Thank you, Mr. Chair.
I think you've all received the French and English versions of a four-pager we prepared. I'm not going to read it, but I'm going to refer to some of the graphs in it, so you might want to have it handy.
The National Farmers Union is extremely concerned about high input costs. We've watched them skyrocket. What we're hoping to bring to the attention of the committee members today is that as grain prices go up, we're expecting that input costs will go up very dramatically, such that we are very worried that it will be the fertilizer, chemical, seed, and fuel companies that will really capture most of the windfall from high grain prices.
We've created a four-page brief for the committee members. In that brief we've used graphs and data prepared not by us but by Agriculture and Agri-Food Canada and by the input suppliers themselves. Your copy of that four-pager shows on the front page a graph that Agriculture and Agri-Food Canada produced a couple of years ago. It shows what total expenses have done on Canadian family farms.
If you look at that graph on the front page, you will see that the big middle wedge--our expenses, our input costs--expands over time until it consumes virtually 100% of Canadian farm revenues and pushes net farm income on the bottom down to zero. What we've seen over the last couple of decades is that increasingly the input supply corporations are capturing a larger and larger share, until today they're capturing virtually all of the revenue. That's why farmers' net incomes are zero or negative.
If you turn the page of the four-pager we distributed, you'll see on page 2 a second graph produced by Agriculture and Agri-Food Canada. What's interesting when you read Agriculture and Agri-Food Canada material is that it's clear they know a lot about this problem. They sometimes don't state it as clearly as farmers would like, but they clearly have the data.
In our handout, the second graph from Agriculture and Agri-Food Canada shows the same data, but this time with realized net farm income and with depreciation taken into account. What I want to point out from that graph is that around 1985 net farm income in Canada fell to about zero and has stayed there ever since. It's been negative and it's been positive, but if you add it up, realized net farm income from the markets in Canada between 1985 and today adds to approximately zero.
If you add up farmers' production over that period of time, it adds up to $689 billion, or two-thirds of a trillion dollars. What I'd like committee members to consider as they think about input costs is this: if, over the last couple of decades, farmers produced two-thirds of a trillion dollars in product and kept none of it, who got the two-thirds of a trillion dollars?
That two-thirds of a trillion dollars went to John Deere, Cargill, Agrium, Mosaic, Exxon, and the other input companies that supply farm inputs in Canada. Really that's what the big picture is on this one. The big picture isn't just whether Canadians are paying a little more or a little less than Americans, or whether fertilizer has gone up a little faster than chemicals, or vice versa. The big picture is that the very powerful transnational input companies have positioned themselves to capture 100% of the wealth produced on Canadian farms.
It's not just a farm issue. The other thing we note is that taxpayers in Canada have been called to come forward to generously contribute through farm support programs to try to keep family farmers on the land. As input suppliers have taken that two-thirds of a trillion dollars off our farms, the taxpayers have generously come forward to fill the gap. Over the last 20 years, taxpayers have put in almost $68 billion in farm support payments to try to keep farmers on the land. That's about $9,000 per taxpaying family.
From some views, these farm support programs look as much like transfers to input companies as they do transfers to family farmers. So when you look at the billions in farm support payments that are necessary to paper over the extraction of wealth by the input companies, this is really an issue that's of importance to all Canadians. Everyone who pays taxes should be interested in the fact that farm income is so low, largely as a result of input costs.
The next two graphs I'll refer to, on page 3, were not created by Agriculture and Agri-Food Canada; they were created by fertilizer companies. They're extremely provocative graphs, because what they say and show is that nitrogen prices follow grain prices, and fertilizer prices are linked to grain prices.
The top graph was created by Agrium Inc., one of the biggest North American companies, and the bottom one was created by Yara, one of the biggest European fertilizer companies. They're in complete agreement that their pricing is determined by grain pricing. When grain prices go up, they raise the price of fertilizer.
Well, what would we expect, then? Grain prices are up dramatically. What would we expect fertilizer prices to do? According to Alberta Agriculture, nitrogen prices are up 39% and phosphate prices are up 42% in one year, comparing December 2007 with December 2006. So we see fertilizer prices up approximately 40%, and that's completely predictable, because according to the fertilizer companies, they raise their prices when grain prices go up.
I'll just say one final thing, because I realize I have just 10 minutes. These fertilizer price increases are in response to higher grain prices; they're not in response to higher costs of making fertilizer.
There's a recent quote in our brief from Agrium Inc., and what they say is:
The combination of record nitrogen prices and only a slight increase in costs due to higher gas prices resulted in record total nitrogen margins of $151 per tonne.
These companies are reaping record margins. The back page of our brief shows they're reaping record profits. Fertilizer company profits right now are five to six times higher than they were over the last decade.
In conclusion, the NFU hopes that the committee members and other parliamentarians can take a large-picture view of this, that they can look at the history of input suppliers and how they've positioned themselves to make themselves the primary beneficiaries of the wealth we create on the land, and now they're making themselves the primary beneficiaries of these grain price increases. We hope they can look into this and that they can speak courageously and clearly about this, and that they can then work with farmers to rebalance the power between farmers and input makers, because it is market power that really determines how the profits are allocated in the system. Because of the imbalance in power, there's an imbalance in profits.
If you had to sum up the farm crisis in one sentence, it would be this: farmers are making too little because others are taking too much.