Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 7 - Evidence - Meeting of October 3, 2006
OTTAWA, Tuesday, October 3, 2006
The Standing Senate Committee on Agriculture and Forestry met this day at 5:31 p.m. to examine and report on rural poverty in Canada.
Senator Joyce Fairbairn (Chairman) in the chair.
[English]
The Chairman: Honourable senators, today we are very pleased to have with us again the Minister of Agriculture and Agri-food Canada, the Honourable Chuck Strahl.
As you know, the last few years have seen the worst levels of Canadian farm incomes in our history. Farm families have suffered the most and the situation has had an impact on rural communities all across Canada. Recognizing the importance of the problem, the federal government announced last July the creation of the Canadian Farm Families Options Program, providing $550 million to help lower-income individual farmers and their farm families.
Last May, this committee was authorized to examine and report on rural poverty in Canada. Until the end of the year, the committee will hear from a variety of different witnesses who will give an overview of poverty in rural areas. This work will then serve as a basis for the committee's planned travel to rural communities throughout the country next year.
This is the second time that Minister Strahl has appeared before this committee since he took over the reigns of this most difficult portfolio. We are pleased to welcome him here again and to hear his views on rural poverty. Minister, I know you have travelled across the country and you were even in Lethbridge.
Accompanying the minister today are Christiane Ouimet and Donna Mitchell. Ms. Ouimet grew up on a dairy farm in St. Albert, Ontario, and Ms. Mitchell comes from Sherbrooke, Quebec. Welcome to you both.
Minister Strahl can stay for only an hour this evening — and we are lucky to get him. However, his two partners are prepared to stay a bit longer to answer any continuing questions we may have. We have taken on a big issue and it is good to have a session with you at the beginning. I am sure we will be able to pick you up during the course of the work that we will be doing, if we need to do so.
Hon. Charles Strahl, P.C., M.P., Minister of Agriculture and Agri-Food: Thank you. It is good to be back. I appreciate the work that this committee does. The topic you have chosen for your next project is a big one and of tremendous importance. It is a very complex and multi-facetted issue. I congratulate you for taking it on and look forward to your report at the end of your investigations. Senator Segal has been in the middle of this project as well. He has done quite a bit of writing and talking to me and to others about this and has covered everything from the need for strategic investment by the government and regulatory modernization to labour force development. It covers the whole gamut, including federal, provincial and local issues.
The government is focusing on rural poverty and rural incomes; I am pleased that you are as well. I wish to reinforce the idea that rural poverty is not only an agricultural issue. Rural Canada faces much the same issues in many of its resource-based sectors, and the economies of those rural communities that are heavily reliant on those sectors, especially single industries, find themselves in this quandary from time to time.
[Translation]
As Minister of Agriculture and Rural Development, I am deeply committed to the viability of rural communities. However, rural policy is not confined to agriculture.
[English]
The challenge will call for a collaborative effort as we deal with this. The rural secretariat located within my department works with other federal departments and other provincial partners to foster a better understanding, both interdepartmentally and amongst levels of governments, about the issues and concerns of Canadians — especially those who live in those areas — and supports efforts to address these issues.
As the responsible minister, my mandate is threefold: to provide leadership and coordination for the Canadian rural partnership, to facilitate liaison and create partnerships around rural issues and priorities, and to promote dialogue among the stakeholders and the federal government. This part of Agriculture and Agri-Food Canada does not have a huge budget, but it is the one coordinating role that cuts across government departments, whether economic, cultural, social or environmental, and tries to coordinate things so that nothing falls through the cracks.
I wish to review some of the steps that we have taken to address rural issues. Many rural issues are reliant on natural resource-based industries and one third of the rural Canadian workforce is employed in industry directly or indirectly related to natural resources. Local, national and global forces have changed the nature of these resource-based industries, and many of the problems facing Canadian rural communities are faced by rural communities worldwide; these problems are not exclusive to Canada. As we continue to improve productivity and competitiveness, we should be aware of the need of these vulnerable communities to adapt.
[Translation]
The May budget included measures to help communities that depend on resources and infrastructure, housing, tax incentive and skills development programs of significant benefit to rural Canadians.
[English]
The budget included measures to respond to pressures in economic disruptions that these industries face from international markets and trade barriers in the respective sectors. We provided $400 million over the next two years to the forestry sector to help strengthen the long-term competitiveness of the industry and to support worker adjustment. We removed the tax liability faced by fishers when they transfer their fishing property to their children by giving them the same $500,000 lifetime capital gains exemption that farmers and other small business owners already have. As well, we have committed $2.2 billion over five years to the Municipal Rural Infrastructure Fund. That fund is a special investment specifically structured to respond to local infrastructure needs.
There are other more general budget measures, such as tax reductions, general income tax reductions, and the universal child care benefit that has been proposed now by a couple of parties. We have been able to institute that for all Canadians, but that universal child care benefit benefits rural Canadians as well. We have increased the income eligible for small business owners from $300,000 to $400,000. We have announced a 12 per cent tax rate for qualifying small business owners, and that will be reduced to 11 per cent by 2009. We have started measures to help small business and other employers who can contribute to a skilled and educated workforce, which is particularly important in rural areas, by providing tax credits for employers who hire apprentices and grants to first and second year apprentices. Often those jobs in the rural areas are in big demand and we are trying to give that a boost.
In addition, my colleague Diane Finley, Minister of Human Resources and Social Development, announced last week that Canada's new government will invest $1 million through Canada's Sector Council Program to help create a new sector council for the agricultural industry, specifically for the human resources side to boost our recruiting and retaining of skilled workers. I am sure you will hear much about that in your deliberations. In some places it is a crisis, but certainly there is a shortage of skilled workers in the rural areas. It is ironic that people from rural Canada looking for work too often go to the big cities to get it. Retaining skilled workers in rural areas is an ongoing problem.
[Translation]
The budget provided for additional expenditures of $1.5 billion for agriculture. Clearly, this new funding will help to stimulate the economies of rural communities.
[English]
We used part of the $1.5 billion announced in the budget to make changes to the Canadian Agricultural Income Stabilization inventory evaluation. A lot of this money will be paid out over the fall, over the next three months, in CAIS inventory value improvements.
We have also implemented a $50-million Crop Cover Protection Program. It has been well subscribed to in rural Canada by people affected by flooding.
The Canadian Farm Families Options Program, which I have spoken to Senator Segal about, is a pilot project aimed at helping rural farm families who have fallen through the cracks and are under financial stress. Eligible families will receive a payment to bring them to a maximum income of $25,000 for families or $15,000 for individuals if they have a commercial farm. That is based on income for bona fide farmers. That money is starting to flow out and well over 3,000 people have already applied and have received funds from the program.
Altogether about $5 billion will flow out through my ministry in government payments by the end of the fiscal year. It is a shared jurisdiction: $3 billion is federal and $2 billion is provincial. Between now and the end of the year $2 billion will be paid out.
Also, in support of rural Canada we have announced our intention to require that transportation fuel sold in this country will have an average of at least 5 per cent renewable fuels, ethanol or bio-diesel, by 2010.
We have announced a program to help farmers get in on the ground floor with the Biofuels Opportunities for Producers Initiative. BOPI has $10 million in it. That money has been farmed out across the country to help individuals, groups and communities, including those that have a high percentage of farmer involvement, to get access to planning services and to hire professionals to help them put together business plans, so that when we announce the rest of our biofuels initiative in the later part of the fall, they will be able to get in on the ground floor. I hope the program we announce over the next little while will help diversify those communities and allow them to take part in what will be a big part of rural Canada.
We put some money into the development of the co-op program in Canada to specifically develop cooperative initiatives to deal with biofuels opportunities for farmers. Again, this is to try to get farmers and not just oil companies in on this project.
As well, in response to the wishes of the co-op communities, we passed a tax deferral measure that benefits members of agricultural co-ops in how they are taxed and how their dividends are taxed. It helps them to retain more of their earnings and makes co-ops more viable in the long-term. Co-ops have a long tradition in Canadian rural communities, so when local people want to use them, we want to help strengthen that co-op community as well.
In conclusion, honourable senators, rural Canada is very important. It is more than just symbolic to Canadians; it is really our heartland in more ways than one. We all have our own stories and experiences that tell us how important rural Canada is.
One level of government alone will not be able to solve the problem of rural poverty. Our efforts are focused on helping rural communities, and working with provincial and territorial governments, to try to eliminate any barriers to training or skills development so that rural Canadians can take advantage of government programs or business opportunities in ways that can address all the challenges we know are out there.
I look forward to your input. I am not sure when your report will be due. I think there are advantages to getting something into the mix for the pre-budget consultation. We may want to consider an interim report. If you think there are budgetary measures that we should consider, I look forward to that advice and something to consider in terms of timing. You do not want to wait, in regard to the budget, if there are budgetary measures. I expect you will have other suggestions that are not budgetary, as there is a host of problems in rural Canada. They are not all agricultural or international trade problems; they are multi-facetted, as are the solutions.
If I have a concern — and this is just an observation — it is that your subject matter is so broad. I spend almost all my time just on the agricultural component and you have taken on the whole rural aspect, so you have your work cut out for you. I do not know how you will focus on it, but I am sure you will find a way. It is a big, big subject and I wish you well. It is important and we look forward to your report when it is done.
The Chairman: You are right; it is a big, big subject. We are hoping to have, from our first hearings here in Ottawa, an interim report by the end of the year to give an indication of where we are going, and then next year, throughout the year, we will be on the road in every part of Canada.
We thank you very much for your concerns, which we share, and the thoughts that you have given us. It is a very troubling situation. We hope that you will be available to meet with us again down the road.
Senator Tkachuk: You mentioned the Canadian Farm Families Options Program, which provides payments that will bring farm incomes up to a maximum of $25,000 for families and $15,000 for individuals. Does money derived from off-farm income sources factor into calculations for this program?
Mr. Strahl: No, it does not, senator. It does, depending on how you look at it. It does in the sense that the program is designed to look at a family's total income. For example, if someone was working off the farm in an oil patch and was making $60,000 to $80,000 a year, he would not qualify for this program. It is based on family income. It is to target those groups that do not have access to off-farm employment or that have not been able to work off farm because either they do not live where that is possible or perhaps their family situation does not allow it.
It is specifically targeted for people who have at least $50,000 in gross revenue. We had to pick a number. That $50,000 in gross revenue was to provide their bona fides as legitimate farmers, if you will. It is based on income and not on any other programming or anything else the government does. Then, if your income tax form shows that you made less than $25,000 net income, it will bring you back up to that level. That is the low-income cutoff for rural Canada, which is why those numbers were chosen.
Senator Tkachuk: It almost sounds like a guaranteed annual income.
Mr. Strahl: This is a pilot project. This has never been done before in public policy. It will help bring those people up to a certain level. It does two or three things. It helps to give them something to live on. Statistics Canada says that there are up to 26,000 families in rural Canada trying to get by on less than $25,000 per year. That is a concern.
Senator Tkachuk: Are those all farm families?
Mr. Strahl: Yes, families, or individuals who make less than $15,000 per year.
The program gives them some money — I do not know on average how much — to bring them up to a standard where they can at least look after their families. It also provides access for those families to business services for which there would normally be a charge. I am talking about business advisory services or skills development to upgrade their farming skills or to develop skills to do something else. It allows them to assess the future viability of their farming activity to see if they should change or do something differently.
In addition, to providing business services and skills development, the program gives those farmers some cash up front, because they are obviously pretty desperate folk. They have to work with us to make these things work for them. The program is about finding ways to increase their opportunities.
Senator Tkachuk: You mentioned 26,000 families in rural Canada. What percentage is that of the total number of farmers in the country?
Mr. Strahl: About 15 per cent of farms in Canada are reflected in that number.
Senator Callbeck: I wish to continue questioning on the Canadian Farm Families Options Program. This is a two- year program. I read that in the second year the payment the farmer receives will be at least 25 per cent less than in the first year of the program. What is the explanation for that?
Mr. Strahl: I will have to get details on that for you, senator.
Senator Callbeck: I have heard the concern expressed that there is no appeal process. Has any thought been given to those farmers who apply but are turned down? Do they have a place to turn to have that situation looked at?
Mr. Strahl: When we designed the program we tried to make it as simple as possible. The common complaint I hear from farmers about the CAIS program, for example, is that it is too complicated, it is not predictable and not bankable. I have been told that you have to hire an accountant to fill out the form. For this program, on the other hand, the form is simple. If you filed an income tax return, you just have to give us a certain line off your income tax and a certain line off your revenue. You apply and we have a cheque out in a couple of weeks. It is very simple.
I have heard complaints when people do not quite make the cutoff. They might make $48,000 in gross sales and not $50,000. It almost does not matter what number you pick. If I were to adjust it to $48,000, there would be people at $47,000 who want it. We have published the numbers. The program covers 15 per cent of the farm families out there, but they have to apply, which is easy to do. We have advertising and so on to encourage them to apply.
There is not an appeal process because it is a simple program for which to apply. Of course, there are some people who do not like the numbers we have picked. Otherwise there is nothing to appeal. There is no discretion as to whether or not they should get the money. They just apply.
As I mentioned, this is a pilot project. There have been accusations that this is a welfare plan for farmers. I argue that it is not. It is interim help with a training component and some business counselling that can help them on their way either to change product lines or to augment their income in other ways.
The payment is reduced in the second year in part to encourage people to do whatever they are going to do in the long term. We do not want to dictate to farmers what they should do. If they are in a situation where they are below the poverty line, then we will help them in the interim. However, they have to do something different in the long run. They cannot continue to do the same old, same old. This is not a year-after-year plan. It is a pilot project, with the amount being reduced in the second year. The plan is that people will start to make decisions that will change their situation and augment their income, either with other off-farm income or with changes in their own business plans to reflect what they have to do to make some more money.
Senator Callbeck: It will be reduced by at least 25 per cent.
Mr. Strahl: Yes, in the second year.
Senator Mitchell: I am very appreciative of having the minister here. Thank you very much.
I am from Alberta. Many people feel that Alberta is infinitely wealthy and that everyone benefits from that. In fact, there are many people in rural Alberta who not only do not benefit from it but who suffer further because it pushes up input costs in various ways.
The Pacific Gateway is an important project for Alberta and Western Canada generally. It will allow farmers to diversify their products and will give them a chance to get those products to diversified markets.
Why is it that in your latest budget the government slowed down the five-year funding to eight years? It was to be five years under the previous government.
Could you comment on what appears to be the government's reluctance to engage in rigorous, robust, positive and diplomatic relations with China? There has been some failure, for example, on the part of the Minister of Foreign Affairs even to meet with the Chinese ambassador for the first eight months of your government. It is standard diplomatic procedure to do that. It could be critical for our ability to develop Pacific Rim products. Canada makes up less than 2 per cent of China's import market at this time. Much of that market for Western Canadians is agricultural markets.
Mr. Strahl: On the Pacific Gateway initiative, we did announce the money that was to be spent over an eight-year period, although Minister Emerson clearly said that it was done because there was some question as to whether it could all be used in the planning period allotted to it. He made it clear that if the B.C. government, working in conjunction with the federal government, could identify the projects and get them approved in time or sooner, then that money would be available sooner. The funds are allocated over an eight-year period and the minister has said that if the projects come on-stream quicker, the money is available as requested by the provincial government.
I will travel to China on Friday to do my bit on Canada-China relations. As several other ministers have had meetings about their portfolios, we have had a steady stream of officials. I find that with a minority Parliament, it is difficult to get away. I will be over there to give thanks with the Chinese people this week because I cannot go any time other than during the so-called ``break week.''
The Chinese market and the entire Far East hold huge potential for Western Canada. Western Canadians look more frequently out across the ocean than we look in the other direction toward Europe or to some of the traditional markets, especially for our agricultural products. The Far East economy is doubling every ten years; we cannot ignore the potential of the growing middle class to start buying increasingly value-added, sophisticated and diverse products thereby creating a huge market. That potential is not being ignored. There are many initiatives, although travel to China is difficult and it is difficult for government officials and ministers alike to get away.
Senator Mitchell: It will probably be okay until our leadership race is over.
You mentioned biofuels — ethanol and biodiesel. The committee is most interested in knowing more about those. First, could you comment on how we fight the U.S. subsidy issue again, not only for corn but also for the grains used for ethanol and biodiesel? Second, what steps are you taking in your program to ensure that farmers can remain involved in the production of the fuels and not be cut out, as they so often are, when it comes to value-added?
Mr. Strahl: The entire biofuels strategy will be rolled out this fall, although I cannot give you the exact date until it happens because I do not have it. It will be part of the clean air package that the Minister of the Environment is spearheading. Minister Ambrose, Minister Lunn and I have met to kick-start the talks on the biofuels component of the clean air initiative. Following that meeting, in late spring I announced the biofuels opportunities package, which is to help farmers develop business plans, to hire consultants and to do some of the legwork. The big oil companies do all of their preparations and planning in-house, but farmers do not have that advantage so they must hire the expertise. We have made that program available for biodiesel and ethanol producer-led initiatives to try to get producers in at ground level.
Since becoming minister, I have made it clear that I also want to see an agricultural-specific part of the biofuels program. In other words, I want to ensure as we roll out the program that although there will be environmental benefits to using biofuels and benefits from diversifying our sources of fuel, the large agricultural component is not lost. It is my job is to look after agricultural interests and look for the agricultural benefits.
As I have talked about this across the country, I have remained insistent that the $10 million or $11 million announced is basically seed money to ensure that farmers are well placed so that when the initiative is announced this fall they will be ready to jump in with their project proposals. I am concerned that it might end up being a status quo industry like in Ontario where a great deal of corn is imported from the United States. I want to try to diversify that source as much as possible and make this as beneficial to farmers as possible.
I would add that I was talking to Mike Johanns, Secretary of Agriculture in Washington, D.C. He said that they have had the biggest crop of corn this year but will likely run out because 20 per cent of it will go to the production of biofuels. Everything Americans do is ten times bigger than it is in Canada. Their move to ethanol is massive. In a sense, I hope his forecast is correct, because corn futures are up 10 per cent to 14 per cent because of that. We had a pretty good crop in Canada this year and near-record crops in the U.S. If those prices and the futures market hold, it should be good news for farmers.
Senator Peterson: It appears to date that the strategy regarding agricultural challenges has been based on the assumption, and perhaps the hope, that the distorting subsidies provided by the Americans and Europeans would be eliminated under World Trade Organization rulings. That does not appear to have happened and, in all probability, will not happen. Will we develop a new strategy taking that into account so that producers can receive a fair price for their products?
Mr. Strahl: That is a fair observation. Obviously, not only Canada but also the world was pinning many hopes on the Doha round both to reduce domestic subsidies and to pry open market access for countries like Canada, which is equally important.
The WTO issue is not completely dead but, no doubt, it is on life support. It does not look good, which is very unfortunate. If I may digress for a moment, Madam Chairman, not only is it unfortunate for Canadian agriculture but also, given the amount of absolute, third world poverty, it is a travesty that the WTO cannot get their act together on agricultural subsidies. People will look back at this time and remark that this was a tremendous missed opportunity to help out people living in abject poverty. I constantly feel bad about that. That is a different study.
On our side, for our farmers, it means that if they renew the farm bill in its present form down in the U.S., our life will continue to be very complicated here in Canada. It is particularly bad for corn. Last year, the U.S. spent $8 billion subsidizing corn — just one product — and 90 per cent of American subsidies go to five product lines or five commodities. Our system is completely different. We have programming for whole farms, for the entire farm community, from horticulture to grains and oilseeds to hogs to honey bees. We have programs to try to help market farmers' product and help them with their income.
Our discussion on the next generation of agricultural policy starts after our November federal-provincial meeting, although really the discussion has already started behind the scenes. I have no doubt that the question you have raised about where we go from here will engage the provinces, the industry, producers and producer groups to find the best way forward.
We put in an extra $1.5 billion this year, over and above what was in the budget last year. It is hard to say what prices will look like. Much of this is commodity price driven. The American subsidies system is so mercurial that it can go from $8 billion one year to almost nothing the next year. For countries like Canada, it is very difficult to plan farm programming to look after competitive forces that vary by $8 billion in a single year. To Secretary Johanns' credit, he wants something different than the traditional farm bill, which he says is unsustainable from the Americans' point of view. We will see whether he gets his way or whether Congress wins out.
Senator Peterson: The Canadian Wheat Board file is heating up. I am from Saskatchewan, so I have to ask this question: Will producers have an opportunity to vote on which way they would like to go?
Mr. Strahl: I have not made any changes to the wheat board. I have not had a plebiscite and do not have plans for a plebiscite. I have a task force working on a corporate structure, answering questions on what a voluntary wheat board would look like in a marketing choice world. As you know, that is something we campaigned on so I have an obligation to provide the detail of what that may look like so that farmers can look at it. That is all I have done to date. It remains a campaign promise. It is something I would like to move to. To date, that is all I have planned and that is all that is in the window right now.
Senator Oliver: Thank you for your excellent introductory remarks. They were broad and comprehensive. It is clear you are pouring a lot of money into the agricultural sector in Canada. I want to make a proposition and have you respond to it. Near the end of your remarks, you commented on how broad the terms of reference of this committee's study are. You said that rural poverty is a huge thing. You said that you as the Minister of Agriculture deal with agricultural issues, and even that is huge. I share your same concerns.
I put this to you as a proposition: If we look at things like your $2.2-billion Municipal Rural Infrastructure Fund designed to help rural Canada, and if that fund and other money you are pouring into the agriculture community could be used to revitalize the farming community so that farming could become viable again and one could again make a living again from it, would that not help to resolve the issue of poverty? In other words, is not the best use of public policy infrastructure funding and other support so that farmers can farm and make a dollar on it?
Mr. Strahl: Just so I am clear, are you thinking of using that rural infrastructure fund as direct support for farmers?
Senator Oliver: I am thinking of direct support in the farming community, not for individual farms or individual farmers.
Mr. Strahl: The solution, if you will, on rural poverty and the problems in rural Canada are multifaceted. Again, I am looking forward to your report when it comes out. When we talk about the country side, it is partly about rural infrastructure. Saskatchewan is a good example. People will say, ``I cannot get my grain to market; the roads have gone to hell; it beats my truck to pieces; there are no local elevators anywhere; I have to truck it so far away.'' On and on it goes. The Pacific Gateway initiative is another example. If the grain is held up in transit and you cannot unload it or dock it or get a ship in, every day you hold it up costs the farmer money.
It is partly infrastructure and partly responsive farm programming. We have a new component in the budget for disaster programming to help when there are disasters. It is also skills development. I am sure you will find provincial policies that affect these communities as well. There are also all the problems that come with the native communities, everything from skills development, to access to capital, to the ability to lever their current assets and outstanding land claims. Those are all part of the problem in rural Canada.
The Municipal Rural Infrastructure Fund is designed to help with one of those problems. There is no panacea. It is part agriculture and part forestry.
Senator Oliver: Do you not think that if you could find a way to give money, training and opportunity for farmers to produce something that is value-added, that would also help them leave more money at the farm gate? The days of selling raw products — raw logs, raw meat, raw fish — are over because most societies around the world want something that is value-added. Are you doing something to help farmers in that way? The aim is to put more money in the farm so that they do not have poverty.
Mr. Strahl: Absolutely. One thing that will come from the biofuels initiative is a whole biomass industry. Biofuels has everyone's attention now because the price of a barrel of oil is $60 or $70. That tends to focus your attention. Folks at CropLife talk about the value-added portion they get from crops. The CropLife people are a group of value-added guys who get value out of every part of the crop, from molecular farming to genetic farming. They do a slew of things scientifically. Right now their companies worldwide get about $25 billion of value out of the crops with which they are engaged. They say that within 10 to 15 years, it will be $500 billion. Everybody now is focusing partly on biofuels. When you start talking biofuels, pretty soon you are talking about feeding by-products to feed lots. We are talking about biodigesters and using other products to create biogas. Some guys are into pulling parts of polymers off to make bioplastics. In each part of it, there is money to be made.
The hog industry has been successful. The beef industry is successful because it is value-added. You grow your grain, feed your cattle. Animal husbandry aside, you are making a dollar.
The whole biomass side will be exciting. We put a good chunk of money from the budget into biomass-enhanced programming, and we have programming in our current agricultural policy framework designed to help farmers take advantage of those value-added opportunities. I think there will have to be much more. If we get the seed money in there — biofuels will be part of that — the future in rural Canada will be much brighter.
Senator Munson: Talk about different roles for both of us, Mr. Minister. You were in opposition. I was a reporter. Now we are back to the same place asking questions again. We have always been friends.
Mr. Strahl: Just be kinder than you were before, Senator Munson; that is all I ask.
Senator Munson: Do we know how many farmers live below the poverty line in this country?
Mr. Strahl: Statistics Canada identified 26,000 families living below the low-income cutoff. We do not actually have a poverty line in Canada. Anything below the low-income level is considered poverty.
Senator Munson: I would like to follow up on Senator Tkachuk's question concerning the Canadian Farm Families Options Program. Many governments in the past have had honourable intentions — and this looks like one of them — to assist farmers. You said that this program is not a welfare plan for farmers; it is an interim program. First, what will it take to make it successful so that it does not turn into one of those programs we do not like that stay around for a long time, such as we have seen with fishers? Second, how many people have signed up since 2006?
Mr. Strahl: I mentioned earlier that we will be starting a discussion this fall with the industry about the next generation of farm programming. That discussion will involve everything from business risk management to other programming that we need to identify as a country, as provinces and as industry in order to determine what we need to be profitable. It will involve everything from market access, to market development, to science, technology, innovation and many other things. It is my hope that by the end of the discussion we will have identified what is needed to minimize the number of people who will be in this category in the future.
We must do more to diversify and to value-add to help the rural area generally. For that reason, this a two-year pilot project. I hope that the programming that will develop over the next while will make this program unnecessary.
As Senator Callbeck identified, the process of weaning off this program starts immediately. It is not a long-term program. We started right away with business consultants and skills development and other advisory services in the hope that farmers will start to make business decisions on how to get out of the quagmire they are in. The idea is not just to throw money at the situation and hope for the best. We will put money into the family because they need it. We will then put money into advisory services and skills development because they need and want that.
There have been 4,000 applications thus far. Some $26 million has been paid out. On average, that is $6,500 per applicant. However, that covers the whole scale.
Senator Munson: You used the word ``travesty'' when talking about foreign countries' using their subsidy programs. What does that do to our farmers in the sense of what stays in the ground? I am talking about what they cannot sell because they cannot compete with those subsidies. Thus they cannot make money.
Mr. Strahl: It is hard to know. How do you know what a farmer would do if he saw a big profitable picture out there? He might do things differently.
In Ontario this year, we are near a record crop of corn. Even though corn has not been a good money maker over the last few years, farmers cannot stop themselves from growing it. They have to plant corn, or wheat on the Prairies. That is partly because farming is ever the optimistic work. You plant seed and hope it will sprout. You hope you do not get hail or drought. You hope the price is there at the end of the year. If you are not in the game, you have to sell out. It is not like you can sort of farm. You have to get at it. That is the frustrating thing for farmers who are willing to work hard and willing to risk. They are entrepreneurs who just want a chance to make a buck.
It is hard to calculate the lost opportunities. I would say they are significant. People have not reinvested into their farm and equipment over the last few years because they have not had the income.
It is interesting to note that Statistics Canada reports that 20 per cent of farmers in any sector will always make money while 20 per cent will always lose money. The Bible says you shall always have the poor with you. That is as true in farming as it is anywhere else. As in any business, there is a natural attrition in farming. If there are 200,000 farmers, there will be some who, because of bad luck, poor management or succession problems, will not be in business two years to five years from now. On the other hand, in the same industry, sector and geographic region, there will be other farmers, up and comers, who are into the business and making money.
It is a difficult to gauge what those subsidies do. We do know that it has driven the profitability out of the grains and oilseeds sector for several years.
Senator Mahovlich: I am from Ontario. I was wondering whether there are many problems in rural Ontario. It seems I have to go on a road trip in my car to find rural Ontario. Our farms are turning into real estate. Have you had many applications from north of Toronto?
Mr. Strahl: We have had 621 applications. The deadline for getting in applications is the end of October. The harvest is coming in. Most of it is over. Applications for this program will likely come in with a vengeance over the next little while because of the time of harvest.
Senator, you have pointed out another reality of parts of Canada. Farm land is no longer priced as farm land. It is priced as development land. It is priced as gentlemen farmer estates. A good part of Ontario is facing that, and the same is happening in the corridor from Edmonton to Calgary.
Ten years ago farmers probably said, ``I bought that land for $2,000 per acre and now it is worth $5,000, $10,000 or maybe even $50,000.'' They say, ``I cannot make it.'' Most would say that no one can make it. In my area, which is the lower mainland of B.C., we have a lot of horticultural and supply-managed industries. Twenty acres of bare land costs $550,000. For a dairy farmer who would need 80 acres, that is over $2 million. A barn and house is another $500,000 or $1 million. That is before you buy any cows or quota.
To farm in my neck of the woods — and this is true in parts of Ontario as well — is no longer based on the value of the farm. It is based on speculative land prices and gentlemen farmers.
In Alberta, you can go from Lethbridge to Edmonton and you will find guys who have bought a quarter section of land. They never intend to make a dollar from that land. However, with oil money they have built a house that goes around the block. No farmer can afford to buy that.
For those trying to farm, it causes poverty. They have assets but no cash flow to make a living.
Senator Tkachuk: They can sell their land.
Mr. Strahl: Yes, they can sell their land and get out of business.
Senator Tkachuk: They could make a great deal money and that would solve the property problem.
Mr. Strahl: The average farmer in Canada has a net worth twice that of the average Canadian because they are land rich, but they cannot put food on the table. Their land might be worth $500,000 but they cannot make $1. In Saskatchewan it is a big problem and in other places as well.
Senator Tkachuk: We have a big corridor of farms too.
Senator Mahovlich: In the United States and in France, does government subsidize farmers so that the land will remain farms?
Mr. Strahl: Different countries have different programming. When I was in Saskatoon this spring I met a fellow who had moved up from Minnesota after he had gone there from Europe. The U.S. subsidizes corn at such a rate that the price of land to grow corn has doubled or tripled. He could not afford to buy land in the U.S. so he came up to Saskatoon, where he started farming because the land was affordable. The prices are not great but at least he could afford to buy land. As soon as commodities are subsidized, the land on which they are grown increases in value, thus distorting the market. Americans are facing that now. Many of their farmers have millions of dollars tied up in land that is all based on subsidies. As soon as the subsidies are dropped, they will not be able to pay for their land, putting them in a Catch-22 situation.
I was in Switzerland at the WTO talks in July. Over there, they anticipate that because of their high subsidies, dairy farms with only 20 cows will lose one half of their farmers over the next five to 10 years. They cannot sustain the current level of subsidization, creating a different set of problems.
This committee will investigate the problems peculiar to Canada and, hopefully, will come up with some solutions as well.
Senator Christensen: I look forward to the committee's report including recommendations that will reflect on and give direction to the future. The current programs are simply stop-gap measures and are not solving the big problem. Ethanol will be cleaner for the air but the heavy use of petroleum is also a stop-gap measure until we develop a better source of energy.
Senator Mahovlich pointed out that so much good agricultural farmland is being taken out of service by developers of homes. With global warming in the North where I live, we see the gradients changing year by year. Our farms are benefiting because we are now able to grow things that we could not grow before. In the Prairies, water will be a problem because the glaciers are melting and the rivers will begin to dry up. Do we continue to subsidize and allow the farms to become poorer and poorer because there will less water and, therefore, less ability to farm? How will we meet that challenge?
Mr. Strahl: I agree; there are challenges. A problem I face and that you might face in your discussions is that we are always drawn to the problem and to the crisis and seldom to where things are running well. In rural Canada there are some tremendous success stories. When we see or hear about those successes, we try to replicate them through encouraging other programs or activities. However, some of the solutions, at least on the agricultural side, will be driven by business decisions. For folks who decide to stay with traditional durum wheat production, the long-term graph has been a continuous downhill slide since World War II. The price for commodities never stops going down and the price for oats and other raw commodities is the same. You will see on the graph a wiggle in the line for ethanol programs but, overall, as Senator Oliver mentioned, being the low-cost commodity provider is not where the future is. Eventually farmers will make business decisions on how to maximize their return. That is why you see more diversity of crops. More farmers are growing canola or pulse crops. They take the pulse crops, split them, bag them and market them. A bag of pulse crops is ten times the value of a bulk shipment. Value-added is the future. You can almost pick your subject matter. You can produce canola seed and it might do okay, but if you have canola oil, you will do better and if you have canola diesel, you will have more value and more income. If you have canola diesel and you feed the by-products to cattle, you will have another value-added. If you have that plus molecular farming and bioplastics and something else, you are more likely to succeed. Each time we do that, we are more likely to succeed. Many of these things end up being business decisions for farmers.
We will need a national water strategy for water problems across the country. We will need to have an entire discussion about the next generation of agricultural policies so that industry can identify to government what they need and when they need it, whether science, technology, innovation, or ways to patent and market new ideas to China and around the world. I have heard some say that they need more help from the Export Development Corporation to finance their product in order to sell it. Each one of the success stories is almost always value-added. Success will be driven by the farmers who see their opportunities and find their niche in the changing market. The ones that are doing that now are making money.
Senator Christensen: They can have value-added only if they have grown something in the first place.
Mr. Strahl: Yes, that is true. You have already identified that if global warming continues apace, it may well be that the Peace River region might have six or ten more frost-free days and suddenly be in the clover, so to speak. The flip side is that this year they had a serious drought which knocked the crop off the field. Global warming is a mixed blessing and curse. It might benefit some and harm others, but that is difficult for anyone to predict.
Madam Chairman, I have a couple of comments in summary.
The Chairman: Certainly.
Mr. Strahl: I have some books with me, one being a rural Canadian's guide to farming. Both books are in both official languages and they list many programs available and work already done. As well, websites are listed. They might prove useful to the committee and spark interest in some of the other things being done at the rural secretariat. I will leave those copies for committee members.
[Translation]
My Parliamentary Secretary, Jacques Gourde, is here with me today. In particular, he is responsible for the agriculture file in Quebec and is at your disposal.
[English]
As you progress in your discussions, if you need more specific information about the Quebec industry, we will stand ready to get that information to you at your request.
Again, I wish you well. This is a big undertaking. I can tell that already from the questions here today. We are working on some of it actively, but your investigation is much larger.
I would encourage you, Madam Chairman and the committee, to consider an interim report somewhere along the way. I know the Senate has the advantage of thinking long term on this. You do not have to think about the next election. Senator Mitchell, as you mentioned, you do not have to worry about that quite yet. However, if there is anything you can give along the way that you think is time-sensitive, there will be interest in the next generation of farm policy discussion. We will be interested in your work as part of it, but so will many other industries as well. Do not be afraid to give us some advice along the way rather than waiting until the end of next year to dump it in our lap. That policy development is ongoing.
The Chairman: Thank you. In the hearings that we will be having here in Ottawa, we are aiming for an interim report by the end of this year, and then off on the road through next year. We also thank you for those booklets. In return, I will ensure that you have an autographed copy of the value-added report that we worked on for quite a long time. Senator Oliver was very much at the helm through that.
Thank you for giving us your time. We are always eager to have you back. As time goes on, if we find there are some issues that you could deal with it, we will be in touch. We thank you for Ms. Ouimet and Ms. Mitchell. I think we will be seeing Ms. Mitchell with the rural secretariat soon.
Senators, we have a little business to do.
Jessica Richardson, Clerk of the Committee: By way of explanation, when I was preparing the budget, I accidentally left out one line item. Procedurally, the committee has to re-adopt the budget. The forgotten line item is a research item for $5,000. It is on the fourth page, two lines above transportation and communications. Mr. Forge can best speak to what it is. Nothing else has changed in the budget. That is the only change from what you saw last week.
Frédéric Forge, Researcher, Library of Parliament: The $5,000 is for data from Statistics Canada, if the committee needs some. Usually, data you may need is compiled from different sources. Since it is a cost recovery agency, we need to pay for that. A simple table can cost up to $600 or more. The library usually pays for this, up to a certain point, but for the kind of study you want to do, it may cost a little bit more. That is why we put in the $5,000. Statistics Canada has an end-use agreement for parliamentarians so it does not cost as much but, as soon as you want to publish it, it is not for parliamentarians only but rather for the public, so that is why it costs more.
Senator Tkachuk: Have you not gone to the committee yet?
The Chairman: No, so this will not confuse them.
Ms. Richardson: It was my mistake, and I do apologize to the whole committee for it.
The Chairman: We need a motion.
Senator Tkachuk: I so move.
The Chairman: Is it adopted?
Hon. Senators: Agreed.
Senator Mitchell: Madam Chairman, given that some of what we will be working on in our study is biofuels and alternative fuels and so on, and given that the program that will address that through this government will be an environmental program, how do I make a request to have the Minister of the Environment appear before us once that program has been announced?
The Chairman: I do not think you have a problem. When the time comes, the steering committee can deal with it.
Senator Mitchell: I am sure she will want to come.
Senator Tkachuk: She will have her own committee to go to.
The Chairman: She has not had the pleasure of coming here before. It will do her good.
Senator Tkachuk: Same policy as the previous government.
The Chairman: On that high note, I will adjourn the meeting.
The committee adjourned.