Agriculture Committee on Oct. 31st, 2024

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for being here.

Thank you to the Dochertys for being here. It's great to see a seventh-generation potato farm, nonetheless. We have that in common, as I'm a third-generation potato farmer.

I'm just curious, Mr. Docherty—either one of you—how you feel today knowing that you've come all the way from P.E.I. You mentioned earlier that your own member of Parliament hasn't consulted you and didn't consult you on any of these changes to the capital gains. I'm wondering how you feel here today when we have a member from P.E.I who's actually sitting on the committee subbing in for somebody today, and you didn't even get a question from a member of Parliament from P.E.I.

How are you feeling right now?

[Alex Docherty]

I guess it really doesn't surprise me. I don't know whether they were under a gag order not to talk to potato growers. I assume so.

I'll go back to March or April of 2022. The same MP who is subbed in here this morning took offence, he said, to a question about the seed potato industry being in chaos in P.E.I. He made a very vocal point that it wasn't, yet here we are. I think Monday makes three years, and we're still not allowed to sell seed, so I take offence to the fact that—or I'm offended, I guess, by the fact that he was offended by our saying it was chaos.

It doesn't surprise me. I live six miles from my local MP. We invited him many times to come to our farm, and he never showed. The Malpeque riding produces 80% of the seed potatoes in P.E.I., but not a peep, so the gag order, I guess, is working. That is all I can say.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

I can say I've been to P.E.I. a couple of times in the last couple of years and visited with many potato farmers out there. I know when our operation was going at size in Ontario, we were buying seed potatoes out of P.E.I. I just want to commend you all for the work that you do.

You did mention earlier that you saw a once-in-700-years type flood. I'm wondering if you can comment a little bit further, because as sixth- and seventh-generation farmers, I'm sure you've seen a lot of different weather patterns over the years.

Have you seen it changing a lot in the most recent years? How have you been affected by the weather changes lately in the operation? Is this something that is cyclical, in your opinion, after all these years?

[Alex Docherty]

I guess what happened on our farm that day was very rare. It hasn't happened again, and I don't expect it to or don't plan for it to. The problem is within our court systems. There was another farm that, again, two years before our situation, had it happen, and the judge said, “You know, they could have done more to prevent the problem.”

Had we known in advance, six months ahead of time, what was going to happen and built a 40-foot cement wall to keep the water from going in the streams and it still went over the top, they would have said, “They should have built it higher.”

There's no common sense; that's the problem.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Do you have any idea what the land values are in P.E.I.?

We heard earlier what they would be in Alberta and Ontario.

[Alex Docherty]

Yes. They're anywhere from $6,000 an acre, depending on where it's located and how big the field is, up to probably $10,000 or $12,000.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

All right.

Mr. Ross, I might turn to you here. We do see with intergenerational transfers.... My family is no different in trying to do succession planning. Are there obstacles specifically in each province to those intergenerational transfers?

We also hear a lot of people talking about farmers selling their land and having it paved over and turned into subdivisions. Mr. Docherty spoke earlier about succession and how farmers have all of their money tied up in assets. Assets are not always paid off, contrary to what we heard from the Liberal members earlier today. Assets don't mean that you are rich; assets mean that you probably still owe a lot of money. As a farmer, I know that.

Being a young farmer trying to get into the business is very difficult. We heard earlier that six million dollars' worth of equipment is needed for these potato farmers, and that's for a seed potato operation. That's not for a fresh market operation like I've been involved in over my lifetime, where it's far greater than that.

What do you see as the biggest impediment to farmers who are trying to transfer their farms intergenerationally?

[Scott Ross]

You rightly pointed out that we are at record levels of farm debt in Canada. We are at roughly $140 billion of farm debt being held across the country right now.

The land prices vary dramatically from province to province, but I think the common burden is twofold. One part is the access to capital and the cost of taxation associated with the transfer. The other is the fact that, increasingly, these large farms are sophisticated operations and there needs to be a long-term planning process. Sudden changes, like those made this year with the capital gains, destabilize that fundamentally for those intergenerational farm transfers.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Ross.

Thank you, Ms. Rood.

Now I understand we're going to split some time. I'll go to Mr. Drouin for the Liberals.

You have five minutes. I'll let you control your time.

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

Thank you, Mr. Chair.

On the capital gains issue, I'll go to the Grain Growers of Canada.

I just want to know if the tax analysis that you guys have was prepared by BDO or MNP, because I know you guys came out pretty quickly after the budget. You came out before the law was even written.

Normally, I wouldn't come to you. I would go to BDO or MNP to get their tax analysis to find out the change. If you have that, can you provide the research you've cited to the committee?

[Kyle Larkin]

Yes. I'm happy to provide that research, and I can answer your question.

It was done in conjunction with farm tax accountants, but we didn't have time to wait. I can tell you that there was a report from MNP that came out about a month ago. That was three or four months after this capital gains inclusion rate decision. We didn't have time to wait. That's why we came out with research as soon as possible that showed that this is going to be a 30% tax increase at the time of succession planning for family farms.

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

Yes. I know that, in Alberta, they don't use family income trusts as much as we do out east, so there are differences in the way people do succession. There are obviously some variations across the country in the tools that farmers use for succession planning. I understand that.

I will move over to the CFA.

I'll ask you a question in French, Ms. Bissonnette.

We talked about the Act to amend the Income Tax Act (transfer of small business or family farm or fishing corporation), or the former Bill C‑208. I know that the Ordre des comptables professionnels agréés du Québec didn't want to use this tax measure. I want to know whether any changes have been made since then, given that there have been more announcements concerning this new measure.

[Julie Bissonnette]

The challenge lay in aligning Quebec with Canada. That's why we were waiting. However, all the changes have been made and everything is under way.

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

So this has been done and accountants are now comfortable using this tax measure.

[Julie Bissonnette]

We often heard in the past that the issue was resolved. However, so far I haven't heard anyone say that this measure has really worked on the ground. I prefer to wait before making a comment.

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

Okay.

I have a question for the two folks we have from P.E.I. You made some comments that you haven't met with the member for Malpeque, or that the minister was not there, but I actually have a picture of you guys at an April 24, 2024, meeting in Cornwall at a round table.

You were there. Is that correct?

Okay, so they are talking.

[Alex Docherty]

We were listening.

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

Okay, but you had interactions with the member for Malpeque and the minister.

I know that during the potato wart issue, the minister was in direct conversations with the P.E.I. Potato Board. The natural associations he goes to have these certain discussions.

The way you've presented it today is that they weren't engaging at all. I have some evidence that they obviously were engaging. I've had some personal conversations with the P.E.I. Potato Board, so I just want to make sure that we're up front and honest here when we say nobody is engaging.

[Alex Docherty]

I didn't say they weren't engaging with the industry. I'm talking about us, as seed growers. We're still affected three years later. It all started with incompetence and it's still going on.

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

Yes. Well, it's the U.S. that's putting on pressure. It's not necessarily Canada. There is no rationale for Canada to put on unnecessary pressure. I'm sure my folks from P.E.I. would have preferred that this hadn't happened. Obviously, we wouldn't want to create a situation where we have phone calls for no reason. I recall this issue, and it is still something that we're working on.

However, I know the minister and members from P.E.I. were engaging with your sector on a weekly basis when that happened, because I was sure getting calls from them.

Mr. Chair, I will cede my time to Mr. Louis now.

[The Vice-Chair, Conservative, John Barlow]

You have one minute.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you. I have more than one minute's worth of questions.

Thank you all for being here.

I'll ask a simple question of Skye View Farms in the last minute. I really appreciate your being here.

Where I live, we have rural farms next to cities, and farmland protection isn't.... We can't do intergenerational transfers if there is no farmland and no soil.

How important is it, as our country and our economy are growing, to make sure that this fertile soil you have in your farms and I have here in southwest Ontario, where I live, is preserved from development? How important is it to save the land?

[Alex Docherty]

It's incredibly important.

The problem we see with our neighbours who are quitting farming.... I honestly don't blame them, but let's say land is worth $6,000 an acre to sell to me, and they're going to get taxed. They're going to lose half of it, right off the bat, to tax. Now they have $3,000. If somebody, a builder or a contractor, decides they want to buy that 100-acre field and give them $25,000 an acre, then it's out of production, and it's gone for good. However, they still end up, if they lose half of it, with $12,000 an acre.

I don't blame them. It's their retirement package too, but we really have to do something as a country to control what becomes of farmland because they're not making any more of it. Every day, there's getting to be less. It's probably the same for young farmers. There's 1% of the people in the country farming. I guess if it was easy, there would be more doing it.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Docherty.

Thanks, Mr. Louis.

Now we will go to Monsieur Perron for two and a half minutes, please.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Ms. Bissonnette, the key issue is land value. We've already passed the tipping point. It's now impossible for the next generation to acquire land and hope to make it profitable one day, given the high purchase price. Is there a way to make transactions based on the agronomic value of the land?

I have an idea. I don't know whether it's realistic, since it may require a great deal of public funding. A farmer could agree to sell their land to a person in the next generation based on the land's agronomic value. This would take the land out of the vicious circle of land speculation. Could this be a viable option? The person who agrees to sell their land would need some form of compensation. Maybe there could be a pension fund for farmers, or something of that nature. What are your thoughts on this?