Good afternoon, everyone.
Thank you very much, Mr. Chair.
My name is Martin Caron, and I'm general president of the Union des producteurs agricoles. I'm also a dairy and grain producer in Louisville, Mauricie, Quebec.
Five minutes isn't much time to talk about such a broad subject. I will therefore focus on the inflation-related issues facing farming enterprises.
As you know, we're experiencing a historic bout of inflation caused by multiple events and circumstances. They've all come together to create a perfect storm that's bringing about a sharp rise in prices. We'd have to go back to 1991 to find a higher annual growth rate in the Consumer Price Index (CPI) than we had in 2021. Since the beginning of 2022, however, prices have continued to rise. Inflation has even accelerated, having reached 6.8% in April.
Some aspects of total CPI, such as energy, have risen faster than others. In the agricultural sector, three of the major production inputs—feed, fertilizer and fuel—experienced much higher price growth than the CPI. In horticultural production, the price of containers also rose significantly.
Since the fall of 2021, the average price of these inputs has shot up by about 50%, while the CPI went up only 4.8% over the same period, from September 2021 to April 2022. For example, last spring I was paying $1 per litre for my tractor's diesel fuel, and it now costs me $2.05 per litre. Nitrogen fertilizer cost me about $640 per tonne last year. This year I had to pay $1,200.
In the Quebec agricultural sector, these increases represent nearly $1.5 billion per year in added expenses. The Canadian sector is looking at $10 billion in added expenses. We've never seen that before.
Historic highs in input prices have led to unprecedented use of cash flow by farming enterprises, even when it comes to enterprises evolving in a more favourable market environment. For those sectors where prices have remained stable in the markets, cash flow issues will soon join up with profitability issues.
It's also important to consider that it's not just established farming enterprises feeling this. Due in part to their higher debt load, startups and emerging businesses are also being hit hard by rising production costs.
In this context, and considering that agriculture plays a crucial role in food security, the government must step in quickly to support the farming sector and limit this exceptional bout of inflation. Special assistance is needed to help thousands of farming enterprises escape financial catastrophe. I repeat that the government must step in quickly. Assistance could be modelled after the Canada emergency business account, which would combine cash flow support—the portion subject to repayment—with assistance to support business profitability, the forgivable portion.
The government must also optimize tools and programs already in place to adequately address the current situation. For supply-managed producers, price adjustment mechanisms must be reviewed to make them more flexible and creative. It's important to limit the impact of rising input prices on the cash flow of businesses in this sector.
Finally, a diesel fuel tax rebate for the agricultural sector and for private forestry would limit the rising cost of that input. It would also have a limited effect on governments' budgets, as they are receiving additional tax revenue from the higher energy prices.
We recognize that one-time assistance and the measures I've mentioned will not address all the impacts of a significant increase in input prices. However, inflation will certainly have a negative effect on productivity and profitability for our businesses. It will also affect their ability to invest in new technologies, particularly to address climate change.
Inflation has also come at a time when labour shortages are already negatively impacting farm competitiveness.
One-time assistance and the measures I've requested will help mitigate the financial impact on farm enterprises, which must simultaneously deal with historic price hikes and secure the food supply for the people.
Thank you.