Thank you.
On behalf of the Canadian Federation of Independent Business, and our farm members across the country, I would like to thank the committee for the opportunity to present our members' views today on the competitiveness enterprises pillars of Growing Forward 2.
You should have a copy of our slide deck presentation, which I'd like to walk you through in the next couple of minutes.
I just want to give you some background on CFIB. We're a not-for-profit, non-partisan organization representing more than 108,000 small and medium-sized businesses across Canada, who collectively employ more than 1.25 million Canadians and account for $75 billion in GDP. Of those, we represent 7,200 farm and agribusiness owners, the majority being primary producers.
We set our association policy through the survey process. In other words, one member equals one vote. So we're pleased to present some of our member survey results and data today on competitiveness from our recent survey on the future of agriculture. Slide 3 is our national monthly agriculture business barometer. We release this every month, and it takes into account our agribusiness members' optimism levels for the year ahead and the various cost pressures and business constraints impacting their farm businesses.
The good news is, optimism levels have been trending upwards since mid-2009, and our agriculture index is hovering near 60.
Agriculture is certainly not immune to the global economic challenges, and while government alone cannot solve all the global problems, they can certainly take steps to improve the regulatory and tax environment in which farmers operate, and help to fuel, not dampen, this optimism. That is why your work is so important in identifying those competitive challenges and barriers to growth as we move forward on policy development for Growing Forward 2.
Slide 4 is about agribusiness succession, and I certainly don't need to tell you this because the committee has focused a lot of attention in recent years on young farmers as the future of agriculture. As you are well aware, one of the trains coming down the track is the issue of agribusiness succession and farm transfer. The latest survey data from close to 1,700 CFIB farm member respondents reveals that nearly 40% plan to exit their agribusiness in the next 10 years, either through retirement, transfer of ownership, or sale of their farm businesses. That's a pretty stark statistic.
On slide 5, when we talk about enhancing farmers' business skills through Growing Forward 2, I think this is certainly one area that needs to be addressed. Only 16% of CFIB farm members have a formal written succession plan. One-third have an informal plan, but over half do not have any succession plan in place to sell, transfer, or wind down the business in the future. So I think this really has an impact on the long-term competitiveness of the farm sector, and the question we need to ask is, how do we encourage that next generation of agricultural entrepreneurs to enter the farming industry? The answer has much to do with the discussions today about removing those barriers to growth and entry and addressing our competitive challenges.
I'll ask you to refer to slide 6. This spring, we surveyed our farm members on the future of agriculture, and we received 1,049 responses from our members and hundreds of comments on the priorities for the sector. It's clear that our members are very engaged on this issue, and when we ask them to prioritize how governments could improve their agribusinesses' overall competitiveness, farmers had three top priorities for government: one, increase the focus on regulatory reform and reducing red tape; two, reduce the total tax burden; and three, increase the focus on improving market access for Canadian agricultural products.
It is important to note that providing more ad hoc subsidy payments was definitely near the bottom of the list.
If you refer to slide 7, this is what an agribusiness owner really feels like. One of our member's comments from our Future of Agriculture survey really sums it up. He says it is just the sheer volume of work that must be done to satisfy all levels of government and industry regulations: manure-spreading regulations, fishery setbacks, environmental programs, employee deductions, CFIA regulations, Stats Can requests, the level of reporting from banking institutions, new livestock hauling regulations—and the list goes on.
As you can see, it's not just that one regulation or that extra form or that bad experience with government customer service; it's that total burden that's placed on the farm business owner. That's why our first priority is focusing on regulatory reform and reducing red tape. We really believe that this is a low-cost way to drive productivity and innovation in the agriculture sector.
CFIB has estimated that government regulations and paper burden cost Canadian businesses more than $30 billion a year—this is just to comply with regulations at all levels of government. Farmers are certainly not immune to this burden. CFIB welcomed the Prime Minister's announcement of a red tape reduction commission, and CFIB's president, Catherine Swift, is serving on this commission. We understand the commission has been working towards addressing red tape and regulatory reform, and we are looking forward to its upcoming report on the next steps in the process.
Many of our farm members submitted their concerns and real-life examples of what is not working to this committee, and we are pleased that many agencies have been provided with this feedback.
One of our pre-budget recommendations is to make regulatory reform permanent through binding legislation that would require ongoing measurement and public reporting of regulatory activity and quality of government service. We also recommend that there needs to be a commitment to paper burden reduction targets—placing constraints on regulators so that for every new requirement that's introduced, one or two will be eliminated.
The Province of British Columbia is the first government in Canada to enshrine regulatory accountability into law. I wanted to provide you with a couple of examples from our Future of Agriculture survey from farmers who submitted their views. It gives you a flavour of some of the regulatory hurdles our members face.
Take the farmer who has to fill out 400 forms for every container of polypropylene bags he imports to package his pulse crops for export. This is a duty drawback that was put in place to protect Canadian bag manufacturers, yet there are no Canadian polypropylene bag manufacturers left in Canada.
We have dozens of comments from farmers who don't feel they're playing on a level field. We've talked to a member who cannot access organic pesticides that have been registered for 20 years in the European Union and in the United States.
In reference to the Canadian Food Inspection Agency, we have a cherry grower who said that the CFIA enforces inspection of exported cherries beyond necessity, and yet allows imports of cherries on consignment.
Pesticide application in Canada is not on a level playing field with the United States and many other countries, where there is access to chemical products not available in Canada.
Increased food safety concerns seem to apply only to Canadian producers and not to the bulk of imported food.
Another comment is:
My product competes openly against those from other countries, yet my inputs are strictly regulated: pesticide residue, minimum days to harvest, etc., while those entering Canada are not monitored. If the product I sell is monitored, so should the competition in the name of public safety and fair competition.
Clearly, there is work to do, and we hope that regulatory reform is a high priority in Growing Forward 2.
Our second priority for government action is on taxation, which feeds into our data on succession. In CFIB's federal pre-budget presentation to the Standing Committee on Finance and in our pre-budget submission, we are pushing for government to index the lifetime capital gains exemption to inflation, as was previously promised. CFIB was pleased that the federal government increased the lifetime capital gains exemption from $500,000 to $750,000 in Budget 2007. The lifetime capital gains exemption is a significant retirement vehicle for our farm members, and given that four in ten agribusiness owners plan on selling, transferring, or exiting their business in the next 10 years, this would be extremely helpful. Indexing this measure will ensure that its value does not erode over time.
We also recommend increasing the capital cost allowance on agricultural equipment. We know that agribusiness owners must make significant annual investments in equipment to stay competitive, and farmers must rely on cutting-edge technology to remain competitive. So CFIB is recommending that the federal government increase the capital cost allowance on farm equipment to more closely resemble depreciation rates in the United States.
Finally, slide 9, as we've heard already today, shows that our third priority is improving market access for Canadian agricultural products. This is really an important slide, because it really shows that when we surveyed our members on business risk management programs and on programs like AgriStability, and we asked them what role government should play in helping to address risk at their farm, CFIB farm members said the government's number one role was addressing actions of foreign governments—for example, border closures. Only 17% said government should address any risks their farm may experience.
CFIB's farm members applauded the recent WTO decision on U.S. country of origin labelling. It's clear our farm members have an appetite for more work to be done to continue to open up global markets to Canadian agricultural products in order to improve the agriculture sector's overall competitiveness.
In closing, we will be providing this committee our members' feedback in the CFIB report on Growing Forward 2 and the future of agriculture in the coming weeks.
I thank you again for the opportunity to appear before this committee.