Thank you.
We each will present part of our presentation, and I'm assuming you each have a copy of our presentation that you can follow along, because there is a graph or two in there we'd like to refer to.
Thank you very much for the opportunity to present our concerns and discuss with you the issues facing Canada's 13,000 hog producers.
The Pork Council is a federation of the provincial hog farmers associations operating in each of the nine provinces, from the west coast through to the maritime provinces. You've just heard from the FPPQ. They're appearing along side us here today, and they're obviously one of our members from the province of Quebec.
I'm going to deviate slightly from the text, and I want to be very clear and very, very straightforward. This industry is in the early stages of crisis, and it's going to get worse before it gets better. You're aware of some of the processors' announcements, and they're going to be appearing here with us today as well. I can tell you that producers have been shielded slightly from a price perspective only because of the price cycle, and you're aware of the disease problems in Ontario and Quebec. We are entering a crisis stage.
The hog industry is one of Canada's most important agricultural sectors, accounting for almost $4 billion in farm cash receipts in 2005, representing more than $1 in every $10 of total farm-gate revenues across this great country of ours. Swine production has accounted for an increasing share of Canada's total farm income due to its rapid growth over the past decade and a half, and it's certainly been a success story over that period of time. Over that decade we have seen Canada grow to be a vital and thriving pork export business. We now ship to over 100 countries around the world, and in 2005 we set a new record, selling over one million tonnes of pork outside of our country, with a value of $2.8 billion. But in 2006, year to date, we have actually decreased exports slightly, while the United States has continued to grow at a very rapid pace. That's a concern.
As can be seen in the illustration--and it's in your presentation--Canadian pork exports are much more diversified geographically and far less focused on the United States market than was the case years ago. We attribute this to a number of factors. Two primary ones that we want to highlight are the increased opportunities that were the result made available from trade liberalizing agreements, particularly the WTO deal from the Uruguay Round, and the Canadian pork industry's collective determination to pursue export diversification and the creation of our export market development arm, Canada Pork International.
If you look at the graph, you can see that in 1990, 90% of our exports went to Japan and the United States. Today, they're at 77%, and there was even a potential that Japan could overtake the U.S. as our number one destination, although I don't believe that's happened this year yet.
As can be seen from the next chart, exports now exceed domestic sales of pork, and again, I'll repeat that: exports exceed domestic sales of pork. We crossed over in about 2002. That shows you how much we benefit the Canadian economy. Canada, with a relatively small and aging population, cannot provide sufficient demand to sustain the Canadian pork industry. Thus, as is the case for much of Canada's economy for which exports are of vital importance, it's absolutely vital that Canada pursue all avenues to obtain favourable terms of access to foreign markets.
This includes multilateral arrangements through the WTO and through regional and bilateral deals. The Canadian Pork Council urges that Canada continue current initiatives such as the new G-6, towards reviving--and I understand it is revived--the Doha Round negotiations. We must also significantly ramp up efforts to complete bilateral negotiations begun several years ago, with Singapore and Central American countries being notable examples, and to achieve some new agreements that will reverse the deterioration in our industry's relative access that will occur if we do not do some catching up with the United States, Chile, and several other pork-exporting countries that have implemented or completed negotiations on an enormous number of regional and bilateral trade deals, giving them preferential access.
In addition to pursuing trade liberalization agreements with the Andean countries, Japan, India, and China, the CPC strongly supports a Canadian free trade deal with Korea, provided, of course, that pork is included in the tariff reduction package, and pork needs to be included in that tariff reduction package. As the chart shows, Korea has been one of Canada's most important growth markets for pork exports. However, our future access to Korea is threatened by advantages that some of our competitors are obtaining, or hoping to obtain, through their own bilateral deals.
Having covered the importance of trade and export access, we now want to turn to significant economic challenges facing our industry and a few of the areas that CPC feels will require immediate attention in order to remain competitive in the future. Again, we're only in the early stages of crisis.
The rapid appreciation of the Canadian dollar has had a wrenching impact on the hog and pork industry. A simple illustration of how the rise of our currency has affected us is to compare hog prices today in Canada and the United States versus 2002, before the Canadian dollar began its rapid upward climb.
If you look at that chart, I would like to add a third column. In 2002, the U.S. price of $53.57 with today's currency exchange, is $1.08. The 2006 number, at $68...if you turn that back to 2002, with the currency back then, that would have netted us over $2 a kilo. So in currency alone, it has cost us between $30 and $40 a pig.
Hog production has gone into decline for the first time in a dozen years. Major packers have announced their intention to significantly downsize or restructure their operations. That's a huge concern for hog producers, but more than that, it's a huge concern for the hundreds of communities and thousands of workers across Canada who depend on the industry for their livelihood.
Hog producers everywhere are considering the conditions under which they can continue to raise pigs and the processing sector can successfully continue to operate. Competitiveness is a focal point of virtually every industry meeting taking place now and in the next few months. CPC and its provincial members want to secure conditions for the long term that will allow us to continue to have the vast majority of pigs born in Canada, to be raised in Canada, as well as processed in this country. We cannot otherwise have the value-added activity and the pork export sales that this country has enjoyed in the past.
Thus, we are making every effort to pursue a forward-thinking approach in the Canadian hog sector that will enable us to continue our role as global leaders in this pork industry.