Good afternoon.
My name is Catherine St-Georges, and I am a marketing consultant for the Union des producteurs agricoles, or UPA. I am also the secretary for the Table pour le développement des marchés de proximité, a local market development issue table established by the UPA in June 2019 and chaired by Mr. Groleau, the UPA's president.
The issue table is a forum that brings together some 30 organizations to discuss developing local markets. In my speaking notes, which were provided to you, I refer to information from the 2016 census. That was the first time the questionnaire included a question about direct marketing.
It's positive to see a question like that on the census form, but so far, the data are very preliminary. We are hoping for more detailed data on local markets in the next few years.
According to respondents, 19% of farms reported engaging in direct marketing. That doesn't mean that they only sell products directly to consumers; it simply means that they have. For instance, it might be a dairy farmer who has a sugar bush and sells maple syrup directly to consumers. Direct marketing encompasses farm stands, farmer's baskets and farmers' markets.
We don't have any data on how those sales impact farm income, jobs or acreage, but we do know that these farms need more temporary and seasonal workers to support local markets. What's more, these farms usually devote more hours to the business, meaning, that the owner spends more time working in the business than a traditional business owner. In many cases, the owner has a job outside the farm.
A total of 57% of businesses that reported using direct marketing had less than $50,000 in sales. Generally speaking, they are small farms.
I should point out that all of these figures relate to Quebec farms.
Quebec's ministry of agriculture, fisheries and food is examining the sales of all the traditional channels, including grocery stores, restaurants and hotels. By extracting the remaining portion, the ministry arrived at the sales of non-traditional channels. It estimates that, for 2018, some $800 million in sales is attributable to local marketing.
In Quebec, local marketing brings the farmer and consumer closer together. That can mean geographically, so, in the same administrative region—the distance between the farmer and consumer can't exceed 150 kilometres—or in terms of the middleman. The idea is to reduce the number of middlemen between the farmer and the consumer.
We set up the local market development issue table with our partners during the COVID-19 pandemic to help us better understand the resulting issues. In the short term, insecurity and the loss of markets and immediate income were the biggest concerns, as you can well imagine. For example, ornamental horticulture wasn't considered an essential service since it wasn't part of the food service sector. I'm referring to the sale of flowers and potted plants, which, very often, are sold directly to consumers. There was definitely a feeling of insecurity.
Quebec gave U-pick businesses the go-ahead to resume on May 28, which is late in the season. A wave of insecurity swept business owners, because U-pick accounts for a significant share of their sales. What's more, they don't know whether consumers will actually show up to pick their own produce. That's one of the challenges.
The closure of bars, restaurants and similar establishments resulted in a drop in income for farms involved in those markets. Certain municipalities opted not to open farmers' markets, which are the main source of sales income for some farmers. New farms, for instance, often rely on farmers' markets. The fact that markets aren't open on Sundays has also had an impact, given that consumers tend to go there on the weekend, which is when they would interact with the farmer and build those ties. If consumers can't go to Sunday farmers' markets, it will clearly affect sales.
The entire agri-tourism sector is stalled. Businesses aren't allowed to let consumers sample their products, so sales are far from guaranteed. On top of that, special events and festivals—normally a significant revenue stream for these kinds of businesses—aren't being held.
Obviously, like traditional business owners, farmers have access to labour. Workers are recruited through programs, so worker availability and the arrival of foreign workers also factor into the mix.
As I said earlier, these businesses hire a lot of workers, so if they can't rely on foreign workers for help, it affects activities on the farm. Financially, as far as cash positions go, supplier payments have been deferred. With fewer sales, income is down. This has created some financial insecurity. If no changes are made, some business owners have told us that they won't be able to keep things going for many more months.
Nevertheless, the situation does provide some opportunities, as you can see in my opening statement.
On the whole, consumers are heeding the call to buy local. We're sensing enthusiasm for buying local products, so it's important to capitalize on that. Agri-tourism and culinary tourism also offer potential. Since Canadians will probably be spending more time in Canada this year, there is an opportunity to develop those markets and take advantage of those potential visitors. Now that people have discovered online shopping, that's another promising area to keep in mind. All of these prospects can help farm businesses sell their products.
Now, I will turn to our recommendations. A program specifically designed to help build local markets would certainly be opportune. In my speaking notes, I've listed some examples for building online sales. There are businesses that have been able to do it, but it requires a certain level of infrastructure. Some regions still don't have high-speed Internet service, which makes online sales a challenge for them.
Support for the development of local slaughterhouses requires that supply be coordinated. Reducing interprovincial trade barriers is something else we recommend. We heard one example of a farm that sells its products right around the Ontario–Quebec border, but the provincial requirements differ, so that hinders the farmer's ability to build the local market. Additional funding would also be welcome for the program to purchase surplus agri-food products for food banks. Local farmers could then take advantage of the program.
On June 2, we appeared before the Standing Senate Committee on National Finance, and we shared our recommendations for business risk management programming and the Canada emergency wage subsidy. Those measures could be better tailored to farmers' needs. Obviously, it's important to assess the repercussions of the COVID-19 pandemic now, because it's having an impact in the short term. It will also have an impact in the longer term, however, so revisiting these issues down the road is key, because our members are likely to raise new concerns over time.