Thank you.
My name is Tom De Nardi. I am a family member of a second-generation food business that I hope to pass on to my children one day. My 80-year-old parents still come to work every day to make sure their legacy continues.
For 50 years, our family has been importing, retailing, wholesaling and distributing domestic and imported cheese to pizzerias, restaurants and retailers, both local and nationally. In fact, some of the products you buy at your grocer may have been pioneered, developed, imported or distributed by Mondo Foods. We have grown from a 600-square-foot Italian deli in Winnipeg's ethnic west end to a medium-size business today.
This was through hard work and dedication to family, staff and customers. It's been a long road. It's been a tough road. Multiple times over the years, we pioneered and built specialty cheese programs for major retailers worth millions of dollars, only to be cut out by the quota holder.
Until CETA, CUSMA and TPP, the only way to import cheese into Canada was to own or rent quota from a historical WTO quota holder. A small amount of WTO quota was reallocated to us in the late 1990s as a result of the Canadian trade tribunal report. This allowed us to pioneer new, exciting specialty cheeses for our customers. We were finally in control of our own destiny. In fact, we further developed a specialty cheese market by acquiring other WTO quota holders' licences, but once again we became a victim of our own success. We developed an imported cracker and cut-cheese tray never seen in Canada before, which we unfortunately had to stop selling, as sales demand far exceeded quota availability, costing us millions.
CETA was rolled out with a four-pool program from 2017 to 2022, which saw access to the Canadian market increased from 15 million to 30 million kilograms. We thought this was the beginning of a more level playing field for companies like ours: a small and large pool for manufacturers, and the same for retailers and distributors, with 60% going to the small and medium enterprises and 40% going to the large enterprises. The threshold for manufacturers was approximately 50 million litres and approximately one million kilograms of cheese sales for retailers and distributors annually.
It is worth noting that under the supply management system, there are potentially thousands of distributors and retailers, but there are under 100 manufacturers.
In 2017, Mondo received its first CETA allocation, which grew to 120 tons in 2020. It used this allocation to import and develop a specialty cheese program with major retailers. The program grew, and we were comfortable in thinking we had a stable 100-ton—plus or minus—supply of CETA, as our sales volume had not changed since 2020. It never occurred to us that in five years the threshold would slide backwards to 475,000 kilograms from one million kilograms.
In 2021, we were devastated to find out we would be competing with the likes of Loblaws and Sysco for quota in the large pool, and we received only 5,800 kilograms, down from 120,000 kilograms just the year before.
Think about that for a second.
This put our family business in extreme peril, and all the hard work evaporated. We sounded the alarm bells to Global Affairs and had several conversations and assurances: “We understand the effects on companies like yours”—there were several—and “This is a result of unintended consequences” of the formula, and there was a comprehensive review to address it.
Follow-up emails and meetings with the deputy director were summed up in the following email to him on September 13, 2022: “In conclusion of our meeting, Mondo is hoping to get a timely resolution to the unintended consequences of the mathematical formula that currently governs the small and large pool of distributors and retailers.”
Some of the key points discussed were thresholds that better reflect those established at the outset of CETA; greater transparency of thresholds, so that companies are not blindsided from one year to the next and put into the large pool; that a reasonable continuity of quota amounts from one year to the next is crucial to a company's contractual commitments and continued viability; that it is unfair and devastating for companies like ours to be given quotas to build our business and then be penalized for maintaining and growing; that it's not just the economic cost but also the damage to the company's goodwill; and that the current system has created a market of “armchair traders” who increase the price to consumers, causing inflation and market instability.
We feel no further ahead than at the beginning, beholden to armchair traders who are making millions of dollars on our work and doing nothing.
Just this year we lost a 30-year customer for the value of the quota that I had to pay for, and a manufacturer was gifted by Global Affairs from a WTO reallocation, a reallocation of 250 tonnes that I was not entitled to, so we are not sure where the equity and equality is on that.
CETA is not the only area where there are problems. Both CUSMA and the TPP are being challenged by the United States and New Zealand. We have problems with this system.
Thank you.