Good afternoon.
I'm Todd Lewis. I operate a family farm at Gray, Saskatchewan, along with my father, brother and nephew. We grow lentils, durum wheat and canola. I'm also president of the Agricultural Producers Association of Saskatchewan. We are Saskatchewan's general farm organization, with over 16,000 members in farming and ranching, as well as 32 associate members in other agricultural organizations.
We are also part of the Canadian Federation of Agriculture, and our comments today reflect a common national view on business risk management.
Our members have been concerned about poor coverage levels in the business risk management programs since changes were implemented in 2013. AgriStability coverage has been a major issue. We are requesting, along with colleagues from across Canada, an increase in coverage levels as well as the elimination of the reference margin limit.
Enrolment in AgriStability by Saskatchewan producers is well under 50%. Producers see little value in the current program. The risk of paying the costs associated with enrolment is not worth the reward of being able to trigger a payment.
Statistics Canada 2018 farm income data released in May 2020 showed that Saskatchewan farm income dropped by 28%. Business risk management support payments dropped by 31%, their lowest level since 2009. A properly designed BRM program should provide a backstop for a revenue drop this large. Payments should have risen to support the revenue shortfall, but that is not what happened in 2018.
Going forward, in 2019 grain and oilseed producers were impacted by commodity price drops caused by trade disputes, drought, transportation delays and a late, wet harvest season.
In 2020, we've seen further disruptions in the supply chain due to COVID-19, which have caused serious revenue problems for livestock producers. This week's estimate shows that cattle producers are losing up to $452 per head on cows, and hog producers' current prices are well below the cost of production. It is clear that the current AgriStability program will not provide enough coverage in these sectors. Many other sectors of our industry are experiencing problems as well.
Besides the reduced AgriStability coverage level from 85% to 70%, another key problem is the reference margin limitation.
In 2019, APAS was concerned about the impact of trade disruption on canola prices. We did some research on a major reduction in canola pricing and the impact it would have within the AgriStability program. APAS found that even with a 35% drop from a historical average of $11 per bushel down to $7.19 per bushel, AgriStability would not kick in.
In fact, we rechecked our data this week, and it would not kick in until it dropped to $6.35 a bushel—