First, I would like to thank the members of this committee for agreeing to hear our views on the situation and on the effects of the rise of the Canadian dollar against the American dollar specifically, but more generally against other world currencies.
Most of you know our organization, the Union des producteurs agricoles. The organization represents agricultural and forest producers in Quebec. In our agricultural division, we have 43,000 members on about 30,000 farms throughout Quebec, with farm-based sales of $6.2 billion.
In our forestry division, which we represent through the Fédération des Producteurs de Bois du Québec, we have 130,000 owners of private forest land who contribute 20% of the supply to Quebec plants. This means 30,000 jobs directly in those forests, a figure that does not include the multiplier effect in processing.
Right off the bat, we must emphasize that the rise in the Canadian dollar against the American dollar is having unprecedented consequences that are destroying our sector. The extent and the speed of the rise in value of our country's currency—almost 30% against the American dollar in only two years—are closely linked to the rise in the price of oil. I have provided a graph that shows these changes. The rising cost of energy and the difficulty in getting our products to market are causing our production costs to increase. This structural and very sudden change has resulted in agriculture and forestry in Quebec becoming significantly less competitive.
As monetary policy is in federal jurisdiction, it seems to us essential that the Government of Canada must show its leadership by bringing in measures to help our industry through this crisis.
At the meeting of Ministers of Agriculture last November 16 and 17 in Toronto, the industry demonstrated the harmful effects of the rise in exchange rates on agriculture, specifically on meat, and the topic was a significant part of the discussions held by the Ministers of Agriculture.
Here are some of the repercussions of the Canadian dollar's rise against the American dollar: it affects the income of producers; it depresses market prices; it means that we lose markets; it adds more imports to our markets; it drives our exports down—especially in forestry, which is being very badly hit all round. Canadian measures to ease this crisis in forestry and agriculture are having little effect.
You know, I am sure, that the prices of most of our agricultural commodities, grains, beef, pork and some market garden products, are set on the Chicago Exchange. Whatever happens on that Exchange affects the Canadian market once the exchange rate is taken into account.
In the Quebec pork industry alone, the loss of revenue, just for 2007, is almost $200 million. If I do the same calculation for Canada, the lost income climbs to the order of $600 million in Canadian pork production. The word "production" does not include slaughterhouses. Pork is our second biggest agricultural export, and sometimes, the biggest. The blow is extremely severe.
There is also an effect domestically. The substantial drop in the value of the American dollar makes their products very attractive in Canadian stores because they are now priced much lower than our own. This creates a substitution effect in our markets.
Furthermore, in export markets other than the United States, where we are compete with American products, the competition is intense, and we are losing export markets as a result.
According to one study at an American university, each time that the Canadian dollar increases by 1%, 0.2% of our exports to the United States disappear in the short term and 0.5% disappear in the medium term. So let us not downplay the medium term effect which is only just starting to appear. What we are seeing in the short term is only the beginning of the full impact that the exchange rate could have. That impact on the farm will be somewhere between $1.5 and $4 billion in the next few years.
In forestry, 68 mills in Quebec have shut down. Producers in the Gaspé, in the Lower St. Lawrence and in Abitibi-Témiscamingue have no way to get their products to market because of the impact that the value of the Canadian dollar has on our exports.
We are making four requests at this committee meeting: to establish an urgent action plan to cushion the harmful effects of the value of the Canadian dollar; to act on the suggestion made by Mr. Charest, the Premier of Quebec, to hold a first ministers' meeting as soon as possible; following on from the recent meeting of Ministers of Agriculture, to quickly implement measures to help the pork, beef and market garden sectors, because we are also losing our slaughtering capacity which is heading more and more to the United States; to establish an AgriFlex program, as proposed by the Canadian Federation of Agriculture, that would allow provinces to access federal funding for provincial programs.
Thank you for your attention.