Agriculture Committee on May 26th, 2009

[The Chair, Conservative, Larry Miller]

I call our meeting to order.

The first part of our meeting today is to deal with the orders of the day, in particular Bill C-29. We do have some witnesses here to answer questions. There is no presentation, I understand, but certainly they are here to answer any questions the committee may have.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

On a point of order, Mr. Chair, I've been led to believe that the motion that was put at the last meeting and that delayed this session for about a week was to be withdrawn. Is that correct?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's right, Chair. That motion is not on the table.

Can I make an opening comment about this legislation?

[The Chair, Conservative, Larry Miller]

Certainly.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

First of all, let me just say that I'm very glad that we're moving ahead with doing clause-by-clause analysis of this very important legislation. It will certainly be of benefit to our farmers.

As we know, the key initiatives are going to be new loan guarantee limits of up to $500,000, which will double the current loan limit of $250,000.

New farmers will be eligible for loans under this new legislation. They were not eligible before, so this will make a big difference. As you know, farmers are very concerned about the future of farming and about getting youth involved in farming, but there is high expense involved. This act will make it far easier.

Of course, agricultural co-operatives are very active across the country. This legislation will improve and increase access to credit for co-operatives. That's definitely a step forward for our agricultural community.

So I just wanted to underline, Chair, that this is important legislation. We've been working together, I and my colleagues in the other parties, and I'm fairly confident that we'll get this through very quickly.

I want to state that our goal as the government is to have this not only through the House but also through the Senate before the government rises for the summer. We would like farmers to have the opportunity with regard to these new measures before the summer. There's no need to make them wait until after the summer.

I'm certain that this will proceed very well, and I thank my colleagues in advance.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Is there any further discussion on the bill?

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Yes, I do have some questions on the bill, Mr. Chair, in a moment. Initially, though, I would like to point out that on this bill we had offered in the House that the bill go through all three stages in the House. One party decided to send it to committee first. That's fine. We understand that. But it's certainly our objective, as the official opposition, to get the bill through the House of Commons through all stages, and ensure that we get the cooperation of the Senate to get it through all stages there, so that the moneys can be made available to co-operatives, to farmers, and in particular to young farmers as soon as it can be implemented after passage. Hopefully that will be early summer.

To the witnesses, how long will it take for the bill to become operational after it passes the House of Commons and gains royal assent? I don't think that should be a cumbersome issue, because it already is operating. This is really new moneys under other areas.

Do you have any responses there?

[Greg Meredith, Assistant Deputy Minister, Farm Financial Programs Branch, Department of Agriculture and Agri-Food]

Thank you, Mr. Easter.

The implementation of the act after royal assent doesn't require any other regulatory changes, so it could be available virtually immediately.

[Wayne Easter, Liberal, Malpeque, PE]

Okay.

As the parliamentary secretary said--I think this is somewhat misunderstood--the $1 billion over five years in the bill would have the 95% guarantee. I think within urban Canada there is probably the impression that $1 billion is going out there to the farm community. We in fact had that discussion in Prince Edward Island over a beef plant issue. It was felt in Prince Edward Island that the government was giving a grant, which we now find is a loan.

So on the staging of the $1 billion, number one, it is a bank guarantee, correct?

Two, it's $1 billion over five years. Can you explain what in fact that means? Is $1 billion immediately available, on day one, to be lent out? Is the period of time just for five years? What are the parameters?

[Greg Meredith]

The billion dollars is really an estimate of the potential take-up by new farmers, because of the expanded eligibility of the act, and additional take-up by co-operatives. So the billion is really a forecast of the draw on FIMCLA funds that farmers and co-operatives would make.

[Wayne Easter, Liberal, Malpeque, PE]

One of the areas you've talked about in your preliminary survey—I don't believe I have it with me—is that there's not a lot of knowledge that the former FIMCLA was available to the farm community, and there seems to have been a reluctance on the part of the banks sometimes to push this point.

Is the Government of Canada anticipating doing some advertising that this is available for their use? Does that money come out of other funds and not the funds that are made available to FIMCLA?

[Greg Meredith]

Thank you. It's a good question in terms of awareness.

You're quite right. The feedback we got in our consultations on changes to FIMCLA led us to understand that it wasn't as broadly known, especially among young farmers, as it might have been. So you're absolutely right. We will be doing some advertising this summer, and there will be promotional material available through banks and other venues. That money is provisioned for the administration of the program. It doesn't come out of the loan funds available to farmers.

[Wayne Easter, Liberal, Malpeque, PE]

One thing we've certainly stated in the House about the government's record since they came to office is that they've been very good at delivering farm debt but not too good at delivering some of the other commitments they've made, such as the cost-of-production program, the farm families options program, and so on.

Do you have the current debt levels for the farm community?

[Greg Meredith]

I don't, Mr. Easter, but we could get them for you and submit them.

[Wayne Easter, Liberal, Malpeque, PE]

If you could, we'd like to see if they match ours. We believe the debt to be in the range of $55 billion. This would probably increase it by another billion. There's no question that the availability of credit is important.

What will be the criteria for young farmers utilizing this money? Is that established by you folks? Is it established by the chartered banks? Is this money going to be available through the credit unions as well or only through the chartered banks? Could you tell us who in the lending community can utilize this 95% guarantee? And what are the criteria, especially for young farmers coming in? I think all of us at this committee, in fact, have had calls from young farmers who are extremely interested in the program and have questions about how it would work. Could you lay that out for us?

[Greg Meredith]

Thank you. That's a good opportunity, in fact, to explain how the program works.

It is delivered through financial institutions, both banks and credit unions. The criteria for young or beginning farmers are the same in terms of loan criteria. It's just that for a young farmer, you get up to 90% rather than the 80% that's available to an established farmer.

If you have not been in the business longer than six years, you're still considered a beginning farmer, because that's the kind of cycle, the business cycle, it takes to get established. A farmer who's been in the business for up to six years would still be considered a beginning farmer. Someone who is not yet in the business but intends to enter the business can demonstrate that intention to the financial institution in a number of ways. For example, people can come with a business plan or a strategy they have put in place and some concrete targets for the acquisition of land or equipment on the land. Other than that, the eligibility requirements would be the same as for a normal borrower.

[Wayne Easter, Liberal, Malpeque, PE]

Also in terms of, say, the lending authority in Prince Edward Island or other provincial lending authorities like Agriculture....what do they call it in Alberta? Treasury Board, or whatever it is. Can they use these guarantees as well, and is the money just for capital assets: land, equipment, technology, buildings, or can it be used for operating expenses?

[Greg Meredith]

In answer to the first part of your question, the Alberta treasury or the P.E.I. authority would be eligible to apply and under the proposed changes in this act the minister would have the ability, in consultation with the finance minister and through Governor in Council, to appoint new lenders and make them eligible for lending.

I'm going to ask my colleague to answer the second part of your question. I'm not quite sure.

Is it just operating expenses, Jody?

[Jody Aylard, Director General, Finance and Renewal Programs Directorate, Department of Agriculture and Agri-Food]

It's not operating expenses. It is capital, land, equipment, and also shares in a company for succession from one family generation to another.

[Wayne Easter, Liberal, Malpeque, PE]

The lending then has to be on...are shares considered a capital asset?

[Greg Meredith]

For example, the purchase of shares for an intergenerational transfer would be an eligible item, yes, and any other sort of fixed assets or repairs to machinery and that kind of thing would be eligible.

[Wayne Easter, Liberal, Malpeque, PE]

I'll pass for the moment, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Easter.

Mr. Bellavance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

This should all have been done beforehand, more than a week ago. Unfortunately, when we should have been doing the clause-by-clause study before the week's break, people from the government decided to start conspiring against the Canadian Wheat Board, so there was a delay.

So, in a way, it makes me laugh to hear the parliamentary secretary say how important this is. We could have done this study well before now, but we will finally be able to do it today. I have some questions from the Fédération des caisses populaires Desjardins, which wrote to Minister Ritz. Perhaps you will not be able to answer on the spot, but I would appreciate you doing the necessary research.

The federation asks if the maximum available funding could go up to $5 million for farmers and $10 million for cooperatives. Perhaps the changes will have to be made in the regulations.

They ask if it is possible to set a maximum amount for the registration fees as the Financière agricole du Québec does, that is, $5,000 for an established business and $200 for a business just starting out. Is it possible to increase the maximum loan period to 15 years for property, including quotas, and to 25 years for real estate? Those are some of the questions from the Fédération des caisses populaires Desjardins, which also said that it was in favour of the spirit of the bill.

Are you able to answer them?

[Jody Aylard]

I can certainly answer some of them.

Currently the loan limits are in line with the Canada Small Business Financing Act, and they've been increased to match those same loan limits.

Increasing the loan limits, as you mentioned, can be done through regulation, so that can be something that can be looked at down the road. Under the act, under their current limits, the average loan has been quite low, around $35,000, so we aren't anywhere near reaching even the current maximum. So we would look at how the program is operating under the new loan limits.

Your second question was in relation to registration fees. They are set into regulation.

Éric, can I confirm that?

Currently they are set at 85% of the loan, so we can get back to you on that particular one.

The loan period is currently set out in the act in terms of the 10-year timeline for loans.