Agriculture Committee on May 2nd, 2017

[Portia MacDonald-Dewhirst]

We are doing extensive research on working with under-represented groups—women, persons with disabilities, new Canadians, etc.—and with all the different commodity associations—cattlemen, etc.—and trying to collect the best practices on how we can engage all of these Canadians and get them interested in doing this work. Part of it is about ensuring that new Canadians as well as young Canadians know we're open for business.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I would like to thank all the witnesses for their presentations today on this important study on farm debt.

Mark Wales, you spoke about the need to improve access to foreign workers. I think we're all on the same page. You said we need changes to the ag stream and improved access to workers in the meat and processing.... Can you elaborate on that, please?

[Mark Wales]

That's really important. One of our challenges as farmers is that if we don't have a supporting processing business to take our product.... The best example would be that a lot of the meat processing plants are operating at about 75% capacity with some of the restrictions put on them previously under the temporary foreign worker program. With a lot of their value-added and their most highly profitable lines, they've had to take people off those lines just to keep their main lines running in the meat processing plants, which very quickly means they become unprofitable. Any processing facility that is not profitable for very long is soon gone, and we lose one more market for what we produce. That's very important.

We need a balanced supply of labour, so it's not just about temporary foreign workers. It's about women and agriculture and all the underutilized parts of Canadian society. Also, as Portia mentioned, young people need to know that there are some really exciting careers in agriculture. It's long been lacking in the education system. We need to get to the full gamut, right from primary school through to guidance counsellors.

There are really great places to work and very technical jobs in agriculture. It's not just the grunt work people think agriculture is about. There are some really good-paying jobs. There are some really good career opportunities. It doesn't matter whether it's HR or marketing. It's working with people. As farms get larger, we need a lot more people with HR skills. That's something farmers typically lack. No farmer hires people by choice, and no farmer is born a good HR manager.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I don't know if you will be able to answer but I wanted to ask you a question about the Perishable Agricultural Commodities Act, PACA. I know you are from Ontario. Are you in vegetables and fruit production?

[Mark Wales]

Yes, I'm wearing one of my crops, garlic, and I'm a hot pepper producer as well.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Are you familiar with the PACA?

[Mark Wales]

Yes.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Can you maybe talk about the importance of having that in place? I know it was brought forward before committee and there's been great study on this.

[Mark Wales]

That's a very critical issue for the horticulture sector. Canadian producers have had coverage when they sell their produce into the U.S. market. We've had it for the better part of 40 years. It guaranteed that as a producer you got paid, really, before anybody else. It was an incentive to make sure that whomever you were selling your product to paid you and didn't abscond with the money.

It's long been promised by Canada that there would be reciprocal protection for U.S. producers here. I believe that was part of the agreement between Prime Minister Harper and President Obama, that this would be in place. It has not happened, and as a result the U.S. government has removed PACA protection for Canadian producers. You may now have to wait a long time to get paid, if ever, for your produce.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Wales.

Thank you, Ms. Brosseau.

Mr. Drouin, you have four minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

My first question is for Ms. Lalancette or Mr. Pagé.

In terms of succession, have you conducted an analysis on how many agripreneurs—as they are called—have a business plan and succession plan? Many farmers are now incorporated, and I see that a number of them do not have a business plan yet. This situation is not unique to agriculture. This is also the case for SMEs. Succession plans are not as widespread among SMEs as we would like.

Could you elaborate on that? Do you do promotion to encourage people to develop business plans and succession plans? These are important.

[Michèle Lalancette]

Yes, we do a lot of promotion.

Actually, 80% of the new generation have a college diploma or a higher education degree. The business plan is an integral part of those courses. The new generation is trained to develop business plans, but the previous one was not. Often, when a young person suggests to dad or mom to draft a business plan, they have no idea what it is. So we present that to companies.

It goes without saying that succession plans are, in fact, non-existent in most cases. That's what we're trying to promote the most. It sounds a bit ironic, because we are the Fédération de la relève agricole. Now we are working to ensure that the sellers are ready to retire and make room for the next generation. That's part of our job.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Are you also aware that there are still some issues? The fact that the business is family-run can already be very difficult. Children do not always get along with mom and dad. Are you aware that this is an issue? Are there strategies to get people to agree on a model?

[Michèle Lalancette]

In Quebec, for more than 20 years, we have what are called CREAs, the Centres régionaux d'établissement en agriculture in Quebec. They bring together people with a lot of experience in providing support during transfers. Those people use their knowledge in human relations to make the seller and the young person talk about their aspirations, their vision of the business, in order to guide them toward a common project.

Right now, we have a project called Arterre, which will put potential sellers in contact with those who potentially represent the future generations, but who do not necessarily know each other, since the next generation is less and less in the family, since families are smaller. So more people from the next generation might be unrelated. This may seem curious, but it is often easier to find an unrelated next generation farmer than one who is related.

[Philippe Pagé]

We often hear from people who are selling or dismantling their farms that there is no one to take their place. That is not true, it is a myth. They exist, but it is necessary to connect those who wish to sell their farms and those who could take them.

[Michèle Lalancette]

The challenge is to connect them and then establish the transfer, making the transaction feasible.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I have often seen models that work very well. For example, once the company has been established, the parents remain partners, but the children also become partners. At some point, the parents will no longer be there, but, until that time, they have a role. Those transfer models work very well.

However, when parents want to sell the entire farm because they want the lump sum for retirement, problems may arise.

[Michèle Lalancette]

That's why I was just telling you about the seller-lender formula, whereby parents are no longer shareholders of the business but retain ownership of the loan that the young person reimburses gradually. The young person therefore does not have a large amount to pay at once. In Quebec, the Financière agricole protects those loans.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Am I done, Chair?

[The Chair, Liberal, Pat Finnigan]

Yes, thank you. The four minutes are up. That’s not a lot of time, is it?

Next is Ms. Lockhart, for four minutes.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you, Chair.

I thank all of you for being here today and giving us your different perspectives on farm debt.

I want to talk about workers. I come from a human resources background, so it makes sense for me to talk about that.

Can you talk to me about the investment in hiring someone new? We've talked about temporary foreign workers, for instance, or even seasonal workers, and how it's important that they return year after year.

How much cost is associated with the training and turnover of employees in farming operations?

[Portia MacDonald-Dewhirst]

That's a really good question. The cost of hiring and the impacts of turnover on a business are often very much underestimated. The estimates are all over the place in terms of the figures. We've done some research on that, and we have cost of turnover calculators so that those who are in this industry can assess exactly how much it costs for them to lose somebody on their farm and in their location.

What you're losing is all the time and attention you spent on creating job descriptions, doing the ad, sifting through the applicants, interviewing them, getting somebody into the position, and then training them. When they leave, it has an impact on your business, your production, your customers, and your other staff. If you have to put anybody in place to cover their shifts, it can be quite costly.

It's really important that businesses understand how to do that, and how to do that well, so we offer some training around that but also some tools.

Earlier, there was a question around succession planning and how many people have a plan in place. We've done some research on that. Only 25% of farms have an HR plan, and of those, only 25% actually ever update it.

That could mean that at one time they created a plan, but it's something like a business plan that needs to be constantly thought about, updated, and planned for, so that you have the right people in the right positions to take your business to where you want it to go in the future. Hiring Canadians for the positions is always the first priority, but when you can't find them, it absolutely does apply to the international workers you're bringing in.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Great, thank you.

One of the slides you presented here was “Invested Capital per Worker has Surged in Agriculture”. Can you talk to us about the significance of those numbers? It is drastically different for agriculture versus other sectors.

[Portia MacDonald-Dewhirst]

We've done some significant labour market intelligence for the industry. We know that all sectors are investing in their workers, certainly—they are investing in their businesses and in training workers—but in agriculture, because there have been shortages, the capital-per-worker investments have skyrocketed. That includes things like the cost of putting a robotic milker in place in a dairy barn because you don't have enough workers and you can't secure that those positions will be filled. You're unable to invest in the worker and instead you're investing in technology to replace that worker. The point there is that, although it has increased significantly and it's higher than in other industries, there is a point at which it can't increase any more, and I think we are near that tipping point. You still need people in order to care for animals and direct the activities, especially of those technologies, and now you're going to need new kinds of skills in order to do that.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

That's very interesting. Thank you.