Thank you, Mr. Chairman.
I'll assume I've been asked the question, “How come we use MPCs and MPIs?” I think it's a very important question. The dairy processing industry functions with one foot in the supply management system, from the standpoint of milk supply. We buy our milk in each province from a monopoly supplier, which is a producer-run dairy board. Everything else we do is in the free market, so from an operating perspective, we of course have all of the market-driven initiatives to seek efficiencies in our plants and to apply the latest modern technology.
Traditionally, when we made cheese, for example, the whey Pierre just referred to, the lactosérum, was simply pumped back out of the plants, spread on fields, dumped in ditches, put in lagoons, sent into rivers, and so on, which was acceptable at the time, but as environmental concerns arose, it emerged as a very major environmental issue, which the industry had to address. It did so by applying technology to this product, knowing that within the product were dairy proteins, some fat, as well as other material. It developed technology to recover these fats and the protein and the ability to use them in cheese-making.
You have to remember that this is a product that is simply the by-product of taking milk and making cheese with it. It's a domestic product. By far most of the whey protein concentrate used in the dairy industry is this type of product; it's domestically produced, and probably 95% or more of it is this product. So we've been able, through the use of technology, to reintroduce the whey protein concentrate into cheese-making to the benefit of the industry. It reduces costs, and there are more efficiencies, and so on.
The other aspect of the proteins, which seems to have drawn the attention—but in my mind this file gets totally confused. It involves the imported isolates that come into the market. By the best measure available to Ag Canada and Stats Canada, there are 3,000 to 5,000 tonnes of these products used in the dairy industry. The reason they are used is that they bring to processors performance characteristics that are not available in the domestically produced whey proteins. The technology is not in place in Canada to produce these products, so they are bought on the world market at world market prices.
They are used in a variety of uses in the dairy industry, but also outside of the dairy industry in further processing of foods, in the chemical industry, in the nutraceutical industry, in the pharmaceutical industry, and so on.
The comment that is often made is, you buy these cheap subsidized imports and use them domestically. I think the first misconception is that they're subsidized. The vast majority of them, according to my understanding, come from New Zealand, and there are no subsidies attached to those products. I think if you inquired at the EU, you would learn that today there is virtually nothing or very little—I believe nothing, but maybe it's very little—in the way of subsidies attached to the exports of those products from Europe as well.
The other interesting thing about those products is that contrary to what is often implied, they are very high-quality products. A large part of the business of the company I work for, Saputo, is food service, where we manufacture a cheese that meets all Canadian standards and all Canadian regulations but that we develop really to the customers' specifications. This means it has to brown at a certain temperature in a pizza oven within a certain period of time, it has to stretch a certain distance, and so on and so forth. Some of these characteristics you can only achieve by blending some of these imported isolates with our domestic source raw material. It's not only a question of buying cheap and selling high; it's a question of applying the best available technology to produce the best quality product, which you can then market at a competitive price. I think it's something that is often overlooked in this discussion.