Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 12 - Evidence - Meeting of February 28, 2012
OTTAWA, Tuesday, February 28, 2012
The Standing Senate Committee on Agriculture and Forestry met this day at 6:10 p.m. to examine and report on research and innovation efforts in the agricultural sector (topic: understanding the significance of new entrants in the agriculture and agri-food innovation system).
Senator Percy Mockler (Chair) in the chair.
[English]
I welcome you to this meeting, honourable senators and witnesses, of the Standing Senate Committee on Agriculture and Forestry.
[Translation]
My name is Percy Mockler, senator from New Brunswick and chair of the committee.
[English]
I would like to start by asking the senators to introduce themselves, please.
Senator Mercer: Senator Terry Mercer from Nova Scotia.
[Translation]
SenatorRobichaud: Fernand Robichaud from New Brunswick.
[English]
Senator Mahovlich: Senator Frank Mahovlich, Ontario.
Senator Plett: Don Plett, Manitoba.
Senator Buth: JoAnne Buth, Manitoba.
[Translation]
Senator Maltais: Ghislain Maltais, Quebec.
[English]
The Chair: The committee is continuing its study on research and innovation efforts in the agricultural sector. Today, we are focusing on the understanding of the significance of new entrants into agriculture and agri-food innovation.
[Translation]
The topic of this meeting is understanding the significance of new entrants in the agriculture and agrifood innovation system.
Today we will hear from Frédéric Marcoux, President of the Fédération de la relève agricole du Québec.
[English]
We also welcome Justin Beck, Past Chair of the Canadian Young Farmers' Forum; Lynne Markell, Government Affairs and Public Policy Advisor, Canadian Co-operative Association; and Lynn Bishop, Co-op Coordinator, West End Food Co-op.
Thank you for accepting our invitation and being here this evening to share with us your vision and your thoughts on the agri-food sector in Canada.
Justin Beck, Past Chair, Canadian Young Farmers' Forum: Thank you, Mr. Chair. My name is Justin Beck. I come from Kings County, Nova Scotia, from a family hog farm started by my father. I am currently working there and helping to manage a 1,100 acre grain farm where we grow corn, wheat, and soybeans and custom store and dry grain for other producers.
I have been involved with the Canadian Young Farmers' Forum for the last four years as a director. I held the position of chair, and I am currently past chair. Last year, at our AGM, we asked our members to do a breakout session about what they thought the barriers for their operations would be currently and in the future, short term and long term. We tasked them with coming not only with barriers but also with solutions to those barriers.
In the seven minutes I have here today, I will try to summarize the report that came out of that and highlight some of the key areas that our members came up with.
The first one that kind of was a common theme among our members was the issues surrounding equity or lack of equity. For most of the young farmers coming out of college or just wanting to start a farm, the equity column on the balance sheet is not great when you look at a farm that is now worth $1 million, $2 million, $5 million or $10 million. The young farmer does not have the equity to make that work. When you go to a financial institution, the atmosphere to get approved for a loan that big is not there now, and the application is not accepted. That is a key issue when you look at young farmers, either from a family farm or trying to get into farming from scratch. It is a huge barrier.
There was talk in the breakout session among the members that some provinces do have some interest-rebate programs. One solution is setting up a capital fund that a beginning farmer could use to help boost their equity position. The other thing that was talked about was the idea of building relationships with current farmers who want to transfer their farms. We have many farms that do not have anyone coming to take over, whether family or someone else, but the farmers want to see the farms passed on. There are current farms where the farmers want to cash out, which is fine. However, there is a group who do want to see their farms passed on and do not have family members or someone close to take that over. That was the issue: How do we bridge that gap?
That led into our next point, which is working on relationship management and communications. A big barrier to young farmers' success in the future was seen to be the ability to build relationships with another farmer or, if you are on a family farm, to talk to mom and dad about the succession, about just opening up the books. I am on a family farm, and it is tough talking to mom and dad about those issues when you come all the way through being told or asked to do stuff. When you start delving into taking over the farm, it is a big discussion and a big issue around the farm table. You may have heard of Dr. John Fast. He said three main things are key to a successful transfer: a profitable business, good communication, and time. The key there is "good communication and time, " both talked about at our breakout sessions by our members, We have to find ways to not only get the communication skills that we need, but also to do it in a timely fashion so that we can increase our chances of success for these transfers.
That leads into the next part that came up around the table, which was education and professional development. If you go back 20 years, farmers could work hard and do well. We are not in that era now; we have to work smarter, and then we will do well. It is not always about how many hours you put in on the tractor seat or in the barn; it is how you can deploy those hours more effectively and more profitably. It is this idea of professional development. The generation of farms coming up for transfer operated in a time when you could work hard and you did do well. That is where we are seeing a change now. That does not work, and we have to have the softer side, the business side, which is vision, SWOT analysis, and strategic planning. We have to have that education if we want to do well and to succeed. Many of our members highlighted that as a key area that they felt could and would move their farm forward.
A group of farm leaders did some statistical analysis and found that, just by writing down your farm or business vision, you can be 20 per cent more profitable. Again, that is a statistic, so they would have done a bunch of tests to prove its efficacy. It is the softer things that the next generation sees as important, and we have to get that down and transferred. That is where our forum, the Canadian Young Farmers' Forum, has picked up. We have said that that is an area we can do well in. Along with farming, I also do welding, which is another trade.
Communication is something that you cannot just read and be an expert at; you have to practice it and massage it, and the only way to do that is through communicating. That is the main goal of our forum, to provide education and an open forum where you can talk to other young farmers and pass ideas around.
We have also implemented best management practice workshops in all the provinces. They deal with the professional development side of things, working on a vision, working on the SWOT analysis strategic planning — the softer side of the business that farm leaders of tomorrow or of today are picking up and will have to do if we want to be successful.
There are three main items that we drew out of our list of 15, and I brought what the list came out of. The first is the equity issue, or lack thereof, on the balance sheet for young farms entering and the real lack of any federal program to help address this. I would say that many of the BMR programs in the past have been designed to help maintain the current farmers' equity and not to help build or develop a young farmers' equity portfolio. Let us face it: Under some of them, if you had a loss you would not see a payment or could not see any benefit from that for a couple years. For a young farmer, that would mean you are out of business. There really has not been a program to help move that along. With saying that, there are programs that our members see as valuable, like our advance payment program. This allows young farmers to get access to capital to be able to purchase inputs at a cheaper price because they can maximize the discounts from dealers, and stuff like that. There are programs that have been beneficial, but when you look at the equity side, the current programs were not designed to help the young farmer build that portfolio.
The second and third are relationship management and communications and dealing with and tackling the professional development side in the industry. As I said, the Canadian Young Farmers' Forum has been dealing with communications and professional development to help young farmers succeed in this ever-changing and ever- competitive industry.
[Translation]
Frédéric Marcoux, President, Fédération de la relève agricole du Québec: Good evening, ladies and gentlemen. My name is Frédéric Marcoux, and I am a young dairy farmer from the Beauce, on the south bank of Quebec City. My father and I own a herd of 45 dairy cattle, a much smaller farm than the average dairy operation. We are also maple syrup producers.
I have been president of the Fédération de la relève agricole du Québec for the past three years. The federation is divided into 14 provincial member associations whose purpose is to promote, advocate and develop the professional, economic, social and moral interests of its members. We have more than 2,000 members in Quebec.
There are currently 30,000 farms and about 42,000 farmers in Quebec. We lose between 600 and 800 farms every year. We would need 400 more farms to keep the number at the known threshold and thus maintain the regional dynamic.
Nearly 8,000 young people between the ages of 18 and 40 are business owners in Quebec. Approximately 40 per cent of that number are dairy farmers and 27 per cent are involved in agricultural production. There is therefore every reason to believe that young farmers in Quebec are increasingly turning to dairy farming, even though there is general pessimism about young people entering that type of production. It has been established that 73 per cent of acquisitions by young people are done through transfers of family businesses, whereas, in 27 per cent of cases, buyers become owners by establishing their own businesses. Nearly 10 per cent of those 8,000 young business owners do not come from a farming background. There is room, and people are entering our sector.
The major challenge that young people face when they take over the family business is the virtually incomprehensible difference between its market value and its economic value, which is one-half the former.
One of the major values that are different from those of the previous generation is work-life balance. Young people love working in the business but do not necessarily want to devote as much time to it as their parents did. That attitude is changing.
I will conclude by describing a few persistent myths about young farmers.
The first myth is that there is a shortage of young farmers. We often hear that young people are not interested in farming. From our point view, that is false; an enormous number of young people are interested in farming, but little headway is actually being made in transferring businesses. There have never been so many young people registered at agricultural training institutions. They are there, but their dreams disappear during their studies.
Another persistent prejudice about young farmers is that their small numbers are due to low profitability in the sector. We disagree with that. The problem is that, as soon as the sector becomes profitable, there is an increase in production assets, which raises an additional barrier to young people becoming established. It is a vicious circle. And it will not be resolved if we rely solely on that logic.
Another myth is that it is necessary to increase the size of the business in order to transfer it. That also means increasing the workload and expenses. This is not a scientific observation, but we sense it in the field: our generation is much less interested in the management of large businesses than in better management of the business. The attitude is changing from that of previous generations.
One final persistent myth about farm transfers is that producers believe they will pay an enormous amount of tax when they transfer their business. That is false. There is not any positive more discrimination toward a transfer than there is toward the dismantling of a business. A business will pay tax of between 3 and 10 per cent on the total market value. You have been directly or indirectly involved in businesses in civil society; if you transfer a business in civil society, you will pay much more tax. People who dismantle their business rather than transfer it should be more penalized. Perhaps the comparison is not perfect, but I could cite the example of France, where every farm that is taken out of agriculture and involved in an economic activity other than agriculture is taxed more. A fund has been created for that purpose, and it is dedicated to establishing young farmers in a business. Could we establish the same logic here? Directly, no, but this is an approach that we can draw on to establish other tax measures.
I believe I have finished with my subject. Thank you.
[English]
Lynne Markell, Government Affairs and Public Policy Advisor, Canadian Co-operative Association: My name is Lynne Markell and I work in co-op development and government relations for the Canadian Co-operative Association. I will begin with a general overview, and then I will turn it over to my colleague, Lynn Bishop, from the West End Food Co-op.
The Canadian Co-operative Association is a national organization for cooperatives representing more than 9 million co-op and credit union members in Canada from over 3,000 organizations. This year, 2012, has been proclaimed the International Year of Cooperatives by the United Nations in recognition of the contribution co-ops make to the social and economic development of communities around the world. We are wearing our buttons for the international year. I should have brought buttons for everyone; I will make an arrangement to get you some.
Our members operate in all sectors of the economy, but we have some very large food and agriculture members, such as Federated Co-operatives, United Farmers of Alberta, GROWMARK, Co-op Atlantic, and Granny's Poultry Cooperative. As well, five dairy co-ops are members: Gay Lea Foods, Farmers Dairy, Scotsburn Dairy, Northumberland Dairy and Organic Meadow. There are more than 1,300 agricultural co-ops in Canada, and most of those smaller co-ops are affiliated with a provincial association, and those provincial associations in turn are our members.
As you know, the average age of Canadian farmers is increasing, making it more important than ever to bring new entrants into farming. Today, we will talk about who some of those new entrants are, how the co-op business model is helping the new entrants and what else is needed to help those new farmers thrive in the agriculture and food industry.
We have some recommendations for you as well about education and training programs, government regulations that are appropriate for small and medium businesses and co-op development programs.
We all know that new entrants are needed to replace retiring farmers, but they are also needed to revitalize the agriculture industry and help it adapt to new circumstances. You have already heard that people coming in are doing things a little differently. Youth and other new entrants to farming are bringing new ways of looking at agriculture, producing different kinds of food and products, reaching out to new markets, adapting more sustainable practices and connecting with customers in a different way.
The Canadian Co-operative Association in partnership with others and with the federal government runs programs to assist new co-ops to get started. Roughly 25 per cent of the new co-ops are agriculture and food related. It is the most popular type of co-op to get started in this country and, increasingly, those co-ops are being started to accommodate some or all of the needs of new farmers.
While the sons and daughters of existing farmers are obvious new entrants to agriculture, we have also observed some other groups coming into farming. I am pleased to be here today to tell you about some of those other new entrants. We have youth coming from non-farm backgrounds. We have people of many ages who are changing careers and coming into and getting committed to farming. We have new Canadians who want to grow food for their particular communities and earn a living through farming. We have First Nations people living on reserves who want to grow more of their own food and create food security for their communities.
Interestingly enough, of all those groups, one of the largest groups of people coming into farming is women. Some of the training programs are showing that 50 and 60 per cent of the people wanting to get into farming are women.
How are co-ops helping these new entrants? As you know, co-ops are a very important part of the Canadian economy, especially in rural communities. Farmers have used co-ops to market their products, add value to their commodities, finance their businesses and supply farm inputs. As a matter of fact, the oldest co-ops in this country are agricultural in nature.
The co-op model is not an archaic way of doing things. It is versatile and can constantly be revitalized to be used for new needs, as it is doing today. A co-op is a business that is collectively owned by its members to meet its member needs and to provide benefits to them and their community.
Here are some of the innovative ways co-ops are being used to help new farmers. First, people are farming together. They are living and farming collectively on land that they may buy jointly, lease jointly or may even have been bought by a land trust that is leasing it to a co-op so the farm can stay in production.
Co-ops are aggregating products for sale. Farmers pool their products in order to sell at a farmers market, participate in a box program or meet the needs of a large customer such as a school or a hospital. Co-ops are creating a place for people to sell their products, whether it is a farmers market, a store or even web-based online selling.
Farmers are joining with consumers and eaters to actually form new co-ops where they sell products. This is one of the most innovative things we have seen in the last five or six years. Where in the past agricultural co-ops were only for farmers, now we are seeing farmers and consumers — the eaters — coming together to form a co-op so they can help one another. This allows the farmer to do what they like best, which is to farm, and other people participating in the co-op are doing the selling.
There is collective marketing through a common brand or adding value or processing. An example is an herbal medicinal plant called rhodiola rosea, which is a plant being used for health. There is a co-op in Alberta that organizes the entire basic infrastructure so that people can grow this plant. They supply the seeds and the knowledge of how to grow it. They then buy it from their members, process it and sell it to a nutraceutical company. The co-op is enabling new people to come in and not have to start from scratch as they are part of a larger group. They are sharing facilities like commercial kitchens and machinery.
Finally, some co-ops are involved in running youth training programs where they are preparing new farmers for leadership. I do not have enough time to tell you more, but Gay Lea Foods and Agropur have come together to form a leadership program where they are training young members under the age of 35 so they can participate in the co-op.
I will turn it over to Ms. Bishop, and she will talk more about her co-op and make some recommendation.
Lynn Bishop, Co-op Coordinator, West End Food Co-op: Thank you for inviting me. I am happy to be here. I am a co-founder of Everdale Organic Farm, which is in Southern Ontario and has a farmer training program. I have worked a lot with new aspiring farmers, and I am also currently acting as a coordinator for the West End Food Co-op, which is one of the first multi-stakeholder co-ops in Ontario. We are bringing farmers, eaters and workers together at the table to try to figure out how everyone can make a living and eat great food.
I wanted to talk about how the co-op model is addressing and encouraging some of the innovation that I see happening in agriculture, specifically from the small mixed farmer perspective.
The West End Food Co-op, for instance, has been in Toronto for about four years and started out as a farmers market. Their main goal was to bring local food to the west end, but as the community and membership grew, some of the farmers became members, the eaters and workers were members, and there was a desire to have good wages for the workers and fair pay for the farmers. One thing that became apparent was that most of the famers at the farmers' market were maxed out by growing for that market and maybe for a Community Supported Agriculture, or CSA, program. If they wanted to increase their production, they needed to have other markets.
The co-op, with help from the Co-operative Development Investment Initiative, is just about to open a store where we will be selling our farmers' products at a retail level into our community and open a community kitchen where the farmers can do their own added value. One of the issues for the farmers is having access to a space where they can create added value products. If they themselves cannot do the added value product, then the co-op will make added value products with that co-op brand. These are small innovations that are giving farmers opportunities to increase their revenue streams.
There are tons of these little co-ops starting to pop up around the country. There is a co-op in Windsor called Coopérative agricole de Windsor, which is a small group of new Canadians, mostly of Haitian background, that have banded together to access land collectively and to grow crops that appeal to their community. They are specifically growing amaranth, African sorrel, gourd leaves and African eggplant, new crops that are currently being recognized as a huge emerging market in Canada, ethnic crops. They are presently in the very early stages and are selling to other new Canadians in their community, but they are looking at expanding those markets and delivering into larger centres.
Another innovative co-op is the True North Community Co-op, which is trying to build markets for the northern farmer. They are chartering planes into remote rural communities in Northern Ontario to bring northern farmers products.
One of the principles of a co-op is to satisfy a need, so this innovative co-op is looking at the needs of the more remote communities to have access to local fresh product, and then the needs of their local farmers to have new markets.
From my perspective, there are a couple of things we need to do to support these innovations. One of them is the same as Mr. Beck pointed out, which is to support the education and training for these new farmers. It can be the hard skills, the actual production skills, and being up to date on new technologies, but even more importantly, it is the business, communications and marketing skills and understanding regulations. We are finding that many of these new farmers do not have the background or business skills that you need to run an efficient and economically viable farm operation.
The other thing we are finding is that many farmers are having a lot of economic stress around the lack of processing and distribution. It is disappearing. We used to have abattoirs that were very localized and regional, and now our farmers have to travel great distances to have their animals processed properly. A lot of the distribution modalities that used to work, from a community level, bringing the food from the region back into the larger centres, are disappearing. Some co-ops are trying to address these issues and reinvigorate it. We are seeing small businesses start up that are aggregating the local farm products and then bringing those into the centres, because the farmers cannot grow and distribute.
I want to point out that, from my perspective, I have seen many of these small co-ops that are really run by their members — their farmer members, their eater members, or their worker members — that are creating viable economic industries and small businesses that are helping to address some of the issues in a really innovative way.
Recognition of the co-op as an effective method to support farmers and the expansion of services for co-op development is important. I want to point out that the Co-operative Development Initiative has operated in Canada as a partnership between Canada's two national cooperative associations and the federal government's role in the Co- operative Secretariat, which is part of Agriculture and Agri-Food Canada. The CDI program has provided support for new and expanding co-ops through project funding and advisory services since 2003, and we have seen a lot of new co- ops developed. The program is currently scheduled to end in March 2013.
We would like to encourage the government to mark the importance of this year, being the International Year of Cooperatives, by announcing the continuation of the CDI program beyond 2013.
Senator Plett: Mr. Beck, you gave us a number of issues that you have, equity issues and so on, and said it was difficult to get money for a young farmer to start, and I certainly appreciate that.
Farm Credit is still operating, I believe. Is it not possible to tap Farm Credit? How much money does Farm Credit give in relation to what a bank would? A bank gives maybe 60 or 65 per cent. Does Farm Credit have some limitations, and would it not be relatively easy for a good farming operation to get farm credit?
You mentioned the Advance Payments Program. Could you talk about that a little?
Mr. Beck: I am not an employee of Farm Credit, but I do know that they are a lending institution. In our farming community, we have been asking Farm Credit to take up more, because they are not considered a bank per se. They do offer long-term financing. We have actually posed the question to them as to whether they could act more as a bank and take on more of those responsibilities, operating as a bank.
Yes, they are one of the better lenders on the financial side. The biggest difference we have found with them is that they have basically been consistent and here for the long term. A lot of the major banking players — it depends on where the markets are — have flip-flopped back and forth, which in agriculture can happen, and sometimes it takes a little longer for that to revert.
Farm Credit has been a vehicle. In the consultations we have had with them, we have asked them whether they could step up and be more of a vehicle and take the place of one of the major banks, so that instead of using the major banks, we could use Farm Credit.
In terms of the Advance Payments Program, this is a program that has basically allowed farmers access to capital, more in the sense of operating. It works quite well for a grain operation, or even for a livestock operation. It allows you to purchase inputs, mostly on the seed side and on fertilizer. If you can prepay for things, you can max out discounts. It is possible to get up to a 20 per cent discount on a seed bill if you can pay by a certain time. If you are able to have cash up front from that crop, you can get those discounts. That is 20 per cent on your bottom line that you will put back if you have the capital in place to pay for that up front.
Senator Plett: What would you like to see from this committee? Ms. Markell said that she would like to see the CDI program continued. What would the Canadian Young Farmers' Forum like from this committee or from the government?
Mr. Beck: There are two parts to that. I highlighted the communication and professional development side. We would like to see continual support and growth in that area.
On the other side, we would like to examine some of the existing programs we have. As I mentioned before, some of the programs are not geared for a young farmer or to try to get young farmers involved. I am mainly referring to a business risk management program. As a young farmer, I do not use them. I do not budget for that as a tool. We would like to revisit that to see how to better fit it to a young producer.
Senator Plett: Mr. Marcoux, what qualifies someone to be a young farmer? I certainly appreciate the fact that we have a young farmers' organization. Would I qualify? Am I just past my prime?
[Translation]
Mr. Marcoux: Being young is not a question of age, but rather a question of attitude. It takes enthusiasm and a passion for the occupation. Those are probably the two most important things that define a young farmer.
You put some questions to Justin, and I would like to speak to a few of them. You asked what we would like the committee to retain from our presentation. One of the things for us, and this is quite important, is knowing the young farmer base, who they really are.
In Quebec, the provincial government has surveyed young farmers. They have surveyed every young farmer who is a shareholder in a business. We have a number of statistics, but we do not have a detailed picture from the Canadian standpoint. It would be very interesting to get one. I put the question to Agriculture and Agri-Food Canada, and we have had a number of discussions on the subject.
Why would that be a good idea? Two years ago, I took part — as did Mr. Beck, I believe — in consultations on new entrants to farming as part of the Growing Forward 2 initiative.
I spoke with one of the directors of Agriculture and Agri-Food Canada about that same subject, about the idea that we should know our base. I mentioned to him that 27 per cent of businesses in Quebec are currently in dairy production, and 40 per cent of young farmers are in dairy production. A start-up bonus is available for young farmers, and 55 per cent of those who apply for it are dairy farmers. There is every reason to believe that the farming profile in Quebec will lean toward the dairy sector, even if there is a decline in the number farms. Do you know what that director's response was? He said "Merde! "
The dairy sector will become disproportionately large relative to the other sectors. It is important to know what young farmers are currently doing so that we can predict what we will be doing in 10 or 15 years and how we can assist producers. That is our wish at the Fédération de la relève agricole du Québec. In other words, we want to develop a picture of young farmers from a Canadian standpoint.
You mentioned funding, which appears to be a very important topic for young farmers in the other provinces. It is a little less so in Quebec. It is not one of the major priorities. It is an issue for people who starting up their businesses. Consequently, in response to pressure that we have brought to bear in the past five years, the provincial government and its partners, Capital régional et coopératif Desjardins and the FTQ's solidarity fund, have created the new farmer investment fund. This is a $75-million fund for individuals who are starting out in farming and who do not come from a farming background. It has been in existence for only one year. Although it was estimated that there would be between 60 and 100 young farmers going through the program, only 10 have applied to it. We know that they are limited by the program's conditions. The need for funding may be overestimated.
[English]
Senator Plett: Thank you.
I want to follow up on one thing. I did say it somewhat tongue in cheek, but I would like to know this: Is a young farmer a new farmer? Are there actually age restrictions on what a young farmer is, or is it somebody getting into the business?
[Translation]
Mr. Marcoux: At the Fédération de la relève agricole du Québec, a member is someone who is between 16 and 40 years of age, is not a farmer and is not necessarily the son of a producer but is interested in farming. New farmers are said to be more established when they own a business and aspire to be farmers.
[English]
Senator Plett: At 40, I almost qualify.
Senator Mercer: Forty, my foot.
An Hon. Senator: You don't qualify.
Senator Mercer: I don't even try to qualify.
I think that young farmers are some of the greatest entrepreneurs in the country, taking the chance of starting in an industry that is tough to make a go of. I want to congratulate you on that.
The question of transfers and succession planning on family farms has been one that we continue to come back to. The issues are complicated by the fact that usually the farmers who own the farm have, as their retirement package, the equity they have built up in the farm itself. The problem is that when they want to transfer it to you, you do not have the money to pay them to live that good life they had planned for themselves. It is a vicious circle.
Has your organization done detailed studies on any new methods of generational transfer of land from older farmers to young farmers? We are looking for something new. The old ways are there; we have survived with them, but it has been a struggle.
Mr. Beck: I think the key I touched on a little bit before is planning and getting that planning started early.
There are vehicles in place and tools that you can use, but if you come to the point where somebody wants to retire in five years, it is not enough time to get the planning in place. We have to somehow bridge the gap for those farmers who do want to see their farm transferred and need to be fairly compensated for what they have built up.
I think time is the key thing, ensuring we start that process early enough that we can take advantage of all the tools and make that work seamlessly.
I have read articles on farms that have had the successor start his own enterprise. One was more of a family operation. They actually started their own operation on the side and were able to start to migrate their way in.
There are different ways, entrepreneurial ways, to do it, but it does take time. Even 10 years is almost not enough time. That process has to really start early, and it is key that you make that match — bridge that gap — a lot earlier. As I said in my presentation, there are some farms that will just want to cash out, and that is fine. It is the farmers who do genuinely want to see their farm transferred that we want to match up with people who want to farm, and we need to get that match done earlier.
If you thought I was going to come up with a new revolutionary way of transferring a farm, I cannot do that. However, I do think we have to start bridging that gap earlier. I think there are vehicles that we can use for that to take place, but it does take longer planning.
I know of members in our group who, right now, are in their late twenties and early thirties, and they are thinking succession. How will they change or transfer the farm? They have a young family, young enough that they are not sure yet if they will farm, but they are thinking of how to set the business up to transfer it and get what they need out of it at the end of the day.
Senator Mercer: We need to talk about how to assist people in the planning process. You are right; you cannot wait.
Ms. Bishop, you said that you started off with a farmers' market. Where are you located?
Ms. Bishop: In Toronto.
Senator Mercer: What part of the west end?
Ms. Bishop: In Parkdale.
Senator Mercer: I used to live there, so I am familiar with it.
Ms. Bishop: The farmer's market is in Sorauren Park.
Senator Mercer: I am familiar with your market then, and it is very good. Does the produce that you market there come from southwestern Ontario, or would it some from Niagara?
Ms. Bishop: Mostly southwestern Ontario. We have a fruit grower who comes from Niagara.
Senator Mercer: The co-operative movement, of course, is extremely important in all aspects of rural life, even if you are not a formal co-operative. If you live in a rural community, you are cooperating, even it is just for the volunteer fire department.
Is the structure that co-ops work under now a hindrance or a help? Do we need to streamline how co-ops are regulated to help make it easier for co-ops to start and to flourish to help their members?
Ms. Bishop: That is what the CDI program does. It helps you with the governance issues, the early stage setup, and developments with your articles of incorporation. Because it is more complicated when you have more stakeholders at the table, membership, and more interests, there are parts of the business development that are unique to a co-op. What we and the other co-ops I have been involved in have done — I have been involved in a biodiesel co-op, and I know some co-ops that do aggregation — is get assistance from the Ontario Co-operative Association to help us with those pieces. In many scenarios, we are doing things which are similar to those in big corporations. We have a board of directors. In a co-op situation, you have to do this right at the very beginning. Those are definitely challenging pieces, and something like the CDI program really helps to build a strong base through the co-op development piece on the bureaucratic side. Then, the co-op is freed up more quickly to run the business operation.
Senator Mercer: The size of co-ops varies significantly from small to large. Ms. Markell talked about Scotsburn Dairy and Farmers Dairy in Nova Scotia, who are by no means small but are very large corporate entities. Is there a difference in the way that regulations affect the larger co-ops like Scotsburn and Farmers?
Ms. Markell: Most co-ops are incorporated provincially, and the regulations apply to all kind of co-ops. They cover how they are governed and selling shares and that sort of thing. We have not seen a huge problem with size in relation to co-op incorporation or regulation. You have to remember that the small co-ops starting today with the help of our Co-op Development Initiative and that are meeting these new needs are taking a little while to get started, but they will sustain themselves over time. One thing that studies have shown is that the sustainability and the viability of co-ops is twice that of private enterprises. Studies have shown that in Alberta, B.C. and Quebec, co-ops last longer because they are collectively owned and there is turnover in leadership and governance and so on.
There is no doubt that at one time Scotsburn was small. Organic Meadow is 20 years old. It was only an organic dairy co-op at one point and in the 1980s was very small. Today, their brand is all over the place and you can buy Organic Meadow milk and cheese; and they are into frozen foods, ice cream and other products. It is just a matter of a small business growing and taking time, but the regulations are not all that onerous and getting in the way. Thank you for asking.
[Translation]
Senator Eaton: Mr. Marcoux, in your presentation, you talked about the number of farms that had stopped operating, that were not being transferred from one generation to the next. The University of Guelph also says that it is having difficulty attracting young people to its educational programs in agriculture.
[English]
Apart from the financial transfer from one generation to the other, are there reasons that our agriculture sector is not attracting young farmers?
[Translation]
Mr. Marcoux: That is what I said in the introduction. I do not really agree that we are having trouble attracting young people. What we are observing in Quebec is that the number of students registered at institutions is steady.
However, what we are seeing in the universities is a decline in the number of students registering to become agrifood professionals. This situation is a major concern because far fewer people are interested in studying in the processing and management sector. That is what we are seeing.
[English]
Senator Eaton: You have both said that your generation has to farm smarter. Does that mean you are trying to create value-added products? For example, Quebec is doing wonderful cheeses.
I am sorry I was late for your presentation and I do not know where you farm.
Mr. Beck: I am in Nova Scotia.
Senator Eaton: What do you mean by "farming smarter? " Are you talking about creating innovative products for the market or simply being smarter about the use of your machinery and how you do things?
[Translation]
Mr. Marcoux: That is a subject I did not address. I agree that businesses must be managed differently. Today it has become more profitable to spend part of the day in an office counting the transactions you will conduct rather than simply to go out onto the land and do manual work.
I believe we have to improve training as such. Yes, we must encourage access to technology and we have to modernize, but we need money to do that. Value-added products, yes, I believe in them, and I also believe that we need them because they are strong products that improve our industry's image, but we should not believe that it is possible to farm based solely on niche products.
Consumers generally demand commodity products, and whether we like it or not, we produce raw materials and we generally respond to a processing need.
Senator Eaton: We cannot do both?
Mr. Marcoux: Yes, we can do both and we should do both, but we should not think it is possible to produce only value-added products.
[English]
Senator Eaton: Mr. Beck, what does "farming smarter " mean to you?
Mr. Beck: It depends where you are at. In our area when you talk about value adding, that is what we see because we cannot compete on the big scheme. With smarter farming and commodity prices fairly strong, we talked to some members in the western provinces and people are buying up land and bigger gear without crunching the numbers and asking whether that piece of equipment or land will give the return on the investment they are making. Farming smarter is analyzing the numbers a little more and delving into it more and not just trying to get big to be big.
Where we are at, the value adding is where we are seeing the smarter farming. I am in hogs, and we know we cannot compete with someone in Indiana that can pull off 300 bushels of corn and have a huge supply of feed, while I have to bring all that in. I have to look at a different market that will pay me what I need to make a profit.
Senator Eaton: Do you produce specifically for markets? Do you have your markets that you produce things for specifically?
Mr. Beck: Yes.
Senator Eaton: Have you thought of creating new products with hogs?
Mr. Beck: Yes. In our operation we send our little pigs up to Ontario. We do not finish any of the animals in our province. We grow what is called an isowean, which is a pig that is 21 days old, and ship it up to growers in Ontario to finish the growing where the feed is cheaper.
Senator Eaton: Would you like to finish them in your area?
Mr. Beck: We have been working on some domestic markets. The key there is that we will not jump back into it again unless we know that the market will be able to pay what we need to get out of the finished hog. It costs more to raise a pig in Nova Scotia, so we have to make sure that the market will bear the price before we jump in full hog doing that. It takes time but we are trying to find those markets to work in our area.
Senator Mahovlich: Do you think it is feasible to teach our youngsters in the public school system about farming? I recall being a young boy in northern Ontario. Not once did we as a class ever visit a farm to see what farming was all about or to grow a plant. I was never introduced to farming. I went into the city to go to high school, where we were never taught anything about farming. Sure, there were a few students whose parents were on farms. They would go through high school and then on to Guelph to learn farming at the university.
Other than that, do you think we should introduce farming into our public school system?
Ms. Bishop: I would love to answer that. At Everdale, the learning centre I co-founded, we developed a farm-to- school program, and now we are offering a kit to farmers to use as another income stream. This is suitable for these smaller family farms that have maybe some horticulture and livestock. Many farmers are doing CSA, where they are retailing directly to their communities. Then they are building relationships with the schools and having the kids come in. Certainly there is a lot of movement to introduce agriculture in schools. I remember when we first had the kids in Hillsburgh come to our farm, they had never seen a carrot growing. These were rural kids, and they had never seen a carrot in the ground. Definitely building food literacy and an understanding of food and nutrition is important.
Now, of course, there are our health communities. The West End Food Co-op is actually located on the ground floor of the Parkdale Community Health Centre, and the Guelph Community Health Centre has a lot of food literacy programming going on. There is a big connection happening between health, nutrition, food and food literacy, and much of that is part of this whole local food movement and the food security movement. That is why there are eaters interested in fair prices for their farmers and would be willing to pay a bit more when they are meeting the farmer at the farmers' market and understanding this is how the person makes a living. Certainly, food education is an important piece.
With respect to kids who went through the program in Hillsburgh — I was there for 13 years — some of them are now on the farm during the summer helping out. They were inspired and excited by it.
The real issue again gets back to how these people have a viable farm. If farming was a viable industry, we would not have a problem. We would not be at the table talking. If there was money in farming, there would be lots of people doing so. There is money in it, but it has to be very clever and carefully thought out. There needs to be business training and all the supports.
Senator Mahovlich: It is essential.
Ms. Bishop: What is your business model and how will you survive in a changing market? Where are you selling: direct, wholesale? There are people doing innovative things around building their economics more locally, direct and with more retail, but some farmers are not marketers. Then there are opportunities for the co-op model to create support for the different aspects, so then you have marketers selling these farmers' products so they can actually farm. It is one way of addressing it.
Senator Mahovlich: Do we have an export market for hogs? Is there a demand for hogs outside the country?
Mr. Beck: Yes. There are high-end markets in Japan.
Senator Mahovlich: If there is a demand, then we should have more hog farms.
Mr. Beck: True. Back to your question about the schools, I think it is paramount because of our demographic shift. The reason farming has not been in schools is because in the past there has always been a connection somewhere along the line to a farm; you may not have lived on one, but your uncle, grandfather or great grandfather had one so you worked there in the summer.
However, we have gone a generation past where there is no connection now to the farm gate or the actual farm, and we have a society coming up that is really disconnected on where their food comes from. I have always made the point that we preach to people to be lawyers and accountants and all that; why not be a farmer and work in the industry? There is more than just somebody in a barn; there is a whole opportunity in the industry, in research and development, that we do not toot our own horn about.
As I said, the major issue now, why it is paramount to get into the school system is because of that disconnect from the farm. We are a generation away; the kids coming up now have no connection to agriculture. In past, they may not have lived on a farm, but they could have connections to one.
Ms. Bishop: That reminds me of something interesting. The people who have the real agriculture connection now are many of the new Canadians. My taxi driver last night said he grew up with 500 sheep on a sheep farm in Iraq. These people actually come from farming backgrounds and could provide important ideas to our new farmers. I do not use the "young farmer " phrase because many of the new farmers I know are not young; they are new immigrants, career changers or people who just want to try it.
Senator Mercer: Senator Plett could qualify.
Ms. Bishop: You can be a "new farmer " in my books.
Ms. Markell: The term that was used for this study was "new entrants. " That is important. Let us take advantage of the people are in this country and who want to farm; let us help them. Some will do it because they grew up on a farm and want to take over the family business, but there are others who want to farm because this is the way of life they desire. They are interested in meeting a need and want to farm. They could be new Canadians, people living on reserve or just young people who say, "I do not want to go to university; I want to work with my hands and I really enjoy the practical side. "
We need to take this broader perspective of who is potentially out there, coming to programs and so on and let us help them get over the finish line and actually be able to earn a living as a farmer.
Senator Buth: I was interested in that neither Mr. Beck nor Mr. Marcoux mentioned technical training or production management as something you might need. Can you both comment on that in terms of what you think young farmers might need in that respect, or is that already being met, specifically as it relates to innovation on the farm?
[Translation]
Mr. Marcoux: Some of you perhaps may not be familiar with Quebec's education system, but one of the statistics that is of great concern for me when we look at the education profile of young Quebec farmers is that 60 per cent of those currently settling on a farming business have no college diploma. They have less than that.
Many good farmers do not have diplomas. However, in my opinion, school is not merely a place where you learn the material and techniques. It is also a place where you open your mind, where you break with the family business. In my opinion, it is the first step toward innovation. That is where you open your mind to innovation. And if young farmers do not put themselves in that mould in advance, they will have difficulty innovating.
[English]
Senator Buth: You are saying that 60 per cent of young farmers coming in do not have —
Mr. Marcoux: Do not have a DEC, diplôme d'études collégiales.
Senator L. Smith: Forty-two per cent of males do not graduate from high school. It is the highest drop-out rate in North America, tied with Mississippi.
[Translation]
Mr. Marcoux' point is therefore very important because you have to develop young farmers' basic education before developing a creative approach to development.
Mr. Marcoux: By comparison, a college diploma more or less represents technical training in farming, but equivalent to half a university degree.
Senator Chaput: So that is a CEGEP?
Mr. Marcoux: Yes, it is a CEGEP.
[English]
Mr. Beck: With respect to education, many farmers are coming out with degrees or getting further education. I did that. I went off the farm, and it was the best experience I ever had. I tell people that probably 80 per cent of the value of my degree was from the people that I met, and I met people that were only 20 minutes away from me that I would not have met if I did not go. One reason education did not get mentioned is because I only had seven minutes to present.
As far as innovation, it is an area that is probably lacking a little. As farmers, people sometimes do not see us as innovators and we do not really harness it or capitalize on our innovations on the farm. We just think of it as something we had to do to make the job easier, or something along that line.
When you think about education, with the Internet and all that, now it is not the issue of finding information but of sorting through it and seeing which is good, whereas in the past it was the opposite; it was much harder to find the information and get access to it, and then usually when you found it, it was good stuff.
We are now seeing that most of the farmers are coming out with a degree or diploma of some sort. Social media, that whole environment, has also changed how we get information, interpret it and use it.
Senator Buth: Have you any specific recommendations for this committee in terms of what might be needed in the way of production management or technical information?
Mr. Beck: That is a good question. I would say probably more training in using social media.
Ms. Bishop: Marketing.
Mr. Beck: Let us face it; if I can get in touch with another hog producer from somewhere else who is having the same issue and figure out that he went through this, and I can ask him the same question, that, to me, is probably more valuable than trying to find it in a book. There might not have been a study on it in any event. I will admit that social media is moving fast to keep up on it, and I am the younger one who is supposed to be up on it. That could be a key tool that could allow us to transfer information back and forth from farmer to farmer much more quickly and easier.
Ms. Bishop: This is anecdotal, but in my experience I see many of the associations, like the horticultural farmers associations, do a lot of education, conferences and workshops. They bring in experts who talk about different production techniques. They have the machinery and the outdoor farm shows, and those are well attended by farmers. Really, it is the soft skills. The production seems to be handled, but the innovation is not necessarily. Much of what they are being told is kind of like the old standard routes.
I often see the younger generation on a farm going to college and then wanting to stay on the farm. They start to have innovations and start looking at different markets and marketing techniques, because they want to move the farm in a different direction.
Senator Buth: On the co-op side, what are your customer limitations? I would assume that your products are being sold at higher prices as you are trying to sustain smaller operations.
Ms. Bishop: At the West End Food Co-op, definitely we are having that kind of relationship and dialogue, because we have the farmers and the eaters at the table, as well as the workers, who want to make a decent wage. In that particular instance, we recognize that we are only servicing a certain demographic. We are looking at co-op credits and social enterprise within the retail space to address some of the other demographics in the community.
It is actually there as part of that mission in the West End Food Co-op. Co-ops in general are not always higher priced. Because they are responding to a need, sometimes if it is an eater-run co-op, they are actually building a cheaper food source for their community. Co-ops can recognize all the different needs and are not really necessarily only for high end. Certainly the West End Food Co-op, with the farmers at the table, the farmers and eaters have to talk about price, so it is pretty exciting.
[Translation]
Senator Chaput: My first question is for Mr. Marcoux. You mentioned that you have noticed a decline in processing studies.
Mr. Marcoux: Agrifood professionals.
Senator Chaput: And that applies to the processing of products, for example.
Mr. Marcoux: I would say everything related to farming businesses, including processing. We also see fewer counsellors.
Senator Chaput: Is that troubling for Quebec? It seems to me you have always been quite good in that field.
Mr. Marcoux: Very troubling, to the point where a Quebec round table has been established by the Université Laval, the Union des producteurs agricoles and other partners to examine the issue.
Senator Chaput: Have you identified certain factors?
Mr. Marcoux: I do not sit at that table. I know that they are just beginning their examination. The finding has been made and they are examining the issue.
Senator Chaput: How many jobs does product processing generate in your province?
Mr. Marcoux: From memory, I believe it is 140,000.
Senator Chaput: That is quite a lot.
Mr. Marcoux: It is one of the major strengths of Quebec's agricultural sector.
Senator Chaput: You also mentioned a financial aid program, the name of which escapes me. If I am not mistaken, you said there were also fewer applications than you had expected.
Mr. Marcoux: The program grants loans to young farmers who do not come from farming families or who do not take over the family business. Young persons wishing to start up a business may be granted a holiday on capital and interest payments for three years, representing up to $250,000. It is quite a generous program. I do not want to be alarmist because it has only been in existence for 10 months. It should be better known, but we did expect to receive more applications.
Senator Chaput: Are your federation's member associations reacting to this situation?
Mr. Marcoux: We have been asking the federation for this program for five or six years. I find myself in a somewhat uncomfortable position because the young farmers are not showing up for the moment, but we hope that promotion will change matters. I just wanted to show that the funding need might not be that great, that it is not as widespread for all producers.
Senator Chaput: Or else young farmers are afraid to borrow in view of the economic situation.
Mr. Marcoux: I do not believe so because nearly 90 young people start up businesses every year.
[English]
Senator Duffy: Welcome to our witnesses. If we want to see innovation and renewal in the agriculture sector, we are certainly seeing it with our witnesses here this evening.
I am just back from Prince Edward Island, where I was visiting the PEI Juice Works, which is in Bloomfield, which is a suburb of Alberton, which is a suburb of Summerside. Anyway, it is a very small, wonderful part of P.E.I. There is a brand new facility there. A group of potato farmers in that area work together almost in a cooperative. They share their money, they put up their credit, and they have created a business that takes the secondary blueberries — not the Canada No. 1 grade, but the others that are a little bruised or whatever — and produces, and they have just started the production of blueberry juice, made from pure blueberries, with no additives. The antioxidants and the health side of this are absolutely phenomenal. PEI Juice Works — again, a modern, clever marketing name.
I think we are seeing this all over. We have a big problem in Charlottetown. The farmers' market creates a huge traffic jam. This is the new thing. Are we going to enlarge the parking lot and encroach on the central experimental farm to handle the crowds of people who want to come to the farmers market?
You people are at the cutting edge of where we are going in this country, and it is remarkable.
As a youth, I was a member the credit union. We were also members of the Charlottetown co-op, which kept the chain stores at bay because they could not match what the co-op was offering in terms of services and price, and of course as a shareholder you get money back at the end. It is absolutely fabulous.
The credit unions wanted handcuffs taken off so that the Credit Union Central could become a truly national banking organization. Now you can get your money at the airport from your credit union ATM as you can everywhere else.
This thing is blossoming wonderfully. What are the current roadblocks?
I will ask you a second question about the CDI. How can we help? What are the immediate problems you see standing in the way of further expansion of this very important part of our society?
Ms. Bishop: The current roadblock is as we were discussing earlier. When you are starting a small co-op, it is a business, but because of the nature of the co-op model, you are creating a board of directors, communications systems and bureaucratic pieces that are different than if you are a private enterprise just starting up a business. You would not need to go through some of these steps.
Senator Duffy: Is the governance structure more complicated?
Ms. Bishop: Of course, you have the board meetings; you have to ratify motions; you have to follow the minutes and the agenda, all these systems I mentioned earlier. A large corporation, as its business grows and if it goes public, has to have these things in place. In a co-op you have to have them right at the beginning. At the West End Food Co-op, we are looking at potentially a million dollars a year in a few years. It is an arduous and time-consuming process to set up proper governance. You need to have knowledge and awareness. What CDI specifically does is help you with those pieces, with the governance and the bureaucratic pieces of how to do your articles of incorporation, how to keep minutes, how to build boards, how to do board training, how to invigorate our boards and all these issues that are unusual for a start-up enterprise to have on top of the stresses of starting an enterprise.
The beautiful thing is that the statistics show that co-ops have high success rates and they can aggregate not just products but money. The West End Food Co-op is an amazing example where we have sold $100,000 in bonds in our community.
The community is really interested in this. Now we have our shoppers. We already have 250 people who are going to be pretty committed to shopping at our store, and farmers who are committed to producing for it. It is a fabulous model, but there is a start-up cost that is in time and education costs that are inherent in a co-op.
Senator Duffy: Do you happen to know the budget of CDI and what it would cost to keep it going?
Ms. Markell: I do. We are one of the two organizations that manage this. The overall budget for CDI for four years is $19 million, so we are talking roughly $4 million a year. The challenge right now is that we do not have quite enough money to be able to be everywhere in this country, to be able to help enough people.
In Ontario, the Ontario Co-op Association and a francophone co-op organization get funding to help new co-ops all across Ontario, but the Ontario Co-op Association has one person in Guelph who has to talk to people on the phone and cannot be in eastern or northern Ontario.
The province of Quebec, in addition to what the federal government is doing with the CDI program, also provides for 11 co-op development resource centres all across Quebec in all the regions to be able to help start new co-ops. More co-ops are started in the province of Quebec because they have these kinds of specialized resources to be able to help new co-ops.
In this time of fiscal restraint, we find it very hard to say, "Please increase the funding for our Co-op Development Initiative, " but we said that last year. Now we are saying, "Please at least just continue what we do have. "
There are several other things that could be done. One is federal tax credits for people investing in their co-op. There is a program in Quebec that we would like to have duplicated across the country. We also would like to have a co-op development fund that would be able to provide loans specifically to co-ops, managed by the co-op sector, because we know what is needed. There are a couple of other things.
Senator Duffy: Has that tax credit proposal been put forward to the Minister of Finance?
Ms. Markell: It has, and it has gone to the Finance Committee. Several times in the pre-budget discussions the Finance Committee has recommended that the co-op investment plan be implemented. We go and talk to politicians and they say, "You mean that thing is not in there yet? " because it makes so much sense.
I have more information on that, too, and I can give it to you.
[Translation]
Senator Robichaud: Mr. Marcoux, you said that you owned a dairy farm with 45 producing cows. When you say dairy farm, you are talking about a farm with a larger number of producing cows. You also said you were a maple syrup producer. Do young people who are starting out in farming try to diversify their operations? Is that a new approach?
Mr. Marcoux: That is an excellent question. I honestly do not even have an answer to give you because that depends a lot on the individuals. Back home on the farm, we previously had four highly diversified lines of production. We dropped two and now have only two left.
If you are asking for my personal opinion, in a case such as mine, yes, I am a single producer; I believe much more in specialization and improving knowledge specific to a particular type of production than in diversification.
However, I believe diversification has to be encouraged for a business limited by its means of production. A business can be diversified by involving an additional young person who would help transform production on the farm. In that sense, yes, we are increasingly seeing that, but I believe a little less in production diversification within a business.
Senator Robichaud: We saw the example of a dairy producer from New Brunswick who had innovated by using byproducs from both his farm and the community.
We know that, in the hog farming sector, a lot of byproducts can be processed as fertilizer. Have you considered the possibility of not limiting yourself to a single producer and adopting the cooperative model in order to use those products?
[English]
Mr. Beck, would you like to comment?
Mr. Beck: On our farm, we used diversification as a way to transfer myself into the farm. Dad started the hog operation, and I have taken another side and expanded the grain side. The reason we expanded the grain side is because pigs need to eat the grain, and we have lots of manure around so we can be competitive with growing grain. I have taken that as my lead, which has allowed me to expand and develop my business skill as little more. At the end of the day, it is basically feeding the one operation and we are all mutually benefiting from it. I am getting the fertilizer that I need and dad is getting the high-quality grains we need to produce the high-quality animals.
It is what I like to call the Irving model — vertical integration. That is where the co-op structure can come into play. It takes a lot of capital and processing plants. It is pooling together groups of farmers to do those things. It is the vertical integration that we as farmers have to do. We have to own more of that chain and get further up that chain.
[Translation]
Mr. Marcoux: I would add that some producers are already innovating in the way you just described. What we see less is good ideas spreading among other producers. We see it when someone manages to use byproduct X and his technique is good. Communication with others is probably the weak link.
Senator Robichaud: Communication, education, exchange among producers?
Mr. Marcoux: Communication and exchange, and yet a lot of tools are already in place. We need to know that so that producers use them. I do not have the answer.
[English]
Senator L. Smith: While listening to the group, one of the things we studied on the banking side was the problem of venture capital.
[Translation]
You said it was difficult to start up your business.
[English]
Before you get into the commercialization of your young business, there is that gap and the issue of how to fill the gap.
Venture capitalists from 1995 to about 2005 got whacked and did not make any returns, and that is why they sort of disappeared. Now you have the big funds that have a portion of money set aside for venture capital, but what type of commitment is there? Is there an opportunity for you guys to work with the co-ops in developing a three-tiered plan, a co-op plan? It would appear that if you are going to be in a co-op, you will have to be a specialist and you will have special products for a special market niche. If you are in a young co-op, there will be a volume issue of how you grow your volume, so it will be a profitability issue.
In a succession situation, Mr. Beck, how do you get the money to pay dad? Dad has invented his life and he has lots of equipment. There is a certain scale. What type of financial model can be built? Can that model be built with Farm Credit or with a banking institution? Who is the best group to work with to build that model? You have a model for the co-op, and Senator Duffy was asking about the tax credit concept and where can we help. Is there a model from the co-op side or from the succession side?
[Translation]
Is there a model for new farmers or immigrants entering the country? You mentioned the FTQ's solidarity fund and Desjardins. Are those models well communicated? Do you have authority in the community to link farmers up with bankers?
Mr. Marcoux: I believe that has been done quite well until now. The average age of Quebec farmers is five years less than the Canadian average. So there are young people coming into the sector.
As I said earlier, 10 per cent of the 8,000 established young farmers do not come from the farming industry, which we think is a lot. We believe we have come a long way.
You asked what tools could be used to transfer a farming business more efficiently or how we could facilitate the integration of young farmers. One of the proposals we have already submitted would be a retirement savings fund.
And as we said earlier, the parents' retirement depends solely on the value of the assets in the business. We believe that, if there were a mechanism for saving outside the farm while the owners were still working, they would be much less dependent on the value of their business.
If we develop these tools, could we not manage to have an exclusive agricultural pension fund? France already has that model; French farmers contribute to a pension fund all their lives, and, when they retire, they have a defined benefit fund at the end of their career. That relieves pressure on the value of assets in the business, which can then be transferred with less debt and not require the business to be remortgaged. This is one option that we could explore further.
[English]
Senator L. Smith:With the group altogether, maybe you have already done it is, so excuse me, but are there three top priorities you would recommend to us that we could try to help you out with?
[Translation]
Are there three priorities that you can mention that might help you in your development, first, as a coop, second, as an independent producer with an estate and, third, for new farmers entering the sector?
Mr. Marcoux: I have three general priorities. The first is that we must know who we are as young farmers. Once again, I come back to my survey idea. I find it inconceivable that we are defining a program called Growing Forward when we do not know who our future producers will be. I think that is nonsense.
The second priority is that we must distinguish between a transfer and a dismantling. Some people would be interested in entering a business, but it is more attractive for people leaving the business to withdraw the money from the sale rather than transfer their business. Could we not create a fund to recover that amount, in a way, so as to give young farmers more assistance in setting up?
The last priority is a factor underlying the retirement savings idea I just talked about; it is fundamentally important to increase the level of training of our young farmers.
Senator L. Smith: Okay.
[English]
Ms. Markell: As we indicated in our presentation, the three things that we think would most help new entrants use the co-op model are: one, training programs, supportive programs for new farmers, and the practical aspects of running individual businesses, including production, training, marketing, business planning, that sort of thing; two, support for more regional processing and distribution of food.
One thing we did not mention earlier, but you have heard it I am sure from other small- and medium-sized businesses, is the issue around government regulations and safety standards. Many regulations seem to be brought in for very large businesses but do not seem to make common sense if you are small and medium sized. Over and over again, those things are getting in the way.
You asked about incorporation and regulations around settling up a co-op. Far more important are the issues around these government regulations for slaughterhouses and processing facilities that do not seem to make sense.
Last is the increased and continuation of programs that will actually help people start a new co-op and get expert advice for this kind of enterprise.
Mr. Beck: We had a breakout session with our members, and I will try to summarize in three. One of them was equity, how we clump the model to transfer this equity to the next generation. There are some tools there that are working well now, but we have to look at revamping some of the tools we have in our toolbox right now to fit that.
The other one was communication. I think I mentioned a fair number of times this evening about bridging the gap, because I think some of the solutions are not rocket science but a matter of bridging the two bridges together and bridging the gap. The third one is the professional development side of things, coming back to that farming smarter, not farming harder.
The Chair: Before we conclude, I would like to thank the witnesses. However, there will be two questions we will be sending to you for your response. This is the impact of box stores like Costco, Walmart, Zeller's, Shopper's Drug Mart and even Canadian Tire and Jean Coutu marketing food products. We would like to have your comments on that and the impact of it. You touched on this, but could you send us your opinions or social media and the impact of social media on agri-food and safety and innovation?
On behalf of committee members, I thank you for sharing your vision and your ideas with us.
(The committee adjourned.)