Thank you, Mr. Chair, and thank you to the committee for the invitation today to discuss the impact on farmers of China's move to revoke export registrations from Richardson and Viterra and, more broadly, to stop buying Canadian canola seed.
My name is Bernie McClean, and I farm northwest of Saskatoon. I'm the current president of the Canadian Canola Growers Association, the national association that represents 43,000 farmers across Canada. I'm joined today by Rick White, the CEO of CCGA.
Finding a path forward with China is CCGA's top priority. We're working with the Canola Council and government officials to find a science-based resolution and to resume trade as soon as possible. I cannot overstate the importance of this resolution and the uncertainty and concern currently being experienced by farmers and the larger value chain. With 90% of our canola exported as seed, oil and meal, we rely on international trade. The loss of our largest market, based on an action that appears to be without scientific evidence, is of real concern.
In 2018, China purchased $2.7 billion in canola seed, or roughly half of our seed exports. Many farmers choose to grow canola for its stable returns. In 2017, canola was the largest source of farm cash receipts of any commodity. It is also an important contributor to the Canadian economy, generating $26.7 billion in economic activity and creating 250,000 jobs from coast to coast.
Farmers, including me, are now weeks away from planting. In many cases, most of the seed, fertilizer and crop protections are purchased and production plans are set. Farmers plan months in advance and consider a variety of factors, including healthy crop rotations, disease pressures, stored grain, input costs, risk management and marketing strategies, all limiting their ability to change plans so close to seeding.
This year, we expect to plant 21 to 22 million acres of canola. As an illustration: I purchased all of my seed and a large percentage of my necessary inputs by the end of December 2018. A representative farm in central Saskatchewan spends roughly $215 an acre on seed, fertilizer and chemicals—those three alone—in advance of putting the crop in the ground, or roughly $323,000 to plant 1,500 acres of canola.
Furthermore, an estimated 10 million tonnes of canola seed remain in storage, creating cash flow challenges for farmers still needing to sell. Situations vary by farm, but it is normal practice to sell some grain in the spring to generate cash flow to cover expenses. With many expenses already committed and larger than average volumes of canola seed still on the farm, cash flow is top of mind.
An increase to the maximum limit under the available federal advance payments program would provide farmers with more flexibility to manage their cash flow and prepare for the upcoming production season, until a resolution can be found. Existing government risk management programs could be used to help farmers manage income and margin declines. Consideration should be given to how the enrolment in AgriStability can be increased and what adjustments can be made to make it more responsive to the current situation.
Overall, initiatives to diversify the canola market, such as increasing the existing biodiesel mandate, or efforts to reach new markets would help provide a new home for our canola. Ultimately, access to the Chinese market for canola seed is required. The measures discussed would help farmers manage the uncertainty in the short term, but the longer this market disruption goes on, the harder it will be to manage and absorb the negative impacts.
In conclusion, grain and oilseed farms are family-owned small businesses that depend on trade. With little warning, the rules of trade changed overnight, without a solution in the foreseeable future. Farmers are set to produce a crop without certitude of market, delivery or price options. We're confident in the quality of our canola and our ability to consistently meet the high safety and quality standards required by the Government of Canada and our customers. Farmers look forward to finding a science-based resolution to address China's concerns, as well as the resumption of trade, as soon as possible.
With that, thank you to the committee. I look forward to some questions.