Thank you, Mr. Chairman.
I appreciate the opportunity today to give you our view on the competitiveness of Canadian agriculture, specifically as it pertains to our industry. I know our presentation has been forwarded to you, so I will just make a very quick presentation and highlight some of the key points.
First a little background. The Turkey Farmers of Canada is a national organization representing Canada's commercial turkey producers. The mandate of the TFC, as we call it, is to promote the consumption of turkey in Canada, as well as to be the voice for Canadian turkey farmers, both domestically and internationally, on matters relating to the future sustainability of our farmers and the sector generally.
We are found in eight of Canada's provinces and have an annual production of 217 million kilograms, or about 23 million birds. We had a 2008 farm gate value of $389 million. Exports of Canadian turkey meat are valued at approximately $23 million, and imports are estimated to total $32 million. Our market, while supply management and domestic in focus, is not closed to trade.
When it comes to sustained competitiveness, to ensure this for the Canadian turkey industry, our focus needs to be on the following five success factors: first, long-term economic stability; second, trade and harmonization, as others have discussed; third, regulatory clarity; fourth, research, infrastructure, and investment; and fifth, domestic balance. I'll just take a moment to touch on each of those briefly.
Supply management offers long-term economic stability. By comparison to unfettered free trade or full protectionism, we believe this is a third and viable option. It creates an environment for sustainable development. Domestic growth has been achieved through an orderly marketing system that matches supply to changing demand in a constructive and thoughtful manner. As an outcome, our sector does not rely on government transfers and it provides a fair return that is earned from the marketplace.
The poultry meat sector, like other sectors in Canadian agriculture, is not immune to international risk brought about by economic collapse, but unlike other sectors, that risk is reduced by virtue of the marketing system these farmers have chosen. It is a policy choice that needs to be sustained to provide certainty for reinvestment and to contribute to ongoing competitiveness.
The industry and government response to foreign animal disease outbreaks is critical in terms of reducing the period of business interruption. Discussions concerning compensation for animals ordered destroyed have been ongoing since 2004. Resolving this matter is a critical component to a prompt recovery for the farmers impacted, whether one or more--the scale is irrelevant; it's the issue itself.
We are pleased with the opportunities recently provided by the government and CFIA to fully engage in this discussion; however, there's much work to be done on this. I hope there will be some resolution and we'll see an end to it shortly.
When we discuss trade and harmonization, the TFC appreciates the support afforded to supply management by federal political parties, as well as the support provided by the federal government over the last eight years, since the beginning of the Doha development round. Some accomplishments have emerged, but not with regard to the import pillar of supply management. The current proposed modalities would bring serious negative economic implications for our farmers. We believe the negotiations are emerging to an outcome that will not produce equitable results for farmers of many commodities in many countries, not just Canada.
Within the trade rules and implementing Canada's WTO Uruguay Round commitments in 1994 and to abide by our NAFTA commitments, certain highly processed products, for example a TV dinner, needed to remain exempt from import control. To accomplish this under the new WTO tariff rules, the federal government defined these products as “specially defined mixtures”, also known as the 13% rule. However, the 13% rule the government administers today is not the rule in our WTO commitments and what was agreed to by industry in 1994. The rule has resulted in expanding the range of products not on the import control list, and it is also undermining the effectiveness of the Canadian turkey import quota. This rule, bluntly, needs to be changed.
When we discuss harmonization, a number of issues require ongoing attention to ensure competitiveness is not inadvertently compromised by government. These areas relate primarily to technical regulations or standards between competing jurisdictions. In our sector, our farmers and processors compete with farmers and processors from the United States and Chile primarily, and to some extent Brazil.
Some examples of what TFC has done: we've developed and are implementing a national HACCP principle based on the on-farm food safety program that is auditable and verifiable. We have a relatively new flock care program that is auditable and verifiable also, and it is being implemented on Canadian turkey farms from coast to coast. A new organic standard is being implemented by regulation in Canada by the end of June 2009. And the avian biosecurity committee is completing its work on a national biosecurity standard.
Each of these initiatives is worthwhile and laudable and meets the demands and expectations of food safety for Canadian consumers. By these very actions, though, we are undermining the competitiveness of our own farmers if these standards are not going to be met by farmers and processors in competing jurisdictions. If not held to the same standards, an imported product will have an advantage and thereby undermine the competitiveness of our sector. In another example, Canadian farmers can be at a disadvantage when competing with imported product if their access to inputs, such as pharmaceutical or crop protection products, is more constrained.
A recent benchmarking study on the competitiveness of the Canadian animal health industry found issue with approvals in Canada compared to other jurisdictions. I know that one of the previous speakers has already commented on that, so I won't go any further. It does, however, raise the matter of equivalency in terms of imports of meat from animals treated with medications that are not approved for use in Canada.
Product of Canada labelling requirements need to be re-examined also, to avoid consumer confusion and to provide a more competitive market for our farmers. Our processors are discontinuing product of Canada labelling as a result of the difficulty with the current regulations. For example, we can import a hatching egg, hatch it, raise it in Canada, and it is eligible for product of Canada labelling. If the same hatching egg were hatched in the U.S., imported as a day-old poult, then raised in Canada, it could not be labelled as a product of Canada. This is an unfortunate side effect, since a meaningful product of Canada label is an important marketing edge for Canadian farming. I know that within our industry, there's a substantial number of day-old poults that are brought into the country, so it is a huge part of our industry.
Within research infrastructure and investment, the members of TFC believe that a critical factor in future competitiveness is investment and research. Since the federal government reduced research dollars in poultry several years ago, the national poultry farmers and processor organizations founded the Canadian Poultry Research Council. In the last few years, CPRC has funded 22 projects, leveraging industry contributions of over $1 million by a factor of over 4:1 to the tune of $5 million.
In aggregate, this is very close to federal expenditures prior to the cutbacks of the 1990s. Rather than requesting additional funding for research, there are three elements that we would ask the government to address. Number one, ensure that existing funding remains for federal contributions to research; number two, sustain the ongoing realignment within the research branch; and number three, evaluate the current expenditures with industry to ensure sustainable and long-term funding for research. The problem is that a lot of the programs at this point are not funded to their conclusion. That's the obvious issue with that.
I have a couple of other facts. The value of our domestic market has grown significantly, by $126 million in five years, for a variety of reasons, such as consumer attitude towards turkey meat. The main challenge faced in the last several months has been managing high input prices and low meat prices in North America. As well, feed prices have increased 57% in Ontario from 2006 to 2008. I know that's something you've probably heard as a common theme from many witnesses.
In conclusion, the current volatility in the poultry industry follows three years of disrupted markets that began with the bird flu outbreaks of 2006 and their impact on world production, consumption, and trade. The governments of two main poultry-exporting countries have had to buoy up their industries to ensure their survival. The USDA announced in March 2009 that it intended to purchase up to $60 million worth of turkey breast meat products to help out the turkey industry, which has been suffering significant financial losses. As recently as mid-May, the Brazilian government announced that it is considering extending a line of credit of up to $1.38 billion U.S. to rescue the country's struggling poultry industry. The Canadian government has not had to bridge any financial losses for the Canadian poultry industry. We've managed our production quotas to address the market dynamic. We also contend that supply management is the key to keeping our industry sustainable and structurally sound in the long term.
The import controls pillar of supply management must be supported and maintained to ensure supply and demand are matched and continue to provide Canadians with safe, affordable food at stable prices.
Thank you very much.