Agriculture Committee on May 31st, 2010

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

David, when you took over the farm, you were perhaps somewhat less familiar with the farm income stabilization programs. Now that you and Cherilyn are owners, you probably know more about the programs. In your statement, you talked about the old Farm Income Stabilization Program, which has since become AgriStability. That is one of the issues that came up constantly on our cross-country tour, especially when we talked to young farmers. They were saying that replacing CAIS with AgriStability has not changed things much.

I would like to know what you think about this program and whether there are any specific improvements you would like to see. This question is for both of you. I'm addressing you, David, because you're the one who talked about the programs. Should we, for instance, add production costs to the program to ensure that losses arising from time to time are covered more adequately? We know that several sectors are experiencing a great many problems.

[David Nagel]

Yes, I believe losses should be covered. That definitely would be one help. We should look at what I call “gross margin”. The cost of growing a crop is really what I'd like to see a program based around.

[Cherilyn Nagel]

We're also open to the idea of having this be.... There are some private programs that are out there as well. We think a really effective crop insurance program will go a long way toward helping young producers. In addition to that, if there were further insurance that we were looking for, that could come from the private sector, whether it's to cover a gross margin or various other insurance programs that we could get involved in. Something like that could essentially be private, versus it having to be a government support program as well.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Since taking over the farm, have you had to join AgriStability or any other program? If so, please tell us a little bit about your experience and—I'm now going back to the same question—how these programs could be improved.

A program is rarely completely adequate or completely inadequate. Most often, it is somewhere in between the two. Our work often consists in improving the situation, and that can be achieved with the help of testimonies like yours.

[David Nagel]

I have not had to make any applications on AgriStability. We are not in it at all. Under the CAIS program, we did. The major problem we found as young farmers in an expansion mode was that the average they came up with was not reflective of an expansion.

[Cherilyn Nagel]

Because of the calculation model they used with this five-year average, every time we expanded it just wasn't reflective of that, and we expanded every year that we were in those programs. It really became an administrative nightmare, effectively, for us to go through those kinds of programs.

We sought advice from our accountants and from our bookkeepers to really get a handle on how this program could work for us. We decided that the AgriInvest program would work and would be very flexible. We had the opportunity to make it work for our farm, especially with this new farm model, while AgriStability didn't work.

Matt, you might have more to add about AgriStability and your own experience with that.

[Matt Sawyer]

Yes. I feel exactly the same way about the program and the old CAIS program. It just seemed like it was a whole lot of work and there were a whole lot of hoops to jump through to hopefully, possibly, be covered off in the end. I would like to see more of a real good crop insurance policy.

I think the biggest issue with CAIS and with this AgriStability is that they're not responsive enough. I have cashflow needs that come due in November and January, whenever they come up, and to have to wait until year-end to submit to see if your margins are correct to get a payout when you have a disaster on your hands, that's not reactive enough, as far as I'm concerned. That's why crop insurance that covers all your bases is where I'm looking.

I also agree that NISA seemed to work well. So does the AgriInvest. But the AgriStability is not.... I'm still in the program, I guess, but I'm not expecting anything from it either, as I am also in expansion mode.

Thank you.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Messrs. Nelsen and Lange, being consultants, you are probably familiar with the situation of young farmers who want to take over from their parents, or with that of new farmers who come to you for advice. You are based in Alberta, and I see that the province offers a program called Beginning Farmer Incentive.

Have you been able to refer young farmers to any federally-funded programs? Is there a program currently offered that is aimed at helping the new generation start up easily without having to struggle mightily, and especially without getting into heavy debt? When these young farmers come to see you, what kind of advice do you give them when it comes to federal programs?

[Owen Nelsen]

The federal programs that I'm aware of are more on the training and getting skills. Specific to starting my farm, I took advantage of AFSC. It had a percent and a half off on its program for beginning farmers in Alberta, and what I recommend to young farmers in Alberta is to try to get that financing where you get a one and a half percent discount on the interest rate to help alleviate some of the problems. But that's what I'm aware of, as far as programs initially with capital.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I am asking you the question.

My time is up? I was going somewhere with this.

[The Chair, Conservative, Larry Miller]

Your time has run out.

Mr. Atamanenko for seven minutes.

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

Thank you very much for waiting for us while we voted.

I'd like to have a clarification. Cherilyn and David, you have 12,000 acres, but I don't understand the Wigmore model. Are other farms part of this, almost like a large-scale cooperative? What is this? Could you very briefly explain it to me?

[David Nagel]

I wouldn't call it a cooperative.

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

Or a business.

[David Nagel]

Yes, it's a business that's run under one banner. There are three different locations in Saskatchewan of farm land and we happen to be one of them.

[Cherilyn Nagel]

We have four divisions. The farm management division, which is the three different farms, and it encompasses 40,000 acres. We process our chickpeas, lentils, and some canary seed in two facilities. We have crop production products, so we have six retail outlets that sell fuel, fertilizer, and chemicals. We also have an export division, so we export our own chickpeas and lentils to 25 different countries.

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

One of the things that came out during our tour was that a lot of farms must have off-farm income. I would imagine, with the scale of your operation, you don't need off-farm income. Is that correct?

[Cherilyn Nagel]

We also run a duck and geese hunting lodge, more out of a passion for hunting, and it's something good to do in the fall. Now that we have chickpeas and lentils, our fall is virtually gone, so we don't have a lot of that any more. Both David and I work on the farm. David's brother is working with us, and his fiancée is working within the company as well. David's dad works with us, and his mom has off-farm income.

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

Thank you.

Matt, how large is your operation and what kind of a farming operation is it?

[Matt Sawyer]

It's 4,400 acres. We grow a variety of grains and oilseeds, wheat barley, malt barley, and canola, and we have a few cows. In our area, we would possibly be considered a larger farm in the Acme area, northeast of Calgary.

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

Okay. Thank you.

It seems to me that both of your operations could probably function in any kind of market, under any circumstances, because you're obviously very successful. The message I'm getting is that open market seems to be the key for you folks.

I'm wondering how you view trade negotiations, such as the world trade negotiations, the up and coming Canada-European free trade negotiations and agreement, both of which...there are threats to our supply management system and our state trading enterprises, such as the Wheat Board. I'm wondering, should we be ready to sacrifice those two areas that seem to be doing okay for our farmers at the expense of getting more markets? How do we juxtapose trying to get more trade, more markets, and at the same time protecting ourselves? You know, we have to be realistic. If we get more markets, we're going to have to give somewhere. Should we be prepared to give on supply management or the Wheat Board?

[Matt Sawyer]

Some of my friends run dairies, and it seems that they run very successful businesses and they seem happy with their supply management, as well as with the feathers. I don't know if that's something that needs to be touched or not. I can't speak for the dairy farmers or the chicken...because I'd hate for them to speak for me on that end of it.

As far as the ability to export our cereals in the same manner in which we do with our canola and pulses, I'd give up my ability to have the Wheat Board market my grain.

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

Maybe anybody can answer this.

I'm wondering if you've followed the experience in Australia where they've deregulated their single desk. Apparently, farmers aren't making as much because of the various players involved now. I'm wondering if that same scenario could happen here, because either you have a Wheat Board or you don't. I think most people are in agreement that you can't have the single and the open desk. I'm wondering how you would see that, especially for farmers whose farms maybe aren't as large as your operations.

[Cherilyn Nagel]

We're watching the example in Australia very closely. I'm personally crossing my fingers that it turns out wonderfully, because I want to use it as a good example. We actually have very good friends who farm in Australia, so we talk with them on a regular basis about the politics involved in that issue for them. And the farmers we know are very happy with the system as it is now. They're working out the kinks. Nothing is perfect. They're also very involved in trade and the open market and really trying to get a handle on how it's going to work.

To your first question, about the WTO and the trade negotiations, we're watching those very closely, not only because we sell chickpeas and lentils, and we export those, so we're interested in trade barriers and the whole system.... You used the word “sacrifice” and asked whether or not we're prepared to sacrifice supply management. Just to keep everything in perspective, I have to remind myself that 90% of Canadians are dependent on the export market. So when we talk about sacrificing that system for something new, I have to wonder whether or not we're actually sacrificing the 90% of producers who are dependent on this export market and whether or not we're sacrificing opportunities for them to keep another system.

I don't want to pit one system against another, because I think it is working for some producers, although I believe in competition, and we talked about that before. I'm looking very closely for the government to be supportive of those producers who are interested in the export market, dependent on the export market. We're looking for market access as our number one issue.

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

I just want to mention that the message we have received over and over during the last few weeks is that supply management is one of the main sectors where people actually can make some money in farming. Other young farmers have told us that, so I wanted to pose that question, because I don't think it's very wise to try to water it down. Anyway, that was my question to you.

If I have a minute, I'd just like to ask you about business risk management. And I wish I had the notes in front of me. I was talking to some farmers in Ontario. They have a proposal they think might work, whereby the producer and both levels of government kind of kick in to some kind of a fund to have a business risk management program that kicks in when they need it.

I notice you mentioned that you don't want government and you just want the open market. But should there be something there available to farmers? I don't mean a complicated CAIS program from which you get money or you may not in two years. But if something happens and your cost drops down, and something would help, and if you've invested into it and it's like an insurance, would that be something that would be worthwhile considering?

Does anybody have a comment?