International Trade Committee on Nov. 21st, 2013

[The Chair, Conservative, Rob Merrifield]

Go ahead.

[John Masswohl]

I guess at some point all products, from all cattle, come into our sector, regardless of the breed of the animal. We are very cognizant that veal is an important market in Europe, and we're very cognizant that we have producers who want to access that veal.

We made sure that veal is eligible in those new quotas. On the existing quotas, they do have a high-quality grain-fed standard, so veal is not eligible on the existing quotas. But on the new ones, it is.

Also, the hides and skins are an important market, regardless of the breed of cattle they come from, particularly for luxury auto manufacturers. That's an important market to have access to.

[The Chair, Conservative, Rob Merrifield]

Thank you.

We're through the first round and we're going into the second round. Before we do that, I'd like to use the chair's prerogative to ask a couple of questions.

I think what I've heard from the dairy industry is the idea of producers being subsidized in Europe and the United States and that the subsidization is hard to compete on. You try to square that with what the international community and many in Canada are saying, that the dairy industry is subsidized right now with the supply management system. One would argue that we're subsidized, and you would argue that Europe and the United States has a direct subsidy. I suppose it depends on whom you ask and how you see subsidization.

I don't know if you have any comments on how you see that. I think the previous questioner was really asking how we can compete—even though we see ourselves as somewhat subsidized, because we're limited in a supply management system—with the direct subsidy in Europe under this agreement.

[Ron Versteeg]

Well, as a dairy farmer myself—

[The Chair, Conservative, Rob Merrifield]

I was, too, for 40 years.

[Ron Versteeg]

My diesel fuel or farm equipment and labour cost is higher in Canada than it would be in the U.S.

[The Chair, Conservative, Rob Merrifield]

Also your price of your milk is regulated based on that.

[Ron Versteeg]

Based on that, yes.

But my point is that because we pay more for diesel fuel or farm equipment or labour, does that mean we as dairy farmers are subsidizing the farm equipment manufacturers, or are they—

[The Chair, Conservative, Rob Merrifield]

But your price of milk has gone up because of it.

[Ron Versteeg]

The price of milk has gone up probably less than the rate of inflation. That's at farm gate; I'm not talking about retail. I mean, the retail world charges what the market will bear, and it really is not directly connected to what the farmer receives.

[The Chair, Conservative, Rob Merrifield]

Okay. I just wanted to make those points.

Mr. Morin, the floor is yours, sir.

Five minutes.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Thank you, gentlemen. As you can see, I am not wearing rose-coloured glasses. It is good to face reality.

The agreement will allow European dairy products to enter Canada more easily. Since we know that the industry is heavily subsidized, will industrial producers of Canadian cheeses not be tempted to buy their milk products in Europe at a much lower price?

[Yves Leduc]

They already do so, because concentrated milk products imported from the United States are not subject to any constraints. The quota that was established in 2007, after the Canadian government invoked article XXVIII under the GATT rules, does not apply to imports from the United States.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Isn’t this another small tear in supply management?

[Yves Leduc]

With respect to the over-quota tariff, I would say that it is essentially a matter of cancelling an agreement that Canada had negotiated under the GATT agreements. Canada had moved ahead with enforcing a new quota that applied to imports from the European Union, among others. Now this customs tariff is being removed, which means that we are not honouring our commitment to Canadian dairy farmers.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Earlier, you talked about the suggestions or options you have presented during the negotiations to help the dairy industry. Could you explain that a little?

[Yves Leduc]

I find myself in a fairly delicate situation. Since we are currently in talks with Government of Canada officials, I cannot really get into the details of what we have presented to them. However, we can say that we have presented constructive options to the Government of Canada that are in line with the way the supply management system works in Canada. The measures we have proposed would mitigate the negative impact not only on dairy farmers but also on the cheese processing sector in Canada.

We have tried to include the entire industry in the options we presented to the federal government, at no cost to the treasury of Canada.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

In your view, should the compensation be for dairy farmers or cheese makers? Often, they are the same people.

[Yves Leduc]

We believe that the mitigation measures should be beneficial for both dairy and cheese producers because cheese producers will also be affected by this.

In terms of marketing strategies, we feel that cheeses imported to the Canadian market will first and foremost compete directly with the Canadian fine cheese sector, estimated at 50,000 tonnes a year. If, of the 17,500 tonnes of cheese that could end up in the retail market, 16,000 tonnes of high-quality cheese end up in the fine cheese sector, one-third of the market could be lost.

[The Chair, Conservative, Rob Merrifield]

The time has gone.

Mr. Cannan, the floor is yours.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair. I'm going to share my time with Mr. Holder.

Thank you very much for the presentation. Coming from the Okanagan, I'll tell you that we have another liquid; it's more the wine aspect than the milk aspect, but we all enjoy the cheeses too. We have some great wine and cheese festivities. It has become a tradition for fall and summer festivals, and also for the winter one that is coming up.

But I know that it's a serious issue for dairy producers across Canada, and we don't take it lightly. I know that my colleague Minister Fast has worked closely with the parliamentary secretary, Mr. O'Toole, and has met with several dairy farmers across the country in addressing their concerns. I know that there's a lot of speculation today. We're hoping that at the end of the day there might be very little impact, and that possibly the veal gains could offset some of the impacts of the additional competition.

I just wanted to go back to this. We have some cheese manufacturers in the Okanagan as well. They have gourmet goat cheese and specialty cheeses. From your industry perspective, what's the sentiment about global competition and the quality of our product, with or without CETA?

[Yves Leduc]

With the quality, you mean?

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Yes. Do you have any concerns about your members competing globally?

[Yves Leduc]

With respect to quality, no.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

So as—