Agriculture Committee on Dec. 13th, 2011

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Thank you, Mr. Chair, and with the limited time I'll get right at it.

Mr. Allen was just talking about the amount of paperwork needed to use some of the programs that are already out there. Each of you, during your presentation, including Mr. Dhaliwal, mentioned some changes or some thought changes. Hopefully, as you were thinking of those changes, you were thinking about whether they would cause more paperwork or less, and we'll go from there.

One of the other things we were looking at in one of the last meetings I was at of this committee was business plans for farming. Mr. Gowland, you mentioned a lot in your presentation about how you've planned to move forward. Even in one of your answers to Mr. Allen, you mentioned about planning and looking at whether AgriStability would work for you, how you would make it work, and that type of thing. I commend you on having that type of business plan for your farm.

We heard that day that 20% of people farming today have a business plan. Most of those put it together simply to be able to get financing, and they're not following a plan the other way. So I thank you for doing that. I think each of you in your conversations with us talked about that. We've hit on some of the 20 percenters here, so let's look at it from that point of view.

Mr. Gowland, you talked about your business and how it works. But you told us a bit about some changes you might like to look at from an AgriStability point of view, and you mentioned transparency being a problem. Is that transparency in how you report or transparency back from Agriculture Canada or...?

[Jim Gowland]

Again, you can maybe look at it that we're contradicting our statements here a little bit, but to try to sort it out here, there is the fact that I think we have good information from our operations. As Mr. Schneckenburger talked about, the whole situation of being able to take a multi-component farm operation, split it apart, and have those numbers—and we do have those numbers.

I think where we end up having a problem is with the AgriStability, the application, and basically, whether we are even eligible for this thing. The fact is the frustration level....again, the timeliness of need, in a lot of cases, comes into that. But it's a situation where you don't know for a long time. It's very past tense on when you get that information of whether you qualify or not. Certainly, the word “bankable” comes out, the word “predictable” comes out, and I think there's a big lack of that happening in an AgriStability type of program.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

So you're trying to find somewhere half-way through, so you can see whether you are going to be eligible or you're not going to eligible, that type of thing?

[Jim Gowland]

Yes.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Both you and Mr. Schneckenburger mentioned AgriInvest, and you talked about increasing AgriInvest from 1.5% to 2% and upping the piece on it. What would that look like in your business if that happened? You're asking for that to happen. What difference will it make to your business?

[Jim Gowland]

Again, I look at the fact that there'd be less dependency upon a program like AgriStability, which is certainly something that we don't.... We pay the premiums, but we don't get it, which, again, is probably good because the operation has maintained profitability over the years.

I think it would allow us to.... I'm not trying to say we're going to hoard away money, because our interpretation of AgriInvest is that you manage that money, and you put it away for a rainy day when you do have a cyclical downturn to use it.

As we move forward, with the size of multi-million-dollar operations, it becomes significant in making sure that you've got enough that you can utilize out of that account to get you through those periods. It's worked well at the 1.5%. I think if you can bump that a half a percent or maybe even a little more, it's a situation where it's attractive to put more money in there.

Certainly there are situations with maximums where you have to take it out. I've heard that mentioned; it gets you to your maximum, then what good's the program? Well, guess what? As a farm business operation or any business operation, I think you can manage that. I think that's not a real big task. There are financial instruments and tools to deal with that.

I'll leave it at that, unless you want to—

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Okay, great.

You talked a little bit about diversifying....

Oh, Mr. Schneckenburger, on the same point...? Go ahead.

[Arden Schneckenburger]

If we go to 2% on AgriInvest and.... I have a belief that farmers will be more successful down the road with things like market development, trade, research, and innovation; you can maybe save that other half a percent if you invest it in on-farm research or innovation and trying new things, etc. You would get matching funds from the government. I would see something like maybe tying it in with some of the other planks of Growing Forward 2.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

I guess the point is that it's an envelope of programs. If you're asking for that, where would you take it from? You're asking for an increase in AgriInvest.

[Jim Gowland]

I would take it from.... Kind of a no-brainer for me is AgriStability; I'm a grains and oilseeds producer. On the other hand, for the red meat sector, it does work for them. But that's probably where I would look. If I had the gift chest to pull out of, that's what I would do.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Valeriote, you have five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Mr. Gowland, did I hear you say “AgriInvest and forget the rest”?

[Jim Gowland]

Yes.

[Frank Valeriote, Liberal, Guelph, ON]

Okay. I do find that interesting.

Interestingly, it agrees with an article I read the other day by Larry Martin, which is a really interesting article. He's with the Macdonald Laurier Institute. He spoke of a study that was done in 2010 by Al Mussell. It showed that from 2004 to 2008, 100,000 farms had sales of less than $100,000. These 100,000 farms represented 55% of all farming enterprises in Canada but represented only 5.7% of total farm operating income from all Canadian farms.

He thought that with the demand for food in the world we ought to be able to scale up, and that these people, these farms, ought not to rely on BRM programs as much as they do. Of course, he went on to quote how much money is spent on them. Yet I read in The Economist that the failure of small farms will lead to the failure of small-town economies and the corporatization of farms—huge farms. He suggests that may be the only way to go if we're going to feed the world.

I understand that argument. I don't agree with it, but I understand it.

But if we get rid of AgriStability, for instance, to me it's like somebody having the opinion that they've been healthy in their eating, they've looked after themselves, and they've cycled every day and worked out, so they don't have to rely on our universal health care system, whereas there are other people—perhaps like me—who are less attentive to their health and who do rely on the health care system from time to time. So while we're not about to get rid of the universal health care system, I don't see why we would get rid of AgriStability.

Don't you see it really as a valuable tool with the BRM and the pork crisis and all of these things we've suffered in the last three or four years? People have had to rely on it.

[Jim Gowland]

Well, from a predictability standpoint, I think that even those sectors would still have to question what's there and what they're going to get out of it. I guess there's.... As long as I've farmed—for 30-some years now—and as long as I continue to farm, or my family potentially may start to farm or something like that, we're going to see cyclical downturns. I think basically you want to look at something from a whole-farm production standpoint.

I think it's everybody's responsibility in a situation where you have a program like AgriInvest, where you can take those dollars, bank them away, and use them in times of downturns. You can use those dollars and you can manage the dollars according to the progress or lack thereof in your operation. I think in the long term, if you're having a lot of issues, you have to look hard at that business to see whether it's a viable business or not.

For the purposes of this discussion, too, I'll say that I married an accountant, and basically things are black and white; there is no grey. The situation is that the business has to sustain itself or it's not going to be there. Maybe that's my opinion, but I think business in general is of that opinion. We're all going to have cyclical downturns. How do you ready yourself for that?

From our standpoint, an AgriStability program in my sector—I'd like to let these fellows here talk about their sectors—a grains and oilseeds sector, certainly does not work very well.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

Mr. Schneckenburger, you talked about multi-enterprises and the difficulties that arise when some of them are profitable and one of them isn't. I don't know this, and that's why I ask. Is there not a legal way to separate your enterprises so that your wife runs one and you run the other, and the one who's running the unsuccessful one is able to apply for it? Can you explain that?

[Arden Schneckenburger]

I'm pretty sure it's arm's-length ownership of the businesses, so I don't think you can.

[Frank Valeriote, Liberal, Guelph, ON]

Is that right? You guys are kind of smiling. Is that the case?

[A voice]

Yes.

[Frank Valeriote, Liberal, Guelph, ON]

Okay. There is no lawful way to do it

[Arden Schneckenburger]

I think you pointed out that out of 100,000 small farms, there were only 5%.... Don't write programs for those people. Yes, they should be in the program. I have no problem with that. Maybe the programs should be written for what I call commercial farms. Then make it so the others fit, and not the other way around. Make it for the business.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

Do I have any time left, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You have three seconds.

[Voices]

Oh, oh!

[The Chair, Conservative, Larry Miller]

Sorry about that, but the clock doesn't lie.

Mr. Hoback, you have five minutes.