Good morning.
I'd like to start by thanking the committee for the opportunity to be here this morning. I know that Ken is a farmer as well, so a lot of the things I'm going to speak about, Ken has already touched on. But I think that's a good thing.
Our farm is located in southwestern Saskatchewan, not far from Swift Current. My grandparents homesteaded here just over 100 years ago. Right now my partner, Terry Toews, and I currently own and operate the farm.
Until the mid-eighties it was a mixed cattle and grain farm, and since that time we've been strictly in grain production. I've been working on or co-managing the farm for 41 consecutive years. During that time I've seen many ups and downs in the farm economy, and I’ve had the time to think about how federal farm policy has affected our farm and how it has affected our neighbours across the country.
In terms of successful value chains from the farmer point of view, I’d like to bring forward three topics for the consideration of the committee: risk management, market power, and vertical integration. Risk management and market power are key considerations if there is to be long-term value at the farmer link of the value chain. Vertical integration is a term currently being used by the Minister of Agriculture in relation to the plight of Canadian hog farmers.
Risk management includes plans like AgriStability, AgriInvest, the PFRA, plant research and seed development, the community pasture program, the agroforestry program, crop insurance, the single-desk selling of hogs and grain, supply management, and regulated rail freight rates.
In almost all of the risk management areas, the government is moving to weaken or altogether end these programs. For instance, without any consultation, the government recently enacted changes to the AgriStability program that will seriously weaken our farm. In the event of a complete crop failure, our AgriStability coverage used to amount to about three times our allowable expenses under the program. In other words, our AgriStability coverage would probably have paid for about two years' worth of our farming expenses. From what I can find out so far, in the future we'll be covered for less than one year’s worth of farming expenses. This will have a serious negative impact on our farm, and I'm awaiting an analysis from Meyers Norris Penny as to whether or not we should even participate in AgriStability going forward, as we have paid a lot of attention to the cost structure on our farm; we've been trying to be efficient and keep our expenses as low as possible.
Let’s talk about plant research for a moment. Farm production relies on climate, and our climate is changing and becoming much more volatile and erratic. And now, at the very time that atmospheric CO2 levels are much higher than at any time over the past 800,000 years—and that's nine complete ice ages—the government is seriously weakening public plant research and giving private companies much more control over our seed and production systems. More restrictive plant breeders' rights, like UPOV 91 and other seed control systems are counterproductive and weaken the farmer link of the value chain.
Let’s turn to market power. A hundred years ago farmers needed to maximize their returns from the marketplace. There were no risk management programs like crop insurance or AgriStability. If farmers could not get enough money from the marketplace, they literally starved and were forced off the land.
These farmers quickly understood that they needed to build institutions like the Canadian Grain Commission, the Wheat Board, single-desk selling of hogs, and supply management—farmer-friendly institutions that could exert market power and increase returns to farmers from the marketplace. Institutions like these both limited risk and exerted market power at the same time.
Lastly, the committee should dedicate substantial time to the statement made by the Minister of Agriculture that vertical integration is the answer to the hog farmers’ problems. The minister is saying that the solution is for hog processors and/or retailers to own the whole production chain, including the actual raising of the hogs. With this statement the minister marginalizes the contributions of individual farmers over the years. When you think about that more deeply, you realize the minister is blaming the victims, in fact, the hog farmers themselves. The minister is saying that hog farmers are the problem, not the solution, and we should just remove them from the chain. If this position is not reconsidered, there is nothing to stop this mentality from spreading to all sectors of agricultural production.
Compared to post-single-desk selling of hogs, hog production that included single-desk selling was a very stable enterprise. It was the processors that convinced governments to destroy single-desk selling of hogs, which in turn greatly increased the risk and decreased the market power of hog farmers, which has now led the minister to say that industry-centred vertical integration is the answer. As odd as it may seem on the surface, I'm going to agree with the minister that vertical integration can be the answer for better values down on the farm. But that can only happen when the elements of the vertical integration are controlled by the farmers or are mandated to put the farmers' interests first.
This brings us back to supply management, the single-desk selling of hogs, the Canadian Grain Commission, the Canadian Wheat Board, the public research system, and regulated rail freight rates. All of these institutions were, in one way or the other, elements of farmer-centred vertical integration. All of these institutions gave the farmers more market power and risk management, and they integrated the farm production system in a way that was directly beneficial to the farmers.
The Canadian Grain Commission and the Canadian Wheat Board were textbook examples of how to integrate plant breeding, production by farmers, grain trade mechanics, and consumers. Fragmenting the system, taking control and information out of the hands of farmers and farmer-friendly institutions, will weaken the farmer link of the value chain. In the worst case scenario it will lead other political leaders to say that industry-led vertical integration is the answer.
That's where I'm going to stop on the written remarks.
Thank you very much.