Thank you, Mr. Chair and committee members.
Thank you for inviting me here today to talk about a key issue for Canadian agriculture.
My name is Julie Bissonnette. I'm an administrator at the Canadian Federation of Agriculture, or CFA. For the past 10 years, I've also owned a dairy farm in the municipality of L'Avenir, Quebec. I acquired this farm through a non‑family transfer.
Before sharing our recommendations, I would like to set the stage. Over the past 50 years, the average farm size has almost doubled. In 30 years, the average price of farmland in Canada has jumped by 727%. Since 40% of farmers are expected to retire within the next 10 years, billions of dollars in farm assets will change hands.
Whether you're new to the industry or already living on a family farm handed down through the generations, in many ways, the challenges remain quite similar. No model is straightforward.
The first challenge concerns access to assets. Modern farming operations amount to millions of dollars in fixed assets. Farmers invest everything in their operations to innovate, adapt or become more efficient. They rely on these fixed assets to fund their retirement. That said, they must also face climate, market and supply chain risks largely beyond their control. They must be able to count on an effective risk management program to ensure the long‑term financial health of Canadian agriculture. Every dollar lost to uncontrollable risks means a dollar no longer available to support the financial health of the next generation. Remember that cash flow remains a key issue for the next generation of farmers.
In addition to asset limitations, the complexity of farm management can discourage farmers from handing over the reins to the next generation, or even from simply passing on management advice. At the very least, the complexity can delay the process. This may discourage the next generation and create additional risk for the business. Farmers are discouraged by the idea of spending years planning to successfully hand over their farm.
In Quebec, 44% of young farmers work outside the home in addition to being full‑time farmers. The struggle to secure suitable child care means added pressure for farm families. Juggling the realities of working outside the farm and arranging child care, not to mention the human component, while managing a complex farm transition or purchase project makes transferring or selling a farm business a complicated process.
The recent increase in the capital gains inclusion rate has only made matters worse for people preparing to transfer or sell their farms. All business structures, schedules and established plans must be reassessed and adapted. For large farms, the tax owed will likely be much higher than anticipated. This could compromise the financial health of a future business.
Given these realities, the CFA has five recommendations.
Our first recommendation is to review the increase in the capital gains inclusion rate, together with farmers, to avoid compromising the financial health of family farms.
Our second recommendation is to make the rules for transferring family farms more flexible. For example, expand the current provisions on the transfer of family farms to other family members when a working relationship on a family farm can be proven; apply the lifetime capital gains exemption to family farms in the event of a retirement or a transfer to the next generation; and increase the lifetime capital gains exemption for farmers to take into account the significant rise in farmland values and capital requests.
Our third recommendation is to immediately launch a review of the Government of Canada's business risk management programs to ensure that they keep pace with changing risks, while also taking measures to support young farmers. For example, raise the limits on interest‑free cash advances under the advance payments program for new farmers and increase the support provided to new farmers by AgriStability and AgriInvest. This all ties in with the cash flow referred to earlier.
Our fourth recommendation is to work with the provinces to invest in suitable child care in rural areas to ensure the delivery, availability and non‑standard schedules of these services.
Our fifth recommendation is to invest in young farmer networks across the country to promote peer‑to‑peer learning and information sharing and to help prepare the next generation of farm managers.
In closing, the financial health of the next generation of farmers remains a highly complex and multi‑faceted issue. Each of our proposed measures would help to directly support this group.
Thank you for this opportunity to speak. I look forward to answering your questions.