I'd like to thank you for this opportunity to speak here today.
We are on a farm near Grunthal, Manitoba. That's about 80 kilometres south of Winnipeg. I am a third-generation dairy farmer. My grandparents came to Canada in the 1920s to start a new life and a family. My parents took over from their farm in the fifties.
Since the sixties, when supply management came into effect, their income on the farm stabilized. With this increased stability, they were able to expand their farm and support the family. Supply management allowed dairy farms to contribute to a vibrant community.
My brother and I and our families took over the family dairy farm, which is where we continue to farm today. The family farm made it possible for my brother and me to raise our families, continue to grow the farm, and continue to contribute to our local community.
Today, as the chair of Dairy Farmers of Manitoba, I am representing 270 dairy farm families in the province. CUSMA will have a long-lasting negative impact on Manitoba's vibrant dairy industry. The concessions granted are ongoing perpetual losses. CUSMA is not a beneficial agreement for the Canadian and Manitoba dairy sectors. Dairy is one of the top two agricultural sectors in seven out of 10 provinces. Manitoba is not one of those provinces; however, this still has a significant impact in our province, considering that dairy processing is the fourth-largest component of food processing in our province.
CUSMA allows increased access to foreign milk, removal of class 7, loss of sovereignty because of U.S. demand for oversight on the development of our future Canadian dairy policies, and a surcharge on Canadian dairy protein exports. There are deep local economic ramifications because of these concessions. The projected annual market loss for Manitoba in terms of additional market access is $8.4 million in revenue. The overall Canadian loss here is pegged at $190 million. That does not account for any implications due to the elimination of class 7 or the export restrictions. The American oversight into the Canadian dairy system is nothing less than a complete loss of sovereignty by allowing the U.S. to interfere in the development of future Canadian dairy policies.
In Canada, of course, we're losing 3.9%, or 100,000 tonnes, of our dairy market to foreign milk and dairy products. This means that when you look at Canada as a whole, losing 3.9% amounts to pretty much wiping out Manitoba's dairy industry.
The concessions agreed to in the CUSMA deal deeply impact the pillars of supply management, which are import control, production management and predictable imports. Like a three-legged milking stool, without one leg the stool falls. The impacts of CUSMA will not only harm the dairy industry in Manitoba, from farms to processors, but the long-term effects will also reduce our contributions to the GDP. Nationally, that's $19.9 billion. In Manitoba, that amounts to $582 million and jobs in the province, as there will be less need for locally supplied milk, which will be replaced by a foreign product.
The loss of our farm production will have negative ripple effects across rural Manitoba. If our family-owned operations were terminated, there would be less demand for many service providers, such as veterinarians, mechanics and nutritionists, as well as less dependence on other agriculture commodities, such as Manitoba-grown feed barley or even canola meal used on dairy farms.
However, those impacts do not cease in rural Manitoba. If less Canadian milk is being produced in Canada and is rather being imported from the U.S., our 12 processors would also be negatively impacted. The dairy industry across Manitoba sustains 7,955 full-time equivalent jobs. Those numbers would decrease. Additionally, this agreement halted new processing investment into Manitoba, as processors stopped to consider the impact on their operations and assessed the type of processing they could focus on in the future. It certainly has put the ice on some proposed investments. Therefore, the future of having another processor, or current processor expansion, is uncertain. Having increased dairy processing would lead to more sustainable jobs, ensure that more locally produced milk is processed provincially and increase Manitoba's GDP.
Furthermore, increasing access to our Canadian market will have a negative impact on dairy farmers' share of the domestic milk market, a share that was the basis for investment decisions for our dairy farmers and for many young dairy farmers getting into the industry. Those dairy products will displace what would have otherwise been Canadian dairy and products made with Canadian milk, even if imports don't meet the same standards for safety and quality that Canadian dairy farmers provide to Canadians under the national on-farm program we call “proAction”. This is about giving up that portion of the domestic market and the government's commitment to provide compensation for those concessions.
The oversight clause undermines Canadian sovereignty and Canada's ability to develop and manage Canadian policies without U.S. intervention. The U.S.A. will not need to provide similar levels of oversight into its system. This approach is yet another example of how CUSMA removes our competitive advantage and ties the Canadian dairy industry's hands to American decision-making. This should not be understated, and it will have a lasting effect on the domestic dairy sector. The sovereignty clause of CUSMA will undermine our ability to manage our own policies without American intervention. Having another country dictate our policies will tie our hands in our own industry by providing the Americans with the ability to intervene in our domestic policies.
The final aspect of CUSMA is the restrictions of Canadian exports. Canada has agreed to the U.S. demands to effectively cap Canadian exports of skim milk powder, milk protein concentrates and infant formula. Added together, these measures limit our ability to grow the Canadian domestic market. The export clause ensures that the Canadian dairy industry's hands are tied from both sides. Not only is our industry losing our market share, but it also cannot export due to aggressive restrictions and surcharges.
While the announced compensation package for the access granted for CETA and CPTPP was a first step in this regard, we are asking that the Canadian government provide dairy farmers, in the form of direct payments, the remaining seven years of full and fair compensation to mitigate the impacts of CETA and CPTPP, with that amount included within the 2020 budget's main estimates. We are also asking that the government deliver on its promise of full and fair compensation for the impacts of CUSMA.
Efforts to mitigate the impact of the export charges need to be made. This could be achieved through administrative measures with the United States, even after the ratification of CUSMA. These caps would set a dangerous precedent for any Canadian product that could be exported, as a means of limiting Canada's competitiveness in world markets. Therefore, we are asking that the Canadian government work toward an administrative agreement with the American government to ensure that the export charges contained in CUSMA apply only to exports to the U.S. and Mexico, and not worldwide.
lt is important to note that, should CUSMA enter into force before August 1—the beginning of the dairy year—the export thresholds for skim milk powder, milk protein concentrate and infant formula will see a dramatic decline of nearly 35% after only a few months. This would be another blow to the dairy market, which would not be able to benefit from a transition period. To enable a proper transitional period for the export thresholds, we ask that CUSMA not enter into force until after August 1 of this year.
ln closing, I want to highlight the increased risks and the need for more resources to monitor and enforce trade and standards at the border as the level of imports increases. The Canada Border Services Agency does not currently have the training, tools or resources to effectively monitor what is coming into Canada. For example, the artificial growth hormone rbST is allowed in the United States dairy sector, whereas it is currently illegal in Canada due to animal health concerns. We are asking that increased resources, tools and training be provided to CBSA to improve its effectiveness in dealing with border issues in a timely and transparent manner.
Thank you.