Agriculture Committee on April 21st, 2010

[The Chair, Conservative, Larry Miller]

Does anybody have a last question?

You'll be the last questioner.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

I just want to follow up a little bit, because there's something I'm just trying to understand. In Ontario, where I live--I appreciate the fact that Ms. Paddock came from that part of this great country--it becomes a bit of mixed messaging. We sit in the committee and we hear that there are crises all over, in different sectors. We know...and this is not a statement of not knowing that; in fact there are, and there have been, and there will continue to be. It seems we can't get agriculture to fire on all eight cylinders at once. That's not new; it just seems to be a part of it.

In your portfolio of lending, is there a balance between supply management and non-supply management?

I wanted to ask Ms. Paddock first.

[Gwen Paddock]

Sure.

Actually, we don't purposely balance it, but just by virtue of the diversity of agriculture across Canada, it gets balanced. In B.C. there'll be a fair amount of supply managed. Through the west it's more grains and oilseed crops. Into Ontario it's very diverse, even into greenhouses.

So the portfolio is quite balanced and not heavily weighted towards supply management or non-supply management. Again, it's just by virtue of the different types of agriculture we have across the country.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Does anyone else have a comment regarding their area or their bank?

Jon.

[Jon Curran]

I can comment.

Certainly, to Gwen's point, there is natural diversification in the industry, and we inherently get that same diversification in our portfolio. There are no specific mandates or policies that say we will have to have a certain percentage in a certain sector or not. So I would say we are well diversified, and we have exposure to all types of businesses, as Gwen mentioned--supply managed, greenhouses, grains and oilseeds, beef, and hogs.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

When you have beginning farmers coming in and they're talking about a business plan and the background, I understand the discussions that go on with that. Is there a particular focus on competitiveness? That's really what we're talking about. We just finished a report on competitiveness. This is actually the follow-up to that to help us understand the beginning farmers and to make sure we have an industry that will be competitive and viable not just for the future but for the short term, medium term, and long term.

With that, do you have farmers who come in who are focused on concerns of competitiveness in the regulatory aspect of government policy? We can't compete, because the regulations we have in Canada are different from those we have with our major competing consumers. I have a motion that was just passed on Friday that deals with that. It seemed to be a big issue, and certainly had the support of all the industry across the country on that.

Or is there an issue that talks about, “Well, we don't get enough dollars in the mailbox to be viable”? Or is there a discussion that agriculture is about the innovation that we see, the light at the tunnel--it's not the train coming, by way--and that we have an opportunity in agriculture.

I just see a growth in it. I see a growth because...and I don't know, but we used to grow crops for food. It's interesting; now we grow it for energy. We grow it for industry. You know, I've met with farmers that I've sat down with at round tables that have never mentioned about dollars in the mailbox; very exciting.

Do you hear any of that in your discussion, or is there a priority with the young farmers, when they're talking to you, about those any of those issues?

[Jon Curran]

Maybe I'll just interject, because I've had lots of those conversations recently in the field.

When the new young farmer comes in to talk to us, they're very optimistic. They're not coming in to talk to their banker about regulatory issues or dollars in the mailbox, as you've said. They're coming in saying, “I have a plan. I have a dream. I want to be in this business.” It's about team work. It's about working together to say, “How can we make this come to fruition?” We sit there as bankers to act as advisers, as we've mentioned before. We're one of many advisers at the table when they come to us. But our goal is ultimately to try to help them realize that dream, where it makes sense. Provided they provide us with a viable business plan, we'll support them accordingly.

[The Chair, Conservative, Larry Miller]

Mr. Hoback, you had one quick question.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes.

To tie into your advisory role, when you're doing your forecast, where are you pegging your interest rates at, and where are you pegging your dollar at?

[Jon Curran]

Do we have the crystal ball?

At the end of the day, there are lots of economists out there. We're bankers. We will seek third-party experts, at the end of the day, and their forecast.

[Randy Hoback, Conservative, Prince Albert, SK]

So what's that number?

[Jon Curran]

At the end of the day, it continues to change. I think all the economists would generally agree right now that we're looking at a par dollar in the short term. In the long term, I'm not entirely sure.

As far as interest rates go, the economists are saying we're going to see probably another 100 to 150 basis point increase to the end of this year, and then an additional 100 to maybe 200 next year. So you want to take that into account, using more of a longer-term interest rate when you're assessing those business plans. Typically we'll add a couple of percent just to sensitize it to say, “Okay, what if?” We'll run a what-if scenario and ask, if it did get this high, what would be the impact?

[Randy Hoback, Conservative, Prince Albert, SK]

As we come out of the global economic situation and into recovery, I know there has been a risk premium put on a lot of these loans. Would that risk premium start to decline also?

[Jon Curran]

At the end of the day, the market will dictate where pricing should be. There's a lot of competition in the financing industry, not just between the banks that are sitting here at the table but also from Farm Credit, the credit unions, and other suppliers of credit to the industry. The market will drive the price; it will dictate what price needs to be charged.

For the most part, while costs have increased, there hasn't been that much of a risk premium put on because of the economic downturn, specifically in agriculture.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Hoback.

Lady and gentlemen, thank you very much for being here today, at our first official meeting on the future of agriculture. We heard a lot of good information and I thank all of you for taking the time to be here. I'm sure we'll see you back here in the future.

Thanks again.

[Marion Wrobel]

Thank you very much, Mr. Chair.

[The Chair, Conservative, Larry Miller]

We have some committee business to deal with.

Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Mr. Chair.

As many of you know, the big thing that has happened in the last week is the volcanic eruptions in Iceland. Many of you might have been to Iceland. Iceland doesn't have a large population. There's only a couple of hundred thousand people, but they have their own small agricultural industry and it's very important and vital because of where they're situated. They have mostly livestock--sheep and cattle. It's not large, but it's important to them.

What has happened there is that the ash has pretty well poisoned the forage that they're using outside, and their land is probably not going to be suitable for at least six months to a year.

Does everybody have a copy of my motion? I'll read it: that due to the eruptions of volcanic ash in Iceland, livestock farmers in the surrounding area have had their feedstuffs contaminated and new forage may not be safe for months or years. The committee recommends that the Minister of Agriculture and Agri-Food approach the Minister of Agriculture for Iceland to see if Canadian forage assistance could help their farmers in this troubled time.

This motion was put together today because of the serious situation, and as we're probably not meeting this Monday, I'm asking to get unanimous consent on this as presented.

[The Chair, Conservative, Larry Miller]

Okay.

As Mr. Eyking said, because there isn't 48 hours' notice, we do need unanimous consent.

Do we have that?

[Some hon. members]

Agreed.

[The Chair, Conservative, Larry Miller]

I think it's a pretty self-explanatory motion, but is there any discussion on it?

Seeing none, I will call the vote on the motion.

(Motion agreed to [See Minutes of Proceedings])

Pierre.

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

Thanks, Chair.

Given that we're on the subject of committee business, at the last meeting we had passed a motion regarding state enterprises. That was put forward by Mr. Atamanenko. It passed, and it was asked that it be reported to the House. So it will be reported to the House.

You were very quick with the gavel, though, because the meeting ended before I had a chance to pursue that we would like to table a supplementary opinion to that.

[The Chair, Conservative, Larry Miller]

I think we had...or at the time, I remember, Mr. Easter agreed to that, so...

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

Oh, did we?

[The Chair, Conservative, Larry Miller]

Yes.