Thank you, Mr. Chairman.
My name is John Gillespie, and I'm the chairman of the Beef Information Centre for Canada. This is a committee of the Canadian Cattlemen's Association. We represent 80,000 beef producers in Canada.
BIC's job is to promote and do market research for the cattle and beef business in Canada and the United States. They are our two important markets.
BIC works directly with packers, further processors, distributors, retailers, food service operators, key stakeholders, and such influencers as health professionals, media, and the government.
BIC's vision is of a sustainable and profitable beef industry, in which Canadian beef is recognized as the most outstanding by both domestic and export customers. Our mission is to maximize the demand for Canadian beef and to optimize the value of Canadian beef products and get the greatest return possible back to the farm gate.
BIC is overseen by an elected committee of beef producers from across Canada and is funded by a check-off from each individual animal sold.
The Canadian domestic market continues to be the largest and most stable market for Canadian beef. In 2007, 65% of Canadian beef production was consumed domestically, while 35% was exported. Canadian beef consumption has remained stable over the last nine years. Beef demand, which measures the relationship between volume of beef consumed and the price consumers are willing to pay, also has been stable during the past decade. In 2007, just over one million tonnes of beef was consumed in Canada. Approximately 80% was Canadian beef. Consumer confidence in the safety of Canadian beef has also remained strong and stable, despite BSE and other food challenges, such as E. coli and listeria.
Quarterly tracking of consumer confidence shows that Canadians' confidence in beef safety is equal to or greater than our pre-BSE levels, which, of course, was in 2003. We have seen significant increases in the amount of U.S. beef being imported into Canada, however. This is primarily due to tightened supplies as a result of economic factors such as higher labour and processing costs in Canada, which make Canadian beef processors less competitive than their U.S. counterparts.
The Canadian beef industry is working cooperatively to identify and develop the quality attributes and points of differentiation, compared to other proteins, that will position Canadian beef as strongly as possible in the domestic and export markets. The strategy is key to addressing our competitive issues. These points of differentiation include quality attributes such as superior genetics, excellent animal health management, individual animal identification, a world-renowned food safety system, superior grading standards, excellent supply capability, and improved profitability for our customers.
As part of this initiative, a new Canadian beef brand has been developed for both the domestic and international markets. The new Canadian brand will be used to build awareness of Canadian beef's unique attributes among customers and consumers. It will capitalize on our strong consumer loyalty in the domestic market. The Canadian beef industry is aggressively moving forward with a new Canadian beef brand identity, and many key retail and food service customers are beginning to incorporate this brand identity into their marketing program.
The Canadian government can significantly assist the beef industry's efforts by creating a supportive regulatory environment that allows the industry to move forward with a number of key initiatives.
Concerning supplemental quota, Canada currently allows 76,000 tonnes of non-NAFTA beef to be imported tariff-free. This is predominantly non-fed beef, or what we might call industrial beef, that's used for manufacturing purposes. Pre-BSE, the Canadian government would routinely allow supplemental tariff-free beef imports. During BSE, this practice was halted to help ensure market opportunities for mature cattle within the domestic market. Consequently, Canadian processors have adapted to take advantage of the domestic supply of mature cattle--cattle over 30 months of age--and have lessened their dependence on offshore grass-fed cattle.Canadian market share in this segment has grown from a pre-BSE level of 25% to approximately 80% market share today. As export markets for Canadian beef continue to open, it is important, in order to safeguard our domestic supply, that government not return to the practice of allowing supplemental tariff-free imports.
The misrepresentation of imported product as Canadian continues to be a concern for Canadian cattle producers. Our industry has worked diligently to develop a marketplace that prefers and rewards Canadian beef. While the new voluntary “product of Canada” guidelines offer welcome improvements for identifying Canadian products, they cannot work if not adequately communicated and enforced by government.
Historically there has been minimal enforcement of labelling requirements and little concern for the consequences of breaking the law. If the Canadian beef industry is going to work to create improved market opportunities and returns through differentiation of our products based on quality and safety attributes, it is imperative that government safeguard these investments through adequate enforcement of labelling laws.
The United States is the world's largest beef-consuming nation and the world's largest importer of high-quality beef. The United States is also Canada's largest and best export market, accounting for approximately 78% of our exports from Canada. While BSE and country-of-origin labelling, or COOL, as many of us have called it, have impacted beef and cattle trade, the U.S. market continues to offer the highest-value market, with the least amount of import barriers for Canadian beef.
BIC works with U.S. trade clients to mitigate the impact of the COOL program and build awareness of the advantages of Canadian beef. BIC's approach has been to align with Canadian packers and U.S. distributor partners to communicate Canada's key points of differentiation and to provide educational resources and market development support that leverage our comparative advantages.
A number of farm groups, including the Canadian Cattlemen's Association, have spoken to this committee at length about the challenges of COOL. U.S. COOL legislation is negatively impacting Canadian exports of beef and live cattle by introducing additional costs through segregation, labelling requirements, and uncertainty of following the published rule versus the more restrictive voluntary guidelines, as was recommended by U.S. Secretary of Agriculture Vilsack. BIC echoes the view of CCA that the Canadian government undertake all available actions, including the resumption of the WTO challenge, to address this COOL situation.
One of the difficulties facing the beef industry is that check-off revenue available to beef marketing organizations has decreased, while the challenges that need to be addressed continue to increase. Typically, domestic marketing activities have been ineligible for funding support through such programs as CAFI. BIC suggests the government consider making domestic marketing initiatives eligible for funding for agricultural sectors in distress.
In conclusion, Mr. Chairman, the Canadian beef industry is working hard to identify and develop the quality attributes and points of differentiation that will position Canadian beef as strongly as possible in both the domestic and export markets. This strategy is key to addressing our competitive issues and creating an environment that will allow Canadian beef cattle producers to be financially successful.
Mr. Chairman, I'd be more than willing to entertain some questions, if you like.