My name is Carter Bezan. I'm a rancher and a cattle farmer from north of Regina. I was really excited when I was asked to speak on this topic today, so thank you.
In the February issue of the Western Producer, there was an article about the feds offering a carrot to young farmers. In this article, junior ag minister, Jean-Pierre Blackburn, stated that it was not an issue of money keeping young people from entering the farming sector, that he was bothered by young farmers' negative attitudes toward agriculture and that these negative attitudes toward farming came from their parents.
I strongly disagree with that statement. There are so many more young farmers, as you've seen today in this industry, that are enthusiastic about farming, about ranching, who want to grow, expand, and even diversify their operations, and hold no negativity toward the industry.
Speaking for myself, it is a money issue. When it comes to my own operation, all profits that my cows make go toward feed bills accumulated through BSE due to poor cattle prices, loan payments, or into buying more cows or better bulls so I can continue to grow my operation. The biggest problem I find with the industry is the inability to keep growing as a young farmer and the inability to access capital. As young farmers, we are competing for land, cattle, and equipment against established farmers who are working on a cash basis, or have so much equity built up that prices or the ability to make a return on that investment are not an issue, as well as competing against fellow young farmers who have off-the-farm jobs to supplement their farm income or have returned from the oil patch with money in their pockets.
In my eyes, there's nothing but potential in this industry and in this country, and if it were easier to secure large amounts of capital, there would be no stopping me from continuing to grow and diversify my operation. To be classified as a beginning farmer by Farm Credit Canada or the Canadian Agricultural Loans Act, you must have less than six years of farming experience. So by the lending institutions and government standards, I would be classified as an old farmer at the age of 25. It would be better to change that to a pure dollar amount invested or have a set age bracket in order to be classified as beginning farmers. The way the industry is now, a 35-year-old farmer is still a young farmer, since he is expanding. The government and lending institutions need to change their criteria. Often when existing farmers are selling out, those farms are being purchased by retirement-aged farmers who are usually the only interested buyers. This is why I say farmers under 35 should be classified as young farmers. That is where the bar needs to be set.
Programs announced by Prime Minister Harper in May 2009, allowing farmers to access credit more easily, are great. But for young farmers, the amount we need for a down payment and the interest rates charged need to be reduced. The Agricultural Loans Act is a great idea and allows farmers to receive much-needed funding at low interest rates with minimal down payments. But, to me, even 10% can be too much to ask for when we're working on such small margins.
A program structured similar to Saskatchewan's livestock loan guarantee program, where the government guarantees 80% of the loan, might allow young farmers to purchase land or equipment at lower interest rates with a lower down payment. The Saskatchewan livestock loan guarantee program is the only reason I have been able to grow my cow herd to its current size. It has allowed me to continue growing my cow herd when the banks in this country would not even look at my applications. As with the livestock loan guarantee program, any lending programs for young farmers need to be government guaranteed and not show up on a credit report. Speaking for myself, my farm and my personal credit are two separate things. But that is all the bank will look at when considering my application, even with the Agricultural Loans Act in place, and because I currently own a house in a city, they will not even look at it as equity.
Programs like the Canadian Agricultural Loans Act should not look only at an applicant's credit score, or total debt service numbers, and judge exclusively on that either. They must allow for a young farmer to present a solid business plan of what he wishes to do with the money, what it will cost, and how he plans to pay it back. Getting started in this industry is the hardest part. Any kind of lending program needs to allow young farmers a one-year or two-year grace period to put money against initial inputs like seeding land to grass, building fences, or putting in water systems. In the cattle business, once the land is developed, it can begin to pay for itself, and that would give a young farmer a further boost in the right direction.
Another thing that needs to be addressed is that support programs like AgriStability do not respond quickly enough or at all. In most cases, the damage is done and the farmer has already made changes to his operation before the funds get paid out. In order to qualify for any kind of payment, you must not show a negative margin for more than two years. For a young farmer who is working with such small margins, that can almost be impossible when you're continuing to grow and expand. Make the program more bankable and precise so that anyone can calculate it. As AgriStability stands right now, only the AgriStability office has any idea how the calculations are really made. Formulas are changing. And the livestock sector has experienced years of declining margins, making the chances of payout when it is most needed nearly impossible to trigger. The program does not work, and I am one of many producers who think it's an absolute joke.
A program this government needs to look at is a livestock insurance program for all levels of the cattle industry, as Ryan spoke about, a program for cow-calf producers similar to the insurance program available in Alberta that is directed primarily towards the feedlots. We need a program that allows young farmers and all farmers alike to ensure a certain level of revenue on their cattle ahead of time at all stages of the production chain. A program like this would allow young farmers to go to the bank with a minimum level of price insurance in their hands that their calves will bring x amount of dollars in the fall. It would allow them to cover their costs of production, make their payments, and make a basic living.
Over the last couple of years I have been looking into ranches and farms in South America, and for a young farmer in these countries it appears to be easier to make a living at what we love, not to mention the huge opportunities for farming in Russia, China, and the Ukraine. Their inputs are lower, their profits are higher, land is cheaper, and equipment is cheaper.
Everything we have developed relating to agricultural technology, equipment, and genetics in this country, we are giving away to our competition. They are taking over markets we once held, and as they learn from us, they will only take over more. I believe in free trade, but we have a superior product in this country and we need to keep ahead of the competition. If things don’t change in this industry very soon, more and more young farmers, like me, may sell their existing farms to buy larger farms in other countries. I know it's something I have considered.
We are about to see a mass exodus from farming as the population gets older and more and more young farmers leave for the oil patch, mining, or jobs in the city. Why stay in farming to just get by when you could go to the oil patch, the mines, or get a government job and make money, have weekends off, get holiday pay, and have more time with friends and your family? If you want young farmers who love doing this to stay in this industry, then we need to make enough money that we are happy to stick around.
My older neighbours and grandfather keep telling me of a time when farmers and ranchers were some of the wealthier people in society, and they were looked up to as well. Why can’t we get back to that? We supply this country and the world with safe, quality food and products, and we are not being paid for these products as we should.
The former Canadian Cattlemen's Association general manager, Charlie Gracey, completed a little study into producer shares of retail beef sales. His calculations, comparing the early seventies to 2008-09 numbers, showed up in a recent edition of Canadian Cattlemen magazine. In the early seventies the producer’s share of retail value of a finished steer averaged 80%. In 2007 that number had been reduced to less than 45%, as our costs of production have increased at a higher rate than those of the retailers.
The retailer/fabricators on this continent are keeping 55% for themselves, and no one says anything. Retailers, such as Wal-Mart and Safeway, are dictating what the prices will be for slaughter plants that dictate the prices to us. The retailers are selling beef and other agricultural products at a premium and continue to raise their prices, but you do not see any of those premiums or price increases trickling down to the producers.
The government needs to enforce more strict rules on the retailers as to how much profit is lining their pockets and how much is getting sent back to us. Presently, industry watchdogs and government boards, such as the Competition Bureau, appear to focus their attention on the effects that mergers and acquisitions have on consumer prices. The focus of the Competition Bureau should be changed to include the effect on prices paid to producers and suppliers.
Every government, when they are running to be elected, talks about helping farmers, but we have yet to see any change. We are here today to talk about securing the future for young farmers, and if the current government doesn’t do something soon, there will not be a future to secure. As our parents get older and wish to leave the farm, who do they leave it to? What young farmer will be around to step into that role? Who will feed the world’s population as it continues to grow? As a member of Parliament involved in agriculture, did I do enough with my time in office to secure a future for young farmers in Canada? These are the questions that I think you need to ask yourselves, because your predecessors never cared to answer them.