Good morning.
The Canadian fertilizer industry believes in managing our supply chain, from the production facility through the retail system to the farmer’s field.
Our industry, in conjunction with our global partners, has developed an innovative science-based approach to best management practices for fertilizer application called 4R nutrient stewardship. That means the right source, at the right rate, at the right time, and at the right place. This concept helps farmers and the public understand how right management practices for fertilizer improve farm profitability while reducing losses of nutrients to the air and water. This concept drives at the efficient use of our products to ensure that the right product is being applied at the right time of the year at the right optimal rate in the right place, away from water and other environmentally sensitive areas.
The Government of Canada, and in particular the Department of Agriculture and Agri-food, can go farther in integrating this program, 4R nutrient stewardship, into its nutrient management policies and communications with farmers, researchers, provinces, and other governments. We believe the federal government has a continuing role in supporting soil science research and 4R nutrient stewardship programs.
Our supply chain also presents challenges relative to the safety and security of Canadians, and we take this seriously. We have developed codes of practice for ammonia and ammonium nitrate to ensure that our products do not cause harm to our employees, our customers, or people in our communities. The Government of Canada should recognize both of these industry-developed codes. In particular, the codes should be recognized in government programs and regulations.
Moving on, I'd like to speak to our fertilizer supply chain logistics. Our industry is globally competitive. Our high-quality product is in demand all over the world. In 2010-11, CFI members produced over 25 million metric tonnes of fertilizer and exported more than 20 million tonnes to over 60 countries worldwide. We export about 80% of our production.
Our production locations are based on proximity to raw materials, such as natural gas and mineral deposits, access to water and rail transportation, and markets. Saskatchewan alone accounts for more than 30% of world potash production and 45% of world potash trade. Four of our five largest offshore importers are located in Asia, with China, India, Indonesia, and Malaysia accounting for 50% of Canadian potash exports outside of North America.
Natural Resources Canada recently cited potash as the number one valued mineral in Canada, worth over $5 billion in exports. Canadian nitrogen fertilizer production was valued at $2.5 billion in 2011, with over half of it exported. Couple this with over $4.6 billion worth of Canadian farm gate fertilizer sales yearly and it paints a picture of a competitive and demanding global market for our products.
Our members rely on a strong supply chain to move product from our manufacturing facilities, primarily by railway, through marine and U.S. ports and then around the globe. Our members also import about one million tonnes of fertilizer, primarily by ship to eastern Canada. About six million tonnes of fertilizer are shipped by trucks all across North America. We deliver plant nutrients to our farm customers, who are also competing in global markets and are helping to feed the growing world population. Whether they are located in eastern Canada or eastern Asia, our product needs to move in a timely and efficient manner.
We understand that the government intends to bring forward legislation before the end of this fall sitting to improve overall rail service, and we are encouraged by this news. We recommend that the government immediately proceed with this legislation and urge the members of this committee to ensure that this bill will provide rail customers with three things.
First is the right to commercially negotiate service-level agreements. Second is a dispute resolution mechanism to backstop the commercial process, complete with negotiations, based on commercial terms and supported by mediation and arbitration, that will permit rail customers to achieve service-level agreements. Last is a dispute resolution mechanism, complete with internal escalation of disputes, again backstopped by mediation and arbitration that will allow rail customers to enforce their service-level agreements.
The last point I want to cover is the Canadian fertilizer industry and their investments. Since 2003, the Canadian potash industry has committed over $15 billion, as Roger mentioned, to announced major capital projects, and about $600 million to Canada’s ports.
The Canadian nitrogen industry has just recently announced plans for nearly $3 billion worth of new investment, with significant further investments still pending. Our members are investing in expansions and new facilities, rail sidings, railcars, trucks, and their terminals in Canada's ports. These investments are creating jobs and making our products more abundantly available for Canadian as well as global farming customers. These investments are capital-intensive. These are challenging economic times to be attracting new capital investment, convincing companies to make long-term commitments that require decades to earn a return to their shareholders.
The accelerated capital cost allowance, or ACCA, is due to expire on December 31, 2013. The ACCA has been beneficial. It is an important consideration when businesses choose where to make capital investments. Since being introduced in 2007, it has been instrumental in assisting Canadian manufacturers in making investments in the new technologies, equipment, and the internal supply chains that they have needed to survive the recession and grow. Since 2007 the Canadian manufacturers and exporters estimates that the ACCA has generated an estimated total of $3.1 billion in additional investment by Canadian industry. CFI recommends that the ACCA for manufacturing and processing machinery and equipment be extended, with consideration that it be made a permanent part of Canada's tax system.
In closing, I want to remind the committee of our three key points. First, the government needs to support voluntary industry programs for safety, security, and environmental protection. Second, fertilizer supply chain logistics of trucks, trains, ports, and ships are critical to getting farmers the fertilizer essential to meeting global demand for food. Government policies need to ensure efficient and effective transportation service. Last, the Canadian fertilizer industry is investing heavily to ensure that fertilizer supply will meet future global demand, with $15 billion in announced investment in potash, nearly $3 billion to date in nitrogen, and $600 million in Canada's ports. Government fiscal policy needs to support a healthy investment climate.
Thank you for allowing us to speak today.
