Agriculture Committee on Dec. 8th, 2016

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thanks very much, Mr. Chair.

Global food demand is going to rise 50% to 70% in the next 30 years. We'll have 2.4 billion people entering the middle class, which will present a huge opportunity, and 1.8 billion of these people are in Asia, China, and Indonesia. There's great excitement about precision agriculture and the advances being made there. All these things I just mentioned point to the fact that Canada can play a real role as, for lack of a better phrase, the world's breadbasket, or at least, an important breadbasket that can contribute tremendously to the creation of jobs and economic growth in this country.

At the same time, though, there will be a need for traditional help on the farm. The Conference Board of Canada is suggesting that by 2025 we're going to see a huge gap in demand and what's required in terms of support on the farm. By 2025, 114,000 unfilled jobs is the estimate by the Conference Board.

Mr. Wells, with regard to policy, what can be done to help deal with this problem? Are there tools in our immigration policy? We tend to focus our immigration policy on attracting so-called high-skilled workers, but we also have this huge gap. Is there something to be said for making sure we are putting in place policies that will allow us to attract the labour needed by farmers across the country? That means perhaps looking at those who are so-called low-skilled and finding ways to privilege their applications.

[Stewart Wells]

Thanks for the question.

I'd really like to get away from the demarcation between low-skilled and high-skilled, because with the types of machinery out there now, which not everybody uses but most farmers do, people are working with global positioning systems, with electronics. In future, say, if you have a business plan and it doesn't involve a cellphone, throw away the business plan, because everything is moving that way. It's digital technology.

I'd like to get away from that notion, but you're absolutely right, there needs to be training and adequate training. Whether it's people coming from outside of Canada or from inside Canada, there needs to be skills and skills development.

One of the things that makes it difficult is the very nature of farming and the fact you are dealing with the environment and the climate, so one of the things I say is that I'm supposed to have 45 years in farming. I've been farming for 45 continuous years in the same operation. I should have 45 years of experience, but I don't. I have one year of experience 45 times. You can't possibly teach that type of understanding in a few classes or a four-year course, but it is essential that there be extension programming and educational and training programming.

During the 1990s and early 2000s, farmers, especially in western Canada, lost a whole generation of new farmers to other walks of life.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I hate to cut you off, but my time is limited. To be clear, I'm talking about the traditional kinds of farmhands that you would need where we have a situation.... So many Canadians, for a number of reasons, the low wage that tends to prevail in this sector when it comes to those traditional jobs, the long hours and the difficult work.... There is a labour shortage because of those reasons and a few others, but those are the two primary ones. We have the temporary foreign workers program that has helped to fill that gap, but it's not adequate. At least, that's what farmers are saying.

I wonder if you could speak to changes, perhaps, in our immigration policy that could rectify this gap. Have you any thoughts on that? By 2025, if it is the case that we have 114,000 unfilled positions in agriculture, it's going to be very difficult to meet that global demand, which is going to continue to rise, as we have an emerging middle class, particularly in Asia, which can really help grow Canada's economy if we fill that demand.

[Stewart Wells]

More people are going to be needed, but I would disabuse everyone from this notion of the stereotypical traditional farmhand, because as technology advances, technological skills are required for the workers on these farms. I wouldn't begin to categorize those people as low-skilled, or having low-paying jobs because they are low-skilled, because it is just not right. The machinery that is out there now is $250,000 to $500,000 to $800,000 per piece. It's full of software and technology and you simply wouldn't take somebody, who I think would fit in your definition of a farmhand—

[Peter Fragiskatos, Liberal, London North Centre, ON]

I'm talking about the person tilling the soil and picking the fruit, that kind of thing. You would say focus more on the innovation aspect of things and really encourage the growth of that in those kinds of skills.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Fragiskatos. We're done.

This is all the time we have. That's the first hour.

I want to thank both of you. They are very interesting topics and I thank you so much for appearing in front of the committee.

We shall break for a short period to change over to our next panel. Thank you.

[The Chair, Liberal, Pat Finnigan]

For the second hour of our meeting today on our APF study, we have with us from the National Farmers Union, New Brunswick chapter, Mr. Ted Wiggans, the president, and Amanda Wildeman, the executive director. Welcome, to both you. You are from my province of New Brunswick as are Matt and Alaina—and almost—Lloyd

With the Western Canadian Growers Association, we have Margaret Hansen, vice-president of Saskatchewan and also Mr. Stephen Vandervalk, vice-president of Alberta. Welcome to both of you.

We'll start with the opening statement from the National Farmers Union, Mr. Ted Wiggans, for up to 10 minutes.

[Ted Wiggans, President, National Farmers Union - New Brunswick]

Thank you.

Good morning. We appreciate the opportunity to appear before the committee today.

At the provincial level, the NFU-NB consulted with our minister of agriculture before the Calgary meeting in July. Federally, our national organization has provided input at various stages of this consultation process. Given that the Calgary statement is the most recent public document informing the next agricultural policy framework, our presentation today will be focused on a pillar that we believe is missing, new farmers, as well as concrete suggestions to improve the business risk management programs, and in particular, agri-stability.

Farmers are a keystone species in Canadian society. Take the farmer out of the ecosystem, and we would see a dramatic decline in our food security, our economy would shrink, and our rural communities would dwindle. While farmers are a keystone species, they are becoming an extinct species. For hundreds of years, the renewal of the farmer population has been maintained through the intergenerational transfer of knowledge, assets, and land on the family farm.

The majority of new farmers grew up on the farm and learned, alongside their parents, to master the skills and knowledge of farming, but this system is broken. As the profitability of agriculture has steadily declined over the past several decades, farming is no longer accepted by society as a viable career option.

While low profitability may be the biggest barrier for entry of new farmers, when you dig below the surface, the challenges are cultural. Public institutions that once supported the next generation of farmers through extension services and education are now heavily influenced by corporations. Young people going to universities are more likely to become an agricultural professional rather than a farmer.

Even so, when these bright minds graduate from agricultural programs, farming is still not seen as a viable career option, yet never before have we relied on so few people to feed the Canadian population, 1.6%, and never before have we been in a situation where 75% of the farmers say they will sell their land and assets in the next 10 years.

As a society, we are setting ourselves up for failure. If nothing is to occur, this land will be bought up by larger farms pushing farm size ever higher and contributing to a cycle of fewer and fewer farm operators. Where will this lead? For decades the mantra has been get big or get out, but as large farms continue down the path of monoculture, commodity production margins continue to decline, and the cycle of dwindling profitability and increasing debt simply continues.

The amount of information available to today's new generation of farmers is limited, as information on aspiring farmers and those making less than $10,000 a year is not captured in census of agriculture data. In response to a 2015 national questionnaire with over 1,500 respondents, 68% of new and aspiring farmers indicated they did not grow up on a farm. In addition, 73% of them responded that they are interested in farming ecologically. Nearly 80% of those with less than 10 years' experience in farming were into direct marketing.

Even without looking beyond these three simple numbers, we can see there may be policy implications, as a significant group of new and aspiring farmers for whom the traditional passing of farm skills, access to land, and business priorities are not available, and who are not well supported by the current policy framework.

We believe that supporting the next generation of farmers is the work of current farmers, NGOs, civil society, and governments. Our specific recommendations for government to better support new farmers under the new next agricultural policy framework include naming new farmers as one of the main pillars of the next policy framework. Under this pillar, we recommend the following priority areas: prioritize a just and sustainable agricultural and food system, move away from an export-dominated model toward a policy framework based on the principles of food sovereignty, and prioritize policies that incentivize farmers to adopt truly sustainable production.

The new policy framework must address the challenges associated with access to land, capital, and knowledge faced by new farmers by developing a national farmland succession strategy; limiting investment acquisitions, non-agricultural development, and non-occupancy ownership of farmland; providing fiscal and tax incentives for landowners to sell or rent land to new farmers who may or may not be family members; and exempting capital gains tax on farm property in transfers to new farmers, regardless of whether the buyer is the child of the landowner.

To ensure that new farmers can earn a livable income, we need to re-create direct, fair, and transparent distribution chains that support farmer renewal, promote direct marketing and re-evaluate regulatory regimes to reduce obstacles to direct marketing, and mandate supply-managed marketing boards to create systems of entry for new farmers with lower barriers to entry.

You can look at the last page of our submission, page 6, for more information on that.

[Amanda Wildeman, Executive Director, National Farmers Union - New Brunswick]

The next topic is business risk management, and in particular, the agri-stability program.

Canadian farmers are experiencing a prolonged income crisis. Federal agriculture policy has consistently promoted increasing agri-food exports, regardless of the impact on Canadian farm families, farms, and food supply.

Federal policy also adheres to market fundamentalism, the belief that markets will solve all problems without recognizing the vast differences in market power between a farm family and the global corporations that supply farm inputs and purchase farm products, and the impossibility of fairness under these conditions. Nor does the market recognize the non-financial values, such as culture, health, community, and ecological integrity, that are important to citizens.

The National Farmers Union advocates for a policy that would bring about food sovereignty, a profoundly different approach to agriculture and food policy that would support the livelihood of farmers, ensure adequate and wholesome food for consumers, work in co-operation with nature, and include citizens in meaningful decision-making regarding the food system.

In the absence of a food sovereignty based federal agri-food policy, we do need safety net programs to help family farms survive the ongoing crisis. The BRM suite needs to be designed in such a way that it actually protects small and medium-sized farms and co-operative farms, and allows them to maintain and build their farms as viable businesses that can be passed on to the next generation of farmers.

While we could make recommendations on many of the BRM programs, we will focus our time on agri-stability. Over the three policy frameworks, there have been substantial changes to the agri-stability program. In the first round, farmers found it relatively effective. Under Growing Forward, it appeared less farmer-friendly, only getting triggered with a drop in income of 15% or more. Under Growing Forward 2, it has become inaccessible.

To make our recommendations more tangible we will share with you the experience that some of our members, who are wild blueberry producers in northeastern New Brunswick, had this year.

Wild blueberry prices have steadily declined in recent years. Some say it is cyclical, while others strongly believe that this current low price, and low price forecast for the upcoming two to three years, is due to an agreement our provincial government made to allow one mega-producer processor to set up in the Acadian peninsula, or northeastern New Brunswick.

This highly contested agreement gave loans and grants to open a processing facility, as well as 15,000 acres of prime crown land, much of which had been requested and denied to other producers in the previous 10 years. This deal will allow one company to essentially double the previous production in the region, creating a market monopoly.

Regardless of the reason, prices were about 30¢ per pound this year. Producers who have been registered in agri-stability for years, but who have not had to draw on it since the previous Growing Forward agreement before 2013, were blindsided as to what the new 30% loss trigger and new margin cap actually meant for their program eligibility. The worst crop price in history was seen in 2016 and it was still not low enough to trigger a payment.

Currently, agri-stability is only triggered with a drop of more than 30% to the producer's reference margin. The reference margin is the average margin over the past five years, leaving out the years with the highest and lowest income or expenses. On top of that, the reference margin is the lower of either the average gross farm income or total expenses. This margin cap means that most farmers will never be eligible for this program, even if they're in huge financial difficulty.

We believe the current example to be representative of the experiences in other sectors in different years. With that in mind, we provide the following recommendations. Agri-stability and all BRM programs must genuinely be made in the interest of family farmers, not in the interest of how much money can be saved for government. To reduce the total payouts by BRM programs, we recommend that the next policy framework include policies that protect farmers from the extreme price volatility of global markets, by focusing on developing our domestic food system rather than prioritizing exports.

We recommend that the government re-evaluate the effectiveness of agri-stability and all BRM programs. Recently, our provincial department of agriculture expressed surprise at how few NB producers were enrolled in the program. Comparing past and current participation rates and payouts may be a helpful indicator to show which versions of the programs were the most beneficial to farmers.

The way agri-stability and other BRM programs are calculated under Growing Forward 2, including the very high payout cap, which is up to $3 million per farm under agri-stability, encourages monocropping and risky business models, and excludes farms that diversify on their own to mitigate risk through mixed farming. This has environmental concerns, and it can lead to increased debt load and inaccessibility of programs to new farmers.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Wildeman.

Next is the Western Canadian Wheat Growers Association. I'm not sure who wants to lead. You have up to 10 minutes.

[Margaret Hansen, Vice-President, Saskatchewan, Western Canadian Wheat Growers Association]

I would like to thank the committee for the opportunity to speak today.

I am Margaret Hansen, and I grow grains and oilseeds on a family farm operation near Moose Jaw, Saskatchewan.

I am also the Saskatchewan vice-president of the Western Canadian Wheat Growers. With me today is my colleague Stephen Vandervalk, who is a fourth-generation farmer who grows crops with his father and brother near Fort Macleod, Alberta. He is also the Alberta vice-president of the Western Canadian Wheat Growers.

The Western Canadian Wheat Growers is an organization founded in 1970. It's a voluntary, farmer-run advocacy organization representing millions of acres of crops in western Canada. We are dedicated to developing public policy solutions that strengthen the profitability and sustainability of farming and the agricultural industry as a whole.

As this committee studies Canada's APF going forward, while looking at programs and services to help farmers with issues around market volatility, it's important to review the good-news story of farming and innovation, and the reality of our businesses and essential export markets.

First, I would like to touch on risk management. We know that agri-stability enrolment numbers are plummeting, but we would like to encourage you, in making any changes to the risk management programs, to focus on agri-insurance, which we know is a predictable and bankable program that's working for our farmers.

In your deliberations on the APF priority of science, innovation, research, environmental sustainability, and climate change, I would like to share with you the good-news story.

As modern prairie growers of grains, oilseeds, and pulses, in the past 30 years we have significantly reduced carbon emissions, and we are reducing emissions further every year. Prairie innovation and technology have led this effort, and it has been exported around the world. Conservation and sustainability are essential to profitability, so we live it. Our homesteading grandparent farmers were the original environmentalists 100 years ago, and our grandchildren will farm the same land as environmentalists 100 years hence.

As we've recently stated, while we worry about climate change, we also can't pull an air seeder with a Prius.

The great news is that farmers are already achieving the desired policy outcome of much of the APF. We are reducing carbon emissions. We sequester carbon while producing food. However, we are concerned about what additional carbon taxes could mean for our farms as input costs spike.

Consider nitrogen fertilizer. Modern, sustainable agriculture depends on fertilizer, but it is energy-intensive to produce. Canadian fertilizer producers work hard to minimize emissions, but a carbon tax would force them to raise prices. That would force Canadian farmers to make a difficult decision: pay a higher price for Canadian fertilizer or buy it from other countries. How would it help the environment to put Canadian fertilizer plants out of business while plants in other countries expand?

Again, let's talk about the good news. We've seen considerable energy efficiency gains in tractors, trucks, and combines—many such innovations found by great agricultural equipment manufacturers here in Canada. I've spent hundreds of thousands of dollars on new combines and tractors. Modern farm equipment has highly efficient engines, with technology constantly monitoring and improving efficiency, and my neighbours have made similar investments.

We used to plow the soil, but with modern precision farming today, we now practice reduced or entirely no-till farming. Fuel use is cut, because we are not passing through the field to plow the soil or apply pesticides over and over again, as in the past. No-till has additional benefits in drier areas, where less irrigation is needed, further enhancing fuel savings and soil conservation. This is great news.

Agronomy has vastly improved. As growers, we now employ diverse cropping rotations and better fertilizer practice. Plant science innovations are remarkable. Productivity gains and yield advances with reduced inputs in wheat and canola, as just two examples, are impressive. This is happening because of advances in genetics and plant breeding, modern plant protection products, and improved soil health through agronomy. Again, much of this is driven by homegrown prairie crop science innovators.

New crop varieties developed through modern breeding techniques see further reduced tillage, with crops growing in drought conditions, meaning even greater sequestration and soil conservation.

A recent CropLife Canada study quantifies the significant contributions farmers have made in major environmental footprint reductions:

Since 1990, the reduction in tillage owing to use of plant science innovations have resulted in a 3.8 fold increase in carbon sequestration in cultivated land, reducing greenhouse gases by about 4 million tonnes per year. Decreases in summer fallow add another 5.2 million tonnes of greenhouse gas reductions through carbon sequestration.

As farmers, we're producing more food on less land, and we're continuing to reduce greenhouse gases further, including reductions of diesel fuel use approaching 200 million litres each and every year. Canada's greenhouse gases are steadily increasing, but in the agricultural sector they are clearly decreasing.

This leads us to the key point in your study on the priority of markets and trade for our products. Canadian farmers are concerned about competitiveness. As we potentially bring in more taxes, it impacts our competitors. France and Australia don't have those types of taxes, but the same world commodity prices prevail for all. The same crops will be grown and the same emissions will be emitted, but carbon taxes will send a signal that farming in Canada is less profitable.

I'm a farmer speaking directly from that perspective. On markets and competitiveness, those key issues of climate change and carbon taxes can't be decoupled from the others.

With trade and markets, while there might be protectionist rhetoric coming from certain corners abroad, Canada should still move forward and lead on this critical issue. We have to maintain our markets, create new ones, and ensure when hauling future harvests that we're not at a competitive disadvantage to other countries. Whether in the trans-Pacific partnership or other bilateral deals, the benefits of trade are real, and every day that we don't have market access at competitive levels we're at a disadvantage. We need a level playing field. There's a reality in global supply chains, and we can't afford a missing link in the chain.

Our grain sector is designed to grow and to be a true modern global player. We produce food, which is something essential to everyone. We just want the freedom to grow, innovate, compete, and market it on a level playing field here, at home, and to families around the world. Combined with a strong agriculture insurance program, that will give us the tools we need to do that.

We thank you for your time here today. I look forward to your questions, and we look forward to working with all of you to enhance the profitability and sustainability of farmers in our agricultural sector.

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you so much, Ms. Hansen.

We'll now start the question round with Mr. Anderson, for six minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair. I want to thank our witnesses for being here today.

Ms. Hansen, you talked quite a bit about innovation and being innovators. As we're having this discussion, we're trying to set some future direction for agriculture in Canada. I'm just wondering if you can talk about where you see the future of farming headed over the next 10 years. What would you see as the focus of innovation? Where is it going to be taking place? We've seen such huge changes in the last 10 years. Where do you think that's going? As we're trying to set a direction for APF, what should we be focused on when we're looking at innovation?

I'll probably ask the same question about research a bit later.

[Margaret Hansen]

We would see it largely with better tools being needed to meet the challenges of the future. Any kind of environment that will encourage investment in that type of area is where we would be seeing things.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Where should the research money be focused? We've heard a lot, as we've had these hearings, about the importance of research in the future, the science clusters, and those kinds of things, but where would you like to see.... Mr. Wells was here earlier, and we talked about the Western Grains Research Foundation. We have other funds in some of the organizations. Where should that research funding be focused do you think?

[Stephen Vandervalk, Vice-President, Alberta, Western Canadian Wheat Growers Association]

The grain companies now and some of the crop researchers, the Syngentas of the world, are doing a lot of research. We do have the fund, which I think is upwards of $60 million, in the Western Grains Research Foundation, and they are doing some research as well.

It's a very tough thing, because every part of the Prairies needs different research. Some areas are droughted out, and other areas are being completely flooded out. I think the key thing to focus on is having that level playing field, making sure that some of our agri-insurance is in place. If we're able to invest in what we put into the ground especially, that's what it comes down to. If we can profitable, we know we can put more into the crop. By putting more into the crop, that decreases the risk of using these insurance programs because usually we're able to grow the yields.

I think we just need to make sure that those programs are definitely bankable from the beginning so that we know what we're going to have and that we're able to have trust in putting the investment into the crop. From there, we can push forward. Then we can use some of these new technologies as far as drought-tolerant seeds are concerned.

A good example is seed treatments. One of the problems we have in western Canada is the wireworm. It's a little worm that's in the ground. You can't do anything about it because it's under the ground and it eats your seed. You have a crop, and then three weeks later you have nothing. Without seed treatments, which are the only way to protect against that, you might as well pack up and go home, because there's no other answer. Without those types of products and research, we would be in very deep trouble.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

There are lots of things I'd like to ask today.

Mr. Wiggans, or maybe it was Ms. Wildeman, mentioned the business risk management. You have a chart in your presentation here. I think it argues against the claim in your presentation that there has been a prolonged income crisis in Canadian agriculture. It shows net income increasing in the last 10 years, from $2 billion to $8 billion; net farm exports are up about 40%; and imports are up as well.

I wonder how you can reconcile the chart with the statement that you made. My experience, on the Prairies anyway, is that net farm incomes have been improving and increasing for people.

[Ted Wiggans]

It all depends upon the commodity group we're talking about. Even if you look at the total net farm income on that chart versus the exports, there has been a tremendous increase in both imports and exports, and net farm income has increased slightly, not nearly as much.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Vandervalk, would you have any comment on that? Larger farms were partially blamed by the NFU for entering into a cycle of declining margins, declining profitability. Is that what you're finding with the farmers in your area?

[Stephen Vandervalk]

No. I would agree that it depends on regions. In western Canada, there is no doubt that farm income, in the last seven to eight years especially, has increased significantly. It has to do with a few things. World prices have increased. In the last 10 to 15 years, with a lot of the technology we use, which we've talked about, our costs have gone up, but our revenue has actually gone up a bit further. That said, with our costs going up, we do have more increased risk because we have those extra inputs, but definitely the net margins have increased. Again, going back to agri-insurance, with our increase in revenue, our averages should be going up; therefore, we should have more bankable, higher base-level coverage.

Yes, we've definitely seen an increase in profitability, but also with that comes an increase in risk.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You mentioned three times about agri-insurance being a far more predictable and useful program than agri-stability. We've heard at this committee that less than 30% of farmers are now enrolled in agri-stability. That basically means we don't have a business risk management tool that works across the board.

You folks like agri-insurance. What other aspects of the APF do you like that have worked for your members?

[Stephen Vandervalk]

There are a few things. Agri-invest has been something that's also bankable. Agri-insurance, as far as a grain and oilseeds farmer is concerned, is the be-all and end-all for the business risk management suite. We get coverage, we know what we're going to have, and we're able to plan our farms accordingly.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Vandervalk. I'm going to have to cut you off here.

We'll move on to Mr. Breton.

You have six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you Mr. Chair.

Ladies, gentlemen, thank you for being here with us today. Your testimony is extremely important in the context of our study on the next agricultural policy framework.

My first question is addressed to Mr. Wiggans and Ms. Wildeman.

According to some sources, there has been a serious labour shortage in the agricultural sector over the past 10 years, and this shortage is not going to improve in the coming years. It is even expected to double in the next eight or nine years. This is a very problematic situation, all the more so since the demand for foodstuffs of all kinds is going to continue to increase, given that the population is also increasing both in Canada and elsewhere in the world.

What are two or three solutions the sector might suggest to alleviate this problem?

What can the government do about this issue, which is in my opinion one of the most serious challenges the sector is facing?

[Amanda Wildeman]

Mr. Wiggans basically stressed the fact that a new generation of farmers is needed, and that in our opinion this issue is first and foremost a cultural one. As Mr. Wells was saying earlier, we lost a whole generation which for various reasons decided they would not work on the farm. Some parents told their children it was preferable to go to university and choose another line of work. That is why the majority of those who want to get into agriculture now are not from farming families.

Consequently these people have not acquired experience from a young age. So it's a cultural issue. To begin to deal with this, we have to start in the schools and broaden the debate and involve all of the population, and promote the valuable work farmers do everywhere in Canada.

Mr. Wiggans mentioned several solutions. It is really very costly to start farming. All of those who spoke to us spoke of the cost of the machinery needed to get going. A person who is just starting out can't afford a million dollars' worth of machinery. And banks are not willing to lend such large sums. It's too risky to lend such amounts to people who are new to the sector. We submitted practically a full page of recommendations on how this process can be approached. I don't, however, want to talk about this at length and use up too much time to set it all out.