Thank you for inviting us Mr. Chairman.
This opportunity that we have to exchange with you is very important to us. The Council for Food Processing and Consumer Products represents businesses who are major players in the food processing industry and it actually represents $14 billion of an industry that generates $20 billion in Quebec.
Let's turn to page 4 of the slide deck that was distributed. I wanted to show you here how important food processing is. It is the second most important industry in Canada, accounting for over $2 billion in contributions to the government. This industry generates 276,000 jobs, $22 billion of added-value in GDP, exports representing more than $20 billion, imports representing $16 billion and $76 billion in domestic consumption.
However, despite the importance of this industry, in the policy document, Growing Forward, the words "food processing" only appear once, in only one paragraph. We feel somewhat like orphans and we're looking for adoptive parents in the Canadian government.
We're facing several issues. In Quebec, 70% of agricultural production is processed. Agricultural production and food processing are an absolutely essential marriage of convenience for the overall development of the industry.
I gave you a table that shows that grocery bills are just about the lowest in Canada, aside from the United States. Overall, Canadians spend 10.3% of their income on food. In France, that percentage is 14.8%, in England 11.2% and in Greece, 31%. When we look at those countries, we realize that the system can perhaps be improved. Even if the cost of groceries in Canada increased by 2%, 3% or 4%, money could be injected into the system and that would allow the industry to evolve more.
France, England and Germany passed legislation that imposes greater restrictions on retail businesses, something that we don't see here. From our point of view, the competitiveness of processors has to be seen through an analysis of the regulations applied in Canada, which are very good, and which we can work with, but which are not applied to or shared with foreign products that enter Canadian territory and that compete with us.
In terms of the use of claims, in the United States 16 claims are allowed. Products that make certain claims on their labels have no problem coming into Canada. However, in Canada we're only allowed five claims. This is a problem that puts Canadian processors and producers at a disadvantage.
The new "Product of Canada" labelling rules considerably restrict the advantage that we used to have in terms of promoting the high-quality of Canadian products because they set a 2% limit on ingredients that are used in products that are processed and manufactured here in Canada. As soon as a little bit of sugar is added to blueberries that were grown here in order to turn them into jam, they can no longer be called "Product of Canada" even if the labour and the product were 95% Canadian. We can put a "Product of Quebec" label on it but not "Product of Canada". Our Canadian products will be more identifiable abroad than they will be on our own grocery shelves, and this a major problem.
If a little of bit of salt is added during the processing of vegetables, they can no longer be called "Product of Canada". This is an aberration that runs counter to the intention that led to the law being passed. Yet these rules are now being applied. We have made representations, but our position wasn't acknowledged. It is very urgent that this situation be corrected and that Canadian content be reduced to a level that would allow us to add something that cannot be grown here to our products and labour. For example, sugar cane cannot be grown here, we have to import it. If we add that to a product, it's game over. The same applies to salt and to certain spices that cannot be grown here. Unfortunately we cannot use them if we want to be able to use the "Product of Canada" label. This is truly of great, great concern.
Page 7 shows how complex processing is and shows the types of pressure on that industry. I won't cover everything because it's not possible to do this in 10 minutes. However I would like to point out that if the Canadian government wanted to include processing in its policies and wanted to be involved at that level, then we could resolve some of these problems and foster a much greater and broader development. We could become winners and we could seize the opportunities before us.
On page 8, we show that the processing industry is somewhat caught between the agricultural producers who have obvious needs, and the distributors, who often engage in abusive practices when it comes to processing. We work within very restrictive margins, and this is preventing us from developing at a rate that is necessary if we want our activities to be more profitable for agricultural producers and the industry as a whole.
In Canada, the distribution network is 90% controlled by three distributors. This is the greatest concentration of distribution in the world. In the United States, the 10 biggest distributors control approximately 30% of the distribution industry, I believe. Therefore when it comes to working with American distributors, we have much more flexibility. In Canada, because of the practices of the three distributors, our access to the market is very limited. If a manufacturer wants to launch a product, a flavour or a format, $550,000 in slotting fees have to paid out in order to have the product displayed throughout Canada. Yet that does not guarantee in any way product sales. It is absolutely unthinkable for small businesses who want to develop, meet the needs of consumers and promote local products.
The right-hand side of page 9 shows developing business opportunities. We are going to have to be involved with Asian markets and they will be dominating the global market. In 2020 they will represent 41% of the global market and global needs. That is very significant. The markets in India, China, Japan, the United States and Russia will be the top five global markets. We have to think about what we are going to offer our consumers and which markets we are going to focus on. However, in order to be competitive we are going to have to use competitively priced inputs.
"Product of Canada" labelling used to give us an advantage in terms of the quality of products. We could display that. That possibility was eliminated and we now have to look at supply on foreign markets. This is going to be rather difficult. On page 17 we make the case for an inclusive policy, such as the one Holland adopted. It would include all the stakeholders who need to work together. Often, the various levels of government do not consult each other when legislative measures are being applied to food products. A consultative group has to be established and an inclusive food policy that includes processing has to be developed.
At the end of the document you will find many suggestions and many sources of information that we can discuss further during questions. Thank you.