Agriculture Committee on Oct. 25th, 2016

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair.

Welcome to the witnesses. It's a pleasure to have you here today. Your testimonies are extremely important for the preparation of our next strategic framework.

I often come back to this next point when I am in the presence of experts like you. I believe that the efficiency and productivity of our farms in Canada are crucial. In the Shefford riding, which I represent, 80% of the land is agricultural. Yet the farmers often tell me that they want to be more productive every day. They need help. It's clear, in fact, that they can't do it all on their own. They also know very well that there will be more and more people to feed, which requires investments.

Could you please talk about investment vehicles that, based on what you've seen, would improve the productivity of our farms and everything related to innovation. I think that's an important aspect.

I would also like to know what the expectations are of the federal government when it comes to the next strategic framework.

Ms. Cook or Mr. Bonnett could answer first. We could then go to Mr. Siemens.

From my perspective, I note that productivity, efficiency and investment in innovation are issues that come up very often. You might first say whether you agree with this and then answer the other questions.

[Fiona Cook]

Our farms have become extremely efficient, and more and more sustainable, because often better economics leads to better environmental outcomes as well. As we look out, having funding, good research, and innovation programs is going to be critical to getting productivity increases for the sake of productivity increases, but also critical to responding to new pressures, such as a carbon pricing mechanism, because it's going to be very hard for farmers to get any more efficiency improvements in the short term. There aren't many substitutes available. They are already maximizing their cost-effective use of inputs such as fertilizer and pesticides, and reducing water use. As we try to respond to these environmental challenges, we are going to have to have programs there to support farmers and to help them innovate even more to get more and more efficient.

[Ron Bonnett]

One of the other areas is taking a look at the research on the innovation side and trying to get more income from the same crops. Agriculture waste presents some opportunity for generating energy, whether it be in livestock farms or grain farms. I think we have to start looking at how we can pull more dollars out of that same acre or hectare of land. That's going to be based on having good research ahead of time and doing pilot projects to see how we can maximize the return in agriculture. One of the things we are starting to see is a number of livestock farms putting in methane digesters and things like that, which have the benefit of not only dealing with the climate change issue, but also increasing the revenue of that farm, so the overall profitability goes up.

I still think ongoing research is going to be needed on the productivity side as well. Some of the gains that we've seen in crop yields over the last number of years are the result of research that was done 20 or 30 years ago. I think that type of research has to continue. The cluster model, as I mentioned in the presentation, seems to be working.

[Kurt Siemens]

I would agree with what Ron stated, as far as the research side is concerned. Having proper research, and the proper researchers in agricultural universities and colleges across Canada, is important for us, so grassroots farmers can take that research and be more productive. We have to keep reminding ourselves that it's okay to be a commercial family farm; there is nothing wrong with that. I think there you get that public trust or social licence dichotomy happening again. There is nothing wrong with my having a big farm and my family running it and producing lots of good-quality, local, fresh eggs for consumers in Manitoba and the rest of Canada. I think there are lots of positives there for us already.

[Pierre Breton, Liberal, Shefford, QC]

Thank you.

Earlier, you addressed another aspect that my constituents are concerned about. It's something we don't talk about often. It has to do with the next generation in agriculture and the transfer of farms to family members rather than strangers. There are significant costs associated with transferring property to family members.

Could you talk about that? I think a lot of families would like to keep their farms but, for financial reasons, they will often make other choices.

Would you like the next strategic framework to contain a provision on this?

Actually, I think, Mr. Bonnett, you spoke about it earlier, as you did when you appeared before the Standing Committee on Finance.

Could you tell me more about this important aspect?

[The Chair, Liberal, Pat Finnigan]

Mr. Bonnett, please be brief.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair.

[Ron Bonnett]

I would reiterate the importance of business planning for succession from farming. I think you have to take a look at how you transfer that asset, taking advantage of all the tax rules in place and really making sure you do it right. If you don't do the planning ahead, you're likely headed for a disaster.

[The Chair, Liberal, Pat Finnigan]

Thank you.

[Ron Bonnett]

Is that tight enough?

[The Chair, Liberal, Pat Finnigan]

Yes, you might be able to pick it up later on.

Mr. Gourde, you have six minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you very much, Mr. Chair.

I would also like to thank the witnesses for being here this morning.

The excellent quality of your testimonies will no doubt help us to draft our report.

Currently, in Canada, less than 2% of the Canadian population has agricultural assets. Unfortunately, the trend in my region is such that, among people my age, two out of three producers aged 55 to 65 are not going to transfer their farms. They will undoubtedly be sold to larger businesses because there isn't anyone to take over, which means that in 20 years, all the agricultural assets will be owned by less than 1% or thereabouts of the Canadian population. This includes new technologies, all the land and new buildings that cost about 10 times more to build than they did 35 years ago.

What might the impact be for the 99% of Canada's population that will not own assets, or who have little interest in owning them? Will the fact that there is only 1% of Canadians who own all the agricultural assets weigh heavily on the future of Canadian agriculture?

[Ron Bonnett]

This is almost a philosophical question. I think what you're describing, the fact that farms are getting bigger, is very real. We initially had a dairy farm. When we started milking cows, there were 75 producers in our area and now there are 13. I think it's just part of farmers adopting new technology. You also have the greater scale.

What I see happening is that we're getting growth in two areas. We are seeing a growth in the number of large farms, the size of the farms, but at the same time we're seeing some niche markets developing for the small farms. I think we're going to see that continue. The real question you are getting at, though, is that with 1% of the population involved in farming, it's going to be increasingly a challenge to deal with public trust issues. I think that's why it's important to start with this agriculture policy framework and make some investments so that we can do a better job of ensuring that consumers who are completely disconnected from the farm have a better understanding of what it is we do, why we do it, and how we do it.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

In the future, we will no doubt see these large companies acquire all of Canada's agricultural assets. One day, sooner or later, these owners will want to do the same thing: they will retire and will sell the farms. It will become more and more complicated to transfer businesses worth $10, $15, $40 or $50 million, compared to businesses worth $1 or $2 million, on average, today, maybe a little less.

Our agricultural programs extend only over the next five years, but the trend is really real. This has been the situation for 30 years, and it risks repeating itself over the next 30. How can we prevent the agricultural sector from becoming too limiting for the next generation? These days, to get into agriculture at 25 years of age, you need $4 to $5 million in capital. Any 25-year-old who can find $4 to $5 million, or managed to win $4 to $5 million, might not be advised to get into agriculture. It would probably be better that the person continue to work in the same sector.

Agricultural work isn't necessarily well paid. Farmers rely only on product sales. This week, for instance, the price of pork is the same as it was 40 years ago, about $0.64 a pound.

What can we do so that agricultural assets are held by more people? If we go lower than 1%, I am really concerned about the ownership of these farms. Will they be bought by large American companies, or by companies from other countries? There will be practically nothing left in the country that is Canadian-owned.

[Ron Bonnett]

I don't necessarily agree that we're going to see large corporate interests taking over the farm. I think it was mentioned earlier that something like 98% of the farms are still family-owned operations, but these family operations are a lot different than they were 20, 30, 40, or 50 years ago. Many people are bringing their sons, their daughters, nieces, and nephews into the operation, and they're creating a business that is a little more sustainable, I think, in the long run. If I look back to some of the older small farms that were in business, some of those farms did not have high productivity, and the people who were working on them were working every day of the year themselves. They didn't have anybody to share that labour.

I think what you've seen is a shift taking place on the commercial farms, and I don't think there's anything wrong with calling them commercial farms. The people working those farms want to have a scale that allows them to make a decent living, and they also want to enjoy the same benefits the rest of society have. If they want to go on a holiday, they'd like to go on a holiday. If they want to take their kids to a sporting event, they take their kids to a sporting event.

The real issue is not about the size of the farm. It's about making sure that there's profitability there. In some cases, the farm that cost $5 million, because of its productivity, may have more profitability than the farm that cost a million dollars. It's all about making sure that the proper tools are there for business planning, so that the people buying a farm have the opportunity to find out what they're getting into. If you put in some of those tools, like tax policy, that allow the farmer who's exiting to decide to hold the mortgage and have the income coming in on a tax-free basis, this may give the farmer the opportunity to move that farm over to the next generation.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Bonnett.

Thank you, Mr. Gourde. Mr. Longfield, you have the floor.

You have six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair, and my thanks to everyone for the great presentations.

Last Friday I was at the Ontario Agri-Food Technologies semi-annual meeting. Each of your organizations from Ontario was presenting, and there were some very consistent messages coming through.

We talked a lot about the “Calgary Statement”, and in particular the public trust piece of it. We also talked about the science research and innovation. Something coming out of the “Calgary Statement” that's new is the part on value-added and agri-food processing. I wanted to dwell on that just a little bit. There's a massive business opportunity for Canada here. We know the planet is growing in population, and we know we can supply food if we can get our innovation funding together properly.

Could you comment, each of you, on innovation funding? For me, as a newcomer to politics, I'm trying to sort out Community Futures, where funding goes up to $250,000. We have the federal regional development agencies, and we have the AgriInvest programs. How does a farmer figure this out? Is it better to get this centralized, to go to the federal development agency that can get you to CF, or could get you to innovation funding in other ways? How does a farmer figure out innovation?

[Kurt Siemens]

Not easily.

[Lloyd Longfield, Liberal, Guelph, ON]

I guess so. It's not just me.

[Kurt Siemens]

Yes, it's not just you.

The innovation sectors, we see it on the eggs side. We have CPRC, which is an organization that helps distribute some of the funding to researchers for all different aspects. As Egg Farmers of Canada, the research we look into is medical to food safety, to animal welfare, to environment, all sorts of different areas.

I think helping some of these agencies that distribute that funding especially helps us as egg farmers, at least, and all of agriculture, because I need Ron and Fiona on the grain side to produce the product I have. I want nothing more than for them to do really well, so that I can do well, and all of agriculture can do well, and feed you guys.

[Lloyd Longfield, Liberal, Guelph, ON]

Before I go on to Fiona and Ron, I want to dwell on the Egg Farmers.

An example they gave us was McGill partnering with the Egg Farmers of Ontario. They developed a new light technology for determining day-of-lay characteristics of the egg. Reducing waste, reducing.... Is that something that then gets spread to the rest of Canada?

[Kurt Siemens]

Absolutely. We're all just waiting for them to release it. They've got it to I think about 85% accuracy. Once they get to 90% to 95% they're going to spread it across Canada. Canada isn't the only place. Other countries are working on the same kind of technology. I think McGill and the Egg Farmers of Ontario are in the lead in this. This is amazing stuff to be able to do, to sex the egg before it's even gone into the incubator.

[Lloyd Longfield, Liberal, Guelph, ON]

Sorry to dwell on this, but we don't have a lot of time. I've got in my mind as a major opportunity the financial and technical sharing across Canada, and how we could do that through the new policy framework.

[Kurt Siemens]

I would agree with you, yes. There are different ways of doing that. We would be willing to chat with you a lot more after this if you would like to.

[Lloyd Longfield, Liberal, Guelph, ON]

I'd love to. Great. Thank you.

And Fiona.