Thank you, Mr. Chair.
I apologize. There's a bit of confusion on time zones here today, so I'm operating from another site. I hope it works okay. I'll try to be loud and clear as best I can.
Again, thank you for the invitation to appear before the committee on your study of business risk management programs. We at the Canadian Canola Growers Association obviously find this one very important.
It's a pleasure to appear today on behalf of Canada’s 43,000 canola farmers. As you mentioned, my name is Bernie McClean. I'm the current chair of the Canadian Canola Growers Association. I operate a 2,000-acre grain farm in the northwestern part of Saskatchewan, near Glaslyn. We grow canola, barley, oats, wheat, peas and hay and, more recently, we've moved into raising bison.
As you mentioned, today I am joined by Dave Carey, vice-president of government and industry relations for the Canadian Canola Growers Association, or CCGA.
CCGA represents canola farmers from Ontario to British Columbia on national and international issues, policies and programs that affect their farms' success. CCGA is also an official administrator of the federal government’s advance payments program, and for the last 35 years we’ve 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 Canadian science and innovation. Today, it is Canada’s most widely seeded crop and is the largest farm cash receipt of any agricultural commodity, earning Canadian farmers over $8.6 billion in 2019 and—this next point is very important—this is a decline of $700 million from 2018. Annually, the sector provides $26.7 billion to the Canadian economy and provides approximately 250,000 jobs.
As farmers, we're faced with many risks, and I believe my approach to managing them is how the majority of farmers approach it. We put in place measures to manage the risks that we're able to and then we rely on business risk management programs such as crop insurance, AgriStability and AgriInvest to help us manage the risks that are beyond our capacity to manage.
For example, last year I purchased a grain dryer to help manage the risk of wet fall weather, and I've also, as mentioned earlier, diversified into hay production and more recently into bison production as we reduce reliance on grain markets. Given the many factors and risks that can impact my farm’s profitability, I cannot foresee and plan for everything. Last year alone, my farm and many other farms were impacted by an extremely wet harvest, rail disruptions and market access issues, not just for canola, but for durum, barley and pulse crops. The loss of any market is obviously a concern, but the loss of our largest canola market—the Chinese market—was of particular concern to canola farmers, who are still absorbing the impact of that market disruption today.
Coming into this year, grain and oilseed farms were starting from a challenging position, which is reflected in the statistics showing that farm cash receipts are down and farm debt levels are at record levels. More than ever, my farm and farms across Canada are relying on our suite of business risk management programs to help sustain our operations and to manage whatever 2020 will throw at us.
I use crop insurance to manage production-related risks and, although there is always room for improvement, that program does work relatively well. I use the advance payments program to help manage my cash flow, and thanks to program changes made by the government last year to increase the overall limit, the APP is now more relevant and useful for farmers.
For all other risks, most farmers will depend on AgriStability and AgriInvest. Last year, I used the money in my AgriInvest account, so that's not really an option for me this year. Despite comments that there is a large amount of money sitting AgriInvest accounts, I believe there are significant numbers of farmers who, like me, have already used this money, but we're still waiting for the analysis from the government on what's currently in these accounts.
That leaves us with AgriStability, where there is a very broad consensus among farmers and farm groups across the country that the program is not effective and is not working for farmers. This is reflected in the low participation number of approximately 30% nationally. Beyond my own experience with the program, which demonstrated that AgriStability is not effective, CCGA has done the analysis on a model farm to test how AgriStability functions. The results confirm that 2018 and 2019 were tough years for grain farms, and that while an AgriStability payment was triggered in 2019, it covers only a small portion of the actual loss, leaving the farm to sustain a large net loss for the second year in a row.
It's this type of analysis, coupled with real-life experiences with AgriStability, that has demonstrated there is need for immediate change.
As you've heard from other farm groups, CCGA is asking governments to adjust AgriStability, so that it covers losses, starting at 85% of historical reference margins with no reference margin limits.
Canola farmers have had a lot thrown at them in the last few years, and our ability to continue to shoulder these events that threaten the viability of our farms is diminished from what it was a few years ago. Therefore, it is important that these changes be implemented now for the current year. Waiting for the fall federal-provincial-territorial meetings means another year will be lost.
In addition, as we prepare for the next policy framework, CCGA looks forward to working with government to ensure the risk management tools available to farmers are effective and reflect the risks of modern farming. The best way to ensure that happens is for government to work closely with industry. Therefore, CCGA requests the establishment of an industry-government technical working group that allows farm groups to actively participate in business risk management data and impact analysis. This is extremely important to us.
As I wrap up, I want to talk a little more about diversification. As I mentioned, I've taken a few steps to diversify my farm operation, and that's been important to the financial viability of my farm. That is the same story for the canola industry. The impact of the China market disruption has really highlighted the need to diversify our markets.
Canada’s domestic biofuel market represents an important opportunity to diversify the canola market, and the upcoming clean fuel standard, or CFS, is an opportunity to realize this potential, if it's designed appropriately. The CFS, which is currently under development, could potentially triple the domestic demand for canola-based biofuels, providing much-needed market stability for farmers, incenting value-added investments, and making real and quantifiable reductions in greenhouse gases.
To leverage this potential opportunity, the government must consider immediate improvements to the regulatory design of the CFS by requiring all diesel fuel to contain a minimum 5% renewable content. The current standard mandates 2%. 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.