We rechecked our data this week, and it would not kick in until it dropped to $6.35 and the producer had lost over $200,000 in revenue. The payment at $6.35 a bushel would be $2,800, and the cheque would not arrive until long after the bankruptcy auction.
To put this in context, canola is our major cash crop, and a price drop of that magnitude, 40%, would reduce farm income by over $2 billion in Saskatchewan alone and would drive many producers into bankruptcy. Thankfully, that calculation only occurred on paper. Canola prices are currently down, but not by 40%.
In spite of the reduced pricing for canola today, producers are not expecting AgriStability payments this year. What we are seeing in 2020 is further serious real income drops and reductions, especially in the livestock sector, without a program to provide adequate coverage. Producers are facing a serious challenge in Saskatchewan and across Canada. I'm concerned about young producers who do not have enough equity built up to carry them through. They will have to exit the industry. Hog and cattle producers do not have adequate programs to mitigate their losses.
The current AgriStability program also penalizes mixed farmers because they are managing risk by diversifying their operations. A well-designed program would not drive producers towards monoculture, i.e., all grain or all livestock. Producers who rely on family labour are also penalized under the current program.
The last time the cattle industry faced a challenge of this size was the BSE crisis. We lost many producers in Saskatchewan then, and cattle production has declined.
Our recommendations to increase the AgriStability coverage levels and the reference margin limit are straightforward and would have a significant effect on producers across the country and go a long way to restoring confidence in the current programming. I would ask this committee to seriously support actions that would help agriculture producers by sharing the financial risks they take every year to produce our food.
I would also remind members that it's not only our livelihood that is at stake, but the livelihood of the one in eight Canadians whose employment depends on agriculture. Agriculture is a major driver in the Canadian economy. The industry is well positioned to be a major contributor to the Canadian economy as it recovers from COVID-19. With proper changes to business risk management programming, more Saskatchewan and Canadian producers will be in business to do what they have always done: supply safe, secure and affordable food, not only to Canadians but to our customers around the world.
Thank you for the opportunity to present to you today. I look forward to your questions.