Thank you, Chairperson Fonseca.
My name is Donald Killorn and I'm the executive director of the P.E.I. Federation of Agriculture.
On behalf of our members, I want to thank you for the invitation to present here today. We represent over 500 Island farm families and 17 commodity groups. Our mission is to improve the sustainability of Island farms and to promote the sustainable production of food on Prince Edward Island.
I understand that the committee is conducting consultations in advance of the 2024 budget. In 2022, crop and livestock production contributed $283 million to our provincial GDP. As well, food manufacturing contributed an additional $265 million. Taken together, agri-food contributes about one-third of all goods produced on Prince Edward Island, so it's a major part of our economy.
However, we saw very little year-over-year growth from 2021 to 2022, and our industry faces significants risks that this committee and the upcoming federal budget can assist with. Strategic federal investment is required to ensure that we grow our economic impact in a sustainable way.
As I'm sure you've heard across the country from many different industries, our farmers face growing risk from climate change. Since 2019, we have experienced two devastating hurricanes—the worst in any farmer's memory—as well as a significant drought. These natural disasters are destroying our industry's capital, and projections show that their impact is likely to increase. We need the government to respond to these disasters with aid systems that can help businesses and communities rebuild more quickly, rather than the current strategy, which depends on financial assistance from ill-equipped agricultural business risk management programs.
I'll give you an example from Fiona.
Post-Fiona, the provincial government contributed $17 million to the recovery effort. The federal government visited us almost immediately, promising support, and $300 million was allocated to ACOA for distribution throughout Atlantic Canada for multiple different industries. We still have not seen any of those funds allocated for agriculture.
We recently received $1.7 million from provincial and federal governments committed to recovery in the fruit tree industry through AgriRecovery, which is an AAFC program. Against the $17 million that was provided by the provincial government, this pales in comparison, and there's been a significant lack of support because of the strategy taken to respond to climate disasters.
Beyond trying to fix what has been destroyed, we need strategic investment in climate-resilient agriculture so that we can implement the adaptations that our stakeholders have identified. This is popularly referred to as “building back better”.
Making investments in our adaptive capacity will allow us to build the resilient barns, hedgerows and orchards that will stand up to the increasing severity and frequency of storms. By making those investments today, we are preserving our industry's capital and ensuring that it can grow instead of being lost in the next storm, fire or drought. These proactive investments are good business for Canadian taxpayers and include here, on Prince Edward Island, access to irrigation infrastructure, support to install electrical service underground, and storage and animal housing retrofits.
Each province in Canada will tell you the same story. They have needs under a program like this.
While working to adapt to climate change, our farmers are ready to be active leaders in reducing and sequestering greenhouse gases, but we need the support and resources do so. According to a very recent report from RBC and the Arrell Food Institute, Canada invests less than one-third of what the U.S., Australia and the European Union each invest in climate-smart agriculture. All four of us pale in comparison to what China devotes to the same topic.
Here on Prince Edward Island, we have the country's first provincial net-zero target as a province. It's not just in agriculture. To reach that, agriculture has been asked to reduce its emissions by 40% by 2040. Currently, the PEIFA implements the on-farm climate action fund. This $670-million federal investment in de-risking best management practices in agriculture has been very popular on Prince Edward Island.
Our portion of the program was fully allocated this year before the first month of the program was even completed. Continued investment in that program should be matched with additional resources for the establishment of soil carbon as part of Canada's greenhouse gas offset credit system. Completing the enhanced soil organic carbon protocol and opening our national greenhouse gas market for soil carbon projects will allow our farmers to continue implementing the practices we need to meet our provincial and national climate targets.
For P.E.I. agriculture, we stand poised to reduce our emissions by 140,000 tonnes per year by 2040. Budget 2024 should ensure that everything is done to make those reductions measured, verified and reported to the Canadian credit system—the Canadian regulated credit system—rather than a voluntary market that we can't fully.... I don't want to say “trust”, but one that we can't fully rely upon.
Along with the on-farm climate action fund, the PEIFA also implements the advance payments program. The APP is a federal loan guarantee program that provides agricultural producers access to low-interest cash advances against their crops and livestock. I'm sure you've heard about it already in your consultations. Budget 2023 increased the interest-free portion of the loans from $100,000 to $350,000. If it's not addressed, that number will return back to $100,000.
Here on Prince Edward Island, we are dealing with a significant increase to our cost of production as well as an increase in the prime lending rate. We have to continue to make this available to farmers at the current level to ensure their cash flow and insulate them against unfavourable market conditions. Now is not the time to diminish the impact of the advance payments program.