Good afternoon, everyone, my name is Leroy Newman, I'm from Blackie, Alberta, just south of Calgary. I'm the fourth generation of my family that's been farming. We grow canola, barley, peas and wheat. We also have a cattle operation. Despite the fact we are in the middle of calving this season, this issue is so important I felt compelled to be here to speak to the committee about the crisis we are facing with canola. I'm here representing farmers on how international trade affects Canadian farmers.
How is the current government going to protect Canadian farmers, not those from my generation, but those who hope to farm in the future, like my kids?
Within weeks, I'll be seeding my crops. As a result of the dispute with China, I'm struggling with whether I can change my acres up or down. The answer is I can, but only about 5%. The canola crisis is devastating to my operation. Price-wise, 2018 was a good year, but for 2019 the price has already dropped close to 20%, which is devastating the canola market. For example, I budgeted on $11.30 a bushel for canola, and due to the trade issues with China, the prices have dropped to $9.20 per bushel and falling. Therefore, my margins have dropped significantly, from $115 an acre to just 14, which is not enough to sustain my farm.
This also impacts the sustainability of my farm. Today's producers follow a sound practice of rotating crops, because maintaining a good crop rotation ensures that we can manage disease...crop protection products. Most importantly, with zero till, my land and soil remain as healthy and productive as they can be. Canola is a vital crop in my rotation, and seed and fertilizer blends have been brought already specifically for canola. Farmers take the risk of planting the crop in the hope it will mature and hit top quality. I take care in managing that throughout the growing season to harvest.
The export market is a lifeline for Canadian farmers. I'd say that most of my crops are sold into the export market. My wheat is destined for flour, my peas for human consumption, mulled barley into great beer and, naturally, my canola into top quality vegetable oil. Over 90% of Canada's grains are exported, and China has always been one of our buyers, and one that we cannot lose.
We producers know that we grow top quality grain. We have the backing of our testing here with CFIA and the science that goes with it. China is demanding more of our products, and they know it is top quality. We see the crisis as purely an artificial trade barrier and expect government officials from agriculture and international trade to take it seriously and work on the solutions.
All this being said, my biggest concern is storage. This summer there will be a large carryover of canola as prices decline and farmers hold on for higher prices. Due to the timing of this crisis and the lack of resolution, most producers will not be able to change their rotation, resulting in more grain in storage. Merchants rely on us to move a lot of grain in the summer and for fall export. Keep in mind there is still only so much storage capacity.
With the loss of China in the market, we run the risk of low prices, no movement in an already bottlenecked transportation system. The current rail transportation [Inaudible--Editor] forecasts another backlog for the fall and winter.
I'm going to save the rest of my time for more questions, if you don't mind.