Agriculture committee  Well, that's the management kind of strategy and tactics that they have to bring to it: what's my best opportunity for revenue from this land? We would look for them to do that. I'm not going to tell you what you need to grow on that acre of land, but if you want to buy it for $8,000 an acre, then I would need to see from you what your revenue generation plan would need to be to make that acre pay.

Agriculture committee  The first part of your question is what do we do to ensure that we are seeing a good business plan, that we understand a good business plan when we see one, and how do we respond to it?

Agriculture committee  I think probably a bigger piece of the answer to the question you're raising is this: when we see a business plan, what's our response? Every balance sheet and every business is going to have certain categories of assets, certain categories of liabilities. You have to line up the liabilities with the categories of assets and then set a debt repayment structure that enables the business to flourish as best it can.

Agriculture committee  I thought I'd already said that, but in any case, one of the things we will do when, for example, a new project is undertaken, is that we'll say, okay, for a year there's going to be no cashflow from this, so we need to put a loan into place. What are we going to require in the way of payments?

Agriculture committee  No. We'd be looking at--

Agriculture committee  --the management capability of the business to physically do what they say they're going to do, at their ability to stay on plan if they set a budget for costs. If you see excessive overruns, then essentially you're not going to get performance the way you wanted it.

Agriculture committee  I am one of the westerners in the crowd. I was born and raised in Manitoba on a beef, cereal grain, and oilseed farm. I graduated from the University of Manitoba with a degree in agriculture economics and did some graduate work at the University of Guelph, so I could split my experience between one end of the country and the other.

Agriculture committee  Perhaps I can offer my thoughts here. When we examine our policies at any given time relative to supply management we look at a number of things. What are the expected changes? How much will the WTO drive in changes to the supply management package? The commitment at this time is quite strong.

Agriculture committee  I think the issue we see with land values is that, when you are operating farm businesses that are growing and that already have a core operation--in other words, to draw a quick and dirty analogy, you've got a corporate farm where you're going from one generation to the next, you're bringing in sons and daughters and grandsons and granddaughters--it's easier to buy incremental assets and to pay the price you need to get adjoining land and adjoining assets than it would be if you came to an agricultural business fresh; you're the first generation, you want to start, and how are you going to start?

Agriculture committee  To your first question, on whether government should treat farmers and other industries differently, obviously a policy decision on how you treat an industry is something a government can make and support with a policy network, as it chooses. If we look from a commercial standpoint at a farmer relative to any other business person, we know that in fact the marketplace they will operate in will be an international marketplace.

Agriculture committee  What we do know is that there's a significant intergenerational transfer that has to happen in agriculture, and that has to be financed. To that extent, I think it is somewhat of an anomaly, perhaps, in industry. So for the next 10 or 15 years, I think there will be a significant demand for agricultural credit of a long-term nature.

Agriculture committee  I think by and large when we look at a business application--regardless of the industry that it comes from--we use the same principles. You want well-managed businesses. You want enough capacity to repay the loan obligations that are projected as being undertaken. Then you want the collateral behind it to give you the safety net in that unlikely event that the business fails.

Agriculture committee  In our banks, the default rate for agricultural loans is not higher than commercial ones. In fact, most years it is less.

Agriculture committee  I think David was looking at this.

Agriculture committee  I would echo that. We don't have any that would be priced 5% higher than they were before.