First, thank you for the opportunity to appear before you today and for accommodating us here in Quebec City. The Canadian Cattlemen's Association is the national organization that represents over 80,000 beef cattle producers from across Canada and across all sectors of beef cattle production.
In 2011, cattle producers generated $6.5 billion in farm cash receipts, and the beef value chain contributed more than $26 billion to the Canadian economy. Beef cattle production generates significant employment, particularly in rural Canada, and producers carefully manage Canada's vast grazing lands, which sustain biodiversity, provide critical wildlife habitat, and store carbon.
Canada's beef cattle industry is vast and complex, yet produces the best beef in the world. It is composed predominantly of family operations both incorporated and unincorporated. It begins with our seed stock and cow-calf producers from virtually every province in Canada, who produce the best calves in the world on our grazing lands and forages. These cattle are generally sold as feeder cattle or to backgrounders or to feedlots weighing between 500 pounds and 900 pounds in the first stage of production.
The backgrounders will raise the calves to a heavier weight and sell them to a feedlot, which will finish them on a high-energy ration using locally grown forages and feed grains. In these lots the animals are finished to exacting standards, which results in the exceptional eating quality associated with Canadian beef. These finished-on-grain cattle are then sold to packers in Canada and the United States; and it's our national beef grading system, which is privately operated under federal regulation and industry management, that measures quality and provides market direction through this production chain.
Through these stages of production there are many supporting services that are important employers in rural Canada. Feed manufacturers, veterinary services and suppliers, farm machinery and equipment services and suppliers, feed grain producers, auction markets, livestock dealers, financial institutions, and truckers are just a sample of these. A large feedlot is often the largest agricultural employer in their local community.
The beef cattle industry is a global business for Canada, and we're part of an integrated market with the United States. Market integration started over a century ago and has generated many benefits for the industry. Today we have the largest two-way trade in live cattle and beef products in the world and a tariff-free access to the largest beef market on earth.
We are very strong supporters of the Regulatory Cooperation Council process and applaud our Prime Minister on this great initiative. Every dollar of unnecessary cost that we can remove crossing the border will directly increase the price we receive for our cattle, and that's because our price is arbitraged off of the U.S. market.
We're very excited about the future for Canada's beef cattle industry in large part due to the growing global opportunity for high-quality beef. Cattle numbers have been declining worldwide, while human population and per capita income in developing countries continue to grow. Demand for high-quality protein increases with disposable income. The world population is growing by one billion people every 12 to 16 years. Canada will be one of the few net exporting countries that can feed this growing demand. In fact, we believe that agriculture can be one of Canada's most important growth industries for the foreseeable future.
This past year we've seen a large increase in cattle prices, including breeding cattle, resulting in greater heifer retention. This signals our cattle numbers are stabilizing and will begin to grow slowly. These increased prices are a function of tighter supply and increasing global demand that we can now access.
We've regained significant access to all of our top-priority export markets as of January, Korea being the last of the large markets. Each of these markets has different preferences that add value to certain beef products, which in some cases would end up in trim or rendering in Canada if we could not export them.
We recently estimated these preferences add over $200 per head to what we would receive in Canada. We want to applaud the efforts of the Market Access Secretariat, the Ministers of Agriculture and Trade, and the Prime Minister, on their many efforts to regain these markets for our members.
Recently we heard some questions raised about the Minister of Agriculture and Agri-Food's travel expenses over the past two years. His efforts have generated at least a $720 million increase in our prices this past year alone. That is an over $2,600 return for every single dollar that was incurred by the minister for travel. Those market access efforts must continue. We estimate that there's another $139 million that could be readily realized in our major markets.
We also continue to strongly support both the CETA agreement with Europe and the CEPA initiative with Japan, which could provide Canada with preferential access that would create a huge advantage for us over our competitors. We also support the efforts to join the Trans-Pacific Partnership, particularly if Japan enters into that agreement. Over the next ten years, the EU and Japan are projected to have the largest growth in demand for beef imports.
You have asked us to comment on the specific challenges, issues, and other factors that favour or hinder our success and your interest in the federal government’s role in addressing those challenges or issues.
In the short time that I have, I will mention some of the challenges we face. These include the remaining market access issues related to BSE, such as the under 21 months for Japan and under 30 months in certain countries, i.e., Mexico; the increased operating costs that we’re all facing; increased operating lines of credit due to higher cattle prices and input costs; the productivity lag in relation to the US—and I’ll mention a couple of areas, such as the feed grain yields, forage variety development, etc.—labour shortages and Canadian labour unwillingness to work in many rural areas; and a non-competitive regulatory environment in a number of areas.
We believe some of these issues require a strong collaboration between industry and government, and others require a competitive business climate to allow the private sector to flourish.
One clear area for collaboration is food safety. We all share this as a top priority, and we will achieve the greatest outcome by working together. Our industry has declared this as a non-competitive area where all interests share information and technology. Research and innovation are crucial for our future success. The establishment of agri-science research clusters that mesh with our value chain round tables is a very positive development. A longer term commitment to shared funding and maintenance of key federal research resources are critical to success in this area. Regulatory cooperation and modernization are also critical to attract greater investment and early adoption of new science, including plant varieties. Canada’s smaller market size and novel rules have resulted in companies seeking approval in the U.S. first.
The Market Access Secretariat has established a focused, coordinated, and highly skilled team that works closely with industry to address technical market access issues. The investment in Market Access Secretariat has generated some of the highest returns for any government expenditure and needs to be maintained and strengthened.
Once MAS and the ministers have negotiated market access, export market development takes over. We are working to establish the Canadian beef advantage in every market. As mentioned earlier, these markets generate greater value back to every animal and allow our processing industry to be more competitive. Continued shared funding of these programs is important and necessary to compete with countries such as the United States, which provides lucrative market development support to the U.S. industry.
Regulatory modernization is welcome and will remove some archaic policies that actually obstruct adoption of improved procedures and technology. Our vision is to have Canadian high-quality beef products recognized as the most outstanding in the world. A regulatory system that allows timely innovation is needed to facilitate continuous improvement. In many cases, this means less prescriptive regulations and more outcome-based objectives.
Risk management and disaster relief remain important areas for industry and government collaboration. We have recommended some changes to the current business risk management programs and are advocating a national price insurance program based on the Alberta model, which is designed to be actuarially sound. Nine years after discovering BSE, there's still not an adequate disaster program to deal effectively with a foreign animal disease border-closing event.
There is a shortage of agriculturally skilled labour, particularly in western Canada. Our production methods and systems, starting with animal handling, are among the most sophisticated in the world. Finding properly skilled employees who want to work and live in some parts of rural Canada is a huge challenge that will only get more difficult.
We're advocating changes to the temporary foreign worker program to make it more efficient and to facilitate permanent immigration status.
The value chain round tables have proven to be excellent forums for bringing entire sectors together with government. We strongly recommend they continue.
I will end by mentioning a number of initiatives we are undertaking on behalf of the industry. We're the first, and to date, the only national group to establish a national check-off to fund research and market promotion activities. Recently we merged our marketing groups into a new global marketing organization named Canada Beef Incorporated. CBI is working to build the Canada beef advantage based on a value proposition and excellence in safety, quality, and service.
We've developed the Beef InfoXchange System, which has created the most modern and successful beef cattle information-sharing system in the world. The program was launched this winter at the cow-calf level, and now includes detailed carcass information that's available back to the original producer who makes the investment in the national ID ear tag. We're adding additional production and animal health information at the feedlot level, and will use this system to encourage age records and tracking information for our traceability system.
Finally, we started the cattlemen's young leaders program two years ago to attract more youth in our industry. We're pleased to say this is one of our most successful initiatives, and it's continuing to grow.
I will stop there. I know there will be questions later. Again, thank you for the opportunity to appear.