We cannot come here today without putting in broader context the impact of COVID on the dairy sector.
At full implementation, when considering the last three trade agreements, Canadian dairy processors will lose about $320 million per year on 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 management system.
As per the clauses of the agreement, there's a significant difference between year one of CUSMA and year two, both in terms of export caps and level of access into the Canadian market. There is no question that having CUSMA entering into force on July 1 instead of August 1 will have a huge impact on the dairy sector, as it means that year one of CUSMA will last 30 days as opposed to a full year.
We trust that 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 the twofold approach to mitigate the negative impact of these trade agreements: first, allocation of import licences to Canadian dairy processors; and second, a dairy processor investment program.
In conclusion, the pandemic has brought unprecedented challenges to the entire Canadian economy, and the dairy sector is facing significant pressures endangering its financial viability. It is imperative that essential activities such as ours be treated as such by our governments.
We thank you for your time and consideration of this important topic, and we welcome any questions you might have.