The agrifood sector won’t reach Ottawa’s $75 billion export goal unless the federal government removes impediments to recruiting foreign workers, says Manitoba potato grower Keith Kuhl.
The sector has identified the labour shortage issue as its No. 1 challenge since 2012, Kuhl, President and CEO of Southern Potato Company based in Winkler, told the Senate agriculture committee.
“If government wants industry to achieve $75 billion in agricultural export sales by 2025, they must ensure that the current barriers regarding access to temporary foreign workers are resolved,” he said. The Canadian Agriculture Human Resources Council said in 2016 the labour shortage in agriculture has doubled to 59,000 in the last 10 years and short workers for 114,000 jobs by 2025. The problem in the food processing sector is at least as grave.
“Canada is continuing to become more and more of an urban society,” Kuhl said. “A huge portion of the population lives in cities, and that it difficult for farms to access labour because the labour is too far away.”
The Canadian Produce Marketing Association and the Canadian Horticultural Council have worked hard to lift restrictions on foreign workers imposed by the former government and unchanged by the current one.
“A lot of the labour that’s needed in horticultural production is manual labour. They’re stooped over a lot of time trying to pick the crops,” he said. “While my farm has been able to continue to operate without the use of the Temporary Foreign Worker Program, I foresee that in the future we may need this.”
There is an inherent mistrust between government and agriculture which can be seen in how Social Development Canada and Service Canada “continue to make it more and more difficult for farms to actually access the offshore labour that they need,” he said.
“Government should be working hat in hand with producers to ensure that they’re a success. They shouldn’t be creating barriers for their producers. I really believe that there needs to be an open dialogue on this and solutions need to be found.”
Kuhl also called for an update in the small business tax exemption, which remains at its 1974 level of $500,000 for businesses that remain under $15 million of taxable capital. “If it were to be indexed, the limit today would be $80 million.”
The tax relief was intended “to encourage businesses to reinvest profits in their business to provide growth,” he said. “The current tax system penalizes companies for being aggressive in growth. The current tax structure reduces our ability to meet our value-added goals.”
He also wants the federal-provincial Business Risk Management programs changed to reflect the risks facing farms producing high-value crops. BRM does not recognize risk identification and mitigation, which “results in farms such as ours not being eligible for government programs such as AgriStability and AgriInsurance, and we get minimal value out of a program like AgriInvest.”
BRM “should encourage and reward farms who identify and mitigate risk,” he said. “Efforts to date to encourage Agriculture Canada to consider change have not been accepted.”
He also raised another sore point of horticulture producers. The federal government has yet to create a program to protect growers who aren’t paid by buyers. “For decades, the Canadian produce industry has been working with the Canadian government to seek financial protection in the case of customer bankruptcy and insolvency, similar to the United States’ Perishable Agricultural Commodities Act, better known at PACA.”
Canadian growers were allowed access to the U.S. program with the expectation that Ottawa would come up with its own version. Despite a lot of promises, it still hasn’t and U.S. ended Canada’s free ride in 2014.
The PACA was vital for Canadian horticultural producers because of their sales to the U.S.
Recent American tax changes make expansion there far more attractive than in Canada, he said. “As we continue to expand and increase the value of the product that we grow, we also look at where to locate the expansion. With the changes that the U.S. government is making to the business tax, it becomes more tempting to consider expansion of the farm into the U.S., so government needs to ensure that we remain competitive in the global marketplace.
Change in U.S. tax policy on businesses allows them “to continue to reinvest in their companies and in the people who work with them, and through that to continue to increase the sales within their companies,” he said. “If I can increase my sales by 10 per cent per year and I have a reasonable tax level, the total taxes that I pay are going to be exactly the same.
“So either government has realistic tax levels for businesses to allow the businesses to continue to put the profits back into the company, or our governments have exorbitant taxes in place and reduce the ability of the businesses to grow,” he said. “That will then reduce the ability for our total economy to grow in the long term.”