Thank you.
Honourable members of Parliament, I'll introduce myself really quickly. I am the director for Latin America of Canada Pork International. I'll describe what CPI is and what we do in the pork industry.
Canada Pork International, CPI, is the export market development agency of the Canadian pork industry. CPI is a joint initiative of the Canadian Pork Council and the Canadian Meat Council. CPI membership includes the national and provincial associations of hog producers as well as federally registered pork packing and processing establishments and trading companies. Combined, CPI members represent nearly 99% of the Canadian pork exporting industry.
This industry has been serving international markets for more than 100 years, and currently reaches clients and consumers in more than 100 countries: more than 60% of Canadian pork production is exported. This said, Canadian pork exports account for nearly 20% of today’s world pork trade. In 2013 Statistics Canada reported that Canadian pork exports amounted to nearly 1,184 metric tons worth $3.2 billion.
Over the last five years, Canadian pork exports have registered record years in volume. One of the reasons for this consistent development of the export business has been establishing free trade agreements with strategic partners, obtaining preferential access conditions such as reduced and/or eliminated tariff rates, and unrestricted access in veterinary and sanitary regulations.
The free trade agreement with Honduras is estimated to generate sales of $5 million to $7 million in the first year following implementation. The FTA will open a duty-free tariff rate quota, TRQ, for pork products starting in year one; the quota will be 1,644 metric tons. It will expand to 2,710 metric tons by year 14. By year 20, the 15% duty rate for the out-of-quota imports will be reduced by one percentage point per year with unlimited volumes at zero duty by year 15 as well.
Furthermore, Honduras has granted system approval to Canadian Food Inspection Agency pork plants, meaning that all federally registered pork plants can export pork products to this market. This measure will effectively restore access for Canadian pork to the level it enjoyed prior to 2009 when regulatory changes made by the local government limited the number of Canadian plants eligible to serve this market.
In 2004, similar to the case of the potato industry, Canada exported 1,345 metric tons estimated at $2.2 million, approximately one-third of Honduras pork imports. By 2006, Canadian pork exports dropped to zero as the Dominican Republic-Central America-United States free trade agreement, the CAFTA-DR, came into effect. The strong competition from the United States is evident in the Central American region. U.S. pork exports account for 99% of Honduran pork imports. The ratification of the FTA between Canada and Honduras could allow Canadian pork exports to attain 10% to 12% of the market share just within year one.
Pork is one of the main animal protein sources in the region. Exported items can serve mostly to further the processing industry. However, CPI will target niche and high-end market segments as trade evolves. Additionally, local pork consumption in Honduras has increased over the last ten years. The current average per capita consumption is about 4.7 kilos a year, not very comparable to what it is in Canada, nearly 15 kilos per year.
In conclusion—I apologize, I'm trying to keep this brief—there's plenty of room for growth. Canadian pork products have been selling well in Honduras in spite of the higher tariff, which is also 15%. Our exports have already risen in 2014. Therefore, Canada Pork International strongly supports Canada's ratification of the free trade agreement with Honduras.
I thank you for your time, and I remain open to any questions or comments you may have.