Agriculture Committee on May 31st, 2010

[Wayne Easter, Liberal, Malpeque, PE]

But that's fine. We've heard the Western Canadian Wheat Growers position before.

Both the Nagels and Mr. Sawyer said that no one wants a career that depends on subsidies.

Can you give me a couple of examples, one of you, of what you perceive the subsidies to be currently that you want us to get rid of?

[Matt Sawyer]

Well, to start, I've never used the AgriStability. Starting off with the CAIS, I thought it was just a big.... I was trying to use the system and trying to work within it, and it just didn't seem to work for me. I guess the idea is that it shouldn't work for you; otherwise, you must not be doing well. Maybe that's the point. It seemed like a lot of unnecessary paperwork and hoops to jump through that I found quite burdensome to use, so I didn't.

That would be number one for me, I guess, as far as the subsidy goes.

[Wayne Easter, Liberal, Malpeque, PE]

Cherilyn or David?

[Cherilyn Nagel]

There's just an image out there that producers go to their mailbox to get their pay cheque from the government, and it's really what we're trying to get away from. We want to be able to manage our business on our own and treat it like any other business. I think the reason there tends to be government involvement is due maybe to a food safety issue and the question of whether there needs to be a closer handle on it.

I see on-farm food safety issues coming down the pipeline as maybe being an issue in which there's going to be subsidization for better methods of farming. I prefer to see the environmental farm plan type of program that we have in Saskatchewan.

[Wayne Easter, Liberal, Malpeque, PE]

Should government be doing anything, then? I maintain that it isn't that Canadian farmers aren't competitive. They are. The problem is that we lack competitive farm policy in Canada vis-à-vis the rest of the world.

Frank is absolutely right that the remarks you folks made today are quite divergent from a lot of the ones we have heard in the country. Be that as it may—that's fine—what do we do in a case in which the Americans' commodity price program right now has durum priced at about $2 over the market in the U.S., which is going to clearly force an increase in durum production in the U.S., while we don't? Do we just get out of that commodity? What do we do as a country when other governments are pumping money into their agriculture, and one is the worst—to say nothing of the divergence between provinces?

Brian goes on a lot about Alberta, but the fact of the matter is, second to Quebec in this country, Alberta has the most subsidies to the farm level, even in the livestock industry. Where I come from—I'm speaking of the livestock industry, not your industry—the fact that they're subsidized in Alberta is driving my producers out of business.

So what do we do in the country as a national government to try to level the playing field across the country and, as a Canadian government, to level the playing field internationally? If other governments are going to be in this game of supporting their farmers, do we withdraw entirely? Is that what you're asking us to do?

I agree on Matt's point. AgriStability—ignore CAIS—has worked right for young farmers. There are problems with both of them; we heard a lot of that across the country. But what do we do to fix it? Do we want a bottom-line safety net for the farm community? Or do we want to go all free enterprise, with no safety nets? And if we want to go free enterprise, fine, let's do it. But what do we do to fix the safety nets and the bottom line, if we want one?

[Matt Sawyer]

I guess if you looked at the States, as you said, and if the price of their durum was $2 a bushel higher, and the government was so inclined, they might say, “Oh, man, how are we supposed to compete with this?” I guess you could have a clear and transparent, “That's not fair, you guys. Here's two bucks a bushel. Go with it.”

It's a great question. How can we look at saying we would create another program to try to hide the fact that we are being subsidized and then jump through these hoops? I don't know exactly how we'd go about doing it. It's a great point. If they are subsidizing their farmers that much, I'm not sure exactly how you would do it, but a clear and transparent program would be a good start, I guess, if you want to talk about that.

As far as levelling the playing field across the whole country is concerned, I guess it's a question of looking at the ability of everybody to open their markets and sell as equals. If the Ontario guys can sell their grain to whoever, whenever they want, that would be a good start for us in the west as well.

Cherilyn, do you have any comments?

[Cherilyn Nagel]

We have heard often about the farmers in Europe being subsidized heavily. When we've travelled there to meet other producers to get a handle on what these subsidies are and how they are managing them, we realized that the actual farmer wasn't as subsidized as we originally thought, and they were as interested in getting rid of those kinds of subsidies. It was going to their landlord, to their equipment dealers, etc.

I don't want Canada to take a schizophrenic position whereby we want everybody else to level the playing field, but we're going to help our producers in the meantime. There has to be that “meantime”. We have a long way to go before it's a pure marketplace; we have some hoops to get through. But I wouldn't want to see us being subsidized in order to compete when we're actually trying to get to that level playing field the opposite way.

[The Chair, Conservative, Larry Miller]

Mr. Richards and then Ms. Bonsant.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

I want to start by clearing the air a little bit. Mr. Easter mentioned that he was hearing some different viewpoints from you today than we've heard from all across the country. I would say that's probably the same reason that he's listening to his leader on the gun registry vote rather than to his constituents: he just isn't listening.

All across the country I've heard comments like the ones we're hearing from you today, over and over again. Those comments are coming from farmers just like yourselves, young farmers who want to get into the industry, who want to succeed, who want to be positive, who want to work hard and innovate. I can clearly see that we have some farmers here today who want to do that, and we've seen this all across this country. We've heard the same kinds of messages that you're sending to us, about having choice in marketing, about having access to new markets.

Even when we were in Ontario, we heard from folks about how bad they felt for those of us out west who, with the Wheat Board, don't have the choice they have. It's clear that farmers see it's important that they have that choice and have that access to markets. They don't want to see big government, more regulation, more government programs. They want to see the opportunity to succeed by working hard on their farms and by being able to have marketing choices. So I sure appreciate the comments that you've made today.

Mr. Sawyer, I think it was you, and I'll paraphrase slightly probably, who made the comment that you'll never attract young people to an industry just to survive on subsidies. That's a comment similar to what we've heard many times. Farmers don't want to earn their money from a government cheque. They want to earn their money by working on their farms.

I want to give you an opportunity to expand on your comments, and the Nagels, if they would like to, could share their comments on those points as well, basically just along the lines of the idea we've heard from several farmers as we've travelled across the country: that where government programs are concerned, we'd like to see some kind of income insurance, or something you can set up so that the good years can help pay for the bad years—that kind of thing.

We have also heard comment—and I don't know whether I heard it today, but I'd be interested in your comments—along the lines of having something for young farmers getting started: maybe some interest-free loans, or some sort of long-term loans that would help them get started. I know you're fortunate enough, Cheryl and David, and you've mentioned that you're fifth generation, so you've been able to have some help getting started, through the family's having been there. But I think of those people who are trying to get into it without as much family history in the industry. It's pretty hard to get an operation the size of yours in any kind of fashion without some kind of help.

So there's talk about those kinds of things for programs, but other than that, let's try to find a way for government to get out of the way and let farmers earn their income by their own hard work, their own innovation, and give them the opportunity to market their products properly.

I'd be interested in your comments on that, whoever would like to start.

[Matt Sawyer]

Thank you.

You are right about farmers not wanting subsidies. It is almost a public perception. You hear on the news or you hear from some of your friends in the city, “Here come the farmers again with their hands out to you guys. What is this all the time?”

If you look at crop insurance, I really trust the crop insurance program, the AFSC in Alberta. I like the different levels of coverage you can choose. My dad's farm is more stable and he takes more risks at his age in life. He chooses a coverage level, a dollar coverage per acre, a guaranteed dollar per acre. Come heck or high water, he knows he is going to get that, whereas I choose a higher coverage level. Through that you can choose to have hail insurance or not, to take the hail endorsement, as they call it. They have been going on with this for a few years and they also added a new program called the spring price endorsement, where you can choose to accept a price and pay more money to choose a floor price for your grains.

In a way, I know that the provincial and the federal governments kick into those programs, and that is a subsidy, as Mr. Easter suggested. It is, but just to expand on that, it is a good program. I like the crop insurance program and I trust it. I feel comfortable. I can sleep at night knowing that if I have a drought or get hailed out or whatever, I am going to be covered at a certain level. Can I handle that coverage? Well, we'll have to tighten up our socks for a year, but at least I know I'm going to get the money come November or December, whenever the payout is. I like that.

I also took out the spring price endorsement on canola. That was another program the Alberta government offered. I was advised by my market analyst to take it. I chose not to take it on the wheat, so I've left myself vulnerable on that, but I did take it on the canola, and I'm looking forward to seeing if that pays out. But that is basically all I'd say about that.

Thank you.

[The Chair, Conservative, Larry Miller]

If you want to comment briefly, your time has expired but....

[David Nagel]

No, that's fine.

[Cherilyn Nagel]

Tax incentives are helpful. The capital gains exemptions are helpful.

Really the role we see government being able to play is sending the message back to the general public, the urban people, Canadians, that agriculture is a huge contributor to the Canadian economy and to our GDP. That is the message we want to send back. It is not all about giving to the farmers. The farmers are giving back in a very big way.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, you have five minutes.

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

Before I continue my conversation with Mr. Nelsen, I would like to comment on one of Blake's suggestions. He said that he heard a lot of farmers saying that they would like to see a kind of dual market, at least when it comes to the Canadian Wheat Board. However, to my great surprise, in the Canadian West, where the constituencies of three of my colleagues are located, many more farmers say that they want the Canadian Wheat Board's single-desk operations to continue. I know that when that issue is raised here, the discussion gets very heated. I'm not trying to fuel the debate, but I just want to put things in perspective. I recommend that you read all the testimonies we heard when we visited Canadian provinces in an attempt to resolve the young farmers issue. If you do that, you will see that many farmers defended the Canadian Wheat Board. I say this because in Quebec, we have the supply management system, which is very important for us. We support letting farmers decide for themselves. In fact, farmers are the ones who should make the decisions. Regardless, I have heard a number of people speak out in favour of single-desk operations.

Mr. Nelsen, I pointed out earlier that you are a consultant. My question was meant to steer our discussion in a specific direction. When you meet with people to give them financial advice, is there a federal entity assisting young farmers to which you can refer them? In fact, I have some idea of the answer to that question. There is no real program or facilitator that is exclusively dedicated to assisting young farmers. I would like your opinion on a few of my suggestions. Since you are a financial consultant, they could possibly be of interest to you.

What I have in mind are tax solutions. For instance, we could introduce a transfer savings plan. It would be somewhat similar to the existing education savings plan. It would enable farmers to accumulate tax-sheltered retirement funds. Of course, the federal government could contribute as well. Why would this kind of program be important? In many cases, when people have the opportunity to take over the family farm, to take over the land and the facilities, they are faced with the fact that everything is extremely expensive and they are unable to cover the costs of upkeep. Bank representatives who testified before us said that they lent money to everyone, and at very advantageous interest rates at that. They claim they are being generous, but I'm not buying it. The banks cannot fix this problem. In conclusion, it is very difficult for young farmers to take over their family farms.

Another option current owners have is to sell the farm at a loss to their children. That is to say, to sell it for much less money than it is worth. The idea there is to help the new generation take over. Ultimately, it is either the children who will struggle taking over the farm, or the parents who will suffer huge financial losses through the take-over process. A transfer savings plan would perhaps balance things out somewhat.

In addition, I have heard that a plan could be introduced for people interested in buying farmland. A similar plan already exists for prospective home buyers. We could introduce a similar plan for young farmers, which would apply to farm purchases. A young person who wants to go into farming could use the plan to buy a farm. Of course, it would help if the federal government transferred to the provinces an envelope designated specifically for young farmers. These financial measures would perhaps not be that complicated to implement. Do you think that initiatives like this might make your work easier and that they are a good idea?

[Owen Nelsen]

That would be a good idea. It would be a way for a young farmer wanting to start a farm to see where the money was coming from. And having money saved in a property ownership fund is a good idea too.

[Art Lange]

Any measures that can help farm succession would be useful. The thing we have to bear in mind is whether the basic farm unit is a viable and profitable enterprise. There is no point in turning over something that isn't a viable and profitable enterprise. That's the first question to be asked.

We're pleased to see that under the hog fund, the loan, the producers have to have a viable business plan. I think that's rule number one. My colleagues who work in farm debt mediation say that too often they see a farmer who has tried to bring in a child or another family when there just wasn't enough money to support the extra people. Over time the debt increases until finally the thing is not viable.

[The Chair, Conservative, Larry Miller]

Thank you. Your time has expired.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

Again, I'd like to welcome everybody here today. It's great to have you here. I apologize for the vote. It ruined the flow of the meeting, but it's unfortunately necessary.

I just wanted to correct the record on one thing. Mr. Easter talked about the durum and the U.S. subsidies. What they're doing with their payment program is a big concern. But I guess the comment could be made that if the CWB hadn't sent a market signal for farmers in Canada to grow more durum two years ago, and if they had done their job three years ago, then two years ago we would have sold record amounts of durum at record price. So maybe we wouldn't have this situation we're facing right now.

I want to just get a feel from you for where your profitability lies. What crops do you grow that are profitable?

Maybe I'll start with you, Matt. You grow cereals and canola. What crop makes you the most money?

[Matt Sawyer]

I'd say canola. Canola makes us the most money on the farm. It does.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, you're in Acme. You're in central Alberta. You're just outside of Calgary. You don't grow chickpeas or lentils in that area?

[Matt Sawyer]

No. Feed barley works fairly well. We're close to the feedlots. We try to get into that 100-bushel-an-acre range. And with some good moisture and with maybe $3.20 to a local feedlot, $3.30 per bushel, that makes you some money.

In the last few years the wheat was fairly good. It won't be as profitable this year. But canola still looks okay. We forward-priced some canola, and we also forward-priced some of our wheat through a fixed price contract through the Wheat Board.

[Randy Hoback, Conservative, Prince Albert, SK]

So you're using all the tools that are available in order to maximize the price.

[Matt Sawyer]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

Going on to the Nagels, what's the most profitable crop in your organization?