Mr. Speaker, I am pleased to speak in support of the proposed amendments to the Farm Improvement and Marketing Cooperatives Loans Act. I am sure that my hon. colleagues will agree that they are solid, common sense measures and that the time has come to adopt them.
Important changes are taking place in the agricultural sector. The size of agricultural farms is increasing and it is becoming more difficult for a beginning farmer to obtain the funds required to set up a viable operation. About half of all farms, representing some $123 billion in assets, are run by farmers who are 55 and older.
What will happen when these farmers want to retire? A good number of them will do so in the next 15 years.
Over the next 15 years, Canadian farmers, operating almost 84,000 farms, are expected to retire. I say “expected” because we know some will work beyond the age of 70.
In any case, we are talking about a major intergenerational challenge for Canadian agriculture that is going to play out over the coming years, a challenge to attract young farmers to the business, a challenge to transfer family farms to the next generation, a challenge to renew and rejuvenate the Canadian agriculture and agrifood sector and to put it on a sound footing for generations to come.
We need to attract young people to a future in farming. Young farmers are the foundation of Canada's agriculture and agrifood sector. They enrich and strengthen communities across Canada through their hard work and innovative spirit. They exemplify the entrepreneurial spirit that is critical to our success in the years to come. As entrepreneurs, young farmers want a government that gives their farm businesses room to grow and the tools to capture new opportunities.
I want to talk about a young farm family that is part of the next generation. Robert and Erin Brunel farm with Rob's dad, Paul, in Ste. Rose, Manitoba. R.P. Brunel Inc. is a fourth-generation family farm that specializes in grain. The Brunels farm 3,000 acres. Rob and his wife, Erin, welcomed their first child, Myley, in to the family in mid-November. Rob would like to continue to expand the business and eventually take over the farm completely from his father.
The Brunels dream of a future in agriculture, but realizing that dream is much easier said than done. It is not uncommon for farms today to have assets of well over $1 million, a considerable amount for the next generation to finance. Rob says that there are programs to help young farmers out there, but he does not qualify for many of them and they are not targeted to his specific needs. He would like a program to help him proceed with his expansion plans and eventually finance the farm transfer.
Farmers like the Brunels are the future of the sector and we need programs that will help them capture that future. That is the objective of the proposed legislation we are discussing today.
For the past 20 years, the Farm Improvement and Marketing Cooperatives Loans Act, commonly known as FIMCLA, has helped farmers and farmer-owned co-operatives improve and develop their businesses through government loan guarantees. Guaranteed loans of up to $250,000 are available to farmers for up to 80% of the purchase price. The interest rate is capped. For co-operatives, the maximum loan is $3 million.
Over the years, FIMCLA has been a valuable financial tool for farmers, helping them improve their farming operations when other sources of funding are not available or priced too high to make them viable.
Federal programs to help beginning farmers enter the agricultural sector have a number of restrictions. The advance payments program, governed by the Agricultural Marketing Products Act, only provides short-term financing to new farmers. Provincial programs for beginning farmers vary a great deal in terms of the types of programs and the amount of assistance provided.
Support for agricultural cooperatives is also limited. Debt financing provided by credit institutions to cooperatives is insufficient and provincial programs present the same problem. There is no doubt that the rules are not fair.
Consequently, in 2005 the previous government announced that it intended to cancel the program. The industry did not see this as a solution, and neither does this government. That is why we have pledged not only to maintain FIMCLA, but to consult on how to make it more responsive to the needs of farmers today. Therefore, we did that.
We heard from young farmers across Canada, farmers like the Brunels, who talked about the need for support for both beginning farmers and farm transfers. We also heard from co-operatives that told us about the challenges they had in raising the equity they needed to help farmers participate in value-added ventures.
I want to linger a moment on the topic of co-operatives. There is no question farmer owned co-operatives are a way to move farmers further up the value chain. In fact, in my riding of Glengarry—Prescott—Russell there is a very important agricultural co-operative known as St-Albert Cheese. Some farmers like the co-op approach. In fact, I have met with some in my riding of Glengarry—Prescott—Russell.
Co-ops have a record of providing benefits to farmers, improving their competitiveness, pooling risk, coordinating marketing and retaining local wealth and promoting rural sustainability through local ownership and control.
For example, Agropur, a Quebec-based dairy co-op, is one of the top dairy companies in Canada. Agropur reported revenues of $2.3 billion and a surplus of over $120 million last year, and it is owned by farmers. Across Canada, some 1,200 agriculture co-operatives generate annual revenues of $13 billion and return over $200 million back to their farmer members.
Like the farmers they serve, co-ops are evolving to take advantage of opportunities in the bio economy, to meet new consumer demands and to find new sources of capital and specialized expertise. This is more challenging than ever, given the high capital requirements of ventures like these.
We listened and we acted. The result is what we have before us today.
Before coming up with the amendments proposed in this bill, Agriculture and Agri-Food Canada consulted widely with young farmers and financial institutions. According to stakeholders, changes to the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA) will be a great step forward.
The Canadian Young Farmers Forum is backing these recommendations. It has also insisted that the paperwork be simplified.
Accordingly, the Department of Agriculture and Agri-Food will devise an electronic loans system under the amended FIMCLA in order to reduce processing times for loan applications.
Under the legislation we are proposing, FIMCLA, or the Farm Improvement and Marketing Cooperatives Loans Act, would be opened up to beginning farmers, to family farm transfers, and to a wider range of agricultural co-operatives.
For beginning farmers, the loan limit would be increased from 80% to 90% of the purchase price. We are proposing an increase in loan limits to $500,000 for real property and $350,000 for all other loan purposes. Loan guarantees would now be available on farm transfers through shares of a corporation or interest in a partnership.
For co-operatives, this proposed legislation would respond to the co-op sector's needs by expanding eligibility requirements to include all agricultural co-operatives with a majority, 50% plus 1 of farm members. These measures respond to recent trends in co-op development by allowing non-farmer investment while at the same time retaining farmer control.
The proposed bill would also build in flexibility in the regulations so that loan limits can be changed as the need arises. We are not talking about just fine-tuning FIMCLA. We are talking about key improvements to the core program.
That is why we are proposing in the new bill that the program name be changed to the Canadian agricultural loans act. This is a better reflection of the proposed legislation's stronger national focus.
Opening up the program to beginning farmers, intergenerational farm transfers, and a broader range of agricultural co-operatives would create a national loan guarantee program that would support the entire agricultural community, and it would bring parity to the agricultural sector with other sectors of the economy which are entitled to benefit from small business financing programs.
This is a government that delivers for young farmers.
We have helped support family farm transfers by increasing the lifetime capital gains exemption from $500,000 to $750,000, the first increase in 20 years. To help farmers manage cashflow, we have doubled the amount of interest free money available through cash advance programs. This would make about $600 million per year available to agricultural producers. We have delivered stable, predictable and bankable support for farm families.
We are working with provinces and industry to design programs under the growing forward framework to secure a profitable and vibrant agricultural sector for the next generation. This government supports strong, young farmer associations such as the Canadian 4-H Council, Canadian Young Farmers Forum, and Canada's outstanding young farmers.
I would like to quote briefly Doug Spencer, a dairy farmer from Campbellford, Ontario, because he touches on an important issue in the farming community right at the moment:
At the moment, the highest priority for my wife and me is to know that the business we've built up will be taken care of by the next generation, and this plan will help see to that.
The proposed amendments to FIMCLA will help farm families like the Spencers keep the farm in the family and help the older generation retire with dignity. It is good news for beginning farmers, for retiring farmers, for farmer-owned co-operatives, and for the whole sector.
The bill would provide fairness and parity with other businesses, both for beginning farmers and for farm families looking to transfer the business to the next generation.
It supports the next generation of farmers and agricultural co-operatives. It gets rid of some of the red tape and paperwork to make the program more accessible and more flexible to all farmers.
Farmers in my riding of Glengarry—Prescott—Russell represent the strong and vibrant agricultural community. They are in favour of this type of legislation and of the increased access to credit that it affords them.
I highlight that we have introduced business risk management programs. We have invested in the agricultural sector and launched new initiatives to help our farmers across the country. The minister has been very busy, opening foreign markets once again to help our agricultural sector. We are taking real action to defend and promote the best interests of our farmers.
Farmers strongly support this bill and I invite members to support the changes we are proposing to the Farm Improvement and Marketing Cooperatives Loans Act.