That, in the opinion of the House, the government should take action to promote the intergenerational transfer of farms by implementing the following measures: (a) increasing the allowable capital gains deduction for agricultural property from $500,000 to $1 million, exclusively for transactions as a result of which a farm remains in operation; (b) extending application of the rules governing rollovers to all members of the immediate family under 40 years of age; (c) setting up a farm transfer savings plan that would enable farmers to accumulate a tax-sheltered retirement fund; (d) make the rules governing property ownership more flexible so that young farmers can obtain a larger share of a residence held by a company and use their registered retirement savings plan to acquire an agricultural enterprise; and (e) transfer a recurring envelope to the government of Quebec and the other provinces for encouraging young people to go into farming
Mr. Speaker, as hon. members are no doubt aware, the population of Quebec, like that of Canada and the rest of the western world, is rapidly aging. The generation that built modern Quebec, from the Quiet Revolution until the present day, is fast approaching retirement age. It is therefore our collective duty, and I am sure we agree on this, to pass the torch to those come after us, so that Quebec may continue to develop its potential at least as much as it has over the past 40 years, if not more.
If that philosophy of passing the torch to future generations is valid for all spheres of economic, social, cultural and intellectual activity in modern Quebec, it is all the more so for agriculture.
In 2005 do we still need to prove how important agriculture and feeding the country's people are to all of the countries of the world? There is a close connection between the regions of Quebec and its major urban centres; while the latter represent industrial, commercial and cultural productivity, the former represent food self-sufficiency and the source of life. Most human beings today lead materialistic and urban lives, but they still need to eat three times a day, and always will.
It is in that perspective of continuity of working the land that we must look today at the question of the future of agriculture in Quebec and Canada.
I myself am a farmer. I have worked in this field for the last 25 years, apart from the last two which I have had the privilege of spending in the company of my colleagues here. It is primarily as a person involved in the field of agriculture that I decided to actively enter politics under the banner of the Bloc Québécois. Our 2004 election platform was and still is relevant to the major challenges that Quebec will have to face in agriculture. It is this important challenge and this questioning concerning the next generation of farmers that I come to present in the House of Commons, in the hope that we can find some solutions and societal choices that demonstrate intergenerational solidarity, for the love of our farming community.
When the economy is bad, the first to be discouraged are the job seekers just starting their careers. They are what is commonly called “the next generation”. This phenomenon is even more pronounced in agriculture. Whereas the economic cycles of recession and expansion follow each other almost naturally, farming has had difficult times for too long. Market globalization has enabled farms on the other side of the planet to compete directly with our local producers. Of course, this globalization trend has had certain advantages. It must be acknowledged, however, that the world of agriculture is not as flexible as the electronics or automobile industries. You need land and heavy machinery to produce a harvest. Furthermore, there is no question that this is the only field of production that is dependent with such uncertainty on climatic conditions. With one thing affecting another, the next generation of farmers is not knocking down the door.
The key word has been uttered: “uncertainty”. Our ancestors saw farming as a safe investment marked by stability, but can the same be seriously said today?.Unfortunately, the vocation of agriculture is demanding more and more financial, physical and human resources in order to face growing uncertainty. It is our duty as elected representatives of the people to find solutions that will permit the farming industry of Quebec and Canada to continue to work for the years to come.
The next generation, these young people to whom we have handed down a love of agriculture, needs help. In order for their ambitions to become tangible reality, they need some clear proposals and real solutions to real problems. I shall start, therefore, by drawing as accurate a picture as possible of the agricultural realities.
First, a general comment: there are fewer and fewer farms in Quebec. Between 1996 and 2001, which was a time of economic growth, the number of farms in Quebec fell by 10% to 32,000. In some traditionally agricultural regions, such as the Lower St. Lawrence, the number of farms decreased by as much as 50%. At its annual convention in 2004, the Union des producteurs agricoles adopted the objective of not falling below this historic floor of 32,000 farms in Quebec.
In addition, farmers' incomes are far from increasing at the same rate as the size and value of their farms. According to some studies, the value of one acre of arable land rose from $606 in 1981 to $1,600 in 2001.
The average assets of Quebec farms rose from just under $700,000 in 1997 to $1.12 million in 2002. But net average income of farmers rose only from $34,000 to $39,000 in this same period. That is a considerable concern to the generation that will replace them over the next few years.
In view of the fact that the average age of Canadian farmers is 50, that 35% of Quebec farmers are over 55, and that about 12% of farmers intend to retire next year but 26% of those have no one to take over, there is an urgent need to take action in order to ensure the survival of the agricultural way of life in Quebec and Canada.
As we know, youth is not necessarily synonymous with wealth. One of the basic problems highlighted by the three facts I just outlined is that it is difficult if not impossible for our young people with agricultural ambitions to acquire the basic tools of the modern farmer unless substantial help is forthcoming. Government inaction, reinforced by market forces, will have no other effect than to concentrate agricultural wealth in just a few hands, that is to say, to create “mega-businesses” and “super-farms” that will only discourage small farmers and lock them into a vicious circle leading to the loss of their agricultural heritage and the inevitable end of any possibility of renewal.
That would be the end of a middle class of farmers, the end of family-owned farms on a human scale. That is what we have to avoid for the sake of the future of farming in Quebec and Canada. In order to increase the chances that farmers will be successful, we have to prevent extreme market forces from encouraging only the mammoth operations with their tendency to monoculture at the expense of small farmers and the healthy diversity of their crops.
The Government of Quebec understands the problem. La Financière agricole du Québec has a financial support program for aspiring farmers that provides several different kinds of assistance, including establishment capital grants between $30,000 and $40,000 for students with a degree in agriculture, secure rate establishment loans, in which La Financière caps the interest rates on the first $500,000 that a start-up farming operation borrows, and many advisory services.
For its part, the federal government provides preferential loans, advisory services and a few tax measures that can facilitate the transfer of the family farm from one generation to the next through Farm Credit Canada. But this is not enough. In contrast to the United States, Great Britain and even Quebec, the federal government does not provide any direct, unconditional grants, such as the establishment grants for example.
It is mainly in regard to the federal measures that my party and I wish to elaborate and further enrich the discussion today in order to analyze how we could contribute to the objective established by Quebec farmers, namely preserving 32,000 farms on all the agricultural land. The federal government must do its fair share.
In order for this ambitious objective to be achieved, an additional 400 young people will have to set themselves up in agriculture in order to create 900 to 1,100 new farms a year, according to figures provided by the UPA. In order to do this, there are three critical areas on which we will have to focus: taxation, savings and cooperation.
The tax problem is related to the problem of selling and buying a farm. When farmers are ready to retire, the financial problem is not as much that taxes are due on the sale of their property as the difficulty of finding a purchaser whose offer is close to the market value of the farm. Since the market value of farms has increased substantially—as we just pointed out—and there are not very many purchasers in the next generation because of a lack of resources and financial supports, farmers have to dismantle their farms, more often than not, which forces them to pay more taxes and does nothing to help transfer the farm to future generations.
In order to increase the benefit of transferring a farm as opposed to dismantling it, would it not be advisable—and this is the Bloc Québécois's first proposal regarding taxation—to increase the allowable capital gains deduction for agricultural property from $500,000 to $1 million for the sale of a farm operation to another farmer?
This would allow farmers who sell their property to avoid having to pay too much in taxes because of a lack of potential buyers, and it would also encourage hesitant young people to go into farming.
In other words, since taxes paid on transactions would decrease, this measure would allow the seller to dispose of his assets at a lower price while guaranteeing him the same amount of money and encouraging young people to go into farming. Basically, if we want to encourage, from a taxation point of view, the transferring rather than the dismantling of agricultural property, we have to increase the gap between the rates that apply to transfers and dismantling respectively. Some conditions could be set. For example, the proposal in the case of a farm that remains in operation could be set at 75%. This would have the effect of preventing speculators from taking advantage of the system.
Moreover, as we know, unlike other taxpayers, a person who operates a farm can, without paying taxes, transfer directly to his children and to the children of his children some of his agricultural property. In order to encourage a larger number of young people to go into farming, why not extend the application of the rules governing rollovers to other members of the immediate family under 40 years of age? If we did that, some brother, sister, niece, nephew or cousin would very likely be interested in taking over the family heritage.
Two simple measures that could provide a win-win situation for both the purchaser and the vendor.
The second problem, as we see it, after taxation, is savings for farmers. If we want to attract newcomers to farming, we have to be able to encourage them to plan for their retirement, despite the numerous investments and expenses they will run into for starting up and running their business. Since a farmer's income fluctuates and they are not all able to contribute to an RRSP, why not set up a farm transfer savings plan to allow farmers to build up a tax-sheltered retirement fund? The governments could make a contribution, like they do for registered education savings plans. Such contributions could be conditional on maintaining the farm.
In that same vein, we could also amend the rules of the Home Buyer's Plan so that a young farmer could use his existing RRSP to acquire the farm, which would usually come with a home. This fourth measure would be feasible only if the maximum HBP withdrawal were increased.
Finally, after the taxation and savings that will help young farmers socially and economically, we feel that it is important to set an objective right away in regard to cooperation between farm organizations and government stakeholders. The effect would be to channel their activities in a more coherent way toward the renewal of the farming generations.
Since Quebec and the provinces are the levels of government closest to the farming world in regard to funding and services that promote the renewal of agriculture, it seems reasonable to suggest that the federal government should transfer a recurring envelope to the Government of Quebec and the other provinces to help the next generation of farmers.
The Government of Quebec could use this envelope for a number of next-generation-related purposes: extending the availability of the start-up subsidy; improving interest rate protection and increasing eligibility ceilings; providing more generous grants for young people who are starting up a farm; and setting up some sort of structure such as a single window providing information on farms without a next generation and young farmers without a farm.
It is possible to have a voice, to ensure that there will a next generation of farmers. But to ensure a future for farming and our youth, it is imperative for government to take action. We cannot just let things slide. The people have given us not just a mandate to represent them but also the power. And the power means the opportunity to use the means at our disposal to take action and influence the course of events. It is up to us, as the political stakeholders, to do what is necessary to ensure that the path from the farm to the fork is not closed to future generations.