Good morning everyone. Thank you very much for giving us this opportunity to express our views to the Standing Committee on Agriculture and Agri-Food.
On behalf of all the pork producers in Quebec, I want to thank you for inviting the Fédération des producteurs de porcs du Québec to provide an update regarding the crisis we are currently facing and to share our concerns about the U.S. Country-of-Origin Labelling Regulations, know as COOL.
When we last appeared before the standing committee in April, we spoke to you about Canadian labelling.
We pointed out that the Canadian labelling legislation put the industry in an unfair situation. For years, Quebec has been structured in such a way as to promote pork processing, and that is why we are very much in favour of fair labelling rules for Canadian products to allow consumers to make informed choices.
We are also involved in a battle at the present time with our partners to the South, to ensure a fair hearing of our objections to the application of the COOL regulations. The Country-of-Origin Labelling Regulation, published in January by the U.S. Secretary of Agriculture, Tom Vilsack, is a matter of considerable concern to us.
First of all, the effects of COOL labelling were already being felt last year, with a reduction in live Canadian piglet exports to the United States. On the one hand, the slowdown was beneficial for Quebec pork finishers because, for a short while, it provided them with a lower priced product. However, the long-term consequences were harmful for the farrowing producers, who could not compete at dumping prices. The domino effect was catastrophic on our system, in terms of a surplus of piglets, a surplus of grower-finisher pigs, and increased input costs.
In the context of free trade, it is normal to have business ties with our neighbours to the South, and this trade is a link in our work chain. A breakdown of this scope can only have negative effects in the long term.
In addition, we are also very concerned about the U.S. plan to extend the labelling rule to processed products. As you are aware, Quebec exports 60 per cent of its processed products to places around the world, including the United States. Extending the application of COOL would largely compromise Quebec's and Canada's chances of selling fresh meat to the United States for further processing, such as the production of deli meats or smoked products.
The economic spinoffs of pork production and processing are in the range of $1.5 billion annually in Quebec. With nearly 24,000 direct and indirect jobs created in every region of the province, this major regional economic driver may be deeply shaken. In the current economic crisis, the Canadian government must take decisive action with the U.S. government to put a stop to the protectionist movement and urge a return to balance.
With these uncertainties in our marketing environment, you will not be surprised to learn that the severe crisis the Quebec pork industry has been facing for several years now has not abated.
The advance payments program offered a reprieve for the many producers who found themselves in dire circumstances. Earlier this year, the government granted a re-payment extension, for which we are very grateful.
These initiatives have helped producers cope with the crisis that is still unfolding. But this situation remains a matter of concern, and to ensure re-payment from producers who received advances, the government will have to develop a re-payment schedule.
In order to come through this crisis, our current priority is to renew our marketing agreement, in order to establish fair prices while encouraging a climate of cooperation between the producers and the processors, so that we can meet the international competition.
Although we acknowledge that a centralized hog marketing system still has a role to play in our industry, we believe there is a need for renewal and are convinced that a new negotiated collective agreement would be in everyone's best interests. We also believe that we have to re-assess the Quebec production model in order to lower production costs and make the system as efficient as possible. We are aware of the major challenges ahead of us, but we are also ready to move forward and do everything it takes to succeed.
Assistance should also be provided for the implementation of new technologies that can reduce costs on the farm. This would be a productive form of assistance that would be acceptable under WTO rules. Pork producers are innovative, open-minded people who are ready for change. We are determined to persevere in order to make our farms profitable again and preserve an industry that is of critical importance to Quebec.
In closing, I would again like to thank you for giving us this opportunity to update you on our situation and explain our views on the COOL labelling issue.