Thank you, Mr. Chairman, and my thanks to the committee for the invitation to speak today.
The Canola Council of Canada is a national trade association representing all sectors of the industry, including producers, input suppliers, processors and crushers, and marketers of canola and its products. Our mission is to foster a regulatory policy and business climate based on innovation, resilience, and creation of superior value for a healthier world. Our current goal, which we set this last year, is to help the industry grow to 15 million tonnes of market demand and production by the year 2015. To put that in perspective, our current production is approximately 9 million tonnes.
Korea is currently a market for Canadian canola oil—and I have supplied documentation on that. In the past, especially during the 1990s, Korea was a significant market for canola meal. In the future, we think it will be a continuing market for canola oil, canola meal, and perhaps canola seed.
Canada now supplies approximately 35,000 tonnes of canola oil to the Korean marketplace. At today's prices of $1,200 to $1,300 per tonne, that trade is worth approximately $45 million to the Canadian economy.
Our market for canola in Canada is limited in part by the tariff structure. There are discriminatory tariffs. They've existed for a long time and they are different from those affecting our main competitor products, which are soybeans and soybean oil.
The current tariff structure for canola oil is 8% for crude oil and 10% for refined oil. At today's prices, this tariff is costing approximately $100 per tonne. Based on sales of 35,000 tonnes, that is about $3 million to $4 million in total costs.
At the beginning of 2006, the Korean government reduced the tariff on crude canola oil—from 10% to 8%. At that time, they also lowered the tariff on refined canola oil from 30% to 10%. This has certainly helped our case. As the numbers show, during this time we almost doubled our sales of canola oil to Korea, and we have certainly seen an increase in the amount of refined oil that is sold. As we look towards 2015, we see that Korea has the potential to import between 50,000 and 100,000 tonnes of canola oil.
We are not now supplying any canola meal to Korea, because there are higher-value markets in the United States. With our expected increase in domestic crushing and increased supply in canola meal, however, we see that in future Korea could import as much as 100,000 tonnes of canola meal from Canada.
With regard to canola seed, the infrastructure is currently more suited to crushing soybeans than to crushing canola. But if the market conditions are right, there is the potential to develop a canola seed market in Korea as well.
In our submission to the standing committee, we stated, with regard to the free trade agreement, that we would like to see the elimination of tariffs on canola seed and oil. In the current negotiations, our first priority would be an immediate reduction of canola oil tariffs to 5.4%, which would provide tariff parity with soybean oil. If we could get a deal similar to what the Americans got with their free trade agreement with Korea, it would be a step forward for us.
As for the phase-down from 5.4% to 0%, we would like to see this at the same rate as soybean oil, so that we are not disadvantaged in comparison with our major competing product.
Thank you. I look forward to your questions.