Poultry concessions in the TPP

On October 5, 2015 an agreement amongst the 12 countries involved in the Trans-Pacific Partnership (TPP) was finally reached.

The supply-managed agricultural sectors in Canada had been concerned since Canada joined the TPP in October 2012 that demands to gain increased access to these sectors from participating countries would pose a significant threat to the supply management system.

Not so, says the federal government, who stated in a press release “despite significant and broad demands from several of our TPP negotiating partners, Canada has offered only limited new access for supply-managed products.” This access, which it says will be granted through quotas phased in over five years, amounts to a “small fraction” of Canada’s current annual production: 3.25 per cent for dairy, 2.3 per cent for eggs, 2.1 per cent for chicken, 2 per cent for turkey and 1.5 per cent for broiler hatching eggs.

To support supply-managed producers and processors throughout the implementation of the TPP and the Canada-EU Trade Agreement (CETA), the Government of Canada announced a series of new programs and initiatives that will allow the three pillars of the supply management system to remain protected under both systems.  These initiatives have been approved by Cabinet.

According to the federal government, the TPP will secure new market access opportunities for Canadian dairy, poultry and egg exports and that dairy, poultry and egg producers and processors will benefit over time from increased duty-free access to the United States and all other TPP countries.

To off-set the concessions it made to sign a TPP agreement, the Government of Canada said it will be providing new programs for dairy, chicken, turkey, egg and hatching egg producers as the implementation of the TPP proceeds.

Although when the TPP will come into effect is unknown at this time, Agriculture and Agri-Food Canada (AAFC) will be working with the Farm Products Council of Canada to ensure that these programs are delivered to producers “in an effective and efficient manner.”

Income Guarantee Program
According to AAFC, this program will keep producers “whole” by providing 100 per cent income protection for 10 years. Income support assistance will continue on a tapered basis for an additional five years, for a total of 15 years. $2.4 billion is available for this program. Annual payments will be directly linked to the amount of quota a producer holds.

The Income Guarantee Program transfers with the sale of the quota, meaning that if the quota is sold at any point in the 15-year period, the remaining direct payments linked to that quota will transfer to the new quota holder. Annual payments will begin when TPP comes into force. The income guarantee payments will be calculated based on expected domestic production levels under conditions with TPP and the Canada-EU Trade Agreement in place.  A model will be used that takes into account detailed historic economic and farm level data, projected into the future.

Quota value Guarantee Program
The Quota Value Guarantee will come into effect once TPP comes into force. AAFC says this program will protect producers against reduction in quota value when the quota is sold following the implementation of TPP, and $1.5 billion has been set aside for this demand-driven program that will be in place for 10 years.

In addition to producer programs, the Government of Canada has also developed two programs to assist food processors within the supply-managed sectors.  These programs have been approved by Cabinet and will be phased in starting fiscal year 2015/16.

Processor modernization Program
This seven-year $450-million program will provide processors with support to increase competitiveness through capital investments and technical and management capacity. For-profit agri-food cooperatives and processors in the supply-managed sectors,including small and medium-sized enterprises (SMEs) are eligible to apply for this program.

The following activities are eligible for financial support: purchase and installation of new equipment; construction, renovation and expansion of facilities; hiring of required expertise to complete the project; development of new products/product lines; improvement of manufacturing processes; and collaborative partnerships for research.

Market development initiative
The Market Development Initiative provides new funding over five years to the AgriMarketing Program to help the supply-managed sector to maintain, develop and expand their Canadian and international market share. The Initiative will add $15 million of new funding to the AgriMarketing Program.

Not-for-profit organizations working on behalf of supply-managed producers and processors, as well as small and medium-sized enterprises in the supply-managed sector are eligible to apply for funding. The following activities are eligible: additional promotional campaigns and activities that position and differentiate Canadian supply-managed products; and marketing materials, events (e.g., attendance at trade shows) and research that supports the sale of Canadian supply-managed products. Eligible activities will be cost-shared on a 50/50 basis with industry.

While the Chicken Farmers of Canada (CFC), Turkey Farmers of Canada (TFC), Egg Farmers of Canada (EFC), the Canadian Hatching Egg Producers (CHEP) and the Canadian Poultry and Egg Processors Council (CPEPC) expressed disappointment that additional access to the Canadian poultry market was granted in the TPP, all national groups recognized the economic importance of the trade deal to other agricultural sectors and industries and thanked the federal government for its support.  

Border control
In addition to program funding (worth $4.3-billion), the federal government stated that it will “intensify on-going anti-circumvention measures that will enhance border controls.” These measures include requiring certification for spent fowl, preventing importers from circumventing import quotas by adding sauce packets to chicken products, and excluding supply-managed products from the Government of Canada’s Duties Relief Program.

This is welcome news for CFC in particular.  CFC Chair Dave Janzen said in a release that fraudulent import practices have plagued the industry for over five years that have cost the chicken industry thousands of jobs, millions of kilograms in production, millions of dollars in revenues and millions of dollars in GDP contributions to the Canadian economy.  

“We are counting on the government to cease the practice of regularly issuing supplementary import allocations,” he said.

All of the national poultry associations have stated they will need additional time and analysis to fully understand the potential future impact of the TPP on their farms and the entire value chain, and that they will work with AAFC on the details of the agreement to ensure that the provisions agreed to do not jeopardize the Canadian Government’s commitment to maintain the integrity of the import control pillar of the supply management system.