Industrial assessments a knockout for farmers

When property tax reform came to Ontario in 1997, the fight for fair farmland taxation appeared to be in the fading seconds of the closing round. Farmers would now pay 25 per cent of the residential tax rate on farmland, and no longer have to pay the full bill and wait for a government rebate cheque.

Could farm tax crusaders finally hang up the gloves? Apparently not. Earlier this summer apple growers in Grey county began receiving tax bills that detailed massive tax increases - some up to 10 times what they paid the previous year. One grower saw his tax bill jump from $2,800 to $16,900.

Apple growers and apple co-operatives in the area have seen their environmentally controlled storage reclassified from the farmland to the industrial category.

"Assessment appears to have taken the position that storage of apples in refrigerated and environmentally controlled buildings is no longer a farming activity," says Oxford farmer David Older, the Ontario Federation of Agriculture's point man on tax issues.

If the decision goes unchallenged, it could have devastating consequences for farmers, says Older. It's not simply a case of a local assessment officer gone berserk. "Regional assessment commissioners basically know the law, the regulations and the policy."

The rationale put forward in this case is that farm storage facilities should be treated like any other storage facility.

"That means that anything done on your farm that might seem to have a commercial or industrial parallel - stored wheat, hay, soybeans, corn, milk, anything - could be reclassified," Older says "If we allow this decision to stand on these properties, there will be no way of defending all of the other activities that we have traditionally regarded as farming activities." In agriculture's case, pitting cherries and adding sugar, storing grain or removing milk from a cow could be considered a value-adding industrial process.

"This decision must be challenged and cannot be allowed to stand," Older says.

Grey farmers first noticed the changes after they received amended tax notices this summer. The deadline for appeal was originally Aug. 31, but provincial Finance Minister Ernie Eves has extended the deadline to Oct. 30 after an outcry from taxpayers across the province who are trying to come to grips with the new property tax system.

Older says any farmers who have amended notices that say "commercial-industrial" should appeal.

OFA will be meeting with officials from OMAFRA and finance ministry to try to resolve the issue as quickly as possible. Some fear that rural municipalities, hurting for cash after changes to the property tax system, could latch on to the reassessment idea and hit farm pocketbooks across the province.

The situation is rather ironic. For years provincial governments have been preaching to farmers that their salvation lies in value-added production. But with success comes a fat tax bill. Time to dust off those boxing gloves. - Bernard Tobin

© copyright 1998 Agricultural Publishing Company Limited.


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The Bottom Line

- Canadian farm cash receipts from January to June 1998 dropped 5.1 per cent to $14.1 billion, compared to the same period in 1997.

- Ontario cash receipts dropped 1.9 per cent while Manitoba farmers took the largest hit, a 12.5 per cent decline.

- After four years of steady growth in the first half of the year, livestock receipts declined by 4.2 per cent, led by an 18.6 per cent slide in the hog sector

- Lower wheat production led to a 6.8 per cent decline in crop receipts. Corn receipts dropped by 20.2 per cent, while soybeans declined 4.9 per cent. Source: Statistics Canada

© copyright 1998 Agricultural Publishing Company Limited.


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Flax flux after financial flop

Eastern Ontario and western Quebec's fledgling flax industry is in flux, scorched by the Asian financial market meltdown. Early September, five eastern Ontario growers and as many as 29 from Quebec with an estimated 1,500 flax acres say communication ceased with Gilflax, the company they'd contracted the crop to.

Gilflax is a subsidiary of Gilbert Holdings, an international conglomerate that trades on the Hong Kong stock exchange. Farmers say they've been told by Gilflax GM Eric Laugier, based in Valleyfield, Que., that Gilflax is in receivership.

Laugier failed to return calls from Farm & Country at press time, but during an earlier conversation for the magazine's Sept. 7 cover story admitted, "We've had a lot of bankers pulling out."

The company's specialized harvest equipment, which according to the contract farmers signed should now be pulling and baling this year's excellent crop, remains locked inside the two-year-old Gilflax scutching mill at Valleyfield. Robert McDonald, who with his son Rob this year grew 65 acres on their North Lancaster farm, has been furiously researching alternative markets, so far unsuccessfully. However, growers feel they are powerless to touch the crop before Oct. 10, 1998 - the final payment date specified in their contract.

First-time grower Francis Chretien, Summerstown, predicts Ontario and Quebec farmers will collaborate in seeking legal remedies. He says growers have been frustrated because there is no apparent receiver and no company spokesperson. - Robert Irwin

© copyright 1998 Agricultural Publishing Company Limited.


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3P turns over new Leaf

Earlier this month, members of 3P co-operative signed three-year contracts with Maple Leaf Foods for 7,000 hogs a week. Agreements are being drawn up to send another 1,500 3P pigs a week to Quality Meats, Toronto.

The move ends speculation over production that had gone to Thorn Apple Valley before the Detroit plant ceased slaughtering July 24. Doug McLeod, Embro, a 3P director and founding member, says the deal wasn't as good as the one with Thorn Apple, "but it is the best deal that is available at this time."

Members can ship under Maple Leaf's Signature grid. Many 3P members accustomed to shipping heavier weights to Thorn Apple have opted for Maple Leaf's Magnum grid, which McLeod concludes is still inferior to Thorn Apple at the heaviest weights.

"We were very comfortable with the fact that [Maple Leaf] had a labour agreement," McLeod notes. Earlier this year, Maple Leaf signed a six-year deal with employees at its Burlington plant following a bitter strike.

McLeod says the deals with Ontario packers will have no impact on 3P plans to build its own "niche plant. Our goal is to have a plant in London," he says.

In fact, within days of its members signing the Maple Leaf agreements, 3P representatives were in the southern U.S., following up on earlier packing plant research. 3P is focused on "helping to control the price of pigs in Ontario," vows McLeod. - Robert Irwin

© copyright 1998 Agricultural Publishing Company Limited.


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Study to seek retail sales tax relief

When the Retail Sales Tax first appeared in 1961, few farmers had heard of the concept of tax cascading or pyramiding. But paying tax on tax has become a fact of life.

The Ontario Federation of Agriculture, however, is hoping a new study will shed some light on the impact incomplete exemption of RST has on farmers, and hopes to convince the province that farmer registration can help rectify the problem.

Oxford country farmer David Older, OFA's tax guru, says farmers are price takers and can't afford to absorb RST-taxed inputs - not if they hope to compete with farm products from other jurisdictions that have single-stage sales taxes washing out the effect of sales taxes on inputs.

Older says farmers can attack the problem in two ways: design a system to gain a complete exemption to stop tax cascading, and use farmer registration to identify farm businesses.

"This is a chance to use a tool that is unique to Ontario farmers," Older says. "We have an annual data base that will identify farmers to vendors if they want to use it."

But first OFA has to identify the impact RST has on farmers. No studies have looked at the issue, but the best estimate is that $30 million could be returned annually to farmers if there was complete RST exemption. OFA has pledged $5,000 to help fund a study; the organization is also seeking support from OMAFRA and the Christian Farmers Federation of Ontario, and hopes to receive a grant from the Canadian Adaptation and Rural Development fund.

Older says the report will be completed next year, and if all goes well he hopes farmers will see some tax relief in 2000.

It won't be easy. There are administrative and financial hurdles, most notably the fact that the RST raises 21 per cent of provincial revenues. But the OFA feels it should be able to get the ear of a government that will likely be looking for farm votes in a bid for re-election next fall. - Bernard Tobin

© copyright 1998 Agricultural Publishing Company Limited.


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Long a leader with vision

With the trend to specialization in modern agriculture, a farmer who spans two industries is a rarity. Gerry Long, who succumbed to cancer at age 65 earlier this month, spanned at least four.

"I'm proud of my father," says Long's son Jim, vice-president and general manager of Wood Lynn Farms Ltd., Delaware. "He was my father, he was my friend, he was my partner."

As well as building Wood Lynn Farms Ltd., a successful egg, apple and swine genetics business based in this town west of London, Long was involved in a long list of commodity boards. He was chairman of the Ontario Apple Marketing Commission for 24 years, president of the Canadian Horticultural Council, president of the Ontario Fruit and Vegetable Growers Association, and a director on Ontario Egg Producers.

Never shy of giving constructive criticism, Long was a firm believer in the co-operative movement. He helped found Ingreen Valley Foods Growers Co-operative, revitalizing the Cobi Foods plant in Ingersoll, and chairing a meeting from his wheelchair days before he died. He also was a visionary behind the 500-member 3P pork co-operative, a venture he remained passionate about to the end. "The dream goes on," he wrote to Farm & Country less than a month before he died.

Embro swine breeder and 3P director Doug McLeod says Long was "a born leader" with a "belief in doing things in a democratic fashion."

Long is survived by his wife Renie, who is current chairwoman of AgriCorp, his parents, his three sons, his brother and sister, and five grandchildren.

There will be "memorial celebration of his life" at the Western Fair Association in London, 11 a.m., Sept. 29. To confirm attendance, call (519) 652-2578 or 1-800-667-5326. - John Muggeridge

© copyright 1998 Agricultural Publishing Company Limited.


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AgriCorp OKs silage option

Late summer, AgriCorp tried to help both itself and forage-starved farmers. It unveiled a new crop insurance option letting corn growers harvest their drought-stressed crops for silage.

Only a half dozen farmers cut their grain crops for silage, however. "The main problem is that it's so expensive to move silage from one farm to the next," said Greg Brown, AgriCorp manager.

Despite severe drought in Huron and Bruce, AgriCorp expects that in terms of crop insurance payouts, 1998 will end up an average year. Farmers paid $72 million in corn premiums: AgriCorp expects to pay out just over $60 million, or about 85 per cent.

Brown said most farmers chose the 80 per cent option, so their yields would have to fall at least 20 per cent below average in order to trigger a claim. "A lot of the dry areas are going to be losing 10 to 15 per cent, not 20 per cent."

Brown said AgriCorp is also helped by the early spring. Most growers should be able to harvest their crops long before the onset of winter. "We expect essentially no fall losses."

The early harvest will also mean growers will be able to cash their crop insurance cheques faster. Brown said AgriCorp will pay claims within four to six weeks of harvest. - Tom Button

© copyright 1998 Agricultural Publishing Company Limited.


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