Will immigration program changes help the agriculture labour crisis?

/12 Comments/in , /by

Photo Credit: GrainsWest magazine
Photographer: Bryce Meyer

 

On the surface, it appears that proposed changes to the Alberta Immigrant Nominee Program (AINP) may help alleviate the chronic labour crisis currently affecting our agriculture sector. However, on closer inspection, some of the changes will actually prevent feedlots from nominating certain highly skilled foreign workers.

The good…

The AINP allows foreign nationals to apply for permanent residency while they work in Canada under a temporary foreign worker permit. The program is not new, but until now, applicants have had to select from multiple streams and sub-categories under which eligibility was assessed. The proposed changes, which take effect on January 2, 2018, will simplify the application process and standardize eligibility criteria, making it simpler for applicants and streamlining the review process.

Of particular note, the new AINP will allow applicants from all skill levels to apply. Up until now, lower-skilled workers (such as feedlot labourers) have not had an option to apply for permanent residency in Canada. As of January 2, they will be eligible to apply under the AINP as long as they meet work experience, education, income and language requirements, among other things.

The bad & the ugly…

The federal government’s Express Entry program has grown increasingly more restrictive, forcing many skilled feedlot workers to look for alternative application streams. Further, the English language requirements of the program prevented many from applying. Luckily, the AINP has served as an option to workers who a) could not gain sufficient points under Express Entry due to their education, age, or a variety of other factors, and/or b) could not apply due to an inability to meet minimum language benchmarks.

As of January 2, all AINP applicants will need to provide proof that they have the equivalent of a Canadian High School Diploma. Further, they will need to pass an English language test. This will cover all skill levels; from pen riders to feed truck drivers or labourers, etc.

While it’s true that many feedlots employ highly skilled foreign workers with veterinary-related degrees and excellent English language skills, many more employ high-skilled workers who do not have high school diplomas or do not meet the language requirements. These workers often have decades of related work experience. Many could pass the speaking and listening portion of the exam, but cannot pass the reading/writing portions as they do not exercise these skills on a daily basis. Unfortunately, once the changes come into place these foreign workers will no longer have any option to pursue permanent resident status in Canada.

Why the agriculture sector needs foreign workers

For Canada’s agriculture sector, many factors have contributed to a labour shortage that makes it increasingly difficult for farmers to find help – factors such as harsh working conditions, the seasonality of the work and the steady flow of young people into urban areas.

According to ‘Agriculture 2025,’ the labour market information report from the Canadian Agriculture Human Resources Council, there were 59,200 more agricultural jobs than candidates in 2014. This labour gap is expected to rise to 113,800 – 27 per cent of jobs – by 2025. In other words, Canadian farmers cannot fill their jobs from the available pool of Canadian applicants.

The Temporary Foreign Worker Program has been invaluable in helping alleviate the shortage. It allows employers to bring in foreign workers on a temporary basis to fill jobs that can’t be filled by Canadians. The AINP, on the other hand, allows those workers to apply for permanent residency while they are working in Canada on a temporary permit.

To learn more about the labour crisis, check out ’12 must-know facts about the agricultural labour shortage and why it matters to Canadians’.

Meet the international trade expert who is helping support the Canadian beef industry abroad

/15 Comments/in , , /by

John Weekes, an independent business advisor who has worked with the National Cattle Feeders’ Association (NCFA) on trade issues, is the subject of this week’s Meet the Team series profile.

John is an expert in international trade policy and a senior business advisor at Bennett Jones in Ottawa. He has been a huge asset to NCFA in developing a strategic approach to negotiating with government and stakeholders.

Supporting Canadian cattle feeders in Ottawa

During his career, John has been chief negotiator for the North American Free Trade Agreement (NAFTA), Canada’s ambassador to the World Trade Organization (WTO), chair of the WTO General Council, and ambassador to the General Agreement on Tariffs and Trade (GATT) during the Uruguay Round of GATT negotiations. His insider’s perspective on governments’ approach to trade matters has been invaluable to NCFA.

Trade files he has worked on include:

Country-of-Origin Labelling (COOL)

In 2002, the U.S. introduced a regulation requiring all beef (and some other agriculture products) to have a label stating where it was from. To be labeled as U.S.-sourced, the animal had to be born, raised and processed in that country. Processing plants in the U.S. were required to keep Canadian born and raised animals separate from those born and raised in the U.S., a requirement that was costly to adhere to. As a result, Canadian exports to the U.S. suffered, and some U.S. plants were forced to close. Many jobs were lost on both sides of the border, and COOL cost the Canadian beef industry billions of dollars. 

Canada appealed to the WTO in 2008 and, in December 2015, won. The U.S. Congress repealed COOL to avoid $1 billion in retaliatory tariffs authorized in the WTO ruling. 

As Canada’s former ambassador to the WTO, John was uniquely positioned to provide advice through the complex web of WTO tribunals and the excruciatingly long appeals process. John worked with NCFA and others on this, including advising federal government officials. His contacts within the U.S. were also helpful in getting NCFA’s messages through in Washington, and he helped us communicate with Canadian importers who might have been harmed if Canada retaliated against U.S. imports into Canada.

Canada-E.U. Comprehensive Economic and Trade Agreement (CETA)

This free trade deal between Canada and the EU came into effect on September 21, 2017. It will allow Canada to ship 65,000 metric tonnes of beef into the EU, without duty or tariffs. This could be worth hundreds of millions of dollars to Canada’s beef industry. John did a great job monitoring developments, needs and the political climate within the EU, and is continuing to contribute while the details are being finalized.   

Trans-Pacific Partnership (TPP) 

Canada was not part of the group that began this trade negotiation, but NCFA urged the Canadian government to become part of the TPP process, which it did. John offered advice on what Canada should secure in this negotiation. Now that the U.S. has chosen not to ratify the deal, John will lend his expertise to a new round of negotiations with other TPP partners, if talks go ahead.

North American Free Trade Agreement (NAFTA) 

As Canada’s former Chief Negotiator for NAFTA, John has an unrivaled understanding of the ins and outs of the agreement, and his opinions are sought by industry and government during the current and ongoing negotiations with NAFTA.

Why international trade matters

Canadian beef is renowned worldwide for its great taste and high quality. A healthy export industry contributes to a healthy Canadian economy. Expertise such as John’s is vital to NCFA in securing the conditions our beef producers need to develop profitable relationships with customers across the globe.

You can read more about international trade issues in ‘Canadian beef trade with China takes a serious blow’, ‘Cattle feeders head to Ottawa to support NAFTA negotiations’, ‘Feeding the world: why the agri-food industry must be an economic priority’ and ‘How people in 58 countries enjoy Canadian beef’.

Why new federal tax changes will hurt Canadian agriculture

/15 Comments/in , /by

Farmers and other small business owners across the country are worried that planned changes to the Income Tax Act pose a direct threat to the viability and profitability of their operations.

Why small businesses are concerned

Federal Finance Minister Bill Morneau announced the plan to update the act on July 18. The planned changes, however, will subject small businesses to higher taxes and eliminate many of the exemptions that make it possible for them to operate and build their businesses.

As with all small business owners, farmers take on tremendous risks and are subjected to much more income and financial volatility than a typical salaried taxpayer. The risk assumed by the small business owner is not always met with a matching reward.

Small businesses account for 30 per cent of Canada’s GDP. A tax structure that helps them weather financial downturns and survive challenges makes sound sense for individuals and for the Canadian economy.

How the changes will affect farmers

There are four changes – two proposed and two scheduled for introduction. Because agriculture is a unique industry and families are typically so heavily involved in operations, farmers stand to be particularly harmed by the changes.

Income splitting: Starting Jan. 1, 2018, income splitting with relatives is subject to new restrictions and a “reasonableness” test. Even though children often do a significant amount of farm work, the rules will make it harder for them to be paid via a dividend, leaving less cash in the farmer’s pocket, and making it harder to fund their business in a capital-intensive industry.

Lifetime capital gains exemption (LCGE): Starting Jan. 1, 2018, rules regarding this exemption will penalize children under 18, eliminate eligibility for capital gains from a family trust, and introduce a “reasonable” test that will be difficult to follow.

Holding of passive investments: Increases to corporate tax will leave less cash in the farmer’s pocket to fund future business operations and capital investments.

Transferring the business to the next generation: The proposed changes will make it more profitable for farmers to sell their business to a third party than to the next generation.

NCFA Submission to Minister Morneau

Like all agricultural operations, cattle feeders are worried about the impact these changes will have on their operations, on their families, and on their long-term prospects for profitability.

On Oct. 2, The National Cattle Feeders’ Association (NCFA) highlighted the negative impacts in a submission to Morneau and the Department of Finance. The changes will leave farmers under undue financial stress, the submission argued, limiting their ability to expand their operations and making it even more difficult to transition farming operations to the next generation. It strongly urged the minister to reconsider the proposed changes and amendments.

You can learn about another taxation issue in Why Lethbridge County cattle feeders could be leaving via new roads.

Canadian beef trade with China takes a serious blow

/22 Comments/in , , /by

Recent trade developments between China and the U.S. have some Canadian beef producers seriously worried.

Their concern stems from the disparity between the types of product China will now accept from the U.S. and those accepted from Canada:

    • Currently, Canadian producers are only allowed to ship boneless, Under Thirty Months (UTM) frozen beef and only from individual processing plants that have been audited and approved by Chinese officials and certified for export to China by the Canadian Food Inspection Agency.
    • China’s trade deal with the U.S. allows American producers to ship boneless beef, bone-in beef, chilled beef, and certain offals from any federally-inspected and approved processor.

Canadian beef producers already suffering the impacts

Producers and industry associations have written letters to Agriculture Minister MacAulay, as well as trade officials, to inform them of the impacts this has on the Canadian beef market. Producers are trading directly into China and have met all the requirements necessary for sale of beef into China – and this is a tremendous opportunity that may fail without similar access to that achieved by the U.S.

Some Canadian producers are selling their product under the branded ‘Farm Gate to Chinese Plate’ program, and have a custom processing contract with a large processing plant here in Alberta. These producers have invested substantial time and capital over the past four years to build a strong relationship with their Chinese partners. In 2016, 10,000 head of Canadian cattle were exported to China. Producers were looking forward to increasing that to 15,000 head in 2017, but their Chinese customers have informed them they may change the order, and want it for a lower price.

Canadian producers are selling product into China for high-end retail and restaurants, but they can only ship frozen, boneless product. The fact that the U.S. is now allowed to ship fresh or chilled bone-in beef puts Canadian producers at a distinct disadvantage in this marketplace. This may end trade with the Chinese for Canadian beef producers as a result.

Canadian trade with China

To date, China has expanded its acceptance of Canadian product in stages, where additional product lines are allowed access over time. For instance, China agreed to accept Canadian bone-in beef back in September 2016, but the agreement has not yet been finalized, so currently, no bone-in product is being shipped. However, the recent agreement with the U.S. shows that China can work on opening many beef product lines at the same time. The hope is that Canadian negotiators can secure the same treatment for Canada.

Canadian beef producers have expressed concerns over the fact that their industry depends on global trade – they need to be competitive for the growth and sustainability of their industry. China is a market where producers need the Canadian government to step up its efforts to gain access similar to that achieved by the U.S.

Learn more about Canada’s beef trade with China from Agriculture and Agri-Food Canada.