Madam Speaker, I will be sharing my time with the hon. member for Vaudreuil.
I am pleased to contribute to the debate on Bill C-86, an act to amend the Canadian Dairy Commission Act. It offers a new, more competitive marketing approach for the Canadian dairy industry, which is required to allow Canada to honour its international trade commitment while preserving the fairness and equity for Canadian milk producers of the present system.
While market opportunities will flow from both the North American free trade agreement and the World Trade Organization agreement, certain changes to our domestic structure must be made. Effective August 1, 1995, under NAFTA Canada will not be permitted to export dairy products to the United States where the price of the product has been supported by a producer funded levy. This relatively immediate export restraint will be accompanied by a more gradually implemented WTO restriction on our ability to use levies to finance dairy product exports to other market destinations.
The importance of maintaining current export and domestic markets for dairy products and for products containing dairy ingredients in a manner that still allows all dairy producers to share the cost of supplying milk to these markets cannot be overstated.
Over 300 dairy plants in Canada employ almost 25,000 Canadians to process milk used as table cream and milk or in products such as milk, cheese, yogurt, and ice cream. Thousands of other jobs are provided in the further processing sector for items containing dairy ingredients such as cookies, pizza, and chocolate, as well as in areas of dairy product transportation, packaging, storage, and marketing.
Under the rebate program for further processors in dairy product export assistance programs, initiatives currently funded by the producer levies and administered by the Canadian Dairy Commission, export assistance was provided to facilitate the export of over 10 million kilograms of cheese in 1993-94 and to support processor purchases of dairy ingredients used in the production of over 2,000 finished food products.
In 1993-94 dairy exports to the United States involved about 0.7 million hectolitres of milk, about 1.7 per cent of the entire Canadian milk quota set for that period.
Canada's dairy processing industry is largely centred in the provinces of Ontario and Quebec. The 1992 census data indicated that 105 plants processing fluid and or industrial milk were located in Ontario, while the 83 plants situated in Quebec had the highest value of shipments, at $3 billion. Alberta follows with 31 processing establishments. B.C. has 25, Manitoba 18, Nova Scotia 14, Saskatchewan 12, P.E.I. 9, New Brunswick 6, and Newfoundland has 5 such processing facilities.
Without price discrimination and pooling of returns, dairy and further processors would not be able to access milk at price levels that would enable them to compete on the U.S. market and be competitive against imports on the domestic market. Furthermore, the current level playing field provided to producers by the current levy system would be eliminated.
The largest volumes of the lower priced milk needed by processors and further processors for certain export and domestic products are produced in the more industrial provinces of Ontario and Quebec. Some smaller provinces are also greatly affected in terms of the proportion of their total milk marketing that is sold at reduced prices.
Without a workable alternative to the current levy system such as that offered by price discrimination, the loss of the U.S. market for Canadian dairy products and products containing dairy ingredients would lead to reduced competitiveness and would place in jeopardy the domestic further processing sector for such products.
Without pooling of the market returns, there would be an inequitable sharing among producers of the cost of maintaining exports to the United States and for domestic competitive markets. This could lead to their abandonment. Should these markets not be maintained, the domestic further processing industry would be less viable due to the diminished economies of scale. Pressure on further processors to relocate their operations to the United States would result. The job loss ramifications of such relocations would be significant.
There is a potential additional reduction in the industry side of almost two per cent resulting from the growing restrictions agreed to under the WTO agreement of the allowable quantity of subsidized exports and the export subsidy paid annually for each product class up to the year 2000-2001. A price discrimination system with pooling of market returns as facilitated by Bill C-86 would address this issue.
Everyone in the Canadian dairy sector is becoming clearly aware of the need to adapt to the new North American and global trade conditions in competition. To illustrate Canadian dairy producers' awareness of this need to adapt, I quote from a May 4 letter written to the Minister of Agriculture and Agri-Food and copied to me by my constituent, Mr. John Core, chairman of the Ontario milk marketing board.
Mr. Core writes:
It is extremely important that Bill C-86 be passed by the House. We have negotiated long and hard to arrive at a system to replace levies effective August 1. The changes to the CDC Act are critical to special class pricing and the required pooling that follows from that new pricing method. Your directive to not use levies for exports to the U.S. cannot be adhered to without the necessary amendments.
We met the challenge given to us by the federal and provincial agricultural ministers to find the solution. We require the legislative changes now to implement the necessary changes.
Mr. Core, I am proud to say, is one of my constituents.
The dairy industry leaders who have developed and negotiated the approach facilitated by these amendments fully understand that while tariff protection is in place between now and the year 2001, the only way to reduce uncertainty and concern about what happens after this period is to meet the new trade challenges head on. Bill C-86 will allow the industry to do so.
I urge my fellow members to support these amendments.