Ian Portsmouth: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine. And we’ve developed this podcast in cooperation with BMO Bank of Montreal.
Most Canadians don’t think much about the domestic agriculture industry and the challenges it faces. Even though it directly employs more than 300,000 people and touches every single one of us each and every day through the food that we eat. A big part of Ron Bonnett’s job is to help raise these issues with Canadians and our governments. Ron is the president of the Canadian Federation of Agriculture, which represents more than 200,000 farmers and farm families and he joins me now to discuss some key issues for farmers in 2012 as well as a big date on the agricultural calendar, Food Freedom Day. Ron, welcome to the Business Coach Podcast.
Ron Bonnett: Thanks for the invitation.
Ian: So Ron, recently, during its red tape awareness week, the Canadian Federation of Independent Business released a statement about the challenge that red tape and overregulation presents to Canadian farmers. What are some of the specific red tape challenges that Canadian farmers face?
Ron: There is a number of frustrations. Everything from specific regulatory problems to frustration with the paperwork that is sometimes required. One of the things that came out of the report from the red tape commission was the need to really address that and streamline it so that businesses didn’t face a tremendous amount, sometimes, of paper work which sometimes filed with Revenue Canada, stability forms and sometimes there is municipal and provincial paperwork that is required. In an age when we get all kinds of internet technology, there has to be mechanism to deal with that overload where you just file once and have that information go to appropriate places.
When you get into the specific regulations, quite often there is crossed departmental approvals needed, you might have several departments, it might be Industry Canada, Health Canada, Department of Fisheries and Oceans. They may all have a role in regulating and quite often they have independent structures to deal with that, you may have to apply for improvements on a drainage ditch, you may have to deal with all of these different departments, plus the provincial and municipal authorities to get an approval in place. And it just creates a level of frustration that sometimes completely stalls some projects.
But with red tape, as the announcement on the red tape review, right now, I am talking to you from Washington and I came out of a meeting where they are looking at regulatory cooperation between United States and Canada. And again, with a goal of trying to reduce the duplication that there is in regulation and streamline the process for not only farmers but for the whole food chain.
Ian: So the Canadian Federation of Independent Business has proposed a one for one policy and by that policy, one regulatory requirement would be removed for each one added. And that is something that Federal Agriculture Minister, Gerry Ritz has publicly agreed with in principle. What’s your view of this proposal? Is it good enough to trade one for one or would you actually like to see a reduction?
Ron: Well, I think it depends on what you are doing. Sometimes there is new technology or you need new regulations where there is no existing regulations. But I think regulations that are coming in that are replacing and duplicating other regulations, so then you have to get rid of the others.
But it is interesting I think when you talk about doing regulatory reduction now, I was just listening to a presentation here in the States where they are having a whole review of regulations to see if some of the regulations are still relevant. And I think that would a good step in addition to the one for one idea. They should be actually taking a look at the regulations and see if the purpose of the regulation is still there, if there is a need for them and if there is no need, let’s cut them off the book so that it doesn’t create an added obstacle for farmers and for other agricultural businesses.
Ian: Now Ron, in your monthly statement to members of the CFA, you’ve called on farm owners to be more responsive to customer demands, to be more market orientated. What kinds of demands are you talking about here?
Ron: Well, one of the things we are talking about not only to farmers but the whole chain, right from farmers to processors to retailers to transportation, really taking a look at what consumers are asking for and try and tailor products more specifically to meet their demands. We are now getting consumers who are asking for environmental standards, food safety standards, animal care comes into it. I think what we will have to start looking at is the whole chain approach to dealing with these issues so that if there is a specific type of product that is being asked for by consumers, we can give that to them. And if there is any additional cost incurred with that demand, as a chain, we take a look at how we make sure that there is profit to the chain that we can supply then products to the consumer.
Ian: Right so, here, you are not necessarily talking about abandoning corn, if that’s what you produce and going into the soya beans, you are talking about things that are a little bit more granular than that. What are some of the ways in which farmers can become more market oriented? How can they get a better grasp of what it is the customer wants and implement those changes on their farms?
Ron: I think one of the biggest things we can do is get better at sharing market place information. I’ll just use our own farm as an example. There has been quite a demand for Angus beef cattle and we switched to a breeding system around a vaccination program in place, feeding protocols. We sell to feed lots who in turn sell the package and retailers and we are developing those linkages. So when I sell calves to a particular feed lot they know what type of cattle that they are getting and they also know where those cattles are going to be marketed. Actually it becomes a lining up of everybody in the chain, to focus in on what that consumer demand is.
Ian: How long does a process like that, for example, take? Is that something that is going to take a farmer, maybe a few years to do and therefore they really have to be ahead of the curb in terms of anticipating that demand?
Ron: It depends on the commodity. Some commodities, you can switch very quickly. The hogs sector has evolved overtime by the type of pork the consumers are asking for, a leaner type pork. And even the beef industry is changing fairly quickly and sometimes for introducing new genetic, you can make a very quick switch in the livestock to as well. But I think by using some of the new technologies, we have a better understanding now of not only crops technology but livestock technology that would make changes a lot quicker than we used to be able to do.
Ian: The Canadian Federation of Agricultures Annual Food Freedom Day is on February 12th. What does it mark and why is it important?
Ron: Well, it’s modeled after the idea of tax free somewhat later in the year than Freedom day. The idea was to give Canadians sort of an overall idea of how much they are spending in food. I think sometimes, we get caught up when we go to the grocery store and we buy our purchases that we don’t put it in a context to what that it actually costs on our overall budget. And if you take the average disposable income of Canadians, it is around $30,000 a year. Of that they spend approximately $3,000 for food and beverage and tobacco products. And that includes restaurant meals. If you think of it, it’s about 10 to 12% spent on food in Canada which is one of the best bargains around the world.
And I think sometimes, we don’t really put that in perspective but that disposable income spent on food is low enough that it gives consumers the ability to spend their money on all those other things they want, whether it’d be a home, vacations, cars. And the agriculture community, by really being efficient by providing products at a reasonable prices has freed up that spending so that people have that money to spend on other things that are valuable in life too.
Ian: It is truly amazing that by the time February 12th rolls around, we’ve earned enough income to pay for our entire year’s grocery bill. It really is a testament to the quality and efficiency of Canadian agriculture. Ron, I want to thank you for joining the Business Coach Podcast.
Ron: Okay. Thank you.
Ian: Ron Bonnett is the president of the Canadian Federation of Agriculture in Ottawa and spoke to me today from Washington.
That’s it for this episode of the Business Coach Podcast. Be sure to check out other episodes which you can download from BMO.com/coach, profitguide.com and iTunes. For other tools to help you build your business, visit the BMO Smart Steps for Business Community at BMO.com/smartbusinessowners. Until next time, I am Ian Portsmouth, the Editor of PROFIT Magazine, wishing you continued success.