Thank you for the opportunity to speak to you again.
I have to preface my comments. When the invitation to speak arrived last week, I undertook some conversations with some colleagues. So some credit is due to John Smithers, Rod MacRae, and Phil Mount for what I'm about to say, if there's any credit due from what I'm about to say.
My primary message to you today is quite simple. In my opinion, there's a rising consumer demand for locally sourced products, ethnocultural foods, and vibrant cultural food systems. I believe that the Growing Forward 2 platform can help farmers meet the demand for these products in three targeted ways. First is through the promotion of a mid-sized processing industry. Second is through the promotion of programs geared toward enticing a new generation of people, and in particular new Canadians, to enter farming and meet the rising demand for ethnocultural foods. Third is by creating the infrastructure through which small- and medium-scale farmers can better market their produce through enhanced connections with large customers, including grocery retail chains.
Before I expand on these three points, let me give you a little bit of background that I think is important.
It's recognized across North America that there has been a hollowing in the middle in terms of farmers. The commercially viable but still small- and medium-scale farmers have all but vanished as part of the rural landscape. Farmers have either become committed to a high-debt, high-capitalization, export-oriented model or have been essentially relegated to the margins, selling their wares in niche venues or by relying on ad hoc value-added activities.
Nevertheless, I think considerable evidence shows that these mid-sized commercial farms have a lot going for them. They tend to be higher in terms of biodiversity. They are more likely to be able to integrate crop and livestock into a single agri-ecosystem and hence typically have better soil and water health. And they generate more vibrant rural communities. This last item, vibrant rural communities, I think is extremely important, as it's been asserted in recent years that to a huge degree, agriculture and rural communities have sort of lost touch with each other, both economically and socially.
So in my opinion, losing the mid-sized farm is a mistake not only because of its impact on the environment but also because it's these farms, these mid-sized farms, that I feel are most efficient at producing local, culturally appropriate types of foods for which demand is rising.
I've been involved in an OMAFRA-funded project over the last year that's explored these issues in some detail. I say without any exaggeration that there is a huge and growing demand for the food that comes off these local but still commercially viable farms. The arguments are being picked up by large retail chains. From conversations with Galen Weston and Loblaws VPs Bob Chant and Paul Uys, I can also say with confidence that the retailers are aware that food that comes from these farming-in-the-middle farms, for which there's a huge demand, commands a higher price.
But there are bottlenecks in meeting this demand, and three in particular I'd urge your committee to consider. The first one is the loss of the rural processing industry. One of the most impressive or important changes in rural Canada over the past 20 years has been a large decline in food processing. I did my Ph.D. on the west coast, where I documented the loss of vegetable processors in the Fraser Valley. I looked at the effect this loss had on local farmers. In that case, as one processor after another closed, farmers found that the selection of crops they had markets for was shrinking.
Also, for many horticultural crops, perhaps only 20% of a harvest is suitable for fresh sale. This is due, perhaps, to minor blemishes that mean a tomato isn't suitable for fresh harvest or due to the fact that a harvest all comes at a single time, so there's too much at a given point in time. As a result, maybe as much as 80% of a farm harvest has to go to processing. With the loss of the local processing opportunities, farmers around Vancouver were obliged to abandon crop rotation and become much more specialized. This process contributed to some very serious environmental problems associated with soil compaction and water runoff and it drove farm consolidation and the reduced vibrancy of rural communities.
Hence, I would argue that the loss of the local processing industry represents a serious bottleneck that prevents local food processors from meeting the demand for local food. Helping promote local processing industries is one key area in which I believe the federal government could take a proactive and constructive role.
If it were possible to use Growing Forward 2 to create opportunities to invest in small- and mid-scale processing infrastructure, I think it would go miles towards helping local farmers access growing markets for local products. For instance, there are some successful models of mobile abattoirs that are operational on the west coast. They help medium-sized livestock producers meet the demand for local meat. There are also individual quick-freeze facilities, such as the one in Simcoe, Ontario, that offer a mid-sized, flexible processing industry for fruit and vegetable producers. At present, these types of processing facilities are struggling to find a place in the market due to the regulatory environment and high startup costs. I would urge the committee to consider this as an area the Growing Forward 2 program could focus on.
The second issue I would like to raise today is that of the aging rural population. The aging farm population--the average age of farmers today is in the late fifties--means that for demographic reasons alone, farms have consolidated and are becoming much more specialized and larger-scale. This too hurts the medium-sized farms that are best suited to meeting this rising demand for local produce.
A huge number of younger people would like to farm and meet these markets, but are prevented due to the high capital costs of starting farms, the challenge of getting access to markets, and some somewhat peculiar regulatory barriers.
I think there are ways around this. A number of small NGOs, including one called FarmStart in Guelph, are developing incubator farms that help farmers develop the agronomic and marketing skills required to launch their own enterprises. In particular, FarmStart has found traction in a new market—that of ethnocultural foods—and is finding that many new Canadians arrive in our country with a strong background in farming, who are linked to growing immigrant populations and are therefore well suited to meet the rising demand for these ethnocultural foods.
These farmers are finding major barriers. Many of these new types of arrangements that link new farmers with retiring farmers are quite informal, and as such the new farmers often don't have what are traditionally considered farm assets. This lack of clear farm assets makes it difficult for these new farmers to qualify for government programs, business loans, etc., even if they have a credible business plan. Here too, I believe the federal government could play a leadership role by developing policies and frameworks that help redefine what a farm enterprise is, build on the success stories such as FarmStart's, and recognize that by connecting new immigrants to aging farmers, it may be possible to bridge two of the core issues that confront the rural landscape today.
The third bottleneck that I would like to address is that within the grocery sector there are structural barriers to trade in local food. Even if aspiring farmers have access to land and processing, farmers have to either produce at a large scale, big enough to satisfy the demands of our large-commodity retail chains, or they have to commit to a small-scale level of production that allows each farmer enough time to develop direct markets on their own. This is another issue that I believe the federal government could help tackle.
First of all, the federal government could commit efforts to developing regional food hubs as a way of connecting small producers with large consumers. In case the phrase “food hub” is something you are not familiar with, and I'm reading here,
The USDA defines a food hub as ‘a business or organization that is actively coordinating the aggregation, distribution, and marketing of source-identified locally grown food products from primarily small to mid-sized producers.’
The OMAFRA project that I mentioned a few minutes ago has surveyed over 100 such initiatives, and here I say again with confidence that there is a tremendous network across Ontario—and I would assume across other provinces as well—that is looking at these sorts of innovative ways to solve some of the mid-scale infrastructure issues. Food hubs are one of the fastest-growing trends in the North American food retail market, in part because the USDA recognized over a year ago that helping small and mid-scale producers gain access to larger buyers makes sense on a bunch of levels. Hubs develop new markets for local producers, allow them to aggregate their products to satisfy larger consumers, and ultimately help keep more money within regional economies, thus arguably promoting growth.
By working together, people across the food chain tap into larger opportunities than they could on their own. The USDA research on food hubs shows that, on average, they become financially self-sufficient after about three years. Using online marketplaces and other flexible infrastructure, these hubs can require comparatively little in the way of capital, infrastructure, and coordination. But this very little is often a critical gap, and it's this very little that stands in the way of innovation.
The committee could recommend that the federal government establish a dedicated fund offering start-up capital for food hubs for the purpose of fostering this missing and critically important piece of infrastructure that would help link small and medium-scale producers with larger-scale consumers.
In short, I believe that through a proactive policy geared at promoting the local processing industry, investing in new farmers—and in particular, new Canadian farmers—and reducing the barriers that prevent small and medium-sized farmers from marketing to larger customers, we can help shore up what has traditionally been called the family farm: that medium-sized but still commercially viable farming operation. In doing so, we can help stop or even reverse the process of hollowing out the middle of the Canadian agricultural landscape. If we do that, we will see a number of key benefits. I think we'll see a better ability to meet consumer demands for local and ethnocultural foods. My feeling is the research shows us we will also see a more diverse and better integrated rural landscape. Ultimately, this will result in a more cohesive environment in rural communities.
Thank you very much.