Cloudy With a Chance of Rain: An Update on Agri-Business Outlook

Through it all, agri-business owners look for opportunities to grow their bottom line and improve their operations. Their perseverance and level of optimism about the future is important and reflects the status of agriculture in Canada – both the opportunities and the challenges.

Since 1987, the Canadian Federation of Independent Business (CFIB) has been surveying its members about their expected business performance. CFIB’s Monthly Business Barometer® (MBB) reports their responses, including their optimism, using an index that is scaled between 0 and 100, where an index above 50 means owners expecting their business’ performance to be stronger next year outnumber those expecting it to be weaker.
This May, optimism levels in agriculture were the highest they’ve been in 2016 at 52.0. However, they still trail levels recorded in May during the previous five years.

Just as farmers need the right weather to grow their crops, they need the right government policies to grow their business. CFIB’s MBB numbers tell us is that agri-business operations are in a good position to continue growing, but they see clouds on the horizon.

While governments cannot control many global market issues facing farmers; it is within their power to help by reducing the total tax burden, cutting red tape, and addressing the chronic shortage of labour affecting many agri-businesses.

From July 20-22, federal, provincial and territorial (FPT) agriculture ministers will be in Calgary for their annual meeting. It will be an opportunity to kick off discussions around their priorities for the next agricultural policy framework, currently known as Growing Forward, slated to begin in 2018. Given what agri-business owners are telling us, there are some key files the ministers should be discussing at this meeting.

Provide a long-term, reliable solution for labour shortages

CFIB agri-business members have been frustrated with the changes to the Temporary Foreign Worker Program (TFWP) that have made it more restrictive, costly and added more red tape. With the federal government conducting a review of the TFWP there is a risk workers will become even more difficult to access for agri-businesses. Agriculture ministers should consider CFIB’s Introduction to Canada Visa as a solution to the continued struggle for an available and reliable workforce in agriculture and agri-food.

Create a more competitive tax landscape

There are many tax clouds looming. Federally, agri-businesses would benefit from better access to the small business corporate tax rate (SBCTR) by increasing the full taxable capital limit from $10-million to $50-million. We also need the federal government to keep its election promise and reduce the SBCTR to nine per cent. Agri-businesses are also worried about the potential of CPP/QPP hikes, which would also hit their bottom lines. Other concerns include the cancelling of the EI holiday for hiring youth and any new environmental policies, like a carbon tax. The Lifetime Capital Gains Exemption (LCGE) should also be increased to $1-million for all businesses (it is already there for farmers and fishers, but not for food processors and other businesses) and indexed to inflation so that it maintains its value over time.

Reduce red tape headaches

CFIB’s research shows that agri-businesses are among the hardest hit by red tape. Over the years we’ve worked with a number of agencies to improve their customer service, including the Canada Revenue Agency, the Canadian Food Inspection Agency and the Canadian Border Services Agency. Some steps have been made, but there is still a lot of work that needs to be done and reducing red tape for agri-business owners can and should be a key focus at the FPT agriculture ministers’ meeting. This is an issue that is not easy to solve, but if overlooked or ignored will only get worse.

The Ag sector is optimistic, but there are storm clouds on the horizon. FPT agriculture ministers must ensure their policy decisions help fuel optimism in the Ag sector, continue to address its competitive challenges, and drive productivity in the sector over the long-term.

Source: Meatbusiness