Agriculture Committee on Nov. 7th, 2013

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Okay.

We know that 17,000 or 18,000 tonnes have been given to Europe in terms of additional access, but we also know that CETA will not start for two years. So over the next two years, the domestic cheese market in Canada is going to grow by 12,000 to 16,000 tonnes, which is almost what we're giving to the EU in terms of new cheese access. In other words, domestic consumption is increasing, and it's going to continue to increase over the implementation phase as well, which would be possibly a five-year implementation phase.

Let me just ask you, of the domestic cheese market today, what percentage of that is serviced or owned by the Canadian dairy sector?

[Wally Smith]

It's 95%.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

That's a pretty strong market position.

I was listening to your opening comments, and you spoke about the money you spend on advertising. I personally feel that it has been extremely well spent, because I feel that you have the confidence and the loyalty of the Canadian consumer. The Canadian consumer loves Canadian farmers, and there you are, building and reinforcing this bridge with the Canadian consumer.

The reason I mention this is that I'm not too sure why you feel you would lose the confidence and the loyalty of the Canadian consumer. There are 17,000 tonnes of European cheese coming in. Just because it's coming in doesn't mean it's going to sell. I think one of your strong messages is that you produce a high-quality, healthy, and competitive product. Is that right? Is that what you produce in terms of cheese?

[Wally Smith]

We're proud of the product we produce in Canada, yes, absolutely.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Right, so I guess I don't quite understand why the dairy sector feels highly threatened by this. When we look at the numbers, we see that you have a 95% lock on the domestic market right now. The cheese consumption growth in Canada will equal roughly what was given to the EU in two years, before CETA even starts, and then there will be a phase-in window of possibly five years.

Maybe you could explain that. If you're making a high-quality product and you have the confidence of consumers, why is the sector so threatened by imported cheese, especially when we have strong competitors for cheese, as mentioned by Ms. Morris?

[Wally Smith]

With your indulgence, Mr. Lemieux, I would turn that question over to Mr. Doyle. I'm a dairy farmer, and the technical aspect of some of this isn't really that familiar to me.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Sure.

[Wally Smith]

Mr. Doyle.

[Richard Doyle, Executive Director, Dairy Farmers of Canada]

Okay.

There is growth in the cheese market, mostly in retail. Right now, there is no growth in industrial or non-retail cheese. Your 17,700 tonnes is divided between fine cheese and industrial cheese. The 1,700 tonnes is in a no-growth market, so that's a direct displacement. The 16,000 tonnes for fine cheese then becomes an issue as to what the product is. If I look at the fine cheese market, I see that it's 50,000 tonnes. The Brie and the Camembert, that's the fine cheese market—

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

If I could, though, from a dairy producer point of view, he's producing milk for cheese products. One can argue that there's a slightly higher percentage of milk in fine cheese than in an industrial cheese, perhaps, but I think if you're looking at the overall metrics, if the cheese market is growing in Canada at the phenomenal rate that it is and it will far outpace what new access has been given to Europe, surely the dairy farmer, who is providing milk to cheese, sees a growing cheese market.

Whether it's fine cheese or industrial cheese, I don't.... In a sense, you're sort of splitting hairs, because there's growth in the cheese market of 6,000 to 8,000 tonnes a year.

[Richard Doyle]

Are you telling me that the shelf space in the stores is all going to increase? The reality is that you have a 50,000-tonne cheese market right now. There's the fine cheese in this country, and that grows by 500 tonnes. In five years, you're bringing 3,200 tonnes into a market that grows by 500 tonnes—

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Right, but the domestic cheese market—

[Richard Doyle]

There will be displacement, whichever way you look at it.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

No, the domestic cheese market is 425,000 tonnes—

[Richard Doyle]

Yes, but that's not the cheese you're importing.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

But from a dairy—

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, let Mr. Doyle answer the question. He was asked a question and he wasn't given the opportunity to answer.

[Lemieux]

Sorry, Chair, but it's my line of questioning.

[Wayne Easter, Liberal, Malpeque, PE]

I think it would be nice if he could answer.

[An hon. member]

Mr. Easter, respect his time.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

On a point of order, please respect my time, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Respect his time to answer the question. It would be nice, guys.

[The Chair, Conservative, Bev Shipley]

I'm going to let Mr. Doyle have a quick wrap-up, and then we'll go to the next speaker.

[Richard Doyle]

We've said it very clearly: the producers are investing to grow that market, and you're saying it's okay, we're just going to give all the growth of that total market. The reality is that the competition is not going to be in the total market; the competition will be in the market niche. A 30% increase versus your 2% or 3% increase is a huge difference in how the market operates.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

I guess what I'm saying is that the existing cheese market is growing.