Thank you.
On behalf of Alberta Beef Producers, I thank you for the opportunity to make a presentation to you today. Being a somewhat uncommon second-generation Calgarian, I welcome you to Calgary today.
A lot of what I will be saying I'm sure you will hear from others of our colleagues across the country, and Bryan and John this morning, but I wanted to bring you a bit of an Alberta perspective.
Alberta Beef Producers is the democratic and representative organization that speaks and works on behalf of close to 20,000 cattle and beef producers from all sectors of the industry—cow-calf, backgrounding, and cattle feeding—in Alberta. We are an organization of producers, run by producers, working for producers.
With all respect to our colleagues in other provinces, we see Alberta as one of the dominant parts of the Canadian beef industry, with 40% of the cows in Canada, 70% of the cattle-feeding capacity, and 70% of the beef processing and packing capacity. We are the largest single commodity in the Alberta agriculture industry, representing over $4 billion a year in farm cash receipts out of a total of about $12 billion. A third of the farm cash receipts in Alberta come from our industry. Agriculture is the second-largest industry in Alberta, and we think of it as our largest renewable industry as well.
Trade is vitally important to producers in Alberta. Certainly trade is important to the Canadian beef industry. About 36% of Canadian beef is exported. From Alberta, between interprovincial and international exports, 86% of the beef is exported out of this province. You can see that trade is important to the whole industry, but for us it's absolutely vital.
We also look for diversity in trade. Three-quarters of the Canadian exports go to the United States. The United States is our largest and best customer, but it's certainly not healthy for any industry to be so dependent on a single export market.
We see the same challenges in our industry that the oil and gas industry faces. The recent Alberta budget talked about the differential of $15 a barrel between the price of Western Canadian Select oil and West Texas Intermediate oil. In the beef industry we face a similar differential. We call it “basis”, the difference between the price here and the price in the United States. Certainly many factors contribute to the basis, but having more markets and broader access to markets certainly tends to reduce the basis.
For many years, the past seven years, a primary priority of our industry was the repeal of the country of origin labelling legislation in the United States. That was costing our industry close to a billion dollars a year. We spent seven years and $4 million in legal fees on fighting COOL. We certainly appreciated the support we received from federal and provincial governments, the previous government and the current government, with support on COOL. Of course we celebrated with the repeal of COOL in December, and want to be sure we retain the ability to impose retaliation if the United States starts to go down that path again.
With COOL repealed, then of course we're looking to broader horizons west and east—east to the Comprehensive Economic and Trade Agreement with Europe, and west of course to the topic of today, which is the Trans-Pacific Partnership.
The Canadian cattle industry and the Alberta Beef Producers strongly support the Trans-Pacific Partnership agreement, and we want to see ratification of the agreement quickly. We believe ratification of the agreement here will continue momentum towards implementation of the agreement more broadly. Furthermore, if Canada ratifies the agreement, we think it will put us in a stronger position if other countries start to waver in their support for it or try to look at making changes.
Japan was our primary target in the TPP agreement, and really the big win for the Canadian beef industry, because the TPP would put Canada back on a level playing field in Japan with our primary competitors, the United States and Australia. We see it as being very good for the industry and very good for Canada.
Australia has a free trade agreement with Japan. This has created a significant competitive disadvantage for our beef. From 2014 to 2015 there was a 9% drop in the value of our exports to Japan and a 24% drop in the volume of our exports to Japan. This was as a result of the advantage of other countries with that free trade agreement. Without the Trans-Pacific Partnership or some other agreement with Japan, we'll see a continued decline in our exports there.
With the TPP, we believe we could double or triple our exports to Japan to the order of $300 million a year, which would represent a 10% increase in the value of our exports.
Without the TPP or some form of bilateral agreement with Japan, we could lose 80% of the value of our exports to that country. It is a very critical market for us, and we need to continue to be able to be competitive there.
Certainly, there is concern that the TPP might not be implemented and uncertainty over the U.S. position on it. As a result of that, we think that Canada also needs to continue to work towards a bilateral trade agreement with Japan. We started work on a free trade agreement in 2011. We would like to see that continue.
Thank you.