Thank you very much for your invitation, Mr. Chairman, to appear before the natural resources committee.
Good morning, members of the Committee.
My name is Roger Larson. I'm president of the Fertilizer Institute and Emily Pearce is our director of government relations. I'll be handling the initial presentation.
CFI represents the basic manufacturers of nitrogen, potash, phosphate, and sulphur fertilizers, as well as the supply chain of major wholesale and retail distribution companies in Canada. Our members produce over 25 million tonnes of fertilizers annually, and over 75% of this is exported to more than 60 countries worldwide. Canada accounts for about a third of world potash production and 45% of world potash trade.
A recent report from Natural Resources Canada cited potash as the number one valued mineral in Canada. Canada is also home to a considerable amount of nitrogen fertilizer production, supplying about half of the United State's imports of fertilizers and making our country a world leader in the fertilizer sector.
We've accepted this invitation to appear before this committee to highlight a unique aspect of the oil and gas sector, using natural gas as a raw material or feedstock to produce other products. This can in turn generate investment, create employment, and help grow the economy.
Natural gas is a raw material essential to nitrogen fertilizer manufacturing, as well as the energy source for fertilizers and many other value-added industries. About 6% of ail natural gas consumed in Canada is used to make fertilizer. Natural gas represents about 20% to 25% of the total input costs for potash production and 70% to 90% of the input costs to manufacture nitrogen fertilizer. With Canadian natural gas exports increasingly facing being pushed back by U.S. shale gas production, Canadian natural gas needs to reach new and growing markets and some of those are in Canada.
The purpose of this study is to consider policies that will allow industries, including fertilizer, to capitalize on the further development of the oil and gas sector to benefit all Canadians. CFI believes there are several key components to this: ensuring that government policies support value-added natural gas resource upgrading to enable major new capital investments; transportation and export infrastructure to better move expanded volumes of fertilizers within Canada and exports to the U.S. and offshore; tax policies that support major new investments in capital projects; immigration policies and skills training programs that ensure the availability of skilled workers; and strong trade agreements to ensure fair access for new exports.
First, CFI recommends government policies that support value-added natural gas resource upgrading. These policies drive industry, including fertilizer companies, to make long-term capital investments. This means more cost-competitive products and enhanced access to key markets, including the United States.
Next, modern, reliable road and rail transportation is vital to maximizing traditional and emerging export markets. Our ultimate consumers are farmers and we must deliver our products to them in a timely and effective manner, whether those products are destined for Canadian farmers, U.S. farmers, or overseas to produce the world's food. This infrastructure must also be capable of responding to new export volumes. In short, we urge the federal government to be mindful of the importance of road and rail transportation when reviewing all policies and regulations to ensure accessibility, reliability, and cost competitiveness of transportation services.
On the fiscal side, keeping corporate tax rates low and the extension of the accelerated capital cost allowance have resulted in undeniable benefits for Canadian industry, including the fertilizer and oil and gas sectors. Canadian potash companies are undertaking major expansions of their existing mining operations and to date have invested or announced nearly $15 billion in new major capital projects in the last 10 years.
We encourage the federal government to make the accelerated capital cost allowance permanent. A predictable tax and regulatory environment is critical for business planning and will bring to Canada more large capital investments and more jobs. Indeed these policies not only benefit the fertilizer sector, but all industries in the supply chain.
On the labour front, our members face the same challenges as the oil and gas sector regarding the availability of permanent and temporary skilled workers. This skills shortage is a challenge for all regions of the country, but is especially felt in rural areas of Canada where resource-based industries are usually centred. We thank the federal government for introducing the Canada jobs grant.
Streamlining entry requirements for foreign skilled workers and allowing the entry of temporary foreign workers for these high-skilled, high-paying jobs will also ensure that the labour force supports the needs of the fertilizer industry to grow. Our industry stands ready to work collaboratively with the government to improve these programs.
Finally, strong trade agreements ensure fair access for new exports. If our farming customers are growing more crops, and exporting more of their products, and receiving higher prices on global food markets, they will need more inputs, more fertilizer and its components, including natural gas. Markets captured by the Trans-Pacific Partnership and other bilateral agreements in the Asia-Pacific region present tremendous economic growth opportunities for our industry and others. We encourage the government to continue an aggressive pursuit of international trade agreements, while ensuring that the outcomes maximize the long-term competitiveness of Canadian industry.
In closing, I want to thank the members for the opportunity to present our views. A good dialogue between government and private sector is important as industrial policies are contemplated, ensuring a good understanding of the opportunities and challenges that business faces, as well as opening the door for partnerships that strengthen Canada's economic competitiveness. We welcome the opportunity to continue this dialogue, and are pleased to answer any questions.
Thank you.