I'll start by highlighting the fact that I am accompanied by Thérèse Beaulieu. She is the assistant director for policy communications at Dairy Farmers of Canada.
I'd like to thank you for the invitation to appear before the committee today in view of its study of the subject matter of Bill C-30. Before I begin, I would like to stress that DFC's preoccupations are not necessarily related to Bill C-30, per se, but rather to the impacts of the CETA agreement itself on the dairy sector. Our presentation, therefore, will focus primarily on mitigating those negative impacts.
I want to point out that the Canadian dairy sector is a huge contributor to the Canadian economy. According to the latest economic impact study that has been performed by ÉcoRessources, in 2015 the dairy sector, both at the producer and processing level, contributed $19.9 billion to the Canadian GDP, provided $3.8 billion in tax revenues, and sustained 221,000 jobs in this country. Compared to 2013, that represents a 5% increase in the contribution to the GDP, a 5% increase in tax revenues, and a 3% increase in the number of jobs that are being sustained in Canada. In addition, dairy is either the top or the second largest agricultural sector in seven out of ten provinces across the country.
It's important also to point out that unlike other jurisdictions where farmers' incomes are heavily subsidized, Canadian dairy farmers receive no direct subsidies and derive their income from the marketplace. In comparison, for example, in the European Union the common agricultural policy budget amounts to 58 billion euros, and on top of that the dairy sector alone received an extra billion in the last year to compensate farmers for the very low prices that confronted them.
In regard to the government's announcement of a transition assistance package for CETA on November 10, DFC was pleased to see that the government decided to invest $250 million in dairy farms as well as $100 million in funding to help spur investment into updating Canada's dairy processing infrastructure. This represents a recognition on behalf of the government that the dairy sector is being negatively impacted by the CETA agreement. While we would, of course, prefer that any future trade deal has no negative impact on the dairy sector, this package does set a precedent for future trade negotiations in the event that they do negatively impact the dairy sector in Canada.
The announced package is a step that will foster the continued growth of the sector for the benefit of all Canadians. However, it only partially addresses the damage that will be caused by the CETA agreement. For dairy farmers, CETA will result in an expropriation of up to 2% of Canadian milk production, representing 17,700 tonnes of cheese that will no longer be produced in Canada. This is equivalent to the production of the province of Nova Scotia alone. It will cost Canadian dairy farmers up to $116 million in perpetual lost revenues.
I will now continue my presentation in French.
While Canadian dairy farmers appreciate seeing the government deliver in these two key areas, we remain concerned that several of our other issues remain outstanding. In particular, Canada's domestic regulations and border measures were not addressed in the transition assistance package, as we were led to believe they would be.
It should be noted that on November 18, our government announced that they are launching a consultation regarding potential changes to the duties relief program and the import for re-export program. This is a step in the right direction, and we remain hopeful that the government will take concrete actions to stop further damage to Canadian dairy farmers, and show they fully support the supply management system.
As Minister MacAulay noted himself during question period on November 14, the government is just starting what they are going to do to address the issues impacting dairy; Canadian dairy farmers are eager to see how the government delivers on that promise.
As mentioned by our friend Jacques Lefebvre from the Dairy Processors Association of Canada, Dairy Farmers of Canada was also disappointed that the government did not utilize the opportunity given on November 10 to announce how the new CETA TRQs will be delegated.
When it comes to the delegation of new TRQs, DFC urges the government to ensure that only those who are negatively affected by the opening of the Canadian market—namely, cheese makers, first, and indirectly the dairy producers that supply milk to the cheese makers—should be eligible to receive a share of the new quota. Therefore, DFC strongly recommends that the new cheese TRQ only be allocated to cheese makers.
From that perspective, cheese makers who are being affected by it, big or small, whether individually or collectively—and I would like to mention here that some small and medium cheese makers are trying to band together to position themselves as acceptable importers—need to be treated fairly and should be eligible to apply for a share of the new quota. Allocating the TRQ to cheese makers will not only help to maintain the stability of the Canadian market; it will allow imported cheeses to have access to established distribution networks, therefore maximizing fill rates and avoiding speculation and disruptive marketing practices. Canadian cheese makers are best positioned to import cheeses into Canada in a way that minimizes speculation because they have no interest in negatively affecting or disrupting their own business.
Furthermore, while we believe it is important to allocate the TRQ in a manner that will assist cheese makers in developing long-term relationships with their customers and ensuring that their share of the TRQ is sufficient to develop a sustainable business, DFC is opposed to allocating the new TRQ to retailers or distributors. Notwithstanding the economic contribution of retailers to the Canadian economy, allocating any share of the CETA TRQ to them will only result in a substitution between domestically and imported cheeses, and will not generate added benefits.
In conclusion, Dairy Farmers of Canada want to continue to be strong contributors to Canada's economy, and DFC wants to continue to work in partnership with the government to ensure the sustainability of the supply managed dairy sector. We have been on record many times as not opposing the CETA deal, or any other trade agreements, provided that Canada's dairy sector is not negatively impacted. Canada's dairy sector will be negatively impacted by CETA, and as much as DFC appreciates the package that was announced, there is still work to be done; the government recognizes as much.
Thank you.