Agriculture Committee on May 4th, 2010

[The Chair, Conservative, Larry Miller]

We're going to call the meeting to order.

Before we start, I'd like to say to our witnesses thanks very much for taking time to come here today. I know what it's like when you're farming to take even half a day off, so I appreciate all of you being here.

If I could have everybody keep your opening presentations to five to seven minutes, I'll give you a bit of a warning at five minutes. I'll be a little flexible, but if you see me do this, that means there's about two minutes left. After that there will be questions from the committee members, so if there's something you didn't get a chance to speak to in your opening remarks you can always enlarge on it a bit there.

We're going to start with Dylan Jackson. Dylan is heading away later today on a school bus trip. Dylan is 18 years old, and he's from the Wiarton area here.

Dylan, I'm going to turn it over to you.

[Dylan Jackson, As an Individual]

Hi. Thank you for coming to Wiarton and talking to us about our young farmers.

I've lived on a beef cow-calf farm all my life, and if I were to take over the farm I'd be the fourth-generation farmer. I currently own six heifers and close to 40 sheep. It's a profitable business for me right now, because as I'm still living at home I really don't have any expenses. All my feed, pasture--it's all given by my dad in trade for my labour.

In grade 11, in career study class, we were supposed to study a career of our choice. I chose farming. I got a little bit of information back then about prices and all that, and I have some information that I'd like to hand out.

[The Chair, Conservative, Larry Miller]

Somebody will come around and get it, Dylan.

[Dylan Jackson]

Shown in the papers here, I think it was a couple of days ago, I went on the Brussels Livestock Market website and I printed off prices of beef cattle. It's on page 3. I've written in the prices that I got from my grandma and grandpa's income tax books from 1988.

As you can see--once you get your sheets--it says that in 1988 my grandma and grandpa sold 18 Simmental steers. They averaged 963 pounds each and they got 84¢ a pound. Today, out of the Brussels Livestock last week, top-quality stocker steers were averaging 900 to 1,000 pounds at 92¢ to 98¢ a pound—a little bit of an increase. Also, back in 1988, my grandma and grandpa sent away 10 cross-bred heifers averaging 963 pounds, and they got 81¢ a pound. Today, in 2010, top-quality stocker heifers are averaging about 84¢ to 97¢ a pound—not much of an increase.

It just goes to show that in 1988 versus today in 2010, there's not much of an increase in the price of beef. On the other hand, there is a great increase in expenses for farmers. In 1988 grandma and grandpa spent $1,500 on fuel—gas and oil—for farm use. Today you can spend upwards of $5,000 or more, depending on the situation.

Another expense that's kind of interesting to point out is fertilizer. In 1988 my grandparents spent $321 per tonne; a few days ago it was $644 per tonne. That's a big increase. It's actually fairly good compared to last year.

I don't see why any young farmer would want to invest in an occupation that costs money. When your income is a lot lower than your expenses, it's not a profitable business. That's what I see. I don't see many young farmers wanting to get into a business that you have to spend money to make none.

If you want, you can look at this income book. I could pass it around. There are two of them, if you're interested.

And that's almost all I have to say.

[The Chair, Conservative, Larry Miller]

Thanks, Dylan. I'm sure there will be some questions for you.

Ray Robertson has a limited time here today. He may have to leave before the session is over. Ray's with the Grey-Bruce agricultural services.

Ray, I'll turn it over to you.

[Ray Robertson, Vice-Chairman, Canadian Forage & Grassland Association]

Thanks very much, Larry.

First of all, I want to thank you very much for coming to the riding here and doing this session. I appreciate you taking me in at kind of the last moment here.

I represent the Canadian Forage and Grassland Association today. I wear a number of hats in the industry related to the agricultural centre in Markdale.

I'll refer to the Canadian Forage and Grassland Association as the CFGA. It includes forage producers from right across Canada. A significant number of those producers are right here in the Grey-Bruce area.

I realize that I have a pretty short timeframe; I think you said four minutes, Larry. You said if I could do it, you could work me in, so I appreciate that, Larry. I'll stick right to my notes here and try to come in within four minutes. I realize there's a lot of time required.

A delegation of CFGA just returned from a forage fact-finding mission to the Middle East, including Dubai, Abu Dhabi, and Riyadh in Saudi Arabia.

Most of the Middle East area that we were in is in the middle of a desert and facing a severe reduction in water table. As a result, their government is phasing in an irrigation ban on farmland. Abu Dhabi has a strong commitment to food security, so it agreed to subsidize forage imports to support livestock production, which includes dairy, goats, sheep, camels, and horses. We were actually on a number of those farms.

Their annual forage requirements in the current year are estimated at close to 800,000 tonnes, and that number is growing rapidly. Last year, Abu Dhabi Food Control Authority paid out $250 million in subsidy alone for the forage imports. They're actually subsidizing producers to bring in forage to the country, since they're not allowed to irrigate. That irrigation ban is being enforced; and over the next two or three years, it will be totally banned.

Industry experts speculate the next tender will reach 11.1 million tonnes in 2011. Fortunately, Canada is seen as a preferred supplier in most goods, based on a strong global reputation for quality and service. If Canada were to receive even 5% of that 11 million tonnes, it would equate to significant export trade revenue for Canadian producers.

I'll use an example. If Canada alone had 550,000 tonnes--I'm just using a figure of $400 a tonne--$180 million U.S. would be a reasonable figure that we might expect from that.

In fact, the UAE government continues to encourage Canadian suppliers to collaborate with other countries to develop a four- to six-year supply. They're not looking for short-term suppliers; they want people who can come in and serve the country for a longer term. They're not interested in just a year at a time, that sort of thing. They're interested in developing relationships, and that's part of our reason for being there, to brand Canada and start to develop that relationship.

Based on western Canada exporters, Canadian producers are currently facing a 36% cost disadvantage due to higher freight costs plus a shortage of container availability.

In keeping with the main theme of this meeting and looking at how young farmers can be attracted to the agriculture industry, the forage sector is a prime example of one that is possible for them to participate in if it is viable. If you compare it with the dairy industry where quotas are extremely high, it's very difficult for young persons who are starting, unless they're starting with a family operation. Many other operations require an awful lot of overhead. The forage industry is certainly one that is reachable for many young farmers, but it must be profitable.

As Dylan said, why would anybody do it if they can't make a profit? No other industry would do it. Nobody else would.

I realize my time today. We want to table our concern and keep the door open for more discussion in the near future.

Wanting to finish on a very positive note, our fact-finding mission to the Middle East was most successful. We certainly came home having been very warmly received in the Middle East. The door is wide open for business when we are able to compete on a level playing field.

I thank you most sincerely for coming to the Grey-Bruce area and providing the opportunity for local producers to express their point of view. On behalf of CFGA, I look forward to meeting with you at a time that is mutually acceptable and discuss the situation in more detail.

[The Chair, Conservative, Larry Miller]

Thanks very much, Ray.

We'll now go to Greg Ardiel, a young farmer from the Thornbury area.

[Greg Ardiel, As an Individual]

Hi. My name is Greg Ardiel. I'm a fourth-generation farmer, mostly in the tender fruit industry. I grow apples primarily, as well as grapes and pears. I'd like to thank you all for coming out here today to listen to some of our growing concerns.

There are many obstacles to be faced in farming as a whole, whether you're just beginning or just ending, as more and more seem to be doing. This is why it is so important to help young people to continue to farm and to create the incentives needed. Our Canadian government is starting to take steps forward to once again make farming a lucrative and successful career and lifestyle. There are many things that can be done to help the entire agricultural industry; some of these steps cost more than others, but they all have a positive impact directly to the farmer.

Canadians are becoming more aware of what's in their food and where it comes from. They want to see healthy and safe Canadian food on their grocery store shelves and their shelves at home. Simply creating more stringent labelling laws that would clearly define where most of the main ingredients of the product come from would help to provide more revenue for farmers. That's part of the money making it back from the retailer. Something as simple as writing labelling laws doesn't cost a huge amount to the government; it's a relatively small bill, compared to some other methods that could be taken.

When it comes to helping youth start into farming, whether taking on the family farm or buying their own, the biggest challenge is quite simply cold hard cash. The need for equipment, a house, an implement shed, and a bunkhouse for workers makes it very difficult to start. This doesn't even cover the operating costs, such as fuel, chemicals, labour, and miscellaneous farm items, and to combine these costs with a low net income produces very little incentive for any farmer, especially a young farmer, to start into the industry.

The effects on the economy would be detrimental if agriculture disappeared. It's Ontario's second-largest industry and is running neck and neck with the auto industry as the largest in Canada.

The average age of farmers is over 55, so this gives us little time to come up with succession plans and viable programs to sustain such a large industry and ensure a healthy future for all Canadians. This means the government must create incentives needed for young people. The only youth getting into farming are doing it with the help of their parents, whether that is through low interest rates--or no interest rates--on farm equipment or through shared labour. Not all farm families are even able to support such methods, as they're costly to the families. It's easier to sell the farm and let the youth move on to more prosperous and less stressful careers.

I recently purchased a farm and am trying to make a living of it. I work for the Canadian Coast Guard on the ships as well, month on and month off, to offset the costs of farming. This consists of 12- to 13-hour days, seven days a week, to allow me to take a month off, though when I get home, more or less the same schedule continues, so it's not overly enticing.

I also rent out the main house and two of the rooms in the bunkhouse where I reside on the farm. My dad and my brother help look after things while I'm gone; I wouldn't be able to do it without them. But right now I'm paying to farm, which begs the question of why anyone would want to get into a situation like that. I guess it would be because, being brought up on a farm, you love the lifestyle and the work entailed with it. But eventually--soon--there need to be some dramatic changes to entice young people, or people at all, to choose this career.

This comes back to the cold hard cash I mentioned earlier. A program that would allow young farmers to borrow money in long-term loans, possibly with the first three to five years of interest waived so that we'd be paying principal only, would greatly help us to get better established and gain a more solid footing. Another opportunity would be to help farm families create a viable succession plan by providing government funding to hire consultants who specialize in succession plans. It isn't right that a person should farm for a lifetime, working tireless days, only to more or less give the farm to the children and take just enough for themselves to retire. These programs can help our youth, but, plain and simple, they require money.

The federal government also mandates that tree insurance will not be provided for first-year farmers. This is ridiculous, as a natural disaster, which I faced earlier this year, will not pick and choose which trees it destroys. The young farmer will be completely out of pocket for these trees and will be forced to replant with less income than before, because of lost acreage. This needs to be addressed.

Also, Farm Credit Canada has been established for many years to help farmers. When I went to them about interest rates and mortgage loans, they told me that they couldn't help young farmers because young farmers didn't have the background or the assets to put up as security, but being in the business they're in, they need to help the young farmers, because the old farmers won't be around that much longer.

The problems facing the industry as a whole also make it harder for the youth to get into it, and need to be addressed. These problems include greatly increased labour costs, with increases up to 28% over the past three years; chemical costs constantly going up; new regulations banning various chemicals that we've used before, with new costly ones coming out; imported products, particularly from China, and a lack of support from our own Canadian chain stores. More common sense and moderation need to be used to improve safety and pesticide risk management as well.

The bottom line is that the costs of production continuously keep rising, while return profits remain the same. I think this has been addressed by Dylan and by Ray.

Overall, I believe moderation is key to successful and therefore sustainable agricultural industry. The government needs to take a step back for a moment and take a good, hard, objective look at what is happening. With perhaps a little less administrative paperwork and more discretion in new regulations, together we can re-energize agriculture and help to brighten all of our futures and a whole bunch of flourishing industries.

Thanks again for your time.

[The Chair, Conservative, Larry Miller]

Thanks very much, Greg.

We'll now move to Keith Kirk.

[Keith Kirk, As an Individual]

I'd like to thank the group for coming here today to what we sometimes call God's country. It's a great place to live.

When Larry called and told me that this was to be about young farmers, I thought he'd called the wrong person. I'm 61 years old, so I'm older than the average farmer. But I'll give you some history of how I started and how my sons are going.

I was raised on a mixed farm not very far from here. My father died when I was 14 years old, and I have three sisters. At that point, my mother had been a school teacher, so she went back to teaching school. We kept the farm going at a reduced scale. I went to the University of Guelph and graduated from there in 1971 with a Bachelor of Science in Agriculture. I came home farming at that point.

My mother wasn't really happy about that, because farming in the late 1960s and 1970s was a lot like now: it wasn't making any money. My classmates all had two or three job offers to go to into industry. But I actually made some money in the 1970s and built up some equity. My classmates came home in the late 1970s or early 1980s, when things were looking better, but some of them didn't survive the 1980s. A lot of it is timing in this business.

When I came home to farming, I rented the farm originally from my mother, with a rental purchase agreement. Then in the 1970s I bought the farm from her, but she carried the mortgage and we worked things out that way.

I'm now married to my wife, Darlene, and we have two boys. Kevin is 28 years old and is still at home with us. He owns cattle and some machinery and does some custom work. My younger son Scott is 26; he's married to his wife Allison. They both work off the farm. Two years ago we sold them a 100-acre farm we had bought that has a house and barn on it. The farm was appraised, but we sold it to them at less than the appraised value. That allowed them to have some equity so that they could go to a financial institution to arrange a mortgage. At that time the capital gains exemption helped us, to some extent, because we didn't have to pay capital gains tax on it.

We still all work together. The cattle are all owned separately. The crops are more or less separate too, but there's a sharing of labour and equipment. It's pretty standard.

The original 190 acres was a mixed farm. We now have about 600 cattle, we're cropping 1,000 to 1,100 acres, and then there's another 700 to 800 acres in hay and pasture. I don't like having all my eggs in one basket; that's why we're cash-cropping and into cattle.

We rent about 1,400 acres of workable land. I deal with 27 landowners, so some of those acreages are small. I have to keep a list of the rents I have to pay, and about half of those are to either widows or retired couples who still want to live on the farm but want it looked after. We don't pay them big cash rents. In some cases, we blow out their lane for them to keep the lane open and we sign their property tax rebates. But we look after the land as if it were our own, and that's what's important to these people. I looked at that list again this morning. Twenty families used to make their living off the land we're now farming, and we're not getting rich from those twenty farms.

I'd call ours a medium-sized operation. There are smaller operations, and quite often they're working off the farm to sustain the operation. Then there are some large operations that.... I don't know whether they're profitable, but they have the cashflow and they seem to be able to keep going that way for a while.

Besides the farm, I have a seed corn dealership that I've had for 35 years, I guess, so I'm on farms talking to other farmers quite often. I looked at that list. There's one hog farmer left and about twenty dairy operations, and in seven or eight of those there's a second generation involved. In three of them there are actually two sons involved, so there's some succession happening there. We have about 35 cash-crop or beef operations, and once again about seven or eight of those have a second generation, but it's usually one son, and he's maybe working off the farm but helping the father.

The mood out in the countryside, I'd call it cynicism. We've all become a little cynical. We're dealing with the consumer. They want cheap food. Everybody wants cheap food, but what gets us, I guess, is that our farmer's share of that food basket keeps shrinking. Somebody else is getting the money ahead of us. We're dealing with large multinational corporations; it doesn't matter whether we're buying or selling. We've been getting gouged by some of these corporations.

I'll give you two or three examples. For glyphosate or Roundup we used to pay $12 a litre. For the last I bought—and I joined Farmers of North America, which is a sort of buying group—we paid $3.60 a litre.

For Ivomec.... This one really sticks in my mind. I was down in the States a few years ago and heard a vet say, do you know what “Ivomec” stands for? We had no idea. He said it stands for “increased volume of money extracted from cattlemen”. It was a joke at the time, and we all laughed. We used to pay $450 for five litres of Ivomec, and I'd buy jugs and jugs of it. I bought the last stuff at $90 a litre.

For phosphate fertilizers, in the fall of 2008 I paid $1,425 a tonne for some; in the fall of 2009 we paid $525 a tonne. I know these companies need money for research, and we don't begrudge it; I see it from the seed business. But I know the returns on assets that these companies expect, and it's about ten times more than what the average farmer is making—and we see the CEOs making millions of dollars.

Then we have to deal with government. We realize that you're all running deficits—we came through a pretty serious recession here. But there was a lot of money quickly flowed into the auto industry to bail out some of what we would think of as poor management. We don't see that much money coming into agriculture. In some of the programs that are announced, we're finding out that maybe 40% of the money is going to administration and is not getting back to the farmers.

Then we deal with bureaucracy. I started listing some of the things and the people we have to deal with. We have source water protection, we have nutrient management, we have environmental farm plans, we have the risk management program, we have AgriInvest, AgriStability, CAIS—my favourite. And then, we have one employee, so we have to deal with Workmen's Compensation and the safety board.

Typically, farmers lived poor and died rich, but the next generation, they don't want to do that, and I can understand why. If you want to attract farmers into agriculture, it's pretty simple: they have to be able to make some money; it has to be profitable. We need some competition in the marketplace. There's too much power in too few hands that we have to deal with.

We need some government programs that are bankable, and I think we need some caps on some of those payments. When I say bankable, I mean that the safety nets.... The volatility that we see in prices today was just unheard of back when I was a younger farmer. We need a level playing field, to some extent. We're in the beef business, so we compete with Alberta, we compete with Quebec, we compete with the States. I know that's maybe a provincial responsibility, but I think the federal government can help some there too.

I have down here on my list “less red tape”. I know that's not going to happen; there's not going to be any less red tape, but we need some accountability or something with the civil servants. A lot of them do a good job—they'll work out in the field—but there's a level of bureaucracy that has gotten out of hand, and they don't seem to be accountable, to us. They're not accountable to farmers, and I don't know whether they're even accountable to you guys. I think something has to happen there.

Among things that you've done to help us, the capital gains exemption helps, and the Income Tax Act with the optional inventory adjustment has helped us. The Agricultural Commodity Corporation has helped with some cashflows. And you brought out some other good programs. There's Growing the Margins, and I can't remember the name of this program, but we had a barn fire in 2003, and I wasn't sure I wanted to go back into this beef industry. But you had a program whereby if you spent $100 you got a consultant to come in and give $2,000 worth of his time. We went through that program, and it was a good program. There are things like these that you're doing that can help.

In closing, I probably have to apologize for sounding negative, but we've beaten our heads against a wall for quite a while now. We haven't made any money in the beef industry since BSE hit.

I've been in it all my life, and I know it's cyclical, but we used to have one or two good years. We've waited a long time for those good years. I hope they come someday.

We need some optimism and enthusiasm, and that's why I applaud youth. They can bring that with them. We have to get some young people into this industry.

Thank you.

[The Chair, Conservative, Larry Miller]

Thanks, Keith. You certainly don't have to apologize; we've heard some of that before. And in terms of the bureaucracy, we don't even want to get started on it. You only touched on the surface. It's ridiculous sometimes.

Now we'll go to Wayne Ferris.

[Wayne Ferris, As an Individual]

As I think you have heard from all the speakers, farming is intergenerational, passed on from one generation to the next. My grandfather emigrated to Canada in 1888. He was a farmer when he came, and he remained a farmer. My grandfather farmed all of his life. My father started farming in 1936 with six heifers, a team of horses, a horse and a buggy, and a rented farm.

In 1960 I decided that I wanted to farm after I graduated from school. My father advised me to go and get a job, since farming had had good years and bad, and he had experienced those and felt it was going to continue.

I often think of my dad's advice as I work with farmers struggling with their financial affairs. I went to Toronto and got a job. I progressed through the chartered accounting field and became a chartered accountant. That's my profession, but my passion is farming. I've been able to mix the two of them, because I specialize in farm accounting.

The years of the sixties and seventies were years of increased production, when the boys and girls who came out of the agricultural colleges were to produce for a starving world. The marketplace was there. We could do so much to feed the world.

It didn't happen. It takes money to buy food, and those countries don't have the money.

In the early eighties, the high interest rates took out a group of those farmers. As we started to rebuild after the high interest rates, we entered into an area of specialization, and bigger was better. We've seen the result of that. It just hasn't worked.

Being intergenerational, to have a successful succession plan requires three things: financial readiness, management readiness, and communication readiness. I think the farming community is well situated with management readiness. I think that the youth of today are better educated and more knowledgeable on all aspects of farming. With communication readiness, it depends on your family. It doesn't necessarily always flow, but I think that certainly the government programs that have been around have assisted in developing that. As for financial readiness, I always say it's tough to will debt. That's really where we're situated with regard to the succession plan. It's tough to bring in the new generation when the old generation is in dire financial straits.

The Income Tax Act has given favourable treatment to farmers and farm families. This is a great benefit in succession planning. The capital gains exemption of $750,000 on qualified farm property allows for retirement of parents without taxing their retirement funds. Keith alluded to that, that they...in their intergenerational transfer, why they used that. Most farmers rely on their real estate for retirement funds. The capital gains exemption greatly assists in intergenerational transfers.

I think from time to time there is a lobby to have that increased. I don't feel that it needs to be increased. A husband and wife get $1.5 million; my own personal opinion is that it shouldn't be used as a tax shelter, and I think it's quite adequate where it is.

The capital gains exemption should be extended to qualified farm real estate owned by family farm corporations. Corporations have to sell out their shares. Most farmers divide up their real estate to their family, and it prohibits them from going into a corporation if they have to dissolve the corporation at the end and there's no mechanism to take that property out of the corporation other than at fair market value and pay the capital gains tax on it.

Alternative minimum tax has a negative impact when attempting to use the capital gains exemption. Qualified farm properties and qualified small business shares should be exempt from alternative minimum tax. I don't think when the alternative minimum tax was brought in that the intention was to catch qualified farm property, but certainly that's the way it works. We struggle with it all the time. Whenever seniors are selling their property they're caught with this alternative minimum tax, even though they have the capital gains exemption.

Taxpayers who sell qualified farm property should likewise be exempt from the clawback of the old age security. Any farmer who's over 65 and getting the old age pension who sells his farm, or tries to transfer it and make use of the capital gains exemption, loses his old age pension for the year he sells it. It's a kind of an ongoing thing because the year for the old age pension runs from July to July.

Consideration should be given to allowing for transferring farm real estate from farm corporations on a tax-exempt basis when it is transferred to the next generation for the purpose of farming. Again, that's going back to the previous one, but on a little different point.

Presently it is not possible to transfer qualified farm property to siblings, nieces and/or nephews without extensive tax planning. If these relatives are to farm the properties, the requirement of the transferring at fair market value should be removed.

Cash basis accounting is a great benefit for the farmers, and in particular it is beneficial to young farmers, deferring income taxes until inventories are sold.

I feel there are a lot of positives under the Income Tax Act. I've enjoyed working with the income tax in the farm community. There are a lot of good points in there.

With respect to some other issues, I guess every speaker has talked about how profitability, financial security, long-term financial stability are what are necessary to attract the next generation to stay on the farm. I'll repeat that. Profitability, financial security, and long-term financial stability are necessary to attract the next generation to stay on the farm.

This challenge for financial security is not unique to the Canadian farmers. We have to be able to compete on a global market. The stability and future farm profitability cannot be dependent on government programs alone.

Programs such as NISA, CAIS, AgriInvest, AgriStability, and risk management that provide payments have been very necessary but do not produce viable farming operations or long-term stability. In my opinion, NISA and AgriInvest have done more to assist young farmers and small to mid-sized farmers than CAIS or AgriStability have.

More must be done to assist farmers in marketing their products, not just selling what they produce. I think over the years marketing has been the weakness of farmers, and I think it's still the weakness of farmers today. We produce for a market we hope is going to be there and we take the price that is provided at that point in time.

Production of quality farm products has been achieved. Financial management has continued to improve. Marketing of the product on the world market at a profit remains the challenge. Diversification of commodities may help in levelling the ups and downs.

Secondary income, be that farm related or non-farm related...today there's a lot of pension money flowing in to keeping the farms going. Off-farm employment, other business ventures, or added value to the farm products are necessary for the short term to obtain financial security for young farmers. I would say this current year that the people who have that secondary source of income, whether it be custom work, selling farm machinery, or whatever, are the only ones.... There was a lot of red ink out there this year, and those were the people who tended to do the best, with that diversification.

The well-being of the rural business community is dependent on a profitable agricultural business to support it, and the farmers benefit from profitable rural businesses in our local towns. Government incentives to rural business indirectly benefit the farmers. These businesses can be a source of off-farm income.

I want to thank you for coming to the town of Wiarton, north of the gates. I wish you well in your challenges ahead, because the average farmer is getting older and older. I know that my son, who I believe is here today, would love to farm, but he and his wife just bought a small farm and they're both working off the farm to support that farm.

[The Chair, Conservative, Larry Miller]

Thanks very much, Wayne. I'm sure there will probably be some questions for you on generational transfers. Thank you.

Now we have our last speakers, Harry and Leony Koelen from between Chesley and Walkerton. Go ahead.

[Leony Koelen, As an Individual]

Thank you all for coming here.

We are Harry and Leony Koelen. We live in Paisley with our five kids. We emigrated from Holland in 1991, with backpacks and $2,000. We worked for other people for four years before we bought our own first farm in Brussels. In 1999 we sold that farm and moved to Paisley, where the land was cheaper, and we built our new 2,700-head sow barn. We built the other 2,700-head sow barn in 2003, and accumulated 1,100 acres throughout the years. Right now we employ 16 full-time people and a few part-timers.

As young farmers starting from scratch, we can identify with a lot of the struggles that young farmers face today.

The number one problem is access to capital. You need a lot of capital to start farming. It is pretty hard if you have to do it on your own without any help from family. Even with help from family, it's still often very hard to accomplish. We feel that there is a need for a start-up program for young farmers in the form of a government-approved loan that would come with low or no interest payments and flexible terms.

Applicants would have to submit a business plan, and cashflow projections would have to be approved by a peer review committee. These programs need to be designed so that only starting farmers can access them and there are no loopholes for big corporations to grow larger from them. In our own situation, we found it very frustrating that despite being very well educated in swine, it was extremely hard to get financing and other people around us with equity but no experience in pigs could just get the money and start building sow barns. Today we know that most of those people do not own those pig barns any longer.

[Harry Koelen, As an Individual]

I'm Harry.

We can talk about the weather, and the Canadian dollar, and a lot of other issues that face young farmers that the government can't help us with a lot, either. We're just trying to put together some other things that maybe we can get some help with.

Just to get back to what Leony was just talking about, I think Ontario--or I'm not sure if it was federal--used to have a program that I think was called FarmStart. I don't know if it was in the 1980s or early 1990s; I think it was before the time we were actually in Canada. I've heard from some other people that it was actually their only help to actually start farming in those days.

Another problem we see is that young farmers often miss out on government safety net programs. It takes a long time to build up enough reference years, and the beef, hog, and horticultural program did not deliver any money to our Bruce farm in 2008. To fully qualify for the payout, we had to be in business since the year 2000. We started selling pigs in 2004 so we mostly missed out. You pretty much had to be in business for at least eight years to fully qualify for the program. This really hurts young farmers. They need these programs more then their established counterparts. They are the ones with the lowest equity and, worst of all, it puts them at a real disadvantage and makes them less competitive compared to their established counterparts.

Another problem farmers are facing is the wild swings in commodity prices. I know it was mentioned before already, but while it is hard for the established farmers, for starting farmers with their higher debt loads it is just deadly. A risk management program, especially designed for a starting farmer, could be very helpful. It should be a program where the applicant does not have to pay in for a number of years or need a number of reference years to be able to qualify.

[Leony Koelen]

What can we do to get young people interested in farming? Farming has a negative image with the general public. We have to re-educate the public about where our food comes from. Rural high schools should offer agriculture classes to get young people interested. Young people should be shown that you can make a good living farming, and it's a great lifestyle as well.

We have to think outside the box. We have to offer young people alternative ways to get started in farming. Young farmers don't have to start 100% on their own. They could buy shares in a larger operation where they will be supported by knowledge and experience from the current producers and they can slowly build their own equity.

In our area, we hear it all the time that people do not encourage their children to go into farming. We feel that young people need to be educated. There are a lot of different ways to make money in agriculture.

Through the Outstanding Young Farmers organization, we met a lot of young, very innovative people who are very creative in making a living from farming. A lot of these people started from scratch and built themselves a very viable business.

[Harry Koelen]

There are a lot of other challenges that face not just young farmers but all farmers in Canada. I want to touch on that somewhat.

As mentioned earlier today, there's an unlevel playing field for producers within Canada--for example, between Ontario and some other provinces. Quebec had the largest percentage of the country's sow herd but yet had the lowest percentage that participated in the buyout program--because of Quebec's ASRA program, of course. The ASRA program guarantees Quebec's agriculture producers their cost of production. How can we compete with that in Ontario? It's hard to believe we can have such a difference in support within one country.

We seem to have a lot stricter export rules than import standards. They should be the same. A lot of our products leave the country produced under very strict rules, yet a lot of imports do not meet our quality standards and regulations.

If the U.S. implements COOL, why can we not do the same? We know the government challenged the COOL law, but it will take years before the WTO will reach a verdict on the dispute. In the meantime, could we have an interim Canadian COOL law in effect?

We have to streamline rules and regulations with the U.S. and between provinces. There is too much red tape in Canada versus the U.S. New pharmaceutical chemical products take too long to be approved in Canada versus the U.S. We know that those products have to be checked out, but processes have to be somewhat sped up.

Something else to think about is maybe supporting supply management when negotiating free trade. It could result in being excluded from free trade deals for other agricultural products. We're saving one sector and hurting many others. Maybe there has to be some give and take there.

Government does not owe its farmers a living, but it does need to supply them with proper legislation and policies and a level playing field for us to be able to make a living.

Thanks again, everybody, for the opportunity.

[The Chair, Conservative, Larry Miller]

Thanks very much, Harry and Leony.

You touched on the Outstanding Young Farmers program. Just for everybody's information, you won that award three years ago, did you not, Harry and Leony?

[Harry Koelen]

It was 2006.

[The Chair, Conservative, Larry Miller]

That was quite a feather in your cap, and I think it speaks well.

We'll move on to questioning.

For everybody's information, this is being wired straight back to Ottawa as we speak. If you are better on a computer than I am, you can go on tomorrow morning and actually read the Hansard in the House of Commons. This committee meeting will be there, if everything goes right.

Without further ado, we're going to move to Mr. Valeriote for five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Larry.

First of all, I want to thank each of you for coming before this committee. I know it has taken valuable time out of your day when no doubt you have other responsibilities to attend to.

We have travelled across Canada now to each of the western provinces, and for me it's been an eye-opener.

You're being optimistic, and I applaud you for that, but from what I've heard, I see the situation as grim.

People around this table have heard witnesses out west say that if we don't deal with this effectively, quickly, and responsibly--and it's going to take a lot more than tweaking a few of these programs--and if we don't have a full review of our farm laws and our programs, from our free trade agreements down to AgriStability and every other thing, then we are going to turn our rural areas into ghost towns.

Keith, you've been far too polite. I applaud you for that. But I think it's time you expected more from us as your members of Parliament. I really would insist on that from you, that you demand more. You're entitled to more.

Greg, I understand your point about food labelling, but darn it, most people out there are only interested in price. There's that certain part of the population who are prepared to buy Canadian, but the first thing they look at is price, unfortunately.

We've heard across the province and from you today about the need for correcting our business risk management programs, the issue of the cost of land being an impediment, and about the lack of harmonization between regulations and approval processes. Harry spoke about that. We talked about competition laws that are allowing certain parts of our industry to consolidate, whether that be the farm inputters, like fertilizers, or the processors, etc. I mean, there are so many things that are broken that anything but a total overhaul is going to really just underestimate the seriousness of the problem.

I'd like to talk about the competition laws. In Canada our competition laws only prevent price fixing. They don't prevent breaking up large companies, as they do in the United States.

Are any of you able to comment on the need for a law that would allow us to go to these large, consolidated companies that are making you be price-takers? Do you think there is a need to fix those laws?

Would anyone like to tackle that one?

[Keith Kirk]

I'll speak to it.

In the beef business, we have one major player in Ontario. It's Cargill. In Ontario, we used to have the highest price of beef in the fat cattle market, because within 400 or 500 miles there's a tremendous population. This winter, we had the lowest-priced fat cow. Cows were a lot higher in the States, and they were higher out west.

I know some of these buyers who work for these companies. When talking to them, I asked why this was happening. They said, well, we know it's happening, and it shouldn't happen. Their solution was that instead of bringing our price up to where it should be, they were going to bring the price in the west down.

I watched the prices, and that's what they did. They brought the price down in the west. Ours has come up a little bit, so it kind of evens out. These packers right now are making pretty good money, but it's to get them to share it with us...and I don't know why they don't want to do it. I know that Cargill wants to invest more money in their plant in Guelph, but unless they have some beef farmers here in Ontario to support them, there's no sense doing it. It's sort of the chicken and the egg. We need them, but they also need us. There has to be some balance. But they've got too much power; we can't compete.

[Frank Valeriote, Liberal, Guelph, ON]

Do any others want to comment on any of that?

Let's move over to education. We were at the University of Guelph yesterday morning. They were talking about the techniques they're teaching young farmers, not just on farming but on diversification and that kind of thing.

When I was in law, every year I went for upgrading courses to make sure I was on top of the recent law and the new techniques and technology that I had to incorporate into my practice. Do any of you engage in those kinds of programs, where you look to diversify processes or production on your farms? Have any of you engaged in that?

Harry.

[Harry Koelen]

We're actually always looking to diversify. We're in the pig business, and it's not been all that wonderful in the last few years, so we're always looking to diversify.

Over the years, it was never a good idea to.... Sows always made us more money, but now, in the last couple of years, it's been a different story. We're going to take advantage of the new solar programs. We're going to put up some solar panels.

Yes, we're always looking for other opportunities.

[Leony Koelen]

I have to say that you also have to look at the fact that you can diversify, but you'll lose some of your time with your current operation, right? So for us, having more sows was always a better deal than going for farrow to finish, because you're doing different things at a time. It takes less time for us to add some more sows. If you're going to diversify, you need a whole new set of eyes on something else.