Agriculture Committee on April 27th, 2010

[Frank Valeriote, Liberal, Guelph, ON]

Darcy?

[Darcy Davis]

I think it could be. I think there would have to be some qualifications around that, about how young the person is and maybe commitments about how long they'd farm. I think there's an ability to do that.

I think, as well, we could create corporate tracts—corporate may be the right or wrong word—or cooperative structures in communities where farmers can farm in groups and then receive some tax relief in those kind of joint ventures. We're seeing some guys do that now, with equipment being so expensive. We could make it easier for those joint ventures to work so that several farmers could own one piece of equipment and things like that. Right now a lot of farm programs and taxes don't recognize those entities very well. So it would require some more flexibility to have that available to them.

[Frank Valeriote, Liberal, Guelph, ON]

We've heard for one year now the problems with the non-harmonization of regulations in other countries with those in Canada. I'm sure it's something you're aware of—being able to use pharmaceuticals in the United States that you can't use here, creating a competitive advantage for them. Are you experiencing the same thing, and would you be recommending changes? If so, what kinds of changes do you think should be made?

[Darcy Davis]

We have to be able to certify these drugs and these chemicals for grain farmers at the same speed that our competitors do. We can't have generic drugs and generic sprays available—herbicides available—in other countries and then our certification process takes four years. That's ridiculous. That's part of the competitive disadvantage we have as Canadians.

[The Chair, Conservative, Larry Miller]

Your time is up.

Michael, before we move on, you made a comment about family farms and yet not, basically, larger farms. Would you agree with the statement that the family farm today still exists but overall is much bigger than it was 20, 30, or 40 years ago?

[Michael Latimer]

Yes, they have to be bigger just to survive. It costs basically the same to buy a 50- or 60-foot air seeder as it does to buy a 30-foot air seeder. You might as well be bigger and rolling. We've seen it on our farm, where we're medium sized. We saw it where we were large sized and now we're back to a small size. Each of them has its own set of problems, but I'd rather deal with the problems of being big because they're more management problems. Then you have some economies of scale. This doesn't mean they're big multinational corporations. They're just farming units.

When I was there I had me, two brothers, my dad, and an uncle—his kids were too young to really be part of the outfit. So there were a lot of us there. To have this simple little old mom and pop with the chicken barn, we can leave that in the 1950s. We don't need to stay there.

Farming has to be a business and there has to be some training. We have to change the mindset of a generation here. I think the younger generation—younger than me—coming in understand that maybe better than the 80-year-old guys who are on their way out. That generation saw the horse age go to a tractor driving itself across the field. It's a lot in the mentality of it.

It even comes into the mentality of encouraging young people to get into it. I've even taken the flak, a little bit of “You ended up doing that? Why didn't you go and do something else?” You have to justify why you did it, and you shouldn't have to do that.

[The Chair, Conservative, Larry Miller]

Okay, thank you very much.

Mr. Bellavance, five minutes.

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

Thank you very much for your presentations.

You are right, Mr. Latimer, things have really changed. I saw a certain shift myself: my grandfather, whose name I have, was a dairy farmer who did his milking by hand until he was 94. I do not think that happens much anymore. He used to feed his calves from a bucket every morning, but that was near the end of his life. He still helped my uncle, who took over the farm. In those days, the natural progression was for one of the children to take over the farm. You could gain your livelihood as a farmer.

Today we heard from witnesses—and not just today, mind you—who said that young people were asking themselves a lot of questions just about whether they would be able to make ends meet if they took up farming. It is definitely not easy. That is not to say that all farmers used to make a fortune, but it was possible to make a decent living in agriculture.

I want to speak to the two producers, Mr. Brecka and Mr. Buckman. One of you—and I do not remember who—mentioned the Canadian agricultural income stabilization (CAIS) program, as compared with the agristability program. We began our tour yesterday, and already we have heard similar comments, namely that the former Canadian agricultural income stabilization program and the current agristability program are exactly the same.

But there is something you did not talk about. You said that it does not work well: farm inputs continue to increase while the value of your products decreases, fluctuates or stays the same.

Do you think the agristability program should take into account production costs? In other words, agriculture has changed drastically, but what has not changed is the government's responsibility to ensure that we use our land, that we have a viable farming sector, that we produce food here and that we are able to feed our people. To do that, we have to ensure that farmers can earn their living from agriculture. The agristability program was put in place to do that. It is the successor to the Canadian agricultural income stabilization program, which was inadequate and did not work well. The government said it was going to change it. As with many programs, it was not put in place to be inadequate. Still today, we are realizing that the program still has flaws, and that is normal.

In my view, a change, among other things—and that is what we are hearing more and more—needs to be made. This kind of stabilization program should take into account production costs. Do you have an opinion on that?

[Brian Buckman]

My first comment on the stabilization programs is right now we're doing 2009 taxes. We're done with that. There are guys who are still working on 2007 stuff right now. The timely fashion is way too long. You have borrowed money on this. There's no way you can get your money to the people who need it when your payments are committed. You have payments every quarter, or whatever, on your property or machinery, and we're working on 2007. That's two years that you're paying interest on top of that. It's just not working. We've never collected anything through CAIS on my farm operation. I grow wheat, durum, flax, canola--peas, occasionally. We're diversified, so we hit the top markets on some and the bottom. It has not worked on my farm operation at all. We don't even have grocery money out of it, let alone payment money out of it. It's not working for my operation.

[Alan Brecka]

It's the same here. It's pretty much diversified. CAIS or AgriStability, whatever, shouldn't be based on the whole margin of your farm. It should be based on each individual.... Say, for example, durum this year is a dog. Everyone knows that. So I'm losing money on it, but my lentils have been through the roof. So they offset one another. It still shows the same margin. I budgeted for next year x amount of dollars and then the pools came out and they dropped, and I don't see that any more. And neither does the government, right? I still have the same expenses. They've actually gone up, roughly, but it's not enough to trigger anything.

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

I recently spoke with the president of the Canadian Federation of Agriculture. He mentioned an article that appeared in Western Producer, which revealed that Agriculture and Agri-Food Canada's planned spending for 2012-2013 would be significantly less than what it spent in the fiscal year ending March 31. It was just under $2 billion, which is 45% less than what it spent in the fiscal year ending March 31, around $3.5 billion. One of the reasons was agristability.

I thought of a comparable situation—then I read the article, and La Terre de chez nous also mentioned the decrease in spending—in terms of employment insurance. Everyone pays into the EI program, but not everyone is entitled to collect EI benefits.

As far as agristability goes, I see that many people contribute to it, but a lot of them will not be able to access it at the end of the day. This will save the government a lot of money, but you will end up being the ones who suffer.

Of course, we will see what ends up being the main message we hear from people during our tour, but our key recommendations will probably include changes to this program.

[Brian Buckman]

I think what we'd like to see is just to be paid for the product we grow. Personally, I don't want to be paid for something I can't grow. If we can grow a product, it's a premium product. Pay us for our product.

Nobody ever wants to rely on a government program. It doesn't make anybody money. All it does is create more expenses through administration fees. For example, since 1992 for my crop insurance, I paid a premium of $115,000. I get $85,000 back on my crop insurance program. That's from 1993 to 2008. If we could get paid for our product, that's all most farmers want. They want to be able to be proud of what they grow and get paid for what they do.

[Alan Brecka]

We basically just need a floor price. North Dakota, or whatever, get basically $6 for their durum. I can't pencil out a $4 durum, yet I've seeded it already. I've stuck my neck out for the year. The Americans get $6 that they're basically guaranteed, so they're going to be growing more durum just because the government pays it out. Isn't that kind of defeating the purpose of NAFTA and the World Trade Organization? Can't we step up and do something like that for our guys?

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Atamanenko, five minutes.

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

Thank you, all of you.

Before I start, I'd just like to say, Mr. Latimer, that you mentioned that your degree is in recreation administration, and you were kind of wondering what you were doing here. I also have a degree in recreation administration, and sometimes I'm wondering what I'm doing here also.

Yesterday we visited some fruit producers in the Okanagan. We heard some pretty gut-wrenching stories of people saying, “That's it. We have apples being dumped, for example, in our country. We've signed onto NAFTA, and apples are being dumped below the cost of production. We can't compete.” A number of them have mentioned that with supply management at least they have predictability, they have a certainty of a market, and they're even thinking of trying to get some kind of an orderly market going to save our tree fruit industry in Canada.

I've just completed, basically, a two-year tour across this country. I visited 28 communities on what we call the “Food For Thought” tour, just listening to what people have to say about food sovereignty, food security. One of the themes that I heard over and over again is that a lot of these trade agreements have had a negative effect on our farmers, in spite of some of the positive effects, obviously.

Mr. Davis, you mentioned that you would like to see a successful conclusion of the Doha Round. It's my understanding that if that were to happen, as the agreement currently exists, there would be some concessions. The average dairy farmer probably would lose $70,000, the current 7.5% quota would go up to 10%, the over-quota tariff would come down, and certainly very soon our Wheat Board would be gone because of the pressure from the world community.

You also talked about the Canada-EU free trade agreement and you would encourage us to get on board. The provinces of all political stripes seem to be supporting this, in addition to the federal government, but it's my understanding that this agreement will open up contracts to European companies that will now have access to municipal, federal, provincial, and crown corporation contracts. This, in my opinion, would be a step in devastating rural Canada, because now we'd have a company here in this community competing with local contractors from Switzerland on a bid, and the local municipality would have to accept their bid if it was lower.

It's also my understanding that supply management and the Wheat Board are on the table. The Europeans would love to get their hands on our dairy and egg and poultry markets.

So I'm just wondering about your thoughts on this. How can we possibly encourage an agreement that would have these constraints put on our ability as a country to survive?

[Darcy Davis]

I think we'd survive. If we can't compete with them, I think we're in some real trouble.

I think you bring up some important points. I think the problem is a lot of these trade agreements haven't gone far enough.

You mentioned the Doha Round, so I'll start with that. The fact is, if we finish the Doha Round, we would have no more export subsidies. We wouldn't have countries subsidizing exports straight across, which we've seen countries go back to in the last two or three years. I'll use the example.... These guys are talking about the LDP program--loan deficiency payment--and the Farm Bill in the U.S. In the Doha Round, instead of their being able to spend $60 billion subsidizing their industries down there, they would be limited to $8 billion under the Doha Round. So you gradually get to a point where you start to look after some of these inequities.

I think the fact that we would open up our markets to European suppliers is great, because maybe we'd get access to supplying them with things. We saw what happened with Buy American. We've been supplying the Americans with lots of things. When they went to Buy American it came back on us. I guess it comes down to this. Can Canada be a little island and only supply itself with things? I'm sorry, we can't. We grow too much stuff; we can't eat it all. Unless you want to turn Saskatchewan into a national park and have all the food grown in southern B.C., southern Alberta, and southern Ontario--maybe southern Manitoba a little bit...that's all we need. We need to export; we need to find these agreements. It's become much more difficult, which doesn't mean I think you give up on it.

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

Other countries have sensitive categories and we have them in certain agreements. Could we expand the sensitive categories to ensure that our tree fruit industry, for example, is protected, as is our supply management?

[Darcy Davis]

Well, the crux of the problem for 20 years is that everybody else's sensitive products are what we export. Beef and grain are sensitive in other countries; our sensitive products are chicken and dairy. I think they would still be allowed to have a 75% to 125% tariff if the Doha Round went through. The rest of us in agriculture don't have any of those kinds of tariffs.

I'm not speaking for the supply-managed industries. I get myself in a lot of trouble doing that. But I think at the same time we have to move forward and figure out how we're going to deal in this new world where our dollar is par with the U.S. dollar and where our currency is high against a lot of the world's other currencies. We must keep managing our competitiveness.

[The Chair, Conservative, Larry Miller]

Thank you.

I'll move to Mr. Richards for five minutes.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you very much.

Thank you all for being here today. I know some of you have come quite a long way across the province. I think it's a good representative panel here of various viewpoints from across Alberta, and we sure appreciate you being here.

A question I've asked all our young farmers who have come before us who are going to study is really trying to get a sense of what's different across different generations, whether it be your father's or grandfather's generation, not as young farmers but what's the difference between your generation and your kids. That's been a very interesting question to ask, and I've had a range of different answers.

One of the common threads there certainly seems to be that while the input costs are going up, the price received at the farm is not, and I've certainly heard that again here today. Actually, though, I'll put a little bit of a different twist on that question for this panel, because I heard a few examples of farmers who probably are going against the grain a little bit.

Mr. Buckman, and Mr. Brecka in particular, you both mentioned that while you previously had jobs off the farm, over the last few years you've come to the point where you are now able to farm full-time without the income off the farm. That's certainly not a story we're hearing very commonly. Farmers are telling us, and I think it's no surprise to any of us, that a full-time job off the farm sort of pays for the other full-time hobby on the farm. Unfortunately, this is really what it all too often comes to for too many guys: it's not really an income and a way to make a living. So I want to get a sense from you as to how you have been able to go against the grain.

Actually, Mr. Davis, you mentioned your nieces and nephews and how they've just bought in and bought a herd from a retiring farmer. So it sounds like to some degree they're going against the grain as well.

Mr. Brecka, I think you even mentioned that you haven't succeeded your father on the farm, that you've actually started your own farm. That's very unique in today's day and age, unfortunately.

I'd therefore like to hear from the three of you. How have you been able to go against the grain?

[Alan Brecka]

Well, it's like you said. Basically, I started off with his equipment, but I started my own business, everything else. You know, it's been tough. I quit two years ago. My wife is a nurse, and she's off now on leave, but she was basically paying all the other bills. I got in with two good years when the prices were right. Durum went through the roof for two years, then all of a sudden has gone down 300% since. Now we're actually talking about going back to work. That's pretty sad, you know, especially on 1,800 acres, if a guy can't make it pay.

My dad, you know, when he was farming back in the seventies and eighties...yes, they had high interest rates, but land prices were low, and he didn't have any of that trouble. Now I have high land prices and low interest rates, so really there's not much difference there. It kind of pencils out the same stuff.

Basically, I've got about a year or two left of farming at these rates, at these prices and everything; otherwise I'm going to sell. This is due, as I said, to these subsidized intensive livestock operations around my area. I'll not get a good dollar for my land. I mean, I took the equity when I had a house in town, working, and I paid off the first quarter of land and all that stuff, then bought some more, and paid through the nose for it, but I had to in order to be farming close to my parents.

They've been talking about succession planning, but we're nowhere near that yet. I don't know what's going to happen in the next year or two. I might have to simply pack it up and cut my losses. That's why I'm here today.

[Brian Buckman]

I guess with mine, I started also from ground level. I run older machinery. With my heavy-duty background, all my stuff gets fixed in my own shop. We do all our own stuff, so we send very little to town, which is very, very expensive.

Good landlords and good working relationships with people, I guess. You know, I adjust with the commodities and the values of stuff, so I guess it's very important. Communications with the people we work with is how we've done it.

[Blake Richards, Conservative, Wild Rose, AB]

I commend you both, because clearly you must be smart businessmen to be able to do what you're doing. That's really where the future of farming is, people who approach it from a business-like point of view.

Mr. Davis, you had mentioned your nieces and nephews. I just wanted to hear your thoughts on that situation.

[Darcy Davis]

Well, ours is different. We're a multi-generational operation. My grandfather came up from the States in 1901 and started farming in our area. To me it's a little ironic, in that he and his brothers custom-broke land for all the neighbours. There were seven of them. They broke land for neighbours for cash so they could eat. The grain they raised, some was fed to the horses and some was exported at that time.

As my dad farmed.... He was an only son, but my grandfather actually had a couple of side businesses. He bought houses and rented them out in the little town of Acme and sold fertilizer off the train. My dad wanted to be just a farmer. He didn't want to have any side businesses, so he was pretty clear on that.

When I started farming in 1983.... It's kind of ironic to talk about the price of land. My great uncle, who was a bachelor, passed away, and we had a land auction and the half section across the road from where I farm now sold for $1,450 an acre in 1983. When I bought my land, it was for $1,000 an acre in 1983. I've managed to scrape and scrabble along, and I've bought land and sold land. For me, being active in the politics and these kinds of things has been about my daughters and my nephews, to try to find a way forward with some freedom.

I agree with Brian, we don't want the government in every aspect of our business. I think it's frustrating to see others in other areas of Canada and North America get subsidies that we don't get. The fact that dried distillers' grains are coming up to these guys' neighbours from subsidized ethanol plants, and they can't ship their durum south because of rules we have, that's frustrating for me. It's hard for me to really be positive with my nephews and my daughters about it. But at the same time, they really love the industry and want to give it a go. How it works for them, time will tell. It will probably be up to their business acumen, how well it goes.

I think we really have to face the reality of the competitive environment and how hard it is. Once you do that and try to work your way forward, it's easier than wishing for things that maybe aren't possible.

[The Chair, Conservative, Larry Miller]

Thank you.

Your time was well up, but we were getting some good answers and I wanted to hear them.

Brian and Alan, I just wanted to go on to something. I've farmed all my life. I bought my first cattle on my own when I was 16. I know what the profitability is like in agriculture today. My youngest brother is farming my land while I'm stuck away in the business of politics or whatever.

I want to go back to a comment you made that being diverse hurts you in the programs. I understand that, and I don't want to take away.... I think there are two different things here. One is the lack of profitability in agriculture. I think that's one of the things we'd like to see.

An example on my own farm that I'm going to use, and I'd like comment on it.... Back in the 1980s, everybody in my part of the world.... And I've got the second-largest beef riding in the country, next to Lethbridge, where feedlot alley is. We're basically a grass and forage legume area. Everybody in my area tried to grow corn for a cash crop. We still grow it for corn silage for livestock feed, but to sell it as a cash crop didn't work. I remember that I could have kept growing it, which some did and had crop insurance and what-have-you pay for it, and maybe some government programs. But at the time it wasn't working.

I guess the reason I'm bringing this up is to ask if we as producers don't also have a responsibility to try--although diversity is the main part of it--to be diverse to stay profitable, in some ways. I know that isn't totally working today, but just to criticize the fact that one subsidizes the other.... I quit growing corn as a cash crop because it just damn well wouldn't work in my area. I guess I felt as a responsibility.... I don't want government.... As I know nobody else around this table does, I don't want my cheque out of a mailbox.

Would you agree with that statement that we do have responsibility as producers to be diverse for that reason, taking away the profitability part of it?