Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 22 - Evidence - Meeting of February 7, 2017
OTTAWA, Tuesday, February 7, 2017
The Standing Senate Committee on Agriculture and Forestry met this day at 5:08 p.m. to study the acquisition of farmland in Canada and its potential impact on the farming sector.
Senator Ghislain Maltais (Chair) in the chair.
[English]
The Chair: Good afternoon, everyone. I would like to welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Senator Maltais, from Quebec. I am the chair of the committee. I would like to start by asking the other senators to introduce themselves.
Senator Mercer: Terry Mercer, from Nova Scotia.
Senator Woo: Senator Woo, from British Columbia.
Senator Beyak: Senator Lynn Beyak, from Ontario.
Senator Ogilvie: Kelvin Ogilvie, from Nova Scotia.
The Chair: The committee is continuing its study on the acquisition of farmland in Canada and its potential impact on the farming sector.
Today, we welcome, by video conference, from the Government of Prince Edward Island, the Honourable Alan McIsaac, Minister of Agriculture and Fisheries; and John Jamieson, Deputy Minister, Department of Agriculture and Fisheries. Welcome, Minister and Deputy Minister. I hope that before we begin questions you have a presentation for us.
Alan McIsaac, Minister of Agriculture and Fisheries, Government of Prince Edward Island: Good afternoon. I have a presentation that we will do, and then we can go into questions, if that is fine with you.
The Chair: Perfect.
Mr. McIsaac: We appreciate the opportunity to meet with you today and to speak to you about changes in farmland values on Prince Edward Island. I also want to discuss with you some ideas our province has to encourage farmland remaining in the hands of farmers and ways to help our young farmers enter the industry.
As bit of background, I would like to give you a snapshot of P.E.I. agriculture and the role it plays in our provincial economy.
Prince Edward Island's economy is very closely tied to our primary sectors of farming and fishing, with farming being our main economic driver. According to the last Census of Agriculture, there are 1,495 farms operating on P.E.I., with 602 of them having gross sales of more than $100,000. There are 596,000 acres in production on P.E.I., and annual farm gate sales have ranged from $466 million to $496 million over the past four years.
While potato production still dominates our industry, we are seeing an increasing diversity in farming in Prince Edward Island. Livestock production includes strong dairy and cattle sectors but also includes hogs, sheep, poultry and eggs, and our cropping sectors include grains and oilseeds and newer production from crops like faba beans and peas. Perennial crop acres, such as apples and high- and lowbush blueberries, are growing significantly.
In 2015, P.E.I.'s international exports topped $1 billion, and our trade with the rest of Canada exceeded $1.4 billion, and food represents about 50 per cent of all the exports from Prince Edward Island.
As you are well aware, farmland values have increased in recent years in Canada, and Prince Edward Island has also followed this trend, but not at the same rate as some of the other provinces. The average value of Canadian farmland increased by 10.1 per cent in 2015, following gains of 14.3 per cent in 2014 and 22.1 per cent in 2013. Overall, the average national values have continued to rise since 1993. On P.E.I., the average value of farmland increased 8.5 per cent in 2015, and there were gains of 9.3 per cent in 2014 and 4.4 per cent in 2013.
From 2006 to 2010, P.E.I. farmland values decreased. During these years, farmers on P.E.I. also had negative or flat incomes. From 2010 on, P.E.I. farming has been increasing and this, in turn, has led to an increase in farmland values. 2013 was a record year for farm income on P.E.I., and in 2014 P.E.I. saw its largest increase in farmland values year to year.
While the farmland values are not in for 2016, we expect to see another increase in farmland value. This is due to continued strong returns in farming but also due to competition for farmland from other interests. P.E.I. has seen strong interest from Amish and now Mennonite farmers from Ontario who have relocated to P.E.I. There is also pressure from local farms expanding and from a growing community of Taiwanese monks who are purchasing farmland here on the island.
Because of our size and due to our history around land ownership, P.E.I. has legislation, the Lands Protection Act, which offers some protection around the acquisition of land. The purpose of this act is to provide for the regulation of property rights in P.E.I., especially the amount of land that may be held by a person or a corporation. The Lands Protection Act regulates the amount of land an individual or corporation can own — 1,000 acres for an individual or 3,000 acres of arable land. It also regulates the amount of land a non-resident can own.
An important piece of the act is the guidelines for advertising. The objective of the guidelines is to provide an opportunity for resident persons and resident corporations to acquire land in the province. To accomplish this objective, land must be suitably advertised on the local real estate market for a reasonable amount of time before an interest in it is acquired by a non-resident person or a non-resident corporation pursuant to the provisions of sections 4 and 5 of the Lands Protection Act. The intent of the guidelines is to ensure that resident persons and resident corporations have knowledge that land is for sale and that they have the opportunity to compete for the purchase of that land.
This legislation is administered by an independent body, the Island Regulatory and Appeals Commission.
In November 2012, the Province of Prince Edward Island established a commission of inquiry to review the Lands Protection Act and appointed Horace Carver to act as a commissioner. Mr. Carver held hearings all across the province and heard from many farmers and farm organizations that spoke to the challenges of land ownership.
Mr. Carver's final report recommended maintaining the current land limits. However, there were some exemptions for non-arable land. Four hundred acres can be exempted from individuals and 1,200 acres from a corporation. In other words, a number of housekeeping recommendations were made, but the spirit of the act was upheld.
Some of the concerns I hear are around the challenge of young farmers being able to acquire land and enter farming as a profession. Our province has tried to address this on P.E.I. with our Future Farmer Program. The Future Farmer Program is very successful, and its purpose is to encourage new P.E.I. farmers to be successful. The program offers mentoring, skills development, business planning and an interest rebate program. We currently have 237 active clients in this program; 65 of them are completely new to agriculture and have not come from a farming background or did not grow up on a farm. Also, 43 of the 237 are women.
P.E.I. has also implemented the Farmland Financing Program, and farmland financing is available to eligible farmers, new and expanding, or those involved in farmland succession within P.E.I. The program provides 90 to 100 per cent of financing for up to 150 acres or 80 per cent financing for up to 450 acres. The program only covers arable farmland.
I trust I have provided you with some information that you will find useful, and John and I will be happy to discuss this issue with you now, if you have any questions.
The Chair: Thank you very much, Mr. McIsaac.
Senator Mercer: Thank you, minister, for being here. We appreciate your time. I'm interested in your Future Farmer Program. You talked about three elements. You had mentoring and skills training, but I forget the third one.
Mr. McIsaac: Business planning and interest rebate.
Senator Mercer: Yes, business planning. I see one thing missing from the plan. I didn't hear a dollar sign mentioned once throughout the presentation. One of the things for people entering a new agriculture business is the fact that the cost of land is significant. The cost of getting into business is significant. Of course, if they are buying an existing farm, the existing farm family is probably looking to make enough money to perhaps start their retirement, which means the price will not be bargain basement. It will be a significant price. How does a young farmer get the capital to do this?
Mr. McIsaac: We have to look first and foremost at the scope of some of these farms. We are not talking massive farms in all of these cases. I will give you an example. There was a couple who moved here. He was from Calgary; she was from Saskatchewan. They bought a small acreage in the Hope River area and started off a little market garden there. He still runs his business from Calgary on the Internet, but they wanted to come and they wanted to farm and they started here. They start with a very small acreage. They do not want to get into a large amount of debt, but they came to the province, so we gave them the help they needed in the business part of it. We helped them do a business plan before they got started and got sunk in too deep to help them determine what they wanted, what the market conditions were and what our department could do for them.
Our department is not in the financing business — that falls under another department — but we can send them in that direction. We can help them purchase land through the Farmland Financing project that was put in place a couple of years ago specifically to get some young people started. That's why we can finance between 90 and 100 per cent of the land up to 150 acres for some of these small farmers when they want to get going.
We have two ladies that started a farm in the Kensington area. They have an acre and a half. They run a small market garden and a basket program where, if you wanted fresh groceries, every Thursday they would give you a basket full of produce from their farm from whatever is ripe at the time. I think they gross about 80 grand off of that acre and a half on a yearly basis. They are at the farmers' markets in Charlottetown and Summerside.
Some of these examples are not massive acreages or massive debt loads they are taking on, but we want to work with each and every one of them to get them to that point.
Of course, we have another case where a farmer's daughter wants to take over the dad's dairy or hog farm or whatever that may be, and we help them do the business plan and work them through that.
Senator Mercer: What is the average cost per acre of farmland in P.E.I.?
Mr. McIsaac: Right now, it runs between $2,500 and $3,500 an acre, which is interesting, because John and I visited some of the Amish farms in the Milllbank area north of Kitchener and Waterloo, in the St. Jacobs area. I think the land there was between $20,000 and $25,000. They move down here and get land that is available. They came here because they couldn't expand anymore up there. The land was basically taken up, so they moved down here. They traded the land up there for $20,000 to $25,000 per acre, moved down here and got it between $2,500 and $3,500 an acre. They make pretty good use of that land. They are absolutely fantastic people, and we very happy to have them here.
Senator Mercer: You also said at the beginning of your statement that there were some restrictions on land ownership in Prince Edward Island, but I didn't hear you say the number of acres that a non-resident can own, or perhaps I missed it.
Mr. McIsaac: A non-resident can own — anything over five acres has to go before cabinet to get approval, and it is not easy to get that. You can buy a cottage lot for that.
To get into a farming operation, first we advertise the land to make sure that the locals can have the first shot at it. For an individual local farmer, it's 1,000 acres of arable acres since Mr. Carver's report and 3,000 for a corporation. But any large amount of land that's above five acres has to go before the appeals body, IRAC, and then if it is approved there it goes to cabinet, and the cabinet will give approval, as long as the locals have the first shot at it and they know it is being sold.
The Chair: Minister, before we continue with questions, permit me to introduce the other members of this committee.
[Translation]
Senator Pratte from Quebec, Senator Duffy from Prince Edward Island, Senator Gagné from Manitoba, and Senator Dagenais from Quebec.
[English]
Senator Ogilvie: Minister, I want to follow up on Senator Mercer's questions about limits on ownership, but first, I was very impressed about grossing $80,000 on slightly over an acre. That's a pretty good return. I hope everyone on Prince Edward Island can gross that amount per acre.
Second, you have a beautiful province, and the land, from my understanding, is relatively fertile. The price of $2,500 to $3,500 an acre seems like a pretty good bargain. I want to come back to that, but first I want to make sure I understand how you have put the restrictions on non-resident ownership.
I gather that there is no absolute total acreage restriction on non-resident ownership. I'm not talking about acres per individual non-residents; I'm talking about total acreage in Prince Edward Island owned by non-residents. Is there a limit on the total amount of land that can be owned by persons who are non-resident in Prince Edward Island in total?
Mr. McIsaac: Yes. Actually, there are. There are areas right now where a non-resident cannot buy land, and that has to do with the fact that in certain areas, when the land purchases go before IRAC, if there is a limit set now of, say, 30 per cent of the shoreline or the area in sections of P.E.I. is already owned by a non-resident, no more non-resident landowners will be allowed to buy in that area.
It got to the point — and Senator Duffy will know this well — a lot of the shoreline was being purchased by Americans, non-residents, all good people who come here and recognize, as you do yourself, that it is such a beautiful spot to be and anyone would want to be here. However, we want the land for our residents and first and foremost for agriculture, so there are limits of 30 per cent in an area where we find that. That is the cut-off, 30 per cent. You can't buy land in that area, no matter who you are, once the 30 per cent threshold has been reached.
Senator Ogilvie: Is that 30 per cent of the gross amount of land in that district?
Mr. McIsaac: Yes.
Senator Ogilvie: Okay. So it is not based on shore frontage or anything like that. It is actual gross acreage?
Mr. McIsaac: Yes, it is.
Senator Ogilvie: The reason I am asking these questions is that over the years, as a Nova Scotia resident, I have been interested in regulations and issues around land ownership in Prince Edward Island and in our neighbouring provinces, and I thought I had understood that there were various regulations.
I understand from your answer that there are sections, counties perhaps, districts in Prince Edward Island where there are in place limits on the total amount of land that can be owned by non-residents of the type you just described for me as an example, and there are more districts than just the one example you gave me.
Mr. McIsaac: I will give you a couple examples. The Point Prim area, which is kind of a peninsula, is already maxed out. There is an area off the North Shore past St. Peter's called Goose River that is maxed, and there are certain other areas as well, where once you've reached that 30 per cent limit, you would have to move further up the shore or further inland or whatever.
Senator Ogilvie: So these limits exist, but based on your examples, there is no district in Prince Edward Island where the restriction is to a larger percentage than 30 per cent? You have used 30 per cent as the example, so I assume that is sort of the maximum restriction in any district in Prince Edward Island?
Mr. McIsaac: That is the maximum now. There are certain ones that I think had reached that before these limits were put in, but that's where it's at right now. That's the standard now.
Senator Ogilvie: Thank you very much. That has clarified that for me.
I want to come back to the value per acre, which seems very reasonable and quite attractive, I would think, for people wanting to set up small farming operations, as you have clearly described.
I may have missed this in your presentation. Could you give us an indication of the quality of the farmland in Prince Edward Island? We have heard that there are various terminologies for the highest quality of fertile land and so on. Could you give us a sense of the fertility scale of farmland on Prince Edward Island?
Mr. McIsaac: On Prince Edward Island, there is no number one land. There is no land that we would really have to put any lime on. There is number one land in the area I mentioned in Ontario, from my understanding, so that will reduce the quality a bit, but we have very fertile soil here. We have different types of land here, sandy loam to clay, and there is quite a mixture of that across the province. That has all been surveyed, and anyone who purchases land can go into the land bank and find out exactly what type of soil is on that, whether it's arable land, marshland, treed land or whatever it might be. We have a full bank of knowledge on pretty well every acre in the province.
No one will buy something without doing the due diligence. The information is all there for them if they want to get it on any piece of land they are interested in.
John Jamieson, Deputy Minister, Department of Agriculture and Fisheries, Government of Prince Edward Island: If I could add to that point, in our department we also have a soil quality monitoring program. We have gridded off all of Prince Edward Island, and every three years we sample each area of those grids to look at the quality of the soil, to see how the organic matter is standing up, to see how —
Mr. McIsaac: Soil erosion.
Mr. Jamieson: — soil erosion is doing. Over the last 20 years, we are also tracking our soil. Because it is a sandy loam soil, it is prone to erosion, so we do a pretty good job on keeping a handle on the quality of our soil.
Senator Ogilvie: Thank you very much; that's excellent.
The final question is: Given what you have just described and that you have certain principal crops, one of which is your famous potatoes, of course, how do your yields per acre compare to the same quality ranking land in other provinces, say Nova Scotia or Ontario? How do your yields per acre for identical crops compare?
Mr. McIsaac: I think our crops compare very well in volume. The quality is exceptional, but I think a lot of that has to do with our farmers too. They do a great job of monitoring their fields.
John has mentioned some of the work that is done through our department on soil maintenance. We work with our farmers. They're very interested in making sure that none of their soil is blown or eroded away. They put a lot of money into the programs to put in grass waterways or berms to maintain their soil because they know that's where their income is coming from.
We get really good crops off our land, but I think a lot of it has to do with the fact that the farmers do a great job on that, and we do put out high-quality product, whether it be potatoes, beans or whatever it might be, like our grasses. Hats off to our farmers who are very diligent in making sure that they maintain the farmlands. That's where the base of income actually comes from.
Senator Ogilvie: I agree with your observations. I was hoping for a quantitative answer just for the purpose of comparison.
Mr. McIsaac: We get a two-week later start than they do down the valley, but we think we can compete.
Mr. Jamieson: Just to give you an example, sir, in potatoes, our Russet Burbank potatoes would average anywhere from 350 to 400 hundredweight per acre, and that's very comparable to what they have in Manitoba with Russet Burbank. Our barley crops run around two tonnes to the acre, probably a little less than in Western Canada, but comparable to the Atlantic region. Soybeans are about 0.8 to one tonne to the acre, which is very comparable, and probably a little higher in soybeans and grains than some of the other provinces. Corn yields are about equal right across the Atlantic region — less so in Newfoundland, but certainly in the Maritimes.
[Translation]
The Chair: If I may, I have a quick question. Mr. Minister, Prince Edward Island is filled with history that attracts tourism. My family and I have gone there a number of times. The people are very welcoming and the place is very pretty. Both the potatoes and the fish are the envy of many people.
Do the regulations on building infrastructure on the seashore fall under the municipality, the government or both? Hotels, motels and restaurants are built on farmland, or lands that have the potential to be farmland. Are there special regulations?
[English]
Mr. McIsaac: If you're going to build a building, you have to apply for a permit, and I know, because I see them come through cabinet. Every application notes what the use of the land has been for the last five years. So if the land has been used for the last five years or more for agriculture, we in cabinet certainly give full consideration to that, and we would much prefer that a hotel or some kind of resort be put on land that is not taking good agricultural, arable land out of production. There is that taken into consideration when land changes hands and goes from one type of income base to another.
Mr. Jamieson: Senator, there is also a Land Identification Program, a policy within our Lands Protection Act that identifies land as farmland. Also, many of our communities have official plans, and in those official plans, they would designate agricultural land as agricultural land and that would have to be maintained as agricultural land unless there was an application to change it, and then it would have to be reviewed.
Senator Woo: Thank you, minister and deputy minister, for appearing before the committee. I have a question on the Future Farmers program. It's very intriguing that nearly a quarter of the participants are first-time farmers and new to farming. I'm just curious about what barriers you have for admitting clients into the program. If you have absolutely no background, can anyone apply for this benefit through the program?
Mr. McIsaac: In 2015, we had 55 new entrants in the Future Farmer Program and forty-one of them had no farming background at all. Fourteen of them were like a son or daughter taking over their mother or father's farm, but 41 of them had no background in agriculture before. That's why we put the Future Farmer Program in place, and we work with them to do the business plan, look at interest rebates and look at whatever support they may need through our department.
We also have a Future Fishers Program through our department as well. We help young farmers and fishermen and women getting in because farming and fisheries are the two main industries in our province and we want that to continue for the long term. We're only going to get that if we allow new people in.
Senator Woo: I cannot remember when the program started. Has it existed long enough for you to do an evaluation of its success?
Mr. McIsaac: Yes. We have done reviews on it, and we get reviews from the people who participate in the program. We get their feedback on it on how we can improve it and how we could change it for new people coming in. It is constantly being reviewed and we will continue to do that. We get very positive feedback on it.
Mr. Jamieson: The other thing we do, senator, is we track the people in the program to see if they're staying in agriculture. I don't want to say a number, but I believe around three-quarters of the people that have gone through the program have stayed in agriculture at least five years after they've completed the program, so it's been quite successful.
We also attach these people to some of our specialists in our department, so if someone is looking at livestock production, we will help them by attaching them to our livestock specialist. If it's crop production, we'll attach them to the crop specialist. Many of the new entrants we are seeing are organic, or people who are selling local, and we also have specialists in the department to work with them as well.
Senator Woo: Thank you very much. The message is very encouraging. It basically says if you aspire to be a farmer, with the right support and training, it can happen, even if you have absolutely no background.
I would like to ask a secondary question, please, on this very intriguing reference you made to the Taiwanese monks. I wonder if you could tell us a bit of the back story and what they're up to. I have heard stories about them, but I would love to get your perspective, and in particular the receptivity to this community and how they're doing.
Mr. McIsaac: They came into the province five or six years ago. They moved into the eastern end of the province and purchased some land there. They looked across Canada — I think they had been in B.C. before — and came to P.E.I. The Abbot is a lady who looked at P.E.I. and absolutely fell in love with it. They have purchased some land here, and they are willing to lease it out. They do a bit of farming themselves, but they're quite interested in organic farming.
They have a school, basically, I guess, where monks train, or young men come to train, and they're building a monastery now in the Heatherdale area and purchasing some land around the monastery there. They also have a place for the nuns in Ewing, but they're building a new place in Brudenell specifically for them, so
There are some concerns, I will tell you will that, from locals who see them buying land but perhaps not using it to the full degree they want, but I think they are looking for a segment of land where they can live privately to some degree.
They're fabulous people to work with. We had a buffalo ranch here that was not going very well, and they took that buffalo ranch over and took full care of the buffalo. They also have a horse farm where retired horses go to finish out their days. They're extremely peaceful people. They open up their monastery once or twice a year where any of the locals can go and see what they do there.
One of the things they do — as a dairy farmer myself, I'm really pleased about this use for butter — they have one of the most fantastic art displays there entirely made out of butter. It would amaze you. So there are lots of really good things happening there.
In the community around the monastery, carpenters, plumbers, electricians, mechanics, whatever, it's really been a boost to that segment of the island, and they're extremely pleased with how they've driven the economy in some of those areas that were perhaps dropping off.
Mr. Jamieson: Senator, the Taiwanese also own a chain of grocery stores in their home country, Leezen, and have been purchasing organic produce and products from Prince Edward Island and shipping it back to Taiwan. They in turn have opened an organic store here in Charlottetown as well.
Senator Woo: Thank you.
[Translation]
Senator Dagenais: My thanks to the minister and the deputy minister. I have two short questions for you. My first question is: Do you have any idea of the abandonment rate for family farms because of a lack of succession?
[English]
Mr. McIsaac: There is an issue because the average age of our farmers is getting higher, but some of that is offset with some of our local farmers becoming bigger than they were in the past, and with the Future Farmer Program and the Amish and Mennonite communities coming in.
We talked about non-residents. You can buy a farm here if you become a resident, and that's what we're encouraging. Come here and put in your time, look for a farm and move your family and reside here. Then you can own the land because you're a resident of the province.
That's happened quite a bit lately with the Amish and Mennonites. There were a lot of farms who didn't have the son or daughter coming home and were really excited about the Amish coming home and running their farm and growing crops on it and continuing that farm on. It may not be in the family name but it's at least continuing the farm.
The Amish were just looking for about 100 acres. That's what they wanted, a house and 100 acres. If you look at what they've done in renovating and changing some of the farms down here, it's amazing. There was one in the Summerville area right off the No. 3 highway shooting from Charlottetown to Montague where they picked up a barn. The foundation was basically gone from underneath it except on the corners. They jacked that old hip roof barn up, put a full foundation underneath it. The front field hadn't been plowed in a while because it had a bit of a wet spot and couldn't take some of the big equipment on it. They pulled in there with a three-horse hitch and plowed that field that hadn't been plowed in, they say, 40 years. Cars were stopping along the side of the road just to see what this new entity was about, and they've done a fantastic job of not only maintaining the farms but actually picking them up and resurrecting them to a certain degree.
[Translation]
Senator Dagenais: I have another short question. When a farmer wants to cede or sell his facilities to his children, clearly, the issue of financing comes into play. We have seen it across the country. Can you tell us how easy or difficult it is for young people in the next generation to get financing for their projects in Prince Edward Island?
[English]
Mr. Jamieson: Senator, we have a program on Prince Edward Island called the Farmland Financing Program, and that is done through a Crown corporation called Finance PEI. In that case, we can offer 90 to 100 per cent financing for new or even existing farmers who want to borrow to buy up to 150 acres of land. Now, if the farmer wants to get larger than that and buy up to 450 acres, we can also loan them up to 80 per cent of the cost. The equity required to buy that land is very low, and we encourage them to use the program.
Also, Farm Credit Canada, which has very active files here in Prince Edward Island, has programs that are specifically designed for young farmers as well.
We also encourage farmers to look at the CALA program, the Canadian Agriculture Loans Act program that is with the banks, and that loan program is covered 100 per cent by Agriculture Canada and administered by our chartered banks. So there are a number of opportunities that farmers can use to access land, young farmers in particular.
Also, with our Future Farmer Program, we offer an interest rebate annually, so they're borrowing at a very low rate of interest with very little equity required. There are some programs that would help farmers. Plus the value of our land is quite a bit lower than it is in Western Canada, British Columbia or in Ontario or even Quebec. That, again, helps our farmers get into the business.
Mr. McIsaac: One of the reasons the farm financing was put in place was a request from some farmers, as well as through the Federation of Agriculture. I know in one case in my riding they wanted to retire, but there was very little equity and they didn't want to sell the land off to someone else and then it shorts the potato operation. They needed a couple of boys who wanted to continue, so through this program they can take some of their own land and sell it to the Farmland Financing Program at a low interest rate, keep the land in the farm and get a few dollars to retire and let the next generation take on the responsibilities and move forward.
That's one of the things we really need to do here because some of the farmers want to retire and some of the young fellows want to run the farms on their own. That program has worked for two generations.
Senator Duffy: Welcome to our two witnesses. As you've heard, colleagues, we're very proud of the agriculture sector in P.E.I. and the many innovative things that have happened on our island, going all the way back to the rural development plan of the 1960s that allowed land assembly and so on. The management of farms on P.E.I. has been a priority for successive provincial governments going back 50 or 60 years.
One of the things I'd like our witnesses to tell the committee about is how, through innovation and new technology, island farmland that was not considered prime land for potatoes or other mainstream crops has been converted to other crops. I'm thinking of the operation in Kensington where they're crushing seeds to turn them into perfumes and creams and so on. Could you expand on that a little bit? It shows how every bit of land in P.E.I. is being put to some good use, even land that in past years was not considered farmable.
Mr. McIsaac: I give kudos to our farmers. They are looking at innovative ways of increasing the dollars they put in their pockets, and the oilseed business is a prime example of that. The pulse crops that are becoming much more popular now is a case of that. We're growing about 60,000 acres of soybeans. We grew hardly any up until 10 years ago. It was potatoes, barley and hay, potatoes, barley and hay, in that rotation. Now farmers are realizing there are other crops out here they can make an extra dollar on. Maybe it stretches out our crop rotation as well, which makes it better for the farm, puts an extra dollar into our pocket.
I had two farmers in my office today looking at what they can grow for another country. They were looking at the Caribbean, a really interesting story. They are so innovative and such sharp young people who are looking at things like that, and they want to get the best value out of their land. We're moved so far from the potato, barley, hay situation of years ago that it makes it really interesting and exciting for the years going forward.
Mr. Jamieson: Senator Duffy, we're also seeing a fairly significant interest in perennial crops now, and these perennial crops are mostly of high value. There are Honeycrisp apples which we grow well on Prince Edward Island, and we have some farmers looking at highbush blueberries. For the highbush blueberries, they have figured out the genetics so that they ripen a little later in the year, so that the British Columbia/Michigan crop comes off before the South American crop goes on, so they are hitting that market when there is a need for highbush blueberries and they can get a significant premium for that product.
We also have some farmers looking at asparagus now. I know of some high slope land that has been converted to hazelnuts, and we have folks looking at cherry varieties on Prince Edward Island. Farmers are becoming much more diverse and making the land work to their advantage as opposed to trying to mould the land to what they need it for.
I think there's a lot of innovation. Our department supports a lot of research, and we provide funding for industry, in fact, to hire research coordinators to work with farmers.
Senator Duffy: Is there anything the feds can do to help?
Mr. McIsaac: We're very fortunate here on the island that the federal agriculture minister has his hand right on the pulse here and we work very closely with Minister Lawrence MacAulay and are excited about that. We are really excited to see what comes out of NPF or the Growing Forward 3 program to help out, again, our young farmers and innovative ideas. I know there is a climate change piece in that as well.
You know, we're not always looking for money, either. I don't think any of the farmers really want that, and you see that with the work that they've put into saving the topsoil. We talked about it earlier. They're willing to invest their own money, for sure.
They'd love to have the feds help them open doors to the Caribbean or some of the other markets. We're on the East Coast, right on the Atlantic. We can move crops to anyplace in the world. We were in China in November looking at opportunities for product there. We were at the big fish show.
We were looking at the Wagyu beef that we can run through our beef plant here in Borden, and we're certified for that now as well. So there's another big opportunity to put dollars in our farmers' pockets.
But being innovative — and a lot of the farmers are that themselves — we have people coming here from China. We have another group coming in a couple of months' time to look at our beef plant and to look at our animals here. They want to see it firsthand, and it's really exciting, but we need the government to open the doors.
We had another example of a dairy farmer who wanted to move live cattle into Peru. Now, the Peru borders were closed because of the outbreak a few years ago with BSE, and those doors had not been opened again. I brought that up at the first ministers' meeting or the ministers' meeting in Calgary to look into opening these doors. It seemed like it had been forgotten. We could put embryos in there but we couldn't put live cattle in there.
Those are things where the federal government can certainly help us as well. It's not always dollars. It's a bit of diplomacy as well. Lawrence will help us in any way he can, and we appreciate any help the Senate standing committee can do for us in that area as well.
[Translation]
The Chair: Mr. Minister, you talked about various markets. To which countries or provinces near you do you export the most? In Quebec, we are familiar with the Cavendish potato, which is grown in your province. How do you strike a balance? Is the trade entirely outside Canada, or is it partly in Canada?
[English]
Mr. McIsaac: We ship to a lot of the provinces in Canada, and down the eastern seaboard as well, which are big markets for us, but we're opening up markets in Asia. The premier is taking another trade mission to Asia in March, I believe it is, to open up markets there.
When we were at the fish show in Qingdao, China, some people were looking at trying to open a market, but they have 1.4 billion people for breakfast, dinner and supper — just do the math. We put in a million pounds of lobster into China right now, and for the oyster business that was over at the fish show, he could make one contact over there and they would take every bit of product he has. That's just an example. What they're looking for is quality and consistency of supply, and we think we can do both of those very well, but that's a massive market in China. We'd like to get a piece of it, and we will continue to look at that.
There are so many opportunities out there, and we will keep working at that. We're going to do more trade missions of course, but there are little areas too that we will grow on, and we have to be diversified, as Senator Duffy has said. We have to make more money off each acre, and we can't continue as we were doing for some many years with the old crop rotation of potatoes, barley and hay. You hope you have a good price for potatoes because you're not going to make any money on barley and you need the hay for crop rotation. So you have to make three years' money on one- year crop. This other way was stretching out the crop rotation, looking at new markets and new crops that we grow. We certainly increased the bottom line for our businesses and dollars in the farmers' pockets.
Mr. Jamieson: In terms of the breakdown on exports, we are a province of 150,000 people, so trade is extremely important to our province. If you look at where we export, roughly half of what we export goes international, with the U.S. being about 60 per cent of the market and the European and the Asian countries making up the rest, and about $1.4 billion, about 50 per cent of what we export, is also sold within Canada, a lot of it to Quebec and Ontario.
We also have some specialty products. ADL is our dairy cooperative, and I think about 80 per cent of the feta that is consumed in Canada is actually produced here in Prince Edward Island.
[Translation]
The Chair: Thank you very much, Mr. Minister. I have a final question. You started cultivating the famous Honeycrisp apple. It is a highly sought-after product, particularly in Quebec, especially since Nova Scotia does not produce enough of it. You would have a very welcoming market in Quebec for this apple that is loved by children and adults alike.
[English]
Mr. McIsaac: The group here planted about 160 acres of apples two years ago. They put in another 70 acres last year. They had plans to go to a thousand acres of apples using four different crops, but Honeycrisp is one the top four for sure, and they expect to be taking a good crop off them this year and growing more after that. If Senator Ogilvie needs some apples down in the valley or you need some in Quebec, we would be pleased to supply.
Senator Beyak: Thank you, gentlemen. Those are good apples. You can send some to Dryden too.
We had the president of the federation of agriculture here before our committee, and he mentioned a tax scale plan that the province can implement, and I wondered if you could elaborate a bit on that, for new farmers to encourage production.
Mr. Jamieson: I'm sorry; it hasn't been presented to us yet, so I really don't have any information on it. Was it Prince Edward Island or Nova Scotia?
Senator Beyak: It was Prince Edward Island. He mentioned a sliding tax scale to encourage new farm development.
Mr. Jamieson: They haven't presented that to us as yet.
Senator Beyak: Thank you.
The Chair: Thank you very much, minister and deputy minister.
[Translation]
Your testimony will be of great help in the production of our report. It is very important for us to know the opinion of the next generation of farmers and to know about your contribution to them and to the acquisition of farmland. Please protect Prince Edward Island, because it is one of Canada's jewels; it is the green province. Thank you very much, Mr. Minister. We will certainly have the opportunity to speak to each other again in the coming months.
[English]
Mr. McIsaac: Thank you very much for the opportunity to appear. If you ever have the opportunity, I would invite the Senate committee to the Island to see first-hand. We will give you a tour of our crops and the changes that are taking place on the island. We are extremely proud of what our farmers are doing here.
The Chair: Thank you very much.
Senator André Pratte (Acting Chair) in the chair.
The Acting Chair: Honourable senators, the committee will now hear from our next witnesses. By video conference, from the British Columbia Agriculture Council, we have Lynda Atkinson, Board Member; and Martin Rossmann, Member.
Thank you for accepting our invitation to appear. I would now invite the witnesses to make their presentations. I believe, Ms. Atkinson, you will make the presentation?
Lynda Atkinson, Board Member, British Columbia Agriculture Council: Yes, I will start. As you can tell, my voice is a bit scratchy, so Martin will be speaking as well.
The Acting Chair: Fine. After that, we will have a period of questions. Go ahead, please.
Ms. Atkinson: Mr. Chairman and committee members, thank you for the opportunity to appear before you and present the British Columbia Agriculture Council's perspective on farmland values and farmland acquisition.
I have invited Martin Rossmann to join us today. He is a respected member of the local farmers' institute and has held positions on the local, provincial and federal cattlemen's associations. Martin ranches on the beautiful Quesnel River and raises Limousin cattle, Canadian horses and pasture hogs.
Reg Ens, the B.C. Agriculture Council executive director, will be joining us from Langley this afternoon.
I am from a Quesnel ranching family. We raise Simmental cattle, Standardbred horses, and I am on the board of Horse Council BC, the B.C. Agriculture Council and the Canadian Federation of Agriculture.
The British Columbia Agriculture Council, or BCAC, is a general farm organization that represents 26 commodity associations in British Columbia. Through our members, we represent large and small farms throughout the province that produce over 96 per cent of farm gate sales.
By now in the process, you have received many submissions that highlight the complexity of this question. We want to provide you with the perspective of farmers on the West Coast.
Martin Rossmann, Member, British Columbia Agriculture Council: Before we get into the details, we have to ask ourselves what our objective is regarding farmland in Canada. Is it to produce cheap food? Is it to ensure the ability of future generations to grow and raise a portion of food for Canada? Is it to maximize the output of food manufacturing? Or is it to ensure healthy and diverse rural communities? Likely it is a combination of all these objectives.
Our perspective is to ensure that farmland is available for successful farms today and for future generations of farmers — farmers who grow and raise healthy food in sustainable ways and are part of vibrant local communities.
The second assumption I want to make is that farming is a commercial venture. A lot of people are passionate about food and enjoy being part of growing and raising food. While we encourage them and want to engage them, farming is also about creating income for rural families. It is more than just green space for a hobby.
We thought we would start this afternoon by giving you a perspective of the agricultural land in British Columbia.
When you fly over B.C., you can see that we are a very mountainous region with a few plateaus scrubbed clean by glacial action, a small northern part of the Prairies and a large river delta at the mouth of the Fraser. The Agricultural Land Reserve, or ALR, was established by the introduction of the Agricultural Land Commission Act in 1972. The purpose of the ALR is to preserve agricultural land. Much of that land is located in the same valley bottoms where people want to live, through which our transportation corridors travel and where industry needs to develop. The competing interest in this land is intense. Without the protection of farmland through the creation of the ALR, agriculture in B.C. would look significantly different. I would suggest that it would be a fraction of what it is today.
Currently, 5 per cent of the land base in British Columbia is in the agricultural land reserve. There are estimates that only 2.7 per cent is suitable for a range of crops and that 1 per cent is prime agricultural land, which would be defined as the land at the mouth of the Fraser River, the Lower Fraser Valley and the Okanagan Valley.
With changes in climate and new farming methods, the amount of land that could be considered suitable for a range of crops is growing. In Quesnel, we currently grow over 100 different crops and livestock species in an area that many consider to be the forest capital of Canada.
Recent changes to the ALR divided B.C. into two zones defined by the growing conditions, soils and population pressures. In zone one, the Fraser Valley and the Okanagan, development regulations have basically not changed from the earlier act, but in zone two there has been some loosening of regulations. This has benefited the oil and gas industry in the Peace River Region and allowed more wineries and small businesses owned by the farmer to be established. The act is complicated and we do not have the time to go through it here, but it does restrict development on farmland as much as any political construct is able to do.
While the ALR has protected a significant amount of land, it is not perfect. Lack of enforcement over several years has eroded the perceived integrity of the reserve. If my neighbour gets away with doing something that is not permitted, I will get away with it too. There remains a general perception that, given enough time or effort, land can be removed from the reserve, so speculation remains part of the process.
Much of the land in B.C. is owned by the Crown. Approximately 94 per cent of the province is Crown land with a further 1 per cent administered by the federal Crown, including First Nations land, defence lands and federal harbours. About 5 per cent is owned privately. Much of the ALR land is owned by the Crown, so you can see that the agricultural land usage can be considered complicated.
Ms. Atkinson: While the agricultural land commission governs land use in the ALR, municipal governments are responsible for local land use planning. This local turf war results in municipalities competing with each other for development and duplication of services. A wider regional approach would provide a more strategic and integrated approach to land use planning.
Farmers do not operate in a vacuum. Suppliers, service trades and processors are all part of the agri-food network. As communities convert industrial commercial land to residential and retail, the businesses supporting farmers look to relocate on productive farmland.
Just under half of the farms in B.C. generate less than $10,000 gross revenue. While we support all sizes of farm and encourage beginning farmers, it is difficult to view many of these operations as commercial businesses. By generating just $2,500 in gross revenue, rural estates can significantly reduce the amount of property tax paid to local governments. We need to ensure that all tax policies and farm programs work together to support farming, especially new farmers and protecting farmland.
There has been considerable discussion at this committee already around land ownership by foreign interests, and while it might facilitate job creation, we must ensure that the foreign interests align with our own. We will refer to this again later.
This ties back to our earlier comments about developing a clear, long-term agri-food policy for Canada.
Mr. Rossmann: In many farm business models, appreciating land values have been part of many farmers' business and succession plans. The expectation was that the increasing value of land would fund retirement. This works, as long as the economic value of the land — the income produced from the business using the land — is linked to the market value of the land.
In most areas of B.C., the market value of land has little relation to the economic value. Most farmers operate a land speculation business in addition to the crop or livestock business.
It is critical that government policy encourages farmland to be actively farmed. Programs or policies that encourage land owners to lease land to the next generation of farmers would help new entrants.
As much as commercial success is critical, it must also be monitored. I would like to end my presentation by talking a little about community and how land acquisition may affect how we live.
The first is consolidation, a problem that is being considered on the Prairies as well. We have some excellent examples here in B.C. The American owner of the Douglas Lake Ranch, the largest ranch in Canada, has bought up several other large ranches in the area. Another company currently ranches 250,000 acres. It is owned by a financial investment company.
We have yet to see the results of these large acquisitions on our local economy. However, we are watching how it will affect our local cattle auction cooperative. The owners of these large ranches very rarely need to join local farm or forage groups and usually are large enough to source supplies wherever they choose.
Another situation happening in B.C. is the use of ALR land for carbon credits either on the carbon market or just as a statement of public trust. One offshore company recently bought up many thousands of acres of very good alfalfa land in the ALR, brought in heavy equipment and dug deep one- to two-foot trenches in the earth and planted trees, removing the land from agriculture for possibly centuries. This was against the ALR regulations, and the public outcry finally paused the operation. Their website states:
We have always strived to be a good neighbour. We understand that land use priorities are changing within British Colombia. As a result, in 2015, we paused the scheme pending a thorough assessment of the program. As part of this review, we have engaged with local stakeholders to understand how RB's Trees for Change programme can continue to make a positive contribution to the local community.
We could continue to lose farmland because, as in most of the rest of Canada, B.C. does not track the acquisition of land either by citizens or foreign buyers. So although the ALR is meant to protect agricultural land for agriculture, in this case over 30,000 acres was lost. The ability to monitor and provide surveillance is costly and beyond the current technological capabilities of provincial governments.
In B.C., we have just begun to track foreign ownership in Metro Vancouver, but I will tell you that the acquisition of farmland by foreign owners is just as massive and speculative. Buying up the land and planting trees on all of those farms was a smart move economically for the offshore company, but not for the community. "No trespassing'' signs went up; common gates were locked; all infrastructure, including houses, was removed, or if not removed, was sectioned off in small parcels where you cannot make a living. So again: no families, no children, no cattle, no hay, reduced property taxes and no community.
Instead of many ranchers running 200 to 300 head of cattle each, buying equipment and supporting the local cooperatives, these lands look like they will be removed from agricultural production for our lifetime and our children's lifetimes for carbon trust when, if you really look at the science, trees are not as good at sequestering carbon as forage land is. We have many acres of forest land that needs management and reforestation, but it is so much cheaper to carve up good pasture and hay land.
Clean food and water are the new currency of a growing middle class worldwide. British Columbia is living up to its slogan, "The best place on earth.'' The world knows it and they are coming. It truly is the Wild West or the land gold rush in many ways. People and corporations from many countries are investing here. These waves of acquisition span many years.
In the 1960s, the Americans discovered our beautiful lakes and bought up or leased all the land around the lakes that they could. Then the Europeans came, reveling in the freedom and distance between neighbours and the casual lifestyle. Now the Middle Easterners are coming because of the peace and the water, and the Asians are coming for the clean food. How will this change B.C.? Time will tell, but it is changing quickly.
Ms. Atkinson: So, yes, our objective is to provide food security to support food processing and to ensure healthy and diverse rural communities. On behalf of BCAC, we appreciate the opportunity to meet with you today and to be part of this very important communication.
We need to develop a long-term vision for agri-food policy and the importance and sustainability of farmland so that we can have successful farms today and for future generations. We need farmers to grow and raise healthy food in sustainable ways and be part of vibrant, local communities. Thank you.
The Acting Chair: Thank you. I see that Mr. Reg Ens has joined us. Welcome. Now is the time for questions.
Senator Woo: Is Mr. Ens going to present first?
The Acting Chair: No, they are all from the same group. They are ready to answer our questions.
Senator Woo: First I want to thank colleagues from B.C. for their thoughtful, thorough presentation and for taking the time to be witnesses on this committee on a very important issue. There are so many questions, and as you have pointed out, it is a very complex situation. I certainly share your goals of producing, as you put it, safe food and food security, food processing and ensuring healthy and diverse rural communities.
You have identified a number of problems that are quite well known in the ALR system, but I sense that you have been a bit shy in putting forward some solutions, answers or recommendations. I wonder if I could encourage you to speak your mind on what you think needs to be done, can be done, first in terms of better enforcement of ALR lands, monitoring different nationality ownerships to the extent that it makes a difference, and perhaps even changing some of the land use regulations so that you do not have problems of the sort you describe such as the one where land was bought to create a carbon sink when perhaps it's not the best way to create a carbon sink. Some ideas and solutions, please, if you would.
Ms. Atkinson: First, I think we need to update our technology so that we can actually track acquisitions. We're doing a lot in B.C. now to do some accurate soil mapping. We have done it in a number of areas. That is important as well.
Also, as you are probably well aware, the Agricultural Land Commission has been revamped in the last year or so. They have hired a number of people to come in and do supervision.
The issue with the situation we are talking about here is the supervision wasn't there. Not only wasn't it there, but government needed to listen when their citizens say, "We have a problem here.'' It took us five years. Admittedly, this was provincial, but it took us five years to get that company stopped. We didn't start with the government in power. We couldn't start with them. The issue for me there is that it shouldn't take five or six years for a government to hear what is happening on the land and to get out there and really take a look at it. We need to shorten those timelines down.
Mr. Rossmann: I would like to add that some of the things that possibly could be done to reduce the likelihood of this happening again would be to put in place regulations with the real estate industry so that when it comes to agricultural land, they would be forced to reveal to potential buyers the restrictions on agricultural land, the expectations, and to make sure potential buyers are aware of it. I think that would go a long way to preventing some of these things from happening again.
On another note, we keep referring to agricultural land, but I prefer to refer to it as food-producing land. We have quite a thing going now about food security for our province and for our country. Agricultural land, or food- producing land, is a non-renewable resource. There is a finite amount of it, and I think it's in the country's best interest to protect it and to keep it to for Canadians to produce food for Canadians. I would hate for future generations to end up being reliant on imports for food simply because we allowed our food-producing land to be bought up by foreign interests. Sometimes these interests might be funded by offshore governments. Once that land is gone, do you think they are going to release it back to Canadians?
Senator Woo: To follow up, you had a quote from the company that created the carbon sink. It was taken from their website. I'm trying to read between the lines as to what you make of this quote, but what I make of it is that they have some expectation or hope that the laws might in fact change to allow them to revert to operating that land as a carbon sink. Is that your understanding?
Ms. Atkinson: We put in the quote to reinforce the fact that they have paused, not stopped, their initiative, even though it has been demonstrated and told to them that it is illegal to use ALR land for that. Yes, our concern is that we need to be vigilant to the fact that if they buy up more land, that it not be turned back into forest land again.
Senator Oh: Thank you, witnesses. I note that British Columbia is our gateway to the Asia-Pacific. It is the first place in Canada that can directly reach the other side of the Asia-Pacific. There is a huge market over there. Understanding that we have an incoming Asian population, including South Asians, the majority are settling in British Columbia. Many are going into the farming business.
In November I was with a delegation in China, and I saw a lot of British Columbia products, including blueberries. They are able to sell fresh blueberries in China, and I see there is a huge market or cash crop for local farmers.
Can you comment on the fact that you have discovered a huge market in the Asia-Pacific?
Ms. Atkinson: That market has always been there. I guess we just discovered it because of trade negotiations that have been in place.
We certainly see that Canada is a land of food export. In terms of food security, by 2020, we might be one of only two or three countries that have the capacity to export to other countries, when you look at the whole trade balance. Certainly we want to help feed the whole world; there is no question about that. But we also want to maintain our communities, and we want to keep the Canadian culture the way it is, or in a good Canadian way, I should say. There are many things that we want to do, not just look at the financial aspects of these deals. That's important when we talk about land ownership.
My great fear is that we will move back into a serf situation where someone else — a corporation, possibly — owns the land and our farmers are able to work the land but only at the discretion of the owner. This is not the way that Canadians should be doing their work. They should be doing it on farms that they own and have discretion over; at least that's my hope for the future.
Senator Oh: Our committee is aware that about two thirds of what we produce has to be exported. We can only consume approximately 30 to 35 per cent of the food we produce. There is a big market and we need to export outside of Canada. With the FTA coming up for renegotiation, can you comment on that too?
Ms. Atkinson: Well, first the Trans-Pacific Partnership. The British Columbia Agriculture Council, through the Canadian Federation of Agriculture, has been very supportive of the TPP and making that work. So we'll see, with the new political situations that are happening in the world, what's going to happen with that.
Of course, NAFTA is important for us because over 75 per cent of our exports go to the United States. But we are reaching out to Asia and our close neighbours, Mexico as well, in case we're not able to get as much of our foodstuffs into the United States. But we definitely are positive about trade agreements.
Reg, did you have anything you wanted to say on that?
Reg Ens, Executive Director, British Columbia Agriculture Council: The only thing I would add to that is that trade is critical for us as a province. The fear of NAFTA being reopened, and the phytosanitary and non-tariff trade barriers that some of our trading partners put in place, is a huge problem for us. We appreciate what the government is doing to keep those borders open and to get access into these countries.
Senator Woo: Just a supplementary on the issue of accessing new markets, particularly in Asia, can you talk a bit about product innovation among your membership in terms of food processing technologies and different product types that are developed to address different tastes, to put it very directly, in Asia, whether it's the end product, the packaging, the marketing and so on? Markets in Asia, of course, are quite different from markets in the United States and Europe, and I'm interested to hear what your membership has been doing to adapt to those new markets.
Mr. Rossmann: I will speak to that. Coming from the cattle industry, the Canadian Cattlemen's Association has established the centre of excellence in Calgary. It's a facility where they showcase the beef product basically from the harvesting of the animal through the processing, right into the preparation and serving of the beef to the consumer. It is a world-class facility. They have on staff very experienced chefs and persons like that. Delegations from visiting countries that are looking to trade in beef products with Alberta and B.C. are invited to come to that centre to see what we do and to sample the products we produce. That's one of the things that's being done by the cattle industry.
The Canadian Roundtable for Sustainable Beef has been put together to work with consumers and the food service industry to show that our livestock industry is working to be a sustainable industry and that the environment, the health and the care of the animals are foremost in our production practices. Canada is also the lead on the Global Roundtable for Sustainable Beef.
Those are some of the things happening on the beef production side of it. Perhaps Lynda will speak on some other issues there.
Ms. Atkinson: We are working closely with CFIA as well to streamline the process, making sure that for anything we export, there are no disease issues or concerns in those areas. Through having direct linkages, many of our farms are able to process on farm as well as sending things to larger packing houses. With the ALR, we are now allowed to build small processing plants, hopefully on a non-productive part of the farm, so there can be direct marketing straight from the farm into those foreign markets.
As you know, in the North, in Prince George, we're starting to look at farming fish and hopefully shipping some of that product. Mainly Arctic char is being researched now so that it can be directly marketed to Asia.
Some of those big planes that come over full are going home empty. Our goal is to try and get more of our products on those planes going west from British Columbia into the Asian market.
Mr. Ens: I would say two things. First, with our very diverse local community here, we have a test market for new products. We don't have to have access to a foreign market before we develop new products. A new initiative we are starting is a communication with our marketplace. One of the things we, as an industry, have lost or are losing is some of the connection with the consumer. We're trying to work with chefs, consumers and food processors to look at what the demands are and to understand how the consumer is changing and what opportunities are there.
Having said that, one of the negatives we have in B.C. is we have lost a considerable portion of our processing capacity over the last 20 years. There is a vacuum of opportunity. Because we are a fairly small, niche market, we don't have some of the economies of scale that some of the larger manufacturing or producing areas have and that some of our mid- or small-sized farms don't have, which is access to processors, that first receiver, to look at those products. That is a challenge we have to overcome.
Senator Gagné: The committee's mandate is to examine the acquisition of farmland in Canada, and one of the challenges facing potential buyers is the increase of farmland prices. It is a challenge for B.C.
If I remember right, the Honourable Norm Letnick stated that the increase in farmland prices might not be driven by foreign ownership. He added that farmland price increase could be attributable to low interest rates and strong crop receipts. Do you share that view?
Mr. Rossmann: Those comments are probably correct, that the actual price of farmland is not affected that much by the foreign acquisition. Particularly here in B.C., the problem is that financial institutions are not really friendly to lending to new entrants to get into agricultural ventures. For instance, for me it would have been much easier to borrow that same amount of money and go out and buy several pieces of logging equipment than it would be to buy farmland for the same value. This is what we perceive to be the biggest problem.
It's often said that we don't have people wanting to get into the agriculture industry. That is false. We have many young people who are very interested and passionate about agriculture, but they are unable to get into it because they cannot raise the funds.
We feel that the lack of programs to help these new entrants is one of the bigger problems, more so than properties being bought up by foreign interests. In most cases, it's strictly who has the deeper pockets. That's where our local younger generation loses out.
Senator Gagné: We will be submitting this report to the House of Commons. Is there a role for the federal government in all of this?
Ms. Atkinson: The answer is yes. I'm trying to think strategically where that might be, really. We're looking at the next agriculture policy framework; right? That's one area that the federal government does give very good direction to the provinces. They can give direction to the financial area. We do have some good federal-provincial programs that give some guarantees for loans.
This is a long-term committee; this committee isn't just a short-term committee. Monitoring what's going on in Canada is useful. For example, with the land acquisition, you now have a good picture of how people can acquire land across the country, and you can see where maybe there are some deficits that could be supported. I'm on the CFA committee for land acquisition as well, and it is amazing how different each one of the provinces is in their approach to this process. Sometimes it's just important that there's someone overseeing it and saying, "Have you considered this? Have you considered that?'' Believe it or not, we don't always know what's going on in the other provinces.
The answer to your question is definitely yes.
Mr. Ens: Lynda hit on the key ones with the next ag policy framework. There is key leadership that the federal government can provide with that. There is tax legislation around succession planning, opportunities to encourage retiring farmers to assist the next generation. As Martin was saying, there are probably ways that we could look at creating incentives for farmers to leave some of their equity in the land, helping the next generation rather than putting it straight into the capital markets.
The other thing is just federal land ownership. The Port of Vancouver is a highly contentious issue in the Lower Mainland where you have competing interests nationally. Grain transport exports, as we have talked about, need ports, we understand that, but from a local perspective that's some of our most valuable land we're using there. That kind of leadership, having that discussion on a national basis, is definitely where the federal government can provide leadership.
Senator Duffy: I thank the witnesses for giving us this time and valuable insight.
I come from Prince Edward Island, and I was amazed to read in your brief that about half the farms in B.C. generate less than $10,000 in gross revenue. You've got a lot of what they call in Ontario "hobby farms,'' and that was the norm for farms in Prince Edward Island 50 or 60 years ago. At that time the federal and provincial government got together and created a fund that allowed for the consolidation of those small farms, to make them larger and viable commercial enterprises.
Has there been any move toward that in British Columbia, or do the people who have these small farms, which would appear on the face of it, given the money we're talking about, to be not economically viable, are they not interested in consolidation?
Who is going to break that logjam, to mix my metaphors? One of my colleagues says maybe they're speculating that they'll turn their hobby farm into a big retirement fund.
Lynda, did you want to try that? You reminded me of P.E.I. when you talked about serfs on their own land. P.E.I. used to be owned by barons in Britain and we were all Irish tenant farmers.
Ms. Atkinson: As you may know, British Columbia has a very diverse agricultural industry. It's not like the Prairies. Even P.E.I. has more flat land, I think, than B.C. does, sort of.
I could be wrong on this, but there are about 200,000 of those farms, and 100,000 of them make quite a bit of money. Of the 100,000 that don't, a lot of them are four or five acres with a house on it, which can be considered an estate in some cases and not a functioning farm, but they may have 10 beehives on their property and make that $2,500 necessary to be classified as a farm.
I'm not sure they want to do that. They don't want to make any more money off that land. They just need to make it for tax purposes. BCAC has some concerns about that because these are classified as farms, but in reality they aren't producing economically.
Now, in the Fraser Valley, it's very important that we get as much production as we possibly can. That's our best productive land, but it's also our most speculative. I think what you're talking about there is definitely true, Senator Duffy, that the money that is made on those properties — and they turn over very often — is in the value of the land.
I used to live in the Fraser Valley. A piece of property that we sold down there for $250,000 about 15 years ago just recently sold for $4.5 million, and that is not unusual. They do make the money, but they're not making it on their beehives.
Senator Duffy: I hear you. There's obviously social tension in relation to this because you have people who truly are farmers who are having difficulties, and then you have this other group.
Can I just ask you one question about your exports? In the past, we have seen, coming from Atlantic Canada, the truck border at Maine, whenever potato producers in Maine get a little itchy, all of sudden our trucks bringing the greatest potatoes of anywhere, P.E.I., get stopped at the border and inspected up, down and sideways for all kinds of things.
In the last month or so, have you seen any change at the border between B.C. and the United States in the attitude of American border officials, given the other changes that are taking place in Washington?
Ms. Atkinson: Maybe I'll start with that. Reg might have more up-to-date facts.
A good example is our landscape nursery business. When there are issues down in the States, even though they have been passed by CFIA up here in Canada, depending on the border guard, they can be stopped and re-inspected or not. According to the trade policy, they're not supposed to be stopped, but a customs agent does have the ability to stop anything they want to. In the last while, many of our truckers will go to a different stop or a different crossing just for that very reason.
I don't have anything specifically since the last American election. Reg, there may be something you know. Reg is down at the coast. We've escaped the coast. We're up in the interior, so we don't have quite that same experience.
Mr. Ens: Not in the last month, Senator Duffy, but we're just starting our export season in the landscape nursery area. Lynda has identified the problem correctly. It is the random stops that are causing the most concern.
Senator Duffy: But that's historically been a problem as opposed to something that's escalated in the last bit. I guess you're not exporting yet, considering the snow you've had there the last couple of days.
Mr. Ens: No, I have not heard anything since the election.
Senator Beyak: Thank you for your presentations. I wonder if you could explain the tax code a little bit. It's my understanding that the Government of British Columbia wants a higher tax on properties for investors who aren't farming the land. I wonder if you welcome those changes or if there are better suggestions you would have.
Ms. Atkinson: At this point, in the Metro Vancouver area, those taxes are basically not for agricultural land. It is being considered. I'm not sure if that will happen.
For us, it is just as important that we monitor and know who is actually buying the land, and then, yes, getting it into production. I'm not sure that taxation will put it in production. With the massive wealth behind some of these speculators, I don't know how much they're going to really care about that, but Reg might have better ideas.
Mr. Ens: There is a tax incentive program currently in place that grants a rebate or a discount for farm properties on their property taxes. That hasn't changed for I believe it's over 25 years.
If you have two acres of land, producing $2,500 gross revenue allows you about half the value of your personal property tax. So if you have a million dollar home in Vancouver, buying a five acre property in Langley and growing a few trees or a few chickens on it allows you to cut your taxes in half, actually cash out on the value of your property, build a nice residential estate and have a great quality of life. So the tax act hasn't increased along with inflation.
Senator Beyak: Thank you very much. Those were great answers.
The Acting Chair: Thank you very much, on behalf of the committee, for being here tonight. The meeting is adjourned.
(The committee adjourned.)