Mr. Chairman, thank you for inviting us before you today to share our perspectives on the 2017 federal budget. Specific policy changes can help Canadian chicken farmers and the Canadian chicken industry grow our economic contribution and create more jobs to support Canada's middle class across the country from coast to coast.
Chicken Farmers of Canada represents 2,800 farmers, and we work with our value chain partners, who include 244 hatching egg farms, 40 hatcheries, 76 feed mills, and 191 processing plants. We take pride in the valuable contribution we make to Canada's rural and urban communities while contributing $5.9 billion to Canada's GDP, sustaining 78,000 jobs, and paying $2 billion in taxes. Our industry generates employment in farming, processing, veterinary work, transportation, retail, restaurants, and more.
The chicken industry in Canada relies on the stability and predictability provided by supply management in order to maximize our contribution to the Canadian economy. This stability and predictability has been compromised by the persistent circumvention of Canada's importing rules.
On October 5, 2015, the previous government announced its commitment to implement changes in order to address the losses that have been caused in our industry by increasing fraudulent imports over the past several years. Chicken Farmers of Canada requests that the federal government fulfill this commitment by implementing our three recommendations for re-establishing the integrity of the import control pillar. Our recommendations come at no cost to government; in fact, they will create more jobs, increase our contribution to GDP, and generate more taxes.
Our first recommendation is to implement a mandatory certification for imports classified as spent fowl and to use the DNA test to guarantee proper classification. Spent fowl are laying hens at the end of their production cycle, while broiler chickens are raised specifically for meat consumption. Broiler chicken is subject to import controls and spent fowl is not, meaning an unlimited amount can be imported; yet a substantial volume of chicken broiler meat continues to be illegally imported into Canada labelled as spent fowl. These illegal imports became noticeable in 2012, and so far in 2016 Canada has imported 114% of the United States' entire spent fowl breast meat production. This is impossible, of course, and points directly to import fraud.
There is no means of visually distinguishing between broiler meat and spent fowl meat at the time of importation. With our support, Trent University developed a forensic DNA test that verifies whether a given product contains chicken, spent fowl, or a combination of the two. We recommend that this test serve as part of the mandatory spent fowl import certification verification process. Based on conservative estimates, 37 million kilograms of chicken was illegally imported as spent fowl in 2015, which is equivalent to 3.4% of our domestic chicken production.
Our second recommendation is to exclude chicken from the duty relief and drawback programs. These programs were never designed for such perishable agricultural goods as chicken, meaning companies can take advantage of the program in order to circumvent import controls.
Firstly, the programs provide a four-year timeline to import, process, and re-export chicken, greatly exceeding the shelf life of frozen chicken products. In addition, product substitution is permitted whereby high-value cuts can be imported but the re-exported product can contain less valuable domestic cuts. Finally, unreported or misreported marinating, glazing, sizing, and yields result in less chicken being re-exported than was imported, with the difference being diverted into the domestic market. Imports through the duties relief program have increased exponentially over the past few years, reaching 96 million kilograms in 2015, representing more than 9% of our production.
Chicken Farmers of Canada would like the government to make chicken ineligible under the duties relief program. Companies can use the Global Affairs Canada pre-existing import for re-export program, a program specifically designed for goods such as chicken.
Our third recommendation is to reinstate into the customs tariff definition the sauce and cooking requirements of the specially defined mixtures as contained in Canada's WTO commitments. Chicken combined with as little as 13% of other ingredients is labelled as a specially defined mixture and is not considered chicken for import control purposes.
Some companies have identified this as an opportunity to circumvent trade rules by adding sauce to a box of chicken wings or by creatively packaging two distinct products together. Chicken Farmers of Canada recommends that the Government of Canada reinstate the sauce and cooking requirements of the definition in the customs tariff. This reinstatement is fully consistent with our WTO and NAFTA obligations.