Last February, the Union des producteurs agricoles (UPA) launched a survey among its members to find out the impact of inflation, production costs, and rising interest rates on their activities. Since 2020, Quebec's agricultural producers have experienced an explosion in input costs (particularly fuel, fertilizer, and animal feed). Those who have invested to automate their production are seeing their interest payments skyrocket and the next generation of farmers, who have little equity, are being hit hard by rising interest rates.
According to the results of the survey published on April 12, nearly 30% of producers across Quebec expect to have a negative balance due to interest rate increases. Of the members surveyed, 40% would fear default and as a result, more than 60% of farmers plan to reduce or postpone their investments.
In its submission to the pre-budget consultation, in anticipation of Quebec's 2023-2024 budget, the UPA proposed a number of government measures to help its members through the crisis, including reinvestment of $500 million per year in agriculture, an equipment tax credit for farms with annual revenues of $50,000 or less, and an interest rate cap of 3 per cent for young farmers. At the time of the budget in late March, the government announced $813.1 million in initiatives over five years to support the growth of the entire bio-food sector. Aimed at increasing Quebec's food self-sufficiency, this amount will be used to fund the bio-food policy and programs that promote investments to increase productivity, as well as the adoption of sustainable agri-environmental practices. In addition, $23.2 million will be used to recognize and reward agri-environmental practices such as pesticide reduction or biodiversity-friendly management.
According to the UPA, societal expectations with regard to the ecological transition and the very high competitiveness of the markets require an ongoing dialogue with the government on obtaining additional support to help farm businesses where profitability is at risk.
The results of this survey demonstrate the complexity and importance of the issues facing the biofood industry, which, with a GDP of $28.2 billion, represents 7.4% of the Quebec economy. Over the next few months, the NATIONAL team will continue to monitor the issues that are affecting the sector in Quebec and Canada. And the pan-Canadian public affairs team will continue to monitor developments regarding the demands of the biofood sector.