Thank you, Mr. Chairman.
I'd like to introduce myself: my name is Serge Lefebvre and I am an egg producer from Saint-Ours. I operate a family farm along with my wife, my sister-in-law and other members of my family. I am here today as the President of the Fédération des producteurs d'oeufs de consommation du Québec. I have been an egg producer since 1993.
Firstly, the Fédération des producteurs d'oeufs de consommation wishes to thank the House of Commons Standing Committee on Agriculture and Agri-Food for the invitation to participate in their deliberations and to express our opinions. The Federation is very concerned by the many questions regarding agricultural trade and it is with great pleasure that we present our dissertation today.
To begin with, we would like to say a few words about the Fédération des producteurs d'oeufs de consommation du Québec (FPOCQ). Established in 1964, the FPOCQ represents 103 producers who have 3.6 million laying hens with an annual production of nearly 86 million dozen eggs. The annual revenue generated at the farm level is in the order of $124 million. This sector creates, on its own, almost 1,000 direct and indirect jobs in Quebec.
Quebec is the second largest egg-producing province, with a 17.6% share of the Canadian market. We believe that the FPOCQ's demands, as presented in this paper, fall within the jurisdiction of the federal government, as related to maintaining the prosperity of the sectors of the industry under supply management in Quebec and Canada. Moreover, a portion of these responsibilities can be attributed to Agriculture and Agri-Food Canada.
Therefore, we ask that Agriculture and Agri-Food Canada intervene specifically with regard to the following three issues: the special safeguard measures that affect the table egg sector, in particular; the WTO negotiations on agriculture; and the agriculture policy framework.
Over the past several years, egg imports have exceeded the tariff limits at an ever-increasing rate. They progressed from 150,000 dozen in 2004 to over 3 million dozen eggs in 2006. The situation has become critical since egg imports over and above the tariff limits contribute to an erosion of the domestic production and to a reduction in revenue and profitability for egg producers in Quebec and Canada. More specifically, these additional imports increase the number of eggs destined for processing, which in turn generates extra costs for egg producers.
In addition, if this continues, these imports will render the administration of the marketing agreement difficult, if not impossible. In fact, supply management depends on the predictability and complete control of production. The absence of control on production, which is due to indeterminate import fluctuations, renders the application of the supply regulating mechanisms inoperative, and consequently, the supply management null and void.
Furthermore, as the value of the Canadian dollar continues to rise, these imports could increase even more. It goes without saying that this problem affects Quebec producers as well. As in the rest of Canada, imports exceeding the tariff quotas have accelerated since 2004. They have gone from 22,550 dozen eggs in 2004 to 1.4 million dozen in 2005 and 2.9 million dozen in 2006.
Another distinct feature about Quebec is that the FPOCQ has the responsibility to redirect eggs from one grader to another and to cover the costs if there is a surplus. The extra imports therefore increase business costs.
In addition, by not having adequate information on the volume of eggs being imported, this causes complications in the smooth operation of the joint plan and its related management tools, such as the egg marketing agreement with the graders. Several times over the last year we have filed access to information requests to find out who was importing the eggs. To this day, we have received no positive answer to our requests.
Furthermore, there are no benefits to consumers either, since they do not know the origin of the eggs. By virtue of the Marrakech Agreement, members have the right to invoke special safeguard provisions found in the Agreement on Agriculture (article 5) for products subject to tariffs. Up until now, 38 members have invoked their right to use these provisions. For example, the European Union and the United States put this measure into effect 12 months after the signature of the Uruguay agreement, but Canada has yet to do anything.
The special safeguard provisions allow a country to impose an additional duty, or tariff, on the condition that certain criteria are met.
These criteria may be either a specific increase in the volume of imports, known as the trigger level or, for a particular shipment, a drop of the import price below a specific reference price. For the egg imports cited above that concern us, these conditions seem to have been met. Currently, efforts to implement the special safeguard provisions have been initiated by Agriculture and Agri-Food Canada and have been transferred to the Department of Finance. Since the decision to proceed has not yet been made and imports continue to escalate, egg producers are of the opinion that this situation must be addressed without delay.
I'm now going to speak briefly about the WTO negotiations on agriculture. Following the latest proposals recently tabled by the chairperson of the agriculture negotiations, Mr. Falconer, we feel that it is important that we take this opportunity to discuss this issue with you. We do not hide the fact that we are worried about the direction that the current negotiations regarding agriculture seem to be taking at the WTO, notably concerning their impact on supply management.
Our worries are focused, in particular, on the question of sensitive products. In fact, the proposed terms and conditions presented in the reference document by Mr. Falconer on April 30 are incompatible with maintaining our Canadian supply management system. If these conditions were applied, they would have the effect of not only considerably limiting the number of sensitive products that could be designated—less than 5%—but also would lead to a decrease of more than 50% in the over-quota tariffs, as well as to an increase of more than 5% in tariff quotas.
We were very surprised to notice that a small country such as Norway, with a population of 4.5 million, that does not have access to the main negotiations was able to negotiate certain adjustments. Canada, although at the centre of the talks, has not yet succeeded in getting the necessary elements recognized to maintain its supply management system. Yet when it really wants to, Canada does succeed in asserting itself. In fact, this did happen in July 2004 and in December 2005 when Canada had certain irritants affecting supply management removed from the discussion document.
There are also the recent public announcements made by our two ministers responsible for WTO negotiations that worry us. They reveal that Canada will not block the negotiations and thus would be ready to sign an agreement at the expense of supply management. At this crucial stage of the DOHA round, it is certainly not the appropriate signal to send to our trading partners.
We would now like to say a few words regarding the Agriculture Policy Framework and more specifically, the elements that affect business risk management. Our position on this issue is clear. We wish to see improvements to the existing program and recognition that supply management is among the risk management programs included in the APF.
In brief, our demands are as follows.
It is essential that the Canadian government exercise the special safeguard provision, as other trading partners have done. Canada must set certain conditions before agreeing to return to the negotiation table with its WTO partners. These conditions should include a requirement that sensitive products be defined in the same way as special products.
Before contemplating increasing tariff quotas, it is essential to gain a minimum level of access that is equal for all member countries, by imposing the necessary control measures.
The Canadian government must recognize supply management as a risk management program, including its three mainstays: production management, the control of imports and a pricing policy that covers the cost of production.
Thank you.