I'd like to take a couple of minutes to speak to the issue of food supply, and in particular, to the current system of supply management in Canada.
We consider ourselves partners with all Canadian producers in Canada, and we have a vested interest in ensuring that there's a robust dairy and poultry sector. I want to underscore the fact that over and above the more than one million employees we employ across the country, we are also responsible for upwards of 20% of all the agricultural jobs created in Canada.
As one of the largest customers for dairy and poultry products, we have serious concerns about the long-term viability and sustainability of Canada's current supply-managed commodity sectors. Canada's closed marketing systems for dairy and poultry have led to a crisis in supply, have stifled innovation and new product development, have shut down export opportunities for all Canadian producers, and have resulted in higher supply-managed commodity prices for customers and consumers alike.
Canadian restaurants buy over $2 billion worth of dairy products every year. This makes us one of the dairy industry's largest customers. As a benchmark, the cost of production, according to the Canadian Dairy Commission's own study, has risen only 1.5% since 1994. The price of producing a hectolitre of milk in this country has actually increased by only 1.4%. At the same time, the price of industrial milk has increased by a staggering 54.5%. As you'll see from the chart I've provided, when you consider this against the consumer price index, which has risen a mere 30.2% during that same 12-year period, the cost-to-price gap is astounding, at nearly twice the rate. Is it any wonder that we've seen a decline in the consumption of dairy, as dairy prices itself off Canadian menus?
The next slide I've provided is a quote. I'd like to read it. It's actually something that came into our website during one of our annual dairy campaigns:
I am a small independent pizzeria operator and one of my biggest costs is cheese. Every time the price of cheese goes up, I have to raise my prices which makes me less competitive. Why do frozen pizza makers get cheese cheaper than I can? We need to make the system fair for everyone.
This is from one of our pizzeria operators in Alberta.
I just want to be clear that restaurants need a level playing field in order to compete successfully in this country. The existing special milk class permit program has created inequities in the system and gives preferential pricing to frozen pizza manufacturers, who pay U.S.-based cheese prices for their pizza cheese. Fresh pizza makers pay 30% more for their cheese, yet they compete directly in the marketplace with frozen pizzas. What I'm asking is to have access to special milk class 5A cheese pricing in order to compete with frozen pizzas in the marketplace.
So what are some of the solutions we see in terms of the supply management system? Clearly, there's a need for reform across the board. As the world's fourth largest exporter of agricultural products, Canada must begin to plan for transition to more open markets. Canada's existing closed marketing system for supply management is outdated and is costly to Canadians. The antiquated legacy systems limit our ability to innovate and promote dairy and poultry products in Canada.
I also would like to highlight that similar supply management systems have been reformed in other jurisdictions, such as Australia and New Zealand, so there is ample precedent and there are case studies on the success of reform.