AGRI Committee Report

DISSENTING REPORT OF THE LIBERAL PARTY

YOUNG FARMERS – PROSPERITY IS THE ISSUE

November 16, 2010

INTRODUCTION

The future for young farmers is directly dependent upon the prosperity and the possibilities for the current farm population. In short, it is the issue of future profitability at the farm gate which will ultimately be the key to attracting and retaining new and young farmers into the industry.

Given current federal policies specifically that future for some is very positive. For others and likely the majority the future ranges from uncertain to disastrous.

In the most recent Report on Plans and Priorities for Agriculture & Agri-food Canada, the reference to programming directed toward the next generation of producers, the future of Canadian farming is contained in the following:

The Agri-Business Development Program Activity provides funding for activities related to business management practices and skills that: strengthen the capacity of businesses in the sector to assess the financial implications of business improvements, including the impact of environmental plans, food safety systems and innovation projects on their business profitability; manage transformation, respond to change and adopt innovation in business operations; help agri-business owners understand their financial situations, implement effective action and business management plans/practices and provide for enhanced participation by young or new entrants, First Nations clients, and clients in specific sub-sectors in transition. (Report on Planning and Priorities, Agriculture & Agri-food Canada 2010 – 2011, p. 30)

It is critical that the encouragement and support for new entrants and principally young farmers be given a priority far in excess of what is currently available.

The Report of the committee, ‘Young Farmers: The future of Agriculture’, contains a number of recommendations which are worthy of support and which it is the hope of the Official Opposition, the government will accept and move toward implementing. However, the report is deficient in several areas which this opinion seeks to address.

This Dissenting Opinion will address the need for sustainable prosperity to be the best building block which will serve as a positive incentive to attract a future generation of farmers. In many respects, unless there is a future which is attractive to a younger generation of farmers, government programming and access to credit will only mean the next generation will begin where the current generation, to a great extent is leaving off – opportunities contingent upon the cycle of increased debt offset minimally by ever changing and inconsistent government safety net programs. This hardly is a prospect which is appealing to anyone.

To make matters worse support for Canadian farmers is dismal when compared to the support to the agriculture sector provided by our major competition in the United States.

There are two aspects which the main report touched but did not expand upon adequately. They are:

• Failure of current safety net programming to address the needs of the farm community
• The reality of a globalized agriculture sector which has moved further and further away from any principle of a fair trading arrangement.
• Need for a comprehensive National Food Policy

Each of these was touched upon during the course of the hearings by the committee and have been referenced in the report of the committee. However, there is the necessity of ensuring that each is given greater emphasis given they are the cornerstone of any future agricultural sector in Canada which is both broadly based and provides the kind of economic support necessary to sustain itself.

GOVERNMENT SAFETY NET PROGRAMS

One of the key issues which places constraints on the future of farming is the ever increasing debt being carried by the farm community across Canada.

According to Statistics Canada farm debt now stands at $63 billion dollars which had increased by almost five percent from the previous year alone! The indebtedness of our farm community continues to accelerate and worse with a federal government that was supposed to ‘put farmers first’. The situation has been one in which while U.S. farmers have seen debt increase by twenty percent over the past couple of decades, Canadian producers have faced a tripling of their debt levels. (“BMO sounds warning bells on interest rates”, Ron Friesen, AgComm.com, June 21, 2010) According to Statistics Canada farm debt has increased by $12.8 billion since the current federal government assumed office. (Farm Debt Outstanding – Agriculture Economic Statistics, 21-014-XWE, May 25, 2010) This situation has shown no signs of abating let alone reversing. For anyone looking at the prospects of farming as a career, the issue of farm debt and the inability of the current government to in any way deal with this situation is not a positive incentive.

With respect to the first the committee during the course of its hearings heard both positive and negative statements and conclusions with respect to the current federal government suite of safety net programming. The reality is that the basic objective behind safety net programming is that those farmers, who through no fault of their own, find themselves in financial difficulties should have recourse to federal programming which will assist them through those difficult periods. Failure to meet that basic criteria on anything approaching a consensus among farmers is indicative of a failure of the programming.

With respect to the governments premier program Agri-stability, here are what farmers from across the country and from a wide variety of ideological perspectives had to say about the program:

With respect to its compatibility with other initiatives from the current federal government there is a serious disconnect with the farm community.

“I have personally seen producers who were eligible and able to take advantage of the interim advance through AgriStability and then receive funds from AgriRecovery. But their dollars were clawed back when they did their AgriStability forms the following year”. (Jay Fox, Manitoba, May 26, 2010, p. 5)

The reality is that given this country’s dependence upon international trade for specific commodities – such as grain for example – if the playing field cannot be leveled through negotiations, the federal government will have to respond through programming, the current set of which are not adequate to the task.

“We feel that existing programs need to be reviewed. This is very important in order to protect the grain industry, because grain markets are distorted by international subsidies, and this can lead to very long periods with low prices. This makes things very difficult for producers. Our simulations show that current programs would have provided very minimal, insignificant payments in the 1990s. The solution that our federation would like to see involves a risk management component in the AgriFlexibility program. This would be in line with the request made by Canadian farm stakeholders when they were consulted in 2008. We believe this would be a cost- and risk-shared program. This would mitigate the impacts of international subsidies on grain markets that Canadian farmers are subjected to.” (Luc Belzile, May 10, 2010, p. 4)

The current federal government has put forward a number of programs while intended to respond to a variety of differing circumstances have often failed to reflect the operations they were supposedly designed for. This situation has contributed to a sense among many producers of having programs designed for them rather than by them.

“We have chose not to participate in Agristability because of the administration required and because it does not work for our farm structure.” David Nagel, May 31, 2010, p. 3)

While it may appear repetitive, it is critical to have on the public record the fact that the current round of federal safety net programs have failed to address all of the troubling concerns out there. The following provides a cross country roundup of some of those concerns:

To provide context here are some of the statements made before the committee:

First of all, our current AgriStability and AgriInvest programs are not a solution. AgriInvest is nice. It provides a little money, but it's not enough. And the way AgriStability is set up, if you have two or three bad years in a row, that's it, you're done. It's not a helpful program.

David Machial, B.C., April 26, 2010, p. 3

What was CAIS is now AgriStability. It's the same idea, roughly, but it still doesn't work for my operation. Anyone who grows average to above average crops and is diversified will almost never get a payment. Usually the losses incurred from one crop will be overshadowed by the rise in price of another. So your margin never changes, even though you budgeted for an increase based on current prices.

Alan Brecka, Alberta, April 27, 2010, p. 16.

The current business risk management programs don't work for beef producers. I'll talk about a couple of things. The AgriStability program—one of the other fellows talked about it—actually penalizes guys who want to diversify their operation, and it actually promotes people doing one thing, building up margins, taking a big hit to collect a payment. We don't need programs like that. That doesn't help our industry.

Ryan Thompson, Saskatchewan, April 28, 2010, p. 7.

Let us talk about the AgriStability program as it stands today. This program might work in a crisis that lasts a year or two. However, when crises persist—like the one beef producers and pork producers have been going through and the one that hit the grain production sector a few years ago—this program no longer works. That is why some organizations have started a third program called AgriFlexibility, which can give the provinces the chance to change the program that does not work in the long run and do something better.

William Van Tassel, Quebec, May 10, 2010, p. 7.

Immediate needs of our farm businesses must be addressed to stabilize the grain, horticulture, and livestock sectors. This is most appropriately done by correcting the AgriStability weaknesses, which have not enabled proper risk management since its inception in 2008.

Ernie Mutch, Prince Edward Island, May 13, 2010, p. 5.

While some witnesses did acknowledge support for the government’s programs the critical issue is that unless the federal government develops a more holistic approach to programs to assist the farm community the uncertainty will remain.

Time and again we have met with representatives of the farm sector and with individual farmers who have expressed deep frustration with and mistrust of the federal governments programming as well as with the manner in which those programs were developed. This must be brought to an end.

RECOMMENDATION

1. There is the need for the farm community to have a direct buy-in to take a stake in the ownership of the safety net programs which are required. What is required is for the federal government to begin with a ‘Clean Slate’ to the building of new safety net programming.

In furtherance of this recommendation, we call upon the federal government to hold hearings across Canada with farmers to review the adequacy and or inadequacy of the current suite of programs and to commit to adjusting those programs to meet the needs of the farm community.

ISSUES OF GLOBAL AGRICULTURE TRADE

The current reality of agricultural policy in Canada is that trade is the basis upon which so much of our success is based. We are a trading nation and thus we are to a very great degree dependent upon access to foreign markets that fairly requires a level playing field.

In short, free trade may not always constitute fair trade and it is the latter which is now an initiative which must take precedence.

The reality is that in the U.S. alone the use of a variety of direct subsidy programs have resulted in the U.S. agriculture sector benefiting by close to a quarter of a trillion dollars over the past 14 years - US$245.2 billion . This for a trading partner that entered into a North American Free Trade Agreement quite committed to ensuring that they would continue to protect their agriculture sector regardless of the impact upon their trading partners.

More recently the European Union has developed a new direct payment program which will ensure that producers have access to a benefit of more that 36 billion Euro’s in this 2010 year alone.

Canadian farmers have no similar programs which could adequately compensate for the kind of assistance provided to those producers who are in direct competition with Canadian producers.

International trade is one of the engines of growth for much of the agricultural industry.

“If we're in what I call a corporate farming system, which is international trade, all the stuff moving, which is based on cheap energy, which we still have, then if we're talking of saving small farms, we're not going to save a lot of them. You're going to save a bunch of them as heritage, for people who want to support a heritage thing, which is only going to be a small portion of your population. A small portion of your population's going to be willing to pay those guys more because they're going to get a provenance value for it, right? If you're talking about the mainstream, producing food for basically our population, you're talking about corporate farming, because that's the model out there. We're dealing with corporations. If we're not corporations, it's not going to happen.” (Mark Sawler, Nova Scotia, May 12, 2010, p. 17)

The role and function of subsidies was well articulated to the committee in testimony presented in Ontario:

“Subsidies have a history of allowing agricultural production to continue that would not under regular circumstances continue to happen if there were not a cash subsidy payment to encourage it to continue. So we now see how government policies, unsustainable production methods, and subsidies have led to the state of the food system that we are supplied with.

Large multinational food processors are delighted to have this type of food system that we have in North America because it allows them a continuous supply of cheap raw materials. It allows them to have captive supply because of the volume they purchase and because governments continue to subsidize producers at the farm level, with no incentive for farmers to continue to produce such stable crops as corn, wheat, soybeans, and cotton, thus keeping the market price for farmers below the cost of production and unable to create a profit from the marketplace alone.” (Sean McGivern, Ontario, May 4, 2010, p. 19)

Testimony was also given expressing grave concern about the level of corporate concentration and the consequences this has on the primary producer. This is, by no means, a new issue. It is, however, an issue that any government which has as its sole and only mantra free trade at any cost, is ill equipped to address.

The reality, as expressed during the committee hearings, is the difficulty in ensuring that trade is expanded while recognizing the necessity of developing a national food policy which reflects the growing demands of Canadians.

“It's obvious that trade built this country, and we have to continue to trade, but we have to have a fair basis for trade. We also know that our biggest customer—and we're also their biggest customer—is the U.S., and they're not fair traders. In my business, we make the most money when we can trade with the Americans, but for the good of Canadian agriculture, we need to protect our own food supply.” (Layton Bezan, Saskatchewan, April 28, 2010, p. 26)

The issue of the Canada – European Union Free Trade negotiations are something that requires far greater analysis with respect to the impact it could have upon our agriculture sector. There are of course opposing views on this issue:

“We also have high expectations with the EU free trade negotiation. We have commissioned a study to determine the potential opportunity that duty-free access into the EU would create for the Canadian beef industry. While the study is not yet complete, early indications suggest that significant opportunity will exist” (Travis Toews, Alberta, May 26, 2010, p. 1)

However, that expression of optimism was countered during the hearings by the reminder of what Canada and Canadian farmers have encountered as a result of previous trade agreements.

“If you want to have free trade, you need to have fair trade. We don’t have that.” (David Machial British Columbia, April 26, 2010, p. 3)

The future of our farming operations, and the opportunities which this industry provides our young entrants should be based, in part, on preserving and building upon our strengths. One of those strengths is clearly supply management. Time and again support for supply management was presented to the committee. Unfortunately, there remains a question as to the current government’s sincere support for supply management regardless of the rhetoric they use.

Brian Lewis, a farmer in Ontario, indicated that supply management provided him with assurance of a return on his investment, something which provides his farming operation with a degree of certainty.

“Supply management is the only thing that allows us to get our $1.40. It's not the be-all and end-all, but it does help us to get some of that return on investment. I think it actually does work for family farms, and I think it does need to be supported through the trade talks.” (Brian Lewis, Ontario, May 3, 2010, p. 1)

In this regard the ongoing campaign of the current federal government to undermine the Canadian Wheat Board (CWB) seeking its eventual demise has broad and negative implications. To date this federal government has unsuccessfully used every devise including those which have been challenged on more than one occasion in court to undermine what it has a legal obligation to support. During the course of the hearings in Saskatchewan the manner in which the CWB should be supported and left in the hands of those who manage it in accordance with federal legislation as well as the manipulation by the federal government to undermine the CWB was expressed as follows:

“With regard to the current government spending our tax dollars fighting a battle against farm groups on the Canadian Wheat Board, it's frustrating to see them spend our money in both the media and the courts when we already have a mechanism in place; if the majority of farmers wanted to, we could get rid of the Wheat Board. We elect the board of directors to do what we want. We elected eight of the ten that we are given to elect as pro-Wheat Board. We already have a way of taking care of this, so maybe those dollars would be better spent somewhere else.” (Drew Baker, Saskatchewan, April 29, 2010, p. 3)

RECOMMENDATION

2. It is critical that the federal government take an aggressive stance with respect to defending our producers in the face of the massive subsidization and direct support in the U.S. and EU governments provide their producers. Either the federal government take direct action under the provisions of our trade agreements, or it undertakes to match, through new programming the support the U.S. and EU provides their producers.
3. That the Standing Committee on Agriculture undertake a full review of the current federal governments negotiations on the Canada – EU Free Trade Agreement on an urgent basis and report its findings to the House.
4. It is critical that the federal government state categorically its support for our supply management system based upon the three pillars of production management, predictable imports, and pricing mechanism each of which ensures quality food products and a reasonable return to producers and that it also declare its support for the Canadian Wheat Board as it is currently constituted recognizing that it will be the farmers of western Canada affiliated with the CWB who will determine its future.

NATIONAL AGRICULTURAL POLICY – OR NATIONAL FOOD POLICY?

There is a growing question as to whether we should have a National Agricultural or National Food Policy. The two may sound similar but they are not.

“This country needs a long-term food strategy. We need to define some goals and put in place a process to make them happen. This strategy development is not government's job. The development of a long-term national food strategy is the agriculture community's job. Once the agri-food industry stakeholders come together to define a national food strategy, we will need governments, both federal and provincial, to work with us to make it happen. This food-based strategy is being developed at the national level now, and we are optimistic that government will work collaboratively with the agriculture community to meet these long-term goals so that the future can be more secure and encouraging for today's young farmers.” (Mike Nabuurs, Prince Edward Island, May 13, 2010, p. 5)

Questions were raised by witnesses at the committee about the framework within which federal government assistance to producers should be structured. One proposal was put forward in Quebec where the reality of increased assistance was referenced. The manner of its delivery was then outlined::

“Should this assistance not be part of a national agriculture policy that is very precise and structured? I think that is what we should look at, a Canadian agriculture policy.” (Richard Lahoux, Quebec, May 10, 2010, p. 21)

The reality is that farmers are price takers and have little control over the cost of inputs or the price they receive from the marketplace. The consequence is evident as expressed by a farmer in rural Ontario.

“The mood out in the countryside, I'd call it cynicism. We've all become a little cynical. We're dealing with the consumer. They want cheap food. Everybody wants cheap food, but what gets us, I guess, is that our farmer's share of that food basket keeps shrinking. Somebody else is getting the money ahead of us. We're dealing with large multinational corporations; it doesn't matter whether we're buying or selling. We've been getting gouged by some of these corporations. (Keith Kirk, Ontario, May 4, 2010 p. 4)

This sentiment was echoed in Saskatchewan namely that the primary producer as a result of increased globalization as well as corporate concentration have found themselves in an ever increasing precarious position.

“To operate a modern grain farm requires machinery, fertilizer, herbicides, seed, fuel, rail services, and borrowed capital. These services and goods that we must have and cannot farm without are all controlled by a few transnational corporations who seem to be more powerful than many governments. During the last few decades, these agricultural corporations have amalgamated, consolidated, and bought each other out, to the point at which they almost are able to perform as a monopoly, and often do. Competition between the few agriculture transnational corporations seems to be a thing of the past.” (George Hickie, Saskatchewan, April 28, 2010, p. 9)

What is required is a holistic approach to the development of a national food policy.

RECOMMENDATION

5. That the federal government move toward implementing the following:

·         Healthy living, including an $80-million Buy Local Fund to promote farmers markets and home-grown foods, a $40-million Healthy Start program to help 250,000 low-income children access healthy foods, introducing progressive health labeling and tough standards on trans fats, and launching a Healthy Choices program to help Canadians make informed eating decisions;

·         Safe Food, by implementing all of the Weatherill report recommendations and investing $50 million in improving food inspections and ensuring imported foods meet our tough domestic standards;

·         Sustainable farm incomes, with a Clean Slate Commitment to build practical, bankable farm programs in partnership with farmers and restore AgriFlex to offer regionally flexible programs that help meet the costs of production;

·         Environmental farmland stewardship, by strengthening Environmental Farm Plans, improving fertilizer and pesticide management, and rewarding farmers for their role in clean energy production and protecting wildlife habitat; and

·         International leadership, to promote Canadian food internationally and expand Canada’s share of high-value export markets while also fostering food security in Africa and the world’s poorest nations.

LABOUR NEEDS

The committee report in its conclusion states that “agriculture has a lot to offer to young people as a career choice.” One point that was not raised during the course of the committee hearings was the kind of farm labour requirements of our agriculture sector will require in terms of skilled workers.

The Canadian Agricultural Human Resource Sector Council has put forward an estimate of labour requirements in the agriculture sector in the coming three to five years. The projection they have brought forward indicates that primary producers have indicated they will need to fill more than 50,000 non-seasonal positions. The Council also indicated that in the coming years there will be a need for 39,000 farm workers on a seasonal basis. Clearly there are opportunities within the agriculture sector, specifically with respect to primary production. What has been lacking is a serious commitment on the part of the federal government to work with stakeholders to provide the skilled labour force the future of agriculture in Canada will require.

CONCLUSION

The current Conservative government has failed utterly to respond to the needs of our farming community who have been struggling to find effective mechanisms to attract the necessary workforce to support those farm operations in order to develop and increase their economic viability.

The future of farming and the future viability of those operations upon which our young farmers embark upon could be sustained and further supported if there was a skilled supportive workforce.

RECOMMENDATION

6. That the federal government in cooperation with industry stakeholders and the provincial and territorial governments develop a policy and implement programs which seek to provide the educational infrastructure to assist in the development of a skilled labour force to address the needs of our primary agriculture producers on both a full and seasonal basis.