NATIONAL FUTURE FARMERS NETWORK MEETING SUMMARY REPORT

Transcription

1 NATIONAL FUTURE FARMERS NETWORK MEETING SUMMARY REPORT November 2010 Gatineau, Quebec

2 Introduction On November 16, 2010 the Honourable Jean-Pierre Blackburn, Minister of Veterans Affairs and Minister of State (Agriculture) hosted the National Future Farmers Network (NFFN) meeting. The goal of the NFFN was to bring together young and beginning farmers to discuss common challenges and opportunities facing new entrants to the sector, and to give them a forum to explore solutions to challenges they face including access to capital, farm transfers and skills and learning. These discussions benefited from the presence and views of representatives from federal, provincial and territorial governments, and industry associations whose role was largely to listen to the participants dialogue to gain a better understanding of the issues. The NFFN was a follow up to Minister Blackburn s 2009 dialogue tour. In 2009, Minister Blackburn conducted a national dialogue tour on young farmers and farm transfers. Agriculture and Agri-Food Canada (AAFC) has undertaken several other initiatives since this tour as well, including: creating a Young and Beginning Farmers web site with information for people interested in learning about farming as well as the programs and services available ( implementing a youth lens within AAFC to ensure that young farmers views are taken into consideration in the development of policies and programs; and committing to include young and beginning farmers views in the development of Growing Forward 2. The morning session of the NFFN meeting consisted of presentations from young farmers to share best practices and success stories. These presentations focused on farmers as innovative business owners, leadership development opportunities in Canada and abroad, and changing the perception of farming as a career. Meeting participants had the opportunity to ask questions to both the presenters and the chairs. During the afternoon roundtable discussion, participants discussed challenges and opportunities facing young farmers as well as solutions to the common hurdles they face. The broad themes that were discussed included the image of the sector, access to capital, farm transfers and succession planning, skills development, land and profitability. While this report captures the essence of the ideas put forward during the discussion, it is a summary only. The factual accuracy of comments was not evaluated, nor was there any attempt made to reconcile opposing viewpoints.

3 From the discussions it was clear that participants possessed a strong entrepreneurial spirit and were passionate about their farming operations. The solutions put forward were thoughtful and positive. The NFFN was an opportunity for young and beginning farmers to discuss their most pressing issues and open a dialogue between young and beginning farmers and government. Government of Canada officials look forward to continuing this dialogue with young farmers and helping the sector succeed and prosper. Below is a summary of the discussions that took place. Access to Capital Any beginning entrepreneur, regardless of the sector, needs to raise capital to start their business. Raising capital can be done in a number of ways, including borrowing money from family, financial institutions, or by seeking investors. The agriculture sector is no different in this respect than other sectors. As expected for any beginning business, young and beginning farmers are more highly leveraged in comparison to older farmers. The value of farm assets, including farmland, has increased substantially over the last decade, requiring newer farmers to access a significant amount of capital to get started. There were many stories of the challenges faced by young farmers in trying to access capital to purchase farms. In some instances young farmers who wanted to farm full-time had greater off-farm incomes and were therefore considered to be only lifestyle farmers by financial institutions, thereby making it difficult to qualify for financing Others were asked to have their parents put up their farms as collateral or co-sign loans. Further, it was recognized that the repayment plans put forward by financial institutions in the agriculture sector could be problematic as young farmers could not farm full-time and still make monthly payments as cash flow varies throughout the year depending on the sector, especially for those no longer generating a steady off-farm income. It was also stated that financial institutions current approach was geared towards the children of existing farmers when they could get their parents backing but did not work for beginning farmers from nonfarm families. Participants discussed some of the innovative solutions they are using such as finance clubs and machinery sharing. Business plans were also identified as an important tool to access capital, plan financially successful operations, access business management services and assist with applications for programs and services. It was stated that farm families cannot keep re-mortgaging the farm with each successive generation.

4 Proposed solutions focused on the desire for government to help young and beginning farmers save money to leverage more capital. Some participants recognized that it was not government s role to remove all obstacles to accessing capital but that there was a need for more business management tools. Some of the solutions proposed included allowing qualified young and beginning farmers to use Registered Retirement Savings Plan (RRSP) savings, without tax penalties, in order to pay down farm debt faster; creating incentives for exiting farmers to assist young and beginning farmers; creating a retirement savings plan to benefit exiting farmers who plan to transfer the farm, and looking to what other countries with high costs of production are doing for ideas and best practices. Participants noted that they are not asking for subsidies and recognize that it is important that young and beginning farmers are not left vulnerable to a higher than manageable level of risk by having access to more capital than they can afford to repay given their plans for their farm. Changing the Image of the Sector Public perception of the agriculture sector can often conjure stereotypes of the small family farm. It can invoke images of simpler times, limited technology and financial hardship. These images are at odds with modern agriculture, a forward-looking, dynamic, technology intensive sector where innovation opens access to world markets and drives profitability and competitiveness. NFFN participants spoke of the need to change the public s perception of the sector in order to encourage new entrants. Some attendees felt that changing the language was key; for example, producer is a more accurate term than farmer and terms such as chemicals and fertilizers should be replaced with plant protection and plant nutrition. Others felt that it is necessary to change the message in the primary and secondary school systems to attract the next generation of farmers as farming as a career is not always promoted by educators. Increasing sector profitability was also identified as a factor in improving the image of careers in agriculture. It was noted that some progress was being made in changing the sector s image among city dwellers who increasingly recognize the important role agriculture plays in their lives and are proud of Canada s agriculture sector. It was recognized that there is a need to attract young people to careers throughout the agriculture field, not only in farming, and that collaboration with educators is required to change the image of the sector. There is a great breadth and diversity of career opportunities within the sector that need to be better communicated.

5 Farm Transfers Passing on a business from one generation to the next can be a difficult transition, especially in agriculture where there may be emotional as well as economic ties to the business. However, intergenerational, family and non-family related farm transfers can create opportunities for all involved. As significant equity can be tied up in farm assets, a frequent challenge is striking the appropriate balance between ensuring that exiting farmers can access funds for their retirement while ensuring young and beginning farmers are left with a manageable debt load. The issues related to farm transfers can be complex, so it is important that everyone involved has access to information and advice on succession planning, as well as legal and other administrative guidance. Farm transfers can occur at various life stages. When the farm is a person s only asset, they are often reluctant to transfer it. When farm transfers occur at death, taxes can be an important issue. While transferring the farm from one generation to the next is a financial, farm management and administrative process, it can also be extremely emotional regardless of whether the transfer is between family members or not. Certain participants shared their experience with farm transfers. In one arrangement, the young farmer s grandparents who were transferring the farm set the rate of interest while the young farmer s parents signed a legally binding agreement guaranteeing the young farmer access to a certain amount of equipment. In another arrangement involving a non-family farm transfer, the young farmer created a customized ten-year farm transfer plan with the farmer transferring the land. This arrangement also included a mentoring component. It was proposed that representatives from Finance Canada and AAFC study the issue of farm transfers in depth to identify possible solutions. Several participants suggested that there was a need for consultants to guide farmers through the farm transfer process because of its complexity. It was further proposed that farm transfers should involve multi-disciplinary teams (e.g., family/non-family members, legal and tax experts) to manage the process. It was also suggested that best practices be compiled and shared among young and beginning farmers, particularly those that are not connected to initiatives beyond the farm. Other possible solutions included re-examining the issue of capital gains. For example, it was proposed that the $750,000 lifetime capital gains exemption limit was too low for today s social and economic realities.

6 Land Finding suitable and affordable land can be an obstacle for young and beginning farmers. Whether starting out small or planning to expand a new or existing operation, young and beginning farmers may not have access to land for a variety of reasons including a shortage of available farmland, urban development and increasing land values. In some parts of Canada, such as Newfoundland and the Yukon, access to land can be a significant obstacle to farming. Participants cited examples of farmers selling off land/building lots to purchase equipment and voiced concerns over land holding companies buying large tracts of land. Solutions put forward by participants focused on the possibility of different taxation rates on property that was farmed versus that which was being held for speculation. It was suggested that there was a need for an overall plan on how to address agricultural land as a resource and that the U.S. model could serve as an example. Learning and Skills Development As in any other sector, farmers need to continuously develop and improve their skills in order to compete and remain profitable. Acquiring and improving skills can be done in a number of ways, including through formal education, training, sharing best practices with other farmers and on-the-farm learning. Previously, agriculture training was not formalized but rather farmers learned by doing. However, with the complexity of farm management increasing, new farmers benefit from not only practical training, but from formal education and training, especially in the areas of financial management and marketing. It was also mentioned that training offered by universities provided little information on available government programs and services. For many NFFN participants, the key training challenge was not the availability of training but rather the time spent away from the farm that it required. It was also noted that while the current Growing Forward provides good training opportunities for existing farmers, new entrants to the sector cannot access these opportunities. For many participants, extension services are important, particularly for technological transfer. Multiple participants voiced the opinion that there was only so much that could be put in a book and as a result, it is important that farmers have the opportunity to meet with other farmers and learn from one another, especially if they are in the same area of production. For those in niche markets however, it is often necessary to hire a consultant to provide advice and direction. Participants also expressed a significant interest in mentorship opportunities throughout the meeting, as well as a

7 desire to explore how to ensure young farmer representation in industry associations. Participants highlighted the need to ensure that regional program administrators thoroughly understand all of the programs and services available in their region. It was suggested that it would be helpful to encourage networks and partnerships between program delivery organizations to ensure that farmers were receiving timely and accurate program information. NFFN participants felt that while there was ample program information available, it was difficult to sort through the information to determine eligibility. Participants had many suggestions for meeting the training needs of young farmers. These included: creating more one-on-one mentoring programs; directing program funding to grassroots organizations that can provide training focused on the issues of concern in their regions or areas of production; using Webinars and other forms of technology to give young farmers access to expertise across the globe; and providing labour replacement services for farmers leaving the farm to attend training. The need to engage young and beginning farmers that are unable to attend events such as the NFFN was also raised in this context. Profitability Profitability is at the heart of many of the issues discussed by the participants. Young and beginning farmers are deeply concerned about debt in the sector. Participants also expressed concern over the inability to generate profits in certain sectors, a lack of access to certain markets, the need to create respect for the products they grow to encourage Canadians to purchase more locally produced products, and the opportunity to use the safety of Canadian farm goods as a marketing tool. Some participants expressed the view that increasing profitability would not only increase the quality of life of farming communities, but would also help change the public s perception of farming and would attract new entrants to the sector. Solutions put forward by participants focused on the need for government to continue to focus on market access. Conclusion Throughout the NFFN meeting, Minister Blackburn listened to young and beginning farmers express their views and their proposed solutions to the challenges and opportunities facing the sector. Participants felt that it was important that young and beginning farmers be able to tell government what is and isn t working and that a means of sharing best practices with those young farmers that don t normally attend these types of meetings be developed. It was widely acknowledged by all

8 participants that agriculture is a sector of the future and that farmers, industry and government all have a role to play. The NFFN was an opportunity for young and beginning farmers to discuss their most pressing issues and open a two-way dialogue between young farmers and government. AAFC looks forward to continuing the dialogue with young and beginning farmers and helping the sector to succeed and prosper. The dialogue is only beginning and members of the NFFN were encouraged to continue their discussions. AAFC will be holding an interdepartmental meeting to undertake a thorough examination of financial and farm transfer issues raised by participants and will consult with young and beginning farmers in the development of Growing Forward 2. AAFC is also implementing a youth lens within the department to ensure that young and beginning farmers views are considered in the development of policies and programs in order to help young and beginning farmers succeed and prosper, and support them in taking their rightful place as leaders of a modern agriculture sector.