 100% of the value of the farm.

A fund could be created so that the downpayment, which represents about 30% or 40%, is not payable in the first 10 years of the life of the business, for example. The young person would really be able to take off and, at the end of the tenth year, start to repay the downpayment. That's an idea we find interesting. However, it doesn't solve the problem of the speculation that's carried on around the major cities. It also happens in Quebec.

Whatever the case may be, by enabling young people to be on an equal footing with the producers around them, we will definitely enable them to invest and devote themselves to their farm.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Right, and I appreciate that the issues around major cities are happening all over the world. It's nothing unique to Ontario or Quebec.

Getting back to my question, in the housing market, the Canada Mortgage and Housing Corporation was created. It stepped in and would actually sell insurance, basically, for people to be able to have higher-ratio mortgages, 90% or 95%. So for those who could afford the payment on the house but just couldn't get together the $50,000, or whatever it was, as a down payment, this helped them into a house and then they'd just pay off the larger mortgage over a longer period of time.

Specifically, if there were a program that allowed young farmers to get a higher-ratio mortgage—that's really what I'm talking about—is that the kind of thing that would help young farmers? You'd still have to pay it back, and maybe there would be some interest rate assistance in the first few years. That is doable. I don't know how much it would cost, but that's certainly doable. Is that the kind of thing you're looking for?

[The Chair, Conservative, James Bezan]

Monsieur Martin.

[Benoit Martin]

We think that would really be a good solution, to the extent that we could spread it out over a longer period and at lower interest rates. This is a system that has previously been in place in Quebec. Of course, you have to take into account the business's level of indebtedness and not make it so that, by providing easier access to credit, you raise the selling price of the property of a person who wants to retire from farming. However, I think this is an interesting idea.

[The Chair, Conservative, James Bezan]

Thank you, Barry.

Monsieur Lemieux.

[Pierre Lemieux]

We talked about farms that are in production. Benoit raised the issue earlier. When these farms are sold, there should be a kind of obligation for them to stay in production. I'm not necessarily talking about regulations, but rather about a tax framework whereby the business, once sold, would remain in production. In those conditions, quite significant tax benefits would have to be offered.

With regard to the transfer of farms, I think the future of agriculture will depend on advantageous tax measures, so that businesses stay in production. In cases where the business is sold for speculative purposes and the buyer makes it merely a hobby, the vendor would not enjoy any tax benefits. Financing together with patient measures could constitute a form of assistance that would encourage young people to stay in agriculture or to start up farm businesses.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Atamanenko, you're on.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you for being with us this morning. I'd like to hear your views on agriculture in Canada, but, first of all, I would like to ask Mr. Lemieux to clarify one point.

With regard to maple syrup from the United States, you said that it was subject to inadequate quality control. Are there any quotas? Can syrup move freely between the two countries?

[Pierre Lemieux]

Yes, it can move freely between the two countries. In Quebec, producers are subject to a quota system, so as to limit production volumes to a certain degree. Earlier I talked about the importance of quality control or safety control in the case of products that cross the border. In production, only a very small core of people are familiar with pure, natural maple syrup.

We have a global market, but, elsewhere in the world, it's impossible to compare that product with another farm product. You can do that in Quebec. European or Asian consumers, for example, have no reference point. If I consume beef, milk or another agricultural product, I can compare it with what's produced in my country. However, for maple syrup, consumers have no point of comparison enabling them to determine whether the product is of good quality or not. They must absolutely rely on what the processor sends them.

Furthermore, our product is not entered in the Codex Alimentarius. Consumers have no reference point, hence the importance of enforcing quality control regulations. This is very important for our industry.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

I understand, but if I'm a processor, am I entitled to import any quantity of syrup, and, if so, what effect will that have on the price that you want to get here as a producer with quotas?

[Pierre Lemieux]

Currently, anyone can import maple syrup as he wishes, based on available volumes. As for the impact on our prices, if the production sector in the United States developed fully, that would normally have the effect of lowering our prices. The advantage in Quebec and the Canadian provinces is that we have a greater advantage in terms of the various factors of production.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

In volume.

[Pierre Lemieux]

Not only in volume. Weather conditions in Canada enable us to achieve higher yields than elsewhere, and that's as a result of freezing and thawing periods. It's in Quebec, mainly in the Chaudière-Appalaches region, that you find the largest number of days of freezing and thawing, which means that we have the opportunity to achieve the highest yields here. The farther south you go, the more yields decline. We note that the difference between the best and the worst year is greater in Quebec than in the United States.

One of our concerns regarding the environment and global warming concerns this factor. Our fear is that there will be an increase in variability between small and large harvests.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

As regards the vision for agriculture, a few days ago in Prince Edward Island, we had the opportunity to discuss two visions. Do we follow globalization or do we concentrate on food security? You raised the community issue. What should our vision be here, in Canada? Should we ensure food security first, then encourage regional producers, or should we find a solution in the global market?

You know there is a global threat. For example, the Canadian Wheat Board is currently threatened, and it's a collective organization. I'd like to hear your opinion on the subject, if we still have time.

[Maurice Vigneault]

When we talk about globalization of trade, we hear a lot of words. We talk about the organization of the global market in particular. There is no global market organization, but rather a global market disorganization. Explain to me how you take chicken from the United States, sell it in Africa for less than the cost to African producers to produce it, destroy their production and throw those people on the mercy of the international market?

As I told you earlier, 10% of products in the global market are exported. We're setting a rule of 90% local consumption around the world. If there was really a world trade organization, we would ask Burkina Faso whether it is capable of producing chicken; we'd let it engage in its production, and if it was short 10%, we would bring in countries capable of producing it. We would let it produce what it is capable of producing at home.

We support the concept of food sovereignty. We don't have any intention of destroying local agriculture elsewhere around the world, that of our colleagues who work as hard as we do and who deserve to earn their living as much as we do. Market globalization has never produced profits for the producers of the world. It has largely benefited major businesses that engage in international trade. They're the ones who benefit from it. If that's what we want, let's let the natural laws of the market, or the law of the jungle operate: the big eat the small.

If we want a Canadian and global society that is based on the protection of resources, and if the people in the communities are involved in the development of their economic and social environment, we will set our own rules for organizing trade, based first on food sovereignty. We will never change positions on that. That's the choice of a society, not only Quebec's, or even Canada's, but global. If we want the population of the world to be able to live in dignity from agriculture, we will indeed have to use the term “organization of trade” particularly with regard to agriculture.

I don't have any intention of competing with the people of other countries, if they are capable of producing their own food. I'm a maple syrup producer, and it's a pleasure for me to ship maple syrup to Japan to give those people the pleasure of consuming a product that's really from my home. However, it troubles me when I have to force down the prices of someone who is having trouble getting by in his country, to enable someone else to make money to the detriment of both of us. We want food sovereignty for that reason. Pardon me, but that came from the heart.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Atamanenko.

Mr. Easter, you're on.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

I really enjoyed those last comments, Mr. Vigneault, because that's where it's at. The only folks who are gaining by this game we're in right now are the international multinational corporations. The rules that we're talking about at WTO are rules around countries, not rules around the traders themselves.

I have a couple of questions.

I must say, Mr. Martin, I really enjoyed your points, everything from farm banks to patent capital and mentoring. I think those are all good points and they are something the committee needs to address.

Mr. Lemieux, I believe you operate under a single-desk selling system. Is that correct?

[Pierre Lemieux]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

Our concern right now is the principle. We're dealing with two principles in terms of the federal government's action on the Wheat Board that I think really should be of concern to you. It relates to the agricultural policy framework that we're discussing: will orderly marketing be allowed, and is it a business risk management tool? The government has really moved in the direction that individual choice is what matters, not collective choice. That's what's happened under the government's strategy in the Canadian Wheat Board. I wonder if you might comment on that. What we're seeing there is that whereas producers have always had the collective choice of marketing under the Canadian Wheat Board, now it's going to revert to individual choice. If one seller wants to market outside that system, it really brings down the whole system. That's a concern to us, and I would like your comments on that.

Secondly, to the UPA, Mr. Vigneault, I just want your further comments on this. You said there's an effort to move to diversification within the industry at the farm level, but other programs are jeopardizing that move to diversification. Are you meaning the CAIS program in terms of its all-farm, whole-farm approach, or are you meaning other programs?

Those are my two questions.

[The Chair, Conservative, James Bezan]

Mr. Vigneault.

[Maurice Vigneault]

I've won the lottery.

Since we have the time, I'm going to start by asking a question about a passage you quoted, Mr. Easter. You said that the rules of international trade are imposed.

Who imposes them? I thought that our states had to define the rules of international trade among themselves. I wonder whether it's they who impose these rules. In my opinion, agricultural producers around the world would like to have a concept of food sovereignty, and many people in society would be quite in favour of that. That would be preferable to the rules of international trade as we know them now.

If it isn't the state that decides this, it's money, but the state should be above money. Perhaps that utopian, but I dare hope that we've established government rules that put human values above the value of money. The states should decide to put in place a concept according to which money is a tool, and not an end. That's philosophical, but I still dare hope that. I have confidence in the future.

We aren't opposed to a concept that an individual should be supported in a business, but we're becoming aware that the CAIS program—and we now have examples—tends to lead businesses to divide.

For example, a beef producer, a grain producer, a pork producer or a maple syrup producer will divide his business if it is big enough. If it's a small business, he can't afford to do so, he's put at a disadvantage because of a program that works better when businesses are divided. When the business is big enough, you divide it. For example, you make a pork division, a beef division. In that way, you have the opportunity to access the CAIS program.

We're in a form of agriculture that has always been based on diversification. However, this program causes us some concern. The concept of supporting the individual is appropriate. The concept of supporting an entire business is appropriate as well. In fact, experience shows us that producers will increasingly divide their businesses. Some have already begun to do so.

I ask myself a lot of questions about the profile of Quebec agriculture in the future. That doesn't mean that you have to throw everything out. On the contrary, you have to take note of what is going on and try to improve things so that we can derive benefits from one type of agriculture, support human beings in production and not production units: pigs, cows and cattle—they're not the ones that have to have the subsidy, it's us— without that resulting in the division of the business, because that will alter our agricultural profile, but I doubt that will ultimately improve it.

Our agriculture is based on diversity. Here in Chaudière-Appalaches, there are virtually all types of production, virtually all climates, and our agriculture is very much based on that diversity. In my opinion, there is a risk that has to be assessed, and we have to ensure that it's possible to alter this program, so that it is based on human beings, without promoting the division of businesses. That analysis is aimed directly at the CAIS program.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Miller.