Thank you, Mr. Chair, for the invitation to appear before your committee today on your study on the Canadian response to the COVID-19 pandemic. It's a pleasure to be here on behalf of Canada's 43,000 canola farmers.
CCGA represents canola farmers from Ontario to British Columbia on national and international issues, policies and programs that impact their farms' success. CCGA is also an official administrator of the federal government's advance payments program. For the last 35 years we have been providing cash advances to help farmers better market their crops and finance their operations.
Developed in Canada, canola is a staple of Canadian agriculture as well as of Canadian science and innovation. Today it is Canada's most widely seeded crop, and has the largest farm cash receipt of any agriculture commodity, earning Canadian farmers over $8.6 billion in 2019, which is a decline of $700 million in 2018. Annually, the canola sector provides $26.7 billion to the Canadian economy, and provides for 250,000 jobs.
Exports drive canola's success. More than 90% of all canola grown in Canada is exported as seed, oil or meal. There continues to be global demand for canola, but blocked market access coupled with the economic downturn from COVID-19 is putting considerable pressure on farmers. Canola prices in 2019-20 lag the previous year's, and farmers face significant market uncertainty. Continuation of this trend could significantly reduce the canola sector's contribution to Canada's economy, impacting employment and wages. Urgent efforts are needed to restore stability and position canola as a dependable economic contributor to Canada's post COVID-19 economy.
To unleash the full potential of Canada's canola farmers, the following actions are requested from the federal government: opening and diversifying markets, ensuring that farmers have access to risk management tools that are effective, and facilitating global competitiveness through access to innovation.
On the trade side, farmers are well positioned to provide safe, reliable canola supplies, both domestically and to the world, but require a rules-based, predictable framework to grow our exports. Promoting this framework will be even more important to counter protectionist policies post-COVID-19 as countries turn inward and look to shore up their domestic economies. Trade is key to the world's economic recovery, and modernization of the World Trade Organization is essential to ensure that borders and supply chains remain open.
For the canola sector to achieve its full potential, reopening the China market must remain a priority. For canola farmers, China was their largest market, representing 40% of canola exports. It has been over a year since market restrictions were imposed, and farmers continue to struggle with market uncertainty and reduced prices. In 2019, canola seed exports to China were a third of those in 2018, leading to a 26% decrease in export value. The impact of such a large trade disruption has highlighted the need to diversity our markets, and to do so, additional resources are required, particularly in the Asia-Pacific, to help understand evolving regulatory requirements and to address market access issues.
In addition, launching FTA negotiations with the Association of Southeast Asian Nations and the expansion of the CPTPP could generate new market opportunities and create a more predictable trading environment.
Canada's domestic biofuel market also presents an important opportunity to diversify the canola market, and the upcoming clean fuel standard, or CFS, provides an opportunity to realize this potential.
Canadian canola is a high-quality biodiesel feedstock currently used in Canada, the U.S. and the EU. It has the potential to not only spur economic investment but to lower greenhouse gas emissions. The CFS, which is currently under development, could triple the domestic demand for canola-based biofuels, providing much needed market stability for farmers, increasing value-added investments and making real and quantifiable contributions to GHG reductions.
To leverage this potential opportunity, the government must consider immediate improvements to the regulatory design of the CFS, including providing the necessary demand signal for biofuels by requiring all diesel fuel to contain the minimum 5% renewable content. The current standard mandates 2%. If this requirement is instated in the CFS, increasing renewable content to 5% of the diesel pool would conservatively use 1.3 million metric tons of Canadian canola and reduce GHG emissions by 3.5 million tonnes of CO2 equivalent per year.
This would represent new domestic demand for Canadian canola that is not subject to trade disruptions, and is roughly the size of the Japanese export market in value. A clear and strong demand signal is critical. The time is now to leverage this opportunity for biofuels to spur economic investment in Canada, with no cost to the government.
Canola farmers need urgent action to improve business risk management programming. Family farms are facing unprecedented challenges and uncertainty due not only to the current pandemic but also to ongoing trade restrictions. Net farm incomes fell 45% in 2018. In Manitoba and Saskatchewan, net farm incomes again saw significant declines in 2019. In addition, farm debt levels continue to increase.
Farmers rely on BRM programs to help manage the risks that are beyond their control. Immediate solutions and focused investment are required to improve programming and provide farmers with effective tools to manage increased volatility and uncertainty that, in turn, will support their ability to contribute to rural communities and economic growth.
The following BRM change is needed immediately: AgriStability coverage adjusted to cover losses starting at 85% of historical reference margins with no reference margin limits.
As we prepare for the next policy framework, CCGA looks forward to working with the government to ensure that risk management tools available to farmers are effective and reflect the risks of modern farming. CCGA requests the establishment of an industry-government technical working group that will allow farm groups to actively participate in BRM data and impact analysis.
It's worth noting that in the last three years, the U.S. government has announced $47 billion in agriculture support in addition to its regular farm bill and crop insurance programs. To realize our full economic potential, we have to remain competitive in the global market.
On innovation, a science-based regulatory process is the foundation upon which the Canadian canola industry was built. It's critical that the PMRA continue to take science-based regulatory approaches that assess risk on crop protection products, including the final decision on the proposed ban of neonicotinoid seed treatments that would cost the Canadian canola industry between $700 million and $1 billion annually.
As part of our stewardship, CCGA collected water monitoring data in collaboration with industry partners, weekly over the spring and summer of 2019, that demonstrates canola farmers are effective at preventing these products from moving into wetlands. The PMRA needs to continue making science-based decisions on crop protection products by incorporating the best available information.
Another important innovation is the advances in new plant breeding techniques, as was identified by the 2018 report from the economic strategy table, the 2018 fall economic update and the 2019 Treasury Board agri-food and aquaculture regulatory road map. These new tools have the potential to create new and better varieties for farmers, consumers and the environment alike. To ensure research and development continues in Canada and to maintain farmers' competitiveness, an enabling regulatory system is required.
In conclusion, we appreciate the opportunity to speak with this committee today. CCGA would urge this committee and all parliamentarians from both Houses to reflect not only on the current challenges that agriculture is facing but also on the support our sector needs to drive the Canadian economy post-COVID.