Thank you, Mr. Chair.
I'm honoured to be here today, and I know your committee has been doing a lot of important work.
I am joined by assistant deputy minister Fred Gorrell and executive director Doug Forsyth, both of Agriculture and Agri-Food Canada. Officials from the Canada Border Services Agency, Global Affairs Canada, and Finance Canada are also at the table should their technical expertise be needed.
I appreciate the opportunity to be here today to speak to you about issues of concern to Canadian dairy and poultry producers. I want the committee members to know that our government supports trade because it creates good jobs for Canadians and helps grow the middle class, which builds economic prosperity across the country.
Canadian farmers depend on trade to sell about half of their production. That is why our government is working hard to open up new markets for Canadian export producers. We are also equally proud to support Canadian dairy and poultry industries, which are essential to a strong and prosperous Canadian economy. All told, the dairy and poultry industries create almost 300,000 jobs in this country while creating economic activity of $32 billion. Both industries operate under the supply management system, which I and our government fully support. The goal of supply management is to match production with anticipated Canadian demand. The federal government supports the Canadian supply management system and we recognize the importance of effective import controls. The Canada Border Services Agency plays a central role in this regard. It administers the border controls that apply to dairy and poultry products in accordance with Canadian international trade obligations.
Let me briefly review the three issues mentioned in your study: duties relief program, spent fowl, and diafiltered milk. The duties relief program relieves customs duties on imported inputs used in the production of goods that are ultimately exported. Supply management producers worry that the program is being used inappropriately. They have expressed their concerns that some features of the program, specifically supply-managed products, are negatively impacting the domestic market, and they are concerned about potential diversion or substitution in the domestic market of supply-managed goods that are imported duty-free. Such imports could allow imported dairy and poultry products to displace domestically produced products, and that's not fair.
Government officials are actively reviewing this, and the Canada Border Services Agency has heightened enforcement activities to ensure that the program continues to be used as intended under the law. As a result of recent CBSA enforcement efforts, imports of supply-managed goods under the duties relief program have dropped since the start of 2016.
The second issue in your study concerns spent fowl. Canadian chicken producers have been concerned that some importers may be getting around the supply system by declaring that some broiler chickens are spent fowl. Spent fowl can be imported without tariffs from the United States.
There is a long-standing track record of legitimate imports of spent fowl to be used in the manufacturing of soups and chicken nuggets. Chicken producers believe the significant increase in spent fowl imports in recent years has been caused by the misdeclaration of broiler chicken meat as spent fowl. They are concerned that this trend will continue to lead to more broiler chicken meat being imported outside of import controls. As broiler chicken meat and spent fowl meat look basically the same, it is difficult to implement practical and effective means to ensure the legitimacy of spent fowl imports.
I can assure the committee that my department and others here today are examining ways to ensure the effectiveness of border control of poultry products. In fact, there's a working group looking at the potential options to ensure that products declared as spent fowl are appropriately treated at the border through measures such as enhancing compliance verification; requiring exporting countries to provide certification, similar to the United States Department of Agriculture's fowl meat verification program; and testing the DNA of products declared as spent fowl.
This goal is to ensure that the products declared as spent fowl are adequately treated at the border. In the meantime, we're in regular contact with producers and stakeholders all along the value chain.
Our government is equally committed to the support of a strong future for the Canadian dairy industry. It is one of the largest agriculture and food sectors in the country generating farm gate sales of $6 billion, processing sales of nearly $17 billion, and well over 100,000 jobs. This success is the result of our hard-working farmers and their commitment to excellence and to listening to consumers.
Being a farmer myself, I certainly am aware of the hard work and dedication that go into running a dairy operation and the concerns that face dairy farmers. In that regard, I want to acknowledge the efforts of the industry to work together.
At the same time, our government is aware of the industry's concerns regarding the use of diafiltered milk in the making of cheese. Over the past several months, my parliamentary secretary and I have had the opportunity to meet with many groups representing the entire industry from coast to coast. That includes the Dairy Farmers of Canada, the many processors and national organizations, young dairy producers, and provincial dairy producer organizations from across the country. We heard their thoughts on a number of key challenges facing the industry. Our discussions focused on transition assistance for the new market access for cheese under CETA and how to strengthen the sector in the face of domestic and international challenges, including the use of diafiltered milk in the making of cheese.
These discussions will certainly inform the development of a long-term sustainable approach for the Canadian dairy industry. Together, we are working to find solutions that work for the whole Canadian dairy sector. While we work to address these challenges being discussed today, our government is moving forward with a number of investments and innovations that will help dairy and poultry farmers succeed.
First and foremost are the dairy and poultry research clusters. These bring together industry and Canada's world-class agricultural scientists at Agriculture and Agri-Food Canada. These two clusters represent nearly $18 million in federal investment. The overall goal is to help farmers and processors strengthen their competitiveness and sustainability.
Under the poultry research cluster, scientists are looking at ways to combat bacterial diseases and avian influenza, as well as looking at innovative production technologies and practices. Recent investments in the dairy research cluster are supporting deliveries in two key areas: increasing the energy of Canadian forages to help increase milk production and researching the potential role played by dairy fat products, including their impact for a healthy diet.
We have also invested $1.3 million for the Dairy Farmers of Canada proAction program, as well as the traceability initiatives. As well, our government has invested $3 million to support a dairy research and innovation centre at the University of Guelph. The centre supports world-class research and outreach activities to stakeholders and the public.
To sum up, Mr. Chair, the bottom line is that Canada's dairy and poultry farmers provide growth, job creation, and innovation across the country. We will continue to work with the sectors to address these issues of concern, and I will continue to invest in innovation to foster growth in the agriculture and food sector.
We all want to see a Canadian agricultural sector that is safer, strong, and more innovative, and that is certainly my goal and the goal of our government.
Once again, I thank you very much for this opportunity to be here. I would be pleased to respond to your questions.