Thank you very much for the invitation to appear. Sorry I wasn't able to get to Ottawa. I appreciate this.
We're concerned that this agreement will be of very small benefit to Canada, because the only estimate we've seen is that it will save an estimated $5 million in tariffs. That's a very small amount when you're dealing with the amount of agricultural trade Canada has. Most of the benefits supposedly are in agriculture and food, although we haven't seen any comprehensive economic analysis.
The bottom line for us is that the measure of the success or failure of any trade agreement from the farmers' perspective is whether it actually raises farmers' net incomes. A trade agreement that boosts exports but results in lower net farm income is not a good deal for farmers.
In general, in the free trade agreement with the U.S. we've seen a consistent increase in exports but an actual decline in farm income. For example, from 1988 to 2007 our agrifood exports increased substantially from $10.9 billion all the way up to $32.65 billion, but realized net farm income declined quite dramatically from $3.9 billion down to $1.5 billion.
Over that period as well we've seen farm debt climb from $22.5 billion all the way up to $54 billion. You might remember that in 1988 farm debt was considered a serious problem in Canada. Now we have well over double that debt, and with the collapse of the stock market and the increase in difficulties with the credit market, this debt will seriously come back to haunt farmers, particularly in the spring.
One of the benefits that has been documented in this trade agreement is that we will increase our exports of frozen french fries to at least one of those countries. The difficulty we see is that the benefits of exporting frozen french fries will not go directly to the farmers; they'll go to the companies that manufacture those frozen french fries. If you look at the latest figures from the Atlantic provinces in particular, you'll see that potato farmers in New Brunswick and Prince Edward Island are in severe financial trouble. McCain and Irving meanwhile are doing fine, and their profits are not in any jeopardy at this point.
It is also predicted that Canada will see an increase in exports of durum wheat to Norway. Keep in mind that Canada already has half the durum wheat market in the world, thanks largely to the Canadian Wheat Board marketing efforts, and the grain quality standards we have in Canada are thanks to the Canadian Grain Commission. I'll point out that both of those institutions are currently jeopardized by some of the other policies that have come down the pike.
The reality is that free trade agreements in themselves don't create prosperity, and they actually undermine the abilities of countries such as Canada to implement policies that are designed to strengthen our own internal industries. The shipbuilders made a good point about the loss of the shipbuilding industry in Canada. That's important, particularly in certain regions, but when you look at the potential loss of a food-producing industry in Canada, the consequences can be devastating.
This agreement in general defers virtually everything to the World Trade Organization. Notwithstanding the government's stated support of supply management, this WTO agreement poses very serious threats to both supply management and the Canadian Wheat Board's single desk. With the ministerial coming up in July, that is going to create a real pressure-cooker situation, where governments will be under tremendous pressure to sign an agreement.
We see the stance of protecting some of these policies beforehand, but when it comes down to it, it's often presented as a trade-off: we had to make this concession in order to get a deal because to not get a deal would be a bad thing.
So in section 28 of the WTO, there are things like tariffs governing milk protein concentrates. These are under review. The whole of tariff quotas are under review. Of course, the Canadian Wheat Board, in the agriculture text, is under severe pressure not only for the government guarantees but also for the single desk at the Canadian Wheat Board. We know the Conservative government has been trying for quite a while now, and using various methods, to eliminate that single desk, so if they're able to accomplish that goal through the WTO, the temptation will be there to sign that deal and perhaps sacrifice the supply management system.
If that supply management system is changed under the WTO, Canadian dairy producers, of course, will stand to lose a tremendous amount of money. If it's signed, the potential income losses would be over $1 billion, according to the Dairy Farmers of Canada, and that includes a $750 million loss through tariff reduction, $300 million through tariff rate quota expansion, $25 million from capping tariffs, and $75 million from the end of export subsidies.
So there's a lot at stake, and the fact is that this agreement defers to the WTO, and the impact will eventually be measured when the WTO agreement actually is concluded, if it is concluded. We feel that agriculture is too important an industry to have all of the rules set at trade negotiations like this.
I'll stop there and go to any questions you've got.