Agriculture Committee on Dec. 15th, 2011

[Michael Delaney]

That's an interesting question.

The reference that you raise has to do with two particular programs that I'm aware of. One is in relation to DON, or deoxynivalenol, testing in milling wheat. For those of you who may not know, we grew our milling wheat industry up to 35,000 acres from about 4,000 acres, and in the span of about two harvests, we dropped back to around 4,000 or 5,000 acres of milling wheat. The primary reason for that had to do with a couple of bad years in growing milling wheat that was high in DON toxin.

How did we know that? Well, the whole country, I guess, is now involved in quantitative analysis in DON-toxin testing and ochratoxin testing. This was in relation to food-borne, food safety issues in relation to baby food a couple of years ago. So the Canadian grain industry is involved in dialogue, discussion, and conversations on essentially how to manage ochratoxin, which is a storage problem in grain, and DON, which is a production problem during growing. Our council is trying to lead a couple of projects, mostly to get at statistical analysis and sampling, so that this quantitative test can provide predictable results for buyers and sellers.

That's one example.

[Francine Raynault, NDP, Joliette, QC]

How could these projects be of interest to other Canadian producers? In what way does the situation you just described....

[Michael Delaney]

You would need to consider the different structural differences in our grain industry. In milling wheat, for example, in Atlantic Canada, we store most of the commercially marketed milling wheat in one central facility. So we're in a position where we can test every load coming in. In western Canada—and I guess there are others who can speak more about that system—product is called for sale, and their primary concern at the moment, from farms through to the elevator system, is ochratoxin.

All we're trying to do is to provide input to the Canadian Grain Commission and others involved in wheat testing for toxin to ensure that the national system for grain, whether it's domestic or international, is based on a sound and smart toxin analysis program.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

Do I have any time left, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You have a minute and a half left, if you want it, Ms. Raynault.

[Francine Raynault, NDP, Joliette, QC]

My next question is for everyone.

The Auditor General recommended that Agriculture and Agri-Food Canada work with the provinces and territories on providing producers and stakeholders with a better understanding of income support programs' objectives, given the complexity of all those programs.

In your opinion, what kind of responsibility do producers have when it comes to risk management, in terms of farm income?

The question is for all of you. You have whatever time is left to answer.

[The Chair, Conservative, Larry Miller]

Briefly, who wants to go first?

[Francine Raynault, NDP, Joliette, QC]

It doesn't matter who goes first.

[Humphrey Banack]

I'll start.

I believe the programs were designed with farmer input and stuff, so I think it's very important for us to have programs that we can go out and explain to producers. When I travel out there and I need to talk to producers, there's a misunderstanding as to how the programs all fit together. I think it's incumbent on everyone concerned—the farm organizations and the governments—to be involved in explaining to producers how these programs can best work to suit our individual industries, individual sectors, and the industry as a whole. We have to help them.

Through that consultation and in talking to producers about how to use the programs, we can also get useful feedback as to how to change the programs to better suit their needs, when we talk to the grassroots producers. I think that's an important part of making sure that people out there understand why the programs are there and how they work, and it's part of the role of both government and industry to get there.

[The Chair, Conservative, Larry Miller]

Are there any more comments?

Travis.

[Travis Toews]

I can make a comment.

Certainly, again, we would see the fundamental role of BRM to be a backstop in times of disaster. That's what we would see as the fundamental role of BRM. We have also identified the fact that there are tools that can be put in place that encourage producers to manage their own risk better in the income stability tiers. That's why we think there's a role for insurance as well.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. Trost for five minutes.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

And thank you to the witnesses.

I'm a substitute for a substitute, but I do enjoy on occasion getting back to the agriculture committee and talking to people here.

One of the things that has always struck me about where agriculture is going is how it's aging. My dad and my uncles, almost all of them, are on my dad's side farm. Of my cousins, I only have one cousin left farming.

Looking at the business risk management programs here, have you or any of your organizations given any thought to how these affect younger farmers who have bigger difficulties getting in? When a program is successful or markets go up, the cost to get into the industry is higher—farmers tend to reinvest in the land, and the price of capital goes up.

Knowing that, have you given any specific thoughts to how these programs can be set up so that new, younger entrants into farming are able to enter? We are seeing an industry that's greying much faster than the greying of the average population.

I'll throw that one open.

[The Chair, Conservative, Larry Miller]

Does anyone want to tackle that one?

Mr. Wipf.

[Kevin Wipf]

I think that's an excellent question, and it is actually a fundamental question of agriculture right now. Certainly getting young farmers into the industry is going to be very important going forward. This is where we would again see the need for BRM to focus on other things, such as actually allowing farmers to have more power in the marketplace.

One of the studies we did in the last few years looked at farm debt, and one of the concerns we have is that as of 2009, we have $64 billion in total farm debt in Canada, and it's climbing. It has climbed quite significantly. In 1994—I'm just looking here—it was $25 billion. So the debt load that farmers are taking on....

Talk about risk management. Look at where interest rates are. What's going to happen when these go up? There are agricultural economists raising alarm bells about the fact that we could be seeing a debt crisis in agriculture.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm hearing the problem; I've got it. Has anyone given any thought to any solutions for the issue?

Not to cut you off, Mr. Wipf, but I need to use my time wisely.

[The Chair, Conservative, Larry Miller]

Mr. Toews, you had your hand up.

[Travis Toews]

Sure. Again, in our industry, we've had these discussions. I'm convinced that when we get our competitiveness issues corrected—and we're going some distance to getting that done—we will see some profitability in the industry. That's ultimately what it's going to take for reinvestment and for young people to come back in.

Anecdotally, we're starting to see that, believe it or not, already in the cattle industry across this country—investment by younger folks again, who are really interested in coming into the industry when they get an opportunity.

In terms of BRM programming, I would default to the disaster tier. I think that's most important for young producers. I will say this: BRM programming is not going to create an environment, nor should it be solely there to create an environment, to attract young people into the industry. That should ultimately be the potential for a return on investment in the long term: it should either attract capital or not attract capital. Ultimately, I think solid disaster tier programming is of real assistance to younger producers who lay it on the line.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I have a follow-up question to that, but does anyone else, very quickly...?

[Humphrey Banack]

Yes.

Young producers are innovative, they're new, and they will be the first ones using up the programs that are innovative. As a grain producer, I can only lock one side of my income equation. I cannot lock anything on the expense side. So programs that are innovative and new, that these young producers can take to their bank, that are bankable, to cover that capital—as we say, it's a very capital-intensive industry—I think would be something they would use.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Okay.

Mr. Toews, you noted that disaster programming was one of the things you'd say would be best for young producers. But I think of one of our neighbours, a guy who's only about two months younger than me, and first year he farmed, when he rented out some crop land and was flat broke by the time he'd done seeding. Guess what? It hailed that year. Andy was 20 or 21 at the time.

How can young farmers who are really tight to the margin even get involved in some of these programs, where it does take a little bit to get in? He's a perfect situation. It completely flattened his crop out. He went to the “Bank of Dad” to bail him out for one year. Fortunately, he only had half a section that year when he was starting out. But what do you do in the not uncommon situation I just noted?

[Travis Toews]

That isn't that uncommon.

My response to that would be, “Well, we're not grain farmers.” Crop insurance and hail insurance are offered. And if you live in a region—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

He couldn't afford either one of those, as a young guy.

[Travis Toews]

Sure. But again, I'm a firm believer that producers need to bear their normal business risk. There's a pretty good tool out there in hail insurance. If they're in a region where hail is a reasonable probability, I would call that an input cost to consider.

[The Chair, Conservative, Larry Miller]

You're out of time, Mr. Trost, so—