Good morning, everyone.
We appreciate this opportunity to speak on CETA. We view this agreement as offering tremendous potential and opportunity for Canada's beef and beef cattle industries. What is quite remarkable in all these negotiations.... Beef is often one of the most sensitive parts of the negotiations and because of that, our organization didn't simply wait passively for this agreement to be achieved; we engaged very actively through the entire negotiation. We worked closely with our Canadian negotiators to provide advice and feedback to get a sense of what the ambition could be during the agreement. We also met frequently with EU negotiators, representatives of the EU member states, and members of the European Parliament. We undertook these efforts both in Brussels and in Canada. Also importantly, we engaged with cattle producers in Europe. We travelled to France, Spain, England, and Ireland, to reach out to those counterparts, many of those being where the greatest sensitivities exist, to try to engage in dialogue with them and explain why the relationship with Canada can work moving forward with this type of agreement.
We felt this was helpful in overcoming some of the sensitivities and allowing for the level of ambition that was achieved to be achieved. We're going to continue to work on these relationships in a number of countries to build the beneficial nature of two-way trade into the thinking of both countries.
You're likely aware of the significance of the agreement. What is unique about this one is the preferential access that Canada gets. As you're aware, there are a number of quotas in this. There are 35,000 tonnes of fresh beef and 15,000 tonnes of frozen beef. At the same time we're still in a position where there's an existing Hilton quota that has a 20% duty. That 20% duty has really discouraged people from using that. It's a high-quality duty that has been around since the time of GATT, and we'll immediately see that 20% eliminated. Until another country negotiates that, it will give Canada a clear advantage by making use of that part of the quota as well.
We also had a smaller quota that got rolled into this related to the hormone dispute that Canada won. As a result we have significant access. We estimate it will take about half a million head of cattle when all of this is phased in to satisfy the volume requirements that could be achieved through this agreement.
At the same time, Europe used to be one of our largest markets for a range of products, like edible offal. That was in a range of rendered products, and we anticipate we'll be able to move a fair amount of product on top of the tonnage that I'm talking about under this agreement.
The other thing that makes Europe an important market moving forward for us is that it's a high-level market. We estimate it will be approximately $11 a kilogram or higher now with the type of product we'll move in there, again, producing a value of potentially over $600 million a year into that market.
One of the other things I do want to repeat is we appreciate the very inclusive nature in which the Government of Canada undertook these negotiations. We were really consulted at every step right through, and we continue to be consulted on some of the sanitary and phytosanitary issues that are still being addressed as we speak.
On the cattle production side, we'll have to raise these cattle without the use of growth-enhancing products such as hormone implants or beta-agonists. That's a condition Europe was unwilling to waver from, and although those products are clearly approved as safe in use, we do anticipate that a number of producers, because of the return that could be achieved in this market, will enter into protocols to raise cattle to satisfy this market.
The other thing that's important about this is we're at a particular time in the industry when we're enjoying record prices because of tight supplies. This is probably 18 months to two years out before this starts. This gives us an opportunity as we begin to see a rebuilding phase of our cattle herds start. As we begin to increase our inventories, we're also creating new market access for our industry so that hopefully we can maintain those higher prices for a longer period of time, along with the other trade negotiations that are under way.
On the processing side, I know that the Canadian Meat Council has appeared and has spoken about the technical issues. Obviously, those are important if we're going to fully achieve the benefits of this agreement. Currently, we only have two small plants approved for the EU, and they're both in Alberta. We see great opportunities across the country. As we take a look at the plants, whether they happen to be on Prince Edward Island or looking into Ontario, and smaller ones in Quebec, and as we are able to get those plants approved, we also need to get our large plants approved. That's the reason there's a side letter that there's continued negotiation trying to get close to systems approval. It's recognition of the equivalency of our respective sanitary measures. Those negotiations are continuing. I understand we're close to the conclusion of those, but there are still a couple of gaps that we would like to see narrowed. Again, we're being consulted closely on that.
Back to my earlier comment, in 1983 Europe was one of our largest export markets. Over the course of a decade we lost most of that access, so we're wary and want to make sure we're able to get those addressed up front so that as we move forward we'll be able to realize this great opportunity that's in front of our industry.
With that, I'll stop. Again, thank you for the opportunity to appear on behalf of Canada's beef cattle industry.