Thank you, Mr. Chairman.
I think the problem we're looking at today is not one of production. It's not one of climate, although there is, from time to time, some variability. The problem is often one of denial. We've invested at least 40 years in going in a direction where the marketplace alone should determine the structure of the agriculture production system and the rural communities of Canada, and that model has failed. Yet it's hard to accept that; there's a denial in place.
In reality, young farmers would be small farmers. My colleague just pointed out the problem of financing. If one were to accumulate 2,000 acres today to make a viable farm, one would be looking at a $4-million or $5-million debt load.
We also understand that technology has made the larger production unit possible. While it has done so, the marketplace has adjusted itself in structure to capture all the so-called efficiencies from the application of those technologies. The smaller margins per unit of production means the smaller farms are no longer viable within this structure.
I think we also have to take a critical look at public policy itself. If one were to look at past public accounts of Canada and see how the distribution of public assistance to agriculture was delivered, one would see even in this community where, with generosity, we delivered over $1,400 a day of federal assistance, on a 365-day basis, to one unit. One would wonder that this did not have the effect of consolidating that unit into a larger and more “viable” operation.
We also might want to look at what the Farm Credit Corporation has done in encouraging this type of concentration, particularly the part it played in the concentration of the structure of the Canadian hog industry, which drove most of the farmers out of that.
We have created a situation today that I call “technology dependency”. I marvel at the sophistication and education of the current large farmers, but I have also have become very nervous about their reliance on that technology.
Whether we have reached peak oil now, or we reach it in the future, when we reach that point, technology based on fossil fuels will not be readily available. We'll rely on another system of agriculture that we have systematically removed and destroyed. The current model, then, is really not a sustainable model for much longer into the future.
I also think the committee members have to look at the declining share of the consumer dollar that comes to the farmer producer. In 1970, the beef producer would earn about 65% of the consumer's dollar. In 2008, according to information released by Charles Gracey, we'd be getting 40% or less. He also pointed out that the retailers today are capturing 50% of the value of beef.
We have to wonder why that would be so. Is it because the retail industry in its concentrated form has become large, bureaucratic, inefficient, and requires a larger share, or they're exercising market power through monopolist structures?
We have to ask ourselves what can be done. We certainly have to look at the issue of food sovereignty from the point of a country--public policy in agriculture versus market forces policy in the marketplace. We have to look at establishing, as much as possible, local food systems, and we also have to look at retaining producer ownership in the marketplace as long as possible within that marketplace.
We have to look at changing the model in which our agricultural faculties at universities now function. We need to do a parallel in education, in what I would call low-input agriculture. We need to educate people that there is an option rather than an expensive, low-margin system of agriculture; also, to create the tools we will need as a society if my theory of peak oil and our current system of production not being sustainable comes to pass.
We have to deal at length with the weakness of our competition and anti-competition laws. They have proven to be totally inadequate in that they have allowed the concentration that has taken place. If one believes in a marketplace, a marketplace can only function if there are a number of competitors in that. As the number of competitors in the marketplace, in agriculture, both on the supply side and the market side, has decreased, the producer's share of the consumer's dollar has also appropriately declined.
We have to deal at some length, I believe, with this whole issue of land transfer, intergenerational transfers of land. Farm debt today sits at $61 billion. Farm debt today, based on market returns, is not sustainable. We have created a situation in land pricing and land ownership very similar to the U.S. housing market.
Land is being purchased on the theory that inflation will continue and I will gain 50% equity in my purchase through inflation over a decade. That theory can only go so far, because if one looks at the real return from the marketplace, in earnings, one would find that this earning has been less than $2 per acre per year for the last 20 years. That type of a return does not support $2,000-per-acre land.
We must also look at this generational transfer of land, at who it benefits and who it harms. It is not in my interest to indebt the population that occupies the land behind me. What I would like to see is a system basically similar to a reverse mortgage, where upon retirement, I need an income, but I don't need a tax problem. The incoming farmer need not pay interest to a bank. I need a monthly payment that supplies me with an income in my retirement, and upon my demise, my estate could then continue receiving those payments and avoid altogether the possibilities of adding to the $61-billion debt.
I would also think that this committee should look at—this is my final point, Mr. Chairman—this whole theory that our success in agriculture is dependent on our capacity to increase exports. If one is going to be the successful exporter, then one has to be the lowest-cost supplier into that export market.
From this geographic location, from this climate, I can never be that. Those are the natural rules.
Thank you for your time.