Thanks very much, Chair.
Good afternoon. I'd like to thank the committee for inviting me to appear today to discuss current markets and trade programs and potential ways to further improve industry's ability to take advantage of both domestic and international markets.
The government is making important investments to ensure that the agriculture and agrifood sector is well positioned to take on new market opportunities at home and abroad. I look forward to talking with you about what we're doing in this area and some areas for future work.
Under our current programming, a large component of the markets and trade programs are delivered through Growing Forward. Growing Forward emphasizes the role of government as an enabler, with industry acting as an important collaborator and leader.
One of the key mechanisms for industry collaboration is the value chain round tables, which draw together producers, processors, retailers, government departments, and provinces to identify market opportunities and develop collaborative strategies. Growing Forward also supports a suite of market development programs that increase the ability of the sector to identify and exploit opportunities in markets where it is competitive on a cost or attribute basis.
These programs include the AgriMarketing program of almost $90 million, the Canada brand program of almost $20 million, the markets information program of almost $9 million, and the trade commissioner service of about $24.5 million. These programs facilitate industry success in global and domestic markets and have been very well received by industry.
Every year AgriMarketing is oversubscribed, and participants have consistently expressed their appreciation for the program.
Industry adoption of the Canada brand has grown steadily since the strategy was introduced in 2006. Membership has increased due to interest in consumer-oriented promotions and the expansion of the Canada brand to the domestic market. There are currently more than 400 members in the Canada brand program.
The domestic branding component of the Canada brand was introduced in response to industry interest in improving its ability to market directly to Canadians. Through retail promotions, the Canada brand has demonstrated that by identifying products as Canadian, participants can increase sales and improve profitability.
Additional funding was provided under AgriFlexibility, part of Canada's economic action plan, to intensify demand for Canadian products and key international markets through the Canada brand advocacy initiative. This initiative works to build knowledge of and demand for Canadian products through consumer-oriented promotion and advocacy campaigns, including advertising.
Another area where we have invested is in markets information, to provide relevant and timely information to clients in industry. Industry has noted that this information has helped positively inform decision-making.
Finally, the trade commissioner service is an important element of our market development programming. We currently have 33 trade commissioners in 13 priority markets and provide on-the-ground assistance to Canadian companies and individuals operating there.
In addition to Growing Forward programs, the government has placed a priority on market access. In 2009, Minister Ritz announced the market access secretariat, which partners with other federal departments, industry stakeholders, and provincial partners to advance Canadian interests abroad to reopen, maintain, and expand market access across multiple sectors in identified markets.
The Agriculture and Agri-Food market access report, which was released by ministers Ritz and Fast in October, highlights the accomplishments of the ministers from January 2010 through March 2011, with our support.
In particular, I would like to draw your attention to a few key successes.
Last July, Canada successfully negotiated transitional measures for canola seed exports with China, a market worth almost $2 billion.
In December, Minister Ritz announced an agreement reached with South Korea to reopen the market for certain Canadian beef and beef products, a market worth $30 million by 2015, as estimated by industry. This announcement is a step towards finally closing the book on BSE.
Another major victory for Canada was the positive ruling on the U.S. mandatory country-of-origin labelling legislation. Through dispute settlement, Canada was able to successfully defend the interests of the sector and ensure fair access to one of our most important markets.
Most recently, as part of Prime Minister Harper's visit to China, an agreement was signed that clears the way for immediate access on beef and tallow, and joint research to create a stable trading environment with China for Canadian canola seed.
In line with industry recommendations, and highlighted in the government's 2011 budget, additional funding was provided under the economic action plan's AgriFlexibility program to seize the full extent of opportunities in some key emerging priority markets like China, India, Indonesia, and Russia.
AgriFlexibility funding is being used to build on the momentum achieved thus far on market access by accelerating progress in priority emerging markets and building stronger relations with key countries to advance our interests through the strengthening of the trade commissioner service.
Also, as part of Prime Minister Harper's trade mission to China, Minister Ritz was pleased to announce that Tongwei Company Limited, a major Chinese feed company, intends to increase its purchase of Canadian canola meal by up to $240 million annually by 2015.
The government has also been active in the negotiation of a number of free trade agreements to provide important new export opportunities for the agriculture sector. Canada has most recently implemented FTAs with the European Free Trade Association, with Peru, and with Columbia. We are in the process of putting into force our FTAs with Jordan and Panama. Negotiations are also under way, notably, with South Korea, the European Union, Morocco, and India. Access gains in these markets would result in significant benefit for the sector.
The government has also formally indicated interest in joining the trans-Pacific partnership.
Bilaterally, Canada is also working on the Canada-U.S. Regulatory Cooperation Council in order to make it easier for Canadian and American firms to do cross-border business. This initiative was announced in February 2011 by Prime Minister Harper and U.S. President Obama.
The government has also made internal trade a priority and is working closely with provinces to review the regulatory environment to make it more relevant to today's market and facilitate internal trade flows. A better integrated domestic market can be a driver for a more competitive and innovative sector.
While our current programming has resulted in significant successes, there have been shifts in global and domestic markets that present new challenges for the sector. The growth and rising demand in emerging markets, coupled with slower growth in our traditional markets of the U.S., EU, and Japan, have shifted our growth opportunities towards the former. These markets require a different approach from the traditional ones. In particular, it requires greater focus on bilateral engagement. Furthermore, technical barriers are increasingly used by countries as a means to protect their domestic industry, making market access initiatives increasingly important to the continued success of the sector.
In the domestic market, Canada's high dollar and strong economic performance have made Canada a preferred export destination. This has resulted in increased import penetration, putting competitive pressure on the sector.
Finally, there are new ways of doing business. Consolidation in the retail sector, the importance of global value chains, and local food movement are increasingly dominant business models that industry and government will need to adapt to in order to compete.
Supported by the unprecedented engagement with industry that has taken place under Growing Forward, Growing Forward 2 presents an opportunity to adjust policies and programs to address new realities and build on successes. The shift in market opportunities to emerging economies suggests that more efforts could be focused on expanding access and improving penetration in these fast-growing markets. In order to maintain our competitive edge in foreign markets, Canada will also need to adopt aggressive strategies to set our sector apart from the pack.
GF2 also provides an opportunity to address the increasing competition in the domestic market. Industry has been supportive of domestic branding. Under GF2 we could explore opportunities to expand this programming with carefully delineated federal and provincial roles.
New market opportunities and a changing business environment may also require our sector to develop new skills. Under GF2 we will continue to explore a means of better assisting the sector in building the skills and knowledge they will need to adapt and compete in a highly competitive environment. We will be working closely with our provincial and territorial counterparts to look at the opportunities and challenges in the sector as we progress towards Growing Forward 2.
AAFC, along with other key departments, continues to work to create and maintain trade opportunities for Canadian agriculture producers and food processors and to support Canada's trade objectives. We also continue listening to stakeholders through forums like the value chain round tables and the market access industry advisory group and using their feedback to identify how Growing Forward 2 can help Canada compete in foreign markets.
Thank you for your time. I look forward to your questions.