Good afternoon.
Thank you, Mr. Chairman and members of the committee, for the opportunity to present here in front of you on this important matter today.
I'm pleased to have with me and will share my time this afternoon with Mr. Murad Al-Katib. He's on the board of directors of Pulse Canada. He's past-president of the Canadian Special Crops Association and he's also president and CEO of Alliance Grain Traders, which is the world's largest lentil and pea-splitting company and one of the world's largest exporters of lentils.
Pulse Canada is the national industry association that represents growers, processors, and exporters of pulses from Canada. Provincial pulse growers organizations and processors and exporters that are members of the Canadian Special Crops Association provide funding and guidance to our association.
Canadian pulse growers, processors, and exporters are critically dependent on exports for continued prosperity and growth. Typically, 70% to 75% of Canada's pulse production is exported, and when you look at specific products, it's even higher than that. In 2009, Canadian pulse exports topped $2.1 billion, which is a new high, a new record.
Our industry has taken a very keen interest in the pursuit of strategic bilateral free trade agreements. Particularly, we look to ensure that we are able to retain competitive access to key markets. Key priorities for us include Peru, Colombia, and Morocco, and the Dominican Republic as well.
Colombia is a critical market for Canadian pulses and special crops. It's one of the top markets for green lentils and Canada's eighth largest market for pulses overall, importing about 104,000 tonnes, or $70-million worth of product in 2009. Colombia is also a very significant market for dried peas, canary seed, and chickpeas, and with an agreement in place, we can begin to re-establish our market share for red beans into Colombia, which we've lost in recent years. In addition, pulse and special crops are Canada's second-largest agrifood export to Colombia at the present time.
In terms of the impact of our competitors' agreements on our industry, the U.S. agreement negotiated with Colombia gives U.S. pulses preferential access. It gives them tariff-free access for an unrestricted quantity of peas, lentils, and chickpeas, and for some special crops as well, and for beans it provides a tariff rate quota system that will progressively increase U.S. access over a period of about 10 years. If this is left unchecked, without a Canadian agreement in place, Canada will face a very stiff tariff disadvantage for pulses into Colombia, and it will significantly impact our market share.
Let me give you a few examples of what the impact will be of this Canadian agreement.
First off, this agreement will ensure that we retain competitive access for one of our key markets. To give you an example, if the landed cost of lentils in Colombia is about a thousand bucks a tonne, a 15% tariff disadvantage works out to about $150 per tonne.
In an extremely competitive marketplace, it's often a matter of a few dollars per tonne that makes the difference between making the sale or not, so tariff disadvantages of this sort of magnitude will effectively shut the Canadian industry out of this market and reduce prices for Canadian farmers. This is really one of the most important aspects of this agreement for our industry: ensuring that we retain competitive access.
Secondly, this agreement will also re-establish competitive access for Canadian red beans, which have been effectively shut out of this market by a prohibitive 60% import duty.
Thirdly, the market will also reduce duties and the cost of product in Colombia. If you look at a product like canary seed, if we eliminate a 15% tariff disadvantage, we reduce the costs, and we have the potential for increased demand because of lower costs into Colombia.
We also could stand to gain an advantage relative to the U.S. for a period of time. We fully expect that it's just a matter of time before the U.S. implements their agreement with Colombia. But if we can get a tariff advantage even for a period of time, we may be able to establish an even stronger foothold into Colombia. An example of this may be the use of peas as a feed ingredient, where our analysis has indicated that, with the Canadian agreement in place, we could stand to have a $10- to $15-per-tonne advantage over U.S. corn and soybean meal into that particular market.
I'll now turn my time over to Mr. Al-Katib, who will make some specific comments from the perspective of a major exporter of these products from Canada.