Agriculture Committee on May 11th, 2010

[Monique McTiernan]

When you come to these programs, because we're involved in grains and oilseeds, we have to be careful which to countervail. It doesn't really affect us as much, but when we sit around with the Grain Growers of Canada, that's the issue that always comes up. They don't want to hear about any programs or any of these because of the countervail issue.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

The WTO.

[Monique McTiernan]

Yes, the WTO. So how do you get around that? We have to speak in one voice, because we represent the grains and oilseeds. But we come up to that wall all the time. East of Manitoba they don't want to hear anything about any of these programs.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

We seem to have to be more complicated, don't we? The Americans, they just give a dollar a bushel, right in the mailbox, for a bushel of corn, but we have to have all of these complications somehow to help. It's just beyond me.

[Monique McTiernan]

Yes. Maybe we should be more like them.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Are there any more comments on that?

[Nathan Phinney]

Personally, I know that in the year of the BSE that we all dreaded, if it wasn't for that NISA program being in--if we still would have been on our current AgriStability--the creditors would have come and taken the farm. The only thing that saved us is that we had a woodlot we were able to cut. The NISA program...we needed that money today, so we withdrew it. If we'd had to wait until our year end and figure out how many hundreds of thousands of dollars we lost, they wouldn't have waited for us.

So yes, that would be a good program to put back in place for an emergency situation.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Lemieux, five minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thanks, Mr. Chair.

Actually, I would like just to follow up on that, because there is a program that's almost the same as what NISA was. It's called AgriInvest. It's part of this suite of Growing Forward. With AgriInvest, for every dollar the farmer puts in, the government matches it with a dollar. It's meant to cover the first 15% loss in any given year. And the farmer can pull it out at any time for any reason. It's almost identical to what NISA was. So that type of thing still exists.

One of the challenges the government has with programs through AgriStability--just to follow up on something Nathan said--is that you have to be careful not to mask what I call market realities. If there's a bad year, the program is there. It will trigger if your farm has been hit due to circumstances outside your control. But if something is in decline for four or five years, there's a market reality going on there. There's something that's long-term. It's not just an unlucky year, the market is changing. And the government has to be careful that it doesn't artificially sustain a market reality--or an unreality, if you know what I mean. This is the challenge we always face.

The other thing that's important to note, too, is that about $3.4 billion, that's how much programming money flows out to farmers across Canada. So there's a lot of money that's moving through the programs. I don't say that it's all perfect and that everybody is getting everything they need, but I am saying that there is a lot of money that moves through these programs. We always seek to make them better. But it's always challenging, as well, because there is a countervail. There are the WTO challenges that kind of rise if it's not done properly either. Anyway, I just wanted to address that because it's come up a couple of times this morning.

One of the questions I wanted to ask Nathan in particular--and perhaps Corey, just because you're at the younger end of things here and getting involved in farming--is can you give me an idea how it is you got involved? I was asking one of the witnesses about succession planning. Are you working on the farm? Have you bought into the farm? If you are working on the farm but haven't bought in, how do you see succession taking place?

[Nathan Phinney]

Well, we first started on the farm because we learned to drive tractors before we walked.

[Voices]

Oh, oh!

[Nathan Phinney]

When I graduated, I went to the AC, the agricultural college, in Nova Scotia. When I completed that, I came back and worked alongside my grandfather and grandmother, who were 50-50 partners. In 2004 my grandmother passed away and Corey was residing at the house, so he and I split her shares at 25% apiece, and my grandfather, who was 73, was still at 50%.

We have a very good relationship. It was thought, I guess, that over time we would start slowly buying shares from our grandfather. However, with times as tough as they are, there's no cashflow. There are not too many creditors that want to go out there and take the gamble and say, “Here's a lump sum of money and buy the rest of the farm.”

I guess that was one of the things I thought. He's 73 years old, and when he goes to bed he still has to worry about where he is on his bank statement. At 73 years old, am I going to be that way? If something isn't done, am I going to have to be that old and lie in bed and worry about what my next day is going to be like?

So as for us taking the farm over completely, my grandfather took his over from his father when he died, and I can honestly see us not taking it over until he goes, or something serious happens.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Let me just ask you, as well, just amongst your peers, the people your age, the people you hang around with, what would you say is the percentage success rate for those who want to farm and who actually transition into farming, no matter how they happen to do it? If you had 10 friends, would you say that it's only one or two friends who are actually transitioning into farming, or would you say it's five or six, or seven or eight, no matter how they manage to go about doing it?

[Corey MacQuarrie]

I would probably have to say it's zero to one.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

So it's pretty low.

[Corey MacQuarrie]

Pretty low; yes, it's really low.

With the way the world is today, there are so many different things for young people to do. When they're taught and bred computers in school, when they leave school, obviously that's what they know. It goes along with the average consumer being so far away from the farm. Well, farms aren't on every street corner like they were years and years ago, right? There just seems to be very few—in our region, anyway.

The other thing is that people want to make money and they don't want to have to work their guts out seven days a week to do it, and that's completely understandable. There are very few of us—and a lot of them are this room—who still want to do that and still have those views, but they're hard to come by.

[The Chair, Conservative, Larry Miller]

Pierre, your time has expired.

Mr. Shipley, five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I just have a quick question. The cost of production has come up a couple of times today. I wonder what the response would be if I went down the row here and asked what your cost of production was last week in terms of your pork or your beef. I'm wondering about this, in terms of moving ahead, because we always have the question about access to credit come up. It's a concern, I think. When I talk to some farmers from the pork or the beef industries, I ask them what their cost of production was last week and a month ago—because there are variables, such as the time you borrowed, the changing of your inputs, whatever those are.

Is that something that's known by the large majority of farmers?

[Corey MacQuarrie]

I really don't think it is. I think it should be, but I think there are far too many producers who don't pay enough attention to their operations and to their costs and their banking. I don't think there are enough out there who do know their costs.

[Robert Godbout]

For us, we do have our cost of production. Last year it varied quite a bit, because the fertilizer prices were up quite a bit. Still, when you're going to the bank, whatever you're going to grow, whether it be flax, canola, or soybeans, you're growing on a negative margin. It makes it hard for the bank to want to lend you money. We're at the point where we need a disaster to happen somewhere else for us to be able to sell our crop at a decent price or make money.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

If farmers don't know their costs of production but they know the situation they're in--actually, it makes a difference, many times, about success and not success--can you give me the reasons why they don't know their costs of production and why they don't target that day to day, or week by week?

I'll give you an example. The stock market took an incredible dive last week. In that period, commodities took a big jump. Now, we're going to hear that commodity prices are dropping, but you could have locked in some prices—in terms of Ontario prices, anyway--and some profits, obviously. That's my question. Can you help me try to understand? If you're saying that many, as a business, don't know, why don't they know? What can we do to emphasize it? What can we do, in terms of education, communication? It is critical, I think, to the success of farming.

From what I've heard this morning and from what I'm hearing today, this is a business, not necessarily a right. I farmed. It's a great lifestyle. I loved it. I worked my tail off. But it's a business.

So give me some ideas of what we can do to help encourage that sort of business management part.

[Nathan Phinney]

For our farm, if you gave me ten minutes, I could give you our cost of production for this week. As I think I touched on before, when I talked about the older generations, a lot of them who are in the farming industry, at least in our area, don't even have their high school education. They got into a farm situation where it was passed down. At the end of the year, when they showed that, yes, they made a dollar, there was no need to know their cost of production.

As the saying goes, it's hard to teach an old dog new tricks. I think for our younger generation, yes, that's one of the things that we have to be aware of and know where we're at and what we need. As I say, there isn't that margin there. Maybe better programs on how to figure out your cost of production would make things a little easier.

[Corey MacQuarrie]

Along with that, maybe there could be access to funds and access to using professionals, as I mentioned.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Some extensions?

[Corey MacQuarrie]

Yes, exactly. Some guys need opportunities to figure these things out and need some help. I'm not saying to go out and buy everybody a consultant for a couple of days, but if people want to know their costs of production, they need some enablement to do so.

As Nathan said, my grandfather has slips from selling slaughter cattle in 1977, getting $1.88. He was making money. He was paying $1.20 for calves. Everybody was making money; everybody was going home happy, so no one cared. But now that margins are tight, you need to know.