AGRI Committee Report

FUTURE OF FARMING: SUPPLEMENTARY REPORT BY

CONSERVATIVE PARTY OF CANADA MEMBER OF THE

STANDING COMMITTEE OF AGRICULTURE AND AGRI-FOOD

1.            The Conservative members on the Standing Committee of Agriculture and Agri-Food (SCAAF) are pleased to submit a supplementary opinion to the report Young Farmers: The Future of Agriculture. This supplementary report is submitted in order to highlight areas where the main report has omitted or erred.

2.            Before commencing with the supplementary report, Conservative members would like to thank each of the witnesses that came before committee to present evidence. The time and effort they dedicated to our study has provided all Committee members and Parliamentarians with greater understanding and insight into the issues affecting the future of farming. 

1. Getting Started: Cost and Challenges Facing Young Farmers

3.            The Conservative Government understands the costs and challenges young farmers face within the agricultural sector. We have not only heard about the difficulty of entering the industry, but also the lack of profit and competitiveness that has deterred many young people from pursuing this livelihood. Although these are seen as challenges to the sector, the Government believes they are also the basic fundamentals that will attract a new generation of farmers. Farmers want to be profitable and competitive, and that is why our Conservative Government has worked hard to institute initiatives that will meet those objectives.

4.            Some of the challenges associated with entering the agricultural sector that committee members heard during their cross-Canada tour include access to capital, debt burden and the availability of land. There was also concern over transferring the farm from one generation to the next.

1. Access to Capital – Committee members heard that one of the biggest challenges facing young farmers entering the industry was their inability to access the capital needed to overcome the tremendous start up costs. These costs often included: land, quota, farm machinery and buildings, and the purchase of animals.
2. Debt – Committee members also heard that many young farmers have great concerns about debt accumulation. Not only do young farmers feel burdened by debt from entering the industry, but also by debt associated with higher education many producers feel they need to ensure better farming and business practices.
3. Land – The cost of land is a deterrent for young people looking to enter the industry. The Committee also heard that the availability of land is becoming a significant problem due to urban development or the establishment of ‘hobby’ farms on prime agriculture land. This was specifically noted when the committee visited the Okanagan Valley in British Columbia.
4. Farm Transfer – Succession planning was another important aspect Committee members heard from young farmers. Along with their parents, young farmers are seeking a way to facilitate intergenerational farm transfers that would provide their parents with equity for retirement, but that does not overburden young farmers with debt. Witnesses noted that facilitating non-family farm transfers from retiring farmers would also help individuals getting into the industry.

5.            In order to meet these challenges the Conservative Government has taken on a number of initiatives to help young farmers establish themselves in the industry. For instance, the Government passed the Canadian Agricultural Loans Act, which allows young farmers easier access to credit. Under this program young farmers have the ability to establish, improve or develop their farms. These loans are also accessible to agricultural co-operatives to process, distribute or market farm products. The maximum loan attainable is:

• $500,000 for land and the construction or improvement of buildings,
• $350,000 for all other loan purposes,
• The aggregate loan limit for any one farmer is $500,000,
• $3 million for agricultural co-operatives with the Minister's approval.

6.            The Conservative Government has also committed to working with farmer organizations that promote the involvement of youth in the agricultural sector. Under Growing Forward, the Government has announced $4.3 million over four years to 4-H Canada and the Canadian Young Farmer’s Forum to help with initiatives that will involve youth in farming. The Government believes that these organizations provide a strong foundation for young individuals looking at getting into the agricultural sector.  

7.            Our Conservative government has also undertaken other initiatives, one which includes the National Future Farmer’s Network. The Network will gather interested young farmers from across the country to discuss issues and challenges facing them.

8.            The Conservative government has taken significant steps and is committed to an ongoing dialogue to ensure that individuals seeking to enter the agriculture industry, and young farmers already in the industry, have the resources necessary assist in their success.

9.             Our Government believes that in addition to limiting the challenges and costs associated with young farmers entering the agricultural sector, profitability and competitiveness must be ensured within the agricultural sector, in order to guarantee a vibrant future for the industry. It will be of no service to help young farmers enter an industry where they cannot market their products, have access to the latest research, or are forced to compete in a regulatory framework that prohibits innovation. In order to ensure a future in farming, the agricultural sector must be profitable and competitive. The Government looks forward to continue working with the provincial and territorial governments and industry to ensure these objectives are attained.

2. Profitable and Competitive: Ensuring a Future for Young Farmers

10.         Ensuring farming is a profitable business for young farmers is a critical concern for this Conservative Government.  The committee heard from a number of young farmers that could not see a profitable future, once or if they were to establish themselves in the agricultural sector. The Conservative Government shares this concern and has undertaken a number of initiatives to ensure that agriculture remains competitive and profitable.  

A.           Domestic and International Markets

11.         The Committee heard many young farmers across the country say that in order to be competitive and profitable they need access to domestic and international markets.  Throughout the discussions, witnesses mentioned the need for the government to forge ahead with multilateral trade initiatives like the World Trade Organization (WTO) and bilateral trade agreements like the Canada-Colombia Free Trade Agreement (FTA). The witnesses also mentioned the value of agricultural specific agreements like the recent work done to reopen the Chinese market to pork. The Conservative Government understands that market access increases the demand for Canadian agricultural products, which results in increased profitability for young farmers.      

12.         In terms of opening international markets, the Conservative Government and the Minister of Agriculture and Agri-Food, the Honourable Gerry Ritz, P.C., M.P., have worked tirelessly on behalf of young farmers. The Government has been extremely successful in signing a number of FTAs and agriculture specific agreements, which include:

Free Trade Agreements: EFTA, Peru, Colombia, Panama and Jordon.

Agricultural Agreements:  China, Mexico, Cuba, Russia, Japan, Hong Kong, India, Saudi Arabia, Jordan and the UAE.

13.         Moreover, the Government is currently negotiating FTAs with several trading partners including: the European Union and the Canada-Central America Four countries (El Salvador, Guatemala, Honduras and Nicaragua).    

Recommendation 1

That the Government of Canada, the Minister of Agriculture and Agriculture and Agri-Food, and the Minister of International Trade, continue their efforts to open international markets for Canadian agricultural products that will result in increased market access for young farmers.

14.         The Conservative Government understands that removing non-tariff trade barriers is crucial to maintaining a profitable farming industry and must play an active role in ensuring international markets remain open. The Committee heard that several trade irritants adversely affected the livelihood of many young farmers. In particular, the most damaging of these have been the Country-of-Origin-Labelling (COOL) legislation implemented by the United States on Canada’s red meat sector, South Korea’s ban on beef, and China’s ban on canola seed.  

15.         Young farmers should be assured that the Conservative Government will always stand up for farmers in the international marketplace. That is why the government has launched a World Trade Organization dispute settlement process against America’s COOL legislation and South Korea’s ban on beef. However, unlike the opposition that irresponsibly demands immediate trade sanctions beyond the scope of the trade irritant being disputed, the Government believes that an open and frank dialogue, in a manner that does not damage trade relations, is a more productive route for Canadian farmers.

16.         An element that was not adequately addressed in the Main Report is the Canadian Wheat Board (CWB). The committee heard repeatedly from young grain farmers in Western Canada that to remain competitive and profitable, they need the same privileges that Eastern Canadians have when it comes to selling their wheat and barely. The Conservative Government has always been clear that young farmers in Western Canada deserve marketing freedom.

17.         Unfortunately, due to punitive efforts by the opposition, young farmers in Western Canada do not have this opportunity. However, according to the CWB’s own 2010 Spring Producer Survey, only 34% and 24% of young farmers feel the CWB is effective in assuring the top price for wheat and barely, respectively.

18.         Regardless of the continued efforts of the opposition to thwart any attempt to modernize the CWB, the Conservative Government has introduced legislation to do just that. Bill C-27 will ensure producers will receive their grain payments up to four weeks sooner and the Bill will deliver reforms in the voting requirements for CWB elections. The CWB has publicly endorsed this Bill and has asked the opposition to join the government in passing it quickly.

Recommendation 2

That the Government of Canada proceed with Bill C-27 in the House of Commons.

19.         Time and again, the Committee heard from young farmers who talked favourably about the supply managed sector, both in terms of profitability and stability. Supply management helps achieve this by allowing farmers to produce what the market needs by balancing supply with demand, while taking into account the cost of production. The Conservative Government is a proud defender of supply management and young farmers can count on the Conservative Government to protect this industry.

20.         For instance, at the World Trade Organization, the Conservative Government continues to strongly defend the interests of supply managed industries. The Government has committed to making the WTO Special Agricultural Safeguard fully operational for supply managed goods. The WTO Special Agricultural Safeguards permits WTO members to provide enhanced stability for sensitive industries by imposing temporary surtaxes in response to sudden over-quota import surges or significant reduction in over-quota import prices.

21.         The Government has taken action under Article 28 of the General Agreement on Tariffs and Trade to limit imports of low-duty milk protein concentrates through establishment of a new tariff-rate quota. The government has also introduced cheese compositional standards to ensure Canadian milk in Canadian cheese.

Recommendation 3

That the Conservative Government continue its strong support for the supply management sector domestically and internationally.

B.           Regulatory Framework

22.         The Committee heard from many young farmers that they were at a competitive disadvantage as a result of some aspects of Canada’s regulatory framework. Although agriculture is regulated in Canada in order provide a level of protection to producers and consumers, the Conservative Government understands young farmers compete in a global environment. If the approval processes for regulated items does not keep pace with innovation and leading edge science, young farmers will suffer an economic disadvantage.

23.         Repeatedly, the committee heard from many young farmers across the country who said they were at a competitive disadvantage, as they were unable to use the same production management tools as other countries. Their concerns focused on fertilizers and pesticides banned for use in Canada, but which could be used on products shipped to Canada for sale. Many young farmers felt that if Canada allows the importation of products with these certain fertilizers and pesticides, they should be allowed to use them as well. 

24.           In order to ensure young farmers that they will able to be profitable and competitive in the future, Mr. Bev Shipley, Conservative MP from Lambton-Kent-Middlesex, introduced motion M-460 in the House of Commons, which would consider equivalent the scientific research and agricultural regulatory approval processes of Canada’s trading partners.  This motion intends to effectively harmonize fertilizer and pesticide standards, helping our Canadian farmers to be more competitive by having access to these production management tools. The motion passed the House of Commons despite opposition votes to the contrary.  

Recommendation 4

That AAFC, CFIA, and Health Canada provide an annual report to the Committee on the progress being made to implement M-460.

25.         Another issue committee members heard a great deal about across Canada was Bill C-474 introduced by the New Democratic Party. The Bill will require that an analysis of potential harm to export markets be conducted before the sale of any new genetically engineered seed is permitted.  If allowed to pass, not only would this bill move Canada away from a science-based variety approval system and devastate Canada’s reputation as a science-based trading nation, it would jeopardize Canada’s ability to take full advantage of new and beneficial technologies.  Without new and innovative seed traits, Canada will be left behind and the livelihood of young Canadian farmers would be put at risk.

26.         Currently, Bill C-474 has been reported back to the House of Commons for report stage and third reading, with Conservative members the only political party resolutely against it. The Liberal Party of Canada has continuously flip-flopped on this issue and refuses to give young farmers a clear answer. It is important that all parties, including the Liberal Party, stand up for young farmers and defeat this dangerous piece of legislation at the committee stage. 

27.         The committee listened to accounts from young farmers about challenges in the livestock sector with regards to Specified Risk Materials (SRM). The Conservative Government understands that the destruction and removal of SRMs can decrease the competitiveness and profitability in the livestock sector. That is why the government included $75 million in the 2010 Budget to encourage new innovation to deal with SRM destruction and removal.  This investment included:

·         $10 million in new funding for the Slaughter Improvement Program, bringing the total investment in this program up to $60 million.;

·         $25 million for cattle processing plants that handle cattle over 30 months of age; and

·         $40 million to support the development and commercialization of innovative technologies related to SRM.

28.         One of the issues brought up during the committee’s travels was the importance Canadians place on knowing where their food comes from. Canadians produce superior agricultural products and young farmers need to be able to capitalize on this competitive advantage.  This niche market is important and profitable for young farmers who wish to sell their products domestically. The Conservative Government responded to the demands of consumers and producers by changing the Product of Canada labelling guidelines. Consumers can now be sure that goods with the Product of Canada label on them contain at least 98% Canadian ingredients.

Recommendation 5

That the Government and the Minister of Agriculture and Agri-Food continue to stand up for strong Product of Canada labelling requirements.

C.  Research and Innovation

29.         The Committee realizes how important research is for Canada’s young farmers to remain profitable and competitive. The Conservative Government has partnered with industry and producers through a number of initiatives, which will maximize the value of research dollars and provide farmers a way to integrate new research and innovations into their businesses.

30.         This includes addressing the recommendations outlined in the 2010 Spring Report of the Auditor General of Canada. The Government has already taken action to address the concerns, including:

o   continuing to improve how the Government manages its research partnerships;

o   improving management and planning practices;

o   better communicating strategic direction and ensuring the timely dissemination of research results;

o   developing a long-term plan for capital assets; and

o   strengthening human resources planning to ensure the right people are in the right place to do the work.

31.         The Government has also invested $500 million through Agricultural Flexibility, which includes:

o    $20 Million for the Live Stock Auction Traceability Initiative;

o    $32 Million for the Canadian Brand Advocacy Initiative; and

o    $50 Million for the Agri-Processing Initiative.

32.         Furthermore, under Growing Forward programming, $158.7 million is being invested in research and innovation, to encourage industry leadership and investment in building a competitive agricultural sector. These investments are on top of the approximately $225 million AAFC invests annually in the important core research done by scientists in labs and research centres across the country. Recent announcements demonstrating the Government’s commitment to science and innovation include:

o   $5 million for a new greenhouse at the Research Centre in Swift Current, SK, to improve research capabilities for the sector;

o   $8.3 million for pulse producers to improve their productivity and gain access to new markets;

o   $6 million for beef producers to research opportunities to reduce production costs, increase feed efficiency and decrease the impact of animal health issues;

o   $14.5 million for canola and flax producers to develop more productive crops and healthier, higher-value products for consumers; and

o   $10 million for Canadian dairy farmers to study the health benefits of dairy products and develop ways to improve animal productivity.

3. Conclusion

33.         The Conservative Government understands the costs, challenges and risks that confront young farmers looking to establish a livelihood in the agricultural sector. That is why the Conservative members on the committee introduced a motion to study the future of farming with an emphasis on young farmers. The Government recognizes that the future of farming in Canada depends upon ensuring young farmers are able to enter the industry and remain profitable. Young farmers can count on the Government to make every effort to ensure their livelihood.