Thank you.
My name is Scott Ross. I'm assistant executive director at the Canadian Federation of Agriculture. For those who don't know, the CFA is Canada's largest general farm organization, representing 200,000 farm families across Canada from coast to coast. Through a unified voice at the national level, CFA works to ensure the continued development of a viable and vibrant agriculture industry in Canada.
While Canada's agri-food industry is a key economic sector in Canada, contributing $143 billion to Canada's GDP while employing 2.3 million Canadians, Canadian farms also provide a range of additional benefits to all Canadians—prosperity in communities across Canada, access to safe, affordable food, and environmental stewardship. Yet our industry still has significant growth potential as identified in budget 2017 and reinforced by the agri-food economic strategy table.
Our submission identifies a number of opportunities to further these benefits, which we would be happy to speak to. You should have that available to you, as it was submitted last August. However, I'll limit my comments today to two of the most impactful measures we would hope to see reflected in budget 2020.
Canadian agriculture is poised for growth, but a number of obstacles continue to constrain that potential. Although Canada has a suite of business risk management programs designed to help farmers manage risks beyond their control, these programs are failing Canadian farmers. Whether it's trade disruptions in key markets, extreme weather events or the rising costs of inputs, Canadian farmers are facing significant financial pressures.
Canadian farmers are also facing an uneven playing field in international markets due to the actions of our competitors. In 2019 nearly 40% of total farm income in the United States will have come from government supports, with EU farmers receiving nearly the same level of annual support. Meanwhile, Canadian farmers saw their realized net income decline by 45% in 2018, with government support in that year amounting to only 3.6% of Canadian farm income. As a result, Canadian farmers are at a competitive disadvantage in world markets, facing unprecedented risks and challenging financial conditions without risk management programs that meet their needs.
AgriStability, a core pillar of our suite of BRM programs, is the only tool available to all farmers that addresses both production and price risk. It had its support cut in 2013 reducing its efficacy to farmers and leaving two-thirds of farmers now opting out of this program, and, as a result, exposed to immense risk. Without urgent action, farmers across Canada face great uncertainty and financial pressures as they approach a new cropping season.
For this reason, CFA is requesting that budget 2020 commit to risk management enhancements that would ensure farmers have access to meaningful tools to manage those risks beyond their control, in particular restoring AgriStability coverage to its pre-2013 levels.
Speaking to the financial challenges affecting farmers, carbon pricing is also imposing considerable unavoidable costs on Canadian farmers. Recent analysis by the Agricultural Producers Association of Saskatchewan found that Saskatchewan farmers can expect to lose 8% of their total net income in 2020 due to carbon pricing. Once that price increases to $50 per tonne in 2022, that will rise to 12% of total net income. Farmers are unable to pass these costs along or avoid these expenses as these costs reflect unavoidable farm expenses like grain drying and heating of farm buildings.
While certain non-farm fuel uses are already exempt, this does not include fuels used for heating and cooling livestock or for grain drying, which are critical to managing the impacts of the weather extremes caused by climate change. These impacts were evident during last year's harvest, which saw grain drying fuel costs skyrocket. Initial data from Keystone Agricultural Producers of Manitoba suggests that a typical farmer growing 500 acres of corn spent approximately $14,145 on fuel for grain drying, while carbon pricing added $1,722 to that bill. To mitigate these negative affects, CFA recommends that the Canadian government fully exempt fuel used for the purpose of heating and cooling livestock and for grain drying. It's further recommended that farmers be reimbursed for carbon tax paid on grain drying during the 2019 harvest. This will provide farmers some relief as they compete with farmers in other countries who don't face a carbon tax and provide a bridge to transition to the high-efficiency energy retrofits offered by the climate action incentive fund.
With that, I'd like to thank you for your time and I look forward to any questions you might have.