Agriculture Committee on Nov. 5th, 2024

[The Chair, Liberal, Kody Blois]

I call the meeting to order.

All right, colleagues, we're going to get started here. Can I have your attention, please, particularly my honourable colleagues from the NDP and from the Bloc? Order, please.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, October 24, the committee is resuming its study of the intergenerational transfer of farms and new entrants.

I would like to thank our witnesses for being very patient. I apologize. We had four votes in the House, which obviously have to take precedent.

We're a bit behind schedule, but here's how we're going to handle things today.

We have, I believe, seven witnesses across two panels. We're going to handle this by having one major panel. We're going to allow everyone to provide their opening statement, and then we're going to do three rounds of questioning, so there will be our normal two rounds and then five minutes for the Conservatives and five minutes for the Liberals. That should put us right around 6:15. It will be a bit truncated, but it's the best we can do in the circumstances, and we want to be mindful of our time and our witnesses' time.

The only other thing I need from you, according to my clerk.... We have Mr. MacGregor and Mr. Epp, who are going to be joining us as substitutes, but on a more permanent basis, up until Christmas. Apparently, we need to get some type of motion from the committee to give them access to the digital binder and distribution list. I'm sure that won't be a problem, unless we really want to punish them. I don't see any issue.

(Motion agreed to)

Colleagues, with us today from the Canadian Cattle Association are Jack Chaffe and Ryder Lee. From the Nova Scotia Federation of Agriculture, we have Allan Melvin. From the Ontario Federation of Agriculture, we have Coralee Foster, who is also a partner at BDO Canada.

From the Union des producteurs agricoles, we have Martin Caron, general president; David Tougas, coordinator of economics and trade; and Marc St-Roch, accounting and tax coordinator at the Research and Agricultural Policy Directorate.

From the Fédération de la relève agricole du Québec, we have David Beauvais and Véronique Simard Brochu.

From Just Food, we have Moe Garahan joining us here in the room. It's so great to have you.

Finally, we welcome Mr. Louis Dionne, executive director of the Centre de référence en agriculture et agroalimentaire du Québec, who is responsible for the ARTERRE service.

Welcome to you all. Thank you for being here.

I'm going to start with the Canadian Cattle Association for up to five minutes. We're going to go rapid fire.

Go ahead, Mr. Chaffe.

[Jack Chaffe, Officer at Large, Canadian Cattle Association]

Thank you for the opportunity to present on behalf of the Canadian Cattle Association, CCA, in your study on intergenerational farms and new entries.

My name is Jack Chaffe. I'm co-chair of CCA's domestic agriculture committee and past president of Beef Farmers of Ontario. Along with my family, I own and operate a beef feedlot in southwestern Ontario.

Today I'm joined by my colleague Ryder Lee, who is online. He is general manager of the Canadian Cattle Association. Also, as an observer in the back, I have my son here, who is lobbying on behalf of the National Cattle Feeders' Association today in their lobby day.

CCA is a national organization representing Canada's 60,000 beef producers. The Canadian beef industry is a significant driver of our economics and a global leader in sustainability, contributing $21.8 billion to Canada's GDP and supporting approximately 350,000 full-time equivalent jobs. A prosperous and thriving beef industry generates considerable economic, environmental and social opportunities and benefits for Canada.

CCA has been extensively engaged in discussions on intergenerational farm transfers and succession planning for several years through advocacy on Bill C-208 and its amendments in several budgets since.

I would like to begin by emphasizing the smooth intergenerational transfers on beef operations within farming families are critical to maintaining the sector's reputation as a major contributor to global and domestic food security.

However, CCA is concerned about recent changes to the capital gains measures, as announced in budget 2024. It will increase the requirement to sell off pieces of farms with these changes. The federal government needs to ensure that this does not happen and jeopardize the current tax policies that allow continuing of the intergenerational transfers of beef operations within families. These include mechanisms such as employment ownership trusts and small business corporation shares.

We emphasize and are concerned about the lack of meaningful consultation time in advance of this announcement in the budget. Beef producers did not have time to analyze the changes and their impact on their family operations. It is important that the government recognize the undue consequences of each operation. It is difficult to quantify the changes of the sector within the proper consultation time.

We also have concerns about the impacts of the inclusion rate, despite the changes announced on August 12. While we are pleased to see the changes in lifetime exemptions, the other amendments to the measurements are counter to the announcements in Bill C-208 and to the amendments in budget 2023. By increasing the capital gains inclusion rate, the federal government risks weakening the provisions under Bill C-208 that facilitate smooth intergenerational farm transfers to the younger producers.

The majority of Canadian cattle farms operate under family-run businesses. Each farm has its own unique operational structures. To address the vast differences between those structures, producers need greater clarity regarding the changes between August 12 and those announced in budget 2024.

As our sector continues to adopt and create new business structures, such as those where aunts, uncles, nieces and nephews are now working together, we need to ensure that these new structures are realized and reflect the government's tax policy when it comes to succession planning. By recognizing these new realities, the government can demonstrate that it is meeting the needs and expectations of our sector and not jeopardizing the existing exemptions at a time when we need all tools at our dispose to streamline asset transfers to that next generation.

To close, our sector is at risk of losing a significant portion of the workforce, as farmers may retire without a viable succession plan. This also places Canada's rural economy at risk of declining. We need to ensure that government policies do not unintentionally contribute to the decline in agricultural production in Canada.

I'd like to thank you for having me appear, and I look forward to answering questions.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We'll now turn to Mr. Allan Melvin, president of the Nova Scotia Federation of Agriculture. He is no stranger to Kings—Hants.

It's over to you, sir.

[Allan Melvin, President, Nova Scotia Federation of Agriculture]

Thank you, Mr. Chair and committee members, for the opportunity to appear today to discuss the intergenerational transfer of farms and new entrants.

My name is Allan Melvin. I am the president of the Nova Scotia Federation of Agriculture and a sixth-generation vegetable farmer based in the Annapolis Valley. Since 1895, the Nova Scotia Federation of Agriculture has represented Nova Scotia farmers, covering more than 90% of the province's agricultural production.

The challenges surrounding intergenerational transfer and attracting new entrants are significant in Nova Scotia. Our province is home to rich, productive agricultural lands that have been sustainably farmed, protected and improved over generations. Maintaining and expanding our food production depend on the ability of the next generation to take up and continue this work.

Unfortunately, our industry does not feel prepared for this transition. The average age of farmers in Nova Scotia is almost 59—the highest average in Canada—and 62% of farms report a need to transition within the next decade. Over the winter of 2024, the NSFA conducted a survey among members to gauge the state of succession planning. The results were concerning, with only 8% of farmers currently having a detailed succession plan in place. Succession challenges in agriculture create unique vulnerabilities, with potential impacts on rural economies and food security. Addressing these challenges is not about finding one solution. It will require a multi-faceted approach of innovative thinking and collaboration with industry.

Supporting these transitions is increasingly urgent, as the agriculture industry faces uncertainty in attracting new entrants. In Nova Scotia, the NSFA has been calling for the return of a land bank program, which would support both farm transitions and new entrants. Land banks are designed to support economic growth by providing flexible financing options and connecting aspiring farmers to farmland. This can be part of the solution that will allow farmers to retire with dignity and enable the successful entry of the next generation.

The financial barriers to entry into farming have become a critical issue. Between 2010 and 2023, the average value of farmland in Nova Scotia has more than doubled, from $1,663 per acre to $3,912 per acre, with some of our most productive land reaching up to $20,000 per acre. Prices continue to be driven up by development pressures and a trend towards land being used as an investment vehicle. This rise has made it increasingly difficult for aspiring farmers to afford land. Many families face situations in which children have pursued different careers, leaving farms without a successor. For these farms, finding a successor is not just a matter of business. It is about maintaining the economic capacity and vibrancy of rural communities.

Another significant barrier for new entrants is a lack of adequate business risk management programs. Today's new farmers must contend with much higher debt loads earlier in their careers, and this challenge is compounded by increasingly unpredictable weather patterns. The current business risk management programs under SCAP do not meet the needs of modern farming. They do not provide sufficient financial stability to offset the risks associated with a changing climate. They particularly struggle to meet the needs of Nova Scotia farms, which are diverse in size and often produce multiple commodities. The frequency and severity of extreme weather events—from hurricanes like Fiona to unprecedented summer rainfalls causing significant floods—have added to the stress of operating a farm. For many young farmers, the prospect of entering such a volatile industry without strong risk management is daunting. This lack of comprehensive support means many will not consider farming as a viable career path. Improved business risk management is critical for new entrants, who are carrying significant debt loads to acquire their farms.

Another area of concern is the rising tax burden on farms. Taxes can impact the day-to-day operations, succession planning and overall financial health in ways few other costs do. The budget 2024 changes to capital gains that came into effect in June have created complications for farmers who are actively involved in the succession planning process. Farm transitions require years of planning, involving legal, financial and family considerations. With 62% of farms in Nova Scotia set to transition or retire in the next decade, this sudden shift adds another layer of difficulty to the industry's efforts to find new entrants and maintain the rural fabric and resilience that come with family farming transitions.

In closing, I would like to thank the committee again for inviting us here to discuss these issues. The intergenerational transfer of farms and the need to attract new entrants are critical challenges facing our industry. As we work towards solutions, it is essential that we address these barriers to ensure that Nova Scotia's agricultural future remains strong and resilient.

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Melvin.

We'll turn to Ms. Foster for up to five minutes, please.

[Coralee Foster, Partner, BDO Canada, Ontario Federation of Agriculture]

My name is Coralee Foster. I'm also from Mitchell, which is in southern Ontario.

I'm here today to bring two perspectives to the committee. I'm a partner with BDO, a national public accounting firm with offices in rural areas across Canada. I'm also part of the leadership of BDO's national agriculture industry group.

My own client base in Mitchell comprises primarily farmers and agribusinesses producing a variety of commodities. They range from small producers to large operators, but what they all have in common is that they are family farms.

I also bring with me personal experience. My family operates an 1,100-acre cash crop farm, which we successfully transitioned from my husband's parents to us. Our two adult sons represent the seventh generation to farm in Perth County, both within our existing operation and through their own ventures. We always structured our operations with a future transition in mind, should they choose to farm. We anticipate completing this transition over the next decade.

The meeting your committee had last week focused heavily on the capital gains rules. I don't want to delve into the technical details of tax policy, but I do want to express our industry's concern over the complexity and unpredictability of tax changes. I've been in public accounting for over 30 years, and each year the Income Tax Act has become increasingly complex and burdensome.

Our firm has a dedicated team specializing in tax reorganizations and succession planning. This specialization is necessary due to the rapid pace of regulatory changes and the complexity of the legislation. Smaller practitioners often seek expertise from firms like ours, because the regulatory environment is so challenging.

There is significant demand for succession planning across the country, but there are not enough qualified accountants to meet this need. This situation risks non-compliance or succession planning being done only in crises or after a death, and that rarely achieves the desired outcome.

Numerous tax changes have been proposed and subsequently amended, causing significant uncertainty and frustration for farmers and their advisers in trying to plan. Examples include the private corporation proposals, specified corporate income, Bill C-208, the underused housing tax, and trust reporting. The proposed capital gains changes from spring remain draft legislation.

These issues cause upheaval and necessitate quick and often inefficient responses. Accounting firms spend considerable time understanding these changes, educating staff and clients and implementing plans that ideally should be executed over several years, not just a few months. Planning is challenging without the stability of the rules. There are many skilled accountants and firms across Canada who have dedicated their careers to farm tax and would welcome the opportunity to be consulted on proposed changes in order to identify concerns in advance.

In addition to the unpredictability and complexity of income tax legislation, there are two specific areas where changes could be beneficial, based on what I see in my practice.

The first is extending the favourable intergenerational rollover provisions to apply to transfers to nieces and nephews in the same manner as they do to children.

The second is providing more options to transition from one farm operation to another without triggering a large tax burden. Expanding the existing replacement property rules to allow farmers to exchange land, all farm and agribusiness buildings, and quota more flexibly could create more opportunities for the next generation to bring in new income streams.

However, beyond tax measures, I believe that there are other impediments to farm transition that government policy could address.

The first is around financing. The cost of capital required to farm is significant. Fortunately, with intergenerational transfers, the debt is often partially funded with promissory notes held by parents, but this is usually the only way for the transaction to be financially feasible. Working capital presents a bigger challenge to new farmers. The number of interest-free advances under the current advanced payment program has fluctuated. Enhancing this program for new farmers to maintain a higher limit permanently or to provide other incentives could make it more accessible.

Education is another area. Farm kids often excel at operating equipment and handling barn chores from a very young age but frequently lack administrative, human resource, accounting and management skills. As farms grow more complex and larger, new owners need to be more adept. Funding for a wide range of existing and not necessarily government-created courses could help.

The final area is farm programs. AgriInvest, in its current form, does not provide a significant source of funding for farm operations, and AgriStability is unpredictable. In general, the programs could be more meaningful and simplified for the whole industry in order to be more beneficial to new farmers.

Finally, under a previous version of the Growing Forward program, funding was available to cover a portion of the costs for succession planning. While it may not have prompted clients to undertake work they weren't already planning, it did encourage some to do so sooner and more thoroughly.

I thank you for this opportunity today.

[The Chair, Liberal, Kody Blois]

Thank you very much.

We will now go to the UPA, the Union des producteurs agricoles.

Mr. Caron, you have the floor for five minutes.

[Martin Caron, General President, Union des producteurs agricoles]

Thank you, Mr. Chair.

Honourable members, my name is Martin Caron. I am a dairy and grain farmer in Louiseville, in Mauricie, and the general president of the Union des producteurs agricoles, which represents 42,000 farmers in Quebec.

The agriculture sector is important to our economy, generating about 7% of Canada's GDP. However, the decline in the number of farms in Canada is a worrying reality. From 2011 to 2021, Canada lost 8% of its farms. That is nearly 15,856 fewer businesses. This situation is all the more alarming given that only a small proportion of farm businesses have a succession plan. Only 22% of businesses have a succession plan and 8.5% have a written plan. In this context, if we want to maintain the family farm model, it is imperative to reflect on this important issue and encourage the next generation, whether they are a farmer's family members or not.

In a context where the average age of farmers continues to rise, the proportion of farmers aged 55 and over has increased from 48% in 2011 to 61% in 2021. Without adequate transfer preparation, businesses risk being absorbed by larger, more centralized structures.

Maintaining the diversity of agricultural models is critical to ensuring resilient and sustainable food production. Small and medium-sized agricultural businesses play a vital role in the economic, social and environmental balance of our regions. Their disappearance would result in a significant loss of that diversity, standardization of production and an erosion of the economic autonomy of many rural communities. While profitable in the short term, centralization weakens our rural regions and compromises the country's food resilience.

In addition, young people wishing to enter agriculture face significant financial and land barriers. Their ability to acquire land and equipment is limited by high costs and fierce competition with larger, better-funded entities.

In order to encourage the transfer of farms and the integration of new producers, a number of solutions must be put in place. Here are a few proposals to that effect.

First of all, a number of tax rules have been adjusted in recent years to improve the conditions for transferring farm businesses, including the possibility for family succession to finance the parental withdrawal and allow parents to benefit from the lifetime capital gains exemption. However, extended family farms deserve special attention. Tax incentives could facilitate the transfer of these farms, particularly by allowing the transfer of farm assets without tax implications to a nephew or niece who will continue the operation, in order to maintain it in a family setting.

Farm trusts are currently being set up in each of the provinces. This new mechanism secures access to farmland for producers without them having to buy it, leaving the farm trust to acquire the property and lease it back to them in the long term. At the same time, it preserves the agricultural purpose of the land purchased, since the trust does not seek to resell its properties, but aims to continue leasing to young farmers as long as possible. These organizations will have land banks that will help new businesses, thereby contributing to the country's food security. These organizations are registered with the Canada Revenue Agency as charities.

Like education savings plans, similar measures could encourage farmers to save for the transfer of their farms. That would reduce the financial pressure on the buyer, who would have to pay less. The farmer could contribute to a savings plan and the government could match it. However, the government share would only be accessible to the saver if the farm were transferred to a new generation under certain conditions that would ensure the farm remains viable.

We are convinced that these concrete measures would contribute not only to the stability of the agricultural sector, but also to ensuring the viability of our rural regions for decades to come.

[The Chair, Liberal, Kody Blois]

Thank you very much, Mr. Caron.

Mr. Beauvais, you now have the floor for five minutes.

[David Beauvais, President, Fédération de la relève agricole du Québec]

Thank you, Mr. Chair.

I'd like to thank you and the members of the committee for having us here.

My name is David Beauvais. I'm a sheep producer in Magog, in the Eastern Townships, and I started a business in 2019. With me today is Véronique Simard Brochu, executive director of the Fédération de la relève agricole du Québec, of which I am president.

The Fédération de la relève agricole du Québec brings together 2,200 volunteer members from all regions of Quebec, representing all types of production. We have drawn up an interesting portrait of the next generation of farmers, and much of the data has already been mentioned. It's interesting to note that, in Quebec, almost half of young farmers—44%—have to work outside the business, mainly for financial reasons. Nearly 55% of transfers are family transfers, and 35% of young farmers' businesses are start-ups. Quebec's generational renewal rate is one of the best in the country, at 30%, compared with 24% in the rest of Canada. Worryingly, however, it was 38% in 2016. So, in Quebec, there has been a sharp drop in the generational renewal rate.

What worries us a lot is the planning of transfer processes—we've talked about this a few times. Many transferors have no transfer process, or too few.

Some people have talked about this before, but in Quebec there's a resource called L'ARTERRE. They run a land bank project to match transferors with the next generation of farmers. But it's an underfunded project that lacks resources. In our view, this is a problem.

On the tax front, Bill C‑208, among others, has led to several advances. This bill is very close to our hearts. However, as we said earlier, we believe there's still a long way to go, for example to include the extended family, including nephews and nieces. Businesses are getting bigger and more diversified, and it's increasingly common for two brothers to each have children, so more and more nephews and nieces might want to be part of the succession.

In our opinion, it might be worthwhile to grant a tax incentive when buying your first land. We've done it for housing, but it could also be an advantage for the next generation, for people buying their first land.

In the majority of cases, transferors or producers need the value of their land to increase if they want to retire. This is a problem. So we, too, believe that a contribution to an RRSP could be very beneficial and would help reduce the financial pressure due to rising land prices.

The diversity of businesses, both in terms of production and type of business, is one of Quebec's and Canada's strengths. We are highly resilient to weather or international trade problems. This is one of our strengths, and we need to keep it.

Finally, we need to set up several assistance programs to help everyone. There can't be just one agricultural model.

[The Chair, Liberal, Kody Blois]

Moe Garahan, we'll go over to you for five minutes.

[Moe Garahan, Executive Director, Just Food]

Thank you for the invitation.

Just Food has been the regional backbone organization in the Ottawa region, working on both food and farming issues for almost 22 years now, including supporting new entrants. When I speak of “regional” today, I am referring to the sub-provincial and sub-territorial regional level.

We've identified five groups of new entrants. The main focus of this committee so far has been the intrafamily transfer, or what is most commonly referred to as “succession”.

We strongly echo the requests and recommendations made by our colleagues to better support transition across families. However, today I draw your attention to the remaining four groups of new farm entrants. Each category comes with different compounded challenges.

I will provide a more detailed written submission and invite further exploration across the networks working on these issues nationally, or coast to coast to coast, including the Food Communities Network and the Common Ground Network.

First, in acknowledgement of the dual governance on these lands, we must centre indigenous entrants into food harvesting, fishing and agriculture businesses. We must note that there are remaining outstanding land and treaty issues related to land access, in addition to environmental concerns on lands and waters that are a priority to be addressed in order that these new entrants can successfully run their businesses.

Second is rural and urban young people who do not have a farm in their family.

Then we have second-careerists, often identified as being under 30 and sometimes under 40, who also do not have a farm in their family.

The fourth are new Canadians, with a majority of those interested bringing substantial agriculture experience, but they have a need for support to transition into a new climate, soil conditions, markets, food preferences and sometimes languages. Temporary foreign workers on farms who are seeking a pathway to citizenship are also included in this last category.

Given that, there are five things the federal government can immediately take action on that would make a sincere difference.

First is protecting food lands. Financial inability to purchase land is the single most pressing problem for most of the new entrant categories. Unregulated investment into farm land, both domestic and foreign, has helped drive prices well beyond what farming can support as a business. Retiring farmers without in-family successors have naturally been inclined to sell to the highest bidder.

In today's world, we run the real risk that farmers become tenants of wealthy, non-farming landowners with no opportunity to participate in equity growth and no ability to raise funds with land as a collateral for capitalizing their businesses. We request that tax and investment rules become uniform across the country.

Second, many of the financial mechanisms that are being asked to support intrafamily transfers need to be equally extended to third party transfers for genuine new farm entrants, given the high percentage of family farms today with no successor.

Third, we need legal structures to support what is being innovated and what is working for new entrants on the ground. One strong example comes from the network of community farms being established coast to coast to coast. Just Food established a 150-acre community farm within the national capital region 12 years ago as one such model of non-profit management of shared land and shared equipment to support both independent, for-profit farm business start-ups and non-profit food production for community food security.

Recent years have seen the growth of diverse models, including community farms, co-operatives, farm condominiums, grazing commons, family farmers who want to donate their farm to support new entrants through community land trusts, and community economic development investment funds. We need to expand the legal and business models on both sides of this relationship for successful transfers.

Fourth, we need federal support for regional, local markets. There has been disproportionate government investment in support of large operations and export commodities that isn't balanced yet with production for local markets coming from small and medium-sized farms, which are of majority interest to the new entrants across the four categories that I'm talking about today. For example, the CFIA's definition of “local” is an example of federal policy that has hindered rather than served to support regionally focused businesses.

Viable farm businesses are needed for viable intergenerational transfer of farmland. Overall, federal-provincial agreements need to prioritize financial support for both new entrants and the organizations that are providing the on-the-ground, regionally adapted resources, education and business tools needed for this massive intergenerational land transfer that's under way to support today's diversity of new entrants.

Thanks so much.

[The Chair, Liberal, Kody Blois]

Thank you.

Mr. Dionne, you have the floor for five minutes.

[Louis Dionne, Chief Executive Officer, L'ARTERRE - Centre de référence en agriculture et en agroalimentaire du Québec]

Good morning, Mr. Chair and members of the committee.

My name is Louis Dionne, and I'm the chief executive officer of the Centre de référence en agriculture et en agroalimentaire du Québec. Our mission is to produce, assemble and adapt knowledge and ensure its transfer, thereby promoting the evolution of practices in the agricultural and agri-food sector. Among other services, we produce transfer strategies, guides, technical leaflets, webinars, videos, events and any other product that enables us to reach agricultural and agrifood customers.

Thank you very much for giving me the opportunity to introduce you to L'ARTERRE. L'ARTERRE is a matchmaking service coordinated by the Centre de référence en agriculture et en agroalimentaire du Québec. L'ARTERRE's goal is to guide and match aspiring farmers who are not related to agricultural producers or landowners with agricultural assets for sale or lease. We also provide guidance for farm transfers in close collaboration with transfer advisers.

L'ARTERRE was launched in March 2018, after many months of work between several partners in the agricultural community. The service is currently offered in some 50 regional county municipalities in Quebec, representing around half of Quebec's agricultural territory. Territories can choose whether or not to join L'ARTERRE. Membership in the service has grown gradually. Some regions have benefited from L'ARTERRE since the very beginning, six years ago, while others have been offering this service to their population for only three or four years.

Before a match is made, candidates go through a rigorous qualification process. Matchmaking agents support candidates in their reflection and in the identification of their needs as they set up their projects. They refer them to the people and specialists involved in the farming business, such as management consultants, notaries, accountants and tax specialists. When candidates and their projects are sufficiently prepared, they can then be put in touch with another candidate. The selection process is carried out by the networking agents, who read the files, discuss them with each other and assess the chances of success of potential matches.

Since the beginning of L'ARTERRE, networking agents have supported 1,841 aspiring farmers and 1,632 owners, including 914 agricultural producers. In six years, 239 matchmaking agreements have been reached within L'ARTERRE. To this figure must be added 306 aspiring farmers and 290 owners who were guided by L'ARTERRE agents, but who found a matching partner elsewhere than in L'ARTERRE's databases. In all, L'ARTERRE staff were involved in more than 800 matches. Among the 239 matches completed within L'ARTERRE, there were 132 rental projects, 44 sales projects, 41 full transfers and 12 partnerships. More than 25 production sectors are represented.

L'ARTERRE is a service appreciated and recognized as essential by all players in Quebec's agricultural community. The expertise developed by L'ARTERRE over more than six years is not found in any other territorial development organization, and contributes to the economic growth of rural communities.

Faced with the immense challenges of farm succession and farm establishment, as you have heard from my fellow witnesses, L'ARTERRE is an essential tool for linking a transferor with a potential transferee, thereby increasing the chances of keeping farm businesses in operation and stimulating the vitality of land occupation.

Despite L'ARTERRE's good results and the interest shown by local authorities in this service, L'ARTERRE faces major challenges that limit its development and the achievement of results that contribute more to the vitality of Quebec agriculture and rural regions.

Over the past year, we have laid the foundations of a new business model for L'ARTERRE to ensure its sustainability. What's missing now is the funding to support this business model. The main avenues of development we wish to pursue are: making the service accessible throughout Quebec's agricultural territory; raising awareness among potential transferors several years before the decision to retire from farming; and making the service accessible in other provinces that wish to support the establishment of farming.

In this regard, we have collaborated with and supported the efforts of Young Agrarians in British Columbia, who have also started a guidance service, the B.C. Land Matching Program, to match farm transferors with candidates.

In addition to all the proposals made by my fellow witnesses, I would add that the federal government could also devote adequate funding for all organizations within each of the provinces that want to get involved in matching unrelated candidates and transferors. This could go a long way to popularizing the tool of matching a transferor with an unrelated candidate.

I'd like to thank you for your attention, and I'd be delighted to answer any questions you may have.

[The Chair, Liberal, Kody Blois]

It's a pleasure for us too, Mr. Dionne.

Just before we go to questions, I must inform Mr. Caron and Mr. Beauvais that, during their interventions, the sound was not perfect.

When answering questions, please do so slowly. That should help the interpreters.

We're going to try it out. We'll go forward from there.

Thank you so much, colleagues. We have an hour here, and I plan to go to 6:15 or maybe a bit less. It will be around 50 minutes if everything goes according to plan. I'm going to start with the Conservatives.

Mr. Barlow, you have up to six minutes.

[John Barlow, Conservative, Foothills, AB]

Thank you, Chair.

Before I start, I would like to welcome our colleague, Mr. Lehoux.

Our thoughts are with you and your family.

We're thinking of you. We certainly missed you and hope that everything is well at home.

Mr. Chaffe, thank you very much for coming. It's good to see you again. I found it interesting that your son is also here lobbying on the Hill today—with the Cattle Feeder's Association, I think you said.

We heard from a young farm family who were here last week about the impact that the capital gains inclusion rate change has on their plans to pass on the family operation to the next generation. Certainly every farmer I've spoken to this summer since this was announced in the budget has said that this has an impact on them. This has thrown a wrench in their planning. It's a stressor, and it has an impact on their mental health.

Can you talk about the experience that you're having with your son and the impact that the capital gains inclusion rate change may have on your plans?

[Jack Chaffe]

Thanks for the question and, by coincidence, my accountant is here. My son Evan is here. I have two boys at home full time, as well as me and my brother. We've formed a corporation to help transfer ownership down the road. It's something that you work on each year, but when, all of a sudden, you get these new tax rules thrown upon you, you spend a lot of time and a lot of money with accountants and lawyers, making sure that you have things right, because, in running a farm, you have all that investment, and your retirement is also in there as well. Anything you make, you invest back in the farm.

I'll give you one example within my family. When my grandpa got out of farming, he used the intergenerational transfer to transfer land to my father and me. His brother, my great-uncle, transferred land to my father, so he missed out on that intergenerational tax exemption. My grandpa had a great retirement. He was able to move to town, build a new house and enjoy retirement. My great-uncle moved to town, lived in an old house and basically retired eating soda biscuits and living on tea leaves. It was a disgrace, and it's quite coincidental. A lot of the testimony here today said that we need to broaden that scope because there are a lot of farm businesses that have uncles working with nephews and so on, and my feeling is that needs to be adopted.

[John Barlow, Conservative, Foothills, AB]

Mr. Melvin, thank you for being here from Nova Scotia. You have the incredible benefit of having the chair of the ag committee as your member of Parliament.

We had the Minister of Agriculture here, and my colleague Mr. Steinley asked him if he knew anything about the capital gains inclusion rate change being in the budget. He said that he had no idea that it was there.

I find it troublesome that the Minister of Agriculture did not know a pillar of the budget and that its impact on agriculture wasn't included in the budget. Have you had consultations with your current member of Parliament on the impact the capital gains inclusion rate will have on Nova Scotia producers?

[Allan Melvin]

I haven't directly in the recent months. We've been in the middle of the farming season, and time flies at this time of year. That being said, I think that, while that's one challenge we're facing—additional hurdles within the tax code are always burdensome for anyone—we're facing many challenges from many different perspectives with succession in Nova Scotia, so this is an added challenge.

To answer your question, no, I haven't had a conversation with him directly.

[John Barlow, Conservative, Foothills, AB]

You talked, Mr. Melvin, about the impact and how hard it is to find a successor to take over that family farm, and the increased tax burden is one reason. The carbon tax is going to be increased again on April 1, and this capital gains inclusion rate change is another potential 30% tax hike on a farm family. Those two tax hikes alone, I would think, are making it that much more difficult to find that younger generation that sees agriculture as a viable career.

[Allan Melvin]

Certainly, I would say that you're right. Every cost is an additional burden in a system and a model where we're very capital intensive and very low margin. That being said, in Nova Scotia, legal and regulatory hurdles are a challenge that our members identify, but we also have those financial challenges outside—the business risk management challenges and the climatic events that are almost burying some of us, quite honestly. It's another hurdle, but there's a bigger picture here that I think we have to tackle.

[John Barlow, Conservative, Foothills, AB]

Thanks.

I want to switch to Ms. Foster.

It's great that you're here. I was actually visiting with one of your members yesterday, the Doelman family, outside of Renfrew, Ontario. They are going through a similar transition. Her grandmother was trying to make a decision on whether to sell the family farm, but because of the capital gains inclusion rate, they can't make a decision. They don't know what it is.

You talked about the bare trust, the underused housing tax, and all of these things that the government had to back off from because they were brought in at the last minute and no one knew what to do with them. Now you have a capital gains inclusion rate change for which the legislation hasn't even been tabled six months after the deadline.

What impact is this having on OFA members and your clients?

[The Chair, Liberal, Kody Blois]

Unfortunately, we're at time, Mr. Barlow. You didn't manage it quite well. We're right up against six, but I know you'll have another chance.

Ms. Foster, if you want to give a 30-second response, I'll give that to you, out of respect.

[Coralee Foster]

As I alluded to in the points I made, the challenge is often not so much the rules themselves but rather the ability to deal with them. It's no fun for the accountants either; I can tell you that. It's certainly frustrating for our clients, though.

When there are changes to be made, we devote a lot of time, as accountants, to understanding the changes, and then it is frustrating to find that you've had to backpedal on them.

[The Chair, Liberal, Kody Blois]

Mr. Drouin, it's over to you for up to six minutes.