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Home My WebLink AboutThe Wingham Advance-Times, 1985-03-20, Page 43Farmers react cautiously to federal white paper By Bandy Threndyle Iorrl farmers are taking a cautious reaction to Finance Minister Michael Wilson's recent- ly released federal white paper called Tax Issues in Agriculture. When the report was released in late Fbruary, it caused a stir in the farming gonununity and the media. Figures from the report suggested fanners 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 fanners 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 fanners. The concern expressed by many fanners and by the minister • in published newspaper accounts is that the 'statistics in the report are out of date and do not accurately represent the state of farming income today.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 of the figures used in the report were taken from a Farm 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 Fbrt Elgin area farmer and president of the Bruce County Federation of Agriculture, says the -&port makes a mistake when it attempts to compare the net wealth of fanners to individuals. Robertson suggests that fames should be compared to small or medium sized business- es. He also took exception to the equity figures. "Equity isn't true wealth unless you sell the farm." Gary Gurbin, Bruce -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 granges in land values and equity in farm operations in the last three years. He says Finance Minister Wilson, ° 'has no illusions about the figures in the report, but in many cases they were.the most up to date figures available." The 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 farm capital gains tax appeared to be the most likely tax reform. ar 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 Febniary 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." "Far 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 bemore 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 white paper, for 1982 and 1983, farmers have been losing on their equity. The crisis has been in recent years, Pelissero said. Another illogical comparison, . PJJissem said, is between the value of farm land and trading stods. "The fad 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 insolation, and the contents of the 64 page document cannot accurately be summarized in a brief news story, Pelissero said. "The Farm Credit Corporation did a thorough study on Canadian fanners 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 ay 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 The Farm Iikiitloi, Week of March 20, 18$5 - 11 HERMAN AUCTIONS Give Us A Try HOME AND FARM CONSIGNMENT AND ESTATE SALES Competitive Prima Herman Herbrink Dial 881-3763 WALKERTON L�1 S24-2177 ALEXANDER & CHAPMAN REALTY LIMITED 10 The Square . 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