Brian's comments sound good, Mr. Chair, but they're a little far from reality.
I do believe, as I said previously, that there's a lot at risk in changing the KVD system. I recognize what's on the website. The Canadian Wheat Board, on its website, in terms of signing a declaration, is basically trying to transfer risk from the Canadian Wheat Board, if there is a screw-up in quality, to individual farmers who sign that declaration. It has nothing to do with our international reputation. This committee needs to be absolutely assured by somebody other than Earl Geddes, by either some of the directors of the Wheat Board or the chair of the Canadian Wheat Board, that this can be handled.
Alex's motion, in fact, doesn't close the door. It says, “...only proceed with its removal when a variety identification system that has gained the confidence of those whose interests are protected by the current KVD system has been put in its place”.
So Alex's motion leaves this committee the option of pulling somebody from the Canadian Wheat Board in here who has the authority to speak for the Wheat Board in a public arena, on the record.
As far as the Canadian Grain Commission and Hermanson goes, I wouldn't accept Hermanson's committee evidence here. We passed a motion at this committee. He's shown to be a mouthpiece of the minister, and the minister wants to move on this. The Canadian Grain Commission's independence has been compromised by that appointment, and we stated that at this committee.
So my position remains the same. We will support this motion, and I would encourage the chair and the government to bring someone forward from the Canadian Wheat Board to give us assurances that our quality system is not going to be compromised. You can bring both the Wheat Board and the Canadian Grain Commission, if you like, but we can have a quick meeting and be assured that our system is not going to be compromised, because we're the best in the world in terms of quality, and let's not jeopardize that.
Thank you very much, Mr. Chairman.
One of the things that truly disappoints Canadians when it comes to politics in this place is when politicians say one thing, know one thing to be true, and go and vote the exact opposite for partisan reasons.
Mr. Bellavance truly believes his position.
While I disagree with Mr. Atamanenko, I respectfully appreciate his position on this. He chooses to discuss these things.
But Mr. Easter knows better. He knows that it's the other way and he voices the other way in countless statements, and he still goes forward with his partisan ways.
I have a report here, quite an interesting little report, many of whose initiatives we have actually already completed as a government in two years. It's called “Empowering Canadian Farmers in the Marketplace, A Report by the Honourable Wayne Easter”. One of the things he talked about in there is that all governments place a priority on measures. One of his recommendations is that “governments place a priority on measures that will enhance farmers' economic returns from the marketplace”.
That's exactly what we're trying to do here, Mr. Chair. We have farmers saying this; we have the Canadian Wheat Board saying this; we have the Canadian Grain Commission saying this; and we have industry saying this, and Mr. Easter still decides to stand on his island, all alone, and refuse the will of western Canadian farmers, and in this case farmers all across the country.
He talks about how what he really needs now is the option to pull somebody in before this committee as a witness. We have that ability; we have that ability at any time we want. They have the votes over there to do so. If they wanted to bring the directors of the Canadian Wheat Board here—because the members or employees of the Canadian Wheat Board, such as Mr. Geddes, apparently no longer speak for them, according to Mr. Easter—then we can do that. But we do not need this motion.
What this motion says is that we recommend that the government abandon its plan to remove kernel visual distinguishability. This would harm our industry. This would harm what western Canadian farmers and farmers across this country have been asking for, and Mr. Easter knows that.
So I ask the members on the other side, who truly know the better choice in this, to please vote for it.
Yes, just on that point, André, I understand the exit proposal by the tobacco industry does include others in the country. We have one in P.E.I. as well--one that's left.
My understanding of the motion is that it would include an exit strategy for tobacco production in its entirety.
So on the motion, Mr. Chair, I know Larry indicated that he hadn't heard of any suicides in the industry. The fact of the matter is, Larry, we met with the tobacco industry, and it was stated at the meeting that there were suicides recently. I think it tells you the seriousness of the situation, Mr. Chair.
The government's move to Mr. Preston as chair of the task force is beside the point. The fact of the matter is the current Minister of Citizenship and Immigration committed to an exit strategy some time ago, and the government has broken its word. It's as simple as that; they broke their word. The Minister of Citizenship and Immigration didn't show up at a public meeting last week; she found another excuse.
At the meeting I was at with tobacco producers, the urgency of this situation was made very clear by a banker in attendance. That crop is certainly in the greenhouses somewhere around May 7 to May 9, I believe--and, Lloyd, you can correct me if I'm wrong--and the bank would be looking at the crop in those greenhouses and making a decision such that the bank would stick with only 7% of that production, because the asset levels in those operations have dropped from about 80% to 20% of the original value that the bank extended money on.
The bank made it clear at the meeting that they will very seldom make a financial decision based on what they have taken to be a political commitment, and the political commitment was given by the then MP, Diane Finley. The lending community had lent on the basis that there would be an exit strategy following up on the one the previous government had put in place. Now the government has backed away from that strategy.
The facts are these. The federal government has a responsibility here, regardless of the political party. There's been an anti-smoking strategy in place, which even the tobacco industry agrees with us was the right thing to do. This is a legitimate industry that operated under the laws of the land. It is a farming community that is now affected by a massive government policy toward anti-smoking. They produce a legal product in a legitimate industry, but government policy itself is shrinking their market.
The other area the federal government has a responsibility for--and they made it very clear, and it is true--is that 40% of the product now in place in Canada is contraband. For a law and order government, the government is not dealing with that contraband coming in and going on the market. That further restricts their market, and as a result, these tobacco producers, in a completely legal and legitimate industry, find themselves being forced out of their industry. And their asset base is dropping. The government had committed itself to an exit strategy, and to come up with excuses for funding more task forces is unacceptable.
I do not know if this is true or not, but they had indicated to us that they felt they had a commitment from the Minister of Agriculture that there would be funding in the budget. As we know, the funding wasn't in the budget.
So, Mr. Chair, I strongly support this motion. It is really a motion trying to force the government, for once, to keep its word. That's what it's about.
I'd like to carry on from what I've said. I know that in all good faith Mr. St. Amand has been working very hard on this problem too. I will say that there even were pieces of truth in what Mr. Easter said.
I agree that we need to find a solution to the problem we're talking about here today. I think the amendment Mr. Lauzon originally moved brought us closer to being able to break the problem into its parts. There are many parts, not just the actual growers of tobacco.
I have many friends and neighbours who certainly grow tobacco still. I've been working very hard for a solution for them, through hundreds of meetings with the tobacco board, meetings with those producers, and yes, Mr. Easter, even meetings with bankers to talk to them about what's happening on the ground. I know--and some of you would say it's from experience--that the easiest way to eat an elephant is one bite at a time. This is a very big problem, and it needs to be taken care of one problem at a time.
As you stated, I'm currently trying to steer a task force on the economic development portion of this area, the five-county area that grew tobacco in southern Ontario, looking at it from the point of view that it's a single-industry area. It's like a single-industry town. Mr. Boshcoff, you'd know this from some of the lumber things. This is a community that has relied, from an economic point of view, on one product for a number of years. The area was very affluent. The product did very well for the area. It's not there any more. For many reasons the economy has gone away.
Through a task force of mayors and economic development officers, we're looking at another way to deal with the economy for that area, looking at what existing programs are in place from government, and even to the point of looking at what other transitional crops there are and what other things we can grow in that sandy soil where tobacco used to grow. We know that's one side of the problem.
I believe Mr. St. Amand mentioned at the start of his comments that around the world there have been other strategies to replace tobacco, and they've all included different formulas. Some of them involved manufacturers, some of them involved governments, some of them involved tobacco growers themselves determining that they're going to leave the business.
I'm suggesting, and Mr. Lauzon's amendment stated very clearly, that this is about working together with all the stakeholders, and not just imposing a government solution on the problem. I tend to agree with that. We have to move forward with all the partners: growers, manufacturers, communities, and federal and provincial governments. These growers have licensed quota under the Ontario provincial government. I'm not ruling them out as being part of the solution. I think that's the point. We need to move forward.
I have to commend Mr. St. Amand for his move forward, but having it be singularly focused as only a federal government solution, I can't support it. I know my friends and neighbours are in the same straits as his friends and neighbours. We have to find a way to solve this problem by working together and not by nitpicking or picking it apart and sledge-hammering a solution through.
Mr. Chair, I hope we can find a way to make the motion have a better solution than it does, just being singularly focused.
With respect to Mr. Miller and Mr. Preston, I'll try to be as diplomatic as possible.
The reality is that tobacco farmers are facing a severe crisis, to the point where some of them have taken their own lives. What they do not need from the federal government--the federal government that leads the nation, as far as I understand it--is some banal, vapid, diluted, watered-down phraseology such as “continue to work with all partners”.
Mr. Chair, it's an absurdity. This is not a new problem. The government has been the government for 27 months. The members opposite are proposing to continue working together; let's all try to get along. But if the manufacturers want to veto something, there goes any type of exit strategy.
Simply put, the federal government needs to take the lead. The federal government is being asked to immediately implement an exit strategy for tobacco producers.
We will all recall, I suspect, the Minister of Agriculture in the House, when I asked him a couple of times about this, saying that we will get the job done sooner rather than later. Well, let me tell you, tobacco producers did not interpret that to mean we'll “continue to work with all partners”, or we'll develop a task force.
Simply put, I can't vote, in good conscience, in favour of the amendment. I think the federal government has to step up to the plate, after 27 months, and actually do something in a concrete fashion for tobacco producers in this country.
Thank you, Mr. Chair, and I apologize to the witnesses. We're into this discussion today because we had a fire alarm last week at the last of the meeting. We apologize for that, but this is an important issue too.
On the amendment--and I find it questionable, but I accept your decision, Mr. Chair--the key part of this resolution is, in my view, consistent with the most recent proposal that is being submitted, which is the exit strategy that was agreed to by the tobacco industry and, from everything I've heard, committed to by the government, at least in internal meetings.
Larry, you can waffle and you can wiggle all you like, but the government broke its word, and I'll tell you that in the 2004 election, when Bob Speller made a commitment to a tobacco reduction strategy and lost the election, the following government, of which I was parliamentary secretary, kept its word and implemented that tobacco reduction strategy. What we have now is a situation in which Minister Finley, as an MP, made a commitment with the full authority of the current government, and they broke their word.
In terms of the task force, Joe, we wish you well with the task force, but that task force can still roll out. If you have the exit strategy that we're currently proposing, that task force can still work. What we're saying here is a commitment to the producers so they know where they stand.
It's the same thing, Mr. Chair, we ended up doing in the area of Quebec where they had a nematode problem; basically, a strategy was put in place to assist that community. What has happened in the tobacco industry is that there's no potential for this industry in this country any more. Their equipments, their facilities, their whole life's work has gone down the drain. Every investment they have made in equipment and buildings is now.... Where are they going to sell it and get any money?
Those people, first and foremost, need a commitment from the federal government. We believe they committed to that and broke their word.
That needs to occur. It can occur right now; it is a $400 million package, but it's 60-40, and it should just happen.
This amendment, in my view, jeopardizes what has been basically agreed to by the industry. It was a compromise on their part; they were first in here asking for, I believe, $1 billion. You can correct me if I'm wrong. They're now down to a federal government commitment of about 60% of the $400 million. I think that's within reason. I understand Ontario would be onside.
So I oppose the amendment so that we will revert back to the original motion and the government can get on and pay the money it committed.
Thanks very much, Mr. Chairman and members of the committee. It's a great pleasure to be here today. I thank you for inviting us to appear.
Food and Consumer Products of Canada is the national industry association that represents the manufacturers of food, beverage, and consumer products in Canada. Our members range from small, independently and privately owned companies to large, global multinationals, all of which manufacture and distribute in Canada.
Just some quick stats on our industry. In 2005, the food processing industry in Canada employed 291,000 Canadians. We're the largest employer in the manufacturing sector. Manufacturing is often discussed in terms of steel or auto or other sectors because some of those productions are local, but we're a national industry and we employ a lot more people, and sometimes that's forgotten. It's worth noting that we generate $24 billion of GDP annually and operate just under 6,700 facilities across the country. That's 2002 data. Most importantly, perhaps, to members of this committee, our members purchase 43% of Canada's agricultural output.
We've reviewed with great interest the transcripts of previous hearings the committee has held on this issue and have noted the strong degree of consensus that the rules around the usage of “Product of Canada” need to be clarified. However, the committee has clearly got its work cut out for it, as we've also noticed there isn't a strong degree of consensus around what needs to be done to clarify those rules.
By way of background, FCPC has long lobbied for additional resources for CFIA enforcement. One of the most common concerns expressed by our member companies relates to an uneven playing field created by inconsistent enforcement of existing rules and regulations. This common theme has been expressed by a number of witnesses who have appeared before you during your review of “Product of Canada” labelling. We have serious concerns when consumers feel they're being misled by labelling rules, especially rules that the committee has heard have been in place for close to 20 years and were introduced by government, not industry.
Food processors in Canada are prohibited from making false or misleading statements by two separate pieces of legislation: subsection 7(1) of the Consumer Packaging and Labelling Act and subsection 5(1) of the Food and Drugs Act.
As members know, enforcement responsibility for the food aspect of the Consumer Packaging and Labelling Act was transferred from Industry Canada to the CFIA upon its creation in 1997. The CFIA then produced a 200-page guide to food labelling, which includes the policy reference we are discussing today as it relates to food being eligible to carry the term “Product of Canada”.
Just to paraphrase briefly, to be eligible to make this statement on our label, food products must meet two conditions: the last substantial transformation of the good must have occurred in Canada, and at least 51% of the total direct costs of producing or manufacturing the goods are Canadian.
The last substantial transformation concept is widely used internationally and probably should not be changed. However, if the 51% rule has been shown to be confusing to consumers and the committee sees fit to recommend that percentage be raised higher, FCPC would not object.
It is our understanding that the government has committed to an in-depth consultation as part of the food and consumer safety action plan--I believe I have the name right; that's the plan the Prime Minister announced before Christmas, and the subsequent legislation was just tabled at the beginning of this month. The government has committed to consultation on ways to address concerns related to “Product of Canada” on food labels. We think that's the right way to go, because, as I will provide some examples momentarily, food labelling is fairly complicated, and seemingly simple changes can have wide-ranging and often counterintuitive results. Having all stakeholders at the table to troubleshoot proposed changes can only improve the net result, from our perspective.
I think this is a message the committee has often heard from a wide range of stakeholders. I noted with interest the testimony of Mel Fruitman of the Consumers' Association of Canada, who noted the difference between products with one or two ingredients, when it comes to “Product of Canada”, and multiple-ingredient products. He also stressed the importance of defining the goal when making changes to the rules and pointed to the difference between a consumer information and product safety goal and a market development and economic goal for Canadian producers.
As I mentioned, FCPC would not object should this committee or the government see fit to raise the percentage value of Canadian content to qualify for “Product of Canada”. However, we would note that state-of-the-art processing, handling, and packaging that our members do when they make products does represent a significant value-add, in terms of the safety, quality, and nutritional value of the products, but also, as I mentioned at the outset, in terms of the employment and spinoff benefits for the country. I think you've heard from a number of witnesses around the importance of retaining food processing jobs in Canada, especially when dollar parity gives us less of an economic advantage than we enjoyed previously.
Any changes to the rules need to allow for some acknowledgement of the value the processors add. This is especially true in an era when the focus on product safety and integrity is top of mind and resulting regulations are expected to increase costs for food processors.
Product safety is number one for our members, obviously, and we're happy to comply with any and all new rules and regulations. But the value added that we make should not be totally excluded from acknowledgement.
That said, it should also be noted that much of the concern the committee has heard results from confusing quality standard descriptions with country of origin descriptions. For example, the pears from China are designated “Canada Choice”. Grading terms like “Canada No. 1”, “Canada Fancy”, etc., are not without value. They allow consumers to compare prices of similar grades and quality of products.
As I mentioned earlier, the issue of the use of “Product of Canada” mostly applies to single-ingredient products or ones with a handful of ingredients. I noticed the Horticultural Council has a number of examples there, and they mostly have single or a couple of ingredients. But the large portion of my FCPC membership makes multi-ingredient products, like frozen entrees, pizzas, canned soups, or what have you, and don't use “Product of Canada” on their labels.
As the committee has heard from numerous witnesses, the rules around food labelling are very prescriptive and are often different for various food categories.
Here are three quick examples. For fish, paragraph 6(2)(c) of the fish inspection regulations requires the name of country of origin to be clearly identified on any label of any fish or fish product imported into Canada. But understandably, this rule presents challenges for CFIA. If a fish is caught in international waters, filleted in China, substantially transformed into a frozen fish entree in Canada, with fish being one of multiple ingredients, how should this product be labelled?
For meat, all meat labels in Canada require pre-approval by CFIA before they are approved for the marketplace. In the instance of meat products, CFIA has to sign off on the label prior to it even being used, so enforcement is less of an issue with meat than it is with other commodities.
For honey—I heard this mentioned previously by a witness around the labelling of imported honey—only honey that is pure honey and that is produced in a federally registered establishment for interprovincial or export trade is covered by the honey regulations. These regulations have no requirement for country of origin. However, the grade of domestic honey reads “Canada No. 1”, whereas imported honey would read only “Grade No. 1”. Blended honey, which is the vast majority of honey these days, is required to carry the tag, “A blend of Canadian and”—the name of the country whose honey it's blended with—“honey”, and the sources must be named in descending order of their production.
When the honey is an ingredient in a multi-ingredient product, however, the consumer would not know the origin of the honey. And I revert back to my earlier testimony about the complexities in labelling the country of origin of the food product, with 30 ingredients, in this day and age.
To summarize, there have been a number of suggestions made by various witnesses and MPs about the possible improvements to clear up confusion. We're open to these suggestions and will work with the committee and with the government during the upcoming consultations to ensure good public policy results.
We certainly agree that any changes should be voluntary in nature. I think the committee has heard about voluntary versus mandatory and some of the challenges there.
If Canadian producers want to pursue a “Grown in Canada” label, which I believe the Federation of Agriculture has raised with the committee, we'd support that fully.
As mentioned previously, if the committee decides to recommend that the government increase the percentage to qualify for “Product of Canada”, we would support that as well, provided the percentage allowed for some acknowledgement of the value added by Canada's food processors. We just need to ensure the changes recommended serve to educate the consumer and not create any confusion.
The Canadian Produce Marketing Association, or CPMA, is an 83- year-old Canadian trade association. It represents a vertically integrated supply chain from farm gate to retail and food service. Our members include domestic and foreign companies selling and marketing fresh fruit and vegetables in Canada, so we'll be speaking about the fresh market.
Our organization has more than 675 members, including 409 Canadian members.
CPMA is aware of the requests from consumer groups, various agricultural organizations, and individual producers of both fresh and processing for changes and greater clarity in the “Product of Canada” regulations for foods produced in Canada.
The CPMA agrees that Canadian consumers are entitled to have accurate information allowing them to identify Canadian products or products grown in Canada and that these products should actually be Canadian in content. The challenge is that the issue is extremely complicated and crosses over multiple federal and provincial jurisdictions and regulations.
To fully understand the cost implications for an already strained fruit and vegetable industry, the reality of application and enforcement, and the implications for fresh produce, both domestic and imported, we must look at four core aspects within the value chain: one, bulk; two, single-package commodities; three, mixed salads and produce blends for fresh-cut fruits and vegetables; and four, the consumer.
Relative to the identification of fresh fruits and vegetables sold in bulk at retail—loose apples, string beans, Brussels sprouts—some provinces have provincial regulations that require imported, fresh produce to be properly identified as to the country of origin. If no foreign country is identified on the retail bulk displays, this implies that the product is Canadian. This allows for the use of “Product of Canada”, and also, as an example, for “Product of Ontario” or “Product of Quebec”.
The retail identification requirements for bulk produce fall under provincial jurisdiction. An initial review has identified four provinces with these requirements: Quebec, British Columbia, Ontario, and New Brunswick. If changes need to be made to meet a desired outcome for “Product of Canada” for bulk product, this would require provincial legislative and regulatory supports.
CPMA's position related to “Product of Canada” labelling on bulk produce at retail is that if new changes are indeed desired, this should be pursued provincially with those provinces without a legislative regulatory base. Where changes to the current provincial requirements might be required, this should be pursued with the provinces involved.
Additionally, if “Product of Canada” were to become mandatory, it might negate the use of provincial identification. However, one would need to examine this with each province and its current legislation and regulations. Relative to complaints regarding accuracy and compliance, this is an enforcement issue that would need to be assessed.
For single-commodity packaged produce, there are federal regulations that stipulate that product origin be properly identified. If imported, whether packaged outside of Canada or repackaged in Canada, it must have the foreign country of origin. If the product is domestic and has the address of the packer, there is no current requirement that “Product of Canada” be used. This allows for the product to be called, as an example, “Product of Canada” or “Product of Ontario”. For products that use the “Canada Grade” prefix--currently 32 different commodities--the “Product of Canada” is not required, as it is understood.
The question must be asked, do we require more information or is the issue consumer education? The CPMA position related to “Product of Canada” labelling on packaged single commodities is that any new requirement stipulating that “Product of Canada” be identified could (1) eliminate the flexibility for domestic producers to identify their specific province of production and (2) add to an additionally complex labelling system. If this is to be considered, then there should be a proviso that allows for “Product of Canada” or the provincial designation.
In addition, there are periodic problems in the fresh produce industry where firms have imported product and then repackaged it and called it “Product of Canada”. This is an enforcement issue, not a regulatory issue. This can happen innocently or intentionally. The CPMA suggests the use of the administrative monetary penalty system regulations to address this issue. However, it is our view that the fines are insufficient to act as an economic deterrent for intentional fraud activities. Heavier fines should be in place for repeat offenders and for violations of safety and security regulations. For serious violations, where appropriate, it is our view that punitive action, such as suspension of the firm's CFIA licence or DRC membership, should be entertained.
Fresh-cut vegetables and fruit and mixed commodities like pre-packaged salads are another matter. They fall under the fresh fruit and vegetable labelling regulations.
Currently in Canada, the regulations allow for the following.
If there are multiple products from different countries, then each country must be identified on the package.
For single commodity mixes, such as peppers, the type of pepper and country must both be listed. The challenge under this regulation begins when you have three peppers in a package from three different countries being repackaged in Canada. The Canadian packer must identify the red pepper from, let's say, Holland, the yellow pepper from Canada, and the green pepper from Mexico.
For mixed leafy green salads, only the countries of origin are required.
Once again, CPMA feels that the requirements are already provided for under the fresh fruit and vegetable regulations. Prior to any change, they should be reviewed to determine any deficiencies or shortfalls. As with any change, it is important to ensure that Canada not proceed to identify new regulations that would create an impediment to our exports or add costs to the industry through an increase in the inventory of packaging materials. This is especially true for Canadian operations that also export, particularly to the United States.
For fresh-cut food, most of the inputs into the products are imported. A requirement to list all the individual countries in a multiple listing—particularly given the rapid and constant seasonal change in source countries—will create a significant problem.
A possible solution for these multiple commodity products is the use of a “Packed in Canada” description. Having said that, we need to be cognizant and look at identification criteria under various trade agreements. As an example, Canada has negotiated tariff-free access to the United States for “Product of Canada”...and caution must be taken not to negatively impact this business with changes to “Product of Canada”....
Finally, there is the consumer. Many consumer groups ask that packages be labelled correctly and provide the necessary information to make a complex purchasing decision. For fresh produce, CPMA has conducted A.C. Nielsen panel track research of over 7,800 Canadian consumers. The findings show that the number one and number two influencing factors nationally in choosing which fruit and vegetables to buy at retail outlets were quality to 88% of respondents and price to 77%; followed by health benefits to 39%; locally grown produce to 36%; and organic produce to 10%.
Quality and price still drive consumer buying patterns. Consequently, it seems that while product identification is of interest to Canadians as a marketing tool to support domestic producers, it is not the primary decision factor for the majority of Canadians. The data released show that various elements influence consumers in making their produce buying decision and that “Product of Canada” is only one of them.
Interestingly, this study was done in January 2008, several months after concerns arose with some products from China—none identified or associated with fresh produce, but which became a focus of public debate on the safety of produce because of those concerns.
In summary, the CPMA appreciates the opportunity to appear before the Standing Committee on Agriculture and Agri-Food on this important subject of “Product of Canada” labelling. This is a complicated issue in today's world of commerce and changing food composition.
We wish the committee well in their deliberations, and we conclude with a simple request, that the government consult with our association as it moves ahead. CPMA would like to ensure that any changes to the current regulatory environment achieve their objectives without a negative impact upon the sector, from grower and shipper to retailer and consumer.
Good morning, and thank you for your invitation to present this morning.
I'm a faculty member at the University of Saskatchewan. I'm an agricultural economist. My research area includes food supply chains, traceability, and the economics of food safety and quality, so I'll be speaking to you from this perspective.
In addressing the issue of “Product of Canada” claims on food products, l'd like to make three key points to you quickly here this morning. First, I'm going to put into perspective the purpose of a label: what does labelling do and what can it not do; I want to consider the implications of increasing the stringency of “Product of Canada” labelling; and then I want to stress the importance of considering the costs and the benefits of a change in “Product of Canada” labelling regulations.
Let's take my first point, the purpose of a label. Simply put, a label can provide information to consumers on the characteristics or attributes of a product. Many of these are what economists call “credence” attributes. What does that mean? Well, a “search” attribute is something that's evident to a consumer before purchase--the colour of a product. We don't need to label that, but in the case of credence attributes, without labelling, consumers can't identify that attribute even after they've purchased it, even after they consume it.
Clearly, country of origin is one of these credence attributes. So is production method, such as organic. We know that, increasingly, many consumers are interested in these credence attributes in food products. So there is a role for labelling to identify credence attributes to consumers.
Why do we then regulate some kinds of labelling? Usually it's to inform consumers about potential hazards—for example, requirements for labelling the presence of allergens—or to allow more informed healthy eating choices, such as requirements for standardized nutrition content labelling.
In those situations, we're basically saying, left to its own devices, the market may under-provide this information. Implicitly, therefore, we're also saying the benefits to society of having this information outweigh the cost to provide it. There is a rationale to regulate labelling.
There are also numerous examples of the private sector voluntarily identifying credence attributes in a food product label when there is a strong market incentive to do so from consumers. l've already provided the example of organic, and of course there are many others.
So where does “Product of Canada” labelling fit? l believe it would be a mistake to see this as a food safety issue. We deal with food safety through our food safety regulations and inspection system, not through labelling the country of origin. Simply knowing where the product comes from doesn't really tell the consumer anything about how that specific product was produced. It doesn't really tell the consumer anything about the safety of that specific product. So if there is a food safety concern, then deal with it through the food safety system and, if necessary, through increasing resources to the CFIA in conducting risk assessments and monitoring the safety of food imports.
In my opinion, labelling is simply too blunt an instrument to address food safety and food quality issues. We address these through other mechanisms. So if there is not a strong food safety or health rationale for “Product of Canada” labelling, why do we use origin labels? Well, clearly knowing where the food came from may be of value, in and of itself, to some—not necessarily all, but to some—consumers. So to the extent that consumers value this information, there is indeed a market incentive for the private sector to provide it.
This sounds fairly simple. The reality, of course, is much more complicated, and in particular, as you've been discussing in these committee hearings, determining what “Product of Canada” actually means.
That leads to my second point: what are the implications of increasing the stringency behind “Product of Canada” labelling? My third point is related: why is it important for a full cost-benefit analysis of any regulatory change?
It seems to me a really key question is, where do you draw the line? Currently it is drawn at 51% of the costs of the economic activity of the product. Perhaps it should be higher, and I think that's a very important conversation. I believe some people have suggested to you, in previous testimony, 75% or 80%. It seems to me the percentage, to some extent, is arbitrary, except that most people would probably agree that 100% is likely unobtainable or not economically feasible. So how do you determine the appropriate percentage of Canadian content or value?
We can only answer that question through research and analysis that takes into account the increased costs to the agricultural and food sector of a more stringent Canadian content rule versus the benefits to the consumers and to the agricultural sector as well. So let's take a look at those two things very quickly.
What would be the key costs? Primarily, it would be identifying and, if necessary, tracking and tracing Canadian food ingredients. This might be relatively simple for some products—apples, for example—but clearly the costs would quickly escalate for further processed food products with multiple ingredients.
Take frozen pizza as an example. Would a manufacturer have to show that the cheese was produced in Canada, or the salami, the tomatoes, mushrooms, peppers, the flour and margarine in the base, and so on? I think as you've heard before, that becomes more complicated.
Who would incur these costs? The onus or burden of proof will be on Canadian firms wishing to identify Canadian products. If the costs of doing so are too high because the rules become overly complex, it may become uneconomic to use voluntary “Product of Canada” labels. So, paradoxically, you could have less information, not more, available to consumers.
The point is that where you set the bar in terms of Canadian content and how much information you require are critically important decisions, and they require a thorough review of potential costs to the Canadian agricultural food sector.
How would any additional costs be distributed across the food sector? Would the food processing sector simply absorb these higher costs? I would argue that it would probably not. I think some of that cost burden would likely be pushed back to suppliers of raw agricultural products--farmers--in the form of lower bid prices for their products. Some of that cost burden would likely be pushed forward to consumers, resulting in higher food prices.
Clearly for those consumers who value the identity of the Canadian attribute and are willing to pay a little extra for this information, that might be okay. For other consumers who don't have strong preferences about that issue or, more importantly, don't have the means to pay higher food prices--consumers on lower incomes--this is going to be detrimental.
Again, it comes down to weighing the benefits and costs to society and the distribution of those benefits and costs across groups.
I talked a lot about costs. What would be the key benefits of increasing the stringency behind “Product of Canada” labelling? Clearly some consumers value this information, and the credibility of the current labelling rules has been called into question. There is considerable confusion, apparently, among consumers about what this label really means on a food product.
So providing clear information will benefit those consumers who value knowing that the product is Canadian and therefore would be willing to pay more for an assurance of origin. We can use economic analysis to measure the value of this attribute to consumers, just as we can for other credence attributes like organic, pesticide-free and so on, through so-called willingness-to-pay studies.
So measuring the benefits, I would argue, is equally as important as measuring the costs. Otherwise you're not going to fully account for the potential benefits of that labelling information.
We should remember that labelling information generates a benefit to consumers only if it's credible. So an important piece of this puzzle will be ensuring that “Product of Canada” or a voluntary “Grown in Canada” label is credible. Third-party verification is one way of enhancing the credibility of labelling information, so in the case of a voluntary “Grown in Canada” standard, I would expect that third-party verification would have an important role to play in that regard.
Credibility extends not only to knowing that a food product really is Canadian but to maintaining a strong food safety regulatory system and having effective private sector quality assurance programs, which will also be important in protecting the reputation of the “Product of Canada” label.
In closing, just to reiterate, “Product of Canada” labelling, in essence, should be a mechanism for identifying Canadian products to consumers who wish to make purchase decisions based on knowing where the product came from--no more and no less.
What a “Product of Canada” label does not do by itself is assure food safety. Our food safety standards and enforcement mechanisms should do that. So a decision to change the threshold or the rules of evidence to assure “Product of Canada” should take into consideration both the cost and the benefits to the agricultural and food sector and to society as a whole.
Good day and thank you.
The Canadian Horticultural Council is a national association that has been committed to promoting the interests of its members since 1922.
We are committed to advancing the growth and economic viability of horticulture by encouraging cooperation and understanding to build national consensus on key issues such as the one we're speaking about here today and bringing those positions to you.
Across Canada, the CHC's members are involved in the production, packing and processing of over 120 horticultural crops comprised of fruit, vegetables and herbs.
Members include provincial and national horticultural commodity organizations who represent over 25,000 producers in Canada, as well as allied and service organizations, provincial governments, and individual producers.
Horticulture is certainly one of the larger production sectors in Canada, with over $5 billion in cash receipts, and critical in many provinces. It's a major source of farm cash receipts in B.C. and P.E.I., and it accounts for more than one-half of crop receipts in provinces outside of the prairies.
There are other stats in the document you have before you, so in the interest of time I'll move on to a few other things, such as why we are here today. We're seeking clarity and truth in labelling and a means to recognize Canada's outstanding products.
We face an inability to know with certainty that we are purchasing and supporting our Canadian-grown products. We rely on a number of regulations administered by the Canadian Food Inspection Agency in order to engage in commerce. The regulations governing the definition of “Product of Canada” date back to the early 1970s, and, clearly, many are in agreement that there's a need to revisit and amend those regulations.
We and others have identified this as a priority for some time. However, it seems that it wasn't until attention was drawn about a year ago to incidents with pet food and some food safety incidents that we really witnessed a heightened and broader awareness of these concerns. These incidents truly served as a call to action. It is, indeed, now time to review criteria linked to “Product of Canada” labelling.
Furthermore, as many will recall, last fall, CBC's Marketplace presented an exposé on “Product of Canada”. While numerous examples were presented and consumers interviewed, perhaps one of the most revealing items was a jar of garlic bearing the name “Canada garlic” and was labelled “Product of Canada”, which upon further investigation was found to contain no Canadian garlic whatsoever.
While it's permitted under current regulations, the result is confusing for the general public, and it is certainly a disservice to Canadian producers. Consumers have a right to distinguish and support Canadian production, but must be in a position to do so. The present definition is obsolete and may be misleading as to the real origin of products identified with the designation.
As you have heard, under the current regulations there are definitions around content and so forth, and the result is a multitude of products containing imported raw material that may be labelled as “Product of Canada”, even though they may be simply processed and, in some instances, only packaged in Canada.
We believe and ask that the criteria for an item to bear the “Product of Canada” designation be amended such that the significant portion of the content of a product is indeed grown in Canada.
Canadian farmers proudly produce our fruit and vegetable crops using environmental farm plans, on-farm food safety programs, and a whole host of other federal, provincial, and municipal regulations. They must be recognized and rewarded for this.
Certainly, we recognize that there are differences when referring to a fresh product, as we've heard, such as an apple, a peach, or potatoes. Whether it be in bulk, bearing a sticker, or packaged, one is generally able to readily determine the origin. It can, however, be more of a challenge when it comes to processed products. Lack of clarity, confusion, and inconsistency are very much the norm.
I have brought a number of examples. I must preface my remarks by saying that we value tremendously our processors and certainly do not want to see disadvantages put upon them.
In the package you have there are three bottles of juice, two orange and one apple. Each is made by the same company, yet there are different labels. One indicates “Product of Canada” as well as “Prepared under licence”; the second, “Product of Canada”, no origin; the third, “Product of Canada” and “Prepared by”. Again, all three are made by the same company.
Some frozen juice indicates “Processed in Canada”. However, there's no reference to “Product of”. On some other juices, some cranberry cocktail, grape cocktail, there's no “Product of” designation whatsoever.
There are two cans of peas. They're from different companies; each one is selling the same product on the same shelf, yet they have completely different labels. One, the Del Monte, has “Product of Canada”, and the other has no designation other than simply “Prepared for”.
Here is some fruit cocktail. “Product of Canada” is how it's identified, yet the ingredients include pineapple. Here is a can of pear halves labelled “Product of U.S.A.”, which is fine; that's good. However, there is no “Prepared for” listed anywhere.
Here are diced tomatoes--“Product of Canada”--yet a can of tomato paste has no designation other than “Prepared under licence”.
Here are some whole white potatoes. They're prepared for a Manitoba company, but there's no packaging done there that we're aware of. Are the potatoes Canadian? Perhaps, but perhaps not.
Finally, here's a Campbell's soup label. There's certainly a name and address, as is required, but there's no “Prepared by”, “Processed by”, “Packaged by”, or “Product of”.
As I indicated, I acknowledge that we need and value and support our Canadian processors and have no desire to see them placed at a competitive disadvantage by changes that may come about. In fact, change must provide benefit to them as well, including opportunities to proudly distinguish premium Canadian products. We believe there are means to accomplish this.
The value our processors add to our sector, our rural economies, and indeed the Canadian economy in general must not be compromised. We value the innovation and diversification they bring to us. Certainly we collaborate with and work closely with the processors whenever possible.
All of this is integral to Canada's food security, both today and, even more importantly, for the future.
We do not want changes to result in reduced returns to processors, as was referred to here just a few minutes ago. Unfortunately, over the past two years we've witnessed the closure of a number of processing facilities.
In Quebec they included Kraft, avec les concombres, à Sainte-Thérèse; CanGro, which was previously Kraft, a bean plant in Chambly; and Smuckers Foods, a cucumber receiving and brining plant in Saint-Bonaventure, in March 2006. Of course, in Ontario just recently it was CanGro, the processing facility for peaches and pears in St. Davids.
Those are the most recent. Sadly, there have been many others, and we fear the company's plant, CanGro, which cans peas, sweet corn, and other vegetables in Ontario, could also close. Hopefully this will not be the case. We don't have any indication, but if we look at history, it is a cause for concern.
In terms of some of the suggestions that have been previously made and the reason you're studying this issue, we also refer to being able to make health claim statements. There's certainly a disadvantage to us here in Canada, and there are many healthy attributes to our products. We should be able to speak to these as well.
Again, in being able to identify Canadian products, no doubt we recall the phenomenal success of the “I am Canadian” beverage campaign a few years ago. Just imagine the possibilities of this type of recognition and the enthusiasm that could be translated to our own Canadian-grown agricultural products.
With that, I'll conclude my comments.
On your first point, Canada has some of the most progressive food labelling rules in the world. The nutrition facts panel we have on food in Canada is only very recent; it came into place just a few years ago, and the rest of the world looks at it.
The health committee was looking at food labelling under their child obesity study not too long ago. They were looking at the United Kingdom and a stoplight or traffic light front-of-package label. During their review, they realized that the reason the British have this is that they don't have the nutrition facts panel we have in Canada, which gives the recommended daily percentage of intake of all the ingredients that are important.
I would say that on the issue of nutrition, Canada is a standard-bearer in terms of the information it provides consumers. That was really carefully tested, and it's in place for the vast majority of food products.
Concerning the subsection of the food group you raised, there were some logistical difficulties with some meat categories, and I believe some vegetable categories as well don't have the nutrition facts panel. I think at the time the government decided, or there was some consensus at that point, that the logistical difficulties of putting those on certain items—how do you put it on a head of broccoli, if you will—presented enough problems that they didn't do it at that stage. But the vast majority of products in the grocery store have that facts panel, which make us a world leader.
On your second point, there are two different issues: we're talking about nutrition labelling versus origin. They're very important to differentiate.
In my opinion, Health Canada is very good at what they're telling consumers about food on food labelling, and it's very carefully managed. They don't do anything half-cocked. They do efficacy studies on everything they do to make sure it's interpreted properly by the consumer, and it's very evidence-based and very good.
I think we really have to separate the two and see the difference between that and what we're talking about here, between the labelling of products as to origin and the labelling around nutrition and health and safety.
Concerning all imports playing by the same rule, that's something we've supported very much, mostly in the context recently of Bill , which is the legislation the government has tabled to amend the Food and Drugs Act in relation to the import safety issue.
We're firm believers that imported products and importers need to comply with all the same rules as domestic producers and that the food industry needs to essentially own their value chain and be accountable for things they bring into the country. I think this legislation accounts for that by requiring importers to register with the federal government and be a bit more accountable than perhaps they are now.
On your final point, about misleading statements, I'm not certain about the administrative monetary penalties that are open to CFIA, but the Food and Drugs Act is a criminal statute, so it's my understanding that companies that are seen to be making these mistakes are open to criminal prosecution in some instances and fines in others.
Perhaps Joe could correct me on that one, if that's—
On your first question about the 51%, the debate comes down to content versus value. The members of this committee have heard from a number of agriculture producer groups that think it should be content. A lot of folks spend a lot of time and money building state-of-the-art, clean factories. We comply with 442 pieces of legislation, federally. The people who spend that amount of money making sure the product ends up safe and healthy probably think it should be based on value.
When you talk to consumers and say it's based on the value of the product, they shake their heads and think it's hard to believe. Perhaps this is due to a failing of government and my industry to educate the consumer about value. That's debatable. But from our perspective, it should stay on value. You might want to raise the number, but there should be something that allows processors to tell the story of the value they add.
Secondly, on your point about GMO labelling, there are two things. My understanding is that the government's organic labelling standards are going to come into force in November of this year, approximately six months from now. This will allow consumers to decide if they want to buy GMO food or not, even though there is no health or safety reason for their choice.
The GMO labelling standard that you referred to was, I believe, put in place in 2004. That was a General Standards Board process that took a long time. I would ask the question and reverse the onus.
Professor Hobbs talked about market forces. He said there would be a benefit to processors to put “Made in Canada” on a product, because the market would somehow buy that. I would throw the question back at you: if consumers are clamouring to know how to avoid GMOs, why is there such a small uptake among processors for that voluntary label? We're certainly not hearing that this is a major issue for producers. As for GMOs, I think most of the members of this committee realize that Canadian farmers are massively adopting the technology. It's pervasive in production of our staple commodities as well as in the grocery store. So we would oppose efforts to raise that.
We agree with Professor Hobbs' assertion that labelling should reflect health and safety rather than things that could frighten the consumer.
Finally, should we be promoting agriculture? That's not representing farmers. Our sector's opinion is not as important on this point, but obviously we support Canadian agriculture. We buy 43% of the production.
With respect to our efforts to try to grow, innovate, and pass values through the value chain, over the last couple of years we've been working with farmers to try to get the next APF, agricultural policy framework. We have tried to make some investments in some of the areas that Anne mentioned, like the uses of health claims. We want to communicate to consumers that the product contains barley and that barley can lower your risk of cardiovascular disease, or that oats that will lower your risk of cancer.
Those are things that we can't do in Canada as much as in the United States. I would definitely say we are working with the whole value chain, and we would like to see farmers do well in Canada, 100%.