Evidence of meeting #15 for Agriculture and Agri-Food in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was farm.
A recording is available from Parliament.
4:45 p.m.
Chair, Organic Farming Institute of British Columbia
I can tell you that just through the farmers' markets themselves, the majority of all the new vendors are all new, young farmers who are all farming organically.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Would that be something that's more symptomatic in your area? In my area, 98%, 99% of farmers are not organic farmers.
4:45 p.m.
Chair, Organic Farming Institute of British Columbia
This would be in B.C., and it's probably due to the high price of land. All our pieces of land that we buy are five-acre parcels. You're looking at $500,000 for a parcel of land. So to make it viable you almost have to farm it organically and sell the produce in a niche market.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
So you admit, though, this may not work in places like Saskatchewan, Manitoba, Alberta, where you're farming 4,000 acres at a time?
4:45 p.m.
Chair, Organic Farming Institute of British Columbia
I do know of several farmers who are actually in Saskatchewan and Alberta and are farming organically.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Would it be your argument that most of the new farmers in Saskatchewan, Alberta, and Manitoba would be organic farmers?
4:45 p.m.
Chair, Organic Farming Institute of British Columbia
I wouldn't know that one, no.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
I'm assuming from your comments that you would be against the low-level presence argument?
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Okay.
Now I have one last question for you. You said access to land is one of the biggest barriers. I'm assuming you're talking about the cost of that land.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Thank you very much. And thank you for the work that you do.
Mr. Sparling, I just wanted to ask you a quick question. You had also mentioned access to land and its cost as being an impediment to new farmers coming in.
4:45 p.m.
Professor, Richard Ivey School of Business, University of Western Ontario, As an Individual
Land costs have gone up quite a bit over the last few years and land just continues to increase. Now, in our area it's not nearly like that; it's more in the $10,000-to-$13,000 range. But still, if you put together a 200-acre parcel, that's a pretty significant chunk.
On top of that, there is the whole value of quotas. In a lot of the interesting parts of agriculture—dairy especially, which a lot of people want to get into—it's extremely difficult because you need millions of dollars to access that quota.
4:45 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
I agree with you. It just seems that in my area all the older farmers don't want to sell their land for a cheaper price so that the younger guys can have access--
4:45 p.m.
Professor, Richard Ivey School of Business, University of Western Ontario, As an Individual
No. Actually, what you're starting to see, and you're seeing this out west particularly, is venture capital firms starting to say, “If you need 4,000 acres and you have 1,000, we'll buy the other 3,000 and lease it back to you”. There's a company in—
4:50 p.m.
Conservative
4:50 p.m.
Professor, Richard Ivey School of Business, University of Western Ontario, As an Individual
I'd say it's a reaction to the reality of the situation. If you need $5 million to get into business, you probably aren't going to have it if you're 26, 28 years old. People in other businesses lease factories, lease equipment. In agriculture we've always had the view that you need to own everything. But I'm actually not sure that's realistic going ahead, in their situation where it costs one-half-a-million dollars for five acres. If you could lease that and have some kind of an arrangement with the owner, then the owner will get some of the capital gain and some of the income. That's one way to do it.
4:50 p.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
I have two quick questions because I'm going to run out of time.
Mr. Sparling, you had talked about improving productivity. That's something that I think is very interesting. Perhaps you could just comment on that briefly.
Mr. Paszkowski, my colleague had talked to you about Bill C-311, Mr. Albas's bill. What would be the actual net benefit? Do you have an idea of where that would leave you if this bill were passed? Is there a dollar figure that you could see and put a tangible number on?
Who wants to go first?
Perhaps, Mr. Paszkowski, you could go first.
4:50 p.m.
President and Chief Executive Officer, Canadian Vintners Association
No, I can't state an actual dollar figure that a winery would make. The smaller wineries would be the largest beneficiaries, because they'd be selling the largest percentage of their total production through direct consumer sales and keeping the margin in their pockets and building a consumer base. The largest wineries will have a smaller percentage of their total sales in a direct consumer market, because they're already very much engaged in the liquor control board system. They have agents in every province, which a small producer can't have. So they will probably be selling a larger volume but a smaller percentage of total sales.
Based on the markups that the liquor boards have in place—a 66% markup in Ontario and a 133% markup in British Columbia—you're getting about $3.46 from a bottle of wine that sells for $10 at the Liquor Control Board of Ontario. That's what the producer gets. He has to pay for his bottle, his cork, his label, and his foil. You have to look at the overhead, the employees, the electricity, the viticultural work, and the grapes. There's not a heck of a lot left over. If he sold that wine directly from his winery to the consumer, he'd have to provide the PST and the GST to the government, but he'd be able to keep the majority of the profit in his pocket.
Currently the margin to the producer is roughly about 40%. So you'll see that farmers will be able to keep more in their pocket. They'll be able to invest more into their business. They'll be able to become more profitable. As they become more profitable, they'll be able to diversify whom they sell their wine to and enter into the liquor board system, I hope.
4:50 p.m.
Professor, Richard Ivey School of Business, University of Western Ontario, As an Individual
Okay, very briefly. I'll do two levels.
On food processing, I think that programs to help people invest in new technology and new methods like lean manufacturing and so on are very important.
At the farm level, I have two things to say: Productivity is inputs over outputs, or outputs over inputs. So I think research into Canadian versions of global crops is very important in many cases. Helping farmers adopt new technology, precision agriculture, and GPS-based systems could help on farms. But the crop level needs to be done more at an industry level, so that's probably university or government researchers. Both of those are important.
4:50 p.m.
Conservative
4:50 p.m.
NDP
Jean Rousseau NDP Compton—Stanstead, QC
Thank you, Mr. Chairman.
My first question is for Mr. Sparling.
What should the government do as part of the new Growing Forward 2 strategy to facilitate farmers' day-to-day management? I'm especially talking about administrative red tape and local health and marketing regulations in the domestic market. I want to know what should obviously be done.
November 29th, 2011 / 4:50 p.m.
Professor, Richard Ivey School of Business, University of Western Ontario, As an Individual
What is obvious to me is that small farms need different kinds of things from larger farms, so they need help accessing markets. That can be help with setting up networks, and also help with understanding how consumers are shifting, becoming more multinational, and so on.
There are some regulatory burdens on small farms—and the Klippensteins could answer this better than I can—though these are probably more in the way of regulatory impediments than burdens. It's not so much in terms of day-to-day operations, but how much time they spend on regulatory compliance, and what it allows them to do. So what should be happening there?
Overall, under Growing Forward, to me the biggest piece is how businesses are going to be successful in different categories. If we're going to have a lot of small farms, those have to have high margins or they're not going to be successful. When we look at small farms we always see that a quarter of them do well, and it's because they connect directly with the consumer. So they need different things.
The larger farms usually need to be cost competitive, globally focused. So they need information about global markets. They need help being part of trade missions and so on to connect to global markets. They also need the research base to be more productive, and that helps both small and large farms.
4:55 p.m.
NDP
Jean Rousseau NDP Compton—Stanstead, QC
But wouldn't you say that, with regard to information exchange, neither big or small producers are doing enough to maximize the use of new technologies?
