Thank you, Mr. Eyking.
Good morning, everyone. Thank you for inviting us to share our perspectives on the Trans-Pacific Partnership.
My name is Mike Dungate. I'm the executive director of Chicken Farmers of Canada. With me today is my colleague Yves Ruel. He's our manager of trade and policy.
I'd like to quickly tell you a bit about our industry, about how the chicken industry benefits all of Canadian agriculture, and about how we can improve our contribution to Canada's GDP, in spite of the additional access that Canada had to provide to conclude the TPP agreement.
We're a national organization. We represent 2,700 chicken farmers in Canada. Our board of directors has farmers, processors, further processors, and restauranteurs. We take a value-chain approach to it and really are a growth and a value-addition success story.
We sustain 78,000 jobs, $2.4 billion in farm cash receipts, and $6 billion in contribution to Canada's GDP. We pay $2 billion in taxes. We're part of the economic solution. We also purchase 2.5 million tons of feed, annually, and support other farmers with what we do.
We have farmers located in every province and we have more farms today than we had in 1978 when we started our business. Production has grown steadily, about 20% in the last 15 years. The year 2015 marked the sixth consecutive year of growth. We grew 3% this last year.
Contrary to a popular misconception, our market is not closed. Everybody focuses on the high over-quota tariffs, which nobody pays. Their sole purpose is to determine what the level of access is to our market and provide certainty. People avoid talking about the tariff that people actually pay. For every one of our free trade partners, chicken comes into Canada duty free or at a maximum of 5.4%.
It's not applied just on a small amount. In 2015 we imported 214 million kilograms of chicken into Canada. That makes us the 17th largest importer of chicken in the world. It makes us the second most important market in 2015, up from number three for the U.S. and after Mexico. Of the 12 Trans-Pacific Partnership countries, we import more chicken than the U.S., Peru, New Zealand, Australia, Malaysia, and Brunei combined. That's absolute volume with 35 million people. We're a big importer of chicken.
Only 10% of chicken production is exported globally. That's because it's a fresh market product. It doesn't have the shelf life of other meats and that's why it is at that level. Of the 10% of global production that is traded, Brazil and the U.S. account for 75%. In fact, we're the eighth largest exporter of chicken in the world, but we're a bit player, at that.
We believe we can increase our contribution to the Canadian economy, despite the concessions provided under the TPP.
At the end of the TPP's implementation period, we will offer additional access of 26.7 million kilograms to our market on an annual basis. This is the equivalent of us losing 61 farms in Canada, average size, with annual sales of $57 million. That's the hit that comes on us. In a loss, in terms of jobs, it's about 2,200 jobs, and it's about $150 million in contribution to GDP on an annual basis.
It will be on top of the already significant access we have of 7.5% of our previous production and that equalled just over 80 million kilograms this past year. When you take the two together, 9.6% of our market will be from imports, very close in line with the 10% that is traded globally. There's nothing for us to be ashamed of regarding the access we provide into our market. Every single kilo of that access will come in duty free.
On its own, this would be a hard hit for the Canadian chicken industry. However, the displacement of our production resulting from this additional access can be mitigated by the elimination of some import control circumvention measures. We've been working with the government for several years on these issues.
Three specific measures were announced by the government when the TPP was signed on October 5, 2015. It's critical that the government implement these, without delay. They were announced with the TPP, but they're not tied to the TPP.
The first is to exclude chicken from the duties relief program. This is a Canada Border Services Agency program that allows companies to import chicken, keep that chicken in Canada for four years—not sure what it's like after four years—potentially substitute it for lower-value product and re-export it. We see it as a fraudulent way to circumvent the import controls that we have. That volume is 96 million kilograms or about 9% of our production, so it's not an insignificant number.
The second is to implement mandatory certification for all spent fowl imports. These are old laying hens and they're not subject to import controls at all. We imported 103 million kilograms, or about 9.5% of our market of them. The problem we have here is not stopping spent-fowl imports but the fact that we're importing more spent fowl from the U.S. than they produce in the U.S. That speaks to outright fraud. They're labelling it as spent fowl, and it's actually chicken. That's taking away 8,900 jobs and $600 million in GDP contribution that we could be doing.
The third issue is to stop creative packaging by modifying what we call the “specially defined mixture rule.” Add a packet of sauce to chicken and it's no longer chicken. It comes in duty free. We don't think adding a packet of sauce that the consumer doesn't want, that the consumer throws away, should be a valid means of changing tariff classification.
In addition to the elimination of these import-control circumvention practices, there were indemnity programs announced on October 5. These will help the industry to face this new TPP access. We believe these measures recognize the difficult concessions that Canada had to make to get this deal that provided us access to other markets. They will provide some relief to farmers, albeit on a temporary basis, and help both farmers and processors.
In conclusion, the Canadian chicken industry and its evolving supply-management system continue to be a significant contributor to the overall health of the Canadian agriculture economy. We're innovating and we're investing to grow our industry. We're evolving our system to change and meet consumer demands. While the TPP agreement will be a hard hit on its own, chicken farmers and the Canadian chicken industry believe that the package that was announced by government on October 5 is the critical component. We support a rules-based trading system and call on the government to re-establish the integrity of our import control system by eliminating those circumvention practices so that we can fully seize the opportunities we have for our market.
Thank you.