:
Thank you, Mr. Chair and members of the committee, for permitting us to share time with you this morning.
The Canadian Association of Agri-Retailers and its 1,000 members across the country service the nation’s producers and are the front line of a fertilizer and chemical trade worth over $3 billion. Our members work closely with grain and oilseed growers to maximize the return on their crop input investments.
Often underrated as a facilitator in the value chain, agri-retailers do not set the price of inputs or trigger market volatility, but they do have a price stabilizing effect that benefits producers. Constantly buying bulk quantities through volume-discounted contracts, dealers are able to lock in best pricing for their customers.
As a result of these pre-season agreements, growers rarely have to pay the open market price. These agreements also guarantee supply and just-in-time delivery to prevent growers from having to store inputs. In other words, dealer contracts serve as a hedge against market volatility, and the value-added services they bundle into the contracts help offset the sting of higher prices for growers.
Contrary to some opinions, crop input dealers do not benefit from high market prices of inputs. They, too, incur the high cost of goods sold, and they typically work within set margins that do not change, regardless of the price of the product. If anything, retailers often find their margins pinched because they wish to placate disgruntled customers and reward loyalty or because volatility often puts the cost of replacement product higher than the original selling price. So you could say that retailers are literally caught in the middle, and as such, they feel the squeeze from both ends.
Despite being disadvantaged by record high fertilizer costs as much as growers are, retailers do not perceive the market to be the result of any untoward business practices. Rather, it's a culmination of several economic factors, including unprecedented worldwide demand, a shift in North American crop allocation due to biofuel initiatives, lag time to increase manufacturing capacity, and an open global market.
The very same commodity-related supply and demand dynamics that are driving record grain prices are also driving fertilizer markets. It would seem somewhat exploitative to cry foul on one aspect of the commodity equation while embracing the other. Growers will have an opportunity to offset input costs with strong returns from the sale of future outputs. We are all praying for a bumper crop this year.
Retailers, on the other hand, do not see this market as an opportunity to widen margins. Instead, they are hoping for a greater volume of crop input orders from growers who want to invest to maximize their yields. But those hopes are being challenged by two unexpected obstacles: a tight supply line and lost sales because of global fertilizer suppliers.
CAAR believes that the supply shortfall will eventually be addressed as greater manufacturing capacity comes online. In the short term, growers may benefit from potential adjustments to the cash advance program or other credit initiatives that facilitate pre-purchasing of inputs from retailers on a contract basis. That will help to guarantee supply, lock in the best pricing, and avoid exposure to open market volatility.
If members of the committee are interested in tackling more immediate and tangible drivers of high input costs, CAAR urges you to consider helping retailers address obstacles that will necessitate incremental costs being passed on to growers. I'm referring to the prohibitive cost of pending retail site security and safety regulations. CAAR has testified in front of this committee before regarding this issue and has briefed many of you personally. We thank you for that opportunity and would like to further update you on why this issue now takes on even more urgency.
The shipment of 9,000 tonnes of ammonium nitrate to Churchill last October from Russia has exposed a potentially serious security vulnerability. The new NRCan restricted components regulation, derived from the industry-created ammonium nitrate code of practice, stipulates rigorous security and safety practices and is awaiting publication in the Canada Gazette Part II.
Retailers support these codes because they set out the type of prudent stewardship under which we have always operated. In fact, we have worked with industry to help write stewardship codes, including the code of practice for anhydrous ammonia, which will be enforceable in varying degrees between now and 2011. This code will be particularly challenging for the retail sector in terms of implementation costs.
Interestingly, the ammonium nitrate code and all future codes will not have jurisdiction over end-users. So in a period when we are seeing more and more on-farm bulk storage of fertilizer, including ammonium nitrate, important security regulations will not apply there. That is a problem, perhaps, for a different committee, but it does highlight an inequitable playing field for agricultural retailers who must comply with these codes.
Some CAAR members have reported that growers who have taken delivery of the Russian ammonium nitrate are asking us to store the product for them. As you know, ammonium nitrate is a product that western growers and retailers have not handled for some time, so storage provisions tend to be challenging because of the inherent risk and liability associated with the product. As such, retailers are understandably declining these storage requests. However, with some financial assistance from the Government of Canada, dealers would be able to upgrade their facilities to store these products securely.
CAAR's concern is not the merit of the codes or the competition from global suppliers, but the fact that regardless of where growers choose to buy, retailers will be required to perform extremely expensive site upgrades, which will only add additional cost to the input value chain and drive our customers further away from us and into the hands of foreign suppliers. We refer to this scenario as compulsory economic suicide.
A number of government departments have reported that they have consulted with the industry and concluded that these initiatives would be cost-neutral or nominal. I can tell you they did not consult with agri-retailers. As the sector that has to incur these costs, we have done our research into the expenses, and they are anything but nominal.
Many of you have been presented with estimates based on actual government-approved expenses under a comparable security contribution program, the marine security contribution program. These costs extend into the multiple tens of thousands of dollars per site, a far cry from the government-estimated $120,000 for the entire agricultural retail sector.
In summary, CAAR is not advocating that grower access to world fertilizer or chemical markets be restricted. We are prepared to compete as best we can and recognize that growers are simply seeking alternative market opportunities. Their message is clear: crop input prices are becoming unbearable, so the last thing we as their suppliers want to do is introduce further cost into the system, only to see the customers who have sustained our livelihoods scatter for cheaper products.
The bottom line is that retailers want to continue to be responsible stewards of the products that are essential for sustaining crop production agriculture in Canada, but if the rules of engagement force retailers to economically alienate their own customers, then the system will inevitably break down. CAAR is respectfully asking for the government's help to neutralize this obstacle, uphold the practice of responsible stewardship, retain more trade within Canada, and prevent additional upward pressure on crop input prices.
Thank you.
:
Thank you, Mr. Bezan and members of the committee, for this opportunity to present to you on farm input costs. I'm the president of the Canadian Fertilizer Institute. With me is Mr. Clyde Graham, vice-president of the CFI.
Fertilizer is the most important crop input. Canadian farmers spend about $2.7 billion per year to purchase their needed fertilizer inputs. Today, global economic growth in developing countries is driving increased global demand for grains. It is not rising world population so much as it is the rising expectation for a better diet from a new, expanding middle class in developing countries. It takes three pounds of grain to produce a pound of chicken and five pounds for pork. Alternative uses for grains, such as biofuels, have been given a lot of attention recently, but the real driver in the market is the demand for better food diets in developing countries. That, in turn, is increasing demand for fertilizer to produce that grain. The result is competition among farmers around the world for the current supplies of fertilizer.
Fertilizer is a commodity that is produced, shipped, and used around the world. There are well over 250 companies internationally that produce fertilizer products. Canada's border is open to fertilizer imports. There are no tariffs, duties, or trade barriers. When we asked one of our members what was required to import urea fertilizer from the United States to Canada, the reply was simple: a customs broker and a truck.
Many of our 41 member companies are engaged in importing fertilizer into Canada. Within Canada, there are about a dozen companies that make various kinds of nitrogen fertilizers. There are three major firms that produce potash. We produce half of the phosphate that we use in Canada, and our industry imports the other half, mostly from the U.S.
Fertilizer prices paid by Canadian farmers continue to rise. However, commodity prices for wheat, barley, corn, soybeans, and canola are also at record-high levels. Who would have ever thought of wheat at over $20 per bushel? As I hear more and more concerns from farmers about fertilizer prices, I note the price they are receiving for their grain. How many bushels of wheat does it take to pay for a fertilizer bill today versus in 2002? It's all about economics.
Since the beginning of 2008, we have met with farm groups and producer groups that are concerned about the fertilizer supply and prices. Farmers want to know why fertilizer is the most expensive on record and whether there will be enough this spring. One thing that has made farmers angry is reports that fertilizer prices are higher in western Canada than in neighbouring U.S. states. Those reports are often based on anecdotal evidence, or small samples taken before spring seeding, when supply-demand conditions can, frankly, be chaotic.
On any given day, there will be differences in the price or quotes of various agri-retailers within Canada or on either side of the border. Government studies have shown that over time prices are equivalent. In fact, Agriculture and Agri-Food Canada reported in March 2007 that there has been no significant difference in Canada–U.S. fertilizer prices in more than a decade. I'd like to quote from that report:
The fertilizer market is global in nature and the North American fertilizer market is completely open and integrated. As a result, Canadian fertilizer prices are linked to the U.S. market.
Statistical analysis has confirmed that average fertilizer prices in Canada and the U.S. border area were not statistically different for urea, mono-ammonium phosphate, and muriate of potash over the 1993-2006 period.
One of the things we distributed to members of Parliament was a deck of 10 slides that illustrated a Green Markets dealer report that features wholesale market coverage from 12 regions in North America. This report is updated every week, and it's commercially available. It shows a remarkable consistency in prices around different regions in North America.
Farmers around the world want more fertilizer. The increase in the international demand for fertilizers has been a factor in the rising cost of fertilizer. Global nitrogen fertilizer demand has increased 14%, phosphate demand has grown by 13%, and potash demand by 10% between 2001 and 2006.
There are three major drivers for the surge in world fertilizer demand. First, India, China, and Brazil are leading as the largest contributors to growth. Ninety per cent of the growth in global nutrient demand is from developing countries. Other factors are world cereal production and consumption, which is on the rise, and corn-based ethanol production in the U.S.
I want to close my comments by saying that the world fertilizer industry is responding to strong market prices. The International Fertilizer Industry Association forecasts significant increases in global fertilizer manufacturing capacity between now and 2011: a 22% increase in urea production, an 8% increase in phosphate production, and a 16% increase in potash production. Canadian fertilizer manufacturers are investing some $3.5 billion in Canada on increased fertilizer manufacturing over the next few years.
With that, I'd like to turn it over to Mr. Graham, who is also executive director of the Crop Nutrients Council in Canada. Clyde works with producer groups across the country to build value for Canadian farmers.
Clyde.
At the Canadian Fertilizer Institute, we believe that farmers should work closely with their agri-retailers well in advance of seeding, to get the best value for their fertilizer dollar. Agri-retailers are the best source of information on the fertilizer market, but they need good, timely information from their farmer customers so that they can plan their purchase of fertilizer supplies.
What can governments do? There are some things governments should consider in order to help farmers in purchasing fertilizer.
Experience shows that waiting till the last minute to buy fertilizer puts supplies at risk and can lead to increased costs. Do farmers have the information they need to make informed decisions about the market? Well, that's a question for government. At the CFI, we have asked the George Morris Centre, an independent economic think tank, to look at some of these issues about the strategies farmers should be considering in purchasing their fertilizer inputs. These go to concepts such as hedging, long-term contracting and pre-purchasing of fertilizer, managing their interest rate risk, and negotiating with the dealers to get the best value they can from their agri-retailers. I think it's essentially the issue that an informed consumer is a smart consumer.
Does the federal spring cash advance program allow farmers to arrange for their fertilizer purchases when they and their suppliers can make the best plans for their overall product and service needs? I think that's an important question that needs to be looked at.
Do the lending programs offered by Farm Credit Canada provide farmers with the flexibility they need to take advantage of opportunities to buy fertilizer well in advance of spring seeding?
I want to echo what David MacKay has said, that the Canadian Association of Agri-Retailers has been asking the federal government to provide 75% funding for the capital costs of new safety and security measures for fertilizer outlets across Canada. Is the government prepared to assist in meeting this security challenge?
I think all these are questions this committee should consider.
Thank you very much. We would welcome your questions.
:
Good morning, gentlemen, and thank you for your testimony.
Mr. Larson, you seem to dismiss out of hand the studies concerning the differences between U.S. fertilizer prices and those of fertilizers sold in Canada. The KAP, Keystone Agricultural Producers study, conducted by Pricewaterhouse Coopers, has been cited extensively in committee. It seems very solid to me. In your presentation earlier, you talked about studies based on anectodal evidence and you cited some government studies. In your brief, I see a short passage from Agriculture and Agri-Food Canada's Bi-weekly Bulletin stating that, between 1993 and 2006, prices for certain fertilizers only were equivalent to those of fertilizers sold in the United States.
I'd like to know what you think about the KAP study, which states that the price cap was only 1% in 2004. I agree with you that we can understand why prices were equivalent in that year. Starting in 2006, however, the gap was 10% and, in 2007, it was 33%. I understand that this is a comparative study of Manitoba, Saskatchewan and North Dakota, but it was very well done. You referred to a number of Canadian government studies, and you cited the Bi-weekly Bulletin of March 30, 2007 to us. Do you have any other studies showing that prices are equivalent? Since 2006, do you agree that the gap, as the KAP study showed, has been quite a bit bigger than what we experienced in previous years?
:
First of all, Clyde and I are not involved in the marketplace, so I can't tell you exactly what the different prices are at any particular time. Mr. Haney might be able to answer that more specifically.
But I did talk to some manufacturers and distributors last spring regarding the KAP study, and I asked whether it reflected the market conditions. The answer we got back from both a distributor and a manufacturer was that it did not reflect their perception of the marketplace during the last spring season.
If you look at the dealer report from Green Markets that I included in the package we sent to you, it identifies the prices of different fertilizer materials at the wholesale level. For example, in the northern plains, urea is between $568 and $579 U.S.; in western Canada it's between $575 and $600 Canadian. The prices are basically the same, so if the wholesale market is the same, why wouldn't the retail market be the same?
Those studies seem to be inconsistent with what you would logically assess and conclude from the marketplace. It's an open border, and both farmers and retailers can move urea back and forth and purchase it from the least expensive source. If there is a minor difference in the market, it will equalize very quickly in a short period of time. So it's inconsistent with how we understand the market to work.
:
Exactly, and that's the problem. Most farmers are forced to buy, and as your industry knows they're forced to buy at this time of year, prices always conspicuously spike at this time of year, and that's what's really driving the demand and the prices up.
I agree with you that we need to look at some ways to distribute the cashflow throughout the year, but your argument does not make logical sense to me.
The other thing I'd like to compare is anhydrous ammonia. I don't know if you have our document, but on page 5, it shows the difference between Minnesota/North Dakota and Manitoba at about $240 per tonne.
In your report, on page 4, you're saying there's anywhere between $150 and $180 per tonne difference. This is substantial. Can you explain to me the difference between these? And please don't try to tell me that you can just go down and bring anhydrous ammonia back across the border with a truck. Security regulations won't let you do that.
So can you explain the differences to me, your logical reason for this difference in price, especially since a lot of this is manufactured right here in Canada? I have a plant in Redwater that manufactures this, and my guys are paying $200 a tonne more for something that's just down the road, because they have to send it to the States and then bring it back.
First, I will apologize. In about five minutes I'll have to leave for about 15 minutes, so I'll work for five minutes, and somebody else can take my two minutes if they would like a freebie this morning.
I'm still not sure what's happening. I have the document that the chair quoted. We have price differences, for example, on anhydrous ammonia, which my colleague talked about. In Manitoba, it's $864.92. In Minnesota/North Dakota, it's $624.52. That's a difference of 38.5%. This was in the summer of 2007. For urea, it's $590 versus $525--a difference of 12.3%. For phosphate, it's $616 as opposed to $504--a difference of 21.1%. Potash, which is manufactured in Canada, is $313 to $302--a difference of $3.8%. The difference in fuel...in Manitoba, $76 and in Minnesota, $75--a difference of just 1%; and gasoline, 91¢, and in the States, 75¢--or 3.8%.
I'm still trying to wrap my head around this. I don't understand why there is that difference, especially in light of the fact that our dollar is at par or worth more than the American dollar.
The question that's been researched, that we have suggested, is whether your organization conducted or sponsored any study on this topic. If so, would you accept to share the results of your study with the committee? What are the fundamental reasons explaining the difference in potash prices between Canada and the United States?
I'll just throw that open, if anybody would like to answer.
:
I'd like to share a point.
I live in Winnipeg. I recently made a trip to North Dakota, two weeks ago, and I made an interesting observation there. I realize this is anecdotal, but I spoke to a number of growers, and with regard to anhydrous ammonia, part of the reason for some of the market differential in pricing has to do with a unique situation that's unfolding in North Dakota and Minnesota right now. This is right from the mouths of a number of growers.
They're transitioning away from anhydrous ammonia as a product of choice. A lot of them are moving to soy crops because that doesn't require a lot of fertilizer, but they also are in fear of a number of regulations that are coming their way relating to anhydrous ammonia. Instead of doing virtually nothing in terms of safety regulations, they're now going to have to hydro test, do a pressure test of their nurse tank vessels, as well as do ultra-scans to check for cracks in those vessels. That's a huge undertaking, to go from virtually no safety requirements to very rigorous ones, and it's driving a lot of the growers and the retailers out of the anhydrous ammonia business.
So I believe you're seeing a fair amount of market dumping of anhydrous ammonia to the northern neighbours--i.e. Manitoba and Saskatchewan--because the product is no longer something they wish to deal with from a standpoint of security and safety regulations. They also know there are potential criminal misuses for methamphetamine creation, not to mention just the safety elements.
I don't know how big this is. But there is a small element of dumping going on as a result of North Dakota and Minnesota growers getting out of anhydrous ammonia.
I'd like to point out, Mr. Storseth, that there is an open market right now as it relates to anhydrous ammonia. A grower can take a tank into the U.S. and come back with it filled. Last year there were a lot of growers who took what we call non-plated tanks, where there are no safety designations on them whatsoever. They did come back with tanks full of anhydrous ammonia. It is an open border. The only thing stopping them was the fact that their tanks were not in compliance. There are no security regulations in that case; there are simply safety regulations. And it's not a trade issue; it's a safety issue. They were stopped at the border because they did not have compliance on their tanks, but there is a completely open border as it relates to anhydrous ammonia for growers.
:
We're echoing what some of the farm groups said when they appeared before the committee earlier this year. In the years I've spent dealing with farmers, getting between farmers and their finances is a difficult thing. I think the arrangement they need is something that farmers should be sitting down and discussing with the government. I think the specifics of that is something the government would want to discuss with farmers.
What we're talking about with the general concept of flexibility is whether farmers have the flexibility they need to time their purchases, to take advantage of buying opportunities if they present themselves. That might be in October, in January, or it might be at the last minute. We don't know how the market is going to unfold in any given year, but I think having that flexibility to make purchases and commitments on supply throughout the year would be advantageous to farmers.
It's a complex question. It's part of the whole assistance package that the government has. There are many levers the government has with farmers. I think it's something that needs to be assessed carefully, and obviously there's a public purse to consider.
I would say the same thing related to Farm Credit Canada. There are excellent programs at Farm Credit Canada, but they need to be reviewed on a regular basis. Are they responding to very different market conditions?
There has been a change in agriculture internationally. This is fundamental. The world has changed. China and India are influencing agricultural markets in the way they never have before.
:
I'm sorry, Ms. Skelton.
I wanted to say to Mr. MacKay that you used the term “dumping”. I think it is the wrong term. It is competition you're seeing from the U.S. agri-retailers. Manufacturers dump if they're dumping into a market to steal market share or to liquidate product below the cost of production. I think what retailers down there are doing is offering a sale, but it's not necessarily at dumping prices. I think they are just reducing prices.
Also, the comment you made in your anecdotal evidence is that soybean acreage is increasing. Actually, to the contrary, all the cropping reports I'm seeing out of the U.S. say that wheat and corn are stealing away soybean acres, including in Minnesota and North Dakota. So just for the members' sake, I don't think that type of information, because it is anecdotal, is useful.
With that, I give the floor to Madame Thi Lac, s'il vous plaît.
:
Thank you, Mr. Chairman.
And to our witnesses, thanks very much for coming today.
I don't usually sugar-coat things, and everybody's been skirting around the whole issue here. What's going on here, gentlemen--and nobody can deny it--is price gouging.
I'm not going to sit here and say that there isn't an increase in demand around the world. At the same time, I don't think any of you can expect me to believe that developing countries, which are usually poorer countries and quite often third world countries, can afford to pay the same prices as farmers are paying especially in North America and I presume Europe. It just doesn't hold water.
When prices are hot, companies or industries have a tendency to see the hot market, and up they go. There was a comment made by somebody here that when demand drops, the prices come down. I'm a farmer—I've been farming for over thirty years—and I can dang well tell you guys that doesn't happen. Or if and when it does happen in any way, it doesn't happen nearly as fast or dramatically on the down drop as it does when you're going up.
Some of the things here.... You seem to point out pre-purchasing as if it were the solve-all and end-all of this problem, and we all know that isn't true. Over the years when I purchased, sometimes it made sense to buy in the fall of the year; at other times it just plain didn't. At other times I didn't have the money to do it.
But that's one tool. It's only going to take care of a minor corner of this. Let's be realistic about the real problem and where these prices have gone.
There are some things that have bothered me that I'd like to hear some comments on.
There was a boatload from Russia that came into Churchill. I'm not sure of the timelines on it, but I presume it was some time last fall. It's hard for me to imagine how and why we would bring fertilizer in there, first of all, when we have such a supply in Saskatchewan—I know we have it in other places in Canada, but Saskatchewan is certainly the big one—and can do it with the kind of product we already have here, and further, do it cheaper.
Can anybody comment on that?
:
This is good to know. There are two LNG proposals on the east coast.
I want to come back to Greg's point from earlier about interest-free cash advances to the retailers from the farmers.
The problem we have here, Greg, is that interest-free cash advance programs for farmers' advance payments were originally established so that farmers wouldn't dump product on the market at harvest time. This has changed substantially, now that we have a spring cash advance as well.
The programs were designed for the farm community, but we seem to be consistently losing the benefits of those programs. We supported using the advance payment program to assist the hog and livestock industry. The problem is that it is borrowing against future income; that's all it really is.
Now we're finding, with the spring advance payment program, that there are requests for more money in that program so that farmers can pay you guys earlier and take advantage of early buy options. It's one of those situations wherein the benefits of programs designed to assist the farm community, who direly need it, are accruing elsewhere. When you guys don't have a farm community you don't have a business either. That's my point. I have no argument with you in terms of your having costs too.
Coming back to the point about China and India that Larry was on, number one....
I don't want to lose this point, but I think Roger mentioned going to the Competition Bureau, who said there's no need to investigate.
Roger, the Competition Bureau in this country isn't worth the paper it's written on when it comes to protecting farmers' interests; it just isn't. That's something we've made recommendations on before.
But concerning China and India, from your perspective as ag retailers—and as I said, you have to have the farm community to have a future too—we're up against countries whose labour and environmental standards are such that we really can't compete. What's your view on that? We have to have trade agreements that level this playing field. We're in a high cost environment in Canada on labour, our environmental regulations are higher, our food safety standards are higher, our chemical regulations are higher. We have to have trade agreements and we have to insert labour and environment into them or, quite honestly, we're not going to be in business.
What's your view on that?
:
Thank you very much, Mr. Chairman.
I apologize for having to go into the House, not necessarily to hear Mr. Atamanenko, but I have to say you were brilliant.
It seems that this issue, from what we've heard in previous testimony--in terms of farm input costs--is one of the sore spots. When we hear your case today, it comes more into balance. I'm wondering what the process is to get some kind of reconciliation on these perspectives towards a solution that is actually workable.
When I look at the presentation by the CFI, I see a graph of U.S. fertilizer prices on page 2. Then I see a different one on Canadian fertilizer prices. Then on the third page--which I would think would give me a better perspective between the northern plains and western and eastern Canada--it's in a chart form. You can see it leads to only more questions in terms of our being able to determine if each of these graphs would compare U.S. fertilizer prices and Canadian fertilizer prices for farmers.
When we say farmers, are we always talking Canadian farmers? That's the first question.
If we had to sell this, say, to the government or to this committee in terms of being able to say, you're right, there isn't any kind of huge price disparity, that it's localized or it's occasional as opposed to being the norm.... You can see where I'm coming from in terms of our trying to reconcile this, to be able to address it or report to the government so they can act in a positive way, without making it look like last week the numbers showed that you guys could pay it off on Tuesday and it wouldn't be a financial cost to you because you're making so much money.
Please go ahead, panel.
:
I will share my time with Mr. Storseth.
Mr. Graham, you spoke just a minute ago about farmers being uninformed consumers, and I think most farmers would take offence to that. For the most part, particularly in the last 10 to 20 years, they've had to be informed. There's always room for improvement, and I'll take that note, but I think overall they're very informed.
Mr. Haney, back to your comments about supplying a quality product for safe food production, that's all admirable when you talk about a reasonable price. Well, that's the only part the industry has forgotten about. You talked earlier about your prices, how they dropped between 1985 and 2000, but in 2002 to 2005 we probably had some of the worst prices we've ever seen in grain and oilseeds, and the price of fertilizer was going up. So I don't think the level of support to the industry that they feed off is there when it should be. Now all of a sudden when the grain and oilseed guys hit pay dirt, there's extra gouging going on there. Whether you want to buy into it or not, it's there.
Back in the BSE crisis, I went off to the banks, because some of them were saying, “Oh, all of a sudden we've got good times and we want to kick the guy when he's down”. To the banks' credit, after getting raked over the coals by more than just me, they actually backed off, and for the most part I give the banks credit for sticking with the farmers. I think your industry could learn something from that. I honestly believe that, and when somebody is down.... It isn't just the grains and oilseeds producers who use fertilizer. The livestock industry is heavy on it as well, and they're in the worst crisis they've had. BSE was nothing compared to what the livestock crisis is.
So you have to support the industry, and you have to be prepared to take some of the lumps along with them, and I'd just like to say that.
I'm going to turn it over to Mr. Storseth.
The increase in the Canadian dollar increases Canadians' buying power around the world. Fertilizer is a globally priced commodity. The price is set by the worldwide market. When the Canadian dollar goes up, that increases the leverage of importers, retailers, and farmers combined who are working in Canadian dollars. So they do buy cheaper.
The two graphs we showed you demonstrate that up until 2006, the price index change in the U.S. was 83% and the price index change in Canada was 48%. The Canadian index has gone up less because of the strengthening Canadian dollar. It shows clearly that the Canadian farmer is benefiting from a stronger Canadian dollar in terms of their purchase price on inputs.
In terms of security and our public responsibility, CFI and its affiliates, including CAAR, came out with a program called “On Guard for Canada”--in French, Protégera nos foyers--in 1996, if I remember correctly. It talked about the importance of maintaining security in the supply of fertilizers to farmers: know your customer, report any suspicious activities to the police. We have been working on this, in conjunction with public officials, for a long time. We take our responsibility very seriously.