Thank you Mr. Chair.
Good afternoon, honourable members. It is a pleasure to appear before the standing committee on behalf of Farm Credit Canada today. My name is Greg Stewart, and I am the president and CEO of FCC. With me today is Lyndon Carlson, our senior vice-president of marketing.
FCC is a commercial crown corporation, and we deliver financial and business services to the agriculture and agrifood industry. We provide 100,000 customers with financing, equity, management software, information, and learning events tailored to the unique needs of agriculture.
We focus on primary producers as well as suppliers and processors along the full value chain. We have provided more information about FCC in a handout in front of you.
FCC supports the Government of Canada's Growing Forward 2 framework. We concur with the vision of agriculture as an industry led by highly skilled, risk-taking, and forward-looking entrepreneurs who create value for our economy and the world. In a rapidly growing world, a safe and reliable food supply is absolutely critical. Canada will increasingly move to the front of the class, from an agriculture standpoint. By the year 2020, we will be one of only a handful of nations capable of producing enough food to sustain its own citizens, and at the same time we will help feed almost 200 other countries.
How can we further enable competitive enterprises in sectors in Canada? I've grouped my ideas into three themes: farms are getting bigger—and big isn't bad; agriculture management is sophisticated; and innovation and productivity are critical.
The first point concerns farms getting bigger. Agriculture now involves players of all sizes, from small farms to substantial commercial enterprises. It provides one out of eight jobs and employs 2.2 million people. The agriculture and agrifood sector is in fact Canada's largest employer. The industry is a huge part of Canada's GDP and affects the performance of our entire economy. It is big, complex, and of course increasingly diverse. There's a perception in some quarters that the family farm is disappearing and that commercial operations are not really farms anymore. For sure, the size of farms continues to increase, as it has for generations. However, almost all of agricultural operations are still run as family farms, despite their size.
Our mindset needs to shift away from the view that our industry is a tiny boat on a rocky sea needing protection from rough economic waves. Instead, we need to view it as the major multi-billion-dollar engine that it actually is and help agriculture to capitalize on domestic and international opportunities. When inevitable cyclical and other challenges happen, policy and other instruments need to be designed to help all producers weather those storms. As with any other industry, we need to understand that bigger enterprises have very different needs from smaller ones.
Adopting a new mindset regarding the need for both large and small operations needs to happen within the industry itself, with policy makers, and throughout the entire value chain. We waste valuable energy when we think we have to satisfy the naysayers or those who are stuck on the old way of doing things.
An increasing number of successful farmers and agribusiness operators have already adopted this mindset. They do not fret about whether they're too big or too small. They appreciate that there are many different ways to succeed. What they all have in common is a thirst for learning and adopting leading-edge business practices. They need the government and Canadians from all walks of life to view farmers as the sophisticated business people they are.
The second point concerns management sophistication. Today's production advances and technology would have been viewed as science fiction less than a generation ago. Big or small, all farms and agribusinesses must master a demanding and complex mix of management capabilities. In essence, producers are just like any CEO of their own business. In the past, farms were often run with one or two hired hands. They now involve a team and outside specialists and require deep knowledge not only of production methods, but also of marketing, finance, HR, and IT.
Producers need information to acquire and develop skills in these areas. That's how they can leverage their position in the agrifood supply chain, both domestically and internationally. Our agriculture community recognizes the need to learn and innovate. For example, more than 14,000 producers attended our FCC learning forums last year. We have more than 33,000 subscribers to our weekly FCC Express, which according to our research is the most widely read agriculture electronic newsletter in Canada. We have more than 75,000 subscribers to our AgriSuccess magazine, which brings successful farm management stories to life.
That's just what FCC offers. We recognize that relevant, accurate, and timely agricultural information can be found in many places today.
According to the latest five-year data available from Statistics Canada, university enrolment in agricultural programs has increased by 16% in the last five years, with enrollment by women jumping by 19%. You can see that Canadian agriculture is a diverse, complex industry that is attracting some of the best and brightest of both sexes.
Successful farmers understand that knowledge is key to staying on top of sophisticated management practices.
On innovation and productivity, Canadian consumers enjoy some of the least expensive, highest-quality, and safest food in the world. That's directly due to innovation and productivity gains in the agricultural food supply chain.
Broad globalization pressures, a more affluent and larger population in emerging countries, and shifting food preferences at home are generating new opportunities for Canadian agribusinesses. A growing world population needs safe and reliable food sources. Export market opportunities will continue to increase, and at the same time, the emergence of low-cost suppliers in emerging markets is bringing new challenges to the Canadian industry.
Innovation and productivity will remain key drivers of prosperity for the agrifood industry well into the future, and a highly innovative marketplace will continue to yield positive returns for Canadian agribusinesses and households.
Agricultural research shows that high rates of return and continued funding should benefit farmers across Canada. For example, Canadian crop scientists developed canola, which has become one of Canada’s leading cash crops. Tomorrow’s discoveries will be just as vital. It’s as straightforward as remembering that two varieties of the same crop can produce dramatically different yields and profits.
Feeding the world means making sure that Canadian farmers can reap the benefits of the best agriculture science. Innovation and productivity are vital to the future success of the industry. We recognize the outstanding work of groups like Agriculture and Agri-Food Canada, the National Research Council, and the Crop Development Centre, and encourage the government to continue their support.
These are just some good ideas to reach what I believe is the very realistic goal of having the best agricultural economy in the world. This will add jobs and new opportunities for many Canadians.
In closing, agriculture is an incredibly diverse industry. Many sectors are doing very well, as you know, while some are facing challenges. I thank our colleagues in industry and government for their collaboration in addressing some of these challenges. For example, with AAFC and other lenders we worked with hog customers through a difficult period to provide some strategic support through the hog industry loan-loss reserve program, HILLRP. I firmly believe that these efforts helped preserve some of the key current and future businesses in this industry.
FCC is only involved in agriculture, so we are there for our customers through all cycles. That's the philosophy in our customer support program, and FCC recognizes the role we play in helping our customers through difficult economic, weather, and industry circumstances that are not of their making. These efforts are not handouts; they are “hands up” that respect the hard work and initiative that are the cornerstones of Canadian farming operations.
Generally speaking, Canadian financial institutions have done a good job of ensuring that credit is available to Canadian producers and agribusiness operators. All financial institutions have been able to provide affordable credit due to the lower interest rate environment that producers have benefited from with these lower rates. But it remains true for us, as for our competitors, that business is ultimately won and lost on the strengths of customer relationships and customer service.
To attain the vision of agriculture outlined in Growing Forward 2 we need to create a mindset in sync with our desire to have a competitive and successful industry. We need to flip the proportion of the time we talk about opportunity rather than challenge. When I say “we”, I mean all of us—farmers, financial institutions, the media, and the general public. Farming is a demanding business. However, its outlook is brighter than ever before.
FCC's vision panel takes the views of some 9,000 Canadian producers and agribusiness operators. More than three-quarters of those surveyed say their farm or business will be better off in five years.
Farmers, especially the next generation, need to feel proud about this industry. They need guidance counsellors who say, “You are smart and should pursue a career in agriculture.” They need access to capital with acceptable repayment terms and competitive rates that really kick-start their ability to start their own operations. Let’s not forget affordability. Although the perception may be that the cost of food has risen dramatically, the reality is that the overall cost of food, as expressed as a portion of a household’s overall budget, has significantly decreased from a generation ago.
Putting it all together, it tells a compelling story about our industry and its people.
Thank you for the opportunity to speak to you today. I look forward to any questions.
