Thank you very much, Mr. Chairman.
I have a presentation that will be made partly in English and partly in French.
First, I'd like to start by giving a bit of background on the organization. We represent all dairy farmers in Canada from a little over 15,000 farms. We market under a supply management system that has worked fairly well for us in all aspects.
Just to give you some background, when we talk about the Canadian dairy market, a lot of countries around the world are very--if I can use the word--jealous of the return dairy farmers are getting compared to the retail price. There are a lot of reasons for that. Producers, every year, invest to the tune of about $90 million in marketing and promotion. That's how we have kept this a very viable market for all industry stakeholders, including retailers and processors. It's a market that, for the last 40 years, we've spent a lot of time developing, especially the cheese market. It's a very viable market for us, and we want it to be maintained as it is today.
That's why, when we go to WTO trade negotiations, we state so clearly that Canada has some offensive interests but also some defensive interests. Our defensive interest--because we are in a sensitive sector and because we invest that kind of money--is to secure our domestic market as much as possible.
We know that the WTO negotiations, for the next few months, are going to be quite an uphill battle, and the survival of supply management is a key concern for us. When we go back to November 22, 2005, when all political parties supported the House motion saying that supply management had to stay intact with its three pillars, that was something.... When we travel in international circles and talk to other farm groups across the globe, they come to the conclusion that the system must be extremely viable for all the stakeholders in the chain if all parties in one country support a common interest in a farm policy. It's something unseen anywhere else around the world. And I think we should use that as much as possible to show how we have been able to keep successful dairy commodities without paying subsidies, as we have had to do for other commodities.
We also need to ensure in the House that our house is in order when we go to this trade negotiation, because when you have offensive and defensive interests, you always have to keep a balance. What we'd like to point out about this balance is that the bulk of the revenue from Canada's agriculture and agrifood production, over 70%, comes from the domestic market. We do export an awful lot, but when you look at the actual revenue--and there's an appendix here to explain that--we have to keep that in mind, because it's a very high percentage.
Government support of supply management must be reflected in Canada's agricultural policy. We know that we are under an APF discussion here, the APF-2. Because everything is about farm revenue and farm income and how we make that sector more profitable in the food chain, it should be very clearly stated that one of the programs that should be looked at is supply management, maybe, for other commodities. Basically, to do that you need a very good producer pricing system, strong import controls, and production discipline. It's becoming clear that if you want a better return, you have to manage your inventory or manage your production somehow so that you don't create a surplus. There's the old saying: a 5% surplus in a commodity that's not organized depresses the price by 50%. This is how supply management really cures the balancing between the processors and the rest of the food chain.
We need to strengthen our import control measures which are necessary to run an efficient supply management system. We would like the government to do a certain number of things.
I will read the list, as these measures are quite specific:
- the operationalization of Canada's right to use the Special Safeguard Measures, permitted under the WTO Agreement. It is incomprehensible that Canada has not yet made its measures operational while the EU and the US began to enforce these measures as soon as the WTO Agreement was implemented;
- exercising our rights such as Article XXVIII of the GATT, just like the EU did in the case of salted chicken, for example;
- using due restraint when considering whether to issue supplementary imports permits. Quite often, when the government issues supplementary imports permits, it is detrimental to farmers;
- reviewing CITT and CBSA practices to ensure greater transparency and ensure that producers of raw products have standing in the context of Canada's trade remedy regime. For example, with respect to increasing butter oil or milk protein concentrate imports, dairy farmers in Canada do not have standing to submit complaints to initiate antidumping or countervail proceedings. The rationale is that dairy farmers produce milk rather than butter or milk protein, although both can only be found in milk. Dairy producers are the ones who are seriously injured, but they cannot have access to antidumping or countervail proceedings because they have no standing.
Proceeding with the above measures will increase Canada's credibility at the international level. Let me give you a simple example: how can Canada be taken seriously when it demands that the special safeguards mechanisms be maintained when these measures are not operational in Canada? Canada is all talk, but there is very little action. Take, for example, the safeguard measures for butter oil. Producers have lost about 50% of their ice cream market. When we look at the product itself and at the impact on dairy producers, we realize that these are reasons enough to justify the setting in place of safeguard measures.
The recess at the WTO is an indication that the proposals laid on the negotiating table need to be reviewed. Although efforts are being multiplied to officially restart the talks in Geneva, the likelihood of another failed attempt remains high. Discussions are being held in many quarters, but there has been very little progress to date. We are all aware that the talks could be stalled for two to three years if no agreement is reached by March.
We have our views on this: the developed world has provided support to its agriculture for decades and this is not likely to change. Because of the green box programs and the decoupled support provided by the EU and the US to their producers, we don't foresee any changes in the near future. The only thing that would change is the location or the name. The United States has semi-green and semi-blue programs. They have a whole host of things. In view of the deadlock in the negotiations, we don't really think there will be too many accommodations for agriculture in Canada, unless we provide access to clean markets, as Marvin has just said.
With that in mind, we must be well aware of the issues and ensure that Canada's interests are taken into account.
In the event that the delay extends beyond March, we will have to review how our system can be less at risk from a WTO perspective. Dairy farmers of Canada do not believe in an unregulated market place. Trade liberalization will not improve the overall economic welfare of the diary farmers. A USDA sponsored study, appended to our brief, demonstrates that the opposite is true.
The negotiations will concentrate on how to eliminate subsidized exports, how to regulate the green boxes, and how to decouple the blue boxes and the payments. While those issues are being negotiated, the interest of producers worldwide will not really be discussed, because farm income is too weak or none existent. That is the problem. That is the context within which these issues must be approached.
Let's be positive and try to wrap up the negotiation while emphasizing our interests, if at all possible. We have the time. We hope that the Canadian government will review its approach and acknowledge the dilemma in which we find ourselves, so that we will not be on the loosing end, unable to turn back. That possibility is fast approaching. There must be some repositioning and strategic thinking by the Canadian government when it comes to Canada's industry as a whole.
Thank you very much, Mr. Chairman.