Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 12 - Evidence - Meeting of November 30, 2006
OTTAWA, Thursday, November 30, 2006
The Standing Senate Committee on Agriculture and Forestry met this day at 8:05 a.m. to examine and report on rural poverty in Canada
Senator Joyce Fairbairn (Chairman) in the chair.
[English]
The Chairman: Good morning, honourable senators and our witness today. Good morning to all of those who are watching the proceedings of this committee on television.
Last May, this committee was authorized to examine and report on rural poverty in Canada. For too long, the plight of the rural poor has been ignored by policy-makers and politicians. This fall, the committee has been hearing from a variety of witnesses who have given us an overview of poverty in Canada's rural areas. This work will serve as a basis for the committee's planned travel on the ground to rural communities in every province and territory of this country next year.
This morning's witness is Kurt Klein, a professor of economics at the University of Lethbridge. Dr. Klein has written more than 300 professional papers in the field of agricultural economies. In 2002, he was awarded a fellowship in the Canadian Agricultural Economics Society. Dr. Klein's research focuses on agricultural and related environmental issues as well the relationship between agriculture and globalization.
We are pleased to have you here today. We wish it were dry and not raining; however, you were telling me that you are coming from 30 below with a wind chill of 40 below in Lethbridge.
You have the floor.
Kurt Klein, Professor, Economics Department, University of Lethbridge, as an individual: Thank you, Madam Chairman. It is indeed a pleasure for me to be here this morning and, as you mentioned, to get away from the western provinces where it has been bitterly cold this week. I am here to talk about the rural poverty issue and, of course, the rural poverty issue as I see it through research and experience of living the first half of my life in Saskatchewan. The second half of my life has been in Lethbridge as a professor, but still closely connected to the rural areas of Saskatchewan and owning my farm in northern Saskatchewan, although not actively farming anymore.
Many people in rural areas of Canada have low incomes, inadequate services that most Canadians take for granted and limited scopes for improving their lives. Yet it is extremely rare to find a homeless person, a food bank or a soup kitchen in a rural community, or people genuinely dissatisfied with their lot. In contrast with the urban poor, whose sometimes wretched living conditions confront us daily on our ways to work and in stories in the media, almost everyone who could be classed as belonging to the rural poor has a warm, dry place to sleep and adequate food intake.
Economists and statisticians have developed several measures of income levels below which people are deemed to have inadequate incomes to support a decent lifestyle. However, people who live on farms and in rural communities across Canada almost always have a base of family and neighbour relationships and use their entrepreneurial skills to provide themselves and their families with standards of living that are higher than would seem possible to urban-based analysts who base their judgment on standardized metrics developed by government agencies and academic researchers.
In several villages in northern Saskatchewan from where I and my wife originate and know well, many people have low current incomes. Most younger and middle-aged people have found jobs in the city or larger nearby towns and commute daily to their jobs. Most elderly people live on their old-age pensions and accumulated savings. Most have large gardens that grow more food than they and their families can use. Nearly all participate in local organized activities that cost little and afford them with many pleasures and also provide the basis for networks of help in times of need.
Although many of those with low incomes have limited opportunities for entertainment — many rely on television with poor reception on only one or two channels — most would not willingly move to the city where their creature comforts might seem higher, even with the constant urging of family members. Thus, we must be careful in our assessment of rural poverty. It is difficult to find a person living in a rural area who would describe themselves as poor, even though many economic and social indicators would describe them as that.
However, despite the overall level of satisfaction of people living in rural areas, they do lack access to important services that urbanites take for granted. Access to adequate health services in rural areas clearly is inferior to that provided in cities. Lack of public transportation and taxi services often cause great hardships for rural people, especially when family members need to go to the city for medical services. Most rural citizens get their water from underground sources that receive inadequate and infrequent testing.
The base of the rural economy across Canada is, of course, the agricultural industry. Most of the people who now live in rural communities are currently or were once part of the agricultural industry. It is important to examine carefully the economic conditions on farms in Canada to get a fair sense of the poverty issue in rural Canada.
Have net farm incomes been falling? Major financial disasters have befallen the agricultural industry in the last few years. These include loss of export markets for potatoes due to the PVYn virus, beef due to BSE and other trade challenges that hampered Canadian exports of wheat, pork, dairy and other products. Hotter temperatures have led to disastrous droughts in some parts of the prairies, while other areas have suffered from flooding and inability to plant annual crops.
Provincial and federal governments have been under almost continuous pressure to find ways to get money transferred to farmers to allay the effects of the latest financial crisis. Usually governments have responded. The publicity generated by the recent events in agricultural has created an impression that net farm incomes in Canada have fallen precipitously, and the rate of decline has been increasing.
What does the data show? Careful analysis of net farm income data in real terms, taking out the inflation factor, over the long term reveals that, although net farm income can be measured to show a downward trend, the rate of decline has been modest, a little less than 1 per cent per year.
It is slower than the rate of productivity growth in yields of crops, the result of plant breeding and management practices, the yields of livestock, the result of genetics, technological improvements and better management practices, and the productivity growth in labour, which grew in the agricultural industry of an annual average rate of 5.8 per cent over the last five years, the fastest growing rate of all industry and nearly three times the national average increase of 2.3 per cent.
The standard of living a family enjoys depends on the total income earned by a family, not the income from single activity. On Canadian farms, the net farm income has decreased at a slow rate while off-farm income has been increasing rapidly from an average of $18,000 in 1980 to now $63,000 in 2002.
Off-farm income sources supplied farm families with more than 87 per cent of total family income in 2002. As a result of the increasing integration of rural and urban labour markets, most farm families have enjoyed standards equivalents to those in urban centres in Canada.
Agriculture and Agri-Food Canada has classified farm categories into seven different types: retirement, lifestyle, low income, small business focus, medium business focus, large business focus and very large business focus. Of these seven groups, only the low-income category of farms had annual family incomes of less than $42,000 per year. Seventeen per cent of census farms fall into that category — the ones that had a low income — with an annual income of less than $7,000, which is clearly insufficient for a satisfactory lifestyle in Canada today. On average, they had off-farm incomes of $14,000 but lost about $7,000 on their farming operations. In some respects, they may be better off than those living in poverty in urban areas. These low-income farms had an average net worth of $423,000, which provides them with a considerable safety net for their essential needs.
Although farmers struggle relentlessly against the forces of nature and uncertain markets, most believe they live very well. In a recent survey, only 10 per cent of families who live on farms rate their standard of living as poor or very poor. Conversely, 90 per cent of farmers rate their standard of living as good, very good or excellent.
The vast majority of farm families in Canada has adjusted to economic conditions and been able to take advantage of new opportunities, particularly in regard to off-farm employment. It is clear that the poverty situation on Canadian farms is less dire than it was in the past. For the most part, low incomes are confined to those farm units that have an insufficient resource base to compete effectively and whose members are unable or unwilling to access off-farm employment opportunities. Even most of those have accumulated assets that provide them with long-term security for their basic needs.
The makeup of most rural communities across Canada is far different today than in past decades. Recently, many families who have little or no connection to agriculture choose to live in rural communities because of lower costs and a belief that there are social advantages in smaller places where people know and take care of each other. Many rural communities accommodate this transition by offering low-cost building lots or tax holidays for those who move there. To many people, the costs and inconveniences associated with long-distance commuting seem small compared to the advantages of living in a small rural community.
Still, people who live on farms and in rural communities suffer from inadequate nearby health care, inadequate public transportation and often unknown quality of drinking water. These are especially serious issues for older people who need more medical attention and often have no way of getting to the cities to receive proper diagnoses or treatments. These are problems that are difficult to fix even if these peoples' incomes could be boosted with additional government transfer payments.
Many government programs developed over the past 40 years have attempted to supplement low commodity prices in agriculture. However, as has been seen in most countries that support the agricultural industry, most program payments have gone to the largest farmers and have had little impact on reduction of poverty. The type of policies that have the most effect on reducing low farm incomes are those that provide more opportunities for farmers, generally, by reducing restrictions on their business behaviours or disincentives to adjust to market signals.
Removal of interprovincial barriers to movement of feed grains in the early 1970s provided increased profits for farmers who grew these crops in the feed surplus provinces, particularly in Saskatchewan. Abandoning the Western Grain Transportation Act in 1995 spurred growth of the livestock industry in the Prairies with considerably more value-added activities than in the simple export of unprocessed grains.
Continuing restrictions in marketing opportunities for wheat and barley hamper adjustments into more prairie- based value-added activities with their associated employment opportunities in rural areas. Policies that promote integration of labour and product markets throughout rural and urban areas offer the best solution for any remaining pockets of rural poverty. Improvement in transportation and communication infrastructure, health services and quality of water would do more for rural residents than any programs involving supplementary transfer payments.
Senator Segal: Thank you for coming all this way. So it is pretty good out there, is it? Farmers are on a roll? They have a half million dollars net worth even in the lowest income context. We probably should not have wasted your time and we should not be wasting our time. We misunderstand profoundly what is going on.
Mr. Klein: I am not relating to business losses in agriculture. There are many serious business issues related to agriculture. I was trying to address the poverty issue.
Senator Segal: So there is not much?
Mr. Klein: In the context in which I have grown up and studied agriculture, I believe that the poverty in the cities is worse than it is in the agricultural regions.
Senator Segal: We had a witness from another academic institution who made the case that one is better of being poor on the farm than being poor in the city. Would you subscribe to that?
Mr. Klein: Yes.
Senator Segal: Why?
Mr. Klein: Because of some of the things I mentioned in my talk. There are support relationships out there. There is the ability to have the essentials of life. You do not find people out there who are homeless, or who have insufficient nutrition. You find people who have bad nutrition. I also want to mention that my remarks do not pertain to poverty in the Aboriginal communities, many of which are rural. That is a much more serious issue.
Senator Segal: The net worth number you included in your presentation, the $423,000, that is net of all debt?
Mr. Klein: Yes.
Senator Segal: Net of the mortgage, the operating line at the bank and other things. There is the assumption that there is someone to buy the farm at the $423,000?
Mr. Klein: That is true. These are capital values that are estimated and are never known until they are sold, that is true.
Senator Segal: Can we talk about the 17 per cent that you reference? They had off-farm incomes of $14,000 but lost about $7,000 on farming operations. You took the view that $7,000 was an insufficient number. Is the assessment telling us that farm incomes for low-income farm operations are depleting and that people are bringing more off-farm income to the farm to make up for the circumstance, so they are getting by in that way, hence another reason for us to be profoundly not concerned?
Mr. Klein: Virtually, all the income for most of the farms now comes from off-farm employment; certainly for the smaller farms, all their income comes from that. Those low-income farmers would be doing better if they just left the farm because they are having losses on the farm. These losses, you have to understand, also include depreciation and things that are not out-of-pocket expenditures. They are able to adjust because they delay replacement of machines. In fact, it does not affect their livelihoods as much as having to pay. It is not a continuous expense in that sense.
Senator Segal: I remember a dialogue that look place between the Government of Canada and the bankers who were trying to find a way for Olympia and York not to go bankrupt, that large development firm in Toronto, many years ago. One of the bankers took the view that there is a big difference between liquidity and solvency. When they came to the federal government for $250 million to bail out Olympia and York, the lecture the bank, which had not made prudential loans, offered was that there was no reason not to offer the money because it was a truly solvent company; it simply had a short-term liquidity problem. I recall having said to the banker at the time, ``We have all these farmers in Canada who do not have a solvency problem. They have compelling net worth; they just cannot make the payments. Yet you are delighted to seize their farms and equipment quickly. Why would the rules be different for a big development company in downtown Toronto than they are for the average farmer across Canada?''
Mr. Klein: I do not think it is different. Again, operating as a business, there are people who have cash flow difficulties and so on. I do not classify that as a poverty issue.
Senator Segal: I want to make sure I understand that construct. Having a cash flow problem is not necessarily a poverty issue?
Mr. Klein: No. Even a bankruptcy issue is not necessarily a poverty issue. To me, a poverty issue is one where people have an inadequate ability to acquire health care, food, shelter, clothing — the necessities of life.
Senator Segal: The Government of Canada introduced a farm options program some time ago, and it was for those farms that had, for whatever reason, a collapse in their revenue beneath $25,000 in total. It will take some time for the data to be analyzed and cross-checked, but some 16,000 farmers applied and received grants in the $10,000 range. They were in that $14,000 area of activity. I hear you saying and I want to understand that, just because someone has a collapse in farm income calculated in various different and appropriate ways, if they are living beneath what the low income cut-off says is necessary to sustain oneself and one's family that does not necessarily constitute poverty?
Mr. Klein: Different people have different views or different definitions of what constitutes poverty. My tenant this year was unable to make his rental payments. Now I have to dig out of my pocket to pay the taxes on the land. He obviously is suffering right now. Nevertheless, he still has a net worth of, I do not know how much, but it is significant, and his family is living well, as far as I can tell. However, certainly there is an immediate business loss problem on their farm. There are many people like that, but I do not call that a poverty problem.
Senator Segal: Would it be your general view, Dr. Klein, that when farm organizations and others and the folks who roll the tractors here to Parliament Hill and elsewhere complain about collapsing income, they are overstating their problem? They have not done a detailed economic analysis of how well they are doing. I assume they are being sincere. I have no difficulty with the econometrics of your analysis, but I am looking for your judgment as to why we have a phenomenon in the marketplace of people and ideas that says there is a problem, yet here we have an economic analysis, which seems to be very straightforward, that suggests that the problem is not that difficult at all.
Mr. Klein: The issue comes up as to whether you will be able to make a decent living only in agriculture. There are very few who can do that any more. If you do not include the other types of income, then there would be a serious income problem. Of course, many people would prefer to make all of their living in agriculture and not have to work off the farm. However, the improvements in technology nowadays have allowed people to farm on weekends and part- time to quite an extent. Because of this, the competition has bid up the price of land so that the net incomes from farming the commodities have been reduced, to the point where it is very low in most years. As a result, unless the farms are very big and efficiently run, people cannot make very much money in agriculture. They must make their income in other ways, and agricultural production has become more of a part-time activity. Technology accounts for a lot of this.
Senator Segal: Even though the annual yield may be low, the real estate appreciation over time may build up the net worth of the farmer before retirement?
Mr. Klein: Yes. Those people who are unable or unwilling to access the urban employment markets are the ones in trouble. They have the low incomes. Even they generally have a pretty good support base in the rural areas.
Senator Segal: You made a comment earlier that it would be more efficient if the farmers who were not making it went off to do something else. Would it be constructive for governments to encourage people who are not making it to stop farming, leave the land and go to places where they can find work? I am speaking only of the econometrics. I am not suggesting a moral value judgment.
Mr. Klein: I do not think the government needs to do that. The government needs to stay out of the way and make it possible to access the off-farm employment market. There are many things that take money out of rural communities that could be reduced. For example, in my rural municipality of Canwood, Saskatchewan, RM 494, all the people there paid for my education up to Grade 12, and that of many others, too, and most of us have left. This is a transfer of income from those rural areas to the city. The city is getting the benefit of the education. The education taxes that come from rural property are a way of transferring capital from poor rural areas to richer city areas. Governments can do things like that to help.
Senator Mahovlich: You never mentioned crime. We find that crime has risen in the cities. The more populated we get, the higher the crime. Speaking for myself, if I got desperate, I do not know what I would do. Is there no crime out on the farms? If so, has it increased?
Mr. Klein: I have no data on that. Certainly, there is some crime in the rural areas. My perception is that it is much less a problem in most rural areas, but certainly there is some crime there.
Senator Mahovlich: There is also the fact that immigrants no longer seem to go to the farms, whereas 50 or 100 years ago they headed out West and on to the farms.
I imagine property is purchased as yours was. You own some property out there and you are working in the city. You are hanging on to your property. Why have you not sold your property?
Mr. Klein: It has not been a good investment, I can tell you that. There is still significant investment and immigrants coming from overseas, primarily from places like the Netherlands, who are buying some of our agricultural property. It is going on all the time.
Senator Mahovlich: These people are not immigrants; they are investors?
Mr. Klein: They are continuing to move to Canada. Some of our hardest working and now prosperous farmers are those who have come in the last 10 to 20 years. They are still coming, although not on a wide scale.
Senator Mahovlich: Is it lonely being out West on a farm?
Mr. Klein: It is getting lonelier. There are not so many neighbours.
Senator Mahovlich: Everyone is heading towards the city. I visited Africa and saw that that is a problem there. Everyone is going to the cities, and the cities cannot cope.
Mr. Klein: Canada is becoming one of the more urbanized countries in the world. Australia is probably the most urbanized country in the world, and Canada is on that same track. However, many of those who are lonely, as you put it, out on the farm are also going into the city on a daily basis working or integrating into the urban economy in different ways.
Senator Mahovlich: The farmer keeps himself busier, and if you are busy, I do not think you are lonely. That could be an answer as well.
The Chairman: Lethbridge is surrounded by some very vigorous and generous small communities that are very much attached to the rural areas. We all do things in those communities, and I think they are often in far better spirits and condition than are our cities.
One of our concerns related to these hearings is that when we are having difficulties on the land, as we currently are in many parts of Canada, we worry about what that does to the small towns and vibrant communities attached to the farming areas.
Senator Mahovlich: Years ago, Johnny Carson interviewed a fellow who had sailed alone from England to New York. Johnny Carson asked him if he had been lonely all by himself on the sail boat. He said that he only got lonely when he got to New York and no one would talk to him, not even his neighbour. Loneliness is a relative term.
Senator Peterson: Like Senator Segal, I am struggling with the notion that all is well. I guess it depends on how we look at it.
The accumulated debt now from lack of cash flow is $51 billion, which is a significant number. Even with government support programs, we are only up to zero, so that is obviously not moving ahead. I think including off- farm income clouds the picture because it is a different source of money going toward trying to keep something going that is in great difficulty.
Many wonder why people stay on the farm. Much of the reason is the way of life and much is pride. Many of these farms have been passed down from one generation to the next and no one wants to be the weak link that lets the farm go. However, they cannot keep going. I agree with the net worth number that you cited. It is built-up equity, but each year farmers are dipping into that and very soon, at the present rate, there will be no equity.
In addition to the issue of poverty, we are also dealing with a crisis on the farm. If we do not resolve this problem and our agriculture industry does collapse, the rural communities will be lost, the support structures will be lost, and then we will have a bigger problem with poverty.
Are we heading in the right direction? If another survey were done, would we find that 90 per cent of farmers think everything is great or excellent?
There is no question that this poverty exists. I just saw a report the other day that over the past 25 years child poverty has never dropped below what it was in 1999.
Mr. Klein: I see two situations. One is on the farm and the other is in the rural communities. I do not believe there is a financial crisis for those who are actually on the farms. There are things that come along, such as the BSE situation, which was financially disastrous. We have estimated the total losses to Canada due to BSE at $4 billion over a two-year period. Others have made different estimates on that. It was disastrous, and in such cases governments need to provide rescue assistance.
However, many of the government programs we have had over the last 20 years have been somewhat counterproductive in terms of both alleviating poverty and facilitating adjustment to better conditions. I believe the agriculture industry in Canada is still very strong. I believe we are very productive and competitive worldwide, for the most part, and I think the industry has a good future.
Having said that, there are individuals in agriculture, as there always have been, who are in the process of adjusting, and this will be a continuing process. We live in a market economy where market signals give incentives for people to do different things. I do not think we should confuse that with poverty unless it actually causes people to have a substandard level of living, and I do not see that. I was an active farmer throughout the 1960s and early 1970s, and the situation is infinitely better on the farms today than it was then, in many respects. People's memories are often clouded by the most recent memory, but the people who live on farms now have a much better family living standard than we had in the 1960s and 1970s. There is no question about that.
Senator Peterson: I question whether there is a bright future for agriculture. The Americans and Europeans are doing fine as a result of subsidized prices. They get $8 to $10 a bushel and we get $3.50, if we are lucky.
What is the nation's responsibility in this? Do we want security of supply? Do we want to be able to feed ourselves or do we want to rely on Bolivia or Colombia to feed this country? In economic terms, should we keep that going or do we let the multinationals take over?
If the auto industry were collapsing, I do not think we would be doing studies and trying to figure out what was wrong; we would be fixing the problem.
Mr. Klein: I do not think our agriculture industry is broken. I believe there are things we should do to move it in the right direction, and some of those things have been done over the last few years. Many more things need to be done.
However, I do not believe there is any evidence that our agriculture industry is going out of business or that we will not continue to increase our level of production. Our productivity is growing quickly. There is much data that shows that our output and efficiency continue to increase despite having some bad years. We are competitive in world markets for wheat, barley, canola, beef and pork. We are not competitive in dairy products, but we are generally very competitive. I believe the industry is going ahead and will continue.
Some of the people who work in the industry may not continue or may not choose to continue. We must allow them to make these choices. Agriculture has certainly become much more businesslike than it was 50 or 70 years ago. This is the nature of the industry. That is also one of the things behind its success.
Senator Peterson: I am encouraged by you saying that; I should like to see further studies that substantiate this. I sense we are on the verge of collapsing. Farmers just cannot keep going with negative income and taking away their equity. I am fearful they will collapse.
Mr. Klein: Equity has been increasing and not decreasing. With some individuals, yes. You raise the comparison with the United States and Western Europe. I have a lot of experience in both of those areas as well.
If you talk with the farmers there, you get exactly the same story. It is the nature of the industry. I was just in Minnesota to talk with some of the farmers there. They cannot keep going. What are they to do? The government is not supporting them enough. It sounds ludicrous from our point of view because we know that they are now heavily subsidized in some areas than we are, but we used to be more subsidized than them. It is the nature of the industry. The subsidies do not matter in the end because they get bid into the land prices. The way the market works, in the U.S. and Western Europe, their current family incomes almost all come from off-farm employment, the same as here.
Senator Mahovlich: Where is Senator Gustafson? He is always trying to get us to subsidize farming. This is the most positive comment I have heard from any of our witnesses. I think it is great.
Senator Callbeck: Welcome, professor. Thank you for coming here this morning.
I want to follow up on a question of Senator Mahovlich on immigration. You mentioned there are people coming from the Netherlands and buying farms in the West. This is of great interest to me because I come from Prince Edward Island. By the year 2011, which is only five years away, our working population will start to decrease. By the year 2030, we will have twice as many senior citizens as children. We need more people.
Do you have any ideas as to what the federal, provincial or municipal governments might be doing to help bring more immigrants to rural Canada?
Mr. Klein: Yes, I have some ideas about that. I also think it is a good idea. In fact, as a result of my roots and interest in agriculture, I feel that our government should be encouraging immigrants to go, if not to farms at least to smaller cities and rural areas instead of having most of them go to Toronto, Montreal and Vancouver. I think they could do a lot to rejuvenate the economy in small areas.
I did not get a chance to mention much about rural villages, but one of the big problems in those areas, certainly in Saskatchewan where I come from, is a lack of investment. The roads are deteriorating as well as the buildings. We need investment.
In Saskatchewan, there have been many disincentives to investment over the years. This is what I think we have learned as a society, namely, how important investment is. We have discouraged a lot of investment over the years, and I think that has been a big mistake. What we have seen around the world, certainly in East Asian countries for example, is how important in those cases foreign direct investment is. Investment creates jobs and activity. This is what we have been lacking in rural areas. I think immigrants could do some of that, if they were encouraged to come to smaller areas.
In my opinion, if we did not have immigrants continuing to come here, our country would not have enough young people to give us the growth that we all want.
Senator Callbeck: On another subject, you mention here that the most effective policies to reduce low farm incomes have the opportunity of producing work for farmers.
I want to ask you about the role of the federal government here. Back in the early 1990s, the federal government cut back on the regional offices where people were there to help farmers. Farmers have lots of ideas as to how they may create jobs within the area and bring industry, but they really have no one there to work with them and to help them. Farmers are busy. They cannot take the time to do so.
Mr. Klein: That is right. They are short of many things — capital and banks. Our banking system is not conducive to getting capital transferred to smaller locations. Even small business people in cities have this problem, but particularly in rural areas. That is one of the reasons ATB Financial was set up, not to mention the many credit unions that have been started. It is inadequate, however.
We need a better system of getting capital to entrepreneurs in rural areas. We need assistance for marketing help. In Alberta now, there is AVAC Corporation, a venture capital, government-supported organization, which was set up to try to encourage the development of value-added agricultural industries. These are the sorts of things that governments can do that can be helpful and instrumental in getting opportunities into these rural areas. I think we need much more of that.
Senator Callbeck: You think the federal government should go back to having people in these regional offices that can go out to work with these farmers, whether it is setting up a Saturday morning market, or a cooperative, or whatever it is, to do some of the legwork and to help set it up and carry it through?
Mr. Klein: Yes. One of the problems in agriculture, as Senator Segal has mentioned, is that there are often very noticeable protest movements. The agricultural producers in Canada are not well-organized compared to other countries, such as Japan. Once in a while, they make a lot of noise and bring a lot of media attention. There is an awful lot of lobbying to get the big deal — that is, to get the next billion dollars for emergency payments.
More effective use of public funding would be to do these sorts of things, to have people in the community and to have programs for development. In Agri-Food Canada there was a division at one time called regional development, but it was neither very effective nor given the budget and resources that it required. We now have Western Economic Diversification Canada and equivalents across the country. That is a start. These are the areas the government should concentrate on.
Senator Callbeck: I have one other question about statistics. You say your net farm income is down less than 1 per cent per year. In 33 years — you use 1971 to 2004 — you say it is down roughly 25 per cent. That seems to me to be a significant decline. From your comments, however, I get the feeling that you feel it is not significant.
You talked about a 10-year period there, from 1991 to 2001, where there was an average increase of 3.5 per cent if you take out farms under $10,000.
Mr. Klein: Yes.
Senator Callbeck: In that period that you studied, 1971 to 2004, if you took out those small farms, would there be an increase?
Mr. Klein: I am not sure. There could be. Another part that I did not put in this paper is that, if you go back to 1960 and up to 2004, the rate of decrease is only about a half of 1 per cent per year.
Therefore, one can use the data in different ways to tell different stories. Although net incomes have been trending slowly downwards, the real point is that one can use different combinations of those numbers to make the situation seem a lot worse than perhaps it is. One must be careful with the figures.
There is no question that the net farm income from farming operations has been trending downwards, but this is in line with the growth in productivity and the competition in the marketplace from people who work in cities, who get most of their income in cities and pay a little bit more for land, which bids up the price of land, making the margin tighter. The margin gets tighter and tighter all the time.
I know a person who works full-time in Mississauga and farms full-time in Rosthern, Saskatchewan. He flies out to Saskatoon and can seed a quarter section in about a day. He handles all his farming from Mississauga. The technology has allowed him to do that. When I farmed, I could not do that. My widest implement was a 12-foot cultivator.
Now people can do that, so they bid up the price of this property, making it difficult for people who are trying to live on the farm to compete. We cannot prevent that situation, and we really do not want to prevent it. That is what is happening.
Senator Mahovlich: We are wondering what the government can do. In the West, Winnipeg once had an NHL franchise hockey team, which was good for Winnipeg and good for business. People were attracted to Winnipeg. This is why the value of a team goes up. All of a sudden, someone from the States comes in with a billion dollars, somebody is having a tough time in Winnipeg, the team is gone, and the public has lost all of this. The city of Winnipeg has lost.
Could the government have done anything for Winnipeg? What could we have done for that city?
Mr. Klein: Actually, the government has done a lot for Winnipeg over the years. It was the centre of the railway.
Senator Mahovlich: It is difficult for the government, though, because once it helps Winnipeg, then Quebec has a problem. It is a tough situation. We still have not found the answer to some of these problems.
Mr. Klein: If you want me on record on this, I do not think the government ought to be involved in that kind of a business. Perhaps the government could set the conditions to make it more possible, but we really need the private sector to take care of the hockey teams.
Senator Mahovlich: Would you say the same for farming?
Mr. Klein: I think we have to treat farming as a business.
Senator Mahovlich: When other countries are subsidizing their farmers, how do we compete?
Mr. Klein: I do not think that affects us very much. It depends on how countries subsidize.
Senator Mahovlich: We are part of the World Trade Organization and are competing with the rest of the world. That is the way the future is going.
Mr. Klein: We are competing, and I think successfully. I do not think that what the other countries are doing is affecting us very much. Yes, we would like to negotiate a better trade deal, but I think we are doing fine. I think we are holding our own.
Senator Mahovlich: I guess it is up to Mr. Emerson to get us a good deal.
Senator Peterson: I am still struggling with this. In any other business, when your operational costs are higher than the price you get for your product, you are going broke. If you become competitive and produce more product, you will just go broke quicker. I struggle with that. The price they are getting for the product is what is giving a spread, so they have a positive spread. We have talked about that.
Let us get back to what we have assembled here for. What is poverty? How do you define poverty?
Mr. Klein: For me, poverty is where people have an inadequate standard of living, a standard of living that we, as Canadians, feel is inadequate; poverty is present where people are unable to have proper clothing, shelter and food and enjoy a level of living that we think should be possible, given how we live.
I apologize for stumbling over this definition. I do not have a good definition to offer. I am not a sociologist. However, when I look at the people in rural communities, I do not see a lot of what I would consider poverty. I see people who live poorer than I do in the city, but they are genuinely happy with their lot. They do not need or want much more. I do not think I would call them living in poverty.
Senator Peterson: As we move forward, should we develop a template that would attempt to incorporate these issues you are talking about and then see how many people fit into that template?
Mr. Klein: It is difficult to produce such a template. I struggle with this, partly because I come from a farm and did my own farming for a long time, and I saw how the conditions were then and see how conditions are now.
Many people who work with me at the university study the data. There was a Maclean's article on rural poverty a year or two ago that does not reflect my understanding of the situation at all. Both my wife and I come from small towns in Saskatchewan. If you drive through some of these towns, it looks like there is a lot of poverty there. However, if you actually get to know the people in those communities, you will see the dynamism there. People are buying houses for $20,000 or $30,000. Many communities, such as Shellbrook, are offering zero taxes for three years if you build a new house there. People who nobody knows are moving there. They work in the city. There are a lot of things happening. They are different kinds of communities than they used to be.
My mother-in-law lives in Parkside, Saskatchewan, in a small house. She is on old age pension, with a supplement, which is inadequate for our standard of living in the city. She is happy. She does not get much television, but she is happy. She has neighbours around her. The trouble is that her water quality is poor. I do not like drinking her coffee because you can see an oil slick on the top of the coffee cup. There is no transportation out there, so she must continue to drive, even though she ought not to be driving anymore.
When my mother was ill, to get her into a nursing home, my brother had to drive from Saskatoon to Shellbrook to take her two blocks from the hospital to the nursing home, because there is no taxi or other service. Those are the kinds of things that are difficult in these rural areas.
Up until that point, rural inhabitants seem to live very well. We cannot move them. If we try to get them to come to a city, nobody will come.
Senator Segal: Mr. Klein, I want to revisit some of the macro-indicators for a moment. We have had testimony here this week that the use of food banks is up in many parts of rural Canada. They have had to set up a questioning process to ensure that people are not using the food banks too frequently and that they are truly in need when they do use them. I read a piece the other day that suggested that farm income has taken its deepest dip in Manitoba and that the utilization of food banks has increased in rural areas.
Mr. Klein, you talked about the anomaly of the increase in productivity, essentially, and about agricultural productivity in Canada being one of the great miracles of hard work, animal husbandry and superb farming technology. However, we are not seeing those elements reflected in an increase in income of farmers. Many people in the food industry are making a great deal of money, but not the farmers. Your example to the committee of land values on the rise is indicative of other reasons that it is happening. Through syndicates in Saskatchewan and elsewhere, people are purchasing partnership units of rural and fallow land. The lines relative to protein requirement and protein interest relevant to the diet in places such as India, China and Asia indicate a demand for more feed. That means we will have a future supply problem with respect to grains and oilseeds. However, there is still the problem of farm families trying to survive, given the current U.S. subsidies. These factors combine to create a bridging issue for the government.
Based on the statistical and econometric analysis you offered, I should like to know your sense of the strategic value for our national economy of having a self-sustaining farm population in place that is able to deal with our country's food production needs on a domestic basis. I am told that we have less than two weeks' inventory should avian flu necessitate the closing of our borders to stop all food imports and exports. I hope that does not happen but there is always the risk.
We invest heavily in other industries, such as automotive, with cash for locating manufacturing plants. As well, we have a better employment insurance plan for auto workers to keep the trained workforce in place in times of seasonal downturns. We invest heavily in aeronautics to keep those Canadian companies competitive on a world basis. We tend to run into physical framework issues when the public service tells us that we cannot meet the need. We work through the other industry groups — defence, nuclear, aeronautics, automobile — but when we get to the agriculture industry, we seem not to have enough money to meet the needs of our farmers. Is there a strategic value, in your judgment, to sustaining people on the land? In the European system, they are recompensing farmers for due diligence of watersheds, the environment and general stewardship of the land. Those issues are important. The normative economics will determine who survives and who does not survive, which is the way in which large parts of our economy operate. That is why we have a dynamic economy. If we have fewer farmers and fewer but bigger farms over time, that would not be a bad thing, but those people whose lives are shattered in the process, well that is the way the world works.
I am not trying to suggest any insensitivity or hard edge to your proposition because you are simply giving us solid, econometric analyses and you are being frank with us in respect of the numbers. However, is there a way to value that strategic presence on the land and, if so, how would we do that?
Mr. Klein: We should not forget that Canadians, through the Government of Canada, invest heavily in the agricultural industry, primarily through research. Agricultural research is a major activity of Agriculture and Agri- food Canada and is the basis for much of the productivity gains made throughout the last 100 years.
Senator Segal: An example would be the development of canola.
Mr. Klein: That is one of the stars but much research is happening all the time. For example, there is a large regional presence in Saskatoon, Swift Current, Lethbridge, et cetera, and right across the country. There is a network of research centres with highly skilled researchers in many areas of agriculture. This has provided the basis for the growth in productivity and continues to this day to be the number one method of government assistance to the industry. That needs to continue because without it we will not progress nearly as well. Of course, there is the other issue of how much of that should be privatized, but we will leave that aside for now.
I do not share the worries about self-sufficiency in agricultural products. For most of the produce grown in Canada, we are large net exporters. We are likely to be that for a long time because we do not have a large population but we have a huge land mass and agricultural production machine. We need to be competitive in the export markets. This differentiates us from Western Europe, where currently they are in great difficulty in the agricultural industry because of the over-protectionism offered. We assisted this by helping them after the Second World War. It would be a mistake to put programs in place that would begin to insulate us from world markets. We need to be competitive and to grow in those markets.
Should we develop programs to pay for environmental goods and services that are provided on the farms? I think we can make an argument about that. In fact, we are trying to establish a research program on that at the University of Lethbridge. A pilot program in Manitoba is looking at this and interest in this is on the rise. However, we must take care if those program payments were developed that they not be capitalized in the price of lands, or nothing will help. If the payments were capitalized, they would benefit current landowners only and not the industry in the future. Should we want to do that, we would have to find a way to compensate landowners for these environmental goods and services. Certainly, we can make an argument for that.
I would also like to see some reversal of the trend of farmers leaving the farms. I believe this process is slower than it used to be, in part because people can continue to live in rural areas and commute to cities, thanks to improved transportation. There has been a huge transfer of people out of agriculture over the last 50 years but it is slowing down. We can begin to reverse this trend. I anticipate such reversals in the future as we develop more industry in rural areas, such as biofuels.
Over the years, we have unwittingly set up a number of incentives for people to move out. Many of the subsidy programs and others in agriculture have had a kind of perverse effect, whereby trying to help to stabilize the situation has, in fact, made the situation worse. We could cite many examples of those and the government has learned from this. In recent years, I have tried to be careful about getting back into that kind of program. Of course, programs such as CAIS have led to many debates in the agricultural community. Do we want a disaster relief program or do we want a year-to-year subsidy program — a kind of deficiency payment program for prices? These are complicated issues but have learned a great deal from them. All who are involved in the agriculture industry want to see the industry grow and prosper and the people prosper as well. What I see for the most part is that people living in rural areas are just doing okay.
Senator Segal: In the government's recent economic plan, the Minister of Finance talked about moving toward an earned income supplement for all working Canadians. The notion is that if you are working but what you are taking home after wages is insufficient to live on by any normative assessment, the system should top you up. That would be for working people, so as to encourage work and to help people over the welfare wall. Would you be in favour of farmers being included in that?
Mr. Klein: I would be in favour of a negative income tax plan. It is hard to implement. We need to have incentives, of course, so that people still have incentives to work harder, work more and get better trained. We want to keep our incentives in place to do that.
The best type of social assistance program is something like what you mentioned, a negative income tax or earned income supplement, if we can design that. Farmers should be included in that, but it has to be their family income, and we need to have ways to develop how to count the farm income. There are many ways of changing the values from year to year, whether grain is sold after the first of January or before the end of December. Given that most farmers are still on a cash accounting basis, it makes it more difficult to know and to develop measures for knowing the real farm income.
Senator Segal: If you assume that an earned income supplement would be tied to filing your tax form, then your obligation is clear under the law to tell the whole truth about your income. For example, for folks who own small grocery stores, CRA has a normative formula as to how much that grocer is likely taking off his shelves to feed his family, and that must be assessed in the process to ensure that fair is fair. Are you saying that, if those technical issues could be addressed, you would not have an objection in principle?
Mr. Klein: It would be very good system. If people have inadequate incomes, give them some income, but do not give it to them in the form of a higher wheat price.
Senator Segal: You may not want to deal with the next question because I realize that in some parts of the Prairies taking a side on this is an act of raw courage, but do you have a view in terms of the economics as to whether the average Canadian farmer in the oil and grain seeds business is better off with the Wheat Board or better off with other options? You do not have to answer. You can take the Fifth Amendment if it is easier for you.
Mr. Klein: We have a highly regulated grain system, both in the marketing of grains and in the release of new varieties that have hampered the growth in the industry over time. The Canadian Wheat Board has adjusted substantially in the last 20 years to accommodate requests for more openness; however, it still needs to adjust further to provide the kinds of signals that the business people really need.
Senator Peterson referred to the fact that the prices in the United States might be quite a bit higher than in Canada. In fact, a farmer in the Prairies would probably observe that now, because grain prices around the world have gone way up in the last several months. Much of that has to do with the burgeoning ethanol industry in the United States, but there have been other reasons as well. However, the grain prices have gone up. Nevertheless, the average farmers in Saskatchewan would not see this because they are still getting the initial payment from the Canadian Wheat Board.
Right now, the wheat board is earning more, and one year and one month from now, it may show up in part of the payment, but the farmers do not see this. However, they will be making planting decisions soon, and unless they are a lot more informed than many, they do not see what the grain prices are really doing. It hampers the decisions made on the farm, and it hurts in that way.
Senator Segal: You talked about getting more industry and other businesses into the rural areas, so the off-farm income side can be advanced and broadened. Mr. Chrétien did some of this and Premier Davis did this in Ontario, where regionally large government departments, back office operations that were labour intense, were moved out of expensive real estate in Ottawa, Toronto, Calgary or Vancouver into rural centres like Kingston and other places to encourage a local employment base that might provide secondary income.
Assuming that government does not do complex things necessarily all that well at the micro level but can make macro blunt decisions, such as move this tax department back office there or OHIP here, does that strike you as a constructive way to be supportive? Do you worry that there might be other distortions of the marketplace?
Mr. Klein: It does. For example, the Alberta Agriculture Farm and Rural Development department did that two or three decades ago where they put major offices in Olds, Grande Prairie and different smaller centres, and that has had quite an effect on the economies of those areas, not just the towns of Olds but also in the surrounding 50 kilometres.
On the other hand, some inefficiencies are involved because now people who work in those smaller areas have to commute to the capital city.
However, I am in favour of doing that sort of thing. Governments can and ought to do more of that.
Senator Segal: Do you remember the agricultural representative, or ag rep?
Mr. Klein: Yes, that is what I was hoping to be when I went to university.
Senator Segal: Maybe you are a macro ag rep here today. I visited with the Manitoba agricultural ministry, and it has 45 little districts, small offices and people who are playing that role in some way. Are we missing the value of the agricultural representative? Most of the governments have done away with it; some still do have it. Do you think that time has passed for the role of the ag rep who can get you advice on how to use some new farm chemicals, assist with farm-level economic decisions or link you up with government programs?
Mr. Klein: No, I do not. This is one area where many governments, including in Alberta, have cut back because they saw it as a cost-saving measure. It is also the case particularly in Saskatchewan also. These decisions are made in capital cities by urban people who do not understand the needs of agricultural people. The farming community has largely adjusted to its loss, but it is now getting information from sources that have a vested interest, for example, Cargill or input supply companies. A lot of the information is useful for their farms, but these firms have a vested interest. That is problematic, and many of these rural representatives of the agriculture department have become clearing houses for government program payments, administrative centres and so on.
I believe we need to rethink the role of having extension people out there. We do not do well with agricultural extension in this country. We never have. It is part of the problem of our federation, the division of powers. If you contrast it with the U.S. where they combine the research and extension at almost all the land grant universities, in Canada, we define the research to be a federal responsibility. Therefore, we have the network of federal agricultural research centres, but extension is education, which is a provincial responsibility and never the two shall meet. This is a problem in this country.
Senator Segal: What would strike you as the necessary professional competencies by which provincial or federal governments should be able to make informed decisions with respect to agriculture and agricultural economics? Working at an organizational chart of a federal or provincial department of agriculture with 20 people in the top three ranks, how many of those people should have had some formal farming experience or be a product of one of our great agricultural universities, grosso modo?
Mr. Klein: It is getting to be a problem because there are very few people coming up like I did, who grew up on a farm, farmed and then went on to university. On the other hand, there is less need now than there used to be because the business has become so big, and it is important to look at all aspects of the value chain. We cannot look only at agriculture on the farm anymore. It is part of an integrated food-delivery chain. If you include the whole agri-food industry, it is still the largest in Canada in terms of employment.
Senator Segal: That includes all the food processors, et cetera?
Mr. Klein: Yes. It is correct to include Agri-Food in Agriculture Canada. It should have been done earlier. As a result, you need to have people who are familiar with these other stages, and so I think we need people with different kinds of experiences. We certainly need people who understand the thinking at the farm level and have experience, and so on, but we also need to have the business people, people with training in international markets, training in sociology, history and many backgrounds we need to make this industry work well. We make a mistake if we only look at the narrow biology or agricultural economics of the farm.
Senator Peterson: I do not think it matters who sells your product if you are not getting a good price for it. Certainly if individual farmers start competing by themselves in the world market, they will get beaten up badly and quickly. That is a comment.
As we move into biofuels, do you think that policy should be taken to keep out subsidized corn, soybean and canola south of the border?
Mr. Klein: I do not think there will be a need for that. At the present rate of expansion in the U.S., they will be out of corn completely in a couple of years. It is unbelievable what is happening there.
In general, I would not think that would be a good idea anyway. In Canada, we need to develop our own biofuels industry, and we have some challenges in terms of biofuels. We have many logistical issues. It is a pretty big topic. In a nutshell, we have most of our production potential in Western Canada for cereal at least — cereal-based ethanol production, or oilseed-based biodiesel. Most of our cars are here in Eastern Canada. It is a long way between these places and you cannot put ethanol into a pipeline. Therefore, we need surface transportation — trucks or rail cars. It makes it not only expensive, but we do not have good linkage across Canada over lands. There might be a possibility to put some on boats that go through the Great Lakes system, but there is a logistical problem there. We also have our green marketing system set up for handling grains for foods and feeds. We need to design something different for bioproducts.
We also must be aware of the impacts this could have on our livestock industry, particularly pigs in Manitoba and eastern Saskatchewan. There will be a great deal of pressure on the pig industry. There could even be pressure on the cattle industry in Alberta. We do not know this yet. No one has studied it or even contemplated studying this. We should be studying this. We are seeing unusually high grain prices, caused primarily by this rapid expansion of ethanol in the United States that will have a big impact on the agricultural economy, regardless of whether we produce biofuels or not.
I am also a little concerned about some incentives being offered to encourage groups of farmers to get into the business. I am not against encouraging farmers to help themselves, but I am worried about this business. This is a big business. There are huge economies of scale involved. It is really necessary that it is professionally managed.
What you are observing now in the United States is that almost all of the smaller new-generation cooperatives that started in the ethanol business have all sold out to bigger companies that are being managed centrally. There is a huge revolution going on in the management and development of the ethanol industry. We would be making a mistake to set up a number of small plants that may become uncompetitive very quickly and really not provide us with much ethanol either. There are a number of issues there.
I mentioned to the chair of this committee that I am writing a green discussion paper on the biofuels industry now that will be due for presentation in March. We have seen an awful lot of hype and vested interests who are promoting this. It could be good, but we must be careful because it may have major impacts on agriculture in Canada.
Senator Peterson: To develop, the industry will require subsidies to build the plants to begin. There are subsidies put in on excise taxes and so forth, which all Canadians are paying for. I have no trouble with market forces determining winners and losers, but you have to start at an even level.
Many farmers are looking at this as the silver bullet. As you have said, it is not, because to be economical, the minimum-sized plant is 100 million litres, and there are so many who want to build 25-million-litre plants. The minute they are built these plants will be uneconomical and will be taken over by large producers.
If we go down that road and taxpayer money is in there, we must have a type of program from which we can get some benefit and not be held hostage by an inability to provide the input product or what comes out the other end.
Mr. Klein: Actually, the minimum size now is almost 130 million litres, but many are now being built up to 300 and 400 million litres. My understanding is the new plant that just opened at Lloydminister is rated at 120 million litres, which would be the very bottom size that should be considered in terms of economies of scale. There are much cheaper costs of production if you go bigger than 120 million litres. At less than 120 million litres, costs seem to be much higher.
The Chairman: During these hearings and also in the last study that we reported on in June, we have discussed the difficulties with grains and oilseeds. This issue arose constantly as one of the few positives in terms of opportunity for our farmers. Listening to what you have said, is this not something that we should encourage those who wish to bring colleagues together and begin this as an effort to keep up their own production and money earned?
It seems to be, in a dark issue, one of the bright lights. It is too bad Senator Mitchell is not here today because he has been doing a lot of work on this, as have other senators. Listening to you, I know one should caution in any new efforts that are starting. There are always many questions and insecurity as to how you go about it. Given the foundation of this industry now and how far it has come, is this not a possibility of assistance to our farm industry in Canada?
Mr. Klein: Are you talking about biofuels?
The Chairman: Yes.
Mr. Klein: I do not believe we really know the answer to that question yet. The work I have completed with some of my colleagues makes us a little worried about the development of the industry. There are a lot of things that need to be worked out.
For one or two plants, there is no problem. If we get to big production, like the 5 per cent target, that would take a lot, and we must get the ethanol to where the automobiles are. I believe we are in a time now, and certainly out West, where the economy is booming.
I was told in Minnesota that it is costing $175 million to build a plant today that could have been built for $100 million two years ago. I suspect those types of ratios will show up in western provinces as well. Construction costs have gone up. We are now beginning to build an industry at these much higher investment costs at a time when the major feedstock has almost doubled in value in the last six months and oil prices have come down from their peak a few months ago. The ethanol industry is hugely profitable and there should have been no need for any kind of government assistance, at least until now.
It is worrisome. There are three major elements that affect the profitability of ethanol. One is the price of oil, which gives the baseline price of ethanol. Two, is the price of the feedstock. In the United States they use corn. We will be using wheat out west and corn in Eastern Canada. There is some room for expansion in Ontario and Quebec with corn, but there is limited room.
The most room is in Western Canada. We have wheat and we have a system for wheat that is based on hard red spring wheat for flour for bread. It is a low-yielding crop. We have all kinds of restrictions on the marketing, but we also have restrictions on the release of new cultivars. I am very happy to see they are thinking of changing that system now. We have low-yielding crops and short seasons, so there is only so much we can do.
There are issues in using this kind of feedstock that has doubled in value, with natural gas prices, also important because they use natural gas for heating, and with the use of water. Water is also becoming an issue. Ordinarily one would think that maybe we should build an ethanol plant in southern Alberta, because that is where the grain yields are the highest with the irrigation, but the water requirement would be very controversial. If we put an ethanol plant in southern Alberta the water is gone.
I think there are a lot of things that we have not discussed. There will be two major issues, ethical issues, that we will be debating probably in the future and maybe the quite-near future. One is food versus fuel. The ethanol industry is already causing food prices to go up. The absolute worst thing for poverty around the world and here too is higher food prices. Food prices go up because we are burning food for our cars. I think will be an ethical issue we will be debating in the near future.
Second is the environmental issue. There is a bit of a gain in greenhouse gases from using ethanol. There is a little bit more if we use ethanol from cellulosic materials, but we are a little further away from that, a little bit more if we go to biodiesel from canola or soybeans, but we are far away from that. It is only a bit of a gain on greenhouse gases, but there is this water issue. Therefore, there are benefits and disadvantages environmentally from the biofuels industry.
I am not convinced that it will make much difference to the farm incomes. What we have seen in the U.S. is a small increase in the neighbourhood of the ethanol plant. The best they can calculate, the net incomes are up less than one per cent. It is very small.
There are small employment effects in the regions where they have the ethanol plants, so there is a little bit of rural development that comes with this, but it is small. It is in the right direction, but it is small. All the benefits tend to be small: small gain in greenhouse gases, small gain in farmer incomes and small gain in rural development. They are all in the right direction, but they are no panacea.
The Chairman: This has been a very interesting and different discussion for our committee. I think it is fair to say that the witnesses who have appeared before us have come through the work they do in supporting the industry and also the work they do in the industry. It has been a rather plaintive and dark discussion. You have brought a different perspective into the issue. I think this is certainly one we will have to look at.
I, too, am disappointed that it was not possible for Senator Gustafson to be here today. He is our deputy chair. He has been on this committee as long as I have, which is a heck of a long time. He is a family farmer and a very good one.
Mr. Klein: One with off-farm income, obviously.
The Chairman: Yes. He is a tremendous proponent of the industry and does it through his own efforts. We, here, can almost hear on a daily basis from Senator Gustafson the reality of changes in prices and marketing. As a westerner, given the endless droughts and other things of nature that batter our prairies, it would have been an interesting discussion to have between yourself and Senator Gustafson. Unlike the rest of us, he lives on the land and is very aware of the problems that our farmers are experiencing.
I do not think you have been discouraging us at all from pursuing our intense interest in studying this issue, but you have brought another perspective to it that we need to hear.
The committee adjourned.