Great. Thank you very much, and thank you again for the opportunity to appear before you. It really has been quite a journey to achieve a successful Canada-Europe free trade agreement. I'm really pleased that this day has come and that we can now speak with you about the tremendous results for the Canadian beef producer.
Also, let me just take a moment to thank the committee staff for really being patient with my travel schedule this week. I'm glad it all worked out and I got here.
Of course, the Canadian Cattlemen's Association hasn't just been passively waiting for this CETA to be achieved; we have actively engaged throughout the negotiations. We've engaged closely with the Canadian negotiators to provide advice and feedback. We've also met frequently with the EU negotiators, representatives of the EU member states, and members of the European Parliament. We undertook those efforts both here and in Brussels, so we put on a lot of air miles in getting this thing done.
Lastly, but also importantly, the Canadian Cattlemen's Association engaged with cattle producer groups in Europe. We travelled to France, Spain, England, and Ireland to reach out to our counterparts in those countries to establish relations and to engage in dialogue with them. Really, we haven't had transatlantic beef cattle trade for some 30 years. So that's something new we have to re-establish. We feel this was very helpful in overcoming sensitivities that might have otherwise prevented our reaching a successful conclusion for the beef sector. So we're going to continue to work hard to build on those relationships as we move forward through the implementation of the CETA.
What did we get in this agreement? Page 9 of that technical summary of the negotiations that the Prime Minister tabled recently provides an accurate account of our understanding of the agreement. Really, on the tariff side, the market access side, there are four quotas for beef products. The first is a new 35,000-tonne, carcass weight, duty-free fresh beef quota. The second is a 15,000-tonne, carcass weight, duty-free frozen beef quota. Those two are new quotas that will be for any grade of beef, including veal, and available for Canada only.
The third is an existing quota. It's called the Hilton quota, and it's for high grading beef. Currently it has a 20% rate of duty, and Canada shares that quota with the United States, but on day one of the CETA, the duty rate for Canada will drop to 0%, while U.S. beef will continue to pay a 20% duty rate. That quota is 11,500-tonnes, product weight, or 14,950 tonnes, carcass weight.
The fourth one is the most complicated to explain. It's an existing quota that was provided as compensation for the hormone dispute, and it currently provides 48,200 tonnes, product weight, of duty-free access for high quality beef. That quota is available on what we call an MFN, or a most favoured nation basis, which means it's shared amongst several countries. In the CETA, Canada agreed to take its 3,200 tonnes out of the total 48,200 MFN, and in return we secured a higher quantity in that first new quota I mentioned, just for Canada. As a result, the 48,200-tonne MFN quota will drop to 45,000 tonnes MFN when the CETA is implemented.
Also, there are several other products such as offals, a lot of the organ meats, tallow, rendered products, processed beef hides and skins that will all gain unlimited duty-free access to the EU under CETA.
As I said earlier, we were consulted closely on every one of these decisions during the negotiations. Any time there was a trade-off or a decision to be made, we were consulted and supported those decisions. We're pleased with this outcome. We strongly support this agreement going forward.
We estimate that the fresh beef exports to the EU will be worth approximately $11 per kilogram and the frozen will be worth approximately $6 per kilogram. So on that basis, doing the math, that brings the potential value of CETA to over $600 million for Canadian producers.
In previous appearances to this committee, I did stress the importance of addressing both the tariffs and the technical access barriers. On the cattle production side, we know the cattle will have to be raised according to EU protocols. That means no growth enhancing products, such as hormone implants or beta-agonists. Despite those products being safe and approved for use in Canada and other countries, the EU has refused to allow them and continues to refuse to allow them.
Fortunately, we feel that the value of the EU beef market is high enough that many Canadian producers will elect to incur the additional costs of raising cattle without those products. We always said that we wanted to be pragmatic about this issue and that if the access was worth our while we would produce those cattle. We feel that access is worth it.
We do estimate that Canada would need to produce approximately 500,000 head of cattle annually under the EU protocol. Clearly we don't need every producer to make the decision to follow the EU protocol, but we feel that enough of them will.
The Cattlemen's Association represents the cattle farmers, but on the processing side I know that the Canadian Meat Council has already appeared. They've spoken in detail about the technical issues at the processing level. On that, I would say that we agree with the CMC that it is vitally important to complete the work to ensure that beef slaughter and processing facilities across Canada are approved to export to the EU.
Currently, we only have two very small facilities that are approved to export to the EU. They're both in Alberta. If you're a cattle producer, whether it's in Nova Scotia or Ontario, you need facilities in the east to be approved. If you're a large producer in Alberta or Saskatchewan, you need the larger facilities in the west to be approved, in High River or in Brooks. You need those facilities competing to buy the cattle that are eligible for the EU.
We do understand that there's been a one-year deadline that was established to resolve those technical issues, and there's still work to do. But once those plant approvals are achieved, we can start making better use of the quotas that we already had, even before the CETA is implemented, because those existing quotas are underutilized due to the technical barriers.
This summarizes the main issues of how we got to this point and outlines some of the work ahead.
With that, I will look forward to your questions later.
Thank you.