Thank you very much, Mr. Chairman and committee members, for the opportunity to appear before you to speak on the state of Canada's business risk management programs.
Ensuring an effective BRM program is critical to our membership, and we welcome this very timely discussion on what is an increasingly urgent issue for farmers from across Canada.
As mentioned, my name is Chris van den Heuvel. I'm a beef and dairy farmer from Cape Breton, Nova Scotia, and I'm second vice-president of the Canadian Federation of Agriculture. I'm joined here today by CFA's assistant executive director, Scott Ross.
CFA is Canada's largest general farm organization, representing 200,000 farm families from across Canada. Through a unified voice at the national level, we work to ensure the continued development of a viable and vibrant agricultural industry in Canada. As you all know, Canada's agricultural industry is primed for immense growth, as identified by the advisory council on economic growth in 2017 and reinforced in the 2018 report from the agri-food economic strategy table, which has set ambitious growth targets for our sector.
Canada's agri-food industry already contributes $143 billion to Canada's GDP. However, this economic activity, the viability of many Canadian family farms, and the sector's overall potential for growth are challenged by a number of immediate risks confronting our family farms across Canada.
For context and to emphasize the urgency of this matter for Canadian farmers, I believe that it's worth highlighting that Canadian farmers saw their realized net income decline by 45.1% in 2018. Meanwhile, we have seen government supports to Canadian farmers drop nearly 50% between 2008 and 2018, declining to only 3.6% of farm income. At the same time, this past year nearly 40% of total farm income in the United States is expected to have come from government supports, with recent estimates finding that EU farmers receive 38% of their total income from public supports as well.
This directly affects Canadian farmers' ability to compete in international markets, leaving us farmers at a distinct competitive disadvantage. Compounding this challenge—following difficult financial years for Canadian farmers, and the headwinds they face when competing in global markets—is that these same farmers now face a wide array of risks beyond their control, risks that continue to increase. Farmers must deal with increasing market and trade risks due to trade disruptions and non-tariff trade barriers to key markets. Examples of this include disruptions to the trade of canola and soybeans with China, pulses with India, and durham wheat with Italy. The rail strike last November and the recent rail blockades have resulted in lost sales and increased costs for farmers.
There are more extreme climate-related events, with this past year seeing farm harvests negatively affected across Canada due to everything from floods to hurricane winds, to heavy rains, to early snowfall. Finally, there has been a rapid increase in costs while farm receipts are effectively stagnating. This was exacerbated by additional climate-related costs due to fuel use for heating barns and grain drying, including the added expenses arising both directly and indirectly from Canada's carbon-pricing regime.
The current BRM suite, which was created to help farmers manage risks beyond their control, is failing farmers as these risks increase and program coverage does not keep pace. The financial challenges facing producers—largely the result of matters beyond their control—are increasingly urgent, yet repeated calls for urgent BRM enhancements continue to face delays.
Canada's AgriStability program is a core pillar of Canada's BRM suite, representing the only tool currently available to all farmers to manage both production and market risks. However, participation has declined precipitously since cuts were made to the program in 2013, reducing the level of support available to farmers who are facing losses. The most recent 2017 statistics indicate that only 31% of eligible producers are in the AgriStability program, and while these numbers did follow a number of years of relatively strong farm incomes, ongoing engagement with our members does not suggest that the recent significant challenges have seen any meaningful increase in participation.
We continue to hear from farmers across Canada that AgriStability no longer provides meaningful support capable of responding to the plethora of challenges affecting farmers, and this is borne out by industry analysis undertaken by the Agricultural Producers Association of Saskatchewan. We have some data in this regard that we would be happy to share with the group. This analysis found that, even if canola prices were to drop precipitously, the vast majority of grain farmers would see little or no support provided, leaving them without meaningful or predictable support to manage these risks that are beyond our control.
Saying that, we are not advocating that farmers opt out of AgriStability based on this analysis, as we believe that farmers must work with their financial advisers to make informed risk management decisions and take advantage of any supports that are available to them. However, it's been nearly three years since the announcement of the BRM review, and we have seen little progress towards meaningful program reforms that address farmers' fundamental concerns with the AgriStability program.
The changes announced in December are modest in nature and fail to address the primary concerns voiced by Canadian farmers. In fact, it's important to highlight that the benefits of any improved treatment of private sector insurance are largely longer term in nature, as current offerings are neither widely available nor suitable for many producers in Canada based on cost and the nature of products available at this point in time.
Despite continued optimism about the prospects of private insurance in this space, we have yet to see the private sector develop cost-effective programs that adequately address the continued deficiencies in Canada's BRM suite. Timeliness, simplicity and predictability are all important, but without adequate support levels, any improvements to these areas will not respond or result in increased participation.
This is why CFA and industry associations across Canada, through the AGgrowth Coalition, continue to highlight that the cost neutrality mandate of the BRM review process is undermining its potential efficacy in addressing farmers' needs. If any significant changes are to be decided upon in July, we have heard that these would be implemented in 2021, and the continued challenges in AgriStability timeliness would suggest that any improvements would not be seen by producers until at least 2022 if not 2023. These timelines fail to respond to the urgent financial challenges facing farmers, and continued reviews and tweaks only further threaten to delay the provision of meaningful support for farmers.
We believe there is a straightforward solution to this issue that could be implemented immediately if supported by FPT governments, and it involves four key actions. Number one, AgriStability coverage should be immediately adjusted to cover losses starting at 85% of historical reference margins with no reference margin limits. Number two, there should be prioritization of the discussions on production insurance for livestock and horticultural crops that are not currently covered by AgriInsurance. Number three, discussions on BRM programming options should be meaningful and focused on program effectiveness rather than funding levels. Number four is the establishment of an industry-government technical working group that would allow farm groups to actively participate in BRM data and impact analysis. To date, engagement has been largely ad hoc and doesn't allow producer associations with the access to data needed to adequately assess or engage in the development of proposed program changes.
Without urgent action, farmers across Canada face immense uncertainty and financial pressures as they approach a new cropping season that threaten to undermine the viability of their businesses and the continued success of Canadian agricultural production.
These enhancements require additional funding from FPT governments, and commitments to consider additional support are critical to moving this review from discussion and minor tweaks to meaningful reforms. Even if urgently adopted, support through AgriStability is still at least two years away, and for those commodities affected by the ongoing U.S.-China trade war, we believe an immediate trade war mitigation fund is also needed to bridge that gap. Some work has been done on this front out of Saskatchewan, and, as mentioned, we would be happy to table that as well.
We also support the continual review of BRM programs to address other elements of the suite, such as increasing AgriInvest matching contribution limits, addressing taxation barriers that continue to limit withdrawal of AgriInvest funds for proactive investment and programming to respond to phytosanitary crises. However, without urgent implementation of the most significant changes I referenced above, we will continue to see producers frustrated and increasingly disenfranchised with the BRM suite and AgriStability in particular.
As a country uniquely positioned to capitalize on the growing demand for sustainably produced agricultural products both domestically and abroad, the cost of inaction not only hurts farm families across Canada but the prosperity of all Canadians.