Agriculture Committee on April 28th, 2010

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

Thank you very much once again for taking the time to be here.

The main theme coming out of the hearings so far is that farmers would like to be like most other people and make some money at what they do. They don't want subsidies; they don't want handouts. For some reason, it doesn't make any sense. If someone were to come from some other faraway planet and were to see all the abundance we have in energy and the education we have and were to see that people are losing money.... Something has gone wrong somewhere.

I just completed a couple of years of touring, visiting 28 communities, talking to folks about food sovereignty and such issues, getting feedback. Many people have flagged the whole issue of trade. Many feel that trade has really hurt us, and they give the example of supply management. We have a system in that sector whereby people make money; it's predictable. The fruit growers told us that two days ago, and they said they're even thinking of doing something like that. So we have a situation, for example, in which—and you mentioned education, Mr. Thompson—they have new varieties, they have the latest technology, they have the education, they're replanting, and yet because of NAFTA we're getting cheap produce and they're getting hammered and they can't make a living.

You also touched on the multinationals. My first question is to Jason, and maybe somebody else could comment on this also. It's my understanding that since Australia lost the single desk, the multinationals have rather taken over. There's competition, and prices have dropped for farmers. In fact, they've lost some markets, and our CWB has actually taken over some of those markets.

I wonder whether you can comment on that first, and then maybe somebody else has comments on it.

[Jason Ranger]

One of the big issues with the Wheat Board is that there's a huge lack of transparency. We can't see the price they're selling our wheat for. How many directors are there, nine? Those are the only guys who can see what price this grain is being sold at.

I've read some reports. I know guys have done some research trying to figure out where they've been.... Basically, there's evidence that they've been undercutting and selling wheat cheaper to other countries than they should be.

There was a tender, I think it was to Egypt, about six months ago. They researched this and found the price of the tenders from the U.S. and from Australia, and Canada's tender came in about $25 a tonne below theirs. There's no reason to cut that far below, just to get the sale. I guess that's a big issue that proves that the Canadian Wheat Board is costing us money.

As for multinationals coming in and taking over, correct me if I'm wrong, but we sell all of our other grain to the multinational corporations and we're doing okay with that. Any grain that's sold is based on a futures price minus a basis. There's an argument that there should be more competition, but you shop around and get the best basis you can. If wheat were in that same situation, I think we could do better with it.

We have clear price signals further out. For example, yesterday I priced new crop canola for next March. I have a price that I know I'm going to get today, I know when I'm going to deliver it, and I know my cashflow requirements. You can't really do that with wheat. I guess that's one of the biggest issues, the transparency and being able to sell a long way out, if you want to, and knowing exactly what you're going to get for it.

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

Are there any other comments on that?

[Stuart Person]

I'll just make one comment on it. The price signals the Wheat Board sent out last year for the 2009 crop of durum caused an enormous overabundance of production of this product. They were way off the mark in what they were doing. Where's the accountability for that?

You have 20% to 40% of the 2008 crop held back, and 60% of the 2009 crop is going to be held back. You'll have guys carrying over almost a whole crop, if they grow a good crop this year. And that crop was grown based on PROs that they put out saying they were going to be able to pay such and such an amount of money, but as the year went on, boom, down the prices went—down, down, down.

That's not a good system to have in place. You're encouraging overproduction. They should have known that. They should have had a better understanding of that, if they properly understand the markets and know how to market our grain.

Those are the types of problems this organization is causing. There are acres and acres of durum down south that probably shouldn't have gone in last year. They sent the wrong signal to the market. You have oats and canola grown on an open market, with the multinationals, and the price signals are there, and generally they're a lot more accurate.

[The Chair, Conservative, Larry Miller]

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

First of all, I want to recognize the fact that for all of you, except maybe Ryan, this is probably the first time you've been to a committee structure like this. I'm encouraged by your bravery. You all did very well in your presentations.

I'm going to key in around the crop insurance side of it, because when we look at young farmers, two things that come into my mind are profitability and how to manage risk. Then a third one would also come in: capital requirements.

If we can start to manage the risk properly, that affects a couple of things. If we know we have a proper crop insurance program, if I can go to the banker and say I'm guaranteed x number of dollars per acre, he's more comfortable giving me an operating line, and away we go.

It's the same with our cash advances. If we have an accurate dollar value, we can get a proper cash advance that reflects the size of our operations—providing you're not over $400,000, as Stuart pointed out.

Kalissa, you touched on something—I'm sorry, I'm used to being informal, but I mean Ms. Regier—about “the first five years”. Have you thought through that program very much, about what you would do for young farmers in those first five years, what types of things you would try to...? Would it be an increase in production? Would you say, okay, you get 110%? Have you put any thought to this?

And Barb, do you have some thoughts on this, too?

[Kalissa Regier]

No, I think it's very self-explanatory. I haven't actually gone through it in detail and come up with a plan myself. What we have right now is a crop insurance program in Saskatchewan that works fairly well for a lot of people. There are some pretty big gaps in it for young farmers, new farmers, and farmers who are producing niche crops or different kinds of crops. That all needs to be addressed in this. I think there needs to be a specific program for beginning farmers to give them some incentives. I don't think covering cost of production, including wages, is too much to ask that program to facilitate.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, you would understand, the problem with subsidies is they get capitalized. That's why it intrigued me when you said the first five years. Then I looked at something and said, okay, would the first five years for a young farmer of Jason's age get capitalized? Does it mean that when Jason goes off and buys land, the land goes up another $100 per acre, or would it actually stay the same? That's why I was curious as to where you're going, because there's an idea there.

Barb, do you have any suggestions?

[Barb Stefanyshyn-Cote]

The only thing I want to add is that possibly in the future we're going to see a lot of farm transfers. There just have to be, because we're getting older and things have to move. Is there some way that we can transfer with the farm our area averages, our experience discount, through a mentorship program of some kind? I'd take Jason on for three years and say, this is what we've accomplished and this is where we're at. We can pass that on to you and it's an advantage to you. Yes, it may get capitalized, because it's worth something to me if I'm trying to sell my farm to him that he can take these on. But it also covers his risk, and I think that might be another way of doing it.

The last thing is, it's not covering some of the other agriculture that we need to be looking at—vegetables, fruit, anything along that line. If we're going to use that method, we need to expand that program.

[Randy Hoback, Conservative, Prince Albert, SK]

We talked about crop insurance. What about other programs—AgriStability?

Stuart, would you have any comments? Should we have a special margin for the first five years? Do you have any ideas there?

[Stuart Person]

I think you need to look at new producer margins closely. I'm not sure how you would come up with that. Maybe you could look at area averages as well, amongst producers in that area. An average is a bad one to use. Maybe you look at giving them the top 30% of producers' margins, or something like that. At least give them a chance to prove that they can do that type of a margin as well. Don't stick them with a poor margin just because certain other farmers maybe have a poor land base or they don't practise good farming and therefore their margin isn't very good. They need that good margin to start with, and they also need a good crop insurance history to start with, so they can go into this and not be busted in two years if they have a couple of crop failures. That's what they're faced with right now.

[Randy Hoback, Conservative, Prince Albert, SK]

On the cattle side, Ryan, what would you see as transition programs? Is there anything we could be doing there?

[Ryan Thompson]

Transition from what?

[Randy Hoback, Conservative, Prince Albert, SK]

Let's say from father to son, or let's say somebody decides they want to become a cattle farmer tomorrow. Is there anything special you need that we could do, again, without creating an issue of capitalization, without driving up the price of land or driving up the price of cattle, because that doesn't help anybody either if they're trying to get into the industry?

[Ryan Thompson]

No, I agree with that. I know we've talked to you a little bit about it. Definitely some sort of financial backing, whether that's guarantees or whatever, will help. But I think the risk is the big thing, and that's why one of these price insurance programs that is completely market driven.... It's all based on free and open markets, and it doesn't work if there aren't those free and open markets. That's the one thing about the cattle industry. We do have very good price discovery in the form of a lot of the auctions and trades that we have.

That's the nice thing about this program. It can be very cost-effective, so it doesn't break a guy to try to do it. Plus, as I said, it's very responsive and it's completely market driven. It won't get capitalized into the cost of the cattle because you'd still get paid to go out and market your products for the best amount you can. Trying to build it into the program, it won't get capitalized.

[The Chair, Conservative, Larry Miller]

Thank you, Ryan.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thanks to everyone for coming.

I would ask everyone to think about this for a minute: if you had one program targeted at young farmers, what would it be? I want you to think about that. But I have another couple of other questions to a couple of people first.

Quite a number of people mentioned profitability, which is more over the long haul. We certainly haven't seen that in the industry in the last 20 years. Your deputy minister from Saskatchewan and my deputy minister from P.E.I.—everybody's worried about where the farm industry's going—did a study. I left the study on the bus, but it showed that from 1929 until 2007, net farm income went down on a 45-degree plane.

We have to give our heads a shake. This can't continue. There's no profitability there, and there are all kinds of different programs that really aren't working. I think it's getting worse. Alberta and Quebec have a lot of programs, but most of the other provinces don't.

Mr. Thompson, you mentioned a number of things. I'm trying to figure out what you're really saying. Are you requesting market price insurance for the cattle industry?

[Ryan Thompson]

Yes. We have a program, and we've gone through it with a number of the members sitting here today. It's basically a risk management program like the Chicago Board of Trade for U.S. producers.

[Wayne Easter, Liberal, Malpeque, PE]

I understand how that works. I asked you the question because we need it specifically stated on the record. You never called it market price insurance.

[Ryan Thompson]

It would be a cattle price insurance program.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

On the cattle and hog industry, we know there are real problems with AgriStability. I believe people are saying there's a problem with the viability test, and there's a problem with changing reference margins. If those two areas had been fixed, there could have been a payout in the last two years.

The federal government paid out $900 million less on safety nets last year. All they really had to do was change the viability test and the reference margins. That would have made it much different--all within the trade agreements--but it wasn't done.

The minister will say you need to have agreement among the provinces. If you talk to the provinces, they'll say it's the feds.

Does anybody have any comment they want to add on that? Should the viability test have been changed, and should reference margins have been changed to allow somewhere around $900 million or more to get out there?

[Ryan Thompson]

Yes and yes. We get a lot of this argument between the provincial and federal levels of government--discussion, or whatever we want to call it. But we need leadership from the federal level to pull all the provinces together. Each province can do their own thing, but we truly need federal leadership to pull everybody together. Otherwise we'll never get anywhere.

Thank you for bringing that up, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Okay.

On my first question--whoever wants to answer--if you had one program targeted at young farmers, what would it be? We'll run out of time, but what would it be, as simple as you can make it?

Kalissa.

[Kalissa Regier]

It would be how to farm without using government programs.

[Wayne Easter, Liberal, Malpeque, PE]

Kalissa, do you really think that's possible?