Thank you very much, Mr. Chair.
I apologize that I am the only thing standing between you and either a bar or a bed, but I will try to be as brief as I can.
It is a pleasure for me to be here. As the chair already mentioned, I'm here on behalf of Farmers of North America.
Farmers of North America, for those of you who don't know, is a farmers business alliance that was started by a grains and oilseed producer from Swift Current, Saskatchewan. The head office is currently in Saskatoon. We have about 10,000 members across Canada. We have members in every province, except Newfoundland.
Our number one mandate and priority is to improve farmers' cost-competitiveness and thereby maximize their profit. Even with the subject at hand, when Bill C-18 passes, we want to help be the architects of a system that's going to help farmers with cost competitiveness and maximizing their profits. That's what we're there to do on behalf of our farmers.
I don't want to beat an old quote to death, but as many of you have heard before, Wayne Gretzky used to say he was good because he went where he knew the puck was going to go. He didn't go where the puck was or where the puck had been. That's the kind of mentality we have at FNA. We want to try to determine where the puck will be and then to be there on behalf of our farmers. We want to make sure that we serve their best interests and that we serve them well.
We do know at FNA that there are some farmers who will want to have current CWB services provided for them in a new system. In looking at this pending legislation, we are trying to determine how best to serve farmers, whether that is in grain aggregation, shortline rail, finding port positions, marketing or whatever. That is, building a crosswalk between farmers and the marketplace, much the way FNA has in the past—and it continues to do so—built a crosswalk between farmers and input suppliers.
To that end, we have created a task force of people with experience in grain handling, rail service, marketing, and producer car shipments. The thrust of our task force is to find solutions that will make farmers more cost-competitive and profitable in a new environment created by policy change.
In that process we've already consulted with the academic community, officials from grain companies, farmers, shortline rail groups, and producer car shippers. While that task force work has not nearly completed its work, we would like to point out the following for your consideration.
The bill does include things like government guarantees, and it has already dealt with cash advances. Those were two very important components. But there are some other issues we would like to share for consideration, and certainly there are issues we want to work on finding solutions for with decision-makers.
Having said that, let me very quickly point out a few things. We do know that the changes in the legislation will have far-reaching implications and will change the environment considerably.
For many farmers to achieve benefits in spite of the changes, and to mitigate some of the impact, they will need tools and assistance to successfully navigate the transition process. They will need to raise capital, make equity investments, market intelligence, and business and market management, to name a few.
A changed role for the CWB in the logistic system will also impact how short lines and producer cars function. This has been a great empowerment tool for farmers, so it's imperative that these essential and very important programs remain a viable part of the marketing and logistic system. Farmers have used them to their economic advantage and they've invested a lot of money.
There also has to be assurance of viable port position access and inland terminal access. We need to create and maintain a system within which we enable farmers to fit their individual marketing goals and producer car shipments into an already challenged and somewhat congested port handling system.
We need to ensure that railways will continue to deliver and service producer cars in a way that is economically viable for farmers.
We also need to build, maintain, and strengthen the relationship between class-one railways and the shortlines to capture the maximum benefit of a substantial public and private investment in infrastructure. And those investments, as you know, have already been made by many farmers—investments made to achieve a cost-effective and efficient transportation system. This has to be harmonized in some way with the new marketing regime coming up.
We need to also assist those farmers who want to take a greater role in the management and ownership of a CWB 2 to allow them to create a cost-effective new grain company that will build and maintain competition in the system. And we need to ensure that a new board will have the incentive to transition the new CWB into a viable company in the interest of all those producers who value it as an empowering market tool.
Finally, we know that farmers, in responding to this policy shift, will need to have access to capital. And as a start, we suggest what we call the AgriInvest and agricultural stimulus initiative.
Very quickly, Mr. Chair—I won't belabour it too long—currently there is about $1 billion in the AgriInvest tier, and about $450 million is in fund 2 in the prairie provinces. Now, for those of you who aren't familiar with fund 1 and fund 2, fund 2 is the tier for which, when farmers withdraw that money, it's taxable, and they have to withdraw fund 2 before they withdraw fund 1. So for the prairie provinces, for example, there's $450 million in fund 2 and there's a further about $280 million in fund 1. This is just in the prairie provinces. That's $730 million.
What we're suggesting is that in order to create an incentive and to help farmers raise capital to make whatever investments they might want to make in a grain-handling transportation and marketing system, we waive the taxes on fund 2 withdrawals if a farmer invested in a prior-approved project. That would immediately release somewhere around $450 million.
Now, let's remember I'm not suggesting that farmers be forced to use that money. It's still there for them to keep for a rainy day fund, if they would so like to. However, you must know that there are currently no triggers in fund 2, so farmers can actually withdraw it to buy whatever they want. This would create an incentive for a farmer to say, “you know something, I don't want to withdraw the money because I'm 30% taxable this year, so I'm just going to leave it there”. Instead, we say, “you know something, if you invested in something that will help maximize your future revenue, then we will waive the taxes”, and of course the benefits of taxation will accrue back later to the government, because farmers will have had the ability to invest in projects that maximize their revenue.
Now, what that would do is it would release a potential $450 million immediately. But because currently farmers have to withdraw fund 2 before they can withdraw fund 1, it would also make available the $280 million in fund 1. Hence, somewhere around $700 million to $730 million now is a potential pool of money for farmers to use to invest in something that will help maximize future profits, and we think is a pretty good way to address some investments that farmers perhaps will want to make to make sure that they continue to be empowered in the grain handling, transportation, and marketing system.
And this is my last comment, Mr. Chair.
FNA is in the role of serving farmers, and because we're in that role we would like to be part of any network created to make a collective marketing tool successful for those farmers who want to use it, including grain handling and transportation.
Thank you very much for your time.
