Thank you, Mr. Chair and members of the committee.
I am Yves Ruel and I am the manager of trade and policy for the Chicken Farmers of Canada.
I would like first of all to thank you for inviting us to debate the important issue of import circumvention, in particular the case of spent fowl and the duties relief program.
To begin, we will provide a brief overview of our industry and our organization.
We represent 2,700 Canadian chicken farmers in every province. Our industry, which includes both farmers and processors, helps sustain 78,000 jobs. Every year, we pay $2 billion in taxes to the various orders of government.
Canadian chicken farmers are proud of their ongoing contribution to the country. We want to continue contributing to its growth. To maintain our success in recent years, however, an essential pillar of supply management must be strengthened, namely, import control, which is the reason for your hearings today on spent fowl and the duties relief program. These are very important topics.
I will now talk about spent fowl.
On spent fowl, we've seen over the years an increasing volume of chicken broiler meat being illegally imported into Canada as spent fowl. It was in 2012 that we saw for the first time pretty strong evidence of that, when the volume of imports from the U.S. represented 101% of the U.S. slaughter volume. As you can understand, this is not possible. First, they consume some fowl meat in the U.S., and they export to other countries than Canada, so it's impossible that we imported 101% of their entire supply. The problem kept going after 2012. You have the graph that was circulated that shows the annual imports. The data suggests that the problem is increasing in 2016.
From the beginning of the year, so for the first seven months that we have official data, the imports represent 114% of the U.S. fowl production. If we were to continue at that pace, this year we would import 118 million kilograms from the U.S. This is 32% more than last year. That's based on the first seven months of data.
We have some preliminary numbers for August, and those numbers show a decline for the first time in years. You've heard from other committee members that there's been increased enforcement by various agencies, and that probably explains the decline that we've seen in August. If the decline in August imports is the result of the increased surveillance, this again provides further evidence that mislabelled chicken is being imported to Canada.
These illegal imports not only undermine our economic contribution to the Canadian economy, but they are also a threat to food safety. In the event that there was a product recall, it would be impossible for CFIA to properly advise Canadian consumers. When they claim that they ship spent fowl to Canada, if chicken is the real product in the shipment container, they would never know in the event of a product recall what was really in the box. They are all labelled as spent fowl.
Chicken farmers are not opposed to the legal importation of spent fowl, but we want an end to the fraudulent imports that we've seen. Based on our conservative estimates, we believe that about 37 million kilograms were imported illegally last year; we figure that about 40% of the imports are illegal imports. That represents 3.4% for domestic production. If we were to produce this in Canada, that would mean the creation of close to 2,800 jobs, and all the other economic benefits for the Canadian economy.
As mentioned by previous witnesses at your committee in August, there are no means to visually distinguish broiler meat and spent fowl. That's why we've worked with Trent University to develop a DNA test. Trent specializes in non-human DNA, and they have expertise that they were able to develop for the poultry industry. They can clearly distinguish between broiler meat and spent fowl meat. We know that currently the government is in discussion with Trent to find out more information about this test.
On the spent fowl file, the Chicken Farmers of Canada recommend, first, that mandatory certification for all spent fowl imports be put in place. That would complement the U.S. voluntary program. Also, we recommend that the DNA tests be incorporated as a means of verification for the efforts by CBSA and CFIA. As was mentioned by the minister earlier, the Canadian and American processors are both supportive of the efforts to resolve this matter.
On the second point of your study today, the duties relief and duty drawback program, I think it's important to mention, as my colleague Robin mentioned, that this program was not designed for perishable agricultural goods such as chicken. First, the program has a four-year timeline, which obviously exceeds the shelf life of even frozen chicken products. Second, the program allows for product substitution. This would imply that high-value chicken products can be imported and low-value are re-exported, or that even spent fowl could be re-exported.
Also, the duty relief program allows marinated products. The reason we saw the increase in the use of the DRP.... It started in 2012-13 when Global Affairs Canada, under the import to re-export program, decided to ban marinated products. All the users of marinated products moved to the DRP, and that's why DRP had such a sudden increase.