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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Tuesday, April 1, 2003

1105

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Mr. Greg Orriss (Director, Bureau of Food Safety and Consumer Protection, Canadian Food Inspection Agency)

1110

1115

The Chair

Mr. Jean Grégoire (First Vice-President, Dairy Farmers of Canada)

1120

Mr. Richard Doyle (Executive Director, Dairy Farmers of Canada)

1125

1130

The Chair

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance)

Mr. Greg Orriss

Mr. Richard Doyle

1135

Mr. Garry Breitkreuz

Mr. Richard Doyle

The Chair

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

1140

Mr. Jean Grégoire

Mr. Louis Plamondon

1145

Mr. Greg Orriss

The Chair

Mr. Louis Plamondon

The Chair

Mr. Louis Plamondon

Mr. Greg Orriss

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

Mr. Greg Orriss

The Chair

M. Richard Doyle

Mr. Claude Duplain

M. Richard Doyle

1150

Mr. Claude Duplain

M. Richard Doyle

The Chair

1155

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

Mr. Greg Orriss

Mr. Howard Hilstrom

Mr. Greg Orriss

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Jean Grégoire

1200

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

The Chair

Mr. Richard Doyle

The Chair

Mr. Louis Plamondon

Mr. Greg Orriss

Mr. Louis Plamondon

Mr. Greg Orriss

1205

Mr. Louis Plamondon

M. Richard Doyle

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mr. Greg Orriss

The Chair

Ms. Gail Daniels (Chief, Dairy Programs, Canadian Food Inspection Agency)

Mrs. Rose-Marie Ur

Ms. Gail Daniels

1210

Mrs. Rose-Marie Ur

Ms. Gail Daniels

Mrs. Rose-Marie Ur

Ms. Gail Daniels

Mrs. Rose-Marie Ur

Mr. Richard Doyle

Mrs. Rose-Marie Ur

Mr. Richard Doyle

Mrs. Rose-Marie Ur

1215

Mr. Richard Doyle

The Chair

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

Mr. Howard Hilstrom

Mr. Richard Doyle

1220

Mr. Howard Hilstrom

Mr. Jean Grégoire

Mr. Howard Hilstrom

The Chair

Mr. Louis Plamondon

M. Richard Doyle

Mr. Louis Plamondon

1225

M. Richard Doyle

The Chair

Mr. John Maloney (Erie—Lincoln, Lib.)

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

Mr. Greg Orriss

Mr. John Maloney

The Chair

Mr. John Maloney

The Chair

1230

Mr. Richard Doyle

The Chair

Mr. Greg Orriss

1235

The Chair

Mr. Greg Orriss

Ms. Carla Barry (National Manager, Fair Labelling Practices Program, Bureau of Food Safety and Consumer Protection, Canadian Food Inspection Agency)

The Chair

Mr. Richard Doyle

The Chair

Mrs. Rose-Marie Ur

Mr. Greg Orriss

Mr. Richard Doyle

Mrs. Rose-Marie Ur

1240

Mr. Greg Orriss

Ms. Gail Daniels

Mrs. Rose-Marie Ur

The Chair

Mr. Claude Duplain

M. Richard Doyle

Mr. Claude Duplain

M. Richard Doyle

Mr. Claude Duplain

M. Richard Doyle

Mr. Claude Duplain

M. Richard Doyle

Mr. Claude Duplain

M. Richard Doyle

Mr. Louis Plamondon

Mr. Claude Duplain

1245

M. Richard Doyle

Mr. Claude Duplain

Mr. Greg Orriss

Ms. Gail Daniels

Mr. Richard Doyle

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. Claude Duplain

1250

M. Richard Doyle

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 023

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, April 1, 2003

[Recorded by Electronic Apparatus]

Á (1105)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we wish to begin our meeting.

This morning we have witnesses here on the whole issue of dairy terms in labelling of food products. I expect this to be a very interesting matter to discuss. It's something we've talked about frequently, and obviously, it's something that concerns not only us, but consumers. Perhaps we can shed some new light on this subject as we hear your testimony and as you answer the questions this morning.

We have with us from the CFIA, Canadian Food Inspection Agency, Greg Orriss, director, Bureau of Food Safety and Consumer Protection, and Gail Daniels, chief, dairy programs. From the Dairy Farmers of Canada we have Jean Grégoire, first vice-president, Richard Doyle, executive director, and Sara Frost, assistant director, policy and government relations. Welcome, all.

I believe, Mr. Orriss, you're going to be speaking first. You'll have 10 minutes.

Mr. Greg Orriss (Director, Bureau of Food Safety and Consumer Protection, Canadian Food Inspection Agency): Thank you Mr. Chair.

We are pleased to discuss with this committee the issue of labelling of dairy ingredients. In order to address this issue, we would like to divide our presentation into two main topics, first the labelling of foods containing dairy ingredients and flavours, and second dairy compositional standards and class names.

Before addressing these issues, I would like to provide you with a brief overview of fair labelling practices, including product composition standards, from the perspective of the Canadian Food Inspection Agency. I should apologize and advise you about the complexity of these various issues and that although the topic of labelling of dairy ingredients has been raised by the Dairy Farmers of Canada, it affects food manufacturers and importers, especially diary processors, the flavour and edible oil industries, and consumers, as you mentioned.

The CFIA's work regulating the composition, labelling, and advertising of food products is important to Canadians, as it protects consumers from deceptive and misleading practices and facilitates fair competition for industry. The CFIA's role is to protect Canadians from unfair market practices by enforcing the fraud and labelling provisions of the Food and Drugs Act and its regulations and the Consumer Packaging and Labelling Act and its regulations.

It is common to find product labels and advertisements that claim, in the common name or as a representation on the label, the ingredients, components, or flavours that characterize the product. For example, “waffles with blueberries” highlights the blueberry ingredient in the food. Likewise, “rum-flavoured candies” and “butter-flavoured popcorn” provide consumers with information on the flavour of the product.

In February 2001 the federal-provincial-territorial agrifood inspection committee made a recommendation to ministers that provinces deregulate restrictions on food that resemble or imitate dairy products and defer to existing federal regulations that address consumer information and fraud issues. Subsequently, CFIA has been working closely with the Dairy Farmers of Canada, and together we have developed an action plan for clarifying the labelling of foods containing dairy ingredients and flavours. CFIA also received written submissions from consumers requesting that food labels be required to disclose percentages of highlighted ingredients in foods.

There are various issues that have been raised, and the CFIA is considering these issues carefully. As you may be aware, the Food and Drugs Act prohibits the labelling, advertising, and selling of any food that is false, misleading, or deceptive in respect of its character, quality, composition, value, merit, or safety. In assessing these concerns, the CFIA recognized that any change to the policy or regulations should address this labelling issue for all food commodities. As well, CFIA considered the relevant standards adopted by the Food and Agriculture Organization and World Health Organization Codex Alimentarius Commission. Our objective is to achieve clear, consistent, fair, and succinct rules for the marketplace.

To consult on these matters, the CFIA has released a discussion paper entitled “Clarifying the Labelling Rules for Highlighted Ingredients, Flavours and Sensory Characteristic Descriptions”. It invites all interested Canadians to contribute their insights and ideas to the proposed labelling changes. The CFIA wants to hear from all those interested, food producers, manufacturers, importers, distributors, industry associations, provincial and territorial governments, special interest groups, health professionals, academics, and consumers. The discussion paper has been mailed to stakeholders and is presently posted on the CFIA website for comments.

Á (1110)

The discussion paper contains three proposals to address the issues raised. First, when ingredients or components are highlighted, whether high or low amount, a percentage of the ingredient, as added into the food, must be declared either on the front panel or ingredients list of the label. Second, when the highlighted ingredient is a flavour or artificial flavour, the words flavour or artificial flavour must appear adjacent to the named flavour, for example, “butter flavour” or “artificial butter flavour”. Third, when an ingredient or component name is used to describe a sensory characteristic of a food, that specific characteristic must be stated adjacent to the description, for example, “creamy texture”. The paper includes recommendations to make these labelling proposals regulations under the Food and Drugs Act, with an interim policy in the “Guide to Food Labelling and Advertising”.

The CFIA supports the proposals presented in the discussion paper and considers the approach to be fair and balanced. It seeks to clarify and strengthen current labelling and advertising requirements and to address consumer and industry concerns by providing consumers with fair and relevant information on ingredient representations, providing the food industry with clear rules for ingredient representations, providing regulations for enforcement, and harmonizing Canadian highlighted ingredient labelling with international standards. The CFIA remains committed to providing Canadians with effective regulatory oversight that continues to protect consumers, but allows for product innovation.

I would now like to turn to the second topic, dairy compositional standards and class names. As you may be aware, federal regulations also include compositional standards for dairy products, as well as other foods, to provide requirements for product integrity, nutrition, and health and safety. The use of some of the ingredients currently permitted by Canadian regulatory standards for cheese and other dairy products is derived from technology that enables dairy processors to isolate milk components and use them in the production of dairy products.

On November 4, 2002, the Dairy Farmers of Canada presented their action plan to maintain the integrity of supply management in the dairy industry to a federal interdepartmental working group formed to address issues of concern to the Dairy Farmers of Canada. In this presentation Dairy Farmers of Canada outlined various issues it would like addressed. It should be noted that to implement the Dairy Farmers of Canada changes would result in more restrictive Canadian standards than presently exist and would not reflect present processing practices.

With respect to dairy standards, the CFIA supports the Codex Alimentarius objectives of protecting the health of consumers and ensuring fair practices in the food trade. Currently, Codex dairy standards permit the use of not only milk, but also products obtained from milk as ingredients for dairy products. The standards result in dairy products that are safe and nutritious and allow industry the flexibility to produce products using various permitted ingredients and processes.

There are divergent opinions on the issue of compositional standards for dairy products. The Dairy Farmers of Canada, in their action plan to maintain the integrity of supply management in the dairy industry, have asked for more restrictive dairy product standards. On the other hand, dairy processors have expressed support for more flexible standards. Canadian consumers are also stakeholders and at present have access to a broad range of products to meet their specific needs and budgets.

The CFIA is currently proposing amendments to the dairy products regulations, and this issue is one of many to be addressed through a consultation process with stakeholders. The CFIA is committed to abide with the Government of Canada regulatory policy, which aims to ensure that regulations result in the greatest net benefit to Canadian society and that the public's money is spent wisely in the public's interest.

I would like to address class names and ingredient lists. To put this into perspective, we need to recognize that milk and its constituents, being both nutritional and functional, are used as ingredients in both dairy products and many other food products. An ingredient list on a label requires the declaration of ingredients and components by their common name in descending order by weight. As you can imagine, the ingredients list can be very long, depending on the food. To address that issue and still provide meaningful information to the consumer, in some cases an alternative name may be used in the ingredients list to replace the specific ingredients with a collective or class name. This also allows the food manufacturer, when necessary, the flexibility to vary the use of similar ingredients while using the same food labelling.

Á (1115)

There are 25 class name common names to group similar ingredients identified in the food and drug regulations. Examples of class names are vegetable oil, colour, spices, seasonings, water, and vinegar. For dairy ingredients there are two class names, milk ingredients and modified milk ingredients. Milk ingredients include a number of specific milk and dairy products, such as butter, buttermilk, cream, and milk, as well as any component of milk whose composition has not been altered and that is in the same chemical state as found in the milk. Modified milk ingredients include a number of specific milk constituents, such as calcium-reduced skim milk, casein, milk serum proteins, whey butter, and any other component of milk whose chemical state has been altered from that found in milk.

While it has been argued that the consumer doesn't know exactly what has been added to the food when a class name is used, it should be pointed out that in some cases the class name may be preferable to the actual common name. This is the case for those with milk allergies, who will quickly recognize “milk” in the class name, but may not be aware that casein, caseinate, and other components of milk are derived from milk, and thus a potential allergen concern.

The CFIA has heard from both the dairy farmers and the dairy processors on this topic. The dairy processors want to maintain class names, but modify the ingredients permitted within each group. The dairy farmers are willing to permit the use of class names, but only if the specific ingredients are also listed. Although no other stakeholder has expressed concerns, the CFIA is prepared to further explore this issue to consider the needs of all affected industry sectors, since dairy ingredients are prevalent in a wide range of foods. As you are aware, any regulatory amendment process requires broad public consultation.

In conclusion, I hope I have conveyed the complexity and divergence of opinions on these various issues. The CFIA remains committed to the values of consumer protection and fairness in the marketplace and will continue to work with the dairy farmers of Canada and all other stakeholders to meet these objectives.

I will be pleased to answer any questions at a later point in the meeting. Thank you, sir.

The Chair: Thank you very much, Mr. Orriss.

Now we will move to the Dairy Farmers of Canada, Mr. Grégoire. You have 10 minutes to speak.

[Translation]

Mr. Jean Grégoire (First Vice-President, Dairy Farmers of Canada) : Thank you, Mr. Chairman.

I'm pleased to be here today on behalf of the Dairy Farmers of Canada. Appearing with me is Richard Doyle, the Executive Director of Dairy Farmers of Canada, and Sara Frost, the Assistant Director of Policy and Government Relations with Dairy Farmers of Canada. We would like to thank the Standing Committee on Agriculture and Agri-Food for this opportunity to appear today to talk about an issue that is affecting dairy farmers across Canada.

The topic of our presentation is Labelling of Dairy Ingredients, and we have divided our comments into two parts. First, we will be describing how dairy terms like “cheese” and “butter” are being misused on food labels.

Second, we will be explaining how Canadian milk and cream are being replaced by imported “modified milk ingredients” in dairy products, and consumers are none the wiser.

To begin, a number of boxes are being distributed around the room for you to look at. You will notice that the labels of each of these products prominently feature a dairy term. You are being given the impression that the product is a dairy product, or contains a dairy product. But look closer. The labels are misleading : the ingredients lists reveal that these foods do not contain the dairy product referred to on the label. Butter-flavoured popcorn with no butter... chocolate cream pie with no cream... buttercream frosting with no butter... These products are on store shelves and these products are misleading consumers.

Here I'm going to ask Richard to discuss the question from a slightly more technical standpoint. Mr. Chairman, we increasingly find all kinds of ingredients such as this in our products.

Á (1120)

[English]

Mr. Richard Doyle (Executive Director, Dairy Farmers of Canada): Thank you, ladies and gentlemen.

The problem Dairy Farmers of Canada is encountering is that federal labelling laws currently permit the kinds of labels you're seeing around the table. The Food and Drugs Act, the Consumer Packaging and Labelling Act, and their product regulations all have general prohibitions to the effect that labels cannot be misleading or that a label cannot give a false impression about the content or food, as Mr. Orriss has explained in detail. However, nothing in federal legislation specifies what is false or misleading for dairy products. The only federal regulatory tool to define what is false or misleading in a dairy context is the Canadian Food Inspection Agency's “Guide to Food Labelling and Advertising”. However, the guide is an interpretative document and is not legally enforceable. We found that out in a court case we lost.

One of the main problems is that the laws and the guide allow dairy terms for dairy products with compositional standards to be used with the term flavour. This means products can be called cheddar-flavoured loaf, butter-flavoured popcorn, or cheese-flavoured crackers, where there is no cheddar, butter, or cheese in the product. As a result, consumers purchase foods like the ones before you believing they are receiving the nutritional benefits of dairy products, when they are not. We did consumer surveys on some of these products and found out that most of the consumers, when they just see the package, believe the product contains the dairy product referred to. Furthermore, the purchase of products that use real dairy ingredients is forgone, and efforts and investments dairy producers put into marketing their products are lost to competing analogous products. For example, there is more consumption of margarine in this country, which is a competitor to butter, but I'd like to know if we've ever seen a margarine-flavoured popcorn. In fact, I've never seen “margarine flavour” anywhere on any product.

In 1999 Canada supported at the Codex Alimentarius Commission the “Codex General Standard for the Use of Dairy Terms”, which is an international standard that would forbid use of the word flavour if the product did not contain the actual ingredient referred to. Codex standards establish minimum benchmarks that should be met by national food standards. National standards can surpass Codex standards, but they should at least meet them, at least once we've approved them. Canada supported the general standard at the international level, but has not incorporated the same rules into its domestic legislation.

Dairy Farmers of Canada has been pursuing two solutions to this problem. We have been supporting private members' bills that have been developed by members of Parliament concerned about the impact of misleading labels. The Dairy Terms Act that was introduced in December 2002 would incorporate the principles of the international Codex standard into Canadian law. We are also supporting another private member's bill currently being drafted that would provide the same protection to dairy product names with compositional standards as that provided to trademarks.

The DFC has also been working with the Canadian Food Inspection Agency to amend the “Guide to Food Labelling and Advertising”. Changes to the guide have been proposed, and these changes will ultimately be incorporated into legislation. DFC believes the changes to the guide must reflect the Codex standard and specify that dairy terms cannot be used with the word flavour if the actual dairy product is not present in the food. We are pleased with the direction the CFIA is taking to protect dairy terminology through amending the guide and making these changes legally enforceable by putting them into legislation. We encourage members of this committee to support our efforts to ensure that this problem is solved through the CFIA process and through incorporating the changes to the guide into legislation.

Á (1125)

The second issue we are addressing today is the use of imported “modified milk ingredients”. These are class names Mr. Orriss was referring to that are replacing Canadian milk and cream and dairy products. In your packages you will find labels of products that have been traditionally been made with milk and cream. Cheese and ice cream are examples of products that until recently were made from milk and cream, but have a look at the ingredient list and you won't find milk or cream. You will see “modified milk ingredients”, which is a catch phrase that covers a number of different ingredients. The definition of modified milk ingredients is also included in your package.

The problem is that manufacturers are increasingly using imported milk protein components such as casein and whey protein concentrate in dairy products such as cheese and ice cream. Casein and whey protein concentrate are listed as modified milk ingredients on the ingredient list. This means we can find a cheddar cheese whose first ingredient is no longer milk, but modified milk ingredients. In fact, I would go further. The way the legislation has been drafted, we used to have cheddar made from milk through a process of cheddarization, and now you needn't even have the process of cheddarization; any process that will mimic or end up in a product that is similar would fit. So we're not getting flexibility, we're not sure what the standards really mean.

There are no restrictions on imports of casein and whey protein concentrate, and this is having two serious effects on our Canadian industry. First, Canadian milk and cream are being replaced in dairy products by foreign protein components, leaving the industry with a huge surplus of protein of Canadian origin. This surplus is left to producers to manage. This has resulted in an incremental loss of $90 million a year to producers since 1997-1998. As you know, exporting the surplus is no longer an option, since the World Trade Organization decision last December makes this a subsidized export.

Second, the quality of dairy products is being eroded. Instead of being made with ingredients like milk and cream, traditional dairy products like cheddar cheese are being made with imported ingredients. Consumers think they are purchasing quality Canadian dairy products, when in fact a significant portion of the product has been imported. What's more, these imported ingredients may not be subject to the same production and safety standards as Canadian milk and cream. We believe these products should at least not be considered or referred to as Canadian.

In fact, Dairy Farmers of Canada has been informed that companies are now melting down old cheese ends, adding modified milk ingredients, water, and other ingredients, and then selling the final product as an all-dairy product that competes directly with real cheese at a far lower price. The use of modified milk ingredients to misrepresent a product to consumers should not be permitted.

The CFIA is beginning a process to amend the compositional standards for dairy products in the dairy products regulations. Currently, two sets of compositional standards exist in Canadian legislation, the dairy products regulations and the food and drug regulations, and they're different. The purpose of the CFIA review is to consolidate these standards under the dairy products regulations. Dairy Farmers of Canada is concerned that the pre-consultation documents on these changes allow modified milk ingredients in most cheeses made in Canada. This has the potential to erode the market for Canadian milk and cream and lower the quality of dairy products in Canada. Consumers expect that traditional dairy products are made with milk and cream. DFC believes the new regulations must specify that dairy products with compositional standards, like cheese, cannot be made with modified milk ingredients and should therefore be made with milk and cream.

We require clear direction from the minister that this review of the dairy products regulations will occur within the agricultural policy framework concept of branding Canada. For dairy this means establishing standards for traditional Canadian dairy products, like cheese, that will distinguish our dairy products as being of the best quality. There's no point in getting more flexibility and going towards the lowest common denominator. If we want to brand Canada, we'll do it by having better requirements, not necessarily stopping imports. Right now the compositional standards of most of the cheese being imported are significantly better and stronger, because the European standards are stronger than the Canadian ones, but we're doing it the other way around.

We thank you for the opportunity to appear before you today to discuss the issue of labelling of dairy ingredients. We'll be happy to answer any questions you may have.

Á (1130)

The Chair: Thank you very much for very interesting presentations. They suggest that we will have an interesting dialogue in questioning, and we await your responses.

We will have questions first from Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): Thank you very much, Mr. Chairman.

Thank you very much for coming before the committee today. For those of us who don't deal with this issue on a day-by-day basis some of the concerns you express are new.

We had a group before the committee recently talking to us about ice cream and concerned about the import of ice cream ingredients. I sensed that this was your main concern, that there are products being imported into Canada that are in competition with what you have to offer. They expressed the concern that the ice cream people expected to buy was not such. But do not people today look at the list of ingredients, do they not examine this carefully? When you go down the aisles in a grocery store, you see people looking. Would it not be good to educate people that they need to understand what certain terms mean, like modified milk ingredients?

Mr. Greg Orriss: It's a continual challenge for us to try to educate consumers, and we recognize the challenge. As you know, the Government of Canada has just introduced a new requirement for nutritional labelling of all food products, and we're embarking on a process with Health Canada to improve the education of consumers with respect to reading labels, particularly the nutritional components on food labels.

One of the reasons we wanted to go forward with our discussion document, seeking the input of all stakeholders, is that we do want to hear back from consumers as to what they understand, what they need. Do they want a balance of products, a range in quality from lower-cost products to premium products, such as the Dairy Farmers of Canada represent? These are the types of issues we're looking forward to hearing from consumers about, so that we can try to come up with a balanced response to meet their needs, as well as the needs of our industry stakeholders.

Mr. Richard Doyle: I agree with your premise. Consumers do read the label, the question is whether they understand it. If you have milk or cream as an ingredient, people have knowledge of what it is. If you put casein, whey, protein concentrates, they have no idea what you're talking about. If you hide it under “modified milk ingredients” and that's the only thing you see there, you still have no idea what it's about. It'd be easier to educate the consumer if at least you had the list, which is what we're proposing, so that they could tell that you can't replace milk or cream in your product with casein and whey and a whole bunch of different alternative products that are dairy ingredients, but not necessarily resulting in the same consistency and the same quality you would have from the original product.

The difficulty of educating consumers is that it's easier said than done when you're talking about products like casein. The whole process has been more to hide these ingredients, rather than to explain to consumers what they are. Mind you, I have some sympathy, in that it would not be easy to explain to consumers what every single dairy ingredient does and what it means within the ingredients. When they buy a product and read the ingredients, they like to see something familiar. They don't have a chemical dictionary beside them to help figure out what the purpose of the ingredient is.

Á (1135)

Mr. Garry Breitkreuz: You mentioned the economic impact. That was one of the first questions that came to my mind as you were talking. Then you brought in the figure of $90 million. How do you arrive at that? I'm wondering what the economic impact would be on other food processors. We have more and more food processing taking place all the time. Foods are continually changing. If your suggestion were brought in, what would be the impact on other industries?

My time is going to run out here, so I'm going to have a second question. Do you have other industries that have experienced similar problems with labelling and have made the necessary changes to try to indicate to people that it's all natural ingredients or whatever?

Mr. Richard Doyle: The $90 million is basically a cost to producers, not processors. The processors use whey protein concentrate to replace skim milk powder, and in doing so, they displace domestic skim milk powder as a residual within the system. Under a supply management system it's the producers who are responsible for disposing of surpluses. Over the last 10 years we were supposed to see that disappear gradually, but we've seen the reverse since 1997-1998. It has grown significantly, even though, when you look at the domestic demand, it should go the other way. Why? Because people are importing cheaper ingredients, and not the same quality of ingredients. Replacing whey with skim milk is to use a different type of protein. And it's the producer who pays, where the processor has it good. The producer pays that $90 million of incremental cost for disposing of this product, rather than on the domestic market, on the world market, or virtually giving it away for feed, which is what is being done right now. This is where the problem is for the producers, that this cost is not shared within the whole industry. In fact, it's one sector transferring an incremental cost to the primary sector, which is the producer in this case.

The problem we're talking about with modified milk ingredients is specific to the industry. You have other modified ingredients, as you see in your list; you have “modified” as a prefix, but normally, it is a single ingredient. I'm not aware that we have a class or a whole list of ingredients like modified milk ingredients. So I'm not aware of a labelling problem.

When you raise the matter of natural ingredients and so on, we have a natural and organic butter flavour that has no butter in it. It would technically be an artificial chemical product. How do you call it natural and organic artificial flavour? That's beyond me.

The Chair: Thank you.

Mr. Plamondon, for seven minutes.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ) : Thank you, Mr. Chairman.

I understand your concerns about labelling very well. I had a personal experience. At my annual medical exam, my doctor told me I had to watch out when buying my products because my cholesterol and blood-sugar rates were a bit high.

I almost went to school, because, when I went to the grocery store, I asked the lady all kinds of questions; I understood nothing. I realized that, when I thought I was eating well, particularly for juices, for example, it was the opposite. I was drugging myself with sugar, thinking that I was drinking very good juice. And I applied that to the other foods and discovered just how far we were being had. Sometimes it was written that it was a sugar-free product, but there was another product in there that was a sugar derivative even more harmful than natural sugar.

Based on that, the thoughts you've expressed today lead me to say that you are perfectly right in carrying on this battle, particularly since Canada recognizes supply management. I believe that the Minister of Agriculture and Agri-Food has compromised himself once again in his answers to the questions asked him in the House.

The Minister of International Trade, Mr. Pettigrew, has also said that he was in favour of supply management. But ultimately, when we allow into the country those products that come from New Zealand, that come from everywhere, but mainly from the United States, which are milk substitutes, for example, oil mixes, when we tolerate that without reacting, we are contradicting ourselves. We're talking out of both sides of our mouth. The minister says that they're in favour of supply management, but they are in no hurry to prohibit products that cause our agricultural producers to lose nearly three percent of their quotas because by-products are entering the country, and increasingly so.

If we allow this consumer habit to increase, it's three percent now, but perhaps it will be five or 10 percent in a few years, and very quickly. When you open the door a little, it's easy then to open it wide.

Do you get the impression that the minister is not firmly determined enough to protect supply management through concrete action, by enforcing the existing WTO agreements more strictly?

Á (1140)

Mr. Jean Grégoire : I believe a little energy is lacking on that side. What saddens me most and what I like least as a dairy farmer is that it's the major multinational corporations that have certain opportunities, which introduce those products to Canada and which create no jobs with that, whereas we have surpluses of those products in our market and we could develop a further processing industry that would create jobs in Canada, with the powdered milk surpluses that we have in Canada, for example, and increase dairy production. We could make different products in Canada for domestic consumption instead of importing all these types of mixes and products that come from different countries that we don't know.

And when the industry says that, if it's prevented from doing that, it's going to reduce employment, it's lying shamelessly because, when you take a litre of raw milk and process it, you add value, you create jobs, but when you buy a finished product to include it in products you manufacture here, you don't create wealth in Canada. You merely make profits on the backs of consumers.

I apologize for my somewhat cavalier manner of speaking, but that's the truth. The truth is that we could create many more industries or much more further processing in Canada. But why should a further processor strive to manufacture products in Canada, when the multinationals buy them in the global market? In addition, those people are competing with Canadian further processors who work with Canadian products, and there is competition in the retail market.

Mr. Louis Plamondon : Thank you.

Mr. Orriss, you seemed to say earlier that you are being lobbied; that is to say that you say in your text that dairy processors have come out in favour of a softening of standards. So that means that those processors are really using products that come from outside Canada and, as Mr. Grégoire was saying, create no jobs here, since the product comes in finished and is incorporated in a product rather than produced here.

So if standards were softened further, that would mean that the door would be open even wider to those products. Don't you get the impression that you have a nearly sacred duty to save the dairy industry in Canada and that your organization should act? You are consulting, you state principles, but it seems to me you should take more rigorous, rapid and severe action to protect one of the major accomplishments, I believe, of the past 30 years in Canada, that is to say the management system we have, mainly for milk.

Á (1145)

[English]

Mr. Greg Orriss: I must first disqualify myself as having any competence with respect to supply management.

The Chair: I trust that our questioners would keep to the subject at hand, not get into the supply management. That's for another day. I realize it's an interesting subject, we want to talk about that, but this morning we want to talk about the food--

[Translation]

Mr. Louis Plamondon : I'll clarify my question, Mr. Chairman. When I spoke of supply management...

[English]

The Chair: Your time has expired, so I'm going to let Mr. Orriss respond in a way he wishes to, unless someone else from the dairy producers wants to speak.

[Translation]

Mr. Louis Plamondon : [Editor's Note: Inaudible] the fact that you aren't moving; that's what I mean.

[English]

Mr. Greg Orriss: I would simply note that when we refer to the Government of Canada's support for the Codex and their objectives of protecting the health of consumers and ensuring fair practices and trade, that's certainly an objective. The principal objective of the Canadian Food Inspection Agency is to protect the health of consumers and ensure fair practices in food trade.

Currently, Codex dairy standards do permit the use not only of milk, but also of products obtained from milk as ingredients for dairy products. That is the international standard that governs our considerations as well.

The Chair: Thank you very much.

We'll move to Mr. Duplain for seven minutes.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.) : The subject before us this morning is very complex, and I thank you for being here to testify about it.

Mr. Grégoire, I want you to know that it's a very great pleasure to hear you talk about trying to find new niches for milk and to develop new markets. You should know that we will always support you in that regard because, to my mind, that means forging even further ahead in the sense of creating new markets.

In the same vein as Mr. Plamondon, I too am a bit concerned about the description of foods. I see “cheddar” and “cheese”. For the CFIA, is that product cheese?

[English]

Mr. Greg Orriss: I'm sorry, I haven't had a chance to look at the label specifically. What I can say, however, is that we recognize there may be a number of products in the Canadian market that do not at present comply with Canadian law. When these types of products are brought to our attention through our regional and area offices, we'll follow up on them.

The Chair: Mr. Doyle may want to respond. I think you talked about cheddar cheese and cheddarization.

[Translation]

M. Richard Doyle : Thank you, Mr. Chairman.

In the current legislative context--this comes from our kit, so I can understand that Mr. Orriss hasn't seen it yet--this product is absolutely cheese and it's legal. The term “cheddar” can be used.

Mr. Claude Duplain : There are only milk ingredients, so there is no dairy product.

M. Richard Doyle : No, milk ingredients are dairy products; they are dairy ingredients. Casein is dairy, lactose is dairy and lactoserum is dairy. However, the process is different. Instead of taking milk and adding a culture as is the case in making cheese... To make cheese, you put milk in a churn, add cultures and let it ferment, and so on. That's the concept that people have of cheese.

That's no longer the case today. It's made in a laboratory with formulas to determine whether you can put in a little more lactoserum, which costs much less and can be imported, or if you can hide the flavour, by replacing a particular ingredient with another. All that's done in a laboratory in an attempt to come up with a similar product.

As I told you, the current legislation no longer even requires, in the case of cheddar, that the cheddarization process be used. Other processes enable a processor to achieve somewhat the same result. Our problem is that we have no strategy. I say that for reference purposes, because I don't want to take too much of your time; I've been told my answers are too long. It is not up to the CFIA to have a political strategy, like the dairy industry. They enforce the laws. The Codex, that's a minimum, and they apply the minimum in certain cases, but not in others.

What we're saying is that, if we can no longer export unless we do it at the local market price--and we know that our prices will never be competitive with those of Australia because, in addition to our winters, we don't have the same pasture lands and our costs will therefore always be higher--the way to do it is to ensure that our standards for products such as cheddar, our Canadian cheeses in particular, are higher. But that's not the case at the present time; it's European cheeses. For European cheeses, all the manufacturing processes are specified in the legislation, which is not the case in Canada.

In Canada, we say what's in cheese and we define the various types of cheese, specifying differences with regard to moisture and fat content. That's all.

Á (1150)

Mr. Claude Duplain : It's a very broad field. A moment ago, I saw something interesting concerning the distinction you draw between the CFIA's role and federal regulations. I read it here, in a brief:

In fact, Dairy Farmers of Canada has been informed that companies are melting down old cheese ends, adding modified milk ingredients, water and other ingredients and selling the final product as an “all dairy” product.

I'm trying to see the context and where I can contact someone. When I see the words “soy”, “cheddar”, I know what I'm buying and I imagine that the manufacturer must know what it's buying. When I see “cream pie”, I don't really agree because cream... But if I told the consumer that what he had in his hands was something that had been manufactured with old cheese ends, that modified milk ingredients had been added with water, and if I asked him whether he wanted to buy it or buy real cheese, I believe the consumer would understand.

But how are we going to make consumers understand that? When we talk about labelling... We talked about GMOs. We've already voted against a bill on GMOs, and that caused a whole outcry. That's because the matter was poorly defined. If we're going to do labelling, we should do it properly. How are those things going to be labelled. I believe this is important for consumers. I agree with you on that. I want to know whether I'm buying cheese made with old cheese ends and whether water was added. I want to know, but how do you go about that?

I would like you to tell us because it's important so the committee can write its report.

M. Richard Doyle : I would like perhaps to draw a distinction, with your permission, Mr. Chairman. The cheese you have is not cheese, it's soy. It's a different case. The other product that was referred to is not in fact legal. It's actually a case that has been detected, which should not exist and which must absolutely be reported. Since it's recent, it was only noticed a few weeks ago, and it was reported.

In this case, the idea is to protect the use of the term “cheddar”. You have a cheese that is a cheese made from cows' milk and soy has been added; it's a question of protecting a name. You know, it's like soy milk. The federal act states that milk is the secretion by the mammary glands of cows. So explain to me why we have soy milk. If the regulations define milk as the secretion of the mammary glands of cows, I don't understand why “soy milk” is written on the label. If it was soy beverage, I would understand, but I don't understand soy milk. Cheddar is made from milk. If you put soy oil in it, then you can't have a soy-oil cheddar product.

If everyone can use the terms without meeting the standards, why have standards? The only ones who seem to be required to use the standards are the dairy industry, and everyone else puts whatever they want; they use the same terms. That's what we're trying to show when we talk about protecting terms.

[English]

The Chair: Thank you very much.

I now will move to Mr. Hilstrom for five minutes.

Á (1155)

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chairman.

Mr. Orriss, I just went back and had a egg roll there, and as far as I know, it was inspected and it's safe. We're not talking about food safety on this issue, are we? And on the nutritional side of things, I see in there a list of ingredients that gives a percentage of how much protein and different stuff is in there, so we're not talking about nutrition, are we?

Mr. Greg Orriss: If it's a replacement product, it would have to be nutritionally equivalent to the product it's intended to replace. Health Canada have provided what are called interim marketing authorities for replacement products that set parameters on the nutritional equivalents of those products.

Mr. Howard Hilstrom: But the nutritional value is listed there, I can read it for myself.

Mr. Greg Orriss: Yes, that's right.

Mr. Howard Hilstrom: It's kind of like being Alice in Wonderland here. Not everything is as it seems to be at times. With the dairy industry, the supply and management people, there's no criticism whatsoever of your being very intent on taking care of your self-interest. Everybody does it, every lobby group that comes to us is very intent on that. But there are words that are in common usage. “Ski-doo”--that term is in common usage. It was started by Bombardier to indicate a certain type of machine, but across this country, we've got groups of people that have ski-doo associations, ski-doo trails. I think butter falls into a similar type of thing. Butter cream, to me, does not mean that's butter. Obviously, it's something besides butter, it's a mixture of whatever. If I want to know a little more, I can read it, and I see it's artificial right there. So I'm not deceived that it's butter. So what is actually happening here? It sounds like a request for more regulation in regard to food labelling. Is that what you're asking for?

Mr. Richard Doyle: Yes, but I want to correct you on one point, because your premise is wrong. Bombardier has a trademark called Ski-doo, and if somebody uses it, they can bring them to court and they will win, if it's a misuse of the term. This is exactly the same. If somebody misuses “butter”, because they refer to the product without my having able to sell the butter for that product, I should have the right to go to court and win. Right now I don't.

Mr. Howard Hilstrom: Okay. Why hasn't the dairy industry, then, patented the word butter and patented the terminology you want to now make regulation about?

Mr. Richard Doyle: We thought we did. That's why we had regulations. It's very specific what butter is, it's 82% butterfat.

Mr. Howard Hilstrom: Why don't the dairy farmers sue?

Mr. Richard Doyle: We did.

Mr. Howard Hilstrom: Have you been successful?

Mr. Richard Doyle: No, because the guide has absolutely no legal force. We presented independent consumer surveys on a butter-flavoured popcorn, and 74% of the consumers believed the product contained butter. The court rejected both the survey and the guide, which we were using as our basis.

Mr. Howard Hilstrom: The bigger Canadian economy has to be taken into account here, along with Canadian consumers. Does Dairy Farmers of Canada own the word yellow? Why is the Province of Quebec so opposed to having canola margarine coloured yellow? Are you opposed to that or in favour?

[Translation]

Mr. Jean Grégoire : Mr. Chairman, we don't object to margarine being coloured yellow in Quebec. What is prohibited is margarine that has exactly the same colour as that used for butter. Margarine can be slightly more yellow or slightly less yellow. What we have in mind is only the colour of butter, which is specified in the act. Margarine can have any other colour.

Â (1200)

[English]

Mr. Howard Hilstrom: What I'm getting at here by using that example is that it is a non-tariff interprovincial trade barrier. It sounds to me as though having lost this WTO ruling in regard to our exports, the dairy industry is very intent now on expanding strictly inside Canada. In order to do that, there has to be increased consumption inside Canada and there have to be fewer imports. So where butter oil and other products are not shown on a tariff line that would allow for high tariffs against them, this looks to me--and you can correct me if I'm wrong, in your opinion--like an attempt to use labelling as a non-tariff trade barrier to keep out dairy products. Is that true?

Mr. Richard Doyle: No.

Mr. Howard Hilstrom: What will be the effect of putting these labels in? Will it have the effect of keeping dairy products out or not?

Mr. Richard Doyle: The effect of the label we're proposing has nothing to do with trade. We're protecting our market, absolutely. It's same as your Ski-Doo example. If I have a regulation specifically saying, if I call my dairy product butter, I have to meet a whole bunch of standards, but anybody can use “butter” without putting any other thing in there, what's the point? I'm only forcing myself to do it.

The Chair: I guess what you're really saying is that you want a colour identification that clearly distinguishes between margarine and butter. That's the issue.

Mr. Richard Doyle: That's a Quebec issue. It's a different issue from what we've been talking about, it's an issue of interprovincial barriers.

The Chair: Thank you.

Mr. Plamondon, for five minutes.

[Translation]

Mr. Louis Plamondon : If I remember correctly, Mr. Orriss, there has already been a debate on the expression “fruit juice”. “Fruit juice“ was used to describe anything. That has now been corrected.

How did you go about correcting that? Would there be some way of using the same method so that we could better serve dairy producers?

[English]

Mr. Greg Orriss: There are clear rules on fruit juices: the product must be derived from 100% juice from the fruit. There are also rules for reconstituted juices, where water has been added to the concentrate, and there are also fruit drinks where the juice terminology isn't denoted. It's intended to distinguish the product from a fruit juice or a reconstituted fruit juice, in that the product is identified as a drink. I could, if need be, call on one of my labelling specialists, who could maybe provide you with clearer information if that response is not adequate.

[Translation]

Mr. Louis Plamondon : Your answer is quite precise. You confirm that there was a problem because everyone used “fruit juice” for all kinds of products, and now you've corrected the problem and you have been quite restrictive, that is to say that it is quite clear in what cases the term “fruit juice” can be used.

If you managed to do that with fruit juice, I ask you why you aren't as strict, as restrictive on the matter of milk products. Why don't you respond more positively to the requests of the dairy producers regarding a stricter application of the standard of what is a dairy product, butter and cheese?

[English]

Mr. Greg Orriss: The discussion paper we have prepared and distributed is intended to address the concerns of the Dairy Farmers of Canada and also balance their concerns against the concerns of other sectors of the industry, as well as consumers. I do believe the proposals in the discussion paper will meet the majority of the concerns the Dairy Farmers of Canada may have. They'll certainly provide, I think, clarity to the issue and provide the Canadian Food Inspection Agency with specific regulatory requirements we will be in a position to enforce.

The tools at our disposal to this point in time have fallen under section 5 of the Food and Drugs Act, which prohibits the selling, labelling, packaging, treatment, processing, or advertising of any food “in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety”. We have certainly enforced those provisions when we have encountered problems where we feel there has been a violation. It is different, however, with the traditional use of dairy terms. For example, is the term peanut butter misleading to the consumer? We think not.

Our discussion document, with the proposals to address when ingredients or components are highlighted, to address flavours or artificial flavours, and to address the sensory characteristics of food, we believe will make clearer our expectations for the industry, to prevent things that could be deceptive or misleading to the consumers. I think that will ultimately address a number of the concerns that have been raised by the Dairy Farmers of Canada.

Â (1205)

[Translation]

Mr. Louis Plamondon : Do you have anything to add to what was just said? Is it true that this document and the day's remarks satisfy you?

M. Richard Doyle : On the first question, the protection of dairy terms, I think the proposal that was put forward is making good progress, although it's not going as far as we would like. Moreover, in the process, we've had a submission focusing on a number of elements. We are particularly concerned about the question of artificial flavours.

The other question that was raised and is not mentioned in the document either is the question of what is natural. Earlier we showed you natural, organic and artificial flavours. I have some difficulty with the comments that elicits from consumers. Let's not be naive. The people who market these products know exactly what they're doing. They know exactly that consumers like to see “organic”, that they like to see “natural”. So those words are used, and that's the only reason why those words are written in large letters on the products.

[English]

The Chair: Thank you, Mr. Plamondon.

We'll move to Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

It was a very interesting presentation this morning, to say the least. Our good researcher has provided some information to us here. In Canada the Food and Drugs Act prohibits the labelling, packaging, treating, processing, selling, or advertising of any food at all levels of trade in a manner that would deceive consumers as to the character, value, quantity, composition, merit, or safety of the product. Mr. Duplain had that piece of cheese. With what was stated on that label, how could CFIA keep that on the shelf if we indeed live up to the Food and Drugs Act? How was that permitted?

Mr. Greg Orriss: If you will permit it, I would like to call upon Ms. Daniels, the national manager of our dairy programs, to respond to that question.

The Chair: Ms. Daniels, please.

Ms. Gail Daniels (Chief, Dairy Programs, Canadian Food Inspection Agency): Thank you.

I'm not certain now whether that product was a dairy product or a blend.

Mrs. Rose-Marie Ur: The dairy farmers indicated that it didn't even go through the cheddarizing process.

Ms. Gail Daniels: Okay.

With the current standards, following the Codex standards, cheese may be made from either milk or cream or the components of milk. I'm not sure I follow this completely, but if it was a case of melting down cheddar ends and putting other products in, that likely would not be permitted, but that may be incorrect. Sometimes, just by looking at the ingredient list, it's not clear what was put together. But if it was done according to the standard that is allowed, it would be permitted to call it cheddar. If it was mixed with any oil or fat other than that of dairy, it could not be called cheese, nor if it had other ingredients or components not permitted in that standard.

Â (1210)

Mrs. Rose-Marie Ur: So does the CFIA go beyond that packaging to see how the process came about for that particular cheese? Do you go that far back, to the processing level?

Ms. Gail Daniels: Yes, definitely.

Mrs. Rose-Marie Ur: And you see that the labelling meets the requirement of cheese in Canada?

Ms. Gail Daniels: I do not know if this particular one does, but we could investigate it and verify the ingredients.

Mrs. Rose-Marie Ur: Well, I'll tell you, that's been on the shelf forever, because I have bought it. I'll certainly be more diligent when I go to the supermarket, because I wasn't aware of this.

In the presentation by the Dairy Farmers of Canada it was indicated that the Food and Drugs Act, the Consumer Packaging and Labelling Act, and dairy product regulations all have general prohibitions on labelling, but they're not strong enough. The “Guide to Food Labelling and Advertising” has stricter guidelines, but they're not legally enforced. So if you put all those acts together, would that be something the dairy farmers could live with? Would it be better for the industry?

Mr. Richard Doyle: That's what is being tried, to some extent, but they're doing two things. The food guide is being amended to be clearer, because it does have certain weaknesses. Second, the CFIA is trying to put in legislation. We're very much in favour of their pursuing that, so that you have some legal grounds for challenging these products. The problem is that while it says you should not be misleading to consumers, it doesn't define what's misleading. You have to go to court and prove that it's misleading, and obviously, even a consumer survey won't necessarily be accepted by the judge. So it's a very tricky legal point.

On the merging of all the legislation so that we don't have dairy products regulations and Food and Drugs Act regulations that have two different standards for the same product, I think the CFIA is trying to put everything under the dairy products regulations, so you avoid having the duplication. However, we're concerned that while this is fine as a process, there is no direction necessarily to the CFIA. This is why I was referring to the political process, basically saying, okay, should we also look at whether or not the compositional standards for these products need to be strengthened, which is what we're asking for? But this is not necessarily what the process is about. The process is about eliminating a duplication. We prefer the Food and Drugs Act regulations, because they're tougher, in our view, than the dairy products regulations. This is not, unfortunately, the way CFIA is going, they're going the other way.

Mrs. Rose-Marie Ur: What is the greatest stumbling block in working on behalf of the dairy farmers with CFIA? Where do you find the most frustration? Where can we improve the communication so that this can move forward?

Mr. Richard Doyle: There is actually a good relationship between Dairy Farmers of Canada and the CFIA. We have good dialogue, it's open. There's an issue of enforcement sometimes. CFIA doesn't necessarily go into all the retail stores, they wait for people to complain, and we do that when we see a questionable product. So there's an issue of enforcement, and sometimes it's difficult because of the legislation. We're talking about provincial legislation in Quebec. If we see something like that, we have to decide whether we'll go through the provincial legislation or the national legislation. Most of the time we'll go with the provincial legislation, because it's a lot stronger and a lot clearer, and you have a better chance in court with clear laws than guides. That's what we're trying to fix.

We have a different view with regard to the labelling, and that is not so much an issue between CFIA and DFC. I think that's an issue where we need political direction, and that's why we were referring to the APF. If you want to brand Canada, it is not by trying to go to the lowest common denominator. Cheeses are international, and most of the standards we're talking about are international standards. We feel we need to actually go the other way. We feel it unfortunate that we should end up with the lowest possible standards competing with European and other countries. Even the United States has stronger standards for cheese than we do, and that's shocking to me, because I think we have much better cheese in this country.

Mrs. Rose-Marie Ur: Since peanut butter was brought up, how much butter is there in peanut butter?

Â (1215)

Mr. Richard Doyle: There is none. This is not a matter of contention between CFIA and DFC. It's a texture issue. We are not against creamed corn or creamy corn. They're using it to refer to texture, and people are not fooled into thinking there are dairy products in peanut butter. I'm more concerned when you have soya milk or things like that. This is not a texture issue, this is really saying, we can replace your regular beverage with this, it's another way of saying it's equivalent to milk, it's in direct competition.

The Chair: Thank you.

Mr. Hilstrom, for five minutes.

Mr. Howard Hilstrom: Soya milk is a good place to start. I see “soya mozzarella-flavoured loaf” here; I don't know if I see the word cheese on there anywhere.

If you get all the regulations you want, what is the purpose of the regulations going to be now? What is the effect those regulations will have?

Mr. Richard Doyle: Are you talking about this particular product?

Mr. Howard Hilstrom: Okay.

Mr. Richard Doyle: We have a standard for mozzarella: it's supposed to be made from milk. This is a soybean mozzarella.

Mr. Howard Hilstrom: Okay. Every regulation has a cost to it, and I don't know if the CFIA can tell us anything about what this will cost.

I don't cook, but if I were going to make a pizza, I assume that I might use a product like this. Is this regulation designed to get me, as a consumer, not to use this, but to use something else that says it's all milk or something? Is that what the purpose of this regulation is?

Mr. Richard Doyle: We're trying to say, if you want to have a loaf made from soya that looks like that, that's fine, we're not against the product being made, but why call it mozzarella? Mozzarella is a cheese made from milk. There's a standard that says mozzarella is supposed to be made from milk. We're not against a loaf of soya. If you want to put it on your pizza, that's your business. If you want to sell it, fine. We're saying, protect the terminology. You've already defined standards by which you claim a certain composition. That's what doesn't make sense.

Mr. Howard Hilstrom: Where in Canadian society--and I didn't do any research on this yet, but I'm sure somebody else has, or maybe I will do some--does this end? The other parts of the economy have the same situation. We've talked about fruit juices, but I'm sure there are many other situations in the economy. Where does this government stop regulating to try to make everything perfect for everybody? Do you not agree that there are many more examples and much more cost to the economy that could arise out of this? Or is this purely a dairy issue?

Mr. Richard Doyle: We're not asking for more regulations, we're asking for better regulations. That's different.

Mr. Howard Hilstrom: And do you not think this has the possibility of snowballing into many other areas of the economy?

Mr. Richard Doyle: No, I think Mr. Plamondon was right. The fruit juice with no fruit was fixed. Fruit juice now must have fruit in it. So why musn't mozzarella have milk in it?

Mr. Howard Hilstrom: Well, there's hamburger with soya in it. They're not pure soya burgers, but they're a mixture of these dairy bull calves that are used for meat and soya. Do you want to get that straightened out too?

Mr. Richard Doyle: That's up to the beef industry.

Mr. Howard Hilstrom: Well, the dairy industry sells an awful lot of beef into the beef industry. I wouldn't be quite so flippant, Mr. Doyle.

Mr. Richard Doyle: Mr. Hilstrom, I'm not an expert on soya burgers. I don't even know if we have a standard for burgers.

Mr. Howard Hilstrom: The dairy industry sells an awful lot of beef for meat consumption in this country. It's a serious issue. Do you think there should be regulations called for to have the same effect as what you're talking about there?

Mr. Richard Doyle: I'm not aware that we have a standard established for burgers. This is not about the whole marketing thing. We're talking about where you have standards, particularly international standards.

Â (1220)

Mr. Howard Hilstrom: It seems as if the dairy industry is once again trying to isolate itself down to a narrow point of view. There's nothing the matter with that, as it's in your own interest, but don't expect that the rest of the economy is necessarily going to go along with you. You're looking at your own narrow interest, thinking somehow you can get consumers to not buy this and to buy your stuff, and you're going to use government to do that. That, to me, is a concern. Do you think that's not the case?

[Translation]

Mr. Jean Grégoire : Why don't you call your soy cheese “pizza topping”? Mozzarella is for pizza. Call it pizza topping.

[English]

Mr. Howard Hilstrom: Okay.

Thank you, Mr. Chairman.

The Chair: I might just add that we have misnomers in many areas. In hamburger there is, to the best of my knowledge, no ham; there's no pork in hamburger, but we call it hamburger. So we have many issues we could correct if we wanted to start correcting society.

Mr. Plamondon.

[Translation]

Mr. Louis Plamondon : Further to the remarks of my colleague from the Canadian Alliance, I would like to emphasize that what we're listening to today and what we will subsequently have to recommend are based on a societal choice that we made in the 1970s. You'll tell me that supply management is not part of the discussion, but, indirectly, it is.

When we decided to live with supply management in Canada with regard to dairy products, chicken and so on, we decided we would only produce what we consumed. And things went well until, by underhanded means, people reduced our production quotas because products that are not normally acceptable, because they are falsely defined, interfere in our management system and destabilize everything.

If we're headed toward what my fellow member called a free for all, then let's abolish supply management and, in a free for all, let's produce everything we want, let's eat everything we want; consumers will choose. First of all, I'm not sure that's going to reduce prices, and, second, I'm far from sure that the products offered to consumers will be of better quality, on the contrary.

So we have a system and we want to protect it. The way to protect it is not to make it a private preserve or to turn in on ourselves. I believe my fellow member was wrong. Simply put, when consumers buy something, they must know what they're buying, no?

So as I told you, if it's soy, it should be indicated “soy”, not “butter”, and if it's a chocolate pie, no one should indicate “chocolate cream”, if there isn't any in it. That's simply what you're telling us today. It seems to me that it would be easy to make things more compliant if the government had the political will to do so.

You said you were satisfied in large part with the recommendations of the Canadian Food Inspection Agency, presided over by Mr. Orriss, that is to say that they are a step in the right direction. You mainly talked about the first part, and you didn't have time to talk about the second part. That bothers me. The time is up, so I'll let you talk about it.

M. Richard Doyle : I had simply started to say that I think we need a political direction. The process initiated by the Canadian Food Inspection Agency is a process to eliminate duplication among foods and drugs and the regulation of dairy products. They tend to recommend moving toward the dairy products regulations, which are much more flexible and much broader than the food and drug regulations.

We would prefer there to be a general direction for composition, which would be intended to improve our standards, not to prevent imports, but simply to establish that Canadian dairy products meet a superior standard, as Europe and the United States do. We don't understand why, in a context in which our quality is recognized, we don't aim for superior standards in order to have a superior brand image around the world.

Mr. Louis Plamondon : It's precisely in that direction that political intervention would be highly justified. Since other countries do it, we wouldn't appear to be protectionist, but simply to be defining ourselves in the same way other countries define themselves.

Â (1225)

M. Richard Doyle : Absolutely.

[English]

The Chair: Thank you.

Mr. Maloney.

Mr. John Maloney (Erie—Lincoln, Lib.): Mr. Orriss, the CFIA issued a discussion paper in January. How many responses did you get?

Mr. Greg Orriss: I'm sorry, I'm not sure just how many responses we've received yet. I know there's been a great deal of interest from a number of industry associations, but I can't answer specifically on the extent of the response.

Mr. John Maloney: If you don't know the exact number, was the response level adequate for you to perhaps move forward from here?

Mr. Greg Orriss: I've just received a note. We've received between 20 and 25 responses, and there are more responses coming in. We have not yet had a chance to assess all the responses. It appears that there are divergent views. There seems to be some level of support for the proposals in the discussion paper, and they feel these proposals would help to clarify the use of any highlighted ingredients or characterizing agents.

Mr. John Maloney: What is the process from here? Can you explain to me what's going to happen? You're going to analyse them, and then what?

Mr. Greg Orriss: We'll analyse the responses that come in, looking at what our primary focus is, the protection of consumers and prevention of deceptive or misleading practices. It is intended to proceed with the development of regulations that would be incorporated under the Food and Drugs Act and in the interim would be adopted as policy under the “Guide to Food Labelling and Advertising”, so that we would have an interim policy, pending the development of specific regulations.

Mr. John Maloney: You'll present draft regulations, but will you present those to the stakeholders, or will you come back to us? Under normal circumstances I don't think you have to, but will you?

Mr. Greg Orriss: We would certainly come back if we were invited. The process does allow for comments through schedule 1 when the proposed regulations are published, and we would receive another round of comments when the regulations were developed to that extent.

Mr. John Maloney: Will the stakeholders and we have the opportunity to comment and criticize?

Mr. Greg Orriss: Absolutely. There will certainly be another round of comments.

Mr. John Maloney: You've indicated that there's a divergence of opinions on this. How do you reconcile the various opinions? Do you just take a policy position?

Mr. Greg Orriss: Government of Canada regulatory policy basically states that regulatory authorities must ensure that the benefits outweigh the costs to Canadians, their governments, and businesses. Therefore, a cost-benefit analysis is usually performed to determine the benefits of the initiatives, and a decision is made about whether to proceed with a regulatory initiative based on that analysis.

Mr. John Maloney: From this point how long will it take to get to that stage you've just indicated, as a ball park figure?

Mr. Greg Orriss: It's a guess, because there are many factors, as we haven't completed the consultation process or the analysis of the discussion comments that have been received, but it would be between six months and a year before regulations could be established to address these issues.

Mr. John Maloney: Mr. Chairman, could we make a note of when we could perhaps revisit this issue?

The Chair: I'm making notes.

Mr. John Maloney: I have no further questions, Mr. Chair.

The Chair: Okay.

Perhaps I will insert a question here.

If the Codex standard were applied--I guess, in a sense, we have adopted that, but we've never really enforced it--the standard that specifies that a dairy term can't be used with the word flavour if the actual dairy product isn't present in that food product, how far would that go in eliminating some of the concerns and problems you have with this particular issue? What we've seen in the products that have been passed around the table this morning has given us some concern. There are two forces at play here. There are the dairy producers Mr. Grégoire and Mr. Doyle are representing, we have the middle ground where government finds itself, and we have the other side, the processing and the value-adding industries, competing for some part of that profit margin. We, as politicians in the middle, would have to somehow make these two become compliant and work together. And if we've adopted the standard, but never applied it, why is that?

Â (1230)

Mr. Richard Doyle: The last part of the question I'll leave to the government regulatory authority to answer.

On your first point, the proposals submitted by CFIA deal with issue of flavour only being used when the product is used in the making. Where we may have a bit of a different view is that they also allow artificial flavour. You could use “artificially flavoured butter” without any butter, provided that “artificial” is prefixed. The Codex would not permit that. My understanding is that the Codex would only allow the use of the word flavour if the product is in there. It would not allow the use of butter just because you put “artificial” with it. Our preferred option would be that you don't allow “artificial butter flavour”. Just limit it to the way the Codex designed it.

The Chair: How would you feel about that, Mr. Orriss and Ms. Daniels?

Mr. Greg Orriss: Mr. Chairman, it's complex, in that there is a flavour industry, and we believe consumers are quite familiar with, for example, what a strawberry or maple flavour should taste like. We don't believe the consumers would be misled if something were called butter flavour or artificial butter flavour. Again, when we receive the comments on the discussion paper, they may guide us in a different direction, but based on what we've heard to date, we don't believe consumers would be misled if something were identified as artificial butter flavour.

With respect to the Codex standard for the use of dairy terms, the World Trade Organization set some disciplines under both the SPS and TBT agreements, as I'm sure you're aware, for countries to base their measures, including labelling requirements, on relevant international standards. Certainly, the standards that are adopted by the Codex Alimentarius Commission are explicitly referred to in the SPS agreement and are implicitly considered in the TBT agreement. Exceptions can be made, however, when justified, and there's a whole range of parameters for exceptions. It becomes less clear under the TBT agreement than it is under the SPS agreement. Exceptions under the SPS agreement recognize the sovereign right of member countries to establish measures that may be more stringent than international standards. A member can, in fact, introduce a more stringent measure, but that's subject to disciplines. That measure must be supported by science and by an assessment of risk, as appropriate to the circumstances, and be applied in a consistent way. Similarly, under the TBT agreement there are specific provisions that allow a country to deviate, when it's justified, from an international standard. As I said, the TBT agreement is somewhat less precise than the SPS agreement.

The challenge we're facing is that there is a range of stakeholders. There are producers, and we certainly understand the concerns of the Dairy Farmers of Canada, but there are processors as well. There is a dairy processing industry that provides us with different advice. There is an edible oil industry, there is a flavour industry, and there is a broad range of food industries that use milk ingredients or modified milk ingredients in the preparation of their products. Ultimately, our interest is to protect consumers from labelling that may be false, misleading, or deceptive.

Â (1235)

The Chair: To build on Mr. Maloney's question on responses made on this issue, how representative are they of the various industries? Are they highly loaded towards industry or towards processing? Are they representative of the dairy industry, having put forward its fair share of representations, or are they simply coming from the other side? I guess that would be a fair question. Without names, I think it could be understood by this group here that there's fair representation being made on both sides. Is that correct? Can you give us some numbers?

Mr. Greg Orriss: I cannot, Mr. Chairman, because I don't know. I could call, with your permission, Ms. Carla Barry, who is our national manager of the fair labelling practices program, and maybe she would be able to answer this.

Ms. Carla Barry (National Manager, Fair Labelling Practices Program, Bureau of Food Safety and Consumer Protection, Canadian Food Inspection Agency): Thank you.

The responses we've had vary considerably. We have responses from two consumer associations either in our hands or promised to us. We also have comments back from the Food Consumer Product Manufacturers Association, Spirits Canada, the spice industry, the bakery industry, the Canadian Meat Council. Basically, I think the responses we're getting are reflecting the entire agrifood sector and processing industry.

The Chair: Are the dairy people satisfied? Mr.Grégoire, are you satisfied that you're being represented by those responses that have been made?

Mr. Richard Doyle: We only submitted one, but we represent all our sectors. If you wanted 25, I could send 25 through my membership. You understand this process is broader than just dairy.

The Chair: Yes, I understand that totally, but I think it's fair for this committee to know the stakeholders on all sides are being represented and we're not just hearing from one, so a year from now we're going to come together and find that it's been heavily loaded one way or the other.

Mrs. Ur, do you have more questions you want to ask?

Mrs. Rose-Marie Ur: I have a quick question, Mr. Chair.

Have there been any problems when you have indicated the common name on the labelling? Have there been any problems through not being more specific as to allergies when they just put a common name, rather than being more specific? Some people really have to look at labels more than others, specifically people who have allergies.

Mr. Greg Orriss: With those who suffer from allergic responses to dairy products, it's the milk protein, so the use of “milk ingredient“ or “modified milk ingredient” is more precise for consumers in alerting them to the potential danger than it would be to list something like casein or caseinate, for example, which they may not understand.

Mr. Richard Doyle: Can I disagree? There are also allergies to lactose, which is a sugar. You could have modified milk ingredients that are all protein, and those who are lactose intolerant would have no problem, which is exactly the reverse of what Mr. Orriss was saying. You could make exactly the same argument the other way around.

Mrs. Rose-Marie Ur: Point well taken, Mr. Doyle.

CFIA made a presentation, and you indicated in the latter part of it that you've heard from both dairy farmers and processors. Processors want to maintain class names of modified ingredients permitted with each group, and the dairy farmers are willing to permit the use of class names, but only in specific ingredients that are listed. Although no other stakeholders have expressed concerns, who else are you waiting to hear from on that subject?

Â (1240)

Mr. Greg Orriss: I would ask Ms. Daniels to respond to this.

Ms. Gail Daniels: We originally got comments from those two stakeholders. If we choose to proceed and address this issue and make any amendments to regulations, we'll have to consult all stakeholders. As we said, dairy ingredients are used quite extensively in other food products, meat products, sausages, etc., and these class names are used within those, so it would have to be the broad consultation again with all the other food industries, and consumers as well. Even though the issue originated from one industry side, to pursue it further, we'd like to go to the rest of the industry and consumers, all the stakeholders.

Mrs. Rose-Marie Ur: Thank you, Mr. Chair.

The Chair: Okay.

Mr. Duplain.

[Translation]

Mr. Claude Duplain : I have regulations here on the definition of dairy terms. It's incredible to see how many definitions there are; I can't get over it. I'd like to know whether we're going to solve the problems by remaking the regulations or by applying the existing regulations.

M. Richard Doyle : The regulations you're looking at are Bill C-340, I imagine?

Mr. Claude Duplain : It's the Food and Drug Regulations, Part B, where all the elements are described. If I read the definition of the word “cheddar”, it states : “(i) be the product made by coagulating milk, milk products or a combination thereof...”. If I look at “ice cream mix”, it clearly states, “cream, milk or other milk products”.

Does the problem arise from the fact that the regulations are not enforced, or do we really need other regulations?

M. Richard Doyle : It's “other milk products” that causes the problem.

Mr. Claude Duplain : In the case of butter oils we were talking about?

M. Richard Doyle : In the case of butter oils, in the case of the ingredients of modified substances. It's because “or any other product” was added. So instead of having milk or cream, as was previously the case, it's “or any other product” that causes the problem.

Mr. Claude Duplain : The other day, you spoke, with Mr. Plamondon, about a question of changing numbers concerning butter oils, and I would like to have that specification again.

Mr. Grégoire, do you remember talking about that in relation to butter oils, saying that, if the number were simply changed, it could no longer enter...?

M. Richard Doyle : I know we must appear again before the committee on the tenth to talk about butter oils more specifically, but what we're asking on the subject of butter oils is that the government recognize that these mixes of butter oils act as a butter substitute, as a result of which there would be a rate classification. There is a tariff quota for butter substitutes, not for margarine, but for butter substitutes. If mixes of butter oils and sugar substitute for butter and the fat in the manufacture of ice cream, we ask that those products not be considered as “any other” mixes without further specifications, but in fact that they be considered as butter substitutes, which would therefore call for a product reclassification.

Mr. Claude Duplain : From where to where?

M. Richard Doyle : For butter substitutes, we're asking that it be 2106.90.34.00 instead of 2106.90.95.00.

Mr. Louis Plamondon : To add to what Mr. Duplain said, changing tariffs would mean that, to bring that product in, there would be a tax of 212%, which is not currently the case. That's the effect that would have.

However, it's the Minister of Finance who could make that decision on the recommendation of the Department of Agriculture.

Mr. Claude Duplain : I see the word “cheddar” here, and the definition is :

(i) be the product made by coagulating milk, milk products or a combination thereof...

Together with that, you can't normally call that “cheddar”, except that the other definition below is :

(B) any process other than the cheddar process that produces a cheese having the same physical, chemical or organoleptic properties as those of cheese produced by the cheddar process...

That's why they can indicate “cheddar”. Is that correct?

Â (1245)

M. Richard Doyle : Because they write “flavoured” at the bottom. The act permits the use of “cheddar” because “flavoured” is written below. Does that meet the definition you've just read, which is in the regulations? Absolutely not. That's the point we're making.

Mr. Claude Duplain : Is the word “cheddar” consistent with the regulations, in accordance with the definition?

[English]

Mr. Greg Orriss: I'm probably not looking at the right label again, but where the highlighted ingredient is a flavour or an artificial flavour, what the discussion paper is proposing is that “flavour” or “artificial flavour” must appear adjacent to the name. For example, it would have to say “cheddar flavour” or “artificial cheddar flavour”.

Ms. Daniels, did you want to try to respond to the question on the composition?

Ms. Gail Daniels: To differentiate between having a standard for a product that's sold as a cheddar cheese and where the name cheddar is used as an adjective to describe the flavour, as with strawberries and strawberry flavour, is what we're trying to resolve with the discussion paper. As you've heard, the dairy farmers do not want to see these terms used with a flavour, whether it's artificial or natural, but does the consumer understand that it's only a cheddar flavour, not a cheddar cheese? These are the issue we have to address, and the comments we get back from consumers will help us decide how to go on this issue, because we differentiate between a product and a flavour.

Mr. Richard Doyle: I want to make a point about consumer perceptions. We seem to often say, the consumer understands this or doesn't understand that. Well, that's pretty much what we believe, and we can differ all we want. One of the recommendations we've made in some of the discussions with CFIA concerns good marketing techniques. We use them, we spend $75 million in promotion and advertising. We do surveys of consumers to know exactly whether or not it's misleading, whether or not they understand the message, and so on. We think the government, before assuming the consumer understands the regulatory issue with labelling, should use some of those techniques and actually do a consumer survey to test whether or not what they believe might be understood or not understood is actually the case. I think that would be useful. Or they could accept that we submit to them evidence to that effect, or something like that.

The Chair: Ms. Ur?

Mrs. Rose-Marie Ur: Mr. Doyle, while the discussion was going on, I thought, that's a perfect way of testing the waters. Instead of our sitting around this table saying whether consumers understand what the labelling indicates, the best thing is to send out a survey and have them indicate their knowledge. I'd probably have failing grades myself on what is being presented on those labels. I think that would certainly be good food for thought for CFIA. We always have the CFIA send out those business cards to the businesses in the area. I think this is something maybe CFIA could bring forth to get consumer input. We have to remember that our primary producers, the dairy industry, are consumers as well, so they're not out there to cut their hands off, they're part of both ends of the scale.

The Chair: Perhaps, to get a real picture of where it's going in Canada, we could do this in a very economical way. Members of parliament have the privilege of using their frank to contact householders. There are 301 members, and we could cover the complete country, do a universal survey, and then report back. There would be no cost to you, and this would be about as impartial politically as you could get, because all parties would be represented. It would probably be heavily loaded on the female side, because it's a domestic issue, but we could live with that. We could probably do this at minimal cost.

Mr. Duplain.

[Translation]

Mr. Claude Duplain : I would just like to ask a final question. Talking about surveys, if I go into a normal grocery store in Quebec, in the common dairy products display, what percentage of this type of cheddar cheese am I going to find, relative to real cheese made from milk? Do you have an idea of the proportions? Does it exceed...?

Â (1250)

M. Richard Doyle : Unfortunately, I couldn't answer your question, Mr. Duplain. I just want to add one comment, however, on the last point. I can understand that the CFIA's budgets do not make it possible to conduct all the consumer tests; there would be no end to them, given all the industries concerned. But we would be quite happy, we who already conduct them within our organizations, to share or even structure them or involve them, if you will, so that they would be satisfied with the results and could... I believe we have a good dialogue and that we can go further in this partnership and try to find answers together.

You're entirely right, Mr. Chairman; we're no longer interested in cutting our own hand. So I believe it's the consumer who must make the determination, but let's ask the consumer what that is.

The other point I wanted to return to before concluding is that there was some question of...

[English]

There was discussion about SPS and TBT. I want to be clear on one thing, we are not seeking to have stronger standards implemented for imports. We're quite happy with the Codex Alimentarus as the minimum from a trade perspective. We believe, however, our domestic production should be subjected to a higher level of quality than the lowest minimum international level.

The Chair: I think that's a fair statement on which to close this meeting. I want to thank you all for your presentations and your attempts to answer some of the questions we have. Obviously, we're rather naive in some of the implications of this, but it's something I think we've reacquainted ourselves with, and we need to do that again, as Mr. Maloney suggested. We need to have you back again. So thank you once again for appearing, and we'll see you again at the table.

I want to just remind you that we have a meeting here at 11 o'clock on Thursday morning, and we will have with us at that time the Grain Growers of Canada and the Canadian Wheat Board as we study genetically modified wheat. This is a very timely issue, and I would encourage you to make sure your colleagues come to the table. We need you here, because this is something of great concern to the industry.

Also, I've had some people say they've had untimely delivery of some correspondence from my office. We're making a deliberate attempt to make sure you get all correspondence--this is from my office, I'm not talking about the clerk's office--and this will be forwarded to you, the committee members, via e-mail. We will scan all the documents to make sure they're tamper-proof, and then we'll use that format in relation to the MPs accounts. If an MP wants another account to be listed, let us know. In other words, if you don't want it coming to this account, let me know and let my office know, and we'll make sure it gets to the right account. This is to be done basically for two reasons, to avoid uncertainty in the delivery of the information we have and to track those who actually get the information: is your staff actually giving you the information we pass on to you? Because we can track from our office whether it's been read or simply deleted.

The other issue, of course, has to do with a motion that was put forward by Mr. Gagnon. We can't deal with it this morning, unfortunately, because we don't have a quorum, but the motion is here, and we will deal with it at the earliest time we have quorum.

The meeting stands adjourned.