We cannot come here today without putting into a broader context the impact of COVID-19 in the dairy sector. At full implementation, when considering the latest three agreements, Canadian dairy processors will lose $320 million per year on their net margin. On top of the market access concessions, CUSMA has a clause that imposes caps on worldwide exports of Canadian milk powder, which will make it increasingly difficult to balance the supply-managed system.
We appreciate the opportunity the government gave to the dairy industry to voice their concerns and work towards a compensation scheme to mitigate the impact of trade agreements through the mitigation working group; however, while dairy processors worked diligently and submitted their mitigation plan in 2019, we haven't yet heard back from the government. This is extremely disappointing.
We trust the government will keep its promises to fully and fairly compensate dairy processors for their losses. As such, we would like to remind the committee of our twofold approach to mitigate the negative impact of trade agreements.
The first is a dairy processor compensation program, which would aim at supporting investment in dairy processing capacity, competitiveness and modernization. That program would include tools such as non-repayable contributions for investments, refundable tax credits, etc.
The second is the allocation of dairy import licences, known as tariff rate quotas, or TRQs for short, to Canadian dairy processors.