I'm honoured to be here today, and I know your committee has been doing a lot of important work.
I am joined by assistant deputy minister Fred Gorrell and executive director Doug Forsyth, both of Agriculture and Agri-Food Canada. Officials from the Canada Border Services Agency, Global Affairs Canada, and Finance Canada are also at the table should their technical expertise be needed.
I appreciate the opportunity to be here today to speak to you about issues of concern to Canadian dairy and poultry producers. I want the committee members to know that our government supports trade because it creates good jobs for Canadians and helps grow the middle class, which builds economic prosperity across the country.
Canadian farmers depend on trade to sell about half of their production. That is why our government is working hard to open up new markets for Canadian export producers. We are also equally proud to support Canadian dairy and poultry industries, which are essential to a strong and prosperous Canadian economy. All told, the dairy and poultry industries create almost 300,000 jobs in this country while creating economic activity of $32 billion. Both industries operate under the supply management system, which I and our government fully support. The goal of supply management is to match production with anticipated Canadian demand. The federal government supports the Canadian supply management system and we recognize the importance of effective import controls. The Canada Border Services Agency plays a central role in this regard. It administers the border controls that apply to dairy and poultry products in accordance with Canadian international trade obligations.
Let me briefly review the three issues mentioned in your study: duties relief program, spent fowl, and diafiltered milk. The duties relief program relieves customs duties on imported inputs used in the production of goods that are ultimately exported. Supply management producers worry that the program is being used inappropriately. They have expressed their concerns that some features of the program, specifically supply-managed products, are negatively impacting the domestic market, and they are concerned about potential diversion or substitution in the domestic market of supply-managed goods that are imported duty-free. Such imports could allow imported dairy and poultry products to displace domestically produced products, and that's not fair.
Government officials are actively reviewing this, and the Canada Border Services Agency has heightened enforcement activities to ensure that the program continues to be used as intended under the law. As a result of recent CBSA enforcement efforts, imports of supply-managed goods under the duties relief program have dropped since the start of 2016.
The second issue in your study concerns spent fowl. Canadian chicken producers have been concerned that some importers may be getting around the supply system by declaring that some broiler chickens are spent fowl. Spent fowl can be imported without tariffs from the United States.
There is a long-standing track record of legitimate imports of spent fowl to be used in the manufacturing of soups and chicken nuggets. Chicken producers believe the significant increase in spent fowl imports in recent years has been caused by the misdeclaration of broiler chicken meat as spent fowl. They are concerned that this trend will continue to lead to more broiler chicken meat being imported outside of import controls. As broiler chicken meat and spent fowl meat look basically the same, it is difficult to implement practical and effective means to ensure the legitimacy of spent fowl imports.
I can assure the committee that my department and others here today are examining ways to ensure the effectiveness of border control of poultry products. In fact, there's a working group looking at the potential options to ensure that products declared as spent fowl are appropriately treated at the border through measures such as enhancing compliance verification; requiring exporting countries to provide certification, similar to the United States Department of Agriculture's fowl meat verification program; and testing the DNA of products declared as spent fowl.
This goal is to ensure that the products declared as spent fowl are adequately treated at the border. In the meantime, we're in regular contact with producers and stakeholders all along the value chain.
Our government is equally committed to the support of a strong future for the Canadian dairy industry. It is one of the largest agriculture and food sectors in the country generating farm gate sales of $6 billion, processing sales of nearly $17 billion, and well over 100,000 jobs. This success is the result of our hard-working farmers and their commitment to excellence and to listening to consumers.
Being a farmer myself, I certainly am aware of the hard work and dedication that go into running a dairy operation and the concerns that face dairy farmers. In that regard, I want to acknowledge the efforts of the industry to work together.
At the same time, our government is aware of the industry's concerns regarding the use of diafiltered milk in the making of cheese. Over the past several months, my parliamentary secretary and I have had the opportunity to meet with many groups representing the entire industry from coast to coast. That includes the Dairy Farmers of Canada, the many processors and national organizations, young dairy producers, and provincial dairy producer organizations from across the country. We heard their thoughts on a number of key challenges facing the industry. Our discussions focused on transition assistance for the new market access for cheese under CETA and how to strengthen the sector in the face of domestic and international challenges, including the use of diafiltered milk in the making of cheese.
These discussions will certainly inform the development of a long-term sustainable approach for the Canadian dairy industry. Together, we are working to find solutions that work for the whole Canadian dairy sector. While we work to address these challenges being discussed today, our government is moving forward with a number of investments and innovations that will help dairy and poultry farmers succeed.
First and foremost are the dairy and poultry research clusters. These bring together industry and Canada's world-class agricultural scientists at Agriculture and Agri-Food Canada. These two clusters represent nearly $18 million in federal investment. The overall goal is to help farmers and processors strengthen their competitiveness and sustainability.
Under the poultry research cluster, scientists are looking at ways to combat bacterial diseases and avian influenza, as well as looking at innovative production technologies and practices. Recent investments in the dairy research cluster are supporting deliveries in two key areas: increasing the energy of Canadian forages to help increase milk production and researching the potential role played by dairy fat products, including their impact for a healthy diet.
We have also invested $1.3 million for the Dairy Farmers of Canada proAction program, as well as the traceability initiatives. As well, our government has invested $3 million to support a dairy research and innovation centre at the University of Guelph. The centre supports world-class research and outreach activities to stakeholders and the public.
To sum up, Mr. Chair, the bottom line is that Canada's dairy and poultry farmers provide growth, job creation, and innovation across the country. We will continue to work with the sectors to address these issues of concern, and I will continue to invest in innovation to foster growth in the agriculture and food sector.
We all want to see a Canadian agricultural sector that is safer, strong, and more innovative, and that is certainly my goal and the goal of our government.
Once again, I thank you very much for this opportunity to be here. I would be pleased to respond to your questions.
That is a good question, and thank you for it.
On the spent fowl, as the minister has clearly identified, there are concerns of fraudulent practices. We are working right now with Trent University and looking at the opportunities of having a protocol on the DNA, distinguishing between broiler meat and spent fowl, and you can appreciate that's a very complex issue that's going to take some time.
We're also consulting with the United States Department of Agriculture. They have a spent fowl verification program. We're looking at what they can do. Right now it's a volunteer program.
It's very clear that we need to be looking at all options to ensure that the product coming north is the product that is being described, and that will be continuing.
I think those issues are complex, because doing a DNA testing of poultry itself will not be that simple. In working with the Chicken Farmers of Canada, I think there is an opportunity to be looking at that as one of the options that the government will be considering.
The clusters have been place for a number of years, and governments have supported them. I think it's very important that you have the brain trust of universities, the manufacturing sector, and the dairy industry, our poultry industry, whatever is involved. Whatever cluster it is, sit down and have a chance to.... You have to have the brains and the research and then the agricultural sector to put the stuff in play.
The end result is that the university and the scientist create, for example, canola. That's a prime example of what can happen when everybody works together. China alone brings in $2 billion a year of new money for the farmers in this country. That's the kind of thing we want to develop.
There was $70 million allocated in our budget for this type of thing and to make sure that we enhance the research in this country. We want to make sure, hopefully in the next budget, that we continue on this process. We want to make sure that the researchers, number one, talk to each other, and number two, talk to people around the world.
The announcement I made in Swift Current a few days ago of $35 million was to make sure that people understand that this government is fully committed to research and agriculture. Science-based research is vital for the agricultural sector.
Thank you very much. Again, I very much appreciate your question.
Yes, you're absolutely correct. The United States wants to rectify the situation. The people involved in spent fowl want to reconcile the situation. We have also made some move at the border with enforcement, but the problem is to get a proper enforcement mechanism in place that would take place just as the product is coming through. That's what we're working on, and that's what we will do, but we want to make sure it's efficient and to make sure it's only spent fowl that comes through.
What would be helpful, and we're working on it too, is the certification program from the United States that would come right from the manufacturer of the spent fowl that comes to this country. This is the process we're working on. We're making slow progress, not enough for sure, but we are making some progress. We want to make sure that, again, whatever mechanisms are put in place are efficient and are reasonably, as you would understand, fast at the border. That's what we have to try to do, and that's what we will do.
Innovation, of course. I always use this as an example. As a farmer, I picked potatoes by hand. I was a seed potato producer. I picked potatoes off the ground when I was a young boy one time many years ago, and the last seed potatoes that I grew didn't touch a human hand, and that's about 25 years ago. Basically if you're going to be in the business, innovation is a vital part of making sure that our agricultural sector.... Whether in the supply management sector or any other sector in the country, it is very important that you keep up with innovation. You never get there. It keeps going, and we have to make sure that farmers are on the cutting edge. That's what every other country in the world is doing, and that's what we have to do. We have the farmers and ranchers who want to do it and are doing it. An example that is mostly in the west is Canada beef, how they handle the situation, how they handle carcasses, how they butcher and sell the meat worldwide, how they make sure the farmers in the end get the best dollar for their product.
It's a great example, but nobody understands better than the people involved in Canada beef how vitally important it is that we continue to be innovative, that we continue to stay on the cutting edge, and that's what we're going to do.
Your question is a good one to which there's not a great answer. Quite simply, it is a problem. A farming operation today is worth an enormous amount of money and we're working on it to see if there's any way that we can address the problem. We're aware of the problem, which is at least a start in trying to deal with it.
However, in order to make sure that the farms stay in a competitive range—that's why I mentioned innovation—they have to stay productive. That's not totally answering your question, because we cannot provide dollars just to buy farms. That is not in the game, but there could be other ways, and we're looking at them. We want to make sure the operations you're talking about remain fully competitive. That's where the research dollars come in and are so vitally important, whether you're in the dairy industry, growing potatoes, canola, or whatever it is. We have to make sure that the farmers, if they're growing grains, have a seed that can produce more and use less moisture. We have to make sure that the fertilizers that are put on the land are used totally by the crop, and find other ways to grow crops with a lot less fertilizer.
This is what's going on in the science and research area in this country. I've had the privilege as a minister to travel across the country and meet some of these people. It's amazing what these scientists do, and it's amazing what results they have. The end result just puts more money in the farmer's pocket and I'm certainly big on that.
That will give an indication of where they're coming from. It's so interesting.
Number one, we've opened markets for cherries in China and this type of thing. We have to make sure no matter what it is, number one.... You have to have the product. We have the farmers in this country who can produce the best products in the world; there's no question about it. We have the best regulatory system in the world. People who eat Canadian food worldwide feel it's safe to eat, but we have to make sure that we provide the product the way that the customer wants it. If you're going to China or India or other places, you have to make sure that they know about our product, but the product also must be produced and presented to them in the way they want it, not in the way you and I would eat it. We want it different from what people in other countries want. If we're going to get into those markets, that is the way that we have to do it.
I'm leading a trade group to China in a few weeks. I've been there on trade shows previously. It's certainly where it's at; there's no question. I was in Shanghai and I think there are about 26 million people, 10 million fewer than the population of Canada, and just looking at how the products were displayed there is amazing. What you have to do, and it was done there, is to make sure that you provide the product the way they want it, but you also have to be present. There are people at this table who are fully aware of this. You have to be there and wave the colours. That's what we're trying to do.
Thank you, Minister and officials, for being here today.
These are issues that, as you rightly point out, sir, have been ongoing. I am buoyed by the fact that you're talking about maintaining trade corridors, you're talking about funding the clusters, and you're talking about agricultural innovation, all good things that need to be carried on. It's very flattering that you're taking that on and continuing on with the work we began a number of years ago. I'm hopeful then that we'll actually see something about agriculture in budget 2017 that will feed into that, as that funding becomes renewed.
There's one other point that I think needs to be made when we talk about issues like this that are very difficult to get around, especially when there are four different departments involved. That's the maintenance and continuation of the value chain round tables. The officials with you today, Mr. Gorrell and Mr. Forsyth, will tell you how important those are in getting everyone from the farm gate to the kitchen plate at the table talking about issues like spent fowl and diafiltered milk. Those are where the solutions will be found. They won't be found here; they'll be found from those people who have a grounded sense of what's needed.
You also talked about the certification program in the U.S. on spent fowl, which I'm aware of. The point I would make is that there is an easy fix, then, because we no longer do meat verification at the border. We did away with that—off-loading, freezer testing, held up—and moved on. We went to a system that everyone agrees with, where the product is done at the point of processing, in the U.S. in this case, and the label for spent fowl is put on it at that point. Why does that then not follow through on those exports coming into Canada? Why are we dropping the ball when that's the new reality of how these things are done?
Well, thank you, Chair. You say three minutes, so we have to get moving fast.
Welcome, Minister. Regardless of our party lines, I think we all agree you're a wonderful chap, and it's always good to have you here.
Mr. Fonseca, that line “If you ate, you can thank a farmer”, we know that, but I think we can extend that. I have a little farm, and I see some of the machinery we have. It's getting pretty amazing as well. We had better thank a manufacturer, but that manufacturer knows that tractor wouldn't run without the oil, so we had better thank the people in the oil industry, too.
Here's what I want to talk to you about: I want to talk to you about pipelines. Of all things, why would we talk about them? We talk about them because in this country we have an oil industry that's going down the tubes. I suggest to you, sir, that if that happens, it is going to affect the farm gate in an incredibly negative manner.
I want to know, and I want to get a commitment from you as the Minister of Agriculture, with the important and the powerful portfolio that you hold, that you will take the government to task and say that we need to get these pipelines built. I'll finish with one final point. The fact that we have low oil prices today is a curse because there isn't the investment being made. Once the glut is gone, we will see the oil price spike like we did in 2008.
Would you care to comment on that and make a commitment to this committee and to these MPs that you will fight for pipelines?
I miss working with you on ag, but it's nice to see you today.
I'm just going to ask you a few more questions about diafiltered milk, because what we're supposed to be concentrating on is a study on the Canada Border Services Agency duties deferral program and other issues, diafiltered milk, and spent fowl.
This is an issue that has been going on for the last number of years. Diafiltered milk is something that was made in the States to ship off to Canada. They found a loophole. Supply management is based on three pillars: production management, pricing, and control at the border, control of imports.
With diafiltered milk, we see the loophole; we see the problem. It has a dual identity. When will this be dealt with?
I know you've consulted a lot, and I know your government likes to consult Canadians, but I think enough consultation has happened. I think a lot of the major players are on the same page as to what needs to be done.
What happened in those consultations, Mr. Minister? Are we on the same page?
I think it's just missing government action. The government needs to control what's happening with the importation of diafiltered milk.
Good morning. Thank you.
My name is Robin Horel and I am the president and CEO of the Canadian Poultry and Egg Processors Council. I thank you for the invitation to provide to the committee and other interested parties our perspectives on the Canada Border Services Agency's duties deferral program as well as the border circumvention issues with spent fowl.
Our organization, CPEPC, is the national trade organization for Canadian chicken and turkey processors, hatcheries, egg graders, and egg processors. Now in its 66th year, our council has member companies in every province of Canada. In addition to representing the interests of more than 170 Canadian poultry processors, egg graders, and processors and hatcheries, we have over 50 national and international industry partners who have joined us as associate members. To put it simply, my members buy live chickens, live turkeys, table eggs, and broiler hatching eggs from supply-managed farmers.
CPEPC member companies work within the supply-managed system for chicken, turkey, eggs, and broiler hatching eggs. Our members support the system, and we are committed to building the long-term competitiveness of the Canadian poultry industry. A foremost priority is to modernize the supply management system to ensure continued broad consumer support and mitigate processor risk and to better respond to market pressures and the competitive environment. The goal of the system for Canadian consumers is to ensure that they receive safe, local, high-quality poultry products while farmers receive a fair return for their efforts, all without government subsidies. The goal for my members, who purchase live chicken, turkey, eggs, and broiler hatching eggs from supply-managed farmers, is to have a fairly priced, dependable supply of the right product at the right time.
As the members of your committee know, supply management depends on three pillars: producer pricing, production planning, and import control. It is our belief that the import control pillar is being circumvented. We are on record with government as supporting efforts to intensify ongoing anti-circumvention measures that will enhance our border controls. For our industry these measures include preventing importers from circumventing import quotas by adding sauce packets to chicken products, eliminating imports of broiler chicken labelled as spent fowl, and excluding supply-managed products from the Government of Canada's duties deferral program.
This committee is concerned with two of these three measures: CBSA's duty deferral program as well as the issue of imports of broiler chicken labelled as spent fowl. The spent fowl issue is one that affects the chicken sector only. The duty deferral program can apply to all supply-managed poultry commodities but currently affects the chicken sector more than the other supply-managed poultry sectors.
I'll first refer briefly to the duty deferral program. CPEPC and our members support programs that contribute to the creation of jobs and innovation in the Canadian poultry industry. That includes programs that allow Canadian manufacturers to purchase raw chicken at internationally competitive prices, add value in Canada, and re-export that product. CBSA's duty deferral program is designed to do that, but so is Global Affairs Canada's import for re-export program managed by the trade controls policy department. The import for re-export program, IREP, is especially designed for products subject to tariff rate quotas and in our opinion is the correct vehicle for this type of activity for our industry. Therefore, CPEPC favours exclusion of supply-managed poultry products from the CBSA's duty deferral program.
That being said, it should be noted that industry requires an import for re-export program that is user-friendly for Canadian companies in the poultry sector in order to encourage economic activity in Canada while protecting our industries from potential TRQ circumvention. Therefore, the timing of elimination of poultry products from the duty deferral program must allow for any necessary changes to IREP. Companies currently using duty deferral will need adequate notice in order to allow for a smooth change to IREP. Our goal must be to ensure there is no impact on legitimate business.
I now turn to spent fowl. In the chicken industry, spent fowl is the term used for laying hens, either table egg-laying hens or hatching egg layers, that have reached the end of their productive life and are slaughtered, with the meat being used for many further processed chicken products. The properties of the meat make this product preferred for many processed products. In addition, this product is usually a much less expensive raw material for processed products.
Spent fowl is not part of the supply-managed chicken sector in Canada, which means that spent fowl can be imported into Canada tariff-free. I need to be clear about this. CPEPC and our members support the import of spent hens and spent hen meat because it contributes to the creation of jobs and innovation in the Canadian poultry industry. Canadian companies are among world leaders in producing many of these products for Canadian consumers and for consumers worldwide.
Our concern is with the broiler product that is labelled as “spent hen” and imported into Canada, thereby circumventing border controls. This fraudulent activity results in illegal meat on the Canadian market. The result is depression of the Canadian market, loss of opportunity for Canadian farmers to grow additional broilers, and for Canadian processors to process that product. We applaud what we understand is a current concentrated effort to address specific incidents of fraudulent imports of these products. However, on an ongoing basis we believe we need mandatory certification of the spent hen product for import into Canada as well as use of DNA testing.
In conclusion, our members operate within the supply-managed value chains. These systems have benefits and our members support them. We are, however, concerned with fraudulent import activity, and we support intensifying anti-circumvention measures that will enhance border controls. For our industry, these measures include certification and DNA testing to eliminate imports of broiler chicken labelled as “spent fowl” and excluding supply-managed products from the Government of Canada's duties relief program and putting them into IREP where they belong.
I'm looking forward to answering questions from the committee members on these two issues.
Thank you, Mr. Chair and members of the committee.
I am Yves Ruel and I am the manager of trade and policy for the Chicken Farmers of Canada.
I would like first of all to thank you for inviting us to debate the important issue of import circumvention, in particular the case of spent fowl and the duties relief program.
To begin, we will provide a brief overview of our industry and our organization.
We represent 2,700 Canadian chicken farmers in every province. Our industry, which includes both farmers and processors, helps sustain 78,000 jobs. Every year, we pay $2 billion in taxes to the various orders of government.
Canadian chicken farmers are proud of their ongoing contribution to the country. We want to continue contributing to its growth. To maintain our success in recent years, however, an essential pillar of supply management must be strengthened, namely, import control, which is the reason for your hearings today on spent fowl and the duties relief program. These are very important topics.
I will now talk about spent fowl.
On spent fowl, we've seen over the years an increasing volume of chicken broiler meat being illegally imported into Canada as spent fowl. It was in 2012 that we saw for the first time pretty strong evidence of that, when the volume of imports from the U.S. represented 101% of the U.S. slaughter volume. As you can understand, this is not possible. First, they consume some fowl meat in the U.S., and they export to other countries than Canada, so it's impossible that we imported 101% of their entire supply. The problem kept going after 2012. You have the graph that was circulated that shows the annual imports. The data suggests that the problem is increasing in 2016.
From the beginning of the year, so for the first seven months that we have official data, the imports represent 114% of the U.S. fowl production. If we were to continue at that pace, this year we would import 118 million kilograms from the U.S. This is 32% more than last year. That's based on the first seven months of data.
We have some preliminary numbers for August, and those numbers show a decline for the first time in years. You've heard from other committee members that there's been increased enforcement by various agencies, and that probably explains the decline that we've seen in August. If the decline in August imports is the result of the increased surveillance, this again provides further evidence that mislabelled chicken is being imported to Canada.
These illegal imports not only undermine our economic contribution to the Canadian economy, but they are also a threat to food safety. In the event that there was a product recall, it would be impossible for CFIA to properly advise Canadian consumers. When they claim that they ship spent fowl to Canada, if chicken is the real product in the shipment container, they would never know in the event of a product recall what was really in the box. They are all labelled as spent fowl.
Chicken farmers are not opposed to the legal importation of spent fowl, but we want an end to the fraudulent imports that we've seen. Based on our conservative estimates, we believe that about 37 million kilograms were imported illegally last year; we figure that about 40% of the imports are illegal imports. That represents 3.4% for domestic production. If we were to produce this in Canada, that would mean the creation of close to 2,800 jobs, and all the other economic benefits for the Canadian economy.
As mentioned by previous witnesses at your committee in August, there are no means to visually distinguish broiler meat and spent fowl. That's why we've worked with Trent University to develop a DNA test. Trent specializes in non-human DNA, and they have expertise that they were able to develop for the poultry industry. They can clearly distinguish between broiler meat and spent fowl meat. We know that currently the government is in discussion with Trent to find out more information about this test.
On the spent fowl file, the Chicken Farmers of Canada recommend, first, that mandatory certification for all spent fowl imports be put in place. That would complement the U.S. voluntary program. Also, we recommend that the DNA tests be incorporated as a means of verification for the efforts by CBSA and CFIA. As was mentioned by the minister earlier, the Canadian and American processors are both supportive of the efforts to resolve this matter.
On the second point of your study today, the duties relief and duty drawback program, I think it's important to mention, as my colleague Robin mentioned, that this program was not designed for perishable agricultural goods such as chicken. First, the program has a four-year timeline, which obviously exceeds the shelf life of even frozen chicken products. Second, the program allows for product substitution. This would imply that high-value chicken products can be imported and low-value are re-exported, or that even spent fowl could be re-exported.
Also, the duty relief program allows marinated products. The reason we saw the increase in the use of the DRP.... It started in 2012-13 when Global Affairs Canada, under the import to re-export program, decided to ban marinated products. All the users of marinated products moved to the DRP, and that's why DRP had such a sudden increase.
As a result of that, when we combine both programs, IREP and DRP, there's an increase of 35% since 2001, and that's an impact on our industry. Last year the imports under DRP reached 96 million kilograms, which is 9% of our production. As you've heard, CBSA also increased its enforcement activities, which probably explains a small decline in the first months of 2016. Once again, it shows that when there's increased enforcement, there's a decline in the use of those programs, which provides further evidence that the program is creating disruptions in the Canadian chicken market.
We recommend that chicken be made ineligible under the DRP. There's already a program administered by Global Affairs Canada called import for re-export. It's designed specifically for goods subject to import control. It's well crafted for agriculture, so users could use the import to re-export program. This would eliminate all program duplication and reduce government cost. We think it's the best way for the industry to go.
In conclusion, we think that by closing those loopholes on spent fowl in DRP, this would generate more than 4,000 jobs, $315 million in contributions to GDP, and $105 million in new taxes every year.
Thank you very much, Mr. Chairman. I will read my text in French, and I will take questions in both languages.
First of all, on behalf of the the Dairy Farmers of Canada (DFC), I am pleased to be with you here this morning. Thank you for your interest in our concerns. I am accompanied by Yves Leduc, the director of our policy and international trade team. He is here to provide additional information to your questions if necessary.
I will give you a short version of our presentation. The complete version is available to you. You may refer to it if you wish.
I would like to draw your attention to the updated figures on the impact of Canada's dairy industry. Our new figures are provided in the complete version. The industry contributes $19.9 billion to the GDP and sustains 221,000 jobs across the country, up from 215,000 jobs. This indicates significant growth in the dairy industry in Canada. That is something worth noting.
Let me be clear upfront, DFC has never opposed Canada's trade strategy. Our position is simple: the dairy sector should not have to pay the price for our nation's trade agreements. Contrary to what some may believe, Canada is not closed to dairy imports. In 2014 and 2015, we imported approximately 900 million dollars annually in dairy products. Total imports are estimated at over 10% of our market.
The minister referred earlier to the long-term situation. Farmers are perhaps indeed concerned that part of our market might slip away. The future of the industry depends on a strong market. This 10% is more than the U.S. and New Zealand, and does not include the 2% under CETA, or the additional 4% of access that will be granted as a result of the TPP.
Preventing tariff circumvention is very important for preventing imports. We would like to remind you that worldwide, with the exception of a few countries that continue to overproduce and flood the market, the production of the dairy sector remains focused on serving domestic needs. Only 9% of the total world milk production is traded on the world markets. The government's role is to ensure that the third pillar of supply management, border controls, is effective. In order to adjust national production, we need to know the level of imports.
I would like to say a few words about the duties relief program. It was designed, as my colleagues have said, for manufacturing sectors, not agriculture. It allows up to four years for re-export, which of course does not apply to fresh products. This directly impacts our production planning, which disrupts the management of our system. There is a glaring lack of transparency in this system, as compared to the import for re-export program, or IRP, which was created for supply-managed products.
The exclusion of dairy, poultry, and egg products from the duties relief program is the simplest solution. This has been under review for years, and a decision was announced on October 5, 2015. Unfortunately, this was never implemented due to the change of government. We understand that the proposed solution is supported by the current administration and is simply awaiting approval.
When it comes to the issue of diafiltered milk, at this point, I'm truly at a loss for words. Between 2011 and the election in 2015, Dairy Farmers of Canada had 59 communications with the previous government on diafiltered milk. After the election, we re-started the process with the current government. Over the past year, we have had numerous and ongoing meetings with the staff of various ministers' offices, as well as consultations and meetings with partners and MPs.
On February 2, 2016, we had a lobby day where we discussed diafiltered milk and various other topics with over 150 MPs. On March 9, 2016, we presented and answered questions on diafiltered milk for two hours before the Standing Committee on Agriculture and Agri-Food.
On April 21, there was a full opposition day in the House of Commons, devoted entirely to diafiltered milk. We consulted with the government both before and after 3,000 farmers came to a rally on the Hill on June 2.
We have heard numerous questions and answers about diafiltered milk from all parties during question period in the last session. I don't know what more I can tell you about this at this point. We will answer your questions if you have any.
In conclusion, I can tell you that we have seen numerous examples of creative tariff circumventions such as the pizza kits, butter, oil and sugar blend, salt or sugar added to cream to avoid tariffs, and food preparation allegations.
These illegal actions have cost our farmers millions of dollars in losses, and it took years to get a resolution on these files from the government. All government departments and agencies must play a proactive role to ensure proper classification, proper inspection, and proper and transparent advance rulings.
In putting pressure on our Canadian government recently, all our international trading partners are seeking is complete access to our Canadian market. Some people, like me, still believe in the right of a country to food sovereignty, and to enforce its own domestic regulations.
In Canada, we have a sustainable dairy sector, without government subsidies. Other countries are envious of the stability of our system, particularly at a time when the global dairy market is hurting worse than it has in years.
We can't blame other countries for being scared of a thriving Canadian dairy sector, but they cannot blame our government for wanting to protect Canada's food sovereignty. All we are asking is for the government to play its role, while respecting our existing international trade commitments.
As you heard earlier, the government can also support the dairy industry through investments in innovation and research. What was not mentioned is investment in infrastructure in order to improve processing and drying capacity, thereby strengthening our dairy industry.
The government can play a role and our sector will continue producing the high-quality milk that Canadians prefer. Canada and Canadians benefit from a strong dairy industry.
Thank you, Mr. Chair.