Agriculture Committee on April 11th, 2017

[Michael Hoffort]

Yes, it's clearly helpful to have a parent who supports them with that strong backing, whether it's from assets, or perhaps for security on loans, and who has that management capability and the experience that comes with multiple generations of seeing highs and lows and all the things you learn along the way.

It's not unprecedented, though, to have young people start and build their way into very viable operations. As farming got more robust, that was one of our challenges, even on our staff, where we have a lot of agriculture grads who clearly want to be farmers. It wasn't unheard of for them to start and to work their way into full-time operations totally independent of the family that they grew up operating with. It does happen. It is facilitated faster and probably with more ease with that financial backing of a parent or a family structure like that, but that's not absolutely necessary to make it happen.

[Lloyd Longfield, Liberal, Guelph, ON]

As chair of the co-op caucus, I have to ask a question around co-ops and the role that co-ops are playing in terms of transition and generational planning. How does FCC partner with co-ops?

[Michael Hoffort]

From the co-operative perspective, the credit unions would be a key factor on the finance side. Their service to rural Canada in particular is very strong.

We've done a lot of work with the credit union system to work more co-operatively and in a more coordinated fashion to help their members in terms of being able to develop their operations from a financial perspective. It's just a reality that the FCC doesn't offer every product they're going to need, so we do work with other banks in almost all cases.

The other area where you see it, though, is in extensive investment in the co-operative sector in the agribusiness side, whether it's service to those along that value chain or on the processing side. It's very robust. I've seen some very exciting things happen. I think they'll be part of the solution in achieving some of the governance objectives as it relates to that 2025 goal. It will be driven to some degree through the co-operative movement and their investment out there.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Finally, with the 30 seconds I have left, the library says that potato, fruit, nut, dairy, and hog farms have 27% liability. Why are these farms higher on liability than, say, grain, poultry, and beef, which are around 17%?

[Michael Hoffort]

I don't have the stats you're looking at, so I don't know if I can comment. I'd be happy to follow up with you afterwards if you wanted to, just to look into the information.

[Lloyd Longfield, Liberal, Guelph, ON]

Again, if those are key areas for us to develop exports in, are we providing the right tools from the government side?

[Michael Hoffort]

That's a good question.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you very much.

[The Chair, Liberal, Pat Finnigan]

Now we'll go to Mr. Ritz for six minutes.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you for your input today. I have weeks and months of frustration in terms of questions I want to ask on agriculture. It all comes down to management and the variables that are out there, as everybody knows: the weather, the markets, and all the other things that go into it.

Could you comment on the education level of today's farmers as compared to my generation and my dad's generation? It was grade 10 and then it was grade 12 with maybe a year or two of...and so on, but now these guys all have degrees and are going back.... They have a lot more knowledge, but they're also seeking out more knowledge. I know that we put on a lot of informational gatherings and so did the FCC. The turnout is always really good, and how helpful you find them in educating.... It's a two-way street.

[Michael Hoffort]

Yes, one of the exciting things in agriculture in terms of the seeking out of knowledge is that the agriculture colleges are full to the brim. There are 12,000 students right now in Canada studying agriculture, in either a university or a college, which is really good because we're going to need every one of them. Think of what's happening with the industry.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

This is true of the techs, as well, with mechanics, welding, and all of that.

[Michael Hoffort]

Exactly. We're seeing lots of good things there.

What's very interesting is the reinvestment in continuous learning that we see. Over 11,000 people attended one of our seminars this past year, and 14,000 the year before that.

They are out seeking knowledge. We're not the only ones who are providing it. There are lots of industry participants who are providing excellent knowledge offerings to their customers and the people they deal with. We're seeing really good things there, and I think it's only going to escalate in terms of that side of the equation.

One area that we hear people are interested in learning more about is how to get connections across like industries that may be national, and we've been facilitating some of that.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Mentorship.

[Michael Hoffort]

Exactly. We've done a little bit of that. We dabbled at FCC with a next-generation council.

We had young producers under the age of 35. There were just a dozen, but it was a chance for them to connect from coast to coast with people who are like-minded and up to things, and to learn from each other. We're out of it now, but they're still connected and able to carry that forward.

From an industry perspective, that's something that I hope we'll be able to do a little more of in the future.

[Tom Rosser]

The only thing I would add very rapidly, Mr. Chair, is that, obviously, as the industry becomes more sophisticated, education levels and educational requirements are increasing. There are a number of different organizations that offer seminars and the like.

I understand that the committee will be hearing shortly from the Canadian Young Farmers' Forum. One of things we do to help build skill levels is to provide support to organizations like that one, so that they can do outreach and education with their membership.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

This question is for both Tom and Kara. From the strategic side of the equation, how much of what you do is proactive and how much is reactive?

Proactively, you're looking at markets, access, value added, and so on. Reactively you're looking at business risk management, what's working and what's not, as you develop the next policy framework.

What's the split between reactionary views and looking proactively to build agricultural capacity?

[Tom Rosser]

I guess it's both, and it's hard to say precisely. Certainly, on an ongoing basis, we regularly monitor developments in markets, looking for signs of changes in trends.

As I think I noted in my opening remarks, we do produce forecasts and the outlook for income in the agricultural sector on a regular basis, and between forecasts we continuously monitor developments to see if things are deviating from the expected paths.

We work closely with colleagues at the FCC and other institutions that share an interest in that. I feel we are fairly proactive. Clearly, we respond and react to events as well.

I don't know, Kara, if you have anything to add.

[Kara Beckles, Acting Director General, Research and Analysis Directorate, Strategic Policy Branch, Agriculture and Agri-Food Canada]

The only thing I would add to that is that from an economic analysis perspective we do a lot of “what if” scenarios as we see things changing in the economy.

Suppose we saw that the interest rates were going to go up or exchange rates were going to change. We would do analysis on that. Looking forward, we ask ourselves what the impact on the industry would be if it did change in these ways, so that we can be prepared and inform our programs as they are being developed.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

In terms of their global production, and highs and lows as well.

[Kara Beckles]

Absolutely.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

When you're making a loan, and now that you're developing the next policy framework, how much does the availability of business risk programming come into your thought process in terms of the percentage of a farm's income it backstops? Is that a significant part of it, or is it something that ices the cake so that when a farmer has loans out he or she will have debt servicing ability?

[Michael Hoffort]

“Icing on the cake” may not be quite how I would term it. We would look at the farm operation, where they are in their life cycle, and how much leverage they have.

The more of a risk stage they are in, the more we would be looking for basic things like crop insurance and some types of business risk tools that are out there.

As they grow their business, become larger, and may be exposed to more international pressures, we might be looking more for what they're doing on currency risk management, foreign exchange risk, and some of those types of things. On both ends of the scale, we would look for it, and vary in terms of what we would focus on, depending on the producer in front of us.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

There has been some discussion sectorally as well. A lot of that comes down to the cycle of the sector, one calf, one crop, as opposed to pork, where you'll get three cycles per year, or chicken, where you'll get multiples every six weeks, and so on. It depends on what you're in.

How does that factor into cash flow and serviceability? Their costs go up accordingly, but there is a correlation to the cyclical nature of sectors, too.

[Michael Hoffort]

Yes, absolutely. Again, it's looking at their history, where they're looking to go if they're expanding, and then what kind of space we have from a repayment ability perspective. Where the risks are apparent, we'll look at what they're up to in terms of actively managing. How much of the crop they are pre-pricing, from an insurance perspective what they are up to—and do leave some of that open to the producer in terms of making their management decisions—but for sure it would come into the conversation on management ability, and what they're up to.