Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 23 - Evidence

The Standing Senate Committee on Agriculture and Forestry met this day at 5:32 a.m. to examine international trade in agricultural and agri-food products, and short-term and long-term measures for the health of the agricultural and the agri-food industry in all regions of Canada.

Senator Leonard J. Gustafson (Chairman) in the Chair.

[English]

The Chairman: We have with us, from the Canadian Farm Business Management Council, Anne Forbes, President, and Jim Laws, Executive Director.

Please proceed with your presentation.

Ms Anne Forbes, President, Canadian Farm Business Management Council: Thank you very much for the invitation to speak to you. We welcome your questions and the opportunity to give you more information, either through correspondence or another appearance if there are areas you want to explore further.

The Canadian Farm Business Management Council was established in 1992. It is the only national organization that devotes its entire efforts, energy and resources to raising the business capability of farm managers.

In 1992, the organization consisted of representatives from each province. In the last few years, the territories have begun to come on stream. We are a board of 23, representing provincial ministries and producers from across the country.

I am a primary producer with my husband. We milked cows for 17 years and enjoyed the dairy industry. However, we ventured out and are currently running an aquaculture operation. I would be happy to answer questions about that on a one-to-one basis.

The first issue I would like to address is the phenomenon of succession planning. Billions of dollars of assets will be changing hands over the next 15 years. One of our priorities is to ensure the success of this process.

The next issue is speed of change. Change is inevitable. We will delve more into the specifics of change and what it means to our farming population, but it is the rate of change that concerns us. I live with this situation on a day-to-day basis in our business. We need to help farmers understand how to monitor their horizons in order to get the appropriate information and to know what to do with it.

The third issue is the level of business skills. Our organization would not exist if farmers had all the skills they needed in today's world, but the fact is that the sophistication of farm business is constantly increasing. It has become much closer to that of other businesses.

Information management is a huge phenomenon. I am concerned about what people do with information when they get it. We have come a long way in managing the inflow and outflow of information, but the important aspect is what is done with information received in order to move our businesses into a more sophisticated sphere.

It is no surprise to anyone that food security is an issue. It has gained importance since September 11 and we need to hang on to that.

Farming has become a sophisticated business of food production. It is also a risky business. I know of no business that is more risky. The farmer runs the risk all the way from the farm to the consumer's plate, and there are many days when that does not feel very good. We must learn to understand risk, to mitigate it and to manage it.

The next issue is change - we will talk a lot about change in our presentation. What is change? We have seen a shift from one of production to one of demand and being pulled into the sphere of "what is it that people want?" When I speak to producers on a one-to-one basis, I use the words "nimble" and "resilient." We must be nimble and resilient in reacting to the fast-changing demands of consumers.

With regard to market volatility, the highs are higher and the lows are lower. We have never seen such disparity. We must address that.

Another issue is farm food industry restructuring, which means that we are not just in the business of producing food. This began when we first discovered that we could produce more than just for our own family's needs, as we did hundreds of years ago. We must recognize that we have to add value to our products. We have to bring our food product up the value chain.

There are fewer input suppliers and fewer retailers. That is concentrating in the hands of a few. Vertical integration is increasing, so our choices of where to go are reduced and the control becomes greater.

The biotechnology revolution is another issue we must deal with. Biotechnology is a word that many people do not want to talk about, but it is a reality. We must recognize it and find out what consumers in this country want. We do not want to steer farm production into that sector if it will not be accepted by the consumer.

With regard to e-commerce, it really has not lived up to its expectations. We were told that it would replace some market constraints, but it has a long way to go before achieving perfection.

On international trade policy, we have hit the next round and we do not know what the outcome will be. However, we will have to deal with the outcome regardless of what it is.

One area in which we do have some opportunity relates to national policies. We are largely funded by Agriculture Canada and are working closely with their policy group. I will share with you the results of some work that we have completed. In fact, you will hear the results before Agriculture Canada hears them tomorrow. I hope that you will pursue the document that we will soon provide to you. It is full of information to help you understand the situation.

Our understanding is that this committee believes that in order to have a sustainable agricultural sector, it is imperative that strong and vibrant communities exist to support farmers and their families. I will suggest that we might challenge it. If we look at what we believe - and I will turn it around and focus your efforts into concentrating on a healthy primary sector - then we will have a healthy rural economy through the value-added and spin-off through the economy.

That is what we will challenge throughout the presentation until we get to the question period. In fact, I do not mind questions en route. I am comfortable with that.

How do we sustain a healthy a viable agri-industry? Internal policy is extremely important. I do not think I have ever had the opportunity, as I have had recently, to work with Agriculture Canada on its policies. We have an avid deputy minister who is intent on putting the cart before the horse. We will look at some of these areas in the policy and address what is missing and what needs to be wrapped up in that area.

With respect to the external policy, we are an export country in agriculture products. We have to balance the inputs. We are watching the lumber industry, and we watched the potato industry almost completely crumble in Prince Edward Island last year. We have to be stringent, politically savvy and capable at the helm.

With respect to developing a program to meet the needs of the different farmers, I believe that our past policy has tended to be universal. We treated every farmer across this country the same, and we tried to provide a safety net equitable to whatever their net income was or was not. In fact, now there is the wisdom that it needs to be addressed differently. I will share that with you because that is, in part, why we carried out a study on Agriculture Canada's behalf: to understand a component of the sector that never has been addressed.

Where are the opportunities? I do not want this whole thing to be negative because I am excited about agriculture, and I share the ups, the downs, the highs, and the lows because it is a tough industry, and we are fooling ourselves if we do not understand that.

Here are the opportunities. Farmers leading farmers, I think, politically, is a winner. We have great models out there who have brought their industries further up the value chain - they have moved the industry forward, and they will, in fact, be the 20 per cent that produces the 80 per cent. That is not to say that we will neglect the rest, and that is what we will share with you.

For bio-diesel production in Canada using plant and animal fats, we need the end product recognized, exempt from fuel taxes as is ethanol and natural gas.

To capitalize on Canada's already pristine image of our products, it is there. We just need to use it. Everyone believes that Canada is clean and free from a tainted environment. We will not answer the question whether it is or not because we are working hard to keep it that way, but let us use the image we have and carry it forward.

With respect to positioning ourselves further up the value chain, you have heard that two or three times, including non-food uses. This will be for everyone. There are virtually three ways we can change what we are doing on the farm. We can try to be more cost efficient, mostly by becoming larger and a low price return commodity basis. Second, we can segregate a market niche and focus our energy and resources into developing something that is very specific, recognizing that at the same time you think you have a market niche, you know that someone is right beside you and they will differentiate what they do, how they do it and that gives them a different end result. The third thing you might be able to do is completely diversify. Again, it is not exclusively an answer for everyone. In fact, there are good examples where farms have used components of each one of those three strategies.

I will not leave out raising the business skills of farmers because that is our focus. I do not want to denigrate in any way the skill level we have. Farming is an industry that has had virtually no entry requirements. Therefore we do have a population of farm managers who are: demographically aging; generally do not have a lot of post-secondary education. We have a segregated strata of groups within our producers who are prepared to go out and continuously learn, versus those who we call "disconnected."

As far as working with young people, I know we are dead in the water if we cannot attract people into our industry. However, I think we can go further and can excite young people about agriculture that are not even in the industry if we use the right programs at the right time of their life. We can use them as volunteers and get them out there to understand where their primary economy comes from. We know where it does.

What are our strengths? One is our huge resource base - both land and water. Therefore, please, do not sell our water. It is probably going to separate us from other high producing countries in North America. Do not sell it, please, because we need it.

We have discussed the reputation of our agricultural products outside the country. There is access to good markets and diversified industry. Regarding the workable farm size, I will go back to that word, "nimble," because, first, we are diversified and, second, we are not so large. I heard a presentation about Brazil, just a matter of weeks ago. Watch out, they are a force to be reckoned with. Their size of land base has increased to 25,000 hectares on average. They have maintained their rural community. They have taken their people from the land into the community where they live and receive services and, in fact, they just take the workers back out to the farms. There is not a housing establishment, but once they get the infrastructure in place, fully utilize the Amazon and get to the eastern side of the country, they will be a force to be reckoned with, more than the United States.

What is missing is a food safety system for farmers, "gate-to-plate." What does that mean? I do believe we have been lucky as a nation in that we have not had more food safety issues. If one listens to a technical scientist, I can tell you that we have been lucky. People think we have a system, and the truth is we do not and we need it. That is what I call the cart before the horse.

We need individual environmental plans to protect and the marketing segregation to enhance. In our business in agriculture, we get questions such as, "Are you environmentally friendly?" We knew the design of setting up our agriculture system would set us apart from other entrepreneurs of the same commodity. We need those plans because we have the infringement of the rural-urban innovation, and it is real. We bought land purposely as cheap insurance to keep someone from building close to our agriculture unit, knowing it would be an incredible nightmare if we did not. We had no choice.

The strategic approach to business is something that we have spent a great deal of time on in council. It is strategic thinking. I do not know how many times I have been asked, "How do you teach it?" It has to be modelled. It has to be in the face, and it has to be constant. You must develop a whole process. Businesses do strategic plans. Governments do strategic plans. When I walk out of those sessions, I ask myself why we are not putting that to work in our own businesses.

Therefore, I do suggest - and my term is "third-party objectivity" - that we invite people from the outside world, from other sectors, from other businesses and ask for their objectivity. We will ask: What it is that they recognize in our business that we do not? What do they see that we have that we could optimize, for example? Strategic thinking is very critical, and it will not be for everyone. However, it certainly will set the producers that will be successful.

Lifelong learning is not something that comes naturally to the producer community. They have learned by skill and by generation to generation and management transfer. However, we are talking about business skills that are much more sophisticated, no different from the Nortels of the world, where you have to step back and say, "I know I cannot raise that kind of capital. I know I need an alliance with someone who can do it. I need another arrangement so they can take the risk for me." We are, in some ways, very capitalized in our supply management commodity. They will ask, "Why do you spend money on that stuff you cannot even see?" We will leave that one at that.

Patient capital - these are my own words - is a category of capital that is not the initial start-up capital. Five banks are still interested in agriculture. The wonderful Farm Credit Corporation is becoming very aggressive across the country in more than agriculture. However, what is missing is the piece in the middle between start-up and venture capital. Our businesses traditionally do not give us a return that will very often entertain venture capital. It is just not going to be there. We need something in the middle, and I call it "patient capital" because of this diversification that we talked about earlier. The idea of setting up alliances requires time, because you will position yourself. You will go forward and take two steps back. You will go forward and then go sideways. That is the patience I am talking about. We are working on that now.

I have a long-term concern that our banks will want to back out of agriculture if we do not address the environmental plans. There is where it is risky for them. At some point, they will be deciding whether they take on clients or not, depending on how they have set up their environmental plans.

We know what has happened in the last several weeks. We know we are off on another round of negotiations. We know what they are like. They are tough and arduous. We have to encourage our politicians to stand tough. We do not know what the outcome will be, and that is what I am calling the new reality. What do you do as a producer when you are faced with a new regulation that becomes a new market constraint or a new business that could put you out of business the next day because they are a national chain and they come out with a private label? What do you do?

This is what you have to do: you have to step back and bring in resources. You have to rethink what you are doing. You can no longer do it yourself. That is how sophisticated it has become.

We feel the best option is to enhance the human capital and its capability. We talked about the mentoring, and I know we will be putting a lot of emphasis on that. We can work constantly at all levels, all strata of the farm managers, to keep working at raising their business capability.

It will only work for those who want to do it. We have an aging population. I think the average age of Canadian farmers is about 57. It has gone up. This is the stratum I keep talking about. Sixty per cent of the farmers have the will to change. Those are the people that we know we are in contact with. We are networked into that group. The top 20 per cent will move forward at their own pace and will seek out what they need.

I have agricultural excellence there. This is something we do not focus a lot on, this top group. It is unfortunate, because we do not have the resources. This weekend will be the second Agricultural Excellence Conference. The first one was exciting, and this one is also exciting. You have the top leaders of agriculture at that conference this weekend in Montreal. That is something we do, but our focus cannot be on them.

We actually focus on the next group, the middle 40 per cent. Those are the people that use our products and services all the time. We call the bottom 40 per cent "disconnected," because it is very difficult to come up with a word that does not denigrate or demoralize. If anything, this is the group where we have to assure that we maintain dignity. When I say, "disconnected," what does that mean? It is just that. They are not connected to the outside world. They are standing still, in some cases stuck. In some cases, it does not matter. They may be well-established people that are lawyers and doctors in town and just want to live on the land, and we certainly will not worry about them.

We were asked by Agriculture Canada to manage a study, and we will present the findings tomorrow. The study was based on Ipsos-Reid, who determined that 41 per cent of those farmers resist change. I do have to say at the outset that it is from B.C. to Quebec. The eastern part of Canada was not studied, and it probably had to do with resources, but that is the population we are looking at. They are not likely to be innovators or early adopters. Their internal focus and limited resources are directed mainly at their operation or off-farm income. They are not actively seeking help, nor are the helpers actively seeking them. They are passively engaged with experts, and for the most part are not even engaged at all.

This is what it looks like. It is not homogeneous. You do have people with high-equity positions. I would not be able to tell that they would be in this group. Their banker would not be able to tell because they look pretty good on paper. Their incomes, educations and regions are all over the place, but it is a large percentage. This is the point I want to make. They have slightly lower farm sales. Half of this group, B.C. to Quebec, were beef producers, 62 per cent in Western Canada. Half of them were unlikely to invest or expand, and they were slightly older than average.

Darwin said: "It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change." The psychology of change is the part I hope you find interesting. David Irvine is a gentleman who has worked a lot with farmers in Western Canada. He has prepared this simple graph showing the stages of what people in transition go through.

The first one is where they are happy and comfortable. Everything feels good. We are okay. Then we move into some external or internal - but mostly external - force. It could be the banker, it could be the market, it could be September 11, and the internal force - the only thing that could happen inside - is that they may have an inward vision that they want to be somewhere else than where they are.

Then we move into the chaos stage. When I am talking about programs, I say, "Stay out of here, folks. It is rough and rocky." You see people who are erratic. It feels chaotic. We often see acute trauma and depression in this stage. There is no point of any form of intervention. When they bottom out, they start to reflect, and they get enough energy to start to look at decisions and options if they get some help, and that is the big "if."

Then the whole process of rebuilding starts to take place, and they start to feel comfortable, and they are back in a culture of trust. Then we hope that they have attached to something new and are moving forward, and let us hope that the wake-up call does not come too rapidly and they have to start this whole process again.

It is a matter of resilience. Not everyone moves through change quickly. In fact, this study will point out to you that the characteristics associated with this group are such that they do not like change. Is anyone familiar with Myers-Briggs personality typing? Have you ever had it done? It streamlines the kind of personal characteristics or traits you have. It really is helpful to understand your makeup, particularly if you are working in an organization, because you will understand, oh, that is why that gentleman talks the way he does.

The typing is something like this. Here is the extreme. This 41 per cent group of farmers, typed out as introverts, sensors, thinkers and perceivers. The contrast is on the other side. The report will spell it out beautifully for you. This is just the contrast of the people that develop programs. For example, I type out INTJ. I live with an ISTP. The chasm is interesting when you put that together, because I am a long-term planner, and I am very factual and I want timelines and time frames. Over here, I can tell you that it is the here and now that counts, and it has to be felt, thought about, touched - very serious thinkers and perceivers. Over here, it is just the opposite.

Senator Day: You type out as an introvert? Is that what you are saying?

Ms Forbes: Good question. Slightly introverted. At the time, I thought, how can that be? I questioned it myself. However, I understand. When you get the study, take a look at an introvert. I do type out with the characteristics of wanting to step back and look at things methodically.

What assumptions do we make, and what were we trying to look at? Government programs or interventions have been successful in the past to influence change, both in agriculture and other sectors. That was an assumption that we went on to prove or disprove.

The cost of government intervention that is necessary may be greater than governments are willing or able to commit. Therefore, we have to understand what dollars would be required and do not think of traditional programming because that is not where we are leading. There are consequences if governments do not help the 41 per cent.

This is interesting. Las week we met to listen to the results and then we tried the test on members from group of Albertan farmers and farm organizations. With our first test, what came out of that group was that the risk is this: if you have one bad apple that does not comply with a food safety regime, it can wipe out a whole industry. It has already been proven in greenhouse tomatoes in southern Ontario. The second component of the risk is that this group will grow to be greater than 41 per cent, so we cannot ignore it.

There is no question that the characteristics or principles for an economic and social program are different. The highlights on which I ask honourable senators to concentrate are the program development principles - the ones to which the programmers must adhere: the characteristics of the group and the characteristics required in the programs. I will give you some examples.

There is quite a component on the rural issues. The highlights came from experts. These are little gems - particularly on the rural side. Please take note.

The risks of what will happen if we ignore this group will increase. The complaining and venting that you see on Parliament Hill is a natural process. I would be able to sit down with Mr. Vanclief and say that now I understand why that must happen. These people are in a chaotic state; they live in fear. That is why they drive their tractors from wherever to Parliament Hill. If the minister can say, "I hear you and I understand why you are here," that is what is important to understand.

The government role does not need to be interventionist, but they do need to support and create the environment. You will wonder what I mean. I am saying that traditionally we have intervened by saying, "Here is a cheque. Hope that works," but it will not work because it will not fit different needs for different farmers at different stages of whatever they are going through. Therefore, it will be comprehensive. I would guess that one of your questions would be, "Is it doable?" We will get to that. I hope you ask that question, because we have some ideas.

These people do not gather in groups. They do not leave their farm kitchen. They do not leave their comfort zone. They will not go to a seminar, so our traditional methods will not work. The 41 per cent do not actively seek information. It does not matter how many newsletters that Mr. Laws spends hours putting together - it will not matter for this group.

We must do it differently. In missionary work, it is difficult to measure impact or results. However, since this study, I feel more positive about how we will approach the problem. There is a need to break out of traditional programming without forgetting the 59 per cent, which is the group we get to work with because they are the ones who will pull the other group forward and they also need support.

In conclusion, we do all need to work together. We do need to work across departments together. I am currently in a position where I will be leaving here and going to an aquaculture reception. If someone asks what I do, I say that I invest in the food business because that is really the place to which we have come. When we talk about foods, whether it is biotechnology or bio-diesel, that is our business and we have to bring ourselves there. It will take a large amount of ingenuity to stay out in front, and it will take support.

I would like to close at this time. I will be happy to take questions. I will be as open and honest as I can.

The Chairman: Thank you, Ms Forbes. I did not see anything in your presentation that mentioned commodity prices. You tell me you are a dairy farmer.

Ms Forbes: I was a dairy farmer.

The Chairman: If we took away the protection of the marketing boards and said, "You compete in the world market," how long would you last?

Ms Forbes: Not very long.

The Chairman: Commodity prices are important, therefore, and that is a problem. Farmers just do not have their hands on dollars in the global economy. Until we address that, you can come up with all kinds of fancy ideas, in my opinion, that will not go very far. I know our farmers pretty well and they are innovative. They work harder than most people in any industry.

Ms Forbes: Yes.

The Chairman: Unless we can address that part of the problem, a lot of fancy ideas will not solve the problem. I was disappointed, I must say, that there was nothing in your presentation on commodity prices. That is the problem.

Ms Forbes: I did mention commodity prices. I said that there are three ways to address a change in your business, and one was, with a low commodity price enterprise you can get bigger, but then you can only get so much bigger.

The Chairman: We have tried that.

Ms Forbes: Right. Then we talked about diversification, that was the second way, and the third way was to find a market niche. That is the other question you have to ask at the end of the day. It is a conscious decision and it is your choice to determine what you will do. No one should influence what you do. At the end of the day, if it is not feasible for you to farm, then that is what will happen. Not everyone can do that.

I was in Saskatchewan several weeks ago and I was impressed. I certainly had some trepidation because I think long and hard about what would I do if I were in Saskatchewan. The only answer I ever come up with is that I know I would not continue to do the same thing the same way and get the same result. That is all I can I tell you. There was a group of people who were prepared and they were pretty excited. They were in Saskatoon, they numbered about 351, and they were ready to move the industry forward and that was exciting to see.

The Chairman: It is interesting to note that in Saskatchewan right now the big push is on pulse crops. I am not talking about canola. I am talking about peas, beans and these crops. At the same time, the Americans are introducing legislation to move ahead on subsidizing those very crops as they move into North Dakota and South Dakota.

There was a news release in The New York Times last week. Many of our farmers are looking at these niche crops. Last week the president of the pulse producers said we should be growing beans now in the south. Good. We did the canola thing and we have diversified. If the Americans stay with the subsidies - and they will - those farmers will go into peas, beans and these crops. The odd one might make it, but they cannot fight against that subsidy. Right now the average American farmer is getting more than Can. $6 for his durum and we are getting $3.17. If that were the situation in the milking industry with those same constraints, would you have a hard time making that profitable?

Ms Forbes: I do not mean this to be facetious, but I think our milking industry will probably be questioned this time.

The Chairman: I agree.

Ms Forbes: Any supply-managed commodity will be in question. I am not really sure how it will make it through.

The Chairman: Senator Tunney is the expert, and he tells me that he is fearful of that.

Ms Forbes: I am fearful of the capitalization of that industry. Five years ago, we sold our cows and quota. I can tell you the value has doubled in five years, and that scares me.

Senator Wiebe: You have presented the agriculture of the future. I think you are right on, but I personally think it is the wrong direction to go. However, it will happen regardless of what we do.

We like to talk about subsidies. We know that subsidies will continue in Europe and the U.S. for at least the next 10 years. There will be a tremendous amount of change.

Big is not necessarily beautiful. As an example, the week before last I visited a flower-growing business in Essex County - that is flowers for homes, et cetera. In Ontario, that industry has ballooned because of new technology and modern techniques. The industry now employs 38,000 people. They told us that, unfortunately, as a result of what they are doing, many of the nurseries that are currently successful will go out of business.

As a corporate group, they can now deliver flowers anywhere in the world with four hours' notice. They are now developing automated technology that will speed up production and be more efficient for the bottom line.

In five years, that industry may employ only half of the 38,000 people currently employed. That, unfortunately, is what is happening in the agriculture industry throughout the world. I need only look at hog barns in Saskatchewan. In 1970, I built a 80-sow farrow-to-finish hog operation. It was one of the largest in Saskatchewan at that time. Today, any person building an operation of that size would go bankrupt before he sold his first hog.

About a month ago, I visited some of the new hog enterprises in Saskatchewan. They look great on the surface. Farmers have banded together, investing $100,000 each, to build these hog barns and lease them to an operator. What happens to the investment of those farmers if a disease strikes in those huge operations? Also, is the farmer becoming a sharecropper?

These are things we must look at. I think, what you are talking about will happen. Unfortunately, because of world trade and what is happening globally, we will not be able to stop it.

You talked about the potential in Brazil. Look at what happens when some of the European countries are allowed into the European Common Market. Poland, for example, could out-produce all of Canada with their land base and new technology.

This scares me because big is not necessarily the best. We will become increasingly dependent on foreign corporations to provide the food we eat. Look at what is happening to our processing industry in this country. Currently, if the border were closed, we would still be able to feed ourselves, with the exception of fruit. However, that will not be true much longer. We are losing our processing plants in this country.

You are making a presentation to the Minister of Agriculture. Have you any advice for him about how individual farmers can transfer out of agriculture rather than transferring within agriculture? You say that within the next 15 years, there will be a huge transfer of assets, and that is taking place right now. What advice can you give to farmers who want to transfer out of agriculture with dignity?

Ms Forbes: Through his policy people, we will be making recommendations to the minister from our study. I am a firm believer that one option is to transfer out of agriculture. People are deterred from doing that because they do not know what else they can do. Farmers do not typically seek help, so they need to learn to trust people. We need to employ the doctors and ministers of the communities, who have the trust of farmers, to help them understand that there are options.

One option might be going back to school. One option would be an EI program to finance re-education. Many farmers could not afford to go back to school while supporting their families. We need support for that. We will not send a 55-year-old back to college because we need to get the best bang for the dollar. Secondary education would certainly be for young people. I know that Agriculture Canada is interested in focussing on that, but people will not move if they cannot overcome their fear. Money is a huge fear.

Assistance programs must be community based. We cannot parachute people in to provide help and advice. The assistance must be focussed, targeted and tied.

It must be understood that if you leave agriculture, you can no longer access the safety net program. It will be for those who stay in the business. I am not saying that we should get rid of safety nets. We need them in times of crisis, but they should not be used on a continuous basis as an alternative to making changes.

We need a strategy of a multiplicity of approaches. It is doable. As I have said to the minister, it depends on how badly you want to do it.

Senator Wiebe: There is no doubt that this proposal is doable. That is quite evident. However, you also mentioned that this kind of program is designed to encourage young people to enter agriculture. What kind of agriculture?

When I started farming, I needed equity of 10 per cent to get started and be successful. Today, you need equity of 75 per cent. When we talk about venture capital or community involvement, we are saying, "We want you to provide the capital so that I can get started." That does not include many young people. The young people who will be involved in the agriculture industry will be employees, not owners. That is not the direction in which I want to see agriculture go.

Ms Forbes: We may not be able to correct that, and that is the problem.

I live in hope of agriculture being able to stay within the hands of family multi-generation farms. However, I do not know what reality will bring. I do not know who will be the farmer or the holder of the assets. I know I have learned recently since we sold our dairy business that we did it right at the beginning. We decided we were not going to invest everything back into agriculture. That is not for everyone. We learned right then that maybe we should be holding back and divesting some of our assets into other areas. It becomes a whole strategy of what you do. Someone said when we started our aquaculture business, "Are you entertaining outside money?" I say, "Yes, anyone's but ours."

The reality is being able to assure them a return, and that is the tricky stuff that we live through - particularly since September 11, even since last week. The playing field changes by the week. I always say I know it will be different when I get home, so I will wait and see what it is like. That is true. It is that dynamic and that fast.

Senator Wiebe: I have three other questions, but I will wait for my second round.

The Chairman: There are only 250,000 farmers now in Canada. The agri-industry has gone to governments making more emphasis on the urban centre. There is only so much money in the pot. I got this from listening yesterday to an economist from the University of Saskatoon who studied these things. He said there is only so much money.

Government decides that they have to have the money from rural Canada. Rural Canada is the producer. You have lumber, oil, gas, agriculture products, mining, water - it all comes from rural Canada. Who is getting the benefit of it? The urban centres.

As we are losing this population, we are driving more and more people in. We just almost had a revolution in Toronto with poor people there who apparently cannot make a living and started breaking windows and so on. I do not go along with that, but those people are hurting.

This is a government decision.

Senator Stratton: I have a short question. Have you identified sources of patient capital? I am interested in that because many businesses have that problem of patient capital. Have you identified sources?

Ms Forbes: I do not generally speak in terms of names of corporations, but this one is a safe one because it is a Crown corporation. It is the Farm Credit Corporation. They have received legislative approval as of June that will allow them to provide that block in the middle. They are short of everything from being a real bank on the operating side. I know the demand is there and I know the pressure is there. I think the vision is there from the corporation point of view, but it is not initiated.

They have not fully developed the programs, but they will make it available. I think it has a limit of $700,000; it can loan that over a reasonable amount of time, not this "Here it is, but I want it right back" approach. We are not getting that from the big five at this time. If we look way out from underneath the ground, I think the big question is, "How long are they going to be in agriculture." I know the Farm Credit Corporation is very progressive, so I can honestly give you that answer. When they will have those products available, I do not know, but they are working hard. They got the legislation in June. John Ryan, who is the CEO, is opening the conference on the weekend with me. I will be the first to ask him when they will be available and get that back to you.

Senator Hubley: Thank you very much for your presentation. Your energy and positive attitude certainly gives us some hope that there are things being done for our farmers.

With respect to the 41 per cent group, are they the farmers who are just going to keep going and going until there is nowhere else to go? On the other hand, are they looking for a way out now? Given an alternative, do you think they would take it? Would that be the turnaround: that they have made a decision to go on and they are starting their climb back up to being a viable farmer? Alternatively, are these farmers quite happy to let things go the way they are going?

Ms Forbes: I have to tell you the study is just the beginning of understanding it. You have to go deeper into the 41 per cent and how it breaks out. However, the greater percentage of it certainly is not the yuppies that hold the land. They are people truly stuck. Some of them think they will be okay because they always have been okay. The government has given them enough to get them through their next operating loan. However, they are eating equity. There is no question. Their machinery is depreciating. The margins are lower and lower. They have a bad year. The impact of a negative force sends them further down the equity chain. I do not think the largest percentage of that 41 per cent know there is an option. They are stuck. I call it a paralyzed state.

That is why the intervention - that is a really strong word - needs to be soft. Can you imagine if I just walked into someone's kitchen and said, "Let's sit down and talk about your situation?" No.

However, it has to happen with someone they know, because they have to first know that they are in trouble. They do not even know that. The banker would know it, so they will come in. However, we have a good chunk of them that look pretty good on paper still. That is just because of circumstances and how they got to where they are, and each one of them is so individual. That is probably what would scare a politician out there in cabinet. I know there are not a lot of friends in cabinet that understand the need to support primary agriculture. I know that.

Recognizing that, I think we have to go at it with a different approach. This study is in fact to support Mr. Vanclief so he can stand up and say, "I will not continue to do it the same way," because he will not get support to just go back and ask for dollars. We feel very good about this much, but we know it is only the beginning of understanding.

Senator Hubley: Do you have any idea, of the 41 per cent, how many would belong to farm organizations or commodity groups - that type of thing?

Ms Forbes: Almost none of them.

Senator Hubley: So it starts even there. They do not participate in the farm community to any extent?

Ms Forbes: There is no collective grouping. They do not go out, and the group does not come in. I know the trend in the west was that there was a lot of learning that took place in the coffee shop, but I understand that that is not what it used to be. "How are you doing, Joe?" "I tried this, that and the other." Even that is not happening because they are not comfortable. They are not happy people. They know that they are in a negative situation, but they are not even prepared to look at it because they are living in fear. That is a very tough place to be. I have been there.

Senator Tunney: Welcome and thank you for coming. I am perplexed because I cannot understand how you could leave the very best sector of agriculture and do anything else. The only reason in my estimation for leaving the dairy industry would be age, and are you far from that yet.

Ms Forbes: The answer is simple. My husband was tired of being a slave to reproductive tracts. That would be his answer, and I had to support him. His question to me was, "Are we smart enough to do something else?" I said, "No question. Don't ask me what it is, but I am prepared to take the time and space to figure it out."

Senator Tunney: It is a fascinating industry, and I have been in it all my life.

Ms Forbes: I love the industry, and I miss it. That is my personal comment.

Senator Tunney: I am disturbed that there is so much criticism of the program and the style in which supply management operates. It is misunderstood and criticized unfairly and wrongly. I wish that other sectors of agriculture could have some of the same rationale, if not the same financial or statistical progress that guides it.

There are people in other sectors who would have nothing to do with time management. It would seem they are giving in to something and it would be taking away their free enterprise dream. I know how serious the situation is for so many farmers. I have worked on the Farm Debt Review Board when it was called that. It is called something else now. One of the problems with it is that not many farmers or other people know that it exists.

Ms Forbes: That would be the Farm Consultation Service.

Senator Tunney: Yes. Bankers do not know it is there, generally. The agriculture offices - and we do not have many of them left any more - they do not know about it now. Therefore, it is not used to the extent that it should be, and the consultation service should be used much more than the mediation service, so that farmers get there before they get into a real financial bind.

The Farm Credit Corporation is perhaps the saviour of farmers who know how to manage. I took the act through three readings in the Senate back in June and we got 100 per cent support when it came to a vote. It did not quite get that in the House of Commons, but that new act is a boon for those who know how to put it to use.

However, here is a problem: Many farmers think they can spend their way into prosperity by buying and investing more capital in machinery that they cannot afford and could well do without. They get on the road to bankruptcy over commitments for machinery that they could hire on a custom basis and save thousands of dollars. You are not giving us any fresh news here about the state of agriculture and the financial predicaments of many farmers.

Ms Forbes: I would like to comment on the financial industry. I am often quoted saying that I am surprised what bankers do not ask for. I interfaced with a banker for a number of years and it amazed me what I do not have to give them for information. I know we have a good track record and that stands a long way, but we need to work with all the professionals. We call it a network. We bring an incredible network to the farmers in this country.

I will refer to the Farm Consultation Service. We recognize that no one knew they existed, so the council teamed up with them and asked what message they needed to get out. We generally are not set up to deal with what I call "acute issues." We are the long-term underpinnings of what needs to happen. Together we developed three pamphlets. Members of our board grabbed people from across the country and said we needed to figure this out. They were mailed out to every farm. These pamphlets contained a checklist on the health of a farm business. I know many would end up in the garbage because they do not even know the health status of their business.

You are right about Farm Credit. They want nothing to do with the 41 per cent we are talking about. I know where their clients are from. We need to address that. Their issues are much more basic because they are not likely to be making their businesses more sophisticated.

There is a large amount of work to be done, but my point is that it is in all areas. One group cannot be targeted. The only group you do not have to worry about, is the top 20. They will pull the industry forward. If we can physically use those people - and this is part of our thinking - and I will suggest to Mr. Vanclief that he physically pay for them to help. One person a farmer trusts is another farmer for the most part. He may not be his neighbour but he does respect other farmers. We must use that because it is a wonderful resource.

Senator Tunney: You so right about that.

Senator Oliver: I have a question dealing with your slide called "What's Missing?" You talked about gate-to-plate and you said that what we really lack in Canada is a food safety system and that really scared me. I was wondering if you could talk a little bit about that. What is missing? What can and should be done about ensuring food safety? How long will it take? Will we all be poisoned before something is done?

Ms Forbes: I will answer the last question first. We have not been poisoned and we are not likely to be. However, I am talking about an accountable system in which we can identify the source of the food so we can mitigate something significant happening. I would think we are talking about a mandatory program. The beef industry has started to initiate a tag system and it is classic. We talked to people last week about the reaction of introducing a tag so you could identify the cattle and that cattle will remain identified right through the pound of hamburger.

Senator Oliver: You can do that now with computer chips.

Ms Forbes: Absolutely. That is what we need to have. The answer to the other part of your question is, we need a system like that. Europe is light years ahead of us. You can go into a grocery store now and dial up through the computers to see what the farmer looked like who raised the beef that ended up in that shop. I do not know that we need to go to that extent, but certainly, in the minds of consumers, food safety is a huge issue. That is upfront and I know that from producing food. They want to know what is in the food. We have to take it right down to the pigment that goes in the feed. They want to know if it is digestible. That is how accountable we need to be.

I did not want to scare you. What I wanted to scare you about is how lucky we have been.

Senator Oliver: What studies are you doing to help speed a process for more farm safety, from gate-to-plate?

Ms Forbes: It is coming down through the policy from Agriculture Canada. They have not come down with a hammer yet, but it is in their framework. Both environment plans and food safety will have something that is connected. In other words, you will not be able to get this if you do not do this.

Senator Oliver: Therefore, will a farmer soon need a licence to be able to plough up a field and do a bit of farming? Would a condition of that licence be that you have in place Hazard Assessment Safety Action Plan, HASAP and other requirements?

Ms Forbes: Exactly. We now have licensed applicators of pesticides. We will need to be certified in every aspect.

Senator Oliver: Will that drive your 41 per cent out of the business?

Ms Forbes: No question. It will drive the top 60 into a lower hole if there is no support to put that in place. What keeps it from happening now is the cost. It is hugely expensive to do an environmental plan because not only do you initiate the plan, but also you find the holes.

Senator Oliver: Now you are scaring me. What will happen to agriculture if you drive all these limited farmers out of the business?

Ms Forbes: First, let me get the horse in the right spot. We will have to do it regardless. If we are to be in the business of food in the world, we will have to do it because Europe have done this and they are already separated from us. The United States is in the process. We must do it and I believe it must come from the government. We will need to provide interest buy down loans, or whatever other form it might take. I am not in a position to be involved in the design. I would love to because I know what helps someone back on the farm who makes that decision. What keeps people from making that decision is the cost.

Senator Chalifoux: I wish to get back to the safety issues and, in particular HASAP. HASAP must be done by value-added small processors by the year 2003, I believe. They are looking at extending it a bit. I live in Northern Alberta, and we have small processors who have been under the health units, looking after their sanitation and doing very well. Now, all of a sudden, they have to come up to HASAP standards. It is costing them $1.5 million. Those small processors are the major economic viability for their communities. If they go under, the whole town dies. Have you considered in your study what will happen, or what is happening?

When we were down in Washington, I questioned some of the senators and congressmen. They said, "Well, that happened here, but they have just gone under." They had no concern about the small communities, the rural communities that are so vital to our survival. Have you studied anything like that?

In Alberta, there is an organization that has a new process of keeping everything enclosed for hog production. It has developed a means whereby the hog would go right into the pork roast, or whatever, and they can identify the hog. That has already been done. There is a pilot project happening. They just signed the agreement in Poundmaker's reserve in Saskatchewan on Friday, and they are in contract with the Japanese. That is another thing that you are talking about identifying. It is already happening in Canada.

What bothers me is that we have a huge processing plant that has the money to get into the HASAP. Have you any idea whether you can meet with Mr. Vanclief, or whomever, to assist those small processors so that our rural communities do not die?

Ms Forbes: I cannot answer that. We use every opportunity of influence that we can. I realize the nuts and bolts of your committee. When we do get to speak with developers of programs, what we have been doing - and I know it has not worked - is universal. I think that is what cabinet has rejected: "Here he comes again; he wants so many millions." However, I think it is through the crafting of who needs to get it, over what period of time and for what reason that will give it the justification. If nothing else, we have to have friends in cabinet. We need sessions like this one with other cabinet ministers because whatever we are doing in agriculture goes across other sectors. It is incongruent.

Three weeks ago, I was filmed at our farm. I was talking about our policy framework. I was looking at Cobequid Bay and I said that at the same time we work on the land issues, I could have a constraint, just because I am on the Inner Bay of Fundy, that will keep me from doing something I am capable of doing because it is not congruent across departments. We have a huge job of doing a better job of what we are doing.

I appreciate that is why a set program will not work. It will have to be for people who need it. The big processors do not need it. It is like us selling direct. It drives me to figure out a way to get the 30 per cent that, if I sell it wholesale, somebody will slap right on it. It will make me think pretty hard. I am unusual. I am not a typical farmer.

The Chairman: Is it possible that we should be investigating the processors instead of the farmers? They are getting 93 per cent of the food dollars and they are billionaires. According to a debate that went on in Saskatchewan as late as yesterday afternoon, they have the numbers and the processors are making the money hand over fist.

The government should be investigating the processors and saying farmers should get a fair share of the food that goes across the table. Until that happens, we are just treading water.

Ms Forbes: That is an interesting point because it boils down to getting a fair return. No farmer expects to be rich, but a fair return is a reasonable expectation.

The Chairman: It used to be possible, but it is not any more.

Ms Forbes: The kinds of elements we talked about tonight will certainly be costly and we will have to hammer the political issues. They are what will put the cart before the horse, and we will separate ourselves from other people.

The Chairman: Will you carry the message that we had better look at the processors to the minister and the government? In their research, they were naming companies that I had never heard of. These companies are making billions. In fact, some of the wealthiest families in this country are in the food processing business.

Ms Forbes: The Westons.

Senator Tunney: They turned a 9-point something per cent profit the year before last. I saw their financial just last week. It is more than 19 per cent.

Senator Oliver: Who was that, Senator Tunney?

Senator Tunney: The Weston group retailers. You might not know them. They are not in the Maritimes.

Senator Oliver: I know them very well. I was there yesterday - the Superstore.

Senator Wiebe: Just for my information, you are not a Crown corporation?

Ms Forbes: No.

Senator Wiebe: Ninety-five per cent of your funding comes from Agriculture and Agri-food, about $70,000 from sponsors. Who are the sponsors? Do they sponsor events or the work you do?

Ms Forbes: They sponsor in a multitude of ways. I will ask Mr. Laws to address that question.

Mr. Jim Laws, Executive Director, Canadian Farm Business Management Council: The sponsors from last year were largely Farm Credit Canada, Royal Bank and a variety of others. We published a disaster-planning book last year where they paid for a percentage of the printing of the document we made, and we handed out 66,000 copies. For that particular document, it was largely a bunch of people across the country.

This year, for a conference coming up this weekend, Farm Credit Canada is the major sponsor, Myers Norris Penny, Sunoco and a variety of others are also helping us with it.

Senator Wiebe: How is your board of directors selected?

Ms Forbes: The province selects from each ministry in the discipline of farm management from whatever ministries are left. Someone made that point. I use New Brunswick as an example. They continue to send someone but that person will not necessarily have a farm management background. The provinces make their selections differently. In our case, the representative is just handpicked. In some provinces, they are appointments. Over time, it has always worked. We get some bright lights around the table. We are now a board of 23 and it is an unwieldy size for making fiscal decisions. Our financing, as we know it, has declined.

Senator Wiebe: Your current agreement with the federal government runs out in 2003?

Ms Forbes: That is right. We have a number of things in terms of long-term funding, so that Agriculture Canada would not be the major funder. We worked hard on the partnerships, recognizing that in this kind of business it is hard to be self-sufficient. We just cannot do it.

Senator Wiebe: You said the provinces contribute to that board of 23. Do they send two or three, or does the federal government?

Ms Forbes: Two from each province and one from each territory. We are going to a board of 10, which will be fully elected from an annual general meeting. We are still asking the province to ensure two people be sent, because four of the members of the board will be producers, four will be ministry people again, one will be an ex officio Agriculture Canada, and one will be from the private sector.

Senator Wiebe: Who qualifies to be an elector?

Ms Forbes: One has to be a member. As we are downsizing the board, we have extended our membership. Up until now, our members have been one and the same. We were mandated to be like that. Now we are extending ourselves out initially to our partners.

We have just passed the model. At our October meeting, we passed the bylaws that enabled us to campaign, to get outside to all kinds of people. However, they are largely people who think like us, do the same sort of things, and they are ready to become members.

Senator Oliver: Senator Wiebe was asking questions about your board. When I was looking through your financial statements, I saw a figure that jumped out at me: approximately $300,000 a year for board activities. What would they be?

Ms Forbes: We have three board meetings a year. Any given meeting costs $45,000. That is why we are downsizing. We were mandated to do this. Up until now, we have not been given an opportunity to do anything different. We have become a governance board, one of policy, and it is clear as mud to me you cannot be a policy board with 23 people.

Senator Wiebe: Whose brainchild is this? How was this done? Was this something that came out of the Department of Agriculture?

Ms Forbes: It was a task force by Agriculture Canada. We were created in 1992. The task force was started in 1990. It divulged that the farm business skills were at a level that needed to be enhanced.

Senator Wiebe: I am surprised that under the old system the provinces are able to provide members to the board, but are not required to put up any money. That is a tremendous system.

Ms Forbes: That is great if you are a province.

Senator Oliver: They had no money to put up.

Senator Wiebe: That may be.

Ms Forbes: There actually was money. Until this past year, it was always federal-provincial agreement. Initially, as I understand it, the provinces held all the money. In those federal-provincial agreements there was more proportionally to the provinces; over time it turned the other way. It became more centralized. In the federal jurisdiction, you were never allowed to do training. It was upheld until about now. So there were no bums in seats. That is why the provinces were given money, so that they could get the training out. Whatever we created, they could get it out.

It worked very well. They had their own little groups back in their province that determined what needed to be done, and then a federal program would initiate national projects so that they would be generic. Nothing is commodity-specific. There is no dairy project. This is business. It goes across all commodities.

Senator Wiebe: Am I fair in saying that more than being a farm business management group, you are more of a think-tank, a farm business think-tank?

Ms Forbes: We have become that to a certain extent, yes. We have become an incredible network. We can mobilize the troops. That is what we will be offering to Mr. Vanclief. If he does want this comprehensive approach, we can do it.

The think-tank part is new. Working with the policy framework people is very new. We have come to a culture of trust. It is really helpful. They are trying to get to the same aim. We are down here going like this, so we just get a little closer.

Tomorrow I will spend from one o'clock to eight o'clock with people from Agriculture Canada. The first portion will be on the study. The next three hours will be on funding.

The Chairman: Of the 250,000 farmers that exist, 20 per cent of those farmers produce 80 per cent of the product. If the 80 per cent of the farmers are phased out, which seems to be the direction things are going, we will end up with 50,000 farmers in all of Canada.

I know a little bit about this subject, especially in the area of grains and oilseeds. If some of those big operators get a dry crop this year, if they get dried out, they will hit the skids.

Ms Forbes: They will be part of the 80 per cent.

The Chairman: They will be broke, because they are operating so big. Many of those farmers have moved in to farm 100 quarter sections of land. They are not getting their money any longer from the banks. They are not getting it from Farm Credit; they never did. The money is financed by the machine company that is putting the machines out there. They are financing their own machines. In fact, what they are really doing is contracting that machinery.

This thing is snowballing so fast that I do not know whether anyone has got a handle on it. In our district, a lot of this has just happened in the last two years.

In fact, I just talked to Grant Devine last night. He was a farmer. He said, "I did the best thing. I cash-rented my land. We were dried out." I said, "You had better go and write out a cheque to the poor farmer because he will go broke."

That is the reality of what we are facing out there. We have gone through it in the hog industry. Much of the hog industry moved from Edmonton to Brandon. There are 13 big hog operations. How many hog farmers? I do not know.

In Saskatchewan, how many chicken producers do we have left? We have maybe 70.

Ms Forbes: You can take any sector in any region and it is doing the same thing.

The Chairman: That was my question. Is that happening in Quebec and in Ontario to the same extent?

Ms Forbes: It is happening less in Quebec. There is no question that Quebec still has smaller, average-sized farms. They do not have a level playing field with other provinces. They have many support programs. It is phenomenal what they have in farm business management. We try to capitalize on it.

The Chairman: It is evident as they come before the committees here.

Senator Wiebe: Many of their farmers are under marketing boards. There are grain farmers, for example, who are not under marketing boards. There are not that many. With their population, they are able to provide the subsidy dollars that allow those small durum growers and barley growers to continue. That is the way it is.

I would caution you in one area. You mentioned in the last part of your report that this new direction that agriculture is going will help rural Canada. I must say that it will not.

Ms Forbes: I hope I did not say "this new direction." It was more detailed than that.

Senator Wiebe: I think there is a statement: "... will result in strong and vibrant rural communities."

Agriculture will not rebuild rural Canada. The processing industry may rebuild rural Canada, but it will be centred on population centres. You will find that our farmers, even if they may be 10, 15 or 20,000-acre farmers, will make their homes close to larger centres. As you mentioned, farm workers in Brazil are brought out to the farms.

We have a tendency to throw something out because it might be unacceptable to the general public. Everyone is concerned about rural Canada, but I think that we must start being honest with the people there. In terms of being honest, there is nothing that frustrates me more - and I speak as a government member - than saying that it is because of these bad subsidies from the European common market and the U.S. that our grain prices are so low.

We are now going into our fifth year. All you have to do is look at Saskatchewan. Our grain prices have been depressed for five years, yet the amount of acres of wheat that has been seeded has not declined that drastically.

If you do away with all subsidies tomorrow, it is still a matter of supply and demand. The farmers in Europe and the U.S. and in Canada who have been growing wheat and durum will continue to grow wheat and durum because there is nothing else for them to grow. They can go into chickpeas. As soon as one farmer is successful with chickpeas, the next farmer will jump in. As a result, the market drops because it is a matter of supply and demand.

The Europeans, the Americans and us are providing a cheap food policy for the countries in the world - such as Japan and a few others - that can afford to buy our product At the same time we are providing a cheap food policy for ourselves here at home.

Ms Forbes: That is the issue.

Senator Wiebe: We are, in effect, providing a cheap food policy for an awful lot of people in this world. It is going to only those who can afford to buy it. We still do not produce enough food to feed the world. We have this problem because we are producing it only for the countries that can afford it. We can talk about this for hours.

Ms Forbes: I want to get the right spin on what we wanted to leave you with. I do not think anyone is in a position to peer into a crystal ball and see what the future will look like. There are forces that we will not be able to effect, let alone stop. One thing we do know, because it has repeated itself a number of times is that when you have a healthy agricultural sector - and producing food is primary - then you have good spin-off happening. We can take who is doing it out of the equation because I do not know who will be the primary owner of those assets. I would be foolish to even try to suggest anything. It will take input and it will get output.

Senator Wiebe: Let us look at the 1970s, the 1980s and the 1990s. We said the same thing then, but each and every time we lost a good chunk of our farmers. Eventually, we will get to the point I was talking about earlier in my remarks. You will have very few people actually involved in the production of food. What do we do with all that land out there? We are not going to repopulate the rural areas or sustain the rural areas with agriculture, especially in the direction we are going now.

I have some solutions for that - and you are probably not the people to talk to on that. As an example, there is nothing in a barrel of oil that a farmer cannot produce. Currently, we are developing means by which to develop rubber from the sunflower seed plant. Perhaps instead of competing with other farmers, we should be competing with the oil producers in Saudi Arabia and Egypt. You can jack up the price of tires, you can jack up the price of fuel, and the general public will wimp. However, they will go ahead and buy it. You then put the farmer in the position of being a price maker rather than being a price taker.

Senator Oliver: Can you produce it for $21 a barrel?

Senator Wiebe: Yes, you can, once the technology is there. Exemptions are necessary. It is a matter of mandating it. You can ask every provincial premier now whether they would mandate that just 5 per cent of the fuel consumed in their province contain ethanol. Not one of them yet is prepared to do it, yet each and every one will say, "We will work very hard towards encouraging the ethanol industry." I think we have to start looking at that land use.

Senator Oliver: She referred to these things in her speech. She did talk about non-food use.

Senator Wiebe: If we do that now, we will keep a lot of those farmers on there.

We are in a difficult position throughout the world and especially here in Canada. In wanting to reduce the drain on the taxpayers because of the deficit, we have reduced our funding to our universities and to our research stations. What has kept the farmer alive in the last 15 years has been research that was done 30 years ago. As a result of this, we have lost researchers with a vision. The only researchers we have left now are the researchers that are looking at developing a product within a period of five or seven years. Corporations are now funding that research and their concern is getting a bang for their buck during that period of time.

The Chairman: Do you not think the oil companies have a cartel that works internationally? They are doing it right now. They are saying, "Let us get the price down here and quit producing, and we will control the thing." I believe the same thing has to happen in agriculture at the global level. We are in a new global economy. The Americans have decided that they have to feed the world. It is more politically acceptable to the American people to subsidize the farmers than it is to give cash dollars.

Senator Oliver: WTO will not let you do it.

The Chairman: No, but the Americans are doing it; the Europeans are doing it. We are sitting here scratching our heads trying to find a method so that the poor old farmer out there somehow can pull himself up by the bootstraps in this global economy. It will not work. Unless we research this and be honest with the people of Canada and the farmers, it will not work. It is as simple as that.

Many of us were over in Europe. We went through the European common countries. We had 25 meetings. We went down to the United States. I think this Senate committee has the best handle on what the Europeans and Americans are thinking of any facet of the government. However, we are not being honest with the situation. We are buying the old line of, "Get them off of subsidies." As Senator Wiebe just said, that will be 10 years. What will we do in the next 10 years? They will not be off in 10 years.

Ms Forbes: I think there is a way, Senator Wiebe. I think you have a lot of hope there. We do not have to call them subsidies.

Senator Wiebe: We do not. My criticism is basically this: as I said earlier, the direction you are talking about here is probably the direction that agriculture will be going. I think you have read the world situation 100 per cent right. My hang-up is that if the government accepts that that is the way it will go, let us be honest about it and say, "Yes, that is the direction we are going, and that is the direction we will encourage." Then the entrepreneurs and those who want to do it will jump into it and work with it wholeheartedly. However, the key - and this is probably my liberal philosophy coming out - is that if we make that decision, then we must provide the dollars to ensure that those who are there now and cannot make it, can exit the business with dignity.

That is something we have not done as a government. We have to cut bait or fish - one or the other - pretty darn quickly. If we want to continue with what we are doing now, we have to provide the dollars with subsidies. If we want to go in the direction you talking about, we will have to spend the same kind of money.

The Chairman: Honourable senators, this has been a good discussion. Thank you for coming. One wonders sometimes how much we do something, but we are still talking. Thank you for coming, and thank you for your patience.

Ms Forbes: Thank you, senators. I think you closed on a nice note there, because that is exactly what we set out to tell you. It cannot be one program for all people. You are saying it has to be comprehensive. I believe it can be done. How badly does the Government of Canada want to do it?

Just before we leave, this book is entitled Who Moved my Cheese? I will give this to the Senate committee and encourage you to pass it around. It is a little parable, and it really is a simple message to help you understand all about change. We will leave this with you. Thank you very much.

The committee adjourned.