Thank you, Heather.
I'll try to enter the eyes of a farmer. I can tell you that, at the age of 60, all the things Heather said resonate a lot more than they did when I was 20 years old, believe me. Also, in wanting to move the farm along to various successors, you'd better have your ducks lined up from a business standpoint, that's for sure.
Historically, a focus on production has dominated the agricultural sector. We know farmers typically do not become farmers because they love business management. However, this is the reality of today's farm operations and those of future generations of farmers.
In the work Farm Management Canada, FMC, does, we find there is room to improve financial literacy among farmers. Many farmers rely on their accountants to produce financial statements for tax or banking purposes. It is infinitely important that farmers know and understand their numbers and know that their decisions will affect not only the bottom line but the business as a whole as well as extending their business beyond where it currently would be.
While the statistics tell us Canada's farmers are in a relatively good financial position, we ask whether this is by default or by design. Certainly when you look at interest rates and where they have been over the last few years, money has been relatively easy to access, notwithstanding many other operatives in the business.
Also, is one commodity or region in a better financial position than another, and why? What does this mean for others and for the true financial picture?
What is the role of our off-farm income in sustaining farm operations? I recall a very telling statistic that came out of the farm census back, I think, in the last report. By the way, we are about to receive a new farm census report, which is going to outline some very important trends for us now to better know where we are. One of these statistics showed that over 40%—almost 48%, actually—of operators of family farms had to go off farm and get an off-farm income to sustain their activity on the farm; and it was all related to debt. That's the consequence we see if they're not properly managed.
Financial literacy becomes vitally important to ensuring the farm's viability for future generations. The focus must not solely be on our young farmers. We need to continue to support today's farmers to transfer healthy farm businesses to the next generation to ensure Canada continues to be part of a world-leading agricultural sector.
When it comes to agricultural lending, we hear of many cases where lending is based on equity. This poses a problem for young farmers and new entrants who are trying to build equity, while it is also a concern for established farms. Equity becomes the main operative in being able to leverage money, and we have to make sure our ratios are properly balanced. When we start talking about farm debt and net equity, it takes on new designs. Having equity does not necessarily mean the farmer is a good business manager. We would love to see more lending institutions taking a look at farm business management practice and taking those into consideration when making lending decisions, to reward farm business management and to help promote that value.
Finally, we know that Canada is uniquely positioned to succeed, and we plan to be there every step of the way to help farmers continue to run healthy farm businesses.
If I could again go off script to conclude, FMC has been around for a number of years, and over these years there's been significant outreach, with good understanding of captured good business practices, great networking, and I think, significant education in various forms as we've reached out. However, FMC's capacity has been a function of funding arrangements that have come through the framework agreement, and now with a new framework agreement coming up in 2018, we have to fit into that formula. I want to leave you with that point.
Thank you very much, Mr. Chairman, members, and guests.