Thank you for the invitation to appear before the committee. My family and I have a beef herd we raise on our farm in Castleton, Ontario, in Northumberland county, about halfway between Toronto and Kingston. Before talking about the Trans-Pacific Partnership specifically, I'd like to provide some context regarding the significance of the beef sector in the Canadian economy.
The 2011 the ag census identified 68,500 farms in Canada that derive more than half of their income from beef production. Over the period from 2010-2014, cattle and calves have been the second largest revenue maker for farms, after canola. Farm cash receipts from cattle and calves totalled $9.7 billion in 2014, representing 17% of the total farm cash receipts. The cattle industry contributed $18.7 billion to the Canadian GDP in 2014.
In 2011 the beef sector supported 228,811 fulltime-equivalent jobs, either directly or indirectly. Every job in the beef sector yields another 3.56 jobs elsewhere in the economy. For every $1 of income received by workers and farm owners, another $2.08 is created elsewhere.
For many years our top market access priority was the country of origin labelling dispute with the United States. I am very pleased to report this long-standing issue was resolved when the U.S. repealed the offending legislation just before Christmas.
The establishment of a new market access through trade agreements is now our top international trade priority. The two most immediate opportunities for new beef access are to Europe, through CETA, and improved access to Japan through the Trans-Pacific Partnership. Canadian beef producers are strongly supportive of the TPP.
We achieved our primary objective in TPP negotiations, which was to re-level the playing field for Canadian beef in Japan. In 2014 we exported nearly 19,000 tonnes of Canadian beef to Japan, worth $103 million. In 2015 we sold only 14,000 tonnes for $93 million. That's a 9.3% drop in value, but nearly 24% drop in tonnage. The main reason for the decline is that we are shipping at a competitive disadvantage to Australia since they already have an FTA with Japan. While Canadian beef is still subject to a 38.5% tariff in Japan, Australian beef is already down to 30.5% for chilled, and 27.5% for frozen. Unfortunately, the disadvantage is just getting started. A weaker Canadian dollar in 2015 partially mitigated the impact. This year we are greatly concerned about the combined impact of a strengthening dollar and the increased tariff disadvantage.
The good news is that we can eliminate the disadvantage by implementing TPP. As soon as the TPP is implemented, the Japanese tariff on Canadian beef will immediately match the rate for the Australian, then decrease to 9% over 15 years. We feel that with the TPP, we can double or nearly triple our exports to Japan to about $300 million. Without the TPP or a bilateral agreement with Japan, Canada will likely lose around 80% of the value of our beef exports to Japan.
For the Canadian beef exports to Japan, there is no status quo. Either we implement an agreement and reap the benefits, or we do not implement and we can say goodbye to nearly all of our existing exports to Japan.
Our only concern about TPP is that it may not be implemented. It is fair to say at this time that it is not certain what the U.S. will do, but we know that according to the implementation formula, the TPP cannot come into effect without the U.S. Therefore, we believe we should have a made-in-Canada strategy to ensure that Canadian exporters are not disadvantaged due to Japan's other FTAs with our competitors.
Although Japan represents a great deal of value for Canadian beef in the TPP, it is not the only benefit. We feel that Vietnam will be a market of growing importance for beef. We know that as countries move up the economic development ladder, their people tend to increase their consumption of beef. Currently Vietnam has a tariff of 15% to 20% on beef cuts, which will be fully eliminated under the TPP in three years. Vietnam's 10% tariff on beef offal will be eliminated in five years.
Korea has also expressed interest in joining TPP. We already have an FTA with Korea that was implemented last year, and we have had the first two of 15 tariff cuts. However, the U.S. is three years ahead of Canada and Australia's beef is one year ahead of ours. We will eventually all be at zero, but we believe that the TPP can be a tool to speed the tariff phase-out. We believe Korea's price of admission to TPP should include accelerating its tariff elimination on Canadian beef to match the rate U.S. beef receives.
Before concluding I want to compliment the negotiating team. CCA was at almost every TPP negotiation round since Canada joined in late 2012, and the negotiators really were committed to keeping us in the loop and getting our direction and feedback. It was great collaboration and the results reflect the co-operativeness of the process.
In conclusion, implementation of TPP is vital for the beef sector. The cost of not implementing it will be severe. There is no status quo.