Thank you.
Good afternoon, Mr. Chair, and honourable members of the committee. It's a pleasure to appear before you again and to see some new faces as well.
My name is Matthew Holmes, l am the executive director of the Canada Organic Trade Association. l will be providing you today with our perspective at this time on the comprehensive economic and trade agreement between Canada and the EU.
The Canada Organic Trade Association is the membership-based representative group for Canada's organic business community. Our membership and our elected board of directors represent organic farmers, manufacturers, inspectors, exporters, distributors, and retailers. Our mission is to promote and protect the growth of organic trade to benefit the environment, the public, the economy, and farmers.
In general, we view progressive trade measures as a means to furthering our goals of expanding and strengthening the organic marketplace.
Today I'm going to begin my remarks with a brief overview of Canada' s organic market, which is now the fourth largest in the world. l will then cover Canada' s organic equivalency arrangements with our major trading partners. These are essentially mechanisms for trade facilitation which fit closely with the objectives of the CETA agreement. l will conclude with some of the lessons our sector has learned from the implementation of these arrangements, which l hope may serve as guidance in the coming months as the CETA is finalized and assist in the objective of facilitating more exchange between Canada and the EU.
As I mentioned, Canada is now the fourth largest organic market in the world, and thus a major destination for the U.S. and Europe. The top country markets are the U.S., Germany, France, Canada, and the United Kingdom. The total world market is valued at about $63 billion per year, and it's growing rapidly.
Of the world's organic market, 96% is found in North America and Europe, and so obviously, with new trade ties with Europe, we're very interested in seeing some of those market connections strengthened. Canadian organic farmers and processors need better access to these marketplaces, particularly for the organic sector.
Here at home our organic market tripled in size between 2006 and 2012, growing right through the recession, and is now valued at over $3.5 billion per year. Our research on exports has also found that these have tripled over the same period and are estimated at $458 million per year, which, in comparison, is more than Canada's export of live or frozen lobster, and more than the projected market for Canadian pork in Europe under this new deal.
We're also growing at the producer level. Our recent analysis of the census of agriculture shows that between 2001 and 2011, while total farms in Canada declined by 17%, organic farms increased by 66.5%. On average, when compared to all farms in Canada, organic farmers are younger, have higher earnings, and create proportionally more jobs in agriculture. We now have approximately 5,000 certified organic farms, handlers, and processors. Whatever your personal views on organic agriculture are, there is absolutely no question that it is among the fastest growing agricultural sectors in the country, and holds massive economic potential for agriculture in Canada, particularly when we're talking about Europe, which is home to the highest consumers of organic in the world.
Last week l had the privilege of meeting with the honourable Robert Goguen in Moncton, as he announced $500,000 , on behalf of Minister Gerry Ritz, for the Canadian organic sector in order to enable us to maintain our rigorous standards and to promote Canadian organic products here at home, and in these critical export markets through the AgriMarketing program.
Additionally, one of the major policy tools for opening markets for Canada's organic sector has been organic equivalency arrangements. Canada has been a pioneer in establishing these agreements on mutual regulatory and standards recognitions with our major trading partners starting in 2009 with a Canada-U.S. deal.
Canada followed up on this in 2011 with another first, announced by ministers Fast and Ritz, an organic equivalency with the EU, making us the only country in the world at that time that could supply 96% of the world's organic markets with one domestic certification. Canadian operators had a significant edge.
Like the previous Canada-U.S. deal, the Canada-EU deal recognizes the organic standards and regulatory oversight of each jurisdiction. It allows Canadian organic products entry to the member states of the EU without having to take on a second redundant and expensive certification or inspection.
Canada's organic equivalences are thus major milestones for our sector, but not just for our producers here at home, but for the entire global organic market. We now have many others who are following in our footsteps to try to strike similar such arrangements.
Here begins what I'll term my cautionary tale for those who will implement the CETA.
In 2011 when the EU published the final text of its regulatory amendments recognizing Canada's organic system, they put in place highly restrictive rules of origin. In good faith, Canada did not do the same thing and opened our market to all organic products originating from the EU. The result in essence is that through this deal, Canadians have become character actors, hewing wood and drawing water, only to be able to engage in commodity exports while buying value-added products from Europe. Single ingredient products and a few multi-ingredient products that are exclusively 100% Canadian ingredients can go to the EU market. Meanwhile, value-added products made here in Canada by Canadian companies with Canadian ingredients that are perhaps sweetened or flavoured with cinnamon or vanilla have to go through a secondary full inspection of all their ingredients, down to origin. It's quite costly and not very conducive for business.
I want to highlight how this equivalency with the EU also became a model for two other jurisdictions. Switzerland is a very important market for us, particularly for organic wheat and oilseed. Soon after the arrangement with the EU was struck, the Swiss came and began discussing a similar equivalency with Canada. We soon reached an agreement, but in deference to their neighbours, the Swiss reaffirmed the same restrictive rules of origin that are in place in the EU-Canada deal.
Meanwhile, the U.S. and EU were also discussing organic equivalency. These are the two largest world markets clearly and this is a striking scenario, very similar to the situation we find ourselves in now. The Americans basically saw the pitfalls of Canada's deal with the EU, and within six months announced a comprehensive trade equivalency for organics with the EU, which did not have the same restrictive rules of origin for products from the U.S. These differences are still in place two and a half years later.
Major Canadian businesses with global organic sales have told me that a second-class deal for Canada has made it almost impossible for them to give preference to their Canadian plants and jobs, while it has strengthened their U.S. lines. More Canadian lines are now at risk. Two and a half years after the original arrangement, Canadian manufacturers have to make a difficult decision if they want to continue to sell to the EU.
I spoke just this morning to a B.C. company that faces moving dozens of jobs and millions of dollars' worth of sales to a U.S. facility, largely because of this specific gap in our organic equivalency.
I want to pause here, though, and commend particularly the hard work and diligence of our Canadian officials who have worked on this file. This happened through no fault of their own. Agriculture Canada and CFIA have really dedicated time and effort to this issue. However, for all of their effort, the Europeans have not responded with action on this.
In summary, Mr. Chair, the Canada Organic Trade Association does not see explicit dangers or concerns for the organic sector in the CETA right now. However, based on our recent experience, we are concerned with how it is implemented and that the deal that was announced for Canada is in fact the deal that Canada gets.
When reviewing the CETA, we note the following favourable elements.
CETA makes commitments to increased regulatory cooperation and that standard-setting bodies will work more closely together. This aligns with the organic sector's needs and builds on our organic equivalencies.
CETA indicates it will not change the farmers' right to save and replant seeds of a protected variety on their own land under the federal Plant Breeders' Rights Act. The organic sector is supportive of the right to save seed, since there is not enough organic seed available in Canada to meet current demand and our growth forecasts. We have very unique needs to ensure the genetic integrity of our seeds and some of the best optimized characteristics for organic production.
As well, I see the CETA agreement spent some time on the rules of origin and how this will be addressed for multi-ingredient products. It's very important that this be scrutinized and implemented carefully.
In conclusion, our organic maple raw commodities and even organic meat sectors will certainly see benefits from the CETA as envisioned, but at this time I cannot say that our organic manufacturers and value-added sector will see any improvement in market access. Unless the organic equivalency with the EU is fixed and prioritized, we will continue to have an agreement in name only while technical barriers to trade are the real order of the day.
On that note, I thank you for your time and consideration, and for the opportunity to appear before the committee again.
