Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 25 - Evidence - Meeting of March 7, 2017
OTTAWA, Tuesday, March 7, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 5:14 p.m. to continue its study on the acquisition of farmland in Canada and its potential impact on the farming sector; and in camera, for consideration of a draft agenda (future business).
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Good afternoon, everybody. I see we have quorum. I declare this meeting in session. I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Senator Ghislain Maltais from Quebec, chair of this committee.
I would like to start by asking the senators to introduce themselves, beginning with the co-chair.
Senator Mercer: I'm Senator Terry Mercer from Nova Scotia.
Senator Merchant: Senator Pana Merchant from the province of Saskatchewan.
Senator Bernard: Senator Bernard from Nova Scotia.
Senator Gagné: Senator Gagné from Manitoba.
[Translation]
Senator Pratte: André Pratte from Quebec.
[English]
Senator Tkachuk: David Tkachuk from Saskatchewan.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Thank you, senators. Today we welcome by video conference from the National Farmers' Federation (Australia), Mr. Tony Mahar. Welcome to this committee. Thank you for accepting our invitation to appear.
I will now invite the witness to make your presentation. Mr. Mahar, please proceed.
Tony Mahar, Chief Executive Officer, National Farmers' Federation (Australia): Good morning, committee, and thank you for the opportunity to talk to you this morning. I would love to have been there in person. I haven't been to Canada, so I look forward to getting there one day; such a beautiful country and big agricultural producer. Thank you for the opportunity.
I will make a short opening statement around our organization and agriculture in Australia, and then I'm more than happy to take some questions. I'll outline our organization's policy on foreign investment in agriculture.
To begin with, the National Farmers' Federation is the big representative body representing farmers in Australia. We are a federated structure that has state farming groups as members as well as commodity councils. So all of the major commodities, such as grains, red meat, wool, dairy, rice, horticulture to a lesser extent, cotton, all of the major commodities that Australian farmers produce have their own individual commodity councils, and we also have state or provincial farming groups that are members of the National Farmers' Federation, of which I'm the chief executive officer.
We advocate on policies that impact on Australian farmers, so right across from rural policy issues like drought, transport and infrastructure to trade, industrial relations, natural resource management, environmental policy and competition policy. One of the important issues that we advocate on and are regularly called to talk to our government and other stakeholders about is the issue of foreign investment in Australian agriculture. It is an ongoing topical issue that is regularly in the public discussion, regularly discussed in the Australian Parliament and something that we have developed a clear policy for our internal purposes, and we regularly draw on that.
I will give you a quick overview of that, and I'm also happy to send a copy of our foreign investment policy in agricultural land to the committee, should you think it worthwhile. You could also access it on our website at nff.org.au.
Essentially, the policy that the National Farmers' Federation takes around foreign investment into Australian agriculture is that we recognize the important role that foreign investment has played in Australian agriculture in terms of development, investing in and growing the sector. We also recognize that it has delivered significant amounts of capital into our production systems, improved our efficiency and ensured that our farmers can contribute to a globally competitive marketplace.
Notwithstanding that, we have become aware in the last number of decades, I suppose, the level of interest that Australian agriculture is developing from a range of countries. We've had investments from a wide range of countries into Australia over the last few decades.
Our policy is essentially that while we welcome foreign investment and it has been good for Australian agriculture, we think it will continue to play an important part in the future growth of the Australian agriculture industry. We need to make sure that we keep track of the level of investment, what impact it is having, so we can get transparency in the impact that investment is having, also where it's having the largest impact from a regional and a sectoral basis. We want to distinguish between competition policy and foreign investment policy because in the Australian debate, those two issues are sometimes intertwined, not necessarily confused, but talked about in the same discussion. So the competition policy issue and foreign investment policy issue is important to distinguish, from our perspective.
We think there needs to be greater certainty and greater transparency around purchasing and investment decisions. So again, from a vendor perspective but also from an investor perspective, transparency and certainty around the process and requirements will do two things. It will help respond to some of the concerns that are in the public around investment in the Australian agriculture industry, and it will also provide some more certainty for any potential investors around the issues that they need to review, consider, adhere to and comply with.
We also think there's an ongoing role for the Foreign Investment Review Board in Australia and any other associated agencies to make sure that there's a monitoring process for the investment.
Should an investment go ahead and is foreign-based or foreign-derived, then we need to make sure that the investment complies with and adheres to the business plan or intentions of that investment in an ongoing way so that should the foreign investment be approved, there's some sort of process to make sure the investment is doing what it said it was going to do around water, land or the business itself and that it's contributing to the growth, productivity and profitability of the broader Australian agriculture sector and not having a detrimental impact on the supply chain bottleneck, whether that's ports, rail or parts of the supply chain where production and/or business comes into a narrow base. Those bottlenecks are what we refer to as bottlenecks across the supply chain, and we don't want such investments to have a detrimental impact on them, competition policy or any other legislation.
By and large, we want the foreign investment to be more transparent. We want it to comply with all of the legislation, regulation and laws of the Australian economy, government and community, and we want the investment to have a positive impact on the community and the economy.
That probably sums up our position on foreign investment. We're open to it. We want certainty, and we think it can continue to be good for agriculture in Australia, but we are very well aware of the concerns not necessarily just agriculture but in the broader community in Australia around the issues of "selling off the farm," as we like to call it here. It's not perceived well. We need to understand what the investment is going to result in from an Australian broader community perspective, but also the agriculture sector here.
We think the register that the government has implemented in the last couple of years goes some way toward that providing actual evidence of the level of foreign investment that is occurring in Australia agriculture. We haven't had that register here before. Successive governments have committed to it, and it was implemented late last year.
So that is a starting point to help have the discussion in Australia. As I say, it's a regular discussion that we have had. Data and evidence to help inform the debate have been very much welcomed by us and the community.
So I'm happy to leave that there as an opening statement and take any questions, senators.
The Chair: Thank you, Mr. Mahar.
For the first round in the question period, the first is our deputy chair.
Senator Mercer: Welcome. It's very good for you to join us.
Have farmland prices increased because of foreign investment in agriculture? Has that been a result of their participation?
Mr. Mahar: It depends where it is. Like Canada, Australia is a big country. We have had a couple of more topical or iconic properties come up for sale. One that you may well be familiar with is Kidman Station, the largest series of properties in Australia. It was sold last year for around about 380 million Australian dollars. It's 10 million hectares, so it's a large property — about 1 per cent of Australia's land mass.
That's iconic and probably not comparable, so your question about whether it's influenced land prices in Australia, I think the answer to that would be "yes," but it would depend on where it is. That property is unlikely to be comparable to anywhere else around the country. There's a property that's up for sale at the moment in what is quite productive agricultural land, and it's 18 farms at about 200,000 hectares. The asking price is around about 300 million Australian dollars. That is quite an iconic property. I would say that would be a benchmark for property in those areas.
It also depends on the seasonal conditions and how far above and beyond the norm or the standard price is for properties.
Senator Mercer: So are the people buying the properties to farm themselves, or are they buying the properties to then lease back the land to other farmers to use for their own purposes?
Mr. Mahar: By and large, they are interested in the farms as ongoing businesses and continue to operate them as farm businesses.
Senator Mercer: But are they operating them, or are they hiring people to operate them and doing it by remote control?
Mr. Mahar: By and large, they want the asset to be managed by experienced operators. It's a case-by-case basis, but my experience has been that they would employ or retain local managers to manage the property and inject other resources or expertise as required.
Senator Mercer: So the only thing they are actually getting out of it is the profit? They are not managing the actual commodity?
Mr. Mahar: Again, it depends which sort of size you are looking at. They are looking at the profit obviously, but also there's been some experience where they are interested in the product. There's a foreign investment company here from Qatar, Hassad Food. That has been a very successful foreign investment state-owned enterprise that has purchased property in Australia. Not only are they operating it as a profitable business, but they are also interested in the supply of red meat to their country, so it works quite well for them. They get the profits, but they also get the product.
Senator Mercer: Those two properties you mentioned were extraordinarily large. What would be the average size of a farm in Australia?
Mr. Mahar: It's really difficult to say. They are extraordinary properties. I would say it might be 10,000 hectares, but it depends what sector you're talking about. More intensive sectors like dairy, chicken and horticulture are much lower than that, but broad-acre farming for cereal crops and large stock cattle or sheep production might be 5,000 to 10,000 hectares.
Senator Tkachuk: Just to follow up on Senator Mercer's questions, who are the people who are buying the farms? Are they state-owned enterprises, and where would they be from? Or are they private corporations, and where would they be from?
Mr. Mahar: The short answer to that is that it's mixed. There are some state-owned enterprises, like the Hassad Foods enterprise. Some are corporate or semi-corporates — joint ventures with potentially some government backing. Others are superannuation firms. Canadian superannuation firms have been investors in Australian agriculture. There are other countries' superannuation firms.
The interesting part for us most recently has been the suggestion that Chinese state-owned enterprises are purchasing large tracts of Australian farm business or farmland. That has been of concern, and the concern has been the ambiguity and uncertainty around whether it is the Chinese government that's purchasing land, a business that is backed by the Chinese government, a joint venture, a cooperative or just a commercial entity that might be located in Asia or in China.
That has fuelled a lot of the debate here, and that's what I referred to with more transparency around not only who is purchasing the land or business but what their intentions are around the land.
There's a big property here. The largest single water holder in Australia was Cubbie Station a few years ago. That property was an extremely large cotton producer, irrigated cotton, and it was on the market for quite a while. Very few Australians were interested in purchasing that property. Again, iconic property, extremely large. It was on the market for a couple of years, and then it attracted interest from Chinese investors, and there was much debate and discussion around why it would or could be sold to Chinese investors.
As it turned out, it turned out to be a joint venture between an Australian corporate family farm and Chinese investors, and by and large, there was huge concern by the internal government and the public around that purchase. Since that time, my understanding is that property and that region has benefited significantly from that investment and that everything is going extremely well around it.
It just demonstrates the point that there is a significant amount of concern around Chinese investment in this case, around what that would do to the property, the region and the community. My understanding is that it's going extremely well. Again, that is probably an extraordinary property and investment purchase because it was so big and it had so much water attached to it. As you realize, water is a precious commodity here in Australia, and it was quite concerning to some people in the industry, but it has gone very well.
[Translation]
Senator Dagenais: Thank you for your presentation, Mr. Mahar. I would like to talk about local farmers. Like all good entrepreneurs, farmers also hope to make a profit. Can you tell us briefly about the local structures in Australia that help Australian farmers? Are there bodies that manage the production, sale and export of your products?
[English]
Mr. Mahar: Australian agriculture is largely deregulated. We went through a process a couple of decades ago where we had single-desk marketing arrangements for sectors like wool, wheat and dairy. We have largely deregulated that industry. There is still some subtle regulation in the rice industry and also — at the moment it's very topical — in the sugar industry, but it has largely been deregulated.
So in terms of marketing bodies, we used to have the Australian Wheat Board that was the sole marketer of Australian wheat, and that was made obsolete at least a decade ago, probably more.
In terms of production or marketing bodies, we have a very liberal and open market. I notice a little about the Canadian market where you have for the dairy, chicken and egg industries supply chain or supply management arrangements, if I'm correct. We don't have anything as such here in Australia. It's very much market driven and an open market.
What we do have is research, development and marketing corporations for the sectors, so Meat & Livestock Australia and Dairy Australia have to use those sectors. They have what we call research and development corporations that do research and development on behalf of the industry. The farmers pay a levy that goes towards research and development into new technology and new processes and practices, and there is also a marketing levy the farmers pay to help market the product, but it's around driving consumption, not price-setting or supply management in that way.
[Translation]
Senator Dagenais: You said that you do not have a supply management system as we do in Canada. You know what supply management entails. Do you have a similar system in Australia that protects dairy farmers in particular by giving them a guaranteed income?
[English]
Mr. Mahar: We don't. We do look at the Canadian system, and there would be some farmers in Australia, I would say, that might like that arrangement. We generally don't like it because it's an intervention in the marketplace, from our perspective. I understand how it works and why it can work, but Australia has taken the stance that we need to deregulate and be very much market driven in the agriculture sector. It was painful for the industry to go through that process, but we would like to think that we are more efficient, more in touch and more market driven as a result of that process. There will be some in the industry that would like to go back to those days, there's no doubt, but by and large, the industry has looked upon deregulation as a positive experience.
Senator Merchant: The Australian treasury published a working paper in 2015 that concluded that although residential real estate property prices were increasing, the growth was not attributable to the increase in foreign demand.
In your opinion, could a similar argument be made about agricultural land and why?
Mr. Mahar: Yes, I think so. I think that would be true. I think that the geography of Australia is such that in the large number of small farms in Australia — we have about 130,000 farm businesses — the geographical spread and the nature of farm businesses in Australia, most of them are small, family-owned operators. There's more consolidation happening, and that has continued to happen over the last couple of decades. The seasonal conditions and the geographical spread, I would say, have restricted the influence or impact of foreign investment in terms of driving prices up. Now, that's not to say that a particular purchase or investment doesn't have any impact in a region, but it is not necessarily the sole driver of land prices in agriculture.
Senator Merchant: Can you tell us if young farmers have difficulty competing in Australia because of land prices? That is one of the issues here. Do you have young people who are interested in farming? Give us a bit of the landscape in Australia, please.
Mr. Mahar: Sure. Look, we don't have enough young people who are interested in farming. I've got to say, it's one of our challenges, to attract people to the industry. By and large, it's hard, tough work. It's hard to get into, and the volatility of the returns and profits in income is something that, being a young person coming into the industry, you have to really consider. There are probably plenty of other jobs where you can go and get a reliable source of income. The mining industry took a lot of young people in the last decade or so. As that industry starts to decline or come off its peak, we think there will be more people coming into agriculture.
It's expensive to get into. You mentioned, senator, the housing market. It's very expensive for young people to get into the housing market. It's probably more difficult to get into the agriculture market because to make a viable business, you need a large-ish parcel of land. The risks associated with that business can be high, depending on what sector you are going into. The start-up costs, again, are high, so it is difficult to attract new people to the industry.
Whether foreign investment is playing a key part in that, I don't know. I think it's hard anyway. I think foreign investment probably is a contributing factor, but I don't think it's the sole factor of people getting into the business.
We are currently looking at ways to attract more young people to the industry in a variety of ways — ways we have not thought of. Some are incentives around taxation or cooperative business structures that allow them to be joint ventures. There is leasing or becoming co-partners with existing firms and transfers. We are looking at ways where stamp duty can be reduced from succession planning so all the people handing it on to their children don't have to pay stamp duty. That keeps businesses in the family but also allows young people to transition into the industry.
We have not arrived at a successful outcome just yet, but it's a real issue for us.
Senator Merchant: One thing we are trying in Saskatchewan is bringing farming into the classroom. Our minister of education told us last spring when we were having hearings — and he appeared before us — that sometimes young people don't really have any notion where food comes from and what agriculture is all about. They think you go to the supermarket and you get the things.
One way of generating some interest — you mentioned about the other industries — is to have people understand from a young age how important it is to grow food, how important food is to society and to also understand that it's something that may be interesting for them to engage with. I understand that we're talking about values today, but one way to engage them maybe is to make them more aware.
Mr. Mahar: I couldn't agree more with you. We definitely need to get an understanding of where the food comes from, and we are actively trying to get it into school curriculums at an early age so that children not only understand but value agriculture and farming in the way that food is produced. It's a real challenge these days to make sure that the broader population, particularly the newer, younger generation and population, appreciates what it takes to get food onto a plate.
Senator Gagné: I had the good fortune of visiting your beautiful country a couple of years ago. I visited quite a few sheep farms in the state of Victoria. I also enjoyed visiting quite a few vineyards as well in South Australia. I was quite amazed.
You did mention something pertaining to stamp duty. What is "stamp duty," by the way?
Mr. Mahar: It is an unfortunate tax that we have in Australia. When the government transfers documents, they just like to stamp it and charge a fee. It's an administrative tax, basically.
Senator Gagné: The question posed was about helping young farmers. That was an issue when I visited a couple of family farms. The challenge for the young farmers was to enter into that business.
Does the Australian government help out young farmers with loans, or are there any programs offered to the younger farmers who want to pursue that business — or if farmers want to expand but cannot due to corporate investment or foreign investors?
Mr. Mahar: By and large, no. There have been in the past a range of small initiatives that have been offered to try and help young farmers into the industry. They are very small and a little bit ad hoc. I think the government takes the view that if they start getting a leg up or assistance to some people in the industry that could be to the disadvantage of someone else. Also, why just agriculture? Should they do it for textiles, mining or other industries?
The government here over the last few decades of whatever persuasion they are has largely stepped away from intervening in the market.
That's a gross generalization. There have been various programs and projects that have tried to assist that. How successful they have been, I don't know.
Senator Gagné: There was also the issue of research. You mentioned that you do invest in research with farmers, mostly with projects that will increase productivity. Am I understanding you correctly?
Mr. Mahar: Yes, that's right. Farmers pay a levy per animal or per tonne of production to go to research and development. It's around new technologies, processes and markets — these sorts of things. It's matched by government. For every dollar the farmer puts in, the government matches that for research and development to grow the industry and make the industry more efficient, more productive and hopefully more globally competitive.
Essentially by OECD standards, Australia and New Zealand I think are one and two in terms of lowest levels of government assistance to the agriculture industry. Any assistance we get is around that matching R&D funding.
Farmers also pay a marketing levy that comes into a central pool and markets the product. It's around opening up and expanding markets rather than setting prices, as I said before.
[Translation]
The Chair: Mr. Mahar, I have two quick questions for you. Are farmers concerned about mining operations on agricultural land?
[English]
Mr. Mahar: The short answer is "yes." Do you want me to expand?
The Chair: Yes.
Mr. Mahar: Yes, it's an ongoing concern, and it's something that the industry is still juggling, managing or developing its position. We have various states or provinces that have different views on coexistence and mining. Gas — is largely the issue that has been affecting Australian farmers, and it's very topical debate in Australia at the moment around energy security and energy prices.
Our view is that agricultural land should be used for agriculture. Where there are other extractive industries and energy industries that can coexist in a way that does not compromise the future productivity of agriculture — and we can be absolutely certain of that using signs and evidence — then we should be open to considering that. The farmer must have the right to say yes or no whether he or she allows that to happen on his or her property. It is largely state-based legislation that drives that.
It is a contentious and complex issue. But in the last few months here in Australia, we've had a couple of energy disruptions. It's very much a topical and hot public issue here in Australia around energy security and what that means for agriculture.
By and large, we think that they can coexist as long as the water and land is not compromised for future agricultural production.
[Translation]
The Chair: I imagine you often use foreign workers. What percentage of foreign workers as compared to Australians do you hire every year in the agriculture sector alone?
[English]
Mr. Mahar: That's a difficult question to answer because of the seasonal nature of agriculture. We have a large proportion of workers on farms who are backpackers or tourists who come to Australia for holidays. They get special provisions in that if they work 88 days on a farm in Australia, they get to have a second year holiday visa. So backpackers, whether from Canada or anywhere else, can come to Australia and work for a year and get a visa. If they work 88 days on a farm, they get a second year visa.
That works well for us because we get fruit pickers and people who can drive headers at harvest time, but they also get to go and lay on the beach in Queensland and have a longer time in Australia.
It works well, but we are heavily reliant on foreign workers in agriculture because we can't attract enough Australian workers to come and work on farms picking fruit, chasing sheep or driving headers because it's hard, tough, hot work. To be honest with you, there are not enough Australians who want to do that.
Senator Mercer: With respect to your last answer, it's a similar problem we have in Canada.
The National Farmers' Federation has asked the Australian government for a national strategic framework that would recognize the value of agriculture in the country's future planning decisions. That's a worthwhile thing, but what key elements would the National Farmers' Federation like to find in a national strategic framework, and do any of those pertain to farmland availability?
Also, to put this in the context of those of us on the committee, is this similar to what the Americans have? They always have a national farm bill every session. Is that what you're talking about?
Mr. Mahar: No, it's very different. We look upon the farm bill as something that we wish we had in Australia. The amount of money U.S. farmers get — Australian farmers look at that and are green with envy.
We are very much a deregulated market. So when we talk about that, we are largely talking about agriculture's place in the economy. Farmers in Australia are a very high-cost producer — high energy, labour and transportation costs. Notwithstanding that, we would like to think we are globally competitive. Agriculture is growing and our exports are growing.
What we want from that statement, senator, is for agriculture to be prioritized within government — a bipartisan approach to agriculture to recognize the important role it plays, not only in the economy. We are only 3 per cent of the GDP in Australia, and I think it's 6 per cent in Canada. We are a reasonably smallish player in the national economy, but it plays a very important part in rural and regional economies.
Out in the country areas, agriculture is a central part of those communities. If agriculture were to leave those communities, there would be a whole range of flow-on effects in terms of social, environmental and economic.
We want agriculture to be prioritized. When government makes decisions around infrastructure, education, planning and land use, we want them to bear in mind that we must have a strong agricultural sector and economy in Australia. We're facing incursions from national parks, extractive industries, urban development and native vegetation and environmental laws that are slowly shrinking the amount of agricultural land that's available. We want to say to government that we need to protect agricultural landing. When is that point? At what point do we say, "Okay, enough is enough, this is all agricultural landing and nothing else can go on there."
That's quite the intervention in the marketplace, but we want to have that discussion with government. We protect prime agricultural landing. Some is very marginal and could be used for other purposes, possibly.
Senator Mercer: Regarding your comment about the American farm bill, I have a saying that my colleagues around here have heard many times: The most important piece of equipment on an American farm is the mailbox where the cheques come in from the government.
I want to ask about agricultural education. How many agricultural schools are there in Australia? Do they have maximum registration, or is there room for more students?
Mr. Mahar: That's declined over the last couple of decades. We used to have a lot of agricultural universities. I went to one myself, but it is now changed to a university that specializes in dentistry. That's in New South Wales. They're declining.
I am seeing reports now of more people coming back into agricultural studies, such as agricultural economics, but the short answer is that they have declined significantly in the last couple of decades. There are still a few around but certainly not as many as there was.
The Chair: Mr. Mahar, thank you very much for your presentation. I see it is early for you in Australia, so thank you and see you again.
Mr. Mahar: Thank you for the opportunity.
The Chair: Honourable senators, the committee will now recommence. Our next witnesses, by video conference from the Regional District of Bulkley-Nechako in British Columbia, are Mr. Mark Parker, Area D Director and Chair of the Agriculture Committee; and Mr. Gerry Thiessen, Municipal Director.
Welcome. Thank you very much for accepting our invitation to appear. If you have a small presentation, please go ahead, and following that senators will ask questions.
Mark Parker, Area D Director and Chair of the Agriculture Committee, Regional District of Bulkley-Nechako: I'm Mark Parker. I'm the district director and Chair of the Agriculture Committee for the Regional District of Bulkley-Nechako. I'm actually a farmer as well. Just so you know, I do have some background in the farming industry. I have been in it for my entire life and will probably continue to be in it for the rest of my life. I will hand it over to Gerry to introduce himself.
Gerry Thiessen, Municipal Director, Regional District of Bulkley-Nechako: My name is Gerry Thiessen, and I'm the Mayor of the Town of Vanderhoof. I also come from a farming family. I just sold my farm about four years ago, but my family farmed for 70 years. I also come from a real estate background. This is my fortieth year in real estate, and farms is a major part of that. I have been the president of not only the northern B.C. real estate association but also the provincial real estate association of B.C. and the Canadian real estate association in 2005.
Mr. Parker: We do have a small presentation for you today. We would like to give you a little explanation on what has been happening in northern B.C. We are located in the upper half and a little bit to the western side. We have a fairly large agricultural area that is in lots of beef production, we have grain and we also have quite a bit of hay sales in the area as well.
I would like to just start with what's brought us here today to present to you, and that is we have had a couple of unique situations that I don't think you are aware of being out in the east. Over the last probably 10 years or so, starting in 2007, we had a company that came in out of the U.K. and started to buy large tracts of land. They started in 2007 and concluded buying land in 2015.
By the time they were done accumulating land, they had come up with 29,652 acres in northern B.C. The purpose of the land tracts they were buying up was in order to plant trees to sequester carbon, which in turn would help them offset the factories they had in Europe, where they produce things such as Glade air fresheners and even French's Mustard, things like that.
By the time it happened, we didn't have enough time to react right away. We didn't see it as being such a big issue, but obviously as you can see, in a short period of time, they have eaten up a lot of land in the north. So again, that land is effectively being removed from agricultural purposes at this point.
What we did do, with a lot of negative publicity on our behalf, from local government and from cattlemen's associations, by pressuring them and making them realize what they were doing to our agricultural lands, they agreed in September of 2016 that they would cease the program, not plant any more trees on some of the existing land that hadn't been done and they wouldn't purchase any more land.
That has still left us with 29,652 acres with seedling trees that are absolutely of no use to the agricultural sector, and that isn't going anywhere. The 7,413 acres they promised will be put back on the market at fair market value, we haven't seen that happen yet, so that effectively is still 29,000 acres that are removed from our lands.
Going forward, we have one more foreign company that has purchased 41 properties totalling 10,862 acres, and that is in a very small area. That is in the Nechako Valley, which surrounds the town of Vanderhoof. The company that bought that did so for the purpose of producing large square bales, compressing them and shipping them to China, so it's for export out of our area, and again, effectively taking away farm value from our local young agricultural entrepreneurs and existing farms.
It does keep the land in production for agriculture, so it's a little better than having trees planted on it, but again, we don't get the social and economic benefits from such applications. A lot of these lands, especially the RB Trees, which would be the Reckitt Benckiser ones that I talked about from the U.K., nobody actually lives on those lands. Nobody is residing on those properties any longer, so you are not getting any income coming in towards the town of Vanderhoof, the rural areas and the smaller communities. It has become a huge issue.
When you add that up, right now there are 40,000 acres in the north that have been bought up by two companies, and that isn't really giving much back to our communities whatsoever.
B.C. doesn't have any regulations or policies in place that restrict foreign ownership of any manner whatsoever. We feel it's time that has to change. RB Trees can't do it any longer. Now the ALC in B.C. has put in a new policy. They actually amended a policy that doesn't allow the planting of trees over 20-hectare parcels without an application. They effectively removed that once they realized there was a bit of an area there where they were using agricultural land for the planting of trees.
Top Hay, the company that's doing the hay compression plants, even though they are producing hay off of the land, there's really nothing stopping three, four or five more of those coming in, doing the same thing and effectively removing it again from our agriculture production and our local food security. If we don't have food security in the valley, we're in trouble. We survive on agriculture, so we need to really have a look at that.
Without any policy in place, we're basically at the bottom of the siphon. With Alberta, Manitoba and Saskatchewan all having very strict foreign ownership policies, every foreign company is looking to B.C. at this point and saying, "Wow, we can go to B.C. and pay $800 to $1,000 an acre for land; this is a great investment." Whether it's for gaining carbon offsets or exporting hay to China, buying up the land as a company is still a huge investment and a great opportunity to make money down the road, so we really feel that there is definitely a need to get a policy. We have a couple of points we would like for you to consider as perhaps solutions.
The first one would be looking for a national policy clear across Canada with minimal foreign ownership policy built into it. We feel this would allow two levels; you would have the federal level and then provincial level policy, which are two policies for some of these corporations to try and get through, because right now they are still doing it on a provincial level.
We have seen in Growing Forward 2 and Growing Forward 3, there isn't anything in there about protecting our farmlands. I think it's time that the federal government — we need to get buy-in as far as protecting them from this exact type of thing. That would be where we would be looking at some federal support as far as having a national policy.
The next point that we would like to look at, if we could find a way to have loans or incentives to get the young farmers and existing farmers to continue to be able to compete, it would take less policy. I will hand it over to Gerry to comment on that side of it for you.
Mr. Thiessen: For me, having been in realty sales for 40 years now, I have yet to sell a farm property in our area through Farm Credit Canada. We find it very ineffective in helping young farmers get into the agricultural part of it.
I really feel strongly that in the same way as people can buy a home by going and getting pre-approval, if there were education sets, stabilized where people need to have an education on what kind of farm, come up with a business plan, allow them to be pre-approved through Farm Credit, and then allow them to go out and start their farm coming up with a good program. The Farm Credit Corporation needs to be used very similarly to Canada Mortgage and Housing Corporation when it comes to residential homes. That's a vehicle the government can use to establish policy for helping young farmers.
We can't just have "big box stores" in the agricultural industry. It has to have the small family farm as well.
The last point we wanted to talk about was that any decision-making has to have a long-term scope. We have seen often — and both Marc and I are in municipal politics — that lots of decision-making is done in a short-term scope through election cycles. Any policy has to be a long-term plan that will go on from one election to another.
The Chair: Thank you. We will begin the question period. For the first question, the deputy chair of this committee.
Senator Mercer: The interesting thing is that the U.K. company is coming in and planting trees in northern British Columbia. What kind of trees are they planting?
Mr. Parker: Evergreen.
Mr. Thiessen: Mostly pine trees.
Senator Mercer: Let me get this straight. You got the U.K. coming in and they are planting pine trees —
Senator Tkachuk: It's good for the environment.
Senator Mercer: It's up where the mountain pine beetle has had a field day on a lot of British Columbia trees. Are they flirting with danger here?
Mr. Parker: We had many meetings with them, and we approached them about a number of different ways that they could — by far better pot planting trees. We have had a number of large forest fires. There are, like you just mentioned, the beetles.
We have a number of issues in key areas that they could have helped out with, but to them, it had to be a purchasing of lands. They weren't interested in leasing or in any kind of Crown land corporations. It had to be a purchase. We got nowhere with them. As you can see — and I think I sent some minutes in — that they weren't interested in anything other than purchasing lands.
The worst part of that is we have guys right next door now who are firing up a D-8 Cat knocking over trees to clear more land so they can expand their farm, because the U.K. company has bought adjacent perfectly good alfalfa fields and planted trees in them to save carbon offsets.
Mr. Thiessen: One of the problems that they have, when they came to purchase land, it had to be land that was cleared and in production prior to 1980, I believe. So they were taking our very best agricultural land and planting trees. They wouldn't just replant trees on deforested land.
Senator Mercer: Which is what Canadians would do as we go through reforestation all across the country.
Do these people employ any British Columbians?
Mr. Parker: For the production, they have a local manager for the properties who was from the area. They brought him in for his specialty — knowing the area. But for the actual planting of the trees, I believe they have some B.C. residents doing it, but it was on a very short-term basis.
Senator Mercer: What's your plan to —
Mr. Thiessen: But no long-term people.
Senator Mercer: Okay. So the return to the British Columbia community is pretty small, if anything at all, other than the fact that there are lots of trees.
Mr. Thiessen: Yes.
Senator Mercer: Does the hay compression plant employ British Columbians? How many would they employ?
Mr. Parker: Yes, it does. I will give them credit where credit is due. It wasn't that way when they first came in, but I think they have realized now that they at least need to employ some locals to make sure they understand what they were doing, because they didn't, to start with. They had a lot of train wrecks out there trying to produce hay. Now they do have local employees. They have hired a few guys who know the business. It's also a bit of PR because they weren't as popular when they were first here. They are getting better. They are putting a little bit back into the community, but it's not the same inputs you would get from individual farms.
Senator Mercer: Is it a net gain or a net loss for British Columbia to have these two operations? We have land out of production, but then we have people who are putting more land in production. Do we have a net loss of land in agriculture production in the area?
Mr. Thiessen: We have a net loss. The Reckitt Benckiser carbon offset or whatever program — they took so much land out of production. The foreign ownership companies that are producing hay are certainly putting into it. I would hesitate to say that when you have a massive farm, they don't do it with the intensity, and you don't realize the production. They are very new; they have only been in our area for about four years now I believe it is. So they are very new into our area, but it certainly isn't the intensity that you saw from the family farm or the smaller farm unit.
Part of your economy is having families in your community, and so when you have those family farms, you have your schools, activities and community halls in your area. If you come through the Nechako Valley now, you will see most rural schools are closed down, most community halls are boarded up and this farmland is being farmed on a large scale.
Senator Woo: To clarify, the land purchased by these two entities — what was it used for prior to the change in ownership?
Mr. Parker: It was farmland — hayed farmland.
Senator Woo: Hay?
Mr. Parker: Crop production. Yes, absolutely.
Mr. Thiessen: It was all cropland. Some of it was in grain crops and other cereal crops, but all of it was our very best farmland. They picked our very best farmland. Both the United Kingdom company — that had to be good farmland, which was put back into trees. Then, naturally the hay producer got the best hay land as well. He has in some cases taken some corners of trees out and put a little bit more into production, but he came out and picked as strong a hay land as he could get to produce good hay for his market.
Senator Woo: What happened to the previous owners of the land, the people who were bought out? Did they reinvest the proceeds in some other part of the district to continue farming, or did they leave the industry? Do you have any idea?
Mr. Thiessen: Yes. With the company that bought it for trees, most of those people retired. They were people who were selling out of the farms. As far as I know, none of the people that sold out are continuing to farm. Once they got out of it, they were gone.
With the hay-producing farm, most of those are farming, some on a smaller scale. But some of them aren't farming at all anymore either. The one large farm is smaller; there are a couple of family members doing a smaller scale of farming, but on the other ones, they have just slowed, left and moved to town.
Senator Woo: It sounds like they cashed out, so to speak, and retired.
Mr. Thiessen: Yes.
Senator Woo: What would have have been their alternative? It sounds like some of these farmers were perhaps older and would have looked to retire at some point, perhaps within the near term. What would have been their options if these two companies had not come along and provided this sort of windfall, if you can put it that way?
Mr. Parker: I think some of them eventually would have sold. Obviously, some of the reasons that we have talked about is having a lower interest rate or some incentives so that the younger farmer could get into some of these properties. Some of them have been selling, some have actually refused to sell because they want to see it maintained, that farming integrity.
You can't blame people. Obviously, they have farmed all their life and somebody comes along. That's the issue here. It's kind of a blank chequebook, "Yeah, we'll take it. What are you asking?" And they cut them the cheque. There are no negotiations.
Somebody might have bought that land within a four- to six-month period, if they had time to negotiate and work out deals with some banks, but there was very little time for any of that on some of these properties and they would just cut the cheque. Some of them might still be sitting on the properties and some might have sold, with a bit of patience.
Senator Woo: If I can pursue this a little bit more. Did the acquisition of these two large tracts of land, in your opinion, lead to an appreciable increase in the price of land for the area as a whole? Did it affect the price of land?
Mr. Thiessen: Certainly, in my opinion, it has. I guess it's a cumulative effect of property sales. To me, in the past what's happened with family farms is there was succession planning that took effect and people made plans for their retirement and saw maybe their family members or someone else come in and be part of the family farm, and it continued on like that.
This allowed people to make a quick decision and step aside and out of the plan. It was one of those pieces that has seen farmland in our area increase quite dramatically. Over the last five years, I'm going to suggest that 30 per cent could have been the increase in farmland in our valley.
Senator Woo: Thirty per cent. I'm not sure what you're referring to.
Mr. Thiessen: Increase.
Senator Woo: Price increase?
Mr. Thiessen: Yes, price increase.
Senator Woo: Thank you very much, gentlemen.
Senator Tardif: I believe I heard you say that Farm Credit Canada was ineffective in helping young farmers. I'm not sure if I heard that correctly, but if so could you elaborate on your statement.
Mr. Thiessen: Yes. As I said earlier, I have sold real estate for 40 years, since 1982 in the Nechako Valley, and many times young farmers will come in and will have this huge expectation that if they have a good business plan they will be able to go to Farm Credit Canada and find financing and be able to purchase the land. In our area, farms are still pretty inexpensive, $800 an acre to $1,200 an acre. Our very best farmland is around $1,500 an acre in the valley.
So it is a really good opportunity for young people to get into farming, but each time there seems to be — and my feeling is that Farm Credit aren't really the people that understand the agricultural needs, certainly of our valley. They possibly do much better in larger places, for instance in the Peace River, in northern British Columbia, or in the prairies, but certainly in the areas of the Nechako Valley, with beef farming and that type of small-scale farming, that has not been the opportunity that I've seen.
I haven't seen anybody either through myself or another real estate salesman in our office that has used Farm Credit for young people to purchase farmland.
Senator Tardif: Do you know if Farm Credit has refused loans to young farmers? Is that the situation, that they are not providing them with the opportunity to purchase, or is it that they are just not interested?
Mr. Thiessen: I believe it's the bureaucracy of it. To me, I think it just slowly frustrates itself out. I know there was a young man that came from Saskatchewan, a young family and wanted to purchase, I believe, two sections of farmland, and he was quite enthused thinking because of his past history with his dad in Saskatchewan that he would be able to do quite well with Farm Credit. In the end, though, he had to go to another financial institution. He did get the financing and was able to fund it, but had to go to another financial institution to do it.
[Translation]
Senator Dagenais: First, I would like to hear your opinion on the trade risks for farmers in your region. In particular, where is global competition and what is the effect of the value of the Canadian dollar on trade in your region?
[English]
Mr. Parker: Sure. Could you repeat the first one again? Sorry, just clarify that for me.
[Translation]
Senator Dagenais: In British Columbia, we know there is competition that can be international, and the Canadian dollar is worth 74.56 cents today. Does that have an impact on the value of your trade?
[English]
Mr. Thiessen: I guess, yes. I think Mark saw it a lot last year. Certainly, it made it very difficult for cattle farmers in our area with all the hay leaving the country and going somewhere else. It had a negative effect because all of a sudden out of the blue one producer produced for one market. So we certainly saw, with that large amount of hay stock going out of our area, it had a negative effect on the commercial viability of a lot of other farms in the area.
Mr. Parker: Yes. That can work both ways. If it's a good year and they export everything out, it drives the price of hay up for the rest of the farmers in the valley. Some years they have to purchase hay to supplement what they need to feed their cattle. So all of a sudden, if it's a good year and the conditions are right and the hay is all exported, it will drive the price from $110 to $200 a tonne for what's left in the valley, forcing either the commercial farmer to sell off some cattle, if he can't afford to buy hay at $200 a tonne, or have to actually go to the bank and get a loan to buy more hay.
On the other hand, if you have that company that has that much control and turns around and has a bad year and they can't export it, so they flood it to the market and it drops it to $80, the gentleman that's usually trying to sell it for $110, the commercial farmer that's just selling hay, he can't get his $110 anymore. That's definitely in effect on that side of it for the farmers compared to these corporations that are doing the exporting.
[Translation]
Senator Dagenais: With your permission, Mr. Chair, I have another question. Would you like to add something, Mr. Thiessen?
[English]
Mr. Thiessen: Yes. To me, it takes away the stability of a very good farm life when you have one year the price is so high you have to sell cows, the next year the price of hay is so low that you're out running around looking for all the animals you can. It causes huge fluctuations. I'm not sure what the answer is. That's the free market economy, but certainly we have seen that in our valley a lot in the last little while.
[Translation]
Senator Dagenais: Does your government provide an adequate statutory framework to protect you from agricultural land being bought up, by banks, corporations and investment funds in particular?
[English]
Mr. Parker: You cut out there a second. Was that foreign investment?
[Translation]
Senator Dagenais: Yes, because we know land is being bought up. You mentioned that England had bought land to plant trees. Banks and fund corporations invest in land. Does the government provide an adequate statutory framework to protect you from foreign invaders?
[English]
Mr. Parker: Absolutely not. We're getting absolutely no support from the province at this point on it.
We've met with the province looking for that exact protection that you're talking about. We're not getting any support from the province at this point at all.
There is absolutely no legislation in place that could stop this from happening tomorrow. Another company in the U.K. has all the right in the world to walk in and much acreage as they like. We have no protection.
Senator Merchant: Forgive me for a minute but Mr. Mahar, did you say that you were in farming and you sold your farm?
Mr. Parker: That would be Mr. Thiessen. I am a current farmer.
Senator Merchant: I got you mixed up; I'm sorry.
Mr. Parker, did you say that you were in farming but you sold your farm?
Mr. Parker: I'm still farming, I still have cattle and hay sales and I'm still in the business.
Senator Merchant: Your partner there at the table, did you say you with were a farmer and sold your farm?
Mr. Thiessen: Yes, I sold my farm five years ago. I raised beef cattle, and I still have 160 acres where I raise some green crops by contract. But I've moved off the farm and I'm living in the town of Vanderhoof.
Senator Merchant: To whom did you sell your farm? You mentioned how so many farmers make plans to have someone, a young farmer or somebody buy their land. To whom did you sell your farm?
Mr. Thiessen: I sold it a young couple. A friend of mine's son wanted to get into farming. He came along and asked to buy our whole place, and he is living on our farm.
Senator Merchant: That's a good answer.
Have you been able to engage the Federation of Canadian Municipalities in your woes? Because after all, they are speaking for rural governments and rural development is one of issues they should perhaps be helping you with.
Mr. Parker: We haven't at this point. Maybe at this upcoming convention it will be on the radar.
Senator Merchant: Do you have issues that you will raise with them?
Mr. Parker: Yes.
Senator Merchant: What are some of the issues that you will raise with them, please?
Mr. Parker: Again, the need for a national policy across the board that's going to be a level playing field. Every province will be under the same playing field. So if our province doesn't step up and give us some form of protection, at least we will have a level of protection above it.
Mr. Thiessen: Mark is saying that whatever decision, whatever policies are put in place, they need to be national in scope. And certainly we've seen it with housing when Vancouver put some foreign investment criteria in, and very quickly that investment went to Toronto and it's very fluid.
It's the same thing in Canada, with agricultural land. As other provinces have put regulation in and have made it tougher and tougher for large-scale investments, and especially foreign ownership investments, they have gone to wherever their access to property is easiest. And yes, we are going to be working. I would have to just check, but I believe the — item was brought to FCM and we have started working on that, and that was part of the whole thing that made the company to decide not to buy any more land.
Senator Tkachuk: You have an election coming up in B.C. next year or is it this year?
Mr. Parker: In two months.
Senator Tkachuk: Is any political party talking about restricting farmland? Is any political party talking about restricting the sale of farmland to foreign ownership?
Mr. Parker: One party has mentioned it, and that's the Green Party. They are the only ones seeing it as an issue at this point.
Mr. Thiessen: If you look at geography of British Columbia, we are a big province and most of the people live in the bottom southwest corner of the province. Our legislature is on an island, which is on the very southwest corner and so I think sometimes these kind of rural issues have a really hard time getting into the mainstream, even at election time. So it's something that we're going to continue to fight for so they are on the scope of some of these parties mandates.
A continual exercise we have in rural British Columbia is to get our message out to the parties.
Senator Tkachuk: Do you have policy as to how you would like to see foreign ownership restricted? Is it by size? In other words, you can buy some but you can't buy this much? Are you looking at policies like that? Exactly how would you have a national policy on this?
Mr. Parker: I think maybe it is an acreage side of things, and that would probably be the starting point. It doesn't have to be as restrictive. I don't agree that we need to totally eliminate foreign investment. If someone wants to come in from Switzerland, China or England and buy a 500-acre farm and farm it, we are supportive of that. We are not supportive of buying 29,000 acres as a corporation. Maybe it's 1,000 acres.
We've tried to start that dialogue with the provinces, and we have sat down with the ministers and said we need to open dialogue in a way that is effective to protect our farmland. At some stage, we need some form of protection. We are not saying down to 10 acres. Maybe it's not that extreme, but we need a form of protection.
The Chair: For the last round, I ask senators to ask small questions. And to the guests, please have a small answer.
Senator Mercer: Your last answer leads me to this question: There is such a thing as the British Columbia Farmland Preservation Program, which has been in place since 1973. So my original question or whether it needs to be updated, I would revise my question. Does it have any effect at all?
Mr. Parker: Not that I'm aware of. We have the ALR, and that's our current form of what can happen. It doesn't dictate how much land you can own, but it dictates what you can do on the land as far as preserving the land for farming, an agricultural aspect. What we have to follow at this point is the Agricultural Land Reserve.
Senator Mercer: They allow planting of trees as being acceptable on agricultural land, is that it?
Mr. Parker: It was. The policy has now been changed. They made an amendment last summer once they realized there was an issue with it and all this land was going back into trees. They have put in a policy where if you are going to plant over 20 hectares, you have to go to the Agricultural Land Commission, put in an application and apply to be able to do that.
Chances are, it will not fly and the ALC will not approve it any longer. It has eliminated that aspect of it, as far as planting the trees.
Senator Mercer: So they have closed the barn door after the horse has gone?
Mr. Thiessen: Exactly.
Senator Woo: I want to go back to the issue of how you deal with this problem and there is ongoing debate on whether you focus on the source of capital, the nature of the capital or on the use of the land. In your previous answer to Senator Tkachuk, you suggested that the colour of the money in a sense doesn't matter if the farmland is kept in production for the purposes that it was intended.
I want to extend that idea to suggest that perhaps it also doesn't matter if the farmers, for example family farmers, whether they are owners or leasing the land under decent, fair, terms and so on. I'm trying to understand why you are focusing so much on the source of investment and the type of investment as opposed to the nature of the use of the land.
Should you not be putting more of your attention on essentially what Senator Mercer has said, ensuring that the purposes of that land are retained for farming and farming alone? It doesn't matter who owns it, who pays for it, what the arrangements are, the principle is to protect the land for farming; does that make sense to you?
Mr. Thiessen: I think I understand you, I don't agree with you. To me, part of the whole thing of being a farmer is the privilege of owning title to a piece of land, something that you can allow your children to inherit. You can see that long-term investment. I grew up in an area where a lot of this hay company has purchased land. When I grew up in that area, some farmers worked not year by year to decide how they were going to improve their farmland but it was a generational thing. It was, "This is how we are going to till the soil and this is how we are going to take care of it to make sure it is there for the long term."
So to us, it's the ownership of that property and the engagement of those people who make a community and become part of it. When people invest from out of country and allow it to still be farmed, it doesn't really add anything to your economy. It doesn't add anything to the understanding of what your needs are in your community, also in the larger area of your province or country, and at any moment that business relationship can change. It is a whole mindset of farmers, such as Mark who has worked with his dad. I worked with my grandfather who moved to the valley in 1942, and so for 70 years we farmed as a family. You knew that your farmland was only going to give you back as much as you were willing to invest in it and not what was going to happen this year or your relationship this year. It looked at the long-term viability of the farm and how to keep it viable.
Senator Woo: I appreciate that answer, but you mentioned there is a capital constraint for most farmers starting out and they have difficulty raising capital for a business that has become I think more capital intensive. We need to solve two problems simultaneously. One is to keep farmers on the land so they can continue with the tradition and heritage of farming, but you also have to solve the problem of raising the capital for them to be viable; is that a fair comment?
Mr. Thiessen: Exactly. We have seen, as you mentioned earlier, not only foreign companies. Large corporate investors have found agricultural land right now as a great investment, and so they are coming in, so things can change. Corporations and board rooms make decisions very quickly and based on a financial statement.
I can tell you that our families farmed through the Great Depression. They never ever questioned about walking away from the farm. They stayed there. They worked with it because they were committed to food production, and that was our security. It really will depend on what type of a country Canada wants to be. Is it one that focuses on a balance sheet and is profitable or one that has a secure food supply? That will be a challenge that will take a lot of conversation.
The Chair: Thank you very much, Senator Woo.
Mr. Parker, Mr. Thiessen, thank you very much for your presentations.
[Translation]
Thank you so much. Your testimony has been very helpful. Thank you for appearing before the Standing Senate Committee on Agriculture and Forestry. Good luck in your work.
Honourable senators, we will go in camera for a few minutes. We have two items to address, including coming to an agreement on the committee's upcoming mandate, which the steering committee has discussed and which we recommend. I believe everyone received it. Senator Tkachuk, you did not receive it?
(The committee continued in camera.)
(The committee resumed in public.)
The Chair: Let us resume the public meeting to address the motion to adopt the budget. Senator Mercer?
[English]
Senator Mercer: That the following budget application for $94,791 for the committee's study on the acquisition of farmland in Canada and its potential impact for the fiscal year ending March 31, 2018, be approved for submission to the Standing Committee on Internal Economy, Budgets and Administration.
[Translation]
The Chair: Are the honourable senators agreed?
Some Hon. Senators: Yes.
The Chair: The motion is adopted. Thank you.
(The committee adjourned.)