Thank you very much, Mr. Chair, and members of the committee.
The Grape Growers of Ontario is the official organization, acting under the authority of the farm products marketing commission, which represents all of Ontario’s 500 growers of 17,000 acres of processing grapes, including 176 wineries.
Just as a little bit of background, Ontario's 2012 harvest has set records in terms of yield and quality. The fact that this has taken place at a time of global wine shortages and skyrocketing international grape prices provides an unprecedented opportunity for Ontario's grape and wine industry. Ontario is the country's leading grape producer, accounting for about 77% of Canadian production.
The 2012 harvest is a record crop, at 66,000 tonnes of grapes, valued at more than $88.6 million. The Ontario industry generates almost $660 million in retail sales in Ontario annually. According to a recent economic impact study, the Canadian grape and wine industry has a $6.8 billion economic impact, a $1.12 billion impact in terms of tax revenue and markups, and creates 31,000 jobs. On average, one bottle of Canadian wine generates $30.76 of economic impact.
Grape growers have invested over $15.8 million in wind machines to protect their vineyards from cold injury over the past seven years. That investment paid off in preventing injury to our grapes in 2012, when we experienced an early spring frost that could otherwise have been devastating to grapes. The year 2012 has been an excellent year for Ontario's grape and wine industry. We have seen some good progress in recent years and there is reason to be optimistic. At the same time, we do have reason for concern and must continue to focus on the growth of our industry.
In 2008, the Government of Canada announced “Product of Canada” and “Made in Canada” guidelines “to provide Canadians with the information they need to choose Canadian foods produced by our farmers and processors.” Key objectives were to avoid misleading claims and to be clear, transparent, and support consumer choice.
Following the announcement of CFIA, the Canadian Food Inspection Agency’s new proposed guidelines, consultations were undertaken, and the Grape Growers, along with the Wine Council of Ontario, made a submission to CFIA's initiative in 2010. We're obviously still waiting for the results of that. We are requesting that CFIA require sellers of blended wines in Canada to include a minimum of 25% Canadian content in blended wines that are called international and Canadian blends, or ICB, in order to provide some justification for using the descriptor “Canadian”.
We also recommend that a list, in descending order by proportion, be provided on the back label, of the countries of origin of the imported wines that have been blended with Canadian wine. We further recommend that the minimum content threshold be reviewed in five years to determine whether the grape supply has been consistently sufficient to justify an increase to the threshold. Canadian content must refer to the ingredients, or grapes in the bottle, not the labels, not the corks, or the glass bottles. Consumers expect no less.
The justification for these requests lies in the need for greater clarity in the labelling of wines sold in Canada, including with respect to minimum levels of domestic content, where Canadian content is indicated on the label.
A survey prepared by Nanos Research for the Canadian Food Inspection Agency in December 2011—“Canadians' Views on Domestic Origin Labelling: Canadian Wines and Blended Wines”—indicated that country of origin is a significant issue among key consumers. More than half of Canadians, 55%, said that they pay close attention to the country of origin information of the wine they buy, and attention to the label was strongly related to wine consumption behaviour.
A key finding in the survey is that “only 32 percent of Canadians agreed that 'Blended in Canada from domestic and imported wines' gives them a clear indication of origin.” Consistently, Canadians tended to find that general statements were not very clear. We submit that it is only reasonable that there should be a minimum of 25% Canadian content requirement at the federal level for any product that wineries seek to market as an international and Canadian blend wine.
Growing the local market is critical to sustaining the Canadian grape and wine industry. Today VQA wine sales, which include 100% Ontario grapes, account for 10.5% of all the wine sold in Ontario. When these sales are combined with the international and Canadian blends, which currently include at least 25% Ontario grapes, Ontario wines make up just 41% of market share in Canada.
Competing international wine regions hold shares upwards of 70% in their domestic markets: Australia 90%, California 63% of the entire U.S. market, and New Zealand 57%.
Exporters of wine are increasingly prioritizing Canada as a target market. What makes our marketplace so attractive? Canada is the sixth-largest wine importer in the world, one of only three countries that have shown sustained growth, United States and China being the other two. Total wine consumption has grown 30% over the past five years. Canada has strong average pricing, and value growth has been outpacing volume growth.
We need to recognize the value of our own marketplace and support the development of the domestic market for Canadian wines. We would also like to suggest CFIA's inspection modernization will require licensing for all parties who import or export food. The Grape Growers of Ontario recommends that primary producers exporting raw product for processing be exempt from this licensing.
In 2007 the Cadbury Schweppes grape juice facility in St. Catharines, Ontario, closed. This plant closure impacted 2,000 acres of Ontario’s vineyards and about 105 grape growers who supply juice grapes. Today, approximately 1,500 tonnes of juice grapes are shipped to the United States for processing into Welch’s grape juice.
As for Growing Forward 2, we want to thank the Government of Canada for approving and moving forward with this important initiative. Government investment in innovation and applied research provides valuable assistance to the agriculture industry in continually improving the production, capacity, financial sustainability, and competitive advantage of our industry.
The Grape Growers of Ontario has been able to deliver a number of valuable applied research projects by accessing Growing Forward funds in the past, such as a $1.9-million DIAP project, in which we, along with Brock University, provided outreach to growers and wineries through a viticulturist and oenologist, and provided analytical services and research support for cold winter hardiness, one of our greatest challenges.
The non-business risk management programs have helped Ontario’s grape industry to increase its competitiveness and grape quality and to reduce production-associated risks, which could not have been achieved without the government's non-business risk management programs. An investment in innovation, science, and research programming helps reduce the long-term cost of business risk management to the government. Innovation programming is supported and needed by Ontario’s agrifood and agri-based products industry.
Thank you very much.