Good morning. Thank you.
My name is Robin Horel and I am the president and CEO of the Canadian Poultry and Egg Processors Council. I thank you for the invitation to provide to the committee and other interested parties our perspectives on the Canada Border Services Agency's duties deferral program as well as the border circumvention issues with spent fowl.
Our organization, CPEPC, is the national trade organization for Canadian chicken and turkey processors, hatcheries, egg graders, and egg processors. Now in its 66th year, our council has member companies in every province of Canada. In addition to representing the interests of more than 170 Canadian poultry processors, egg graders, and processors and hatcheries, we have over 50 national and international industry partners who have joined us as associate members. To put it simply, my members buy live chickens, live turkeys, table eggs, and broiler hatching eggs from supply-managed farmers.
CPEPC member companies work within the supply-managed system for chicken, turkey, eggs, and broiler hatching eggs. Our members support the system, and we are committed to building the long-term competitiveness of the Canadian poultry industry. A foremost priority is to modernize the supply management system to ensure continued broad consumer support and mitigate processor risk and to better respond to market pressures and the competitive environment. The goal of the system for Canadian consumers is to ensure that they receive safe, local, high-quality poultry products while farmers receive a fair return for their efforts, all without government subsidies. The goal for my members, who purchase live chicken, turkey, eggs, and broiler hatching eggs from supply-managed farmers, is to have a fairly priced, dependable supply of the right product at the right time.
As the members of your committee know, supply management depends on three pillars: producer pricing, production planning, and import control. It is our belief that the import control pillar is being circumvented. We are on record with government as supporting efforts to intensify ongoing anti-circumvention measures that will enhance our border controls. For our industry these measures include preventing importers from circumventing import quotas by adding sauce packets to chicken products, eliminating imports of broiler chicken labelled as spent fowl, and excluding supply-managed products from the Government of Canada's duties deferral program.
This committee is concerned with two of these three measures: CBSA's duty deferral program as well as the issue of imports of broiler chicken labelled as spent fowl. The spent fowl issue is one that affects the chicken sector only. The duty deferral program can apply to all supply-managed poultry commodities but currently affects the chicken sector more than the other supply-managed poultry sectors.
I'll first refer briefly to the duty deferral program. CPEPC and our members support programs that contribute to the creation of jobs and innovation in the Canadian poultry industry. That includes programs that allow Canadian manufacturers to purchase raw chicken at internationally competitive prices, add value in Canada, and re-export that product. CBSA's duty deferral program is designed to do that, but so is Global Affairs Canada's import for re-export program managed by the trade controls policy department. The import for re-export program, IREP, is especially designed for products subject to tariff rate quotas and in our opinion is the correct vehicle for this type of activity for our industry. Therefore, CPEPC favours exclusion of supply-managed poultry products from the CBSA's duty deferral program.
That being said, it should be noted that industry requires an import for re-export program that is user-friendly for Canadian companies in the poultry sector in order to encourage economic activity in Canada while protecting our industries from potential TRQ circumvention. Therefore, the timing of elimination of poultry products from the duty deferral program must allow for any necessary changes to IREP. Companies currently using duty deferral will need adequate notice in order to allow for a smooth change to IREP. Our goal must be to ensure there is no impact on legitimate business.
I now turn to spent fowl. In the chicken industry, spent fowl is the term used for laying hens, either table egg-laying hens or hatching egg layers, that have reached the end of their productive life and are slaughtered, with the meat being used for many further processed chicken products. The properties of the meat make this product preferred for many processed products. In addition, this product is usually a much less expensive raw material for processed products.
Spent fowl is not part of the supply-managed chicken sector in Canada, which means that spent fowl can be imported into Canada tariff-free. I need to be clear about this. CPEPC and our members support the import of spent hens and spent hen meat because it contributes to the creation of jobs and innovation in the Canadian poultry industry. Canadian companies are among world leaders in producing many of these products for Canadian consumers and for consumers worldwide.
Our concern is with the broiler product that is labelled as “spent hen” and imported into Canada, thereby circumventing border controls. This fraudulent activity results in illegal meat on the Canadian market. The result is depression of the Canadian market, loss of opportunity for Canadian farmers to grow additional broilers, and for Canadian processors to process that product. We applaud what we understand is a current concentrated effort to address specific incidents of fraudulent imports of these products. However, on an ongoing basis we believe we need mandatory certification of the spent hen product for import into Canada as well as use of DNA testing.
In conclusion, our members operate within the supply-managed value chains. These systems have benefits and our members support them. We are, however, concerned with fraudulent import activity, and we support intensifying anti-circumvention measures that will enhance border controls. For our industry, these measures include certification and DNA testing to eliminate imports of broiler chicken labelled as “spent fowl” and excluding supply-managed products from the Government of Canada's duties relief program and putting them into IREP where they belong.
I'm looking forward to answering questions from the committee members on these two issues.