Thank you very much, Mr. Chairman.
I do appreciate the opportunity to present to this international trade committee meeting.
As you well know, our Canadian hog producers are continuing to battle an unprecedented period of losses on their farms. The hog sector crisis is now into its third year, as we're trying to struggle with the shocks hitting our system every month, it seems. While the crisis was started with the rapidly rising exchange rates and high feed costs, these variables have moderated. They've been replaced by the global economic crisis, which has reduced access to credit, and by the U.S. introduction of mandatory country-of-origin labelling.
As our sector relies tremendously on exports—in fact, two out of every three hogs born in Canada are exported either as live hogs or in the form of pork products—we are totally exposed to global shocks. We're facing serious challenges in terms of our ability to compete in the world market, and we must not lose sight of the Canadian hog industry's long-term interests. The world economy will continue to evolve, and we cannot afford to suspend any efforts that can improve our market access. In the short term, we encourage you to ensure that Export Development Canada has the tools in place to ensure that lines of credit are available to exporters for emerging markets.
The Canadian pork industry enjoys a solid worldwide reputation for superior quality and animal health status. For example, in 2005 Canada set new pork export records by shipping for the first time over a million tonnes of pork to over 100 countries around the world, valued at over $2.8 billion. A study from the George Morris Centre found that those pork exports alone account for about 42,000 jobs and $7.7 billion in economic activity in Canada. In 2008 the export value was $2.7 billion.
In today's economic crisis, I think we have to remember that we want to protect these jobs in our country. And given that hog and pork production occurs in every province in this country, there's no denying our industry's significant contribution to Canada's economy and labour force.
We must point out that the creation of the Market Access Secretariat for livestock producers is a positive step, but it's necessary that the government properly fund the secretariat, aggressively explore trade opportunities, and assist our sector in developing measures to increase exports to other markets.
We've been downsizing in Canada because of the shocks, and the number of farms reporting hogs continues to decline. In fact, we've had dramatic decreases in the past two years, with 28% fewer farms reporting hogs than in 2006. Our inventories have fallen 18% since January 2006.
Today we want to remind this committee that while we try to remain optimistic about the long-term potential of the Canadian hog sector, it's increasingly difficult to be prepared for, and manage, the shocks that continue to hit us. The most recent and most pressing is COOL.
The many associations and governments representing livestock and meat producers who have been dealing with the U.S. country-of-origin labelling regulations since they were introduced in 2002 received some very disappointing news on February 20. While the U.S. Secretary of Agriculture, Tom Vilsack, announced that he would not reopen the final COOL rule issued by the Bush administration, he is asking U.S. processors to do several things: first, to “voluntarily include information about what production step occurred in each country when multiple countries appear on the label”; second, to extend COOL to processed products, that is, the ones subject to curing, cooking, smoking, etc.; and third, to reduce the inventory allowance for ground meat from 60 to 10 days.
American processors are now faced with extreme uncertainty. If they simply satisfy the law as it currently reads, they risk having the rules changed once again, changes that will make it more, not less, difficult to operate within an integrated North American market—as has increasingly been the operating environment since free trade was implemented 20 years ago this past January.
Furthermore, they’re being asked to function as if COOL now applies to a vast range of processed pork products that, in the past, were never included, or intended to be included, in the scope of mandatory labelling.
Secretary Vilsack's suggestions would make COOL as restrictive for live animals as what was in the original 2002 bill. This more restrictive version was rejected as too costly to implement by the U.S. Congress in the 2008 Farm Bill.
The expansion of the COOL mandate to include processed meat products would put at severe risk more than 165,000 tonnes of Canada's pork exports to the U.S. in 2008. This is more than half of our shipments, which were $1.2 billion in total last year.
U.S. processors are being forced to make business decisions that will have market-closing effects on Canadian hog and pork exports, as well as detrimental impacts on hundreds of U.S. hog farmers who depend upon Canada for their feeder pigs, and on the many U.S. processors who rely on Canadian hogs and pork. Already in the first quarter, total exports of live hogs to the U.S. are down by 45%, of which feeder export are down 35% and market hogs down by 66% year-to-date.
Moving on to the trade agreements, the CPC's support for the completion of the Doha Round of multilateral trade negotiations remains strong and unequivocal. However, the slower pace of the negotiations has led many of our competitors, such as the U.S. and Chile, to pursue bilateral and regional trade agreements. We cannot rely on multilateral trade negotiations to offset the preferential access obtained in bilateral trade agreements. Without a dual focus on both multilateral and bilateral trade agreements, Canada's ability to supply current export markets, as well as breaking into emerging markets, will be undermined.
The Canadian Pork Council has been following with great interest the developments since the 2008 Canada-European Union Summit, which explored an economic partnership. We strongly support the negotiation of a comprehensive free trade agreement between our country and the EU, but we will oppose any exemptions if, as a result, our access to the EU for pork is in any way diminished.
With a population of over 500 million in the EU, the majority of whom view pork as their favoured meat, the Canadian industry is making important investments to be able to respond to this increased demand. In fact, our first plant for exports to the EU was just approved. We strongly urge the committee to give its support to Canada engaging in negotiations for an ambitious trade and economic agreement with the European Union.
Bilateral trade agreements help diversify our market abilities; and the legislation that was recently tabled for agreements with Colombia and Peru needs to be approved. The Canadian Pork Council, furthermore, is an avid supporter of current negotiations to liberalize trade with Korea, Panama, and the CA4 countries. The CPC also encourages trade negotiations with Japan, India, and the Dominican Republic.
To conclude, we would ask you to continue to pursue a better outcome on COOL, one that recognizes the important trade flow between Canada and the U.S. We need to encourage you to pursue the WTO action, which has been on hold at the present time, in order to encourage the U.S. not to make things more restrictive on the COOL front.
It is critical for Canadian exporters to have continued access to markets. We therefore ask that when you visit U.S. representatives, you should raise COOL and the detrimental impact it is having on free and open trade on both sides of the border. And you should engage in bilateral trade agreements and support the Canada-Colombia and Canada-Peru agreements, and others on the way.
Thank you.