Evidence of meeting #11 for Agriculture and Agri-Food in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agriculture.
A recording is available from Parliament.
Senior Advisor, Agribusiness and Agrifood Sector, National Bank of Canada, Canadian Bankers Association
It is an issue that we are well aware of. Looking at Statistics Canada data and subtracting the value of quotas from the balance sheet of the milk industry, for example, it is quite clear that there would be a loss of a significant part of the net value. This would probably also lead to a reduction of incomes.
Our position is that, were this to be decided, it would be vital to prepare for the transition. There would have to be enough time for a smooth transition because, if it were to be implemented suddenly, it would obviously--and I am sure everyone here shares my position--severely impact the portfolio of farm loans to the milk industry.
Bloc
Claude Guimond Bloc Rimouski-Neigette—Témiscouata—Les Basques, QC
It does not relate only to the milk industry but also to the poultry industry.
Is that unanimous? Do you all share that view?
Vice-President and Director, Agricultural Services, Scotiabank, Canadian Bankers Association
Perhaps I can offer my thoughts here.
When we examine our policies at any given time relative to supply management we look at a number of things. What are the expected changes? How much will the WTO drive in changes to the supply management package? The commitment at this time is quite strong.
The other factor is that as and when changes are made, they have an introductory period and a phase-in process, whereby it is not this way one day and a totally other way the next. So we anticipate that we will be able to work incrementally with the changes that might be introduced. That is how we examine our policy at any given time.
We think about what would happen if such-and-such change were made and we had five years or seven years to implement it. If we think that would be catastrophic to the industry, it would be much more challenging for us with producers than if we said, “Just give us a little time.” Many of these operations would already have loans well in progress. Changes would not involve stopping the flow of income to the business. We would want to be able to evaluate what the cost structure changes would be and see if the margin of revenue over costs could be maintained.
Those are the assessments we do as we look at what the potential policy changes would be.
Bloc
Claude Guimond Bloc Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you. This means that we have to make sure that supply management is protected.
As I told you, I am a farmer and I have been involved in farm unions in Quebec for 15 years. Unfortunately, for a number of years, because of the crisis in agriculture, we have seen a high level of distress in Quebec, particularly in the farming community. There are more and more suicides and cases of psychological distress. Farm groups in Quebec, and even the general society, are taking stock of the situation and are wondering if the present model has not reached its limits. When I talk about the present model, I am referring to extreme globalization and free markets. More and more, we negotiate the price of a pint of milk as we would the price of a TV or a sofa and many people in Quebec are convinced that we are reaching the end of the line.
Faced with this situation, lots of people talk of a new principle of food sovereignty for Quebec. I understand that you are not the ones making policies but, still, you are a very important partner of the farming community. Therefore, what is your vision or your opinion about what is happening currently in the agriculture industry with this system of unfettered free markets, and what do you think of this new principle of food sovereignty that is more and more talked about?
Director, Market and Regulatory Developments, Canadian Bankers Association
The banking industry is a profit-making industry. We believe in free markets. We recognize, as some of the members have said, that agriculture is unique to some extent. There are many more government programs associated with it, and there are social issues associated with it. But generally we operate in a free market, and we think free markets tend to work well.
If the government and the Parliament of Canada were to decide that agriculture should be very different, it's really up to them, and we would have to operate within that kind of an environment.
Conservative
Conservative
Blake Richards Conservative Wild Rose, AB
Thank you, Mr. Chairman.
I appreciate all of you being here today as we start this study on the future of farming and young farmers. It's actually quite fitting that we have a panel of bankers here on our first day of study to talk about this issue. As much as we wish it could be otherwise, the relationship that farmers have with bankers is certainly a very important relationship for the farmers.
Although I think the banks need to do more work from their end in terms of the relationship with the farmers, I would commend you on some of the efforts you're making. Some of the things I've heard today have been in terms of trying to make sure the relationship with farmers is a good and strong one. I often hear farmers complain about the big bad bank, but on the other hand, they talk about Joe, at a local branch, who is very good to deal with and very understanding about farming and the business. It may be a small contradiction in some ways, but I appreciate the work you're doing to try to improve.
To begin with, in your presentation you specifically mentioned the Olds College school for bankers. Olds College is actually in my riding. It's in my home town as well. As it is one of the premier agricultural schools in all of Canada, I would say that anyone who receives an education there certainly receives a good education, one that will be valuable, and has spent time with some of our great future farmers. I commend you for that and for mentioning it.
The question I have is to all of you. Try to answer as briefly as you can, because we have a very limited amount of time. I guess it's a three-part question.
One of the things mentioned in your presentation, to quote you, is that “The key to the strong relationships we have with farmers is understanding their circumstances.” I'm very curious; all of you hold senior positions within your organization in terms of dealing with agricultural portfolios, and I'd like to know about your specific backgrounds. Do you have a background in farming? Did you grow up on a farm? Do you have a degree? What is your specific agricultural background?
Secondly, what is the one piece of advice, the best piece of advice, you would give to a young farmer? You deal with them when they come into the banks to get started in the industry. What would be the one best piece of advice you would offer to young farmers? Certainly the key to the future of family farms is helping our young farmers.
The third part to the questions is this. What one specific program do you have that's designed to help young farmers get started in the industry, whether they're taking over a family farm or looking to start their own farms?
I know it's a lot to try to answer. But very briefly, each one of you could answer, if you can.
Director, Agriculture Segment Business Banking, CIBC, Canadian Bankers Association
I personally have a background in farming. I have a business degree in agriculture. In my role, I try to get out and meet as many farmers and producers as possible on a regular basis. The people across our organization who work in agriculture certainly have similar backgrounds.
In terms of advice for young producers, I think planning is probably the biggest piece of the equation in terms of getting into the business. My colleagues have mentioned that today in terms of proactively building good business plans, planning ahead, and understanding the international landscape. I think planning is the key for young Canadian farmers today.
In terms of programs, as I mentioned earlier, we work with farmers across the country on the farm business-transition side or succession planning and through our sponsorships, such as the Outstanding Young Farmer program with the CIBC. We work with young farmers to help them build the confidence to succeed in the business.
National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association
Thanks for your question.
First of all, I worked on a farm extensively both after high school and throughout the post-secondary degree that I did in Alberta. I then began banking in Medicine Hat and later in Olds. I have spoken at your college, and I'm familiar with it.
With respect to advice to new entrants into agriculture, my suggestion would be that they need to be proactive and preemptive. They need to ensure that they have the means with which to address issues before they arise, as opposed to waiting for them to transpire and then trying to be reactive.
You'll have to forgive me, but I didn't hear the third part of your question.
Conservative
Blake Richards Conservative Wild Rose, AB
I was asking specifically about whether you have a program that looks at helping young farmers start in the industry.
National Manager, Agriculture, BMO Bank of Montreal, Canadian Bankers Association
I do know that we have representatives who speak at various institutions that teach aspiring farmers about agriculture. In addition to that, we participate in the CALA program, which, of course, is a program that's now well tailored to serving aspiring farmers. Last, we're extremely keen on facilitating succession within the agricultural space.
National Manager, Agriculture and Agribusiness, RBC Royal Bank of Canada, Canadian Bankers Association
I'll be quick, because we have a few things to go through.
I grew up on a beef cow-calf farm in southwestern Ontario, and came up through 4-H and Junior Farmers. I have a degree in agriculture economics. I've been an agriculture banker for 25 years, a graduate of the advanced agriculture leadership program, and past president of the Ontario Agri Business Association. So my blood is pretty green.
National Manager, Agriculture and Agribusiness, RBC Royal Bank of Canada, Canadian Bankers Association
No, not John Deere green.
National Manager, Agriculture and Agribusiness, RBC Royal Bank of Canada, Canadian Bankers Association
On the second question, my advice would be to treat your operation as a business. There are a lot of reasons as far as lifestyle is concerned to want to live in a farming environment, but first and foremost, treat it as a business.
Third, as far as the initiatives are concerned, we sponsor the agriculture speaking series. It allows us to bring very high-quality speakers to address groups, people who our producers wouldn't normally have access to. One speaker we feature quite often is Dr. David Kohl, who is probably one of the most renowned agriculture economists in North America. The speaking series would be what I would highlight as far as a program is concerned.
Senior Advisor, Agribusiness and Agrifood Sector, National Bank of Canada, Canadian Bankers Association
About the degrees I have obtained in France, I have a master's in animal production and a PhD in farm management and economics.
My advice to a young farmer, to answer the previous question, is to take the time required to set up a strong business plan.
Finally, at the National Bank we have a team specialized in farm economics to help young farmers prepare their plans for entering the industry or, in some cases, take over an existing farm. We have specific lines of services and products especially for that clientele.
Manager, Agriculture Credit Products, TD Canada Trust, Canadian Bankers Association
I spent part of my youth growing up on a farm, when I was in high school and university. I continue to get my hands dirty helping my dad out on his small farm in Grey County. I'm a University of Guelph graduate in agricultural business, and up until two years ago I was lending money directly to farmers as an account manager in the field. So I've had a lot of first-hand experience working with producers, both existing farmers and new farmers trying to get into the business.
My best piece of advice for them is to talk to lots of people and to get lots of different perspectives and to come up with a good plan and test it against a couple of different individuals. Obviously there are a lot of nuances out there now in the business: you have to know international markets; you have to know production; you have to know finance; and sometimes you have to know human resources. So it takes a lot.
As for what we're doing at TD to support young farmers, we're a title sponsor of the 4-H youth leadership conference every year during the Royal Agricultural Winter Fair as the primary sponsor of that fair. We also provide over $25,000 a year in scholarships to young students looking to get into business agriculture across the country.
Vice-President and Director, Agricultural Services, Scotiabank, Canadian Bankers Association
I am one of the westerners in the crowd. I was born and raised in Manitoba on a beef, cereal grain, and oilseed farm. I graduated from the University of Manitoba with a degree in agriculture economics and did some graduate work at the University of Guelph, so I could split my experience between one end of the country and the other.
My best piece of advice for the next-generation farmer is to think ahead and build a strong business plan. My reason for that is fairly clear: plans do not always come to fruition, but the people who plan are closer to their goals than people who don't. So I think you have to keep doing that.
The specific thing we are doing at Scotiabank for young farmers is that we have dedicated farm teams from the field level, whether in the local branch for the small business farmers, or commercial credit client relationship managers, or the credit people who adjudicate credit in face-to-face contacts with farmers, up to the policy-making level of the bank. At all of these levels, we have people involved who are trained and specialized in agriculture. We do that because we want to help the industry grow.
Conservative
The Chair Conservative Larry Miller
Thank you. There has been some good advice all around the table.
Mr. Valeriote.
Liberal
Frank Valeriote Liberal Guelph, ON
I have three specific questions to ask. Whoever feels most qualified to answer them can step up. If more than two want to answer, that's great.
One of the things you do in giving out loans is assess the risk. Obviously you're profit-oriented, and that's fair. In assessing that risk, I think you need to know, when a farmer might run into some kind of trouble, what kinds of programs are there for the government to assist. One of those programs is AgriStability.
We've had many farmers come before us to... I can't count the numbers. And this isn't a criticism of the government; this is an assessment of the program to decide whether or not it's working.
So the farmers talk about this olympic averaging, and how the protocols are not working. They say it's not being fair to them because they need to have two years where they're in the black and not the red, and they can't get those two years in many cases.
I'm wondering to what degree might you recommend--if you could, if you look at this--that we redesign or tweak the business risk management so that it helps the farmers and lessens that risk so you might be more willing to have them qualify for loans. That's the first question.
The second question is about transition, about succession planning. We all know how much is going from one generation to the next. I used to be a succession planning lawyer, and I did a lot of work helping plan the transition of farms from one generation to the other. I would assume that you've been engaged with the government to some degree in helping them redesign some tax rules and laws that might address the issue that Randy was talking about. I'm just wondering if you have some advice for us on how some of the tax laws might be adjusted to enable that transition to occur when it might not otherwise occur.
My third question is on loans, not just to farmers but to other areas of the industry that ultimately help the farmers. That involves loans to companies that turn biomaterials they get from processing plants into energy, that kind of thing. As you know, we're becoming far more innovative now in pursuing the use of those materials to create energy.
I'm wondering to what degree the banking industry is prepared to participate in that as a partner. Government is a willing partner, with the announcement of $25 million and $40 million in the recent budget, and we applaud that. But how willing is the banking industry to participate with that industry in financing those projects?
Those are my three specific questions.
Director, Market and Regulatory Developments, Canadian Bankers Association
Mr. Chairman, let me make a couple of opening observations.
A number of those questions are very bank-specific. They need to be answered by an individual bank as opposed to the industry.
On the question of assessing risk in AgriStability, every bank will look at that program and decide how that adds to or contributes to risk mitigation.
In terms of what we might suggest for redesigning that program, I don't know if this is a good venue, or if offhand we can tell you what needs to be done or what we would suggest, at this point, to do to that program. But I will let you know that we do meet with officials on a regular basis, and these are the kinds of things we do discuss.
So it is important, and it is something that we will be taking forward, as we do with a number of other things. I think that is a better venue...that we can prepare to have those discussions.
We didn't come here thinking that we were going to give that kind of a suggestion to you.
Director, Market and Regulatory Developments, Canadian Bankers Association
Once we have our discussions, we can share whatever thoughts we have. That wouldn't be a problem.
But on the others, I think it's very much what an individual bank does in assessing the role of the product, the role of the program when it looks at risk, what its own succession planning programs are, and how individual banks deal with those who are in the biofuels and biomaterials industry.
I don't know if any one member can answer all three questions, or if anyone can answer one of them...
