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Farmers react cautiously
to federal white paper
•
By BBy Raady'1furendyle
Lock farmers arra taking a cautious reaction
to Flamm Minister Michael W il$01es recent-
ly
ecently released federal white paper called Tax
Issues in Agriculture.
When the report was released in late
February, it caused a stir in the fanning
community and the media. Figures from the
report suggested farmers were nine times
more wealthy . than the average Canadian,
earned twice as much per year, and paid only
one quarter the income tax of the average
Canadian.
- The major concern expressed by most local
farmers revolves around those statistics and
how they were interpreted.
The report was prepared by the finance
department at the request of the finance
minister in order to help create new tax
policies for farmers. The concern eagmressed
by many farmers and by the minister in
published newspaper accounts is that the
statistics in the report are out of date and do
not accurately represent the state of farming
income today.
Most off the figures used in the report were
taken from a Farrn Credit Corporation Survey
completed last fall. The most recent figures in
that survey were taken in 1981 when the
inflation rate was high and land was more
expensive than it is today.
The report suggests that the average farm
was worth $508,000 of which $417,000 or 82
per cent is debt free. It compares that figure
to the net wealth of the average Canadian
which is pegged at $47,000.
Wayne Robinson, a Port Elgin area fanner
and president of the Bruce County Federation
of Agriculture, says the report makes a
mistake when it attempts to compare the net
wealth of farmers to individuals.
Robertson suggests that fanns should be
compared to small or medium sized business-
es. lie also took exception to the equity
figures.
"Equity isn't tame wealth unless you sell
the farm."
Gary Gurbin, Baum -Grey MP says the
paper is not a statement of government
policy, but is designed to provide a basis for
discussion.
"Recent newspaper reports have created a
controversy by misinterpreting the statistics
and the purpose of the paper. Unfortunately
the most recent statistics available in many
instances were from 1981," he says.
Gurbin says there have been significant
changes in land values and equity in farm
operations in the last three years.
He says Finance Minister Wilson, "has n�
illusions about the figures ie the report, but hi
many cases they were the most up to date
figures available."
Me finance department intends to get
more information from fanners and farm
groups before any recommendations are
made in the federal budget expected
sometime this spring, says Gurbin.
The finance department is considering
several proposals for the budget but wants to
know which ones farmers consider to be "top
priority" , before making a decision, says
Gurbin.
"We can't do everything at once."
Of the proposals now before the finance
department, a reduction in fann capital gains
tax appeared to be the most likely tax reform,
Robertson says the federation is taking a
cautious approach to the white paper and
plans to make a written response to it some-
time this month.
He stresses the need for storage comodity
prices to solve the long term problems in
agriculture.
"One thing the report does point out is the
constant and continual decline in farm
income," says Robertson.
Interpretation of paper shocking
The interpretation of the figures in the
federal government's white paper on tax
issues in farming, and further misinterpre-
ations in the news media are shocking and
appalling, according to the Ontario Federa-
tion of Agriculture (OFA).
From an emergency executive meeting
held in Toronto on February 25, OFA
president Harry Pelissero said, "While
figures don't lie, interpretations may vary."
He said the white paper, prepared at the
request Of Finance Minister Michael Wilson,
is "one sided and not current."
' `For instance, in discussing the decline in
land values, the white paper stops at 1981.
Since then, land values have plummeted,
especially in western Canada where they
were hit by drought."
"Some of the comparisons used in the
study and reported in the media are
illogical," Perlissero said. "To compare the
worth of the average farm to the worth of the
average Canadian family is comparing apples
and oranges. It would be more credible to
show a business to business comparison."
The white paper's figures on the rate of
return on equity may look good on paper, if
it's interpreted to be 19.3 per cent for the
years between 1975 and 1983, "But farm
groups aren' t talking about the golden days of
the seventies. According to the tables in the
0 white paper, for 1982 and 1983, fanners have
been losing on their equity. The crisis has
been in recent years, Pelissero said.
Another illogical comparison, Pelissero
said, is between the value of farm land and
trading stocks. "The fact that the value of
rural real estate has increased means noth-
ing. A farmer can't dump his business as
easily as he could shares on the Toronto Stock
Exchange. Equity, or paper value, doesn't
put the kids through school or put shoes on
their feet," Pelissero said.
In addition, Pelissero said, the white paper
shows that in 1982 and 1983, the nominal
value of lands and . buildings declined
significantly. "Once again, these are the,
crisis years, and the severity of the problems
is diffused when the interpretations incorpor-
ate figures from 1972.
The white paper's interpretations should
not be read in isolation, and the contents of
the 64 page document cannot accurately be
summarized in a brief news story, Pelissero
said. "The Fann Credit Corporation did a
thorough study on Canadian farmers which
showed that 17 per cent are in severe
financial stress, seven per cent are in
moderate distress and the remaining 76 per
cent are more stable because they have the
minimum equity needed to give them a
reasonable chance to survive in agriculture."
"This is a far cry from the white paper's
interpretation that only 3.2 per cent are in the
distress ' category. .The contradiction in
figures, both from government departments,
proves only that there is no definitive
statement on what his happening in the farm
sector. As president of an organization that
represents over 24,000 farm families, I can
Only say that there is more than enough cause
turn to page 27
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