Competition from off-shore shooting destinations trying to lure US projects is causing concern amongst Canadian producers, according to the annual report issued by the Canadian Film and Television Production Association.

Foreign-financed shoots spent US$1.42bn in 2001-2002, nearly 40% of the country's total production volume of US$3.7bn.

Although there was an increase of 8% in foreign location shooting, the period under review does not reflect the impact of SARS in Toronto in 2003 - when film production came to a virtual standstill - or an increase in the value of the Canadian dollar relative to the US greenback.

The dollar has gained 10 cents in less than 12 months, from US65 cents to US75 cents. Eighty cents is regarded as the threshold at which US producers may begin to question the economics of shooting in Canada.

The bad news was not limited to service production. Declaring that "Canadian content production is under siege", CFTPA president and CEO Guy Mayson warned that worse is yet to come, as the federal government reduces its contribution to the Canadian Television Fund, the single-most important source of financing in the sector.

The pain is compounded by declining sources of international finance, creating a co-production chill, and an increase of in-house production in international markets traditionally friendly to Canadian-produced fare. Further, the report does not include Alliance Atlantis Communications December's announcement that it was withdrawing from production of feature films and television drama.

The results were released one day after speculation that the province of Ontario is considering cut-backs on its 11% production services tax credit. The CFTPA is holding its annual summit in Ottawa, where keynote speaker producer Robert Lantos is expected to rally the troops.