Agriculture Committee on April 26th, 2010

[The Chair, Conservative, Larry Miller]

I'd like to welcome everyone here to the first meeting of our cross-country tour looking into the future of agriculture and particularly how we can encourage and keep young people in agriculture.

Before we go to our witnesses, I'd like to thank MP Ron Cannan for having us.

It's a beautiful town here, Ron, and we're very happy to be in Kelowna.

Thanks again to our witnesses for being here today. We really appreciate your taking the time out of your busy schedules. I'm a farmer myself, so I know what it's like, especially on a nice day like this, to leave what you're doing, but I think you'll agree with me that this is a very important study. We appreciate it.

We'd like you to give a presentation for five to seven minutes, if you could. I'm not going to cut you off if you're a little over that. The more time we have for questions--and I'm sure there will be lots of them--the better.

With no further ado, I'm going to go with ladies first and ask for Ms. Van Roechoudt to go ahead. Thank you very much.

[Madeleine Van Roechoudt, As an Individual]

Thank you for having me here today. My name is Madeleine Van Roechoudt. I'm a third-generation apple grower from Winfield, which is half an hour north of here. I completed my degree in agriculture at the University of British Columbia, and am about to start an online MBA through Athabasca University, next month.

In the interests of time, I have narrowed challenges in my sector to three.

Number one is the high cost of land. Here in the Okanagan, land goes for $80,000 to $100,000 an acre.

Number two is low returns to growers. When you're paying a mortgage for really expensive land and you're not making much money, that's a pretty challenging life.

The third challenge is an inability to brand produce. Produce doesn't come in the store with a package that explains its virtues or its origin. If you read next to the price, it might say “Product of B.C.”, but so often when you actually look in the bin--with apples, anyway--they're Washington state apples.

Even if a consumer was wanting to buy local, they'd really have to look. With the new stickers that go on apples, with the bar code for traceability and ease for cashiers, the little logo that says where it's from is so small that I think you'd have to get your magnifying glass out. How can you promote your product when the consumer can't even identify what it is?

With these challenges, we don't have a competitive advantage. We were making money growing premium products, but as I've mentioned, we are obviously not a low-cost producer. So how are we to compete with the rest of the world in a global marketplace?

With those things in mind, the question that comes to my mind is this: is it important for Canadians for us to be producing Canadian food? If it's not, then we'll just let the global market run its course, and those without a competitive advantage will die out. If it is important, then what programs do we have to help farmers?

Existing programs that are helpful are the replant and removal programs. These help farmers pull out old orchards and replant with higher densities and newer varieties. That helps with the rejuvenation of the orchards here.

AgriStability is helpful, but I think it's designed mostly for markets where prices are fluctuating up and down. When you're having diminishing returns year after year, it's not going to help in the long term if it's not solving your problem of decreasing returns.

Research is essential to stay leaders in our industry, to have new varieties, and to have solutions against pests and diseases.

As for programs that we don't have that we need, there are no programs for young farmers here in British Columbia. I wasn't aware of any, so I did a little research. I didn't find any.

I found one that helps guarantee loans up to $500,000. Well, $500,000 in the Okanagan doesn't buy very much. At $100,000 an acre, we're looking at maybe five acres. That's not including any machinery or buildings.

We need a program that's going to match young farmers to landowners who want to lease their land long term. There are people in the Okanagan who move here--they're wealthy, they have money--and they want the rural lifestyle but don't want to farm. They have the land. How can we match young farmers to these people who have the land but who don't want to farm? If they're willing to agree to long-term leases, then that gives the farmer the ability to plant something like tree fruits that take several years to be established and get going.

Another program we need is for marketing and branding. We need a way to exclaim the virtues of our products to consumers, to have “buy local” campaigns to know that farms are bringing benefits such as environmental stewards and carbon sinks and green spaces. That's on top of the jobs that farms are providing into the local economy. So we need these buy local campaigns to identify those kinds of attributes, but then also to be able to identify local products in grocery stores. Without that, how are you to buy something local even if you wanted to?

Those are my main points.

Sorry if I rushed; I was trying to stay within my time constraint.

[The Chair, Conservative, Larry Miller]

That was very good. I'm sure there will be questions for you.

We'll now move to Mr. Dobernigg.

You just arrived, so would you like a little bit more time?

[David Dobernigg, As an Individual]

Either/or is fine.

[The Chair, Conservative, Larry Miller]

Well, you're next on the list, so you have five to seven minutes. There will be lots of time for questions.

Welcome here. Thanks for coming today.

[David Dobernigg]

Thank you very much.

Thank you for the opportunity to speak to your committee about agriculture and my experience being a young farmer in Canada.

I've been growing fruit on our family farm for the past 10 years. I'm a third generation of Dobernigg to farm on that property. I served on the executive of the Fruit Growers' Association 2004 to 2007--until my second daughter was born and I had time constraints. And now I'm up to my third daughter.

Our farm right now is in transition, both in succession and renewal. Our farm succession plan has been completed and we're slowly working through the legal aspects of land transfer.

We have recently embarked on revitalizing our farm through the removal of larger trees and unprofitable varieties while replanting high-density plantings and more profitable varieties. I'm hopeful the federal removal program will continue past its end date of March, as it sounds like new money would not be needed to keep this program going; at the current rate, we will not be able to spend all of the money in that program. A replant program would also be useful to help continually revitalize the industry.

I once heard agriculture defined as the use of land, water, capital, and labour to produce food. I'd like to address each of those points briefly.

Agricultural land in the Okanagan Valley is prohibitively high-cost for people who want to become a bona fide hands-in-the-dirt farmer. In B.C. we have a policy that is pretty good at protecting agricultural land. However, it tends to be that those who can afford to buy agricultural land do, but most of these are more interested in the rural lifestyle than agriculture. In my neighbourhood, productive agriculture is being replaced by large houses in the middle of 10-acre fields, with a few horses or cows that are largely kept to maintain tax breaks.

All of the young farmers I know come from farm families, and a large percentage of those from my dad's generation came from farm backgrounds as well. There are very few youths or others entering agriculture due to low returns and high land prices. This trend does not bode well for our ability to grow our own food once the current generation of farmers, many into their senior years, retire.

Water is vital to the production of food, and the Okanagan is experiencing increased pressure on water availability. Increased development and decreased snowfall in the recent years have put stress on our water resource. Research at PARC, the Pacific Agri-Food Research Centre, has predicted that agriculture will need more water in the future to adapt to climate change. B.C. has a policy of protecting our agricultural land. However, there is no protection for water for agriculture, which leaves our farms very vulnerable in drought years, more of which are expected than in recent years.

Money or capital has always been a challenge for agriculture, and margins are tight across almost all commodities. Fruit production in the Okanagan is in its second straight year of harsh market prices, well below break-even. There are a few reasons for this, and they include the strong Canadian dollar, massive production in Washington state, and the economic downturn. My own farm suffered a massive hailstorm, wiping out the crop this past year, with 97% damage, so to some degree we avoided the market conditions of last year.

Labour is the issue that keeps me up the most at night. It's difficult to find people to harvest a delicate perishable food item. SAWP has worked well, if you have the necessary housing and facilities in place. However, if you do not have the ability to bring workers in from a foreign country, you have to put in a pretty good effort to find reliable workers for a four- to six-week harvest and a few weeks of summer work. By harvest time for apples, most students who would be a good fit are back at school and unable to participate in the harvest.

Overall, it feels like there are few supports for young farmers in my industry. Education for tree fruit production is non-existent. You either learn from your parents or you learn from being a farm labourer and take the next step of leasing or purchasing land.

Several years ago I took a course to improve my horticultural knowledge. Despite the Okanagan's history and emphasis on tree fruit production, there is nowhere to go to learn about fruit production, so I took agricultural marketing and agricultural finance courses through Olds College in Alberta. The focus was on field crops and cattle. There was nothing on horticulture.

Almost a decade ago, I participated in an agricultural exchange program. It was striking to see the significantly different approach to agriculture in Europe. In Sweden, an agricultural degree was needed to purchase the land. In Germany, in the Bodensee area where I was, there was a seven-year program for fruit production, which was similar to trade school, with class time and work hours needed. In Italy, their land prices are double what we have, so their farms are old, with their families owning their land for generations. With that value in the land and in farming, farmers have a status similar to that of doctors, lawyers, or the professional class.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Machial. Go ahead, please.

[David Machial, As an Individual]

Good morning. Thank you for having me.

My name is David Machial. I'm a 27-year-old tree fruit farmer in Oliver, B.C., which is an hour and a half south of here. The orchard I run is 11 acres in size. I have nine acres of apples that are mixed with older varieties, such as Red Delicious and Golden Delicious, and newer varieties, such as Royal Gala and Fuji. I also have an acre and a half of cherries and half an acre of nectarines and apricots.

This is going to be my fourth year of farming, but having been born and raised on a farm, I've been working in the industry for 26 years. They give you the first year off.

[Voices]

Oh, oh!

[David Machial]

I'm fortunate in the sense that my parents own the farm that I'm running. When I graduated from university about four years ago, they came to me and said, “Hey, Dave, we're getting tired. We don't want to do this. We're looking at retiring, and we're considering selling the farm. So if you've ever considered it, try it now, before the option isn't there.”

Not wanting to pass up on that opportunity and have regrets down the road, I decided to come home, and I started farming.

As I said, I'm fortunate. People who aren't in my position--I don't know how they can get into this industry. The cost of land in the Okanagan is around $100,000 an acre, which would put my orchard at $1 million. I don't have $1 million. If I did, I probably wouldn't be farming. No one is going to lend that kind of money to someone my age in an industry that's known for its unpredictability and uncertainty, and has a reputation for poor returns.

In addition to working on my farm, I also work at a private packing house called Fairview Orchards. It is owned and operated by my dad and my uncle. You need to have something else on the side to bring in a steady cashflow. The way this business works is that all your costs are up front--your labour, your sprays, your chemicals--and you don't see your return until a year later. If you don't have something else to bring in reliable money, you're either going to have to borrow money or go under.

With regard to what I think the biggest concern is facing the young farmer, it's the same concern facing all farmers: am I going to make any money? Right now in our industry, the average return to growers is 13¢ a pound for apples, and your cost of production is around 22¢ per pound. That's not sustainable.

We're not going to attract new people to this industry if things don't change. People who want to get into this industry can't afford to do it because the return on investment isn't there. We're not even going to be able retain the farmers we currently have and we'll see a decline in agriculture in this country. If things don't change, it's inevitable.

To me, that's the biggest issue: how do we make farming profitable? Everything else is irrelevant. You can have all these wonderful programs and wonderful support, but if farming isn't profitable, it's not sustainable.

In addition to that, I do a few frustrations. First of all, our current AgriStability and AgriInvest programs are not a solution. AgriInvest is nice. It provides a little money, but it's not enough. And the way AgriStability is set up, if you have two or three bad years in a row, that's it, you're done. It's not a helpful program.

I've gone to a lot of different conferences and meetings where I've heard politicians talk about free trade. They want to push toward the idea of free trade. That's great. I took economics in university, so I understand the principles and the ideals behind it, but I also know that if you want to have free trade, you need to have fair trade. We don't have that.

Washington state, which is right next door, is one of the largest apple producers in the world. When they have a big crop, they dump the fruit on our market. When that happens, this business is about minimizing costs and not making profits, which is not sustainable. There are dispute mechanisms in place, but they're too slow and too costly. Whenever there's a resolution, I am either in debt or out of business. We need something better.

The other issue I have with fair trade is on regulations. I do not have access to the same types of sprays and chemicals that my competitors do south of the border. The chemicals that I do have access to are more expensive, because it's more expensive for chemical companies to do business in this country.

I'm not against regulation. I think it's important that we have high safety standards, high environmental standards, and high labour standards, but we have to recognize that a cost is associated with that. I don't think it's fair that farmers should solely bear the cost. If Canadians value these things--and I think they should--then they should be willing to share in the costs by providing some aid to farmers to offset the disadvantages.

If that's not going to happen--let's face it, times are tight, and the money isn't always there--then at the very least we shouldn't allow fruit or food to come into this country if isn't grown to the same standards as the food grown in this country. It doesn't make sense to me.

If you take anything away from this, please, if we're going down the free trade road, which I think we are, then let's try to make it fair. Let's have better mechanisms for resolving trade violations and let's trade a fair playing field by not having our regulations, which we need, penalizing our farmers. It's not right.

I look forward to your questions later on. Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much, David.

Your comment about farming with your parents rings loud and clear with me. I started in the late seventies, and when interest rates of 22% and 23% came in the early eighties I would never have made it if I hadn't been farming with my dad, so I know what you're saying.

We'll turn it over to the B.C. Cattlemen's Association.

Mr. Fossen, you have five to seven minutes, please. Thank you.

[Doug Fossen, President, Kettle River Stockmen's Association]

Hello. Thank you for having us here.

It rings true; a lot of what these guys were just saying all comes through to the cattlemen as well.

My name is Doug Fossen. I am 32 years old. I'm married. I have three girls who are nine, seven, and five. I'm a rancher from Rock Creek, B.C., which is about an hour and a half straight south of here on the U.S. border.

I graduated from high school in 1995. I travelled across Canada, and in the fall of 1995 I got my private pilot's licence. I then went to Olds College and graduated with a diploma in agricultural business with a major in finance.

During college I worked calving out cows, and then spent the summer in Anahim Lake, B.C., cowboying. The only thing I've ever wanted to be is a rancher. I train my own horses and dogs, and use our airplane to find stray cows. I would call myself a professional rancher, and I am very good at what I do.

My wife, Erika, was raised on a mixed grain and cattle farm in northern Alberta, near Grande Prairie. She took the same college program as I did and is 100% into agriculture. She works on the ranch beside me and raises our girls.

My dad bought our ranch in 1976. We run 250 cows and do custom vegetation management. I farm with my older brother, who is 45, and my dad, who is trying to retire at the age of 67.

Since my wife and I were married in 1999, our family income has steadily declined. Last year our net family income was $14,284.98. I worked roughly 60 hours per week. The only reason my family can continue to do this is with family support from both sets of parents and that we live on our ranch. Every dime we've ever made goes right back into our farm. Our child tax benefit and programs like the family farm options program also help keep us in groceries. Our share in our ranch and our equity is worth approximately $500,000, and we do not owe a lot of money personally. We are a classic example of being land rich and cash poor.

This spring my wife and I looked at buying 100 cow-calf pairs from a retiring rancher to try to bring more cashflow into our business. Even with a 30% cash down payment from my wife's parents, Farm Credit Canada declined our application. Our company, Fossen Air Ltd., was started by my dad in 1968 as a commercial crop-dusting business. The company is owned by my mom and dad and brother and me. Last year our company grossed $250,000, with a net loss from operations of $78,000. With this loss, we have to service a $500,000 mortgage.

In the current situation there is no money. The only way for us not to go broke or quit agriculture is for us to start selling land. Our family has had off-farm jobs. We have run a bed and breakfast and sold produce off the farm. Our contract work makes up half our gross income. We have adapted new technologies to make us more efficient, and have cut costs and increased our cow numbers to make our ranch work. It seems like every time I turn around I have to defend agriculture. A lot of our stress comes from defending ourselves against people who seem to want cattle ranches to leave B.C.

In the news, they make a big deal about when a doctor gives up his practice because of being overworked. If I finally have to give up my ranch because financially I cannot do it any more, is anyone going to care? I love ranching, and it is the only way I want to raise my children. If prices do not double or more in the next year or two, I will be getting out. And I am the youngest person involved in the Cattlemen's in B.C.

I'll go over some points that make ranching even more difficult. We use a lot of crown land for our grazing in the summer, government land. Tree encroachment on crown land with a lack of logging now because the forest industry is so depressed and too much fire suppression make grasslands the most endangered ecosystem in B.C.

Farm help cannot get their driver's licence until they are 18 years old. Last year I had a young man working for me. I had to drive him home eight kilometres every day because he couldn't get his driver's licence. He can run heavy equipment, yet he can't drive home.

There's a lack of financing available just because of a lack of income. I know that there are programs like Farm Credit. There are government-backed loans, but we have a lack of income, and they don't really apply to us.

There's no money to retire my parents.

There is the threat of a park being created in southern B.C. If a park were created, we would lose more infrastructure because of our lack of cattle. It would shut down a few key ranches, and that could be the end of our stockyards in OK Falls and things like that.

There are health risks from working long hours with no pay and high stress.

Most government programs seem to spend a lot of the agriculture money on administration. A few of the government programs that helped our family ranch get through this BSE program were CAIS, AgriStability, and the family farm options program, which really helped us out. The environmental farm plan program helped us build some fencing and was a good program, and so was the heifer set-aside program. Those all have been key in keeping us around for the last few years. But as these guys mentioned, a lot of them are based on us eventually having a good year to bring profits up. When we keep going down, it's tough.

That's it. Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Fossen.

Mr. Lalli isn't here, but we'll certainly allow him to join us when he arrives.

We'll start off our questioning with the Liberal Party, and it will be Mr. Mark Eyking.

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

Thank you, Mr. Chair.

Thank you, guests, for coming here.

I was here four or five years ago. We did a study on agriculture. And we have some of the same issues we had four or five years ago. I think, really, the sad reality is that it's getting tougher than it was four or five years ago.

I have three questions, and if you can keep answers short so I can get the three of them in, I'd appreciate it.

The first is to Madeleine on the identification of produce. The reality is that three-quarters of produce bought by Canadians comes through the retailers, even though there are farmers' markets. And there are only three or four left in Canada. My sense is that they want to see the same produce every day in every store, and they want to get the cheapest price possible.

They'll do the talk that, yes, they want to buy local. They'll advertise that. But I've dealt with them for 20 years, and the reality is that this is the way they deal with it.

First, should we be changing the signage? Even on the labels, they don't even want to see the labels. They turn them. They just want to see fruit. That's the way they're going to do it. Even though you add the label, that's the way they're going to do it. Should we be looking at signage in more Canadian stores to show where it's grown and how it's grown? Would that be a solution to identification?

[Madeleine Van Roechoudt]

Definitely. I think so. We developed some new graphics with B.C. Tree Fruits. They're our brokerage. They do the marketing and the selling, and they did some stand-alone...

They're essentially four boxes high--the height of the table--but all sides, to the ground, are covered in graphics. They're eye-appealing. They have a logo you can remember and go to, and they state the origins. I think finding ways to put that signage in the retailers is important, either on the base of the stand or above it or something. I think there has to be a way to identify those products.

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

So put the standards on their identification above the produce: yes, I agree with that. I think we'd have to work with the provinces, too, because there's jurisdiction. I think there has to be something done in this country. Stores will have local produce, but most of it's not local. People don't know the difference.

Dave, my next question is to you. We hear time and time again, especially from horticulture producers, and it was mentioned also about the beef industry, that it's hard to get those top years to fill in the blanks.

What changes do you think should be made in the AgriFlexibility programs to help horticulture or orchard people, especially. What are a couple of big ones?

[David Machial]

What changes should there be, aside from an overhaul?

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

Should the programs be specific to different commodities, maybe?

[David Machial]

It's tough to say. I know that with AgriStability, as I said, once you have three bad years, it's not going to help you.

My parents talked about the old NISA program. You're probably more familiar with that than I am. They thought it was a good program. It was a way to get money to help them, and they would like to see something like that come back.

I know that in British Columbia, when they introduced the agricultural land reserve, they had a funding program. Growers were paid a little bit per pound to compensate them for having their land locked into the ALR. Our B.C. government removed that, but that was a nice program that a lot of farmers miss and wish they still had.

I think something along those lines would be an improvement.

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

The last question is for David. You talk about being in Europe. My parents are from Europe, and there is a whole different philosophy about farmers in Europe whether it's education or a recognition. I think the sad reality in Europe is they went through hungry years, and somehow they have a different concept of the importance of agriculture. We lose that because we've never had that in North America.

Let's say I was a young farmer coming from Europe, and I had three choices in where to go--New Zealand, or Washington state, or here. It seems like Washington determines the price of a lot of tree fruit here. Would it better to go to Washington? Are there better programs there? Is it better for growing? Or are they having the same problems down there?

What's the difference, I guess, if I were thinking of moving here or were a young farmer starting out? Where should I go? Or what's different down there from what's up here?

[David Dobernigg]

There are a couple of differences between here and there. The first is land prices. I think here you've heard $100,000. In my area it's probably closer to $40,000 an acre. I've heard Washington state in some areas is around $5,000, so just the ability to get into it is easier.

You do have Washington State University, which is quite into its horticulture program. You do have the extension, the ability to learn.

The way they're producing, it sounds like they're getting most of their water through us...through the Columbia Basin. Water's a huge issue here. I would imagine it would be somewhat similar in Washington state. However, their production is so much bigger; they must have larger quantities of water available.

They do have the larger Farm Bill, and it's my understanding that there are lots of food stamp programs. So their governments are buying their food as well.

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

For Washington state and the U.S., there's a bigger support for the orchard industry overall down there than probably here.

[David Dobernigg]

I believe so, yes.

[The Chair, Conservative, Larry Miller]

You have one minute if you want, Mark.

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

Yes.

To Mr. Fossen, can you tell me a little bit about your operation? We always think, because I'm from the land of coasts, that we can't make money in beef. My family's into beef and they're just ready to give it up. It's a mixed farm, so their costs are lower than some other beef farmers. We think everybody out west must be making money on beef because we're not making it.

So what do you see in the beef industry? On the retail side, the prices are still up. Do you think there's a bigger gouging between what the ranchers and farmers are getting, between them and the other end? Is that spread getting more and more? Is that part of the problem here?