Thank you for the opportunity to provide our association's views to the finance committee on the changes we believe the Minister of Finance should include in the 2011 budget.
My name is Gerrid Gust, and I am a full-time farmer and the volunteer chair of the Western Canadian Wheat Growers.
For the past 40 years, the Wheat Growers have been a voluntary organization of business-minded prairie farmers who recognize the importance of competitive markets, innovation, and free trade. Our mandate is to advance the development of a profitable and sustainable agriculture industry.
The competitiveness of Canadian farmers has been undermined by an excessive tax burden and onerous regulatory impediments. The Wheat Growers provide the following five recommendations, with the sure knowledge that these changes will lead to greater economic prosperity and investment in the agriculture sector.
First, we recommend that block averaging of farm income over five years be restored. As I'm sure you know, due to environmental factors, grain farming is subject to tremendous swings in farm income. These are not factories, mines, or mills, where a set production is almost guaranteed as long as the equipment is operating. The inability to average income causes farmers to pre-purchase inputs or buy equipment to reduce their tax liability in those years when their tax income is projected to be relatively high. While this makes perfect sense from a tax planning point of view, it may not be in keeping with the best farm practices. In our view, the tax system should be structured in a way that encourages farmers to engage in sound business practices. The restoration of five-year block averaging would help achieve this.
Second, we recommend the introduction of an investment tax credit on the purchase of certified seed. Currently, the use of certified seed in western Canada is at 18%, which is among the lowest of all industrialized nations. The use of certified seed tends to increase and improve uniformity of product, which allows us to better meet the quality needs of end-users in markets here and around the world. Such a tax credit would promote innovation and would allow Canadian farmers to retain our reputation as a leading producer of quality wheat. It would also encourage the development of new varieties that have the potential to enhance human health.
Our third recommendation is to increase public expenditures on seed research and development. For various reasons, there is very little private investment in cereal and grain research in Canada. To compensate for this, we recommend that A-base agricultural research funding be returned to 1994 levels, adjusted for inflation. This should be done in increments over the next 10 years.
I'd like to pass the rest of my time over to our Saskatchewan VP, Geoff Hewson.
I thank you very much for your time.