Agriculture Committee on May 31st, 2010

[The Chair, Conservative, Larry Miller]

We will call the meeting to order. This is the last segment of our study on the future of agriculture, and in particular on how we attract young people.

I want to welcome all of our witnesses.

I will remind you that we are breaking this session at five o'clock to go into the initial discussion on Bill C-474.

I would ask our witnesses to try to keep their comments to ten minutes or less for each group or individual, and we'll go from there.

We're going to start with the Alberta Ag Business Consultants. We have Mr. Art Lange and Mr. Owen Nelson. You have ten minutes, please.

[Art Lange, Farm Financial Consultant, Alberta Ag Business Consultants]

Good afternoon, ladies and gentlemen. We are members of the Alberta Ag Business Consultants group, which is a voluntary organization of people who used to work under the Canadian farm business advisory program under the previous APF renewal chapter.

My name is Art Lange, and my colleague here is Owen Nelson. I'll let Owen start.

[Owen Nelsen, Farm Financial Consultant, Alberta Ag Business Consultants]

My name is Owen Nelson. I have a small farm near Vegreville. I have experience in the agriculture industry, I have my Bachelor of Science in agriculture, and I have worked in a number of different facets. I have business consulting experience in the U.S. and Australia, and I've also been fortunate to have been involved with young farmers organizations, such as the Canadian Young Farmers Forum and Rock the Farm, which is hosted by the Future Agriculture Business Builders in Alberta.

I feel that it is very fortunate that we live in a country that asks our young farmers what they think about agriculture. I really value this opportunity and hope that something like this continues.

[Art Lange]

Other members of our group who helped with our brief are Larry Lindquist, Larry Morin, and Gordon Williams. And there was me, of course. Collectively, we have experience doing over 500 business plans for farmers, so we think we have a good base of knowledge about what goes on in farming and about the advantages, and challenges, especially, that young farmers face.

[Owen Nelsen]

To put together our submission we focused on our reliable expertise and looked at the 40 years of experience we have in the group. We have come up with a definition of a viable farm, which we feel is a farm that's able to cover its operating expenses, including rent, depreciation, and unpaid labour, and all living expenses. That's what a viable farm to us means. It is not just on a cash basis; it has to be on an accrual basis. We look at the same trends the business bankers look at. That's how we evaluate farms in terms of their success.

[Art Lange]

We feel that future farmers, young or maybe not, will come from three main groups. First are those who are farming on a commercial scale and are building on a farm business that may have been started one, two, or even three generations ago. These people are likely to be producing generic commercial crops and livestock on an extensive basis.

The second group is what we tentatively call lifestyle farms, which are usually fairly small. These farmers produce specialty products and are doing some specialty niche marketing work. They probably can't sustain themselves, at least initially, on their own and have or will require some off-farm income. They may or may not transition into full-time farmers, depending on the success of their particular endeavours and their dedication to it.

Third are immigrant farmers. In Alberta, at least, they have been part of the renewal of the industry. Alberta Agriculture had a mission, which started in about 2002 and is still going on, somewhat, to attract Europeans, mainly, to Alberta.

We feel that the first group I talked about will be the major renewal of the industry. They are the large-scale farmers. There are some challenges for those farmers. Some of them are their traditional views on agriculture--farmers need to have a land base; they need to have equipment. The younger view, on the other hand, tends to be that I don't have to own all my own equipment. I can rent some land. I can lease. I can have some work done on a custom basis, which reduces the capital requirements quite significantly.

Another point that we find is very important for a young farmer, or any farmer, is that farmers tend to be very much hands-on people. As well as hands-on work, there is also business acumen and business assets that have to come into the business as far as financial planning, marketing, and planning other business ventures are concerned.

As I mentioned, the second group, the specialty farmers, may or may not transition into full-time farmers.

The third group includes farmers who have a good knowledge base. They may not be familiar with local customs and things, so usually business planning is an asset for them as well, so that they can deal with local lenders, learn business practices, and so forth.

[Owen Nelsen]

The challenges that we see for young farmers are basically how they can make enough money to make a living from farming--and coming up with a plan that does that--and how to apply what they already know and make it into a successful business. We feel it's essential that young farmers have a business plan that is looked at by an outside third-party person. Very often it's beneficial to get some outside input into your situation and to see what the strengths and weaknesses of your business are.

Another major challenge for many young farmers is family succession into a farm. Many of these farms, as you already know, have been in the family for so many years that they want to keep it in the family. Trying to find a way to bring another income in and bring another family onto the farm to generate enough money for the business is a struggle.

There are some tools that we've highlighted for young farmers. To basically get started they need financial assets in some form, whether it's savings or equity in existing operations. They need some way to start a farm with some cash. Then access to ongoing support groups we also feel is really important. Groups such as Executive Link, where they get outside peer support from other farmers, are very valuable. Being part of young farmer organizations is another valuable asset for many young farmers.

[Art Lange]

We see a number of business problems that young farmers do encounter--not having individual business plans--and on page 8 of our brief we list a number of those. We won't have time to go into them all in detail.

A business plan is important, as is having the flexibility and the foresight to look into that business plan, review it, update it, and change it, if necessary. If something isn't working, there's no point in doing the same thing over and over again. Succession arrangements can be difficult, not only from the financial viewpoint but also with the interpersonal situations that result. I've worked in a number of those myself. It's often the interpersonal relations that need to be mediated. Sometimes they don't work. I just finished working with a situation that wasn't going to work.

[Owen Nelsen]

Some of the recommended actions that we feel are important for young farmers and the future of agriculture are government support for events that encourage young farmers, like the Canadian Young Farmers Forum and Future Agriculture Business Builders. We also feel that government assistance is required for succession planning under the Going Forward program. Government assistance is very helpful for taking additional training opportunities to help young farmers develop the business skills they need. The Canadian applied skill service program was an excellent program that allowed young farmers to take the training needed.

[Art Lange]

That completes our submission. Thank you very much.

[The Chair, Conservative, Larry Miller]

Now we have Cherilyn and David Nagel.

Are the pair of you speaking for 10 minutes? Yes. Thank you. Go ahead.

[Cherilyn Nagel, As an Individual]

Thanks for the invitation to speak to you today.

My husband, David, and I are both fifth-generation farmers from Mossbank, Saskatchewan. We both left our farm to pursue higher education and gain some life experience, but it didn't take us long to realize that the grass wasn't greener on the other side and we headed back to the farm. And of course after all the rain we've had, the grass isn't only greener; it's about a foot long.

Personally, we think agriculture is the industry to be in. It already has most things young people are looking for these days, and with the right messaging I think all the components are there. Agriculture is high tech, from the GPS equipment we use in our tractors, to the incredible genetics found in seed production, to the sophisticated new methods of grain storage and handling. Farms are now run by a computer, not a pitchfork, and the technological advances we are seeing in agriculture are enough to excite anyone about the future, and most of all the upcoming generation of young tech-savvy students.

Agriculture inspires the entrepreneurial spirit. Aside from some regulatory burdens, which we'll touch on later, farmers are free to be their own bosses and run their farms as they see fit. Big or small, agriculture offers young people the freedom to niche market, to bulk export, to add value, or to specialize.

Agriculture is green. Many young people nowadays are concerned about the environmental footprint they're leaving on the planet. Historically, farmers have been good stewards of the land. You don't get to be a fifth-generation farmer unless that's the case. And the good news is that our practices are getting even better. Moving to zero-till from cultivation is one way our practices are getting better. And we're improving soil and water conservation. Using modern genetics has allowed us to reduce our pesticide use and cut our fuel consumption. Promising new technology will soon allow us to reduce our fertilizer use and make better use of available water. Also, as the ongoing oil spill disaster in the gulf has shown, producing fuel from crops can be an environmentally friendly alternative.

Agriculture can be profitable. Young people want and need to make money. No one, least of all young people, wants to enter a career that is dependent on subsidies or has no potential to be profitable. Making money farming is something we're proud of, and we intend to find new and unique ways to increase our profitability as it fits our family's goals and aspirations.

The world needs food. With a rising global population and increasing incomes in Asia and other parts of the world, the demand for grain and meat is going to rise even more. The long-term prospects for our industry are good, especially when you consider the limited opportunities to bring new, arable land into production. What it means is that those of us on the land now are going to be asked to increase our output per acre.

Young people want to be part of the food solution, and agriculture is a logical avenue. For these reasons, among others, we're rather bullish about the outlook for the commodities we grow, despite today's disappointing grain prices.

So there you have it. You're wondering how the government can attract young people to this incredible industry, and we're saying that the components are already there. What we suggest, as a young farming couple, is that rather than trying to do more, you do less.

Less market interference—let the marketplace figure it out. The marketplace is the only way we can get the proper signals we need to make the best decisions.

Less political posturing—we need science-based policy decisions, not politically based policy positions.

Less time needed to get new products to market—Canadian producers are historically early adopters of new technology, and despite our long distance to many markets, we've been able to compete because of the use of our innovation.

Less government interference—I would be remiss if I did not specifically mention the issue of the Wheat Board monopoly. As David will explain, our farm is part of an integrated value chain that produces, supplies, processes, and exports our commodities. The monopoly is interfering with our business, and we ask that the government treat us like all other business owners in Canada and let us be free to sell our product to the buyer of our choice at the price we negotiate without the administration and the bureaucracy the current monopolistic system entails.

As I mentioned in my opening remarks, the enthusiasm and willingness of young people to come back to the family farm is often already there, but due to some existing barriers to entry and some regulatory issues, it's often difficult for them to have a smooth transition.

I'll turn it over to David to discuss some of our personal issues.

[David Nagel, As an Individual]

One of those barriers to entry that affected us personally was in the area of succession planning. Farming requires an incredible amount of capital investment, certainly more than most young people can afford. This has been even more daunting over the past three years, as profitability has been high in grain farming, increasing the net worth of our parents substantially. This is of course a good thing for our parents, but for us it made transferring ownership more challenging.

Now, with commodity prices decreasing due to normal or below normal levels, profit margins have once again collapsed. We now have to come up with more capital from even lower margins to compensate. Tax incentives and increased capital gains exemptions have a direct impact and provide immediate relief to young producers and their predecessors.

We have participated in the farm programs CFIP and CAIS. Unfortunately, we faced the same problem over and over: the calculations did not adjust for expansion properly. Every year since we started farming we have expanded our acres. The farm programs took a five-year average and didn't reflect those expansions.

We have chosen to participate in the AgriInvest program because of its flexibility and because it allows us to choose when the rainy day fund is needed, rather than having it triggered by someone else's calculations. We have chosen not to participate in AgriStability because of the administration required and because it does not work for our farm structure.

As a part of our own risk management strategy and succession plan to retire my parents and welcome my brother home to farm with us, we are experimenting with a new model of farming. We are now farming 12,000 acres as part of an integrated value chain called Wigmore Farms. The company has four divisions. There's farm management: in total, Wigmore farms over 40,000 acres in three areas of Saskatchewan. It has a crop production division: Wigmore owns and operates six retail facilities and supplies fuel, fertilizer, and chemicals. In its processing division Wigmore has processing facilities for chickpeas, lentils, and canary seed, and has capacity for over 100,000 metric tonnes. The export division of Wigmore exports chickpeas, lentils, and canary seed to more than 25 different countries.

Joining up with an integrated company has given us perspective within many areas of the agriculture industry, and it has allowed us to see our commodity move throughout the value chain. We have direct access to consumers, which is becoming increasingly important for food safety and to our end-use buyers. Having a company like Wigmore, which purchases millions of dollars of input costs every year, has given us the opportunity to advance our succession plan, give my parents much deserved income to enjoy their retirement, and have more time for us to focus on the decisions we need to make to grow more quantity and quality of crops.

We hope that for the next generation of young people, including our four-year-old daughter Claire and 18-month-old Addison, we have new and unique opportunities within our own company if they choose agriculture as their career. Coming home to the family farm has taken on a whole new meaning.

We'd also like to emphasize the need for proper messaging around agriculture and how important the industry is to Canada's economic position. We see a role for government to play in advocating a positive image for Canadian producers. Much of the media attention our industry receives is focused on handouts and crisis management, as politicians trip over themselves trying to be seen as saving the noble farmer. As Cherilyn mentioned, we need less interference in the marketplace. Please don't get caught up in how the urban public might perceive your policy positions. Farmers need government to let them run their businesses as they see fit.

To attract young people to this business we need policies that respect the entrepreneur, policies that promote a positive image--

[The Chair, Conservative, Larry Miller]

David, I apologize for having to interrupt you. There's an emergency vote coming up in 25 minutes. As long as I have unanimous consent, I believe we have enough time to hear David out, hear Matt Sawyer, and still get over there.

Do I have unanimous consent to do that?

[Some hon. members]

Agreed.

[The Chair, Conservative, Larry Miller]

Thank you.

Sorry about that. These things happen down here.

[David Nagel]

That's all right.

To attract young people to this business we need policies that respect the entrepreneur, promote a positive image for agriculture, encourage investment, and recognize the strong environmental leadership that is taking place on our farms today.

Thank you for taking the time to listen to our suggestions on how to make agriculture an even better industry to be in and a more attractive career path for young people.

[The Chair, Conservative, Larry Miller]

Thank you very much, David.

We'll now move to Matt Sawyer for 10 minutes.

[Matt Sawyer, As an Individual]

Thank you.

Good afternoon. My name is Matt Sawyer, and I'm a fourth-generation farmer from Acme, Alberta. Acme is located around 80 kilometres northeast of Calgary. Our farm was established in 1903 by my great grandfather, and we've been blessed to have someone in each generation who wanted to farm.

We have expanded our operation to 4,400 acres on which we grow a variety of grains and oilseeds as well as cattle. We have around 60 head of Black Angus cows. I know that calving with 60 head of cows isn't really profitable in today's numbers, but my mum likes to chase around a few cows, so we keep them on the marginal land there.

I appreciate having the opportunity to present my thoughts on young farmers and the future. In my opinion, the future of farming is very bright as long as we encourage science, innovation, and trade, and portray agriculture in a positive light. It's a challenging task. In order to attract young people to become engaged in all levels of agriculture and to choose agriculture as their life path, I believe the value and exciting potential of our industry needs to be promoted. The leaders of this country, whether they are farm leaders or elected people such as yourselves, need to be positive, demonstrating that we value Canadian agriculture and want to be world leaders in our industry.

To achieve this goal, we need to start with a public awareness campaign promoting Canadian agricultural products, encouraging the public to buy Canadian meat, poultry, cereals, oilseeds, pulses, and vegetables. We need positive public advertising explaining the value of the agriculture sector to the Canadian economy. There are more negative media articles about agriculture than positive ones. Sometimes it is farm groups themselves that emphasize the negatives in the hope of free government money. I believe this is wrong and needs to be reversed. Today's producers are good stewards of the land, not abusers of the environment, as often portrayed by the media.

Profitable farming of today relates to environmental sustainability. Our use of leading-edge technologies, like GPS, auto-steer, zero and minimum tillage, and biotechnology, have allowed us to reduce the use of pesticides, fuel, and fertilizer. Our farm has cut our annual commercial fertilizer requirements in half by applying an organic composted material that consists of composted cattle manure and recycled gypsum from new home construction.

With these best management practices in place, our overall carbon footprint is reduced. Our commitment to the environment demonstrates that profitable farming and environmental sustainability and awareness can go hand in hand successfully.

Two elements that I feel don't go hand in hand are farming and subsidies. You will never attract young businesspeople into an industry where you need subsidies to succeed. A transparent and responsive crop insurance program, as well as a government-encouraged savings program, are all we need. I do not have time to work the system, and I would rather concentrate on best management practices to be profitable while managing risk.

In Alberta, and I suspect in southern British Columbia as well as in Ontario and Quebec, a land use framework must be established, focusing on urban sprawl. Prime agricultural land must be preserved for future generations of farmers. In order for us to be competitive on a global scale, farmers need good trade agreements in place. Canada has been blessed with a good climate, good land, and, in most years, good yields, so we are able to produce far more than we consume. Our trade agreements must include prompt resolutions to conflicts. Our market access secretariat has been a positive step but needs the resources to respond quickly when unfair trading practices occur. Direct marketing is a key interest of young farmers.

We need an open market for cereals, free from the constraints of the Canadian Wheat Board. An open market would encourage more malt, milling, and pasta plants to take root in Canada. A competitive value-added industry is important to farmers, but there has been virtually zero investment in the last 15 years in the malting industry, at a time when global demand for malt has soared.

Young farmers also need to access local markets. We need to connect better with our consumers. For example, having consumers knowledgeable about where their food comes from and how we produce it can help alleviate the needless fears and concerns over our use of safe new technologies.

The growth of the biofuels industry in Canada has been positive. We want to see more value-added processing in all areas of rural Canada. Not only does this provide more marketing outlets for farmers, it also gives young farmers and their spouses more opportunities for off-farm employment. In my case, my wife Tara is a partner in our farming operation and also operates a high-end food catering business. Entrepreneurs will be successful as long as they have access to markets, the right education, and a transparent regulatory environment.

To produce successful young farmers, Canada needs to be a global leader in innovation and research. We need to attract young scientists from both private industry and the public sector. We need a positive investment climate in which innovation is rewarded and not hindered by unwarranted regulatory barriers. We need research teams developing leading-edge technologies. We don't want to lose our researchers to other countries. This means maintaining our science-based regulatory system. Our willingness as Canadian farmers to be early adopters has allowed us to maintain a competitive edge on the world stage. Legislation must allow innovation and investment to thrive, not wither and die. We must stick with sound science.

Finally, I feel you have to love what you do to be successful at it. The other day, as I was tearing down an old fence line, I was rolling up this unwilling wad of old barbed wire in an open field, concerning myself with all the things that needed to be done before the seeding season began. I stopped and just listened. I heard nothing, silence, not a sound, no cars, no planes, no tractors, just complete silence. It was a very peaceful moment, and I realized that day that I love what I do. Just imagine—complete and utter silence. I don't know how many of you have ever listened to that. I couldn't believe it. I couldn't hear anything, just a slight ringing in my ears. It was peaceful and I loved it. That was the day I realized I love what I do.

You have to treat farming as a business to be successful, and if you have success there is no better business to be in. I had always detested talk of farming for the lifestyle, but that day I was overwhelmed by it.

Thank you, and I look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thank you.

Just before we go on, we have a quick decision to make. By the time we get back here, the time will have almost run out for our witnesses. I would suggest, with your permission, Alex, that we add the half hour onto the front of Wednesday's meeting, that we come here right at 3 o'clock and allow the witnesses today...because some of them came. But I need unanimous consent to do that.

Alex.

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

Three o'clock probably wouldn't be realistic; I would imagine we'd be kicking off around 10 after. Do you want half an hour before?

[The Chair, Conservative, Larry Miller]

If this committee makes a commitment, and if everybody agrees to be here at three o'clock, I'll leave question period early and be here. But maybe we can work that out later, Alex. That way we can at least hear from our witnesses.

We're going to adjourn for the vote. Could the witnesses stick around until 5:30? Does that time suit all of you? No?

[Art Lange]

My plane leaves at 7:30.

[The Chair, Conservative, Larry Miller]

In that case, just stay as long as you can, Art. I believe you would still have lots of time, but we understand if you can't stay. We have to adjourn, so if you'll just bear with us, we'll be back as soon as we can.

[The Chair, Conservative, Larry Miller]

I'm going to call our meeting back to order.

We have a quorum here. Could I ask everyone to take their seat.

I thank our witnesses for bearing with us. These votes happen from time to time.

I'll turn it over to Mr. Valeriote for seven minutes.