Thank you very much.
In public school my teacher told me that repetition is a good way of teaching, so I'm going to repeat some things that Monsieur Dufresne has said today, and hopefully some of it will stick.
My name is Urs Kressibucher. I'm second vice-chairman of Chicken Farmers of Canada. I farm and reside in Beaverton, Ontario. I have a mixed farming operation, which consists of chicken farming and grains and oilseeds. I have my feet on both sides of the fence, so to speak, when it comes to farming.
Rather than repeat a lot of what Martin has said, I'm going to skip forward to my presentation and talk about the 13% rule.
The root of our problem in the chicken industry is the absurd 13% rule defining products that are not subject to the import controls, i.e., non-ICL products. The genesis of this 13% rule stems from the conclusion of the Uruguay Round, when Canada's WTO schedule of commitments was created with the intent of reflecting Canada's existing concessions under the Canada-U.S. Free Trade Agreement.
Unfortunately, the phrase “lost in translation” applies here, as the 13% rule has a much broader definition than the Canada-U.S. Trade Agreement non-ICL list.
With the creativity of the industry, meat products were introduced by adding items such as bacon or vegetables to a chicken breast, for example. This made the standard chicken breast no longer subject to import control, simply because 13% of another ingredient was added.
Consequently, the 13% rule has resulted in an expansion of a variety of non-ICL products. If a manufacturer's recipe conforms to the 13% rule, regardless of whether foreign competition exists, they are now eligible and receive an import allocation. By expanding the variety and thus recipes of non-ICL products, the Canadian manufacturers of these products request increasing levels of chicken import quota.
This has resulted in the non-ICL allocation growing from 10 million kilograms in 1998 to 33 million kilograms in 2007, a 230% increase, compared with 25% growth for domestic chicken production.
Let me refer you to the graph on page 5 of our presentation. You will see that the blue line there represents the allocation of imports to Canadian manufacturers of non-ICL products. You see how it's been rising exponentially. The red line represents imports of these same products from foreign sources. The allocation of these special imports to Canadian manufacturers has risen much quicker than the imports of these products.
Modifying the 13% rule by restoring the original intent to the 1994 trade negotiation will not only limit the non-ICL product list but will also alleviate the pressure on the TRQ. Furthermore, the claimed requirement of Canadian manufacturers to have access to U.S.-priced imports will be diminished by limiting foreign competition and by creating a more level playing field. This will not in any way diminish the economic activity of these manufacturers.
This generous 13% rule has not only created exponential demands on the TRQ allocation, but has the potential to significantly erode the Canadian chicken market through imported products not subject to import controls.
This loophole must be corrected before there is further erosion of the Canadian chicken market by imported products. These non-ICL products are not considered chicken for the intent of Canada's import controls, but in reality represent direct substitutes for chicken.
There are reasons why since 2002 Chicken Farmers of Canada and its industry partners have asked the government to modify the 13% rule. In order to avoid abuses and prevent further erosion of the market for Canadian chicken products, it is proposed that all products containing more than 20% chicken, instead of the more generous 87%, be subject to import controls. In the case of products coming from the U.S., an exception could be made to recognize historical access.
This solution, approved by most industry stakeholders, was presented to the government in 2002. The government decided not to proceed at that time because they were in the midst of WTO negotiations. Today, industry's desire to modify the 13% rule still stands. In fact, in August 2006 and January 2007, Chicken Farmers of Canada and other industry partners, including the Canadian Poultry and Egg Processors Council, the Further Poultry Processors Association of Canada, and the Canadian Association of Regulated Importers and Food Processors of Canada each sent a letter to both the Minister of Agriculture and Agri-Food and the Minister of International Trade requesting a reconsideration of the 2002 industry proposal.
Last year, the European Union also modified its WTO obligations to control the import of some of these chicken and turkey products. I might remind you that this was in the midst of negotiations also.
The Canadian government needs to seize this opportunity and modify its 13% rule for chicken products. This would demonstrate support for an essential pillar of supply management, as my colleague has outlined.
l understand that unfortunately, officials representing the department will not be able to contribute to our discussion during the present session. However, l am sure that in the next session they will be able to help the Canadian chicken industry and the members of the Standing Committee on Agriculture and Agri-Food advance these important Issues.
In summary, CFC asks the Canadian government to use its domestic powers to allow a chicken import allocation in line with our international obligations of 7.5% access. The path to this desired outcome is for the Canadian government to act in the national interest and to proceed with the modification of the 13% rule, as requested not only by CFC but by a wide spectrum of industry stakeholders.
Thank you very much.