Thank you, Chair.
Thank you, members of the committee, for inviting us today.
My name is Kyle Larkin. I'm the executive director of Grain Growers of Canada, also known as GGC.
As the national voice for Canada's grain farmers, GGC represents over 65,000 producers through our 13 national, provincial and regional grower groups. Our members produce over 280 million metric tons of grain annually for Canadians and over 150 countries worldwide, creating $40 billion in export value. As the farmer-driven association for the grains industry, GGC champions federal policies that support the competitiveness and profitability of grain growers across the country.
We would like to thank the committee for studying intergenerational transfers and succession planning, as this is critical for family farms. In fact, over 97% of farms across the country are family operated. However, due to the challenging realities of farming, Canada is losing 500 to 1,000 family farms each year. This is due to an increase in the challenges that farmers are facing, which includes increasing input prices, changing weather patterns and increasing taxes. When operating a farm is already so difficult, the last thing farmers need is increased taxation from the federal government.
That is why we have opposed the capital gains tax increase since its introduction in budget 2024. In response to this tax hike, GGC, in conjunction with farm tax accountants, conducted research to understand the effects of the policy change on family farms at the time of succession. Our research showed that farmers would generally pay 30% more in taxes due to the increased capital gains inclusion rates. This capital gains tax increase targets farmers' retirement plans, moves the goalposts for the next generation of farmers and prices out many families from their own operations.
With the average cost per acre at $6,900 in Alberta and $19,275 in Ontario, young farmers are already facing significant financial challenges. National farmland values appreciated 11.5% last year alone, further increasing the burden. The capital gains tax increase moves the goalposts for these future farm owners, adding hundreds of thousands or even millions of dollars to the cost of taking over family farms.
In August, the government released draft legislation on capital gains, which included revisions to the Canadian entrepreneurs' incentive, which now allow farmers to access it. Through further research, we noted that the overall changes to the capital gains inclusion rate, even with the addition of this incentive, will continue to represent higher taxes for most farmers, who produce the majority of the food that Canadians and the world rely on.
For example, farms with revenues above $500,000 comprise only around 25% of Canadian farms yet account for nearly 90% of farm revenues. While smaller farms will see some benefit from the CEI, mid-sized farms and larger, which produce most of the food, will see an increased capital gains tax bill.
Lastly, these changes further complicate the tax code at a time when most economists and financial experts are asking for a simpler code. The added complexity introduced by these changes will drive up accounting and legal expenses for all farmers, putting further pressure on their finances. While larger accounting firms will benefit, grain farmers will be forced to spend more in fees.
To protect and support family farms, we're calling on the government to allow intergenerational farm transfers, as enshrined in law through Bill C-208 and clarified through subsequent budgets, to be taxed at the original one-half inclusion rate. This will ensure that government can be an equal partner in supporting family farms, ensuring they remain the backbone of Canadian agriculture.
Thank you. I'd be happy to take any questions.