AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 29, 2001

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[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone.

We'd like to call our meeting to order, pursuant to Standing Order 108(2), conducting a study of the future role of the federal government in Canada's agricultural sector, mainly dealing with grains and oilseeds.

This morning we have two distinguished professors with us. From the University of Guelph we have George Brinkman, and from the University of Saskatchewan we have Hartley Furtan. We'd certainly like to thank them for coming at very short notice.

Gentlemen, we have been hurrying through our program and looking forward to a summer recess. We have heard various groups dealing with the problem in that sector of agriculture. We certainly want to say we appreciate very much your coming, with such few days' invitation.

• 0910

It certainly wasn't our intent to try to hurry this thing, but June is the month when we will probably be going back home, and I know we will be looking further at this issue in the fall. In the meantime, for our own committee and for the farmers who are approaching our committee on this issue, we certainly appreciate the input you will be able to give us this morning.

I'm not sure who would like to speak first, but we would certainly like to hear your presentation. Following that, we have what we call a question and answer period around the table, when the various parties are able to ask questions on your presentation.

Mr. Brinkman, will you be first?

Mr. George L. Brinkman (Individual Presentation): I guess I'll speak first.

This morning I propose to raise a series of issues for consideration in future Canadian agrifood policy. I'm not going to provide a prescription in detail of what I see Canadian policy should be, but I want to raise some things I think are very critical.

The first issue I want to look at has to do with farm incomes and farm viability. I have submitted to the committee some tables on farm incomes, which will be translated and circulated later on for your use. Part of what I will do is raise a series of questions, in the hope that you may want to follow up on some of them later on when there's more time, recognizing that there's so little to cover at first.

If you look at the incomes for Canada, for example, as a whole in 1971 and 1972, we had about $1.5 billion in net farm income. In 1973, 1974, and 1975 that doubled to about $3 billion, and every since then, net farm income in Canada has been in about the $3 billion range. In the meantime, capital investment has increased from about $24 billion to $175 billion. So you can see that if farmers were earning 1% on their capital, they would be earning about $1.7 billion, which is more in 1999 than they earned from the marketplace. In a very brief nutshell, I see the agricultural sector as one that has not kept up with the rest of the economy. Later on, we will return to this issue.

I would, for this reason, look at an impact, in terms of support for Canadian agriculture, as a part of agricultural policy, but I will argue later on that it needs to be based on Canadian conditions and Canadian injury, rather than on international competition with other providers of support.

If we look at the basis for government support within Canada, we can certainly look at farm incomes compared to non-farm incomes. There's no question, in all the research I have had, that on average, at least, they have not kept up.

We also have to look at the issue of chronic versus single types of support. In many instances, you see that there is support for some industries on a one-time basis. In agriculture, we've had the conditions where we've continually had support for the farm sector, and it's likely we will need to continue to have that in the future. That's a different set of issues, when we argue that some other industry gets support, so why not agriculture. If it's one-time support to be able to get things back on track, it's quite different.

I think we have to deal with the issue of the current crisis that looks at support from the standpoint of the call from farmers to achieve equity with U.S. producers. It's one thing to argue that governments have the responsibility to achieve comparable incomes across the international borders; it's another thing to justify that, not only for agriculture, but for the entire sectors we have.

For example, when I was on leave in Texas four years ago, I bought Michelin tires built in Canada. I was in Raleigh, North Carolina, on leave this year and I bought light bulbs and all kinds of things. If we argue that the objective of governmental policy is to assure comparable incomes across international borders, we run into difficulties. Why not university professors? Why not public servants? I think there are grounds for providing support to agriculture, but support should be based on the income and the injury within Canada, not on the level of support that is achieved somewhere else. Those are two different issues.

• 0915

On the other hand, the level of injury from other countries is an issue. There's no question that the U.S. programs have caused injury. But at the same time, we also neglect to see that from a Canadian perspective, the U.S. has a conservation reserve program that sets aside 35 million acres a year. That's 40% more acreage than we seed to wheat in Canada, so it has a substantial impact. So all of the impacts of the U.S. are not bad.

If we look at the assessment of Canada's global competitiveness, let me raise a really interesting question. I'm not saying this is the case, but I think this is something we have to address in Canadian policy. What if the North American farmer is no longer the most efficient producer of grains and oilseeds? We have growing evidence that the Brazilians can produce soybeans at a cheaper and more efficient rate than we can in North America—in both Canada and the U.S.

Our policies have traditionally been designed on the basis that we are the most efficient producers, and that we need to put safety nets in place that will allow us to ride through upsetting times, only to return to a position where we are now market leaders. If that condition is not going to hold for such things as soybeans, then we may be looking at a completely different kind of policy. That's one of the things you may want to address later on.

I see the kinds of emphasis in Canada, with a made-in-Canada agriculture policy. I think we need to have extremely strong support for food safety, environment, and animal welfare kinds of things. These are going to drive our international competitiveness in the future.

We also need to have a very strong component of research and technology transfer policy. I don't know whether you are aware of it, but since 1995 the professional years of public research in Canada have declined by 37%. Since 1996, professional dollars spent on public research in public institutions has declined by 32%. This has some very significant implications for Canadian agriculture policy.

I see government support as a component of policy. I see it based on Canadian conditions and injury. I think it's necessary for us to allow, within any kind of support program, that the necessary structural adjustments will be able to take place. That means everybody who wants to farm may not necessarily be the most appropriate people to be farming. That's a tough kind of thing to address, but at the same time we have to recognize that the world is becoming even more competitive than it is now, and for our long-term competitiveness, we need to allow for structural adjustments.

I read an article in The Western Producer, I believe, that raised the issue of assistance for adjustment policies within agriculture. That can involve structural adjustments within agriculture, and even address exit assistance. Then we may likely have to address the issue of compensation for program changes that affect farmers. A good example is the potential implications of WTO negotiations on supply management. If this were to unravel the supply management system, the precedent for compensation has been established in western Canada, with the change in the Western Grains Transportation Act, and it would be extremely difficult politically not to be able to address a similar kind of treatment within the supply management sector.

Finally, what would happen if there were no government support? I do not advocate this position, but I want to address the issue very briefly. Would we have no farmers in Canada? No. That is not true. Would we cease to have family farmers in Canada? No. That is not true. Would we have the same farmers? Possibly, but not likely. So from the standpoint of the agricultural sector, it would continue. What would happen? We would see adjustments in land values. We would see adjustments in farm incomes. We would see structural changes in the industry.

• 0920

The burden of that adjustment would affect the current generation of farmers, but a new generation of farmers would come in. The land would not sit idle. We would not lose our agriculture; we would have a different kind of agriculture.

Thank you.

The Chair: Thank you, Dr. Brinkman.

Dr. Furtan.

Mr. Hartley Furtan (Individual Presentation): First, let me say thank you very much for inviting me here. I appreciate that, and so the privilege is ours.

I have prepared a report with Professor Richard Gray, which I've given to Suzanne. Unfortunately, I didn't get it translated into French, and so it's only in English. I'll speak largely to that, I won't read it. Basically, our objective, Mr. Chairman, is to try to make the case that in Canadian agriculture we are seeing a structural change. When we put this together, we asked ourselves the question, what can we say to this committee that would help, if anything, that you don't already know? That's a difficult question to answer.

So what we're going to do is simply go through the way we see the grains and oilseeds in particular changing. We don't want to address the issues of supply management or the red meat. They're completely different as structures and they face different economic situations, they operate in different markets. So we are going to try to focus on this one particular case. Grains and oilseeds, of course, apply across Canada, not just in the west. Soybean and corn prices affect Ontario and the maritime provinces as well as the west.

Grain and oilseed producers today deal with rapidly changing technology in everything from precision farming to the types of crops you can grow. Farmers face a massive array of regulations on production and marketing. They face a drop in commodity prices, changes in government support, increased competition from European, American, and recently Australian subsidized production. All of this has left the grains and oilseeds producers in a rather uncertain position. So really the question you're faced with is what to do about all this, what the implications are. So it's not just one change that is happening out there, there are many, it's a composite of changes.

In our report we give a short background on the income situation in Saskatchewan. The results are pretty clear across the board for grains. There's almost no crop you can grow where you can cover the full cost of production. The only crop that is reported where you can cover all of your direct costs, excluding management and labour, would be lentils, and barely at that. It may apply to chickpeas this year for some people in a very small area of the southwest of Saskatchewan, maybe the southeast of Alberta. Right across the board that's the situation. So this leaves producers in a pretty difficult position.

The rest of the paper deals with the notion of stabilization and what farmers mean by stabilization. I'll leave that to you.

I'd like to talk about diversification for a minute. Is diversification the solution? That may be a question you have in your minds. No doubt diversification is a good thing. You can reduce your risk through diversification. But diversification is no substitute for lowering the costs of production, lowering transport costs, access to markets, or the creation of new products. So while we do not downplay the role of diversification into hogs, potatoes, etc., we point out that a few years ago everyone thought ginseng was the answer. If you read the Globe and Mail a few weeks ago, you would have seen that ginseng is way oversupplied, the price is about a third.

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In our view, the government can create the conditions for diversification, but diversification must be determined in the marketplace, not by government policy. The government does many things to encourage diversification, many good things. You support research, as was stated by George Brinkman. Changes in education, knowledge, how resources are used, farming systems, marketing and processing systems, transportation systems, all of these “public goods” supported by government are good for diversification. But diversification is a slow process, very slow, it doesn't happen overnight. We would argue that it is not the solution to the “this year, next year” problem many grains and oilseed producers face.

One of the related issues on diversification is the relationship between free trade and farm income. This is another issue you might raise in your mind: What's the relationship between trade and income? In our view, trade has the potential to be very good for farmers, and in most cases it is. But there have to be some conditions met before you can really capture the benefits from free trade. In Saskatchewan we do not have a class one road to our best market, which is the United States. We don't have a class one highway to our best market. So we argue—and this is not your jurisdiction, this is another government's jurisdiction—that one of the reasons we haven't achieved as much benefit from free trade as Manitoba and Alberta have is that there's that block in there. You're going to have to remove that block before you can move diversification.

So what are the policy options? The first question I think you people have to address in your own minds is what kind of agriculture you think will dominate. Here Professor Brinkman and I are going to disagree a bit. We see large corporate-like agriculture moving to dominate the sector. I don't mean multinational corporations, I mean where you split up the relationship between who owns a farm, who works in the farm, who manages the farm, who calls the shots in the farm, from the notion that most of you have in your minds, I believe, about what a family farm is. Many of our safety nets are now designed to support the first type, not to support the traditional family farm. In Saskatchewan, with farming technologies available and used today, one person can farm 5,000 acres, and they do—that's eight square miles. But even those farms are facing difficulty. They aren't big enough, I guess. They don't have a way to handle the risk. There's no way to securitize that extra risk.

So that's one of the things you have to think about. Of course, associated with that are the community ramifications. If all farms in Saskatchewan were 5,000 acres—and they probably won't be, but suppose they were for a moment—we'd have to get rid of three-quarters of our existing farmers. So you can imagine the ramifications. That's a strong driving force, and it's not all subsidies, it's technology, it's the whole question of which train we are on here, which road. Is it the one you want to be on? I think that's a question for politicians. You have to decide that.

What can we do about this issue of farm income problems in the grain and oilseed sector? We suggest three things—we've been here before, and they're going to be the same. First, we believe government should continue to encourage and push diversification. This is going to take new money, doing many of the things you're already doing, research, extension, providing investment for new operators. However, we are convinced there must be a way to lower the costs, such as transport costs. They must be driven down. Energy costs are high and have to be dealt with. It's not quite a diversification issue, but it has to do with the cost of production.

Second, many of the existing farmers who are in trouble are not going to diversify for reasons of age, lack of skills, inability to make changes—there's a whole set of reasons. They aren't going to diversify, and they shouldn't diversify. These farmers need to find a dignified way to leave the industry. We suggest, as we have before, that the government create an early retirement package and examine a way to move some people off the farm in a dignified way, because that will let new people come in. It doesn't really matter whether they're children of existing farmers or people from other countries, it will help to move the log-jam.

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Third, if family farms are going to maintain their prominence in this sector, we believe they need more economic protection. That does not necessarily mean more money in the safety net envelope. We have to look at who's currently getting the money and why. Is the current policy working, paying the money out to the people you want it paid to? If it is, you're going to have to appropriate more money to provide family farms with protection. If you're willing to change the direction and perhaps target existing payments, a very difficult political sell, then maybe there is enough money. That's a question I think you have to consider.

It's interesting to note that in the U.S. one of the critical problems with safety nets is who gets the money. Most of the money in the U.S. today is not going to family farms, it's going to people in New York and Arizona. We suggest that we are on the same track. That's where our policies are taking us. If you have a large hog operation, you can get a payment easily. If the price goes down, you get a nice big payment. But if you are a family farm, even a large family farm, where you've been suffering under the grains and oilseeds price and cost scenario, you may get nothing. I think that's a question only the politicians can answer: is that what you intend those programs to do?

The rest of our report deals with, I think, an interesting scenario. We had a number of producers from Saskatchewan in, large farmers from three different soil zones, and we asked them these same questions: What's happening on your farm? What changes have you made? What changes are you going to make? They basically agree with us, we're reflecting their view, that there is a real income crisis here, even for big family farms. Their children aren't coming back to farm—it's one of the things you'll read in the report. They're concerned about it. They're not negative, they don't have a bad attitude, as we often hear these days, but they're not optimistic either, because they can't see a renewal of their farms and their community, and the two are related. So I think it would be an interesting read for you or your staff.

In conclusion, Mr. Chairman, we believe there is a real income crisis here in the case of oilseeds across Canada, all the way across. There's a need to diversify, that's true. We must have a renewal of farm families to continue to participate in the larger Canada. Governments cannot play a big role in this, but they can play an essential role. The essential role for government is to create the environment in which the type of farm organization desired by Canadians can grow and flourish. By supplying goods and services, like research, extension, and education, we have achieved that in the past. However, without a clear understanding as to what is at stake currently, it's difficult to design programs and support this. So I think we have to go back and again ask the question, what really is the type of agriculture we want to see dominate here? Once we have that decision made, the rest can follow fairly directly.

Thank you.

The Chair: Thank you very much.

Howard, are you ready to lead off?

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chairman.

Welcome, gentlemen. They always have me and the Canadian Alliance go first to warm things up, and then the rest of them get hints as to where to go and they take off.

We've got at least two active farmers over on the Liberal side, and you've got two active farmers right here. There may be more who are out there with a shovel, a fork, or whatever, and on the tractor.

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Mr. Brinkman, do you not think that with agriculture and food production, there's a certain amount of national interest involved in this, and it should be part of the decision-making process that it's in Canada's national interest that we are able to produce x amount of our own food, in dealing with this whole subsidy issue?

Mr. George Brinkman: Yes, I do. Being able to produce our own food is a critical issue, but it is a much broader issue than that when we're talking about grains and oilseeds, because most of what we produce is exported. The problem right now isn't that we don't have enough grains and oilseeds to feed Canada or the world; the problem is we have too damn much. So it's an issue of certainly being able to keep our farmers and our farm sector viable, continuing, renewable and competitive. But I don't see, in the grains and oilseeds sector, that the key issue is providing enough grains and oilseeds for Canada. There's plenty there.

Mr. Howard Hilstrom: You know that the Americans didn't produce a whole lot of canola until a few years ago, and it's only as a direct result of their subsidies, in my opinion, that they started producing canola to the extent they have. Is that not true?

Mr. George Brinkman: It's interesting. If you look at what's happening in western Canada, without the same levels of support in Canada as in the U.S., have we cut back on our acreage? Murray Fulton, the chair of the department, said we're still producing the same number of acres. We've changed the mix, but we haven't cut back on our acreage.

The point I want to make is that in the U.S., there has been support for wheat production, and that has been encouraging farmers to produce wheat and not specialty crops. If you look at what's happening, the U.S. is producing some canola, and I'm surprised they haven't produced far more than they have, but we have the specialty markets pretty much to ourselves. We haven't been blown out.

Mr. Howard Hilstrom: Over the past 40 to 50 years, government policy has been really negative toward certain parts of the country, and I'll talk about western Canada right off the bat. The Crow rate kept western Canada from diversifying and changing for a long time. I'll give you two examples. The feedlot industry—the livestock industry—was down here in Ontario and Quebec. We shipped our feeders down here for years and years, and these last couple of years they haven't been able to afford to buy them, or they could afford to buy them but they couldn't make any money at it.

We never had any research on diversifying to crops that grow in cooler conditions, with shorter growing seasons, and different things. Right now, a good example is white beans. Manitoba grows maybe more white beans than Ontario. We grow an awful lot of potatoes—the same as P.E.I. does. Do you know what? It was government policy that kept western Canada from doing that for years. When we have recommendations to the government here about the government having the magic bullet to fix these problems, I don't agree with that. I think that's one of the problems.

Do either of you directly advise Minister Vanclief, through any formal format?

Mr. George Brinkman: No.

Mr. Howard Hilstrom: Do you, Mr. Furtan?

Mr. Hartley Furtan: No.

Mr. Howard Hilstrom: Okay. So this is your input here. Of course, you know that we just simply recommend to the minister and then he does what he wants.

Mr. Furtan, you made one really amazing good statement—this is what policy must be based on—that diversification must be determined in the marketplace. That is exactly right. Minister Goodale comes out and talks about diversification and tries to tell farmers what they should be diversifying into. The Saskatchewan government is subsidizing. They subsidized potato production at one point, with no market for it. Government policy should not be in the area of deciding what farmers should or shouldn't be producing.

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I guess, Mr. Furtan, I'll ask you this question. There are individual things, like the Crow benefit, that have to be dealt with. Just as diversification should be determined in the marketplace, what is wrong with wheat and barley growers not being able to market their own grains? Can you explain that to us?

We're going to have witnesses coming down here from the Wheat Board, from the organic farmers, and from the grain growers. As an academic, can you tell us how an organic farmer, who can sell his or her organic wheat or flour to the United States or Europe for $8 a bushel, can get more money by having to sell it to the Wheat Board and buy it back, and then service his customers? Can you explain that to me?

Mr. Hartley Furtan: I anticipated this question coming up about the Wheat Board, but in a slightly different version.

Mr. Howard Hilstrom: Good. I've asked a very specific question, and I'd like you to tell me how he can get more than $8 a bushel.

Mr. Hartley Furtan: I'm going to. I think the problem, as I understand the organic question, is that all wheat is organic. Before your desired outcome can occur, there needs to be a clear, enforceable, and monitorable definition of what is organic wheat and what is not organic wheat.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): That's not the problem there.

Mr. Hartley Furtan: I don't think so. I think it's—

The Chair: We have an academic here and we want to hear his response. I'm giving him a little extra time because it's a very important issue. I'm not an academic and there are very few academics around the table. We have a professor here who is an expert in this field, and we would like to hear him out.

Continue, Dr. Furtan.

Mr. Hartley Furtan: There's a larger debate about the Wheat Board, but you asked a specific question around this organic issue, and as I understand it, the hang-up is on the definition and knowing exactly what would qualify under that terminology.

Mr. Howard Hilstrom: They're already selling it. They've already made sales to other countries, but they can't get the export permit.

The marketing of organic products, whether it's factual or not.... I don't believe organic food is any better than regular food, myself. But they are marketing it in such a way that the consumer believes in it. As a result, those people are willing to pay a higher price for it.

My question is, how can they get more money back by selling to the Wheat Board first?

I appreciate I'm over my time, Mr. Chairman.

The Chair: You've had extra time on that.

At one time I did a little bit of work for universities, and it's not what we believe, it's what is. I think that's what we have to deal with.

I'll move on to Marcel.

A voice: Do we get a response?

The Chair: I think, Dr. Furtan, you did give your response. Do you want to go further?

Mr. Hartley Furtan: No. As I understand that issue, it's around the definition of organic. To answer his question directly, I don't think they can make more by going under the Wheat Board. I think the definition of organic, to get these pools separated, is where the hang-up is.

The Chair: Marcel.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman.

I listened to our two guests with great interest. The least we can say is that the table is set. You raised many fundamental issues dealing with agricultural problems. You mentioned issues that are often talked about, for instance, the commercial farm, the large farm, corporate type farming as opposed to family type farming.

You said quite a few times that it is up to the politicians to make decisions on the type of farming we want to have. I don't quite agree with you. If you count on politicians for the future of agriculture, you might be disappointed. To me, the truth is in the field, it is held by those who farm. You raise issues but I did not find any suggestions in what you said. Unless I misunderstood, you do not have many suggestions to give us. You depicted the problem in the agricultural sector quite well but do you have any thoughts on the way the government should go or the way we should proceed?

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For instance, you are asking if the safety net money is going to the producers or if it is going to the farm owner or the real producer, which is the integrator in most cases. I think that you are right about asking yourself that question.

My question is this. What are you suggesting? How should we go about fixing the main problems that you listed this morning?

[English]

Mr. Hartley Furtan: There is a whole set of reasons why grain farmers are in trouble. I think that's part of the vagueness. From a political standpoint I agree, governments can't do very much for agriculture. Actually, they aren't doing all that much for agriculture, and I don't mean that as a demeaning statement. If you look at the area of agricultural research, in this country it is being driven by the private sector, and maybe that's a good thing—I happen to think it is. But there still are some essential things government has to do, education, training, and making sure research that's not being done by the private sector is being done.

With regard to policy, I think we have to look at a way of allowing older farmers who are not going to adjust and who are caught in this five-year, ten-year trap to exit from the industry. We have to find a way to get rid of that log-jam, to allow new people to come in, whoever they are, wherever they're from. One of the things the government could do is have an early retirement package, so that farmers could elect, if they wanted to, to leave the industry, get some financial support to do so—they wouldn't be eligible for government support in the grain programs in the future—and get on with their lives. A great many farmers would be much better off in that scenario than they are currently. They'd have a better life, they'd have more income, and the system would move on. I think that's a positive suggestion.

Second, I think you have to look at your safety nets and ask whether they are targeted, achieving what you want them to achieve. We hear this complaint, we've got to get rid of the inefficient farmer. You can have 5,000 acres and be inefficient by the definition of not making any money, and you're a big operator. So I think you have to clarify that in your programs. You have to decide who you are really trying to target here. Is it the family farm? Then you're going to have to change some of your definitions, change the way you make the payouts, because now there are a lot of people slipping right through the system who are probably the ones you want to help, but you can't, because of the way your programs are designed.

The Chair: Thank you, Marcel.

Murray.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you, Mr. Chairman.

Gentlemen, I have two questions, which you could write down for me, and a bit of a preamble to go in with. You've done demographics, so question number one would be, what type of agriculture do the people of Canada want? The second question is, what type of agriculture is going to exist 10 to 15 years from now? We know that the average age of a farmer is 58, so by 2010 or 2015 that generation is going to be retiring. Who is going to replace them?

I've also done some research on the basic 80-20 rule, that 20% of the farming population is producing 80% of the food. If you take the pie of all the farmers in Canada and break it into three pieces, gross income $10,000 to $100,000, $100,000 to $500,000, $500,000 and up, what I found is that the first group, the $10,000 to $100,000, isn't really in that much trouble, or any trouble at all. What I found when I researched further is that basically you have two professionals who do not want to live in the city, they have bought a farm and they have a few cattle and what not, and have good off-farm income. It's why they're not in trouble.

• 0950

When we get to the $100,000 to $500,000, therein lies the problem. You have a large enough farming operation where you probably have the perfect farm marriage. The farmer has married a nurse, a school teacher, or someone with an equivalent wage. She's working off the farm and he's working on the farm. He's losing a good chunk of her pay cheque, if not more than what she's making.

Then you get into the $500,000 plus. Again, the higher up you go, there seem to be fewer problems. Probably you're into a commodity that's supply-managed.

We know the U.S. has a new farm bill coming up in 2002. There's going to be $260 billion over the next ten years. In 1999 they injected $15.2 billion. It means that's going to increase up to $26 billion.

There are two points I see that have to be addressed within rural Canada. Number one would be the quality of off-farm jobs in rural Canada, in reference to wages and everything, and availability. The second point would be the on-farm support programs. I guess we could deal with the issue of cost of production, which is in Quebec with the AZERA program, and the possibility of tax-free food production.

I'll leave that and invoke your comments.

Mr. George Brinkman: Murray, I've looked at this 20-80 rule a lot. I would agree with you pretty much. Essentially, 20% of the producers produce 80% of the product. It used to be 30% and 70%. It's becoming more concentrated. Right now, it's more like 16% producing 80%.

In the range of the $10,000 to $100,000, I would caution you that there are still a significant number of players who are primarily dependent on agriculture. They do not have off-farm jobs. Don't overlook the group. Those who are in that category can be in very serious difficulty because they don't have off-farm jobs. The ones in the category without off-farm jobs are some of the lowest chronic low-income people.

The commercial farmer rises and falls with the marketplace. The person with $50,000 gross farm sales who doesn't have an off-farm job has a real problem. They exist.

We were interviewing farmers across Canada four years ago to look at top managers. In Manitoba, I interviewed one of the farmers there. They were working very hard, but their net income was $7,000.

It's a real social problem. It's not just an agricultural problem, it's a social problem. There is some of that still. I don't think we should ignore it.

From the standpoint of the $100,000 to $500,000, I think absolutely.... In the 1970s, we used to have a problem with small farmers with up to $100,000 in gross sales. Back at that time, it was about $25,000. In the 1980s we shifted our emphasis to problems with commercial farmers. The main emphasis now is on a commercial farm problem. We have targeted most of our programs to commercial farmers.

We have to recognize this has been a low-price problem. Keep your fingers crossed. It has not yet become a debt problem. If interest rates rise, we're going to get a double whammy. You're going to think the problems today are pale by comparison.

It is one of the real issues we have to recognize. It will affect the $100,000 to $500,000, and $500,000 and above, far more than it will the $10,000 to $100,000. Watch that. If we are able to keep the interest rates low, we may survive this situation. If interest rates go up, there are going to be real problems.

What kind of agriculture do people want? If you go downtown in Toronto, do you know what they want? They want a readily available safe food supply. Some of them don't even know where milk comes from. Among the people here, we recognize what agriculture is like and how important it is. With the general consumer, if you're really honest, do they care whether they get beefsteak from the U.S. or Canada? Do you think they really care, if it's sitting there, is healthy, and is safe? There are some who do care. By and large, the real interest of the Canadian consumer is getting well fed at a good price.

• 0955

We have to turn it around to be able to say this is an important industry, and this is why it's important. It has a strong basis. I think Canadians generally would prefer to have a family-farm-oriented agriculture.

I don't think Hartley and I disagree as much as Hartley might have indicated. When I talk about the future being in the family farm, and when I talk about family farms and corporate farms, we have to recognize that eight out of nine farm corporations are family-run. We're not talking about large-scale takeovers by Del Monte and others. There are a few.

By and large, I don't see it happening. For the most part, you can earn more money outside of agriculture than you can within production agriculture. You don't have the same level. You have more in the west. You have Cargill involved in feedlots, but typically not directly in production in terms of meat processing. You see that kind of role.

What type of agriculture will exist in 15 years? I think we will continue to be a country of family farmers, but I want to stress, modern family farmers. If you think we're going to be farmers who provide all the labour, provide all the capital, and operate the “mom and pop” farms of 1930, it's not going to happen.

In the future, we're going to have multiple families operating where there will be someone who specializes in the management and someone in the production. By and large, they will be farmers who take responsibility and accept the risk.

That's the key element. It's not someone sitting outside. You will see some in the larger livestock operations. You are seeing some of that in western Canada, in particular, partly because you have a greater capacity to be able to provide for it due to environmental concerns.

In Ontario it's going to be very difficult to introduce a 3,600-sow unit nowadays, simply because you can't handle the manure.

In Dinsmore, Saskatchewan, they put in a big three-stage operation. There are only six farms within three miles. Plus in Dinsmore, Saskatchewan, they've recruited “part” investors from Dinsmore where it's partly their responsibility. It's an opportunity for them to earn and be part of the community.

It's a different situation in eastern Canada from western Canada.

The Chair: Thanks.

Rick.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman.

I appreciate the presentations by both of the gentlemen. Both of you, through your presentations, mentioned a transition policy, or what you saw as being a necessary policy coming forward. In fact, I think George referred to it as an exit strategy in his presentation.

Mr. George Brinkman: Hartley is doing the same.

Mr. Rick Borotsik: I would like you to expand on it.

Hartley, I think you mentioned an early retirement policy. I wonder if you could expand on that.

By the way, let me preface this. Farming has been evolving since the 1930s. I think you would all agree that things in the farming industry have changed quite dramatically. There are larger farms. There are fewer farmers. We've gone through cyclical upturns and downturns over the last 50 years. I think you would agree. Have you looked at the past in order to try to see the future?

Could you expand on the transition strategy you talked about? Hartley, could you expand on the early retirement you referred to? George, could you expand on your exit strategy for the farmers you see as not being in the industry? Where does this come from? How do you identify those producers? Is it by application? Do we go out individually one on one to identify the people who are farming now who shouldn't be?

You said yourself, George, there are people who would be better off not in the industry, who would have more money and a better lifestyle being outside. How do you identify them? It's a broad question.

I know I don't have a lot of time, and I have another question after that.

Mr. George Brinkman: I'll answer briefly so that Hartley can comment as well.

First of all, you don't force anyone off. In agriculture, I think it's critical it be a matter of choice. I think Hartley's early retirement package versus what I talk about in terms of exit strategies could very well be the same kind of thing.

• 1000

Many farmers don't retire till they're 85 or 90, so it's not just talking about early retirement at age 55. You may be talking about people moving and the transfer of resources to new producers to allow them to do that.

Mr. Rick Borotsik: Could you expand on that, please? That's one of the problems we have, new producers coming in and not all having the necessary capital. Is that what you're talking about as a strategy?

Mr. George Brinkman: That's the other side of an exit strategy, because as you have people who are then freeing up land, it makes it available for other people.

In most cases you have farmers who have a substantial amount of net worth. How do you generate either the capacity for them to own that and receive an annuity on the value of that or some way of allowing them to capitalize on the assets they have? Some of them won't do that if they can't maintain the asset, if they can't maintain the farm themselves. Can we develop ways for them to realize that capital asset base and live better than they would otherwise?

Mr. Rick Borotsik: You've still not given me any answers, though, George.

Hartley.

Mr. Hartley Furtan: The reason I would use the word “retirement” is a sort of realism. Exit, in many parts of this country, has a negative implication. So I would say don't use that word, because it implies that you're pushing people out. I don't believe anybody here thinks that, but my use of the term dealing with farmers who are in financial trouble indicates that it's much more amenable to think of retirement, giving them the same kind of treatment as government gives its own civil servants. So it's partly a political situation.

I agree with George, it should all be self-selection. Offer the plan to them, just as you offer it to the civil service or whatever, and people will take it. If we have an opening at the university for an economist, we don't take a 55-year-old physicist and retrain them. If we have too many physicists, all institutions allow these people to retire and bring in new people. In agriculture we have a bit of a log-jam on that. We need to find a way to allow those who aren't going to adjust, who can't adjust, to get out of the industry and allow new people in, whether they're from Europe, Asia, or wherever.

Mr. Rick Borotsik: Is it necessary that new people even come in?

Mr. Hartley Furtan: Yes, it will be necessary, because they'll bring with them new technology, new ideas, and new ways of doing business.

Mr. Rick Borotsik: George, you indicated that we don't have a debt problem. You said something in your comments to the effect that should interest rates go up, we have a double whammy. I'm not finding that. You both said we're growing crops now that have no opportunity of producing any profit, but in fact, there's always a loss, based on the crops we're growing right now. I'm finding that there is a debt problem out there, and even without interest rates coming any higher, a lot of people cannot service that debt. That's a revolving door scenario. Why would you say there isn't a debt issue right now in farming? We know that debt has gone up quite substantially, even in the large to mid-size farms. Why would you make that comment?

Mr. George Brinkman: That may have been an overgeneralization. The critical problem we have right now I would not classify as a debt problem. In the 1980s it was a debt problem.

Mr. Rick Borotsik: Interest rates at 22%.

Mr. George Brinkman: Yes. What we have now is a very different problem from that we had in the 1980s. This is a low-price problem, rather than—

Mr. Rick Borotsik: Will commodity prices come back?

Mr. George Brinkman: Will they come back?

Mr. Rick Borotsik: Yes.

Mr. George Brinkman: The commodity prices go up and down over time.

Mr. Rick Borotsik: They're cyclical.

Mr. George Brinkman: However, I raise the question whether or not we are not we are the most competitive producers in the world. If you look at what's happening with soybeans in Brazil, the ball game is changing. It is no longer just the production occurring in North America that is going to create the ups and downs. Brazil has—I've heard different comments—50 million acres that could be put into soybean production, compared to the U.S.'s total of 75 million acres in current soybean production. If you look at it that way, it says, I don't expect the prices to recover tremendously. They may recover somewhat, but there will to continue to be pressures. This may be a significant problem for quite a while.

• 1005

Mr. Rick Borotsik: In your research have you done any impact analysis for the rural communities themselves in relation to where you see agriculture going in the next ten years?

Mr. George Brinkman: When I first came to Canada in 1973, I worked exclusively in rural development. I have not done that recently, but I haven't seen a whole lot of change in the impacts.

The Chair: Rick, you always take up about half a minute saying you don't have much time.

Mr. Rick Borotsik: I never said I don't have much time.

The Chair: It hurts on the end.

Rose-Marie.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I want to thank the presenters. It's been a most interesting presentation. I would have loved to have both of you gentlemen at my August meeting with 400, 500 farmers. I don't know who would've got out the door first alive. You certainly gave a different perspective here, and I appreciate your presentations.

Are you suggesting we take a tough love approach with our Canadian farmers? Are you advocating that we take the New Zealand experience, offer Canadian policy-makers some pause for reflection, and work the New Zealand experience into the Canadian agriculture sector? Do you really feel that's workable?

Mr. George Brinkman: No.

Mrs. Rose-Marie Ur: Why?

Mr. George Brinkman: I indicated that if we did that, it would not be the end of agriculture, but it would be a burden of adjustment on the current farmers, which would be very serious and very significant. If you are going to use that, the cold turkey approach, you're going to have some serious hardship in the adjustment phase. You can do it overnight, you can wipe things out and start all over again, as they did in the New Zealand case. If market prices are going to continue to slide and you don't have the adjustments on that, you may very well have that occur over time. But at least it gives farmers a chance to adapt, adjust, change their technology, move into early retirement, if they so desire, and the rate of structural change is smaller, and therefore the burden and the shock is smaller.

Mrs. Rose-Marie Ur: Why did New Zealand survive, then?

Mr. George Brinkman: I said we will survive, we will have agriculture, but a lot of those current producers didn't, a lot of the rural communities didn't. Agriculture is there, it will recover. We will not lose agriculture if we do that. But it is an approach that is very tough on the current generation of farmers.

Mrs. Rose-Marie Ur: When you say new people will come on board, are you saying new people from other countries or are you saying within Canada?

Mr. George Brinkman: There will be some who will survive that kind of adjustment, they will take advantage of land values that may be two-thirds of what they are right now. They will expand and change the structure of agriculture in a way that eventually makes them competitive again.

Mrs. Rose-Marie Ur: I had the opportunity to see one of your articles in the Ottawa Citizen, March 18.

Mr. George Brinkman: Be careful, because I had quotes attributed to me there that I did not make.

Mrs. Rose-Marie Ur: Okay. Because there's some interesting reading material there.

A voice: That's not like newspapers.

Mrs. Rose-Marie Ur: I can't believe that.

Mr. George Brinkman: For the record, I did not say that Canada has a bright future, but it must be without government, that if you depend on government you will “wilt on the vine”. That was a quote from Mr. Solomon that had my name attached to. I did not make that quote.

Mrs. Rose-Marie Ur: Okay. But there was other interesting information that you elaborated on this morning on that was attributed to you.

In my area a proposition has been made by a farmer. Do you see this as the way of the future for farming? It's in the hog industry, this particular set-up. He's thinking that maybe the best bet, because it's difficult for young farmers to get into agriculture, is to go into a lease arrangement in a hog operation from beginning to end, to have the sector set up in such a way that a farmer can lease one section of the operation, another farmer can come in and lease another section, so that they in turn can save enough money to get into their own farming. Do you see that as the wave of the future for farming?

• 1010

Mr. George Brinkman: I see it as one form, but not the only form. Certainly one of the burdens that beginning farmers have now is the upfront costs of buying farms. By leasing, you can develop into that farming operation at a scale that is necessary to be competitive and efficient without all the upfront costs.

In the past the appreciation in land values has been one of the major returns to farming. And if you lease, you buffer yourself from falling land values, but you also miss out on rising land values. So if you are a leaser, you are a production operator only, not an asset holder of land as well. And both of those generate returns to farming.

The Chair: Thanks, Rose-Marie.

David.

Mr. David Anderson: I'd like to talk a little about the intergenerational transfer of land. And I have a suggestion for a partial solution to the problem that involves little government involvement, and that's vendor financing. I'm wondering if you can talk a little about why we never hear anything about that. I understand, in Saskatchewan in particular, the provincial government's involved in what may be interference with that.

With some aggressive government promotion, by working with the provinces on some tax policies, do you think that vendor financing would be an appropriate way to see that land transfer from one generation to the next? It worked well in the States.

I'm asking both of you.

Mr. Hartley Furtan: I think the answer is there are opportunities in vendor financing. And I agree with you that in the case of Saskatchewan there are land impediments, debt. The farm ownership would all have to be examined and looked at. However, the Agricultural Credit Corporation in the nineties looked at the vendor financing issue and it didn't find a lot of take-up because of the risk. There's a little risk that's held by some of the vendors if it's too close. You could design a way to get around that problem. So I wouldn't discourage it. I think it's an opportunity that can be part of the solution.

Mr. George Brinkman: I would say the same.

Mr. David Anderson: If there's a good opportunity for the government to show some leadership here that isn't going to cost a lot of money, it would be good to try to structure that so it is fair to both the vendor and the young person who's trying to buy that land.

Mr. George Brinkman: You may address such issues as loan guarantees that reduce the risk and represent usually a fairly small cost to government and a whole lot less capital commitment than if they were providing the finances themselves.

Mr. David Anderson: Lots of those older farmers are willing to leave with a reasonable income without having to get the full value of their operation out of it right away, especially if it's going to a relative.

Mr. Hartley Furtan: Beware of the fact that the government generally accepts the worst risk. I disagree with George. My experience with this is it costs government a lot, because you get a high default rate on this.

Mr. David Anderson: On vendor financing?

Mr. Hartley Furtan: If you're coming in with the government at the end and supporting it, because the banks and the private sector pick up the most profitable.... Just as long as you don't end up giving loan guarantees on the worst loans and having taxpayers pick it up—that's the danger.

Mr. David Anderson: I'm not suggesting that government get involved in the loan guarantee part of it. I'm suggesting that it's a private deal, but the government policy promotes the ability to do that.

Mr. Hartley Furtan: That's good, as long as you don't get the other.

Mr. David Anderson: We're talking about some general things here, but I did want to come back to the organic wheat situation. You may have seen my reaction there.

Mr. Hartley Furtan: Yes.

Mr. David Anderson: I have a brother-in-law who has grown organic wheat for 20 years. I'm not an organic wheat grower, but there is a standard and it has been developing. It's been a fairly strict one.

I also reacted to a familiar theme that I've seen as I've grown up here, and that is with the Wheat Board. When they run into an issue for which there's no rational argument or defence, they have an ability to confuse the issue and then to delay a solution to it.

One thing they have going on is they do not want to hold different groups of wheat that they cannot visually distinguish. Organic wheat is one of those products they can't distinguish.

So you're right, the Wheat Board has a problem with separating that wheat; organic farmers do not.

As Howard said, unless we can show that the Wheat Board can get those people the money that they can get themselves, they should be allowed to market that product. There's a niche market right there that is profitable and they're not being allowed to use it.

Mr. Hartley Furtan: I agree it's a Wheat Board issue; it's the board that can't separate it. I didn't think it was the farmers who couldn't separate it.

Mr. David Anderson: When a government agency is involved in redistributing wealth, such as is happening here, I've usually seen that as taxation.

• 1015

Mr. Hartley Furtan: That's a very political decision to make. I'd be glad to talk with you about that issue.

Mr. David Anderson: Mr. Brinkman, do you have any comments on that?

Mr. George Brinkman: No. Hartley's was fine.

Mr. David Anderson: To follow up on success in small communities, I come from an area in southwestern Saskatchewan. The local area has done very well and part of that has been due to an attitude over the years. It's been over 40 years of people who have been willing to take a chance in developing industry and manufacturing. I see that in other areas where you have people locally who will put their money into hog farms or into processing plants. You can have success in the small communities. Even as the population around them declines, you can still have success; you can bring other people in to work in those places.

I'm just wondering if you have any reaction to developing some of those small communities and how we can go about doing that.

Mr. Hartley Furtan: I agree with you. We don't know very much about why that occurs.

You take Humboldt. It's a tremendous area, which has been studied. As academics, we don't know the answer to why those occur and why they don't occur in other communities. It's a really good question. It's not related to the solution to the grains and oilseeds cost-price squeeze.

The Chair: While we're on the subject of the organic, I wonder if we could just clarify in our own thinking what Howard had brought up originally with that. With the organic situation, is it certified in Saskatchewan as being organic in terms of the food market?

Mr. David Anderson: It's been self-certified by a producer association, and they're trying to develop national standards for organic products. They've had organic products for 20 years.

With the wheat, the product problem is not a certification, because people can have their products certified as organic and they're delivered as organic products. The problem is that the Wheat Board will not take different varieties of grain that are not visually distinguishable without mixing those. I don't know if I'm explaining this very well, but the varieties have to be distinguishable from each other for them to be able to pool them. Organic wheat is not visually distinguishable because it's certified on a different level.

The Chair: Hartley originally said that all wheat is organic, so when it comes to this Wheat Board argument, could we just hear the academic answer to what the problem really is?

Mr. Hartley Furtan: I don't disagree with what we're saying; we're coming at it from two different areas. He's saying that the way organic works now, it's certified at the farm that you're organic. You go through three years of not using fertilizer and chemicals, etc. From the Wheat Board's perspective, they can't distinguish that as organic because for them everything is organic. I think we agree on where the problem lies. It's in the definition and how you make these products different in the marketplace within the current system. The Wheat Board doesn't have any way of doing that.

Mr. David Anderson: My argument would be they don't call all wheat organic, they just call it wheat. They don't have organic and non-organic. It's just wheat and they will not distinguish it.

The Chair: Is everyone fairly clear on what we're talking about? It comes up a lot at our table.

Mr. George Brinkman: May I make a a comment? It would appear that part of this issue is the ability of the Wheat Board to have identity preservation on products that are not visibly distinguishable. In eastern Canada we have soybeans that are genetically modified and some that are not. And it's a similar kind of issue of being able to develop a supply chain that will assure the security of that product all the way from the seed development through to the eventual consumer.

Organic wheat isn't going to be the only thing. Right now, the Roundup Ready wheat is in process, so you're going to have an issue of genetically modified wheat as a potential issue. This will raise very similar kinds of things if it's not kernel-visible distinguishable.

Mr. David Anderson: We had at least two varieties of wheat that would have been very useful in our areas that have been taken off the market because of that.

The Chair: In terms of niche markets, this will be a big problem.

Mark.

• 1020

Mr. Mark Eyking (Sydney—Victoria, Lib.): Let's assume Canada as a society wants to produce its own food, whether it's for food sovereignty or just to keep the rural fabric, I guess, and that we want to export so many billions of dollars worth of food for economic reasons for our country.

Back to the young people who are going to be getting into this food industry, assuming they're educated properly and they're willing to put their time and ambition into producing food, we have to have something there for them that's not going to give them too much risk and where there's light at the end of the tunnel. If you assume a lot of these farms are going to be probably $1 million plus in assets....

I heard in Europe they have a thing called a perpetual mortgage. They have ownership, but it's not true ownership. The government is also involved with the ownership.

Wouldn't it be better to have a scenario...? If it were a $1 million farm, for instance, and the older farmer had a couple of hundred thousand dollars left to pay off that farm.... There would be kind of a three-way partnership. That way this young person would go into this knowing they weren't going to be all of a sudden straddled with $1 million worth of debt. Yes, maybe that person is going to be liable for $200,000 or $300,000. But as that farmer pays it off, the three-way partners are paid off. The older farmer would automatically get so much money up front, but as the farm continues on, he would be paid the rest.

I think a lot of people are talking about this, but there are no specifics, and that's why I'm zeroing in on specifics. Get some models on the table. At the end of the day, if that young person is going to go to an agricultural university or is going to be educated, they have to see that, yes, that road is not so bleak.

Mr. Brinkman: I don't understand all of the dimensions of this question, so I'm probably not going to give you the answer you want, but I will provide an answer for this committee that is still worthwhile.

In the 1980s we looked at a whole wide variety of different ways of financing. I attended conferences out in Saskatchewan with Hartley on some of these things. Some of the discussions were the development of land trusts and so on and investments by outsiders in farms. The dilemma with that is it sounds good, but farmers don't want non-farm partners when land values are rising; they only want them when land values are falling. Non-farm partners don't want to invest in agriculture when land values are falling. Just like in a falling stock market, they want to invest when the land values are rising. Sure, when land values are falling, farmers are very interested in having equity financing, but nobody's interested in being the equity partner.

So there's a conflict here, and that makes this whole concept of equity financing in agriculture very difficult. We discussed it. We looked at it from the standpoint of options in Saskatchewan.

Hartley, are there any viable equity financing issues in Saskatchewan right now?

Mr. Hartley Furtan: Not land trusts.

Mr. Mark Eyking: We always talk about the west. Let's look at even a dairy operation in Ontario that's worth a couple of million dollars. If they're in an area with fairly stable land prices.... Let's look at that transfer to another generation. That's what you have to look at. What does the older farmer really want? He wants a return on some investment. If he's 60 years old and he needs $600,000 to $700,000 to retire for the next 20 years, this is what he needs. He has it there, but somebody has to pay him for that. You have to say, okay, this transfer is going to take place.

If we as a country want to produce and export the food, we can't now put the onus on the young person to take all the risks. We have to somehow as a society take that risk too. It has to be in place, or you're going to be too timid to get into this industry. You have to have a model where we as a government or a country are taking on some of this risk. That's the model you have to focus in on.

• 1025

Mr. Hartley Furtan: Right. Maybe it's because I come from western Canada, but I would never advise anybody to get involved in farming with the government. I just think it's a bad business. It's counter to our culture. Maybe it's different in Ontario and Quebec.

Mr. Mark Eyking: Not the government farming as much as taking on—

Mr. Hartley Furtan: Once they're an owner, they're in there. It's just not a good experience.

But your point is right. What I hear coming from the Americans these days is they say they are supplying their country with really good, high-quality food. Any support is a cheap policy. Maybe the supply management system in Canada is starting to make that same statement. Supply management may be a cheap policy.

I think the grains and oilseeds, which we're focusing in on here, may say the same thing. Boy, if you give us a little bit more money, it's a cheap policy overall. There is a lot of talk about how expensive it is and there are inefficient farmers, but overall, in the big picture of things, it's not very expensive.

Mr. Mark Eyking: If you go that route, where the young person is buying the farm, something has to be in his model to say, you're going to have to continually support the prices to pay your assets off.

Mr. Hartley Furtan: You might have to have something like that.

Mr. Mark Eyking: Right now our government says next year we're going to have...and maybe we'll have something. As a business person doing an investment, or a young person, there has to be something a little further than that.

Mr. Hartley Furtan: I agree, and we talk about that in our paper. But I would hesitate to ever suggest government involvement in ownership. That was my reaction. We tried that in Saskatchewan. It was just a disaster.

The Chair: Thanks, Mark. I'm going to try to go to people who haven't had an opportunity yet.

I have a quick question. We're talking about land here. One of the things that seems to surprise a lot of us in term of this overall problem we're having with corn and with grains is the cost of land. In terms of supply and demand, and looking to the future, you would think that as the outlook became bleak or the possibilities of making money were less, the rental prices of land or the actual value of the land in terms of sales would go down.

What is your reaction to what's actually happening in terms of land values, looking at the problem we're facing now in terms of oilseeds and grains?

Mr. George Brinkman: In the tables you will get later, there's a column that looks at debt-to-income ratios. That's partly a measure of land values and purchasing and expanding and capitalization of benefits back into the cost of land. If you look at the debt-to-income ratio in Canada in recent years as a total, it's been about twelve to one.

I had some students do a similar kind of assignment through a distance MBA class I'm teaching about Iowa, Minnesota, and California. California is about six to one—four to six to one in recent years. In Minnesota it's about six to eight. In Iowa it's about six to eight. What that says is that maybe our incomes are less, but incomes get capitalized back into debt in terms of land purchases as farmers want to expand. There's very little grains and oilseed support in California. That income level is very different.

So they have a different price relationship. Why is that? I don't know. I don't know why in Canada the price of farmland relative to its income-producing capabilities is so high. It doesn't make sense to me. I would argue that farmers tend to pay too much for land and that contributes in part to the long-run problems they face. I don't know why that happens. But it is a phenomenon that in fact does occur.

If you're in Ontario, you may be competing with houses. There is no way we can even support agriculture in a long-run fashion that's going to make it competitive with houses. If that's the objective, you have to use a different policy approach, and that's land-use controls. You can't compete on the basis of price supports or income supports.

If you're in Saskatchewan, on the other hand, the land is priced primarily in terms of agricultural uses. If you look at the debt-to-income ratios in Saskatchewan in recent years, in 1997 it was 27.5 to one, but in 1999 it was nine to one. It goes up and down a lot by the prices, but it's still in the range of ten, eleven, twelve to one in recent years. It's a higher capitalization rate than what exists in the U.S., and it's an indicator that we have a greater difficulty in paying off our land purchases than they do there.

• 1030

The Chair: We've had reports of some farmers in Ontario paying as much as $250 an acre rental for corn land per year. You know, you're amazed that this kind of value is out there when the crop value is not there.

Hartley, in terms of Saskatchewan, your land values haven't changed much, even though there is a concern with the—

Mr. Hartley Furtan: Oh, I think they have changed a lot.

The Chair: They have changed?

Mr. Hartley Furtan: Yes. I don't put much credence in aggregate measures, because we all know the land prices are all very communal and local.

This spring, for example, I'm renting land with a group of people at Indian Head, Saskatchewan, for taxes. It's not just a half section; it's a fairly large seed operation we're putting together, for taxes. That's pretty low land prices.

The Chair: We hear that, but in terms of the sale of land, has it really fallen in Saskatchewan?

Mr. Hartley Furtan: In real terms, for sure.

The Chair: George, you were saying...?

Mr. George Brinkman: I was raising the question in nominal dollars. In real terms, it has fallen across Canada since 1980. The real question, though, is what is happening now in nominal terms as well; the nominal land price in Saskatchewan is starting to come down.

Mr. Hartley Furtan: Sure it is.

The Chair: Okay. Paul.

Mr. Paul Steckle (Huron—Bruce, Lib.): We live in a changing world, and obviously one of the things we hate most about life is the fact that it changes, and farmers hate change as much as anyone does. We are living in a world that seems to diminish in size, and of course the control of power is becoming more and more concentrated in the hands of very few people.

I guess what farmers have always felt is that we've been price-takers; we haven't been able to establish our prices. We've been great producers but poor marketers. Those are statements of fact. And I guess the question remains, how is a farmer ever going to...unless we take the position that McCain's is in, where they control everything from gate to plate? Farmers just aren't in that position.

Is it the view that we want to continue down that road towards more globalization, more consolidation of our food efforts, with three majors controlling the food supply, the distribution of the food products in Canada, the gasoline industry, the concentration of power there, and we see what's happening? So basically the price is established at a profitable level.

As we go down this road together, do we see vertical integration as the way of the future? Will this continue to be the direction in which we're going? Ultimately, once the control comes into the hands of these very few...because these people not only control food stocks in Canada, they control food stocks throughout the entire world—Brazil, or wherever it might be. They're opportunists. We have Europeans buying land, and that's one of the reasons for the high land prices. They've sold land for housing ventures in Switzerland, Germany, or Holland, and they've come to Canada with this huge amount of money. So Canadian farmers, and Ontario farmers particularly, are competing with those kinds of people.

So where do we go? Are we ultimately going to see those kinds of people control the food, where they control the demand and also the supply, or they create the demand and then they control the supply?

These are the questions that I think we have to ask, and how do we as politicians go back and sell that futuristic view, which is way out there somewhere, which people are grappling with and don't want to anticipate? Farmers have given consumers the world over a cheap food supply, and we haven't been rewarded for it. But somebody someday will be rewarded for producing that food, once the control becomes even more concentrated in the hands of fewer people.

Mr. George Brinkman: I have a few comments.

One of the dilemmas I've seen with farmers is, typically, they've wanted to be producers, not marketers, and this has been very much to their undoing. Farmers make more money in marketing than they do in production in many cases.

• 1035

I think vertical integration is a possibility, but I would hope that, for Canada, strategic alliances would be the route we would take, because that allows more control within a family farm operation, but it achieves many of the same kinds of things, where you are producing within an integrated supply chain that enables you to identify what that consumer wants and produce on niche markets, and deliver what is really important.

You have to remember that being competitive is not necessarily just being the lowest-cost producer. If you look at Europe, they have a product there, label rouge, that is organically grown, and it sells at two or three times what the normal product does. Producers do very well because they can market. I think that's one of the dilemmas we have.

I think the rest of the question is very true, and it is a concern not of agriculture alone, but of national policy—that is, the concentration in terms of the retailing giants, the control over the infrastructure in terms of machinery and energy supplies, and so on. But this is not just a farm issue. This is a competitive policy issue for all of Canada, but it is impacting on agriculture.

Mr. Paul Steckle: My question would also be that we have all these young men and women going to your particular university, for example. How many of them are returning back as partners in a primary production enterprise?

Mr. George Brinkman: It's interesting that the traditional agriculture major has been what we call the BSc Agr, the bachelor of agriculture, and that degree has been declining in terms of enrolment and continues to decline. Our growth areas are in agribusiness and in the environment; they're in other aspects related to agriculture. I'm sorry to say, but we do have a concern right now about those who are taking degrees for production agriculture primarily.

Hartley may have a different experience in Saskatchewan.

Mr. Hartley Furtan: No. We have two programs. We have a degree program, and virtually none of the students now go back. We are also associated with what we call a diploma in agriculture. It's largely aimed at men and women who come in for two or three years. They're not going back either. There's no money to be made. Why should they go back? That's the bottom line.

The way I illustrate this point is that we've had ten years of real solid growth. How many people do you know in Saskatchewan who have made $20 million out of grain farming? How many do you know who have made $10 million? You know, $10 million is not a big number. This is not where the exciting field is. You don't fool kids. They know that. They can make more building houses in Saskatoon or Edmonton. Start up your own construction company and you might be a multi-millionaire, but you're not going to do it in production agriculture. I find that a very sad statement.

Mr. Paul Steckle: It is. I hate to engage in this discussion, because basically it leads to a dead end when you look at it, in terms of people who are obviously going to read the transcripts of what we've said this morning. What is the conclusion here? Is there a future for agriculture? I believe there is. It's certainly going to be a changed agriculture from what we know today.

Are we ready to face that future? Ultimately someone will be producing food and it will be a profitable venture, but I believe it won't be for a number of years yet. I don't think we've gone down that road far enough.

The Chair: Thanks, Paul. I'm going to have to move to Howard now for a very short question.

Mr. Howard Hilstrom: Yes, I have a very short question, and then I have to leave for a meeting.

This isn't the essence of the whole issue of farm income and support and all that sort of thing, but while you two gentlemen are here, recognized as relatively independent academics with a lot of study behind you, would you explain to the committee—I guess, Hartley, you'd be the best one to explain this—the essence of the Canadian Wheat Board, which is orderly marketing and pooling. You can describe it. It's not that each farmer gets to go and get the best price they can by marketing their own products.

Could you explain that? This is going to be an ongoing issue. The Canadian Alliance and I have been making it an issue for quite some time, and we're going to get it resolved. We've been using the organic producers just as an example of one that is actually selling outside the country, or is able to.

Could you briefly describe what the Wheat Board really is, and then they'll have that basis on which to do our next committee meeting?

• 1040

Mr. Hartley Furtan: Here's a book I wrote with Andy Schmitz a year ago on the Wheat Board; it describes it in detail. It think it is a very unbiased approach; it describes both the pros and the cons. It deals with the questions you're asking.

Basically the Wheat Board is a monopoly marketer for durum, spring wheat, and malting barley in the Canadian Wheat Board area in Canada, which is Peace River, Alberta, Saskatchewan, and Manitoba. So if you were going to sell into the human consumption market for durum or spring wheat or for malting barley, you have to go through the Canadian Wheat Board. The Canadian Wheat Board does not control what you produce, but if you're going to sell into those markets domestically or internationally, you have to go through the Canadian Wheat Board, and you get a pooled price.

Mr. Howard Hilstrom: Can I interrupt you for second before you go past the issue of it being a monopoly marketer in Canada? I believe you're correct there, but you will agree it's not a monopoly marketer in the world situation, because there are multiple marketers out there of similar products.

Mr. Hartley Furtan: No, it's the monopoly for a producer. So if I'm a producer I have to sell through the Wheat Board, and whether I go to Japan or China or whether I go to ADM in Montreal, it doesn't matter. It's a monopoly for those producers in that region.

The feed barley market is an interesting case of where it's not. There's a dual market for barley. If you're going to market barley into southern Alberta for feed grain you can go outside the board. If you're going to market barley to Saudi Arabia for feed barley you have to go through the board. So there are lots of little domestic issues around barley.

For the most part, that's how it operates. The reason it exists is because of legislation, and of course you all know that. Whether producers want it or not, I'll leave that totally up to you people; you're the elected officials, not I.

Let's see, what else can I say about the Canadian Wheat board, of how it works? One of the complaints about the Canadian Wheat Board is that it's not transparent. In other words, it can make deals and its prices are never made public. That's a true statement.

Mr. Howard Hilstrom: Is the essence not that it's a collective type socialist system, as opposed to there being individual responsibility for my $500,000 or $1 million asset farm where it's up to me individually to do what's best for my farm and get the best prices for my farm, as opposed to being pooled and lumped in on the whole Wheat Board concept? Is that not the essence of the argument? Because some farmers are saying they could do better for themselves, for their farms, by marketing their own wheat, whether it's organic or not. Is that not the essence of the argument?

Mr. Hartley Furtan: If you had taken the word “socialist” out of there I would agree with you, because the private sector does exactly the same thing in terms of forming these kinds of coalitions. Other than that, you're correct. Some farmers would do better outside the board, there's no question about that. You're correct about that. It does average everybody. It's a form of collective action, but it's not socialist.

We find the same thing in U.S. sugar, for example. Americans do this all of the time. If you produce raisins in California you have to go through under certain marketing orders. This is not a socialist thing, but it does do the rest of what you say.

Mr. Howard Hilstrom: Thanks, Mr. Chairman.

The Chair: Thank you.

Claude.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): I have a short question to ask you, Mr. Furtan.

I truly believe in the future of farming. In the province of Quebec, we have a lot of farms that are living proof that there is a future in farming. Despite all the problems, we have farmers that are up to date in their production and very prosperous.

What really worries me is land transfer and the young people. Many youth do not have access to land because the old farmers do not want to sell their land or because their price is too high.

Here is a short question right to the point. We were talking about rental earlier. One of the possibilities I see is the government helping young people rent land. Twice I've heard that there were quite disastrous experiments in that regard in Saskatchewan. Can you tell me in what way those experiments were disastrous?

• 1045

[English]

Mr. Hartley Furtan: Certainly.

In the late 1960s, 1967, 1968, up to 1970, we were in a situation very similar to today except we couldn't move grain. Prices were low, but couldn't move it, so incomes were very low. In 1971 we had an NDP government under Allan Blakeney, which introduced the concept of a land bank. The land bank was to buy grain land from a father and, if possible, lease it to the son, with some buyout provision. If the son didn't want to lease it, then it was generally available.

Two things happened on this. First of all, for public policy to work, it has to be generally accepted in the community. What you created there was one person getting a benefit and ten people angry because they didn't get a benefit. That doesn't mean it wasn't a good program from the sense of transferring it, but it was not accepted in the community because it was seen as this family getting an advantage and that family didn't get an advantage.

Later on, what happened is the program became a little bit corrupted, where people started to take advantage of it, saying, “I'll sell to the government at a fairly good price, my kids are going to get it, and then I'm going to get out of the system. I'm going to use the government as a vehicle here to my own personal benefit.” And that was seen as being an undesirable effect in the community. It was totally farmers themselves who in the aggregate felt that this particular form of government intervention favoured a few, had a tendency to be politically driven, and did not meet their cultural and community desires. So it was massively rejected as a form of transferring land, where the government bought land and sold it by the community.

You could ask Barry Wilson here from The Western Producer. He might give you a different perspective on that particular point. I'm not the only one. Some people like the land bank, but in aggregate it was rejected.

The Chair: Larry, do you have a question?

Mr. Rick Borotsik: Do you think, Mr. Chairman, we could call Mr. Wilson as a witness next time?

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): I certainly think, Mr. Chair, that these two writers who we have at the table would be very interesting witnesses in the future.

I want to thank you, gentlemen, for your presence here and your excellent presentations, which have resulted in a very interesting session.

Following the additional $500 million that the federal government gave for support to grains and oilseeds, which resulted in something like $1.2 billion, certainly there was lots of criticism of the support. Some writers said—certainly not in this room—there was not the political will in the government. Other writers said the political will is not there because there wasn't Canadian support for our primary producers. And I don't think it's a lot different in the United States. Not all producers there are doing well. The new Secretary of Agriculture in the United States comes from California. It will be interesting to see what happens there, how long that minister is there.

In California, in the valleys where most of the vegetables that North Americans eat are grown, I've always been amazed by the old story of how they pay more for the two-pound poly bag, the empty bag, than what the producers get for the carrots. But what direction can we, in Canada—and it's not that simple—move to encourage Canadian consumers to appreciate Canadian food? What are we not doing here to build the support for our primary producers, gentlemen?

Mr. George Brinkman: It is a very good question. I think we have seen some activities through the Ontario Ministry of Agriculture and Food, in terms of trying to promote “Grow Ontario”. The comments I've made before is that if you go to the grocery store and it's a steak and it's a good one, there isn't as much concern about that as whether it's healthy or not. That's the real question. So it is a challenge.

• 1050

I don't have a really good answer, other than some of the things we have tried in the past. The University of Guelph has introduced agriculture in classroom programs so that young kids will learn that milk comes from cows and not from containers in the grocery store. We have a fundamental educational problem here, particularly in urban areas. Rural areas are pretty used to this. But if you go to downtown Toronto and I'm sure here in Ottawa, you'll find a lot of people who do not see it in that light. So you have that educational problem.

You have identification. I think one of the key elements is that we have to maintain food safety in Canada. That has been one of our strongest selling points. We have not had some of the European diseases and some of the other kinds of problems. If we do, then we will be in very serious jeopardy. As I said in my opening comments, food safety is a very critical dimension that we must have. There's no compromise on this. To utilize that quality we have in Canada as the basis for selling food certainly is a major component.

Mr. Larry McCormick: Thank you.

Mr. Chair, exports of our commodities are very important to this country. I think that in most cases in the past the Wheat Board did an excellent job, and no doubt there'll be changes that need to be made.

Mr. David Anderson: Thank you.

Mr. Larry McCormick: Jake Hoeppner educated me well, and a lot of other people in the west who support the Wheat Board totally and others say we have to have some changes.

Sorry, Mr. Chair, for reacting to my colleague's comment.

Exports of agricultural products have gone up 50% in the last few years. That's good, and we need to do a better job on that. Yet we see graphs showing that the producers are still getting the same share. My background is in very small business. I always thought that a great title for talks was “Challenges and Opportunities”, and there are challenges and opportunities for producers today. There may be more opportunities in other provinces than there are in Saskatchewan. What are we not doing right, in your opinion, if our producers are not getting enough share? That includes grains and oilseeds and beyond that, gentlemen.

Thank you, Mr. Chair.

Mr. Hartley Furtan: That's a very good question. I think there are some notions of market power that need to be examined, as was suggested by your colleague, that have not been.

I'll confine my comments to what I think is happening in Saskatchewan. I think we have failed to look to the larger opportunities in Saskatchewan and in the west. By this I mean that if we're going to diversify and reach the real growing markets where the big money is, where are they? They're in Arizona and California, etc. But we're not connected. We're too far away. It costs too much to get there.

I have a book coming out, which is published by the University of Toronto Press, where we talk about this issue. When Canada built the railway, the Government of Canada put up a $100 million bond to finance it. Do you know what the revenue for the Canadian government was when they did that? It was $25 million. Think of the magnitude of risk they took to put that investment in place—four times the government revenue. Yet if we in the west were to say let's cut our transportation costs by 50% and let's cut the time it takes to get a load of peppers grown under glass from Moose Jaw, Saskatchewan, to San Francisco by half, then we'd be in the same thinking mode as they were when they built the railway. But we aren't there. I think that's the kind of thinking we have to do to look to the markets.

Ontario is simple. They're sitting right on the north end. For B.C. and Quebec the same thing is occurring, and to a lesser extent for Manitoba and Alberta because they're better connected. But we have to find a way to lower our transport costs and increase our efficiency in getting to those growing markets, and the private sector will take care of the rest.

Mr. Larry McCormick: That seed farm in Indian Head.

The Chair: Hartley, with the disappearance of the Crow rate, Saskatchewan was given some money for roads. Is there any evidence, in your opinion, of what happened with that?

Mr. Hartley Furtan: Sure. Much of that went into municipal roads. They built one by our farm. It helped to take grain trucks over.

• 1055

Thank you for sending the money. I'm not trying to be cynical here. That was good, and we need to upgrade the transportation. But it doesn't get us outside the box. It doesn't let us take advantage of the FTA and the NAFTA. Our roads and our trains still go east and west. Those are wheat and barley markets. They aren't tomato or green pepper markets.

The Chair: So roads from resources would be a big part of your—

Mr. Hartley Furtan: Into the U.S., because for the next 50 years that's where we're going to be pushing our product to a large extent.

The Chair: A few years ago some farmers from Brazil visited us. They were clearing land and making new ventures throughout South America. When you talk about them producing more efficiently than we do, George, what inputs do they have that would give them this advantage?

Mr. George Brinkman: There are a couple of things. I'm not an expert on Brazil. I'm picking up a lot of this second- or third-hand, so we'll hope that what I relate is accurate. What I've heard from the people who are a little closer to the situation is that one of the advantages they have is incredibly cheap land. It's like when you opened up the prairies. You homesteaded, and you were then able to achieve a completely different scale of operation. There are farms there from 30,000 to 300,000 acres in size, and you have the opportunity there of achieving economies of size that we don't have here.

The Chair: Another factor I gleaned from them is that some of their land will be very productive for a short time, and they were burning and clearing.

Mr. George Brinkman: Some of it is thin.

The Chair: With regard to our own inputs in terms of your own province of Saskatchewan, Hartley, farmers have planted, they see the markets as they are, and they say they're going to lose $25 or $50 an acre on the basis of their experience in the last few years. How can we as the government at least give them some degree of hope? I think hope is the big thing most of them are looking for. What would be your answer to our committee in terms of some hope? We hear that the international stockpile of grain is very low. Could that be a hope? This morning the Globe and Mail advertised interest-free loans for an airplane company, the name of which I won't mention. What can we offer them to try to continue the operations they have in Saskatchewan and western Canada?

Mr. Harley Furtan: I think that's a very good question. The first thing you can offer is to come and listen to them. I think that's the most essential thing. I don't mean this cynically, but often we see Ottawa and the bureaucracy as being a long way away, with no connection. I think the most important thing you can do as a politician is to go out there, spend time with the people, talk about it, and listen to them. Governments can't do very much in the end. After all my experience, I don't think there is all that much they can do. That's why people say send money, because maybe that's the easiest thing for you to do. But that's your decision. Essentially, it's to open up a dialogue and to talk about the problems so that you know the problems and they know you know the problems. I think that's the most important thing. There's a lot of frustration. People ask, who do I talk to? Who will listen to me?

The Chair: Thank you. Our two hours is up—

Mr. Rick Borotsik: Mr. Chairman, we have other things on the agenda.

The Chair: We have a couple of short items on the agenda.

We thank the witnesses for coming this morning. We certainly appreciated it, George and Hartley. We'll continue, hopefully, to glean some information from your contribution and from Hartley's books. Our researchers, I'm sure, will be looking for the new edition right away. It is shocking when you think in terms of the $25 million and the $100 million and how things are today.

• 1100

Rick, your item is an invitation to some producers. The fifth is when the ministers are coming from the provinces. We have word back that at least two are coming. Is it all three? All three will be here. And with that, Rick, the official critics have also been invited to hear at least the political leaders in the three western provinces.

Mr. Rick Borotsik: Mr. Chairman, what I put forward and what others have put forward, as well as other organizations that have written to this committee, is an indication that there are an awful lot of people who wish to make presentations. We at this committee decided prior to the break not to go out and listen to producers. As we heard just now from these witnesses, one of them said the best thing we can do is listen. And I saw some heads nodding on the other side. I think that's what we're talking about.

Mr. Larry McCormick: This side listens quite well.

Mr. Rick Borotsik: I think what we're talking about now is trying to listen. So I would like to see producers or organizations that have been listed here invited to this committee to put their positions forward, or put on the table an opportunity for this committee to in fact go out and listen to the people we are supposed to be representing in the agriculture industry. Mr. Chairman, I put that on the table.

Mr. Larry McCormick: Mr. Chair, can I clarify? I thought we had decided that we were going to tour some western provinces this fall at the very latest. If we haven't, I'd like to find that out. I think it's very important that we start this process now to get the funds and get the House leaders agreeing on this. I think it's most important that we go west.

Mr. Rick Borotsik: I think your comments are—

Mr. Larry McCormick: Mr. Chair, can I just get some response from you on that? Then I'd be glad to hear from my colleague.

The Chair: I think the decision that was made is that we would hold hearings in the fall in the west and hear stakeholders affected. So the plans were, as the motion indicated, that in the fall that would be our priority—to go out to the west as a committee.

Mr. Rick Borotsik: I agree with the parliamentary secretary. If that's in fact the case, Mr. Chairman, I suggest that the chairman and the clerk start working on that very thing right now.

I don't disagree, Mr. Chairman, that two hours on June 5 will not accommodate these people. I agree with you on that. We do have the ministers coming and the critics coming, and I don't think we can accommodate any others. The issue here is that there are people who want to have their say and have their voices heard, and that's where we're at right now, Mr. Chairman.

Mr. Larry McCormick: Yes.

The Chair: You are satisfied, then? That was the motion, that we would go out in the fall and we'd do our plans in the fall and the committee would travel to the west.

Mr. Rick Borotsik: Yes, Mr. Chairman, that's good. Why don't we do some work on it, rather than just simply have a motion to say do it and come back with a plan?

The Chair: The only work will be for the chair to meet with the committee to get funding to go and the clerk to begin work on it.

Mr. Rick Borotsik: And scheduling, Mr. Chairman, I think is important.

The Chair: David, on the same topic that Howard had brought up here, do you want to...?

Mr. David Anderson: I guess one of the reasons we had suggested that is because we do have the ministers coming and we're going to get the government line on that. The producers would be able to come in and give us a little bit different perspective on what's actually going on out on the farms.

I know that our time is restricted, and we were wondering if there is a possibility of having a limited number of these people appear. I don't know what the time schedule is to allow that. Obviously we're bringing in the ministers and critics and it's going to take up the two hours that day, but maybe one of the other days before we go we can bring in some of these people.

The Chair: Could we be prepared maybe to spend two and a half or three hours on that day, rather than the two, when the ministers come? Are we prepared to spend—

Mr. Paul Steckle: If we're going to do it, we have to do it that day. I don't think we have any choice.

The Chair: Yes, but are we willing to extend our two hours into say a maximum of three hours that day when the ministers come?

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): Who would we have in, and how would we get them representative of what's going on?

The Chair: No, this is with the ministers. We have three ministers and possibly three critics coming, so somehow we have to allocate time for presentations. If there are six of them, if it's even five minutes each—and maybe it will be ten for the ministers—it will be nearly an hour just for presentations.

Would the committee be prepared to spend more than two hours that morning? That's what I'm asking.

An hon. member: Absolutely.

• 1105

The Chair: Also, a number of people have asked about farmers coming with the minister. I have said that if the farmers want to come, they come on the own business. They could be here in the hall to hear what is being said and be able to at least on a one-to-one basis maybe communicate with some of us later.

We've had a lot of farm groups and individual farmers requesting to come to appear before committee, more than we could ever hope to accommodate.

Mr. Paul Steckle: Could we have some of the printed material or the presentation material on our tables or at least on our desks in our offices the day before, if it is available?

The Chair: With that then—

Mr. Rick Borotsik: So are we going to go three hours, Mr. Chairman?

The Chair: I've asked. I don't think anyone objected.

Mr. Rick Borotsik: No, none at all. I think it's important that we go three hours.

The Chair: Three ministers, three critics, for three hours.

We're looking for a motion. Paul, have you moved that?

Mr. Paul Steckle: I would make that motion.

(Motion agreed to)

The Chair: With that, we'll adjourn our meeting this morning.