Agriculture Committee on May 10th, 2010

[The Chair, Conservative, Larry Miller]

I call the meeting to order.

It's great to be here in Quebec. We're continuing our study on the future of agriculture, and particularly on young farmers and how we can not only attract them to agriculture but keep them there.

I'd like to thank all of our witnesses for being here today. As a producer myself, I know how hard it is to take a morning or a day off. We really appreciate that you're here.

With no further ado, we'll move to our speakers. From the Fédération de la relève agricole du Québec, we have Mr. Frédéric Marcoux for 10 minutes, please.

Thank you very much.

[Frédéric Marcoux, President, Fédération de la relève agricole du Québec]

Good morning. Thank you for the invitation and the opportunity to say a few words about what we do and what we hope the federal government will do for us.

Before I get into the specifics of what we do, I would like to share a general observation with you, one that has led us to appear before you here today. Whether we are talking about the agricultural policy framework or the growing forward program, nowhere in this entire agricultural policy is there any mention of young farmers or the next generation of farmers. How can we develop an agricultural policy for the future, such as the growing forward program, if the next generation of farmers is not included anywhere? That is our first observation.

What is the current status of the next generation of farmers in Canada? What is the profile of young farmers? What problems do they face? What sort of costs are associated with the transfers? Before any tools whatsoever are introduced to help the next generation of farmers, the Fédération de la relève agricole du Québec would first like to get to know those young farmers, their characteristics and challenges, and determine whether they have the right tools to take over these farms and manage them in a viable, sustainable manner.

Why? Because we have no idea how many young farmers are working throughout Canada.

Before we create any structural programs to assist the transfer of farms to the next generation, we need to remember that the choices being made by farmers right now will have a significant impact on production in 25 or 30 years. Personally, I am a dairy farmer and I will probably still be a dairy farmer 25 or 30 years from now. The decision to be a dairy farmer is not a question of context, but rather a choice: one chooses to produce a given product.

How do we develop a policy? By knowing what young farmers really want to do in the future. That is why we are asking for a major census to be conducted across the country regarding the current status of the next generation of Canadian farmers. We need to know who these young farmers are.

We would also like to see the creation of a review committee that includes representatives from the next generation of farmers. That committee should conduct an analysis and make proposals based on the results of the farming census. We need a spokesperson to converse with young Canadian farmers. By way of comparison, in Quebec, MAPAQ officials work with young farmers full time. We believe the same thing should be happening at the federal level. These people would not have to make any demands, but rather to work towards that, as well as to follow up on and continue to analyze the census that we hope will be done.

We are also asking that Agriculture and Agri-Food Canada continue the work we have begun in Quebec in relation to examining the financial situations of the transferors and that that department play an active role in the work recently begun. Quebec has a few excellent programs to help young people enter the agricultural sector. However, one major factor that limits agricultural transfers is often the situation of the individuals leaving the agricultural sector.

In Quebec, we are beginning the work of assessing the situation of farmers who are retiring. Those people rely on the value of the business. They need cash and must leave the business in a situation that ensures its sustainability. We should be helping these people. Furthermore, a committee has already begun examining this matter, and we would very much like Agriculture Canada to be part of that committee.

These observations should serve as a basis for the creation of a real Canadian action plan for starting out in the agricultural sector. Following the example of what is being done on the provincial level in Quebec, co-operation between public authorities and the farming community should motivate the government to introduce a national policy with highly effective measures in order to meet strategic objectives.

At present, regarding the situation in Quebec, the FRAQ is proposing the following priority initiatives. First of all, in the farming census done every five years, we are proposing that questions be added regarding farmers' intentions in terms of succession. At this time, there is no way of knowing when farmers plan to retire and whether they have someone to take over their farms. Without this crucial information, it is impossible to establish a database of farms to match young aspiring farmers without farms and farmers with no succession.

We are also proposing a few financial incentives for farm transfers. For instance, a farm transfer savings plan would allow transferors to see their savings grow considerably when they transfer their farms.

Roughly speaking, such a program would be similar to education savings plans, only it would apply to farm transfers. As an additional measure, the transfer of farm property should be tax free in cases of gifts and transfers to individuals who are not family. Lastly, new farmer subsidies should also be tax free, in order to support farm businesses that are bringing in young farmers. At this time, farmers receive funding to be able to transfer and start up the business, but those subsidies are taxable the following year.

That is what we wanted to present to the committee this morning. I thank you for your attention.

Magali, would you like to add anything?

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Delomier, do you want to add anything?

Thank you very much for being brief. You were actually just over five minutes and we appreciate that.

Now we'll move to Mr. Olivier and Mr. Lapierre from the egg producers federation of Quebec.

[Sylvain Lapierre, Table egg producer, Fédération des producteurs d’oeufs de consommation du Québec]

Thank you very much for inviting me to speak here today.

My name is Sylvain Lapierre and I am a table egg producer from Saint-Gervais in Bellechasse. I have also been an administrator with the Fédération des producteurs d'oeufs de consommation du Québec since 2007. I am also the president of the evaluation committee for the start-up assistance program for new farmers.

When I was 22, I took over my father's farm, which he had taken over from his father 20 years earlier. One of the many advantages of the supply management system is that it allows business owners to predict their income, which greatly facilitates the planning and transfer of farms. I have 24,320 hens, and the average in Quebec is 35,000 egg-laying hens per farmer. In my case, the transfer took place via the creation of a new business 10 years ago. Over the last 10 years, no less than 34 egg production businesses in Quebec have been partially or completely transferred.

With regard to the next generation and sustainability in table egg production, every industry that claims to be able to ensure its survival and continue to develop must find ways to ensure its sustainability. One way to do this is by making sure that the younger generations can continue in the safe conditions that the previous generations have created.

In the table egg industry, a certain degree of concentration has been happening at all levels, whether in terms of the producers, graders or supermarket chains, as has been the case with most other agriculture sectors in Quebec and Canada. This situation, combined with the rarity of production quotas, has made things very difficult for the next generation. Between 1982 and 2004, the number of producers dropped considerably, from 234 to 102, a historic low. That trend stopped in 2005 and we now have 105 egg producers in Quebec in 2010.

Egg producers are very aware of this situation and therefore decided to introduce a number of tools to help improve access to quotas and encourage new producers. One such tool is the start-up assistance program for new egg producers, which Philippe will present to the committee.

Thank you.

[Philippe Olivier, Communications officer, Fédération des producteurs d’oeufs de consommation du Québec]

Good morning.

I would like to speak briefly about the start-up assistance program for new egg producers, which was officially launched by Quebec's table egg producers in 2006. Through this program for new non-family farmers—only people from outside the sector qualify for the program—they hope to increase the number of producers by focusing on young farmers and regions with low poultry density.

The start-up assistance program for new producers has been a resounding success. It has already brought in five new producers. The 2010 edition will allow a sixth candidate to begin producing eggs thanks to a lifetime quota loan for 5,000 laying hens. The producers who have taken advantage of this program have settled in various regions in Quebec—Chaudière-Appalaches, Saguenay-Lac-Saint-Jean, Pontiac, Lanaudière and the Eastern Townships. I have compiled a list of the new producers who came from this program and the year they began.

The addition of just one new producer a year might seem modest, but out of a total of 105 producers, that works out to a 1% annual increase. So that constitutes a considerable step. With respect to the lifetime loan of 5,000 laying hens, as a comparison, the revenues of such a business are similar to a dairy farm of about 35 cows or a poultry farm—for meat-producing chickens—of approximately 2,000 square metres.

Along with this program, the centralized quota exchange system, implemented in 2009, will make it possible for these new businesses to expand. It seems clear to us that the supply management system that egg producers operate in allows them to implement all kinds of tools that help ensure the sustainability of the sector. We must recognize that this system is good for Canadian society as a whole, because it gives consumers access to high-quality products in sufficient quantity and at reasonable prices. The market pays producers for their products based on their production costs. At the same time, processors benefit from a very stable supply and achieve an advantageous bottom line. Supply management is also good for the state, and therefore taxpayers, because farmers do not receive any government subsidies to support their incomes.

Furthermore, this system promotes efficient and human-scale agriculture throughout Canada that respects resources and people. We must remember that supply management production accounts for 40% of agricultural income in Quebec, nearly 30% in Ontario and 20% of agriculture in all of Canada. Furthermore, these systems do not cause any distortions to international markets, because their primary objective is to supply the domestic market.

In closing, I would like to point out that our federation received a “next generation” award from the Fédération de la relève agricole du Québec for the start-up assistance program I just told you about.

That concludes my presentation.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to the federation of commercial agriculture producers.

I apologize for my French.

We have Mr. Luc Belzile and Mr. Van Tassel for 10 minutes, please.

[Luc Belzile, Manager, Research and Communication, Fédération des producteurs de cultures commerciales du Québec]

Good morning and thank you for the invitation to speak here today.

My name is Luc Belzile and I am a research and communication officer with the Fédération des producteurs de cultures commerciales du Québec. Here with me is William Van Tassel, the first vice-president of our federation.

Our federation brings together approximately 11,000 farmers who grow and market grain in Quebec. We have prepared a submission for the purpose of today's exercise. What I am about to present to you over the next few minutes summarizes that submission.

First of all, our federation has made some observations regarding agriculture in Canada. First, we are seeing significant concentration. For instance, according to information gathered by the agricultural census, from 1981 to 2006, the number of farms dropped from 318,000 to 229,000, and the average acreage per farm increased from 207 hectares to 295 hectares. This phenomenon might suggest that these expanding farms have improved access to technology and are increasing their productivity, which ensures them greater prosperity. However, we have some concerns about other indicators, particularly concerning the future of farming and the next generation of farmers. Also based on information from the agricultural census, from 1991 to 2006, the proportion of farm operators under 35 years old dropped from nearly 20% to 9%, and the proportion of farm operators with a non-farm paying job increased from 37% to 48%. Despite the concentration phenomenon, we are seeing an aging farm community and a greater need for non-farm income.

In order to reverse this trend, our federation believes there are two main factors that we need to work on more. First of all, we need a farm income safety net policy to reduce the need for non-farm income. Second, we also need—and we believe this is urgent—a public agricultural research policy that will put Canadian farm productivity on a level playing field with Agriculture and Agri-Food Canada's other research policy priorities, such as protecting the environment and public health.

Why do we need to invest in public agricultural research? First of all, several studies have shown that the economic returns associated with public agricultural research vary between 40% and 60%. This benefits society, the government and farmers. Furthermore, we need public agricultural research to better serve certain niche markets, such as organic grains, non-GMO grains and identity preserved grains. This is needed because private research tends to focus more and more on very limited markets, especially on GMO technologies in canola, corn and soybean.

Furthermore, I would like to share some evidence that demonstrates the strong divestment in Canada with respect to public agricultural research. According to the OECD, Canada has underperformed internationally in that regard. The ratio in terms of public agricultural research investment compared to agricultural production value was 1.83% in 1986. In 2008, that ratio dropped to 1.08%. That was the fourth greatest drop—41%—among all OECD countries. Thus, there has been a significant drop in investments in public agricultural research in Canada.

We are also deeply concerned about some other facts. This spring, the Auditor General of Canada issued her report, which dedicated an entire chapter to scientific research at Agriculture and Agri-food Canada. We are very concerned about three main shortcomings mentioned in that report. First of all, the Auditor General mentioned that Agriculture Canada is not keeping many of its financial commitments. Second, a lack of human resources planning is also a problem. Finally, the third factor is inappropriate renewal of buildings and equipment dedicated to research.

To be more specific regarding the undelivered financial commitments, the Auditor General reported that funding for peer-assessed research projects dropped by 6% in 2007-2008 and 20% in 2008-2009.

As a specific example, one project aimed at developing disease resistant wheat varieties did not receive the funds originally promised. After the project was well underway, its budget was cut. It must be understood that when it comes to developing disease resistant wheat varieties, that protects both the environment as well has public health. Thus, this affects not only farm productivity, but also society as a whole.

The Auditor General also indicated that there was a generalized 70% downward financial adjustment in all research projects that had been approved.

We are very concerned about the lack of human resources planning. Agriculture and Agri-Food Canada does not appear to be renewing its research staff. The Auditor General's report confirms this. For instance, the report states that 40% of AAFC research department staff is over 50 years of age and 18% of the over 2,000 research department staff members are currently eligible for retirement.

The third factor in the report that worries us is the renewal of buildings and equipment used for public agricultural research. The Auditor General reported that 71% of the buildings dedicated to research activities are in a fair or bad states, instead of good or excellent. Also, 71% of the equipment items dedicated to research have exceeded their useful life span. So as we can see, the situation in terms of property assets is also very worrisome.

The federation therefore believes that there is a real need to re-invest in public agricultural research. To that end, our federation has joined forces with the Farmers for Investment in Agriculture coalition, which brings together 100,000 Canadian grain farmers from across the country. Basically what we are asking for is that public agricultural research investments be restored to 1994 levels in constant dollars. In concrete terms, that means an additional yearly budget of $28 million for the next 10 years. This might seem like a lot to some people, but we believe it is quite realistic in relation to the kinds of investments made in public agricultural research about 15 years ago.

Another factor that we belive is very important is a farm income safety net policy. We feel that existing programs need to be reviewed. This is very important in order to protect the grain industry, because grain markets are distorted by international subsidies, and this can lead to very long periods with low prices. This makes things very difficult for producers. Our simulations show that current programs would have provided very minimal, insignificant payments in the 1990s.

The solution that our federation would like to see involves a risk management component in the AgriFlexibility program. This would be in line with the request made by Canadian farm stakeholders when they were consulted in 2008. We believe this would be a cost- and risk-shared program. This would mitigate the impacts of international subsidies on grain markets that Canadian farmers are subjected to.

Thank you for your attention.

[The Chair, Conservative, Larry Miller]

Thank you, Mr. Belzile.

Mr. Groleau is not here, so if he does join us--

[William Van Tassel, First Vice-President, Fédération des producteurs de cultures commerciales du Québec]

Could I keep on with the presentation for a few moments? I believe ten minutes hasn't gone by yet.

I'll do it in French.

[The Chair, Conservative, Larry Miller]

Okay. No problem, Bill.

[William Van Tassel]

We believe that Agriculture and Agri-food Canada's public research department is extremely important.

We have seen stagnating crop yields, especially in small grains. Why? Because of the funding cuts this sector has been subject to since the middle of the 1990s. It is definitely harder to see the problem in the short term, but it can be seen over the long term. Now we are seeing diseases, such as fusarium, appear more and more frequently.

The public sector has definitely not been there, nor has the private sector stepped up. The private sector steps up when there is a return on investment, as we have seen with GMOs. When it comes to small grains, 4% of investments are made by the private sector and 96% come from the public sector.

For the next generations of farmers to be prosperous, we need excellent, innovative research today and over the long term.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you. That was very brief, Bill.

We'll now move to questioning. With the time today, I think we can allow the first round to be seven minutes, and then we'll move to five minutes.

Mr. Valeriote, go ahead for seven minutes, please.

[Frank Valeriote, Liberal, Guelph, ON]

I want to thank each of you for presenting today. I know you've taken time out of otherwise very busy schedules, and I want to compliment you on the substance of your presentations as well.

What we're hearing here is perhaps a little different from what we've heard from across Canada over the last couple of weeks, only to the extent that you may not have addressed some of the issues that were addressed in western Canada and Ontario.

We know, at least from our discussions in the last couple of weeks, that 65% of people under 35 have left the farming industry in the last 15 years, and I understand the average age of farmers to be about 57 years nationally, although I understand it's lower in Quebec, at 52.

I have a couple of questions. The Province of Quebec appears to be more supportive of its farming industry than perhaps is the case for other farmers. It makes the playing field unequal to a certain extent, but at least it helps your farmers in Quebec. I'm wondering if that's your observation as well. I understand that Alberta is more helpful to its farmers and Saskatchewan and Quebec are among those that have good farm programs.

Can you comment on the difference between your farm programs here in Quebec and those in other provinces? I would open that up to anyone who wishes to answer.

William.

[William Van Tassel]

We have one program... Well, Quebec is divided almost equally. You have a lot of supply management, and that is the same pretty well everywhere in Canada. On the other side, in Quebec we have the ASRA program, which goes partially according to the cost of production, because the components are not put in. We have had that since the end of the 1970s, so it's a program that we can rely on. That is something you don't really have in the other parts of Canada. You can have other programs, but they don't last. There is uncertainty when you have programs that change often.

[Frank Valeriote, Liberal, Guelph, ON]

Luc, you spoke of assuring farmers that they will have a stable income. I suspect you were speaking of business risk management programs at that point in time. That's what we've heard across Canada, that the program just isn't working, but we're not certain how to fix it. Some say the viability test doesn't work. Others have said you can't go to a program that's based on the cost of production, which William just spoke of.

Do you have any thoughts on how the AgriStability program might be fixed in order to respond better to the needs of farmers?

[Luc Belzile]

I believe that the request made by the stakeholders when they were consulted in 2008 was to allow the provinces to manage the AgriFlexibility funds themselves. I think that would be the best solution. That would allow each region of Canada to manage the resources based on their needs, which are—and this is very important—different in each region. I think that would be the solution: allowing the provinces to manage the AgriFlexibility funds they receive based on the needs of their farmers.

[Frank Valeriote, Liberal, Guelph, ON]

The fear, of course, is that while the money may be given to one province, it may not be matched with provincial money in each province in an equal way across the country, so you'll still create a situation of lack of competitiveness in one province versus another.

I'm wondering if it's time the Minister of Agriculture met with all the provincial ministers of agriculture so that we can have a more harmonious response, rather than just giving the money to each province and letting it apply it itself. Do you understand the concern we would have? How would you feel about participating in a nationwide agricultural building effort?

[Luc Belzile]

I think it would be reasonable to have different applications for each region of Canada, because farming varies greatly from one region to the next, and therefore the needs also vary greatly. I do not believe that standardizing the income security program across Canada would be very effective. I think that is why the stakeholders had requested that the provinces be allowed to manage the AgriFlexibility funds as they see fit.

[Frank Valeriote, Liberal, Guelph, ON]

You spoke of concentration. We heard about particular levels of concentration within the processing area and the agriculture retail sector; those areas of concentration have almost reached the point of looking like monopolies, so much so that farmers have become price-takers rather than price-setters. Has that phenomenon happened in Quebec? Are you finding that you're suffering from too strong a concentration in industries that are controlled by just a few companies?

[William Van Tassel]

We saw in 2008 that when the price of grain went up, all the inputs went up. It didn't go up just elsewhere in Canada, but all over. If you look at the price of potassium, it was something like $250 a tonne for many years. All of a sudden it went up to $1,400. There had to be a certain monopoly to do that, and it affected us very much, as it did all farmers across Canada.

[Frank Valeriote, Liberal, Guelph, ON]

Do you feel the Competition Act should be modified somewhat in order to regain some control over that problem?

[William Van Tassel]

There were demands across Canada from farmer groups to look into that issue, because it affected us greatly.

[Frank Valeriote, Liberal, Guelph, ON]

You also spoke of farm transitioning from one generation to the next. That has been a topic over the last couple of weeks as well. Somebody mentioned creating a protocol that would match up people who were leaving the industry with young farmers who wanted to come in. Do you have anything like that now in Quebec? Is there no farm matching?

[Frédéric Marcoux]

No.

There is one reason, in particular. Many young people are asking to have access to a list of farms being sold. But the number of people really interested in transferring their business, compared to those who want to shut it down, is just a fraction.

That is one reason why we are asking for tax relief, but only for those who intend to transfer their business. People who plan to leave the farming sector should at least reflect a little more carefully in order to make things more equitable with respect to shutting down a business compared to transferring it. Otherwise, even if there were a farm matching tool, people will decide they do not want to go that route.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Groleau is here from the Fédération des producteurs de lait du Québec.

Thank you for coming today. We appreciate it.

We look forward to your presentation.