Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 20 - Evidence - Afternoon sitting
OTTAWA, Thursday, October 22, 1998
The Standing Senate Committee on Agriculture and Forestry met this day at 12:35 p.m. to study the present state and future of agriculture in Canada (recombinant bovine growth hormone, rBST, and its effect on the human and animal health safety aspects).
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: We will be hearing next from the dairy producers and processors, but I would indicate that next week we will be hearing from the senior Health Canada officials and also from the Council of Canada and the National Farmers Union.
Our next witnesses are from the Dairy Farmers of Canada. Following them, we will hear from the National Dairy Council of Canada.
We must be out at two o'clock to attend the Senate.
Mr. Baron Blois, President, Dairy Farmers of Canada: I am the president of the Dairy Farmers of Canada. I am also a producer living in Nova Scotia. I have with me Madame Lise Beauchamp, an agriculture specialist, a dairy producer from Quebec, and a board member on the Dairy Farmers of Canada.
Dr. Ray Bouchard, assistant director of policy and dairy production for the Dairy Farmers of Canada, is here also.
The Dairy Farmers of Canada is the national organization representing the interests of Canada's 24,000 dairy producers.
In my presentation I will describe the situation surrounding rBST; outline DFC's position on rBST; and finally I will explain each element of DFC's position.
Recombinant bovine somatotropin growth hormone, known as rBST, is classified as a production aid. It is manufactured using genetically modified bacteria. It is claimed rBST mimics the action of natural bovine somatotropin to stimulate lactation. It is currently administered to lactating cattle by injection.
The product is licensed in 26 countries, but the main use is in the United States and Mexico, where rBST is sold under the trade name "Posilac." The trade name is registered by Monsanto.
As we know, rBST is not licensed in Canada and, therefore, its use is not allowed.
Canadian consumers have complete trust in the dairy supply. They know that milk is a nutritious and essential part of a balanced diet. The livelihood of dairy farmers has always depended on the belief that our products are safe and nutritious. The Dairy Farmers of Canada will not do anything to undermine that trust in the Canadian dairy products, in the milk supply, and in dairy farmers themselves.
The Canadian public is concerned that rBST will affect the safety of milk and the health of dairy cattle.
Like other Canadians, dairy producers are not experts in evaluating the safety of veterinary drugs. Canadian consumers and dairy producers rely on the integrity of Health Canada's drug approval process to ensure the food they consume is safe.
Health Canada, as a government agency independent from industry and with a mandate to protect the interests of Canadians, should be able to credibly assure the consuming public that their dairy products are safe. The credibility of the drug approval process is paramount.
It is essential that consumers' legitimate food safety concerns regarding the use of veterinarian drugs are adequately addressed.
The integrity of Health Canada's veterinarian drug licensing process is being questioned by the drug evaluators of the human safety division of the Bureau of Veterinarian Drugs. This is the organization responsible for the licensing of veterinarian drugs in Canada.
Concerns have been raised in the media about the approval process related to rBST. In July 1997, statements were made by evaluators working for Health Canada's Bureau of Veterinary Drugs that publicly criticized the process used for licensing veterinarian drugs and, in particular, the process for licensing rBST.
Again, in December 1997, Health Canada evaluators repeated their charges that the department's licensing process was flawed.
rBST has been an issue in the media and it is currently being reviewed in a number of forums, including this committee and Codex Alimentarius.
In view of these international and domestic developments, the general council of the Dairy Farmers of Canada has asked the federal government that the following conditions be met prior to any approval of rBST in Canada:
First, that the Auditor General completes a comprehensive audit of the approval process for rBST to ensure full consumer confidence.
Second, that the Codex Alimentarius Commission rules that the product is safe.
Third, that Health Canada informs the public about the risk-assessment process and rationale it used in its evaluation and approval of rBST.
I will now expand on these three conditions.
First, that the Auditor General completes a comprehensive audit of the approval process for rBST to ensure full consumer confidence. The position of the Dairy Farmers of Canada on the issue of rBST is simply that the Canadian dairy industry risks being financially affected when a veterinarian drug raising concerns with consumers is not supported by a credible licensing process. Canadian dairy producers cannot risk financial losses that are directly related to the failure of this process for licensing veterinarian drugs -- a process that is entirely the responsibility of Health Canada.
Consequently, the Dairy Farmers of Canada will hold the federal government fully responsible for any financial loss attributed to a faulty process in the licensing of veterinarian drugs by Health Canada.
On September 11, 1997, DFC requested that the Auditor General of Canada complete a comprehensive audit of the approval process for rBST to ensure that any questions about its integrity are fully dispelled. The response to DFC was that such a request must come from a minister or from a standing committee of the House of Commons.
Since then, DFC has communicated with both Minister Allan Rock and the former chair of the Standing Senate Committee on Agriculture and Forestry, Mr. Joe McGuire, without receiving any definitive response. The response given by Minister Rock is vague and stresses the fact that two external panels of experts are reviewing both the human and the animal safety aspects of rBST. Although this is not an unusual process in the evaluation of a veterinarian product, it should not be a substitute for the normal process used by Health Canada.
Health Canada is the only organization in the country which has the authority to licence veterinarian drugs. Therefore, the institution must be completely credible, in the eyes of the public, with respect to its competence for making licensing decisions guaranteeing the safety of drugs for both humans and animals.
The second item is that the Codex Alimentarius Commission rules that the product is safe. The issue of the acceptance of rBST is not limited to Canada. The Codex Alimentarius Commission -- an international organization of the Food and Agriculture Organization and the World Health Organization -- is responsible for establishing international food standards. The Codex commission has been discussing the safety of rBST for many years and has not yet been able to agree on the issue. The matter will be discussed again at the commission meeting scheduled for July 1999 in Rome.
The third point is that Health Canada must inform the public about the risk-assessment process and the rationale used in its evaluation and approval of rBST. The dairy industry will expect Health Canada to be fully prepared to address all concerns from the public before granting rBST a notice of compliance. Health Canada must also assume the responsibility for educating the public about its decision if rBST is licensed for use in dairy production.
If this task is not carried out properly, the dairy industry could face significant losses through the undermining of consumer confidence in the safety of our products. Health Canada must not place the dairy industry in such a position.
Dairy Farmers of Canada must be assured that Health Canada will take all necessary steps to educate consumers, and that significant time will be taken to demonstrate to the consuming public that its approval process is credible and that the product is safe.
Mr. Chairman, that ends our statement. We are willing to take questions.
Senator Whelan: We all agree that we have one of the best dairy industries in the world, which produces probably the safest products ever produced. It is the cleanest and the best in every fashion. As was explained earlier today, the United States allows 750,000 units per sample while we allow 500,000. However, dairy farmers try to keep it down to around 150,000, which is super as far as the world's dairy industry is concerned.
My concern has been that the Dairy Farmers of Canada has not taken a strong enough stand. You have not said anything in your paper about the fact that we have built a record of performance across this nation without using any of these artificial hormones. We have done that through good nutrition and good genetic breeding.
Do you not have some concern about what will happen if this product becomes legal for farmers to use? How will you check the regular performance of a cow that may be injected? Will you make the farmer swear in an affidavit that he is not using rBST? If he is, will he be barred from participating in our national cattle program? At one time the buyer of a cow, a bull, a calf, semen, or an embryo could check the national records on computer and find out who had the best herds. Are you not concerned about losing some of what we have built up over the last 75 years?
Mr. Blois: At this point in time, I will tell you where the dairy industry is. The product is before Health Canada in the drug approval process. The dairy industry has not debated at any great length many of the questions that you ask. What we have said, right from the beginning, is let Health Canada and the drug approval process do its work. Along the way, this problem of credibility arose. One and a half years ago, we said, let us have an independent body, such as the Auditor General, to review this process. That is where we are now.
At the end of this process, Health Canada might find that this product is not safe. Therefore, there may be no need to carry on that other discussion. However, let that first level be completed. To be able to finish it, you must ask an outside, independent person to go in and clean up this situation we find ourselves in.
Senator Whelan: Perhaps I am a little old-fashioned. The system that we built together was the envy of the dairy world. Even when we look at what has happened with APEC, we see that our dairy farmers might be slightly affected by it, but not like the other parts of our industry that are outside of an organization such as the National Dairy Council.
We heard today that India is one of the biggest dairy producers in the world now. A big part of their genetic stock came from Canada.
What I am concerned about here is your lack of concern about what will happen if this product is used. If I were a third generation dairy farmer who had built up a genetic herd that was the envy of my neighbourhood, my province or my nation, I would be concerned that someone down the road may be using this product, and that they may be using it now. You do not have to take an oath, but can you swear that there are no Canadian dairy farmers using rBST today?
Mr. Blois: I am glad you asked that question. I assumed someone would ask me that. I can honestly swear today that I do not know, nor does DFC or any of its staff, know of any producer using rBST in this country. If there is a person out there who believes that there is a producer using it, then they should contact the proper authorities so that the appropriate action can be taken.
Senator Whelan: Are you referring to someone like Ian Cunningham, who writes for the Ontario farmers' publication? Did you see what he wrote?
Mr. Blois: Yes. They should be brought before the laws of the land because this product is illegal at the present time.
Senator Whelan: You probably saw that I said if I were the minister of agriculture and I found anyone using it, I would put them in jail or ban them from ever selling milk again, because I feel that strongly about this.
I fear for the destruction of what the producers, the provinces and the federal system, have built over a long period of time. Then, a company like Monsanto comes along and says, "This will be so much better for you." It will be good for Monsanto. The economics of it were touched upon earlier today. You and I both know that the cow will eat more and that she will have two or three lactation periods at the very most and then she will go into a rendering plant. We have studied this and we have seen it in other parts of the world where they are using it -- for instance, in Romania and Africa. They do not have enough feed for their cows now. I have seen these cows when they do not have enough nutrition; they look like skeletons.
Have you done any studies on this?
Mr. Blois: No, we have not. Why not? Because it has not even gone through the first process.
Senator Whelan: You are waiting until the first process. How will you stop them if they go ahead with the rBST?
Mr. Blois: I can only tell you that the product is not used, licensed or approved in this country. I can only tell you what I read in the farm magazines that come out of the United States where the product is used. They say that you get around a 10 per cent to 15 per cent increase in production.
I do not know what the product would cost in this country. I do not know what the management level will be. I know they have done various trials at various universities, but those have been carried out in a controlled environment. I do not know what it would be like on a commercial farm.
There has been a suggestion that the somatic cell count will increase on some of those farms in the United States where they milk two or three times a day. Our smaller farms do not have the ability to milk two or three times a day. I do not know what the economic effect of that would be, because the product is not here to use.
We will not use this product until the consumers and we have full confidence in it because that is where we make our money. That is a simple fact.
Senator Whelan: There is still some value in being able to declare a cow's actual production and genetic background to a foreign buyer. We should be able to guarantee that an artificial hormone has not been injected into the cow to make it give more milk.
Mr. Blois: I assume the foreign buyers would ask that particular question.
My understanding of this product is, even if it did ever reach that point where it was approved, no producer would be made to use it. It would be an individual's decision to use it. That individual may be a seller of animal genetics, they may be a commercial producer. I assume that the farm buyer would want to know that. I assume that is what happens in the United States now because they buy cattle abroad, too.
Senator Whelan: Americans can buy more up here because of their American dollar, but they are also getting a higher quality animal. So far they have been able to honestly buy that animal knowing that it has not been given rBST. That is an advantage.
I do not get the impression that you are concerned and preparing for the worst. The worst, as far as I am concerned, would be the approval of this artificial hormone.
Senator Stratton: What is your opinion of the quality of the products you produce?
Mr. Blois: They are of the highest quality in my opinion.
Senator Stratton: The best in the world?
Mr. Blois: Yes.
Senator Stratton: What is your opinion of the safety standards we have currently in place for bringing new products on stream and to ensure that your product remains the best in the world?
Mr. Blois: When you say "new products" you mean such as drugs?
Senator Stratton: Anything that is used in the dairy industry. You use antibiotics, I would assume?
Mr. Blois: Yes.
Senator Stratton: I am concerned. I want to know from you and your council what is your opinion as to the safety standards in place to ensure that your products are the best in the world?
Mr. Blois: Until many of these questions arose around the veterinarian drug approval process, it was that it was a strong process and it was credible.
Senator Stratton: You no longer have that confidence?
Mr. Blois: One must take into consideration what was said this morning. That is why we have said at the outset, let us have the Auditor General review this process.
Senator Stratton: Is there not a certain onus on the Dairy Farmers of Canada to try to ensure by some process or method that your products are safe? In other words, to measure what is occurring in government and in industry to ensure that those safety standards are met and the quality of the product remains -- if that is the case, let me hear about it.
Mr. Blois: I will happily answer that question. In many provinces across this country, there are various types of producer organizations or producer-government cooperation in regulating the industry within that province.
There was discussion this morning of antibiotic levels. I can tell you, as a producer who milks cows often when I am home, that every day that the milk truck comes and picks up the milk, the first thing that the milk truck driver does is take a sample of that milk. He then puts it in a separate vial. That then goes to the laboratory for full analysis of bacteria, somatic cell count. If that milk does not meet the quality standards that have been set by government, in cooperation and discussion with industry, then that producer faces penalties.
Antibiotics are checked on every load. When a tanker load arrives at the dairy, there is a check on the full tanker load. If that tanker is found to contain an unacceptable antibiotic level, then that tanker is disposed of. They then go to the particular vials that made up that load. That producer is then found. He is responsible for the full tanker load of milk. I am talking about $17,000 or $18,000 for one tanker load. He does not get paid for his milk, plus he is responsible for everyone else's milk on that truck. That is quite an incentive to ensure that that does not happen. That is done on every load in this country.
I believe the quality standards are there, the somatic cell counts. We are continually striving to lower counts. On my particular herd, which I do not think is different from any other herd in this country, once a month we do a somatic cell count on every cow. If that particular cow is found to have a high level, then she is isolated either for treatment or for removal from that herd. That is a normal practice across this country.
Senator Stratton: Do you rely on the safety standards established by the federal government? Do you have input into those standards?
Mr. Blois: Yes.
Senator Stratton: Do you have a monitoring system of those standards?
Mr. Blois: Yes, through our staff and discussions with Agriculture Canada.
The Chairman: I would like to know if your standards are better today than when Senator Whelan was minister.
Mr. Blois: We are always striving to increase our standards, as we strive to provide the consumer with better products.
Senator Whelan: The chairman missed a point. I said "we" built them -- the producers, the province and the federal system working together in the true concept of Confederation.
Senator Taylor: We are talking about Canada being rBST free. Approximately 26 other countries, including the U.S. and Mexico, have it. In view of the publicity that has been given to rBST in milk, I gather that the public is not too keen on receiving more additives.
The dairy producers frequently complain, when the milk production is divided up, that there is not enough market for everyone's wishes. Would there be a market to export Canadian "rBST-free" milk to the United States?
Senator Spivak: They already do it.
Mr. Blois: There very well could be. We have not explored that. There are certain milk products that we move into the United States under an in-quota tariff. There have been some exports of butter that goes into further processing. They have not come to us and asked us to market milk under those specific terms.
Senator Taylor: My understanding is that we are the odd men out on the dairy products. We have high tariffs on bringing anything across our borders to keep our milk, butter and egg prices up.
If you are not hurtling too far back into the past, and not looking into the future, why are you not using the fact that you are rBST-free to penetrate that U.S. market? When I talk to dairy farmers, there are constant complaints that they cannot sell enough milk or there is too big a quota to Quebec or Alberta and too little to Manitoba. Everyone is crying about that. Here you have a product that 26 countries do not have and you are trying to sit on it.
Mr. Blois: We are not trying to sit on it. We are developing optional export programs. Some marketer within this country may want to explore that in the future. I have the impression that people think dairy farmers are sitting around waiting for the day that rBST arrives. I can tell you that when my brothers and I are talking with our colleagues, that is the last thing we talk about, because it is not here today; it is not usable at this point in time. It is just not something that presently we are spending a lot of time discussing. However, I will agree with you that it may be a marketing advantage somewhere along the way.
As I understand it -- and I may be corrected on this -- you cannot use as a trade barrier the fact that you are using a product or not using it.
Senator Taylor: You mean it might be similar to manganese, where we were sued and had to allow it back in the gasoline?
Mr. Blois: I am not sure.
Senator Spivak: Do I understand correctly that you did not call for this product? In other words, it is not the Dairy Farmers of Canada that is saying you should get rBST approved so that you can use it on your cows?
Mr. Blois: I can honestly tell you that no dairy producer, to my knowledge, ever said that. Certainly the Dairy Farmers of Canada never said that.
Senator Spivak: The reason is that you have such a wonderful product. If it ain't broke, why fix it? Is that the reason? What is the reason? Is the 10 per cent or 15 per cent increase really a consideration for you, with all the concomitant problems that it may produce, like lack of credibility, and mastitis, and increased use of antibiotics? I am curious about your attitude.
Mr. Blois: I had a reporter ask me that a while ago. I said, "There are a lot of other methods that I can use now, on my particular farm, to increase production." I can tell you that over the last few years, I went from a feeding program that fed a silage and a grain twice daily to what we call a total mix ration. It increased production significantly.
In my understanding, rBST is just another tool or production aid.
Senator Spivak: Before I ask you about labelling, I want to say that my colleague here is not entirely correct. The 26 countries may have approved it but not all are using rBST. This carton is from Vermont in the United States. On the carton it says it contains no synthetic hormones, and it has a disclaimer that rBH and rBST are the same. I do not think that is accurate but that is what they have on here because the FDA says they must have it on the carton.
Suppose we do get rBST approved here. Do you think we should label it? Do you think the consumer is entitled to know whether rBST is in their milk or not? How practical do you think that would be?
Mr. Blois: First, I go back to what I said originally. We must have a credible process of approval before that discussion with the consumer even begins.
Senator Spivak: I want to know whether or not you would approve of labelling milk as rBST-free.
Mr. Blois: I am not sure what the Canadian government would suggest in the area of labelling, whether it would have to be labelled rBST-free or non-rBST free. I am not sure. We would have to explore that.
Senator Spivak: But what do you think?
Mr. Blois: Ultimately, the consumer is the purchaser of the product. If there were enough product there and the will to do it, the dairy producers of this country would address that particular issue.
Senator Spivak: In other words, they would be interested in having the milk labelled. I think a lot of consumers would want to know what they are drinking.
Mr. Blois: I did not say they would be interested in labelling. I said they would be interested in discussing it with the Canadian consumers' associations.
Senator Spivak: What about powdered milk? We heard about a big market for powdered milk. There is no shortage of milk right now, either in the U.S. or Canada. The problem is generally one, as Senator Taylor pointed out, of limiting the supply.
If we do not get into that area, could we be drinking U.S. powdered milk? Would that affect Canadian dairy farmers, if they do not get into that market? The question is related only in the sense that if you are looking at expanding the supply -- and rBST is a way to do that -- should we be looking at it?
Mr. Blois: As a producer who has been in many discussions on trade with the U.S. over the last few years, I do not think there will be any major markets opening up in the U.S. in the near future. Every time we turn around, they come up with a reason not to accept our product. There has been a shortage of butter fat in the United States over the past few months and we have exported that down there to the further processor. However, if there were no shortage, we would have a harder time doing that. That is my view of that type of situation.
You mention powder. Powder is a commodity product. Will Canada ever become a significant producer of powder? That is unlikely because we are a northern climate, we are a higher- producing part of the world. India was mentioned here this morning. My understanding is that, in India, the majority of that milk production increase is in buffalo milk.
Senator Hays: Why should the Auditor General be involved? The witnesses earlier today illustrated that there are some unfortunate differences of opinion on the way in which decisions are made in this division of Health Canada. We heard from the vice-president of the Professional Institute of the Public Service, whose members are involved. There is a grievance process. There are established ways of dealing with this. In this particular case, it is on the table before this committee, and something needs to be done to resolve it. Presumably it is being worked on as we speak, but to this point at least, without great success.
The Auditor General is often looked to as a good person for these situations, but the Auditor General is an accountant. His normal process, when he does a comprehensive audit, which is also a value-for-money audit, is to hire people to advise on determining whether something is wrong; and if something is wrong, what can be done about it.
Are you totally committed to that one approach, or would a panel of experts or some other, independent group be just as satisfactory to you, in terms of coming up with a way to deal with the decision-making problem in this branch of Health Canada?
Mr. Blois: My understanding of it, sir, from what I heard here this morning, is that it involves not only science, but other areas. How did we arrive at the Auditor General? The Auditor General is, in the eyes of Canadians -- and dairy producers are also Canadians -- the logical office to go in there, as an independent body, and gain an understanding of what is going on and report back.
Senator Hays: He is the only person you have confidence in?
Mr. Blois: He is the only person we have discussed within our Dairy Farmers of Canada general council, or the only body. If this committee can suggest another body, we would take that under consideration.
Senator Fairbairn: You mentioned that the introduction of rBST as a tool to improve production would produce an approximate increase of 10 per cent to 15 per cent. We hear that we produce enough milk or more than enough. I understand that you are not opposed to increased production, but that there are other ways of doing it, from the perspective of your association, and you personally as a producer.
Mr. Blois: That is true. All producers are at various levels. I am not sure I totally understand your question.
Senator Fairbairn: Earlier today it was said here that we did not really need to increase production in Canada, therefore why would we introduce this new element, the sole reason for which is to do that. I understand that you are not averse to increasing production, but you believe it could be done by means other than this growth hormone.
Ms Lise Beauchamp, Dairy Producer, Agriculture Economist, Quebec representative on Dairy Farmers of Canada's Board of Directors: That question has two sides. First, as Mr. Blois said, there are other tools for producing more milk from the herd. rBST is not the only tool. Monsanto and other companies say that the increase can be as much as 15 per cent, but other studies show that the results vary greatly from herd to herd. It is not an average of 15 per cent. Some studies have found that it is not necessarily a benefit for dairy producers to use rBST. In some cases, with some herds, although they do not lose money, they do not make any additional money, so there is no advantage.
In the second part of your question, you say that Canada has the objective of producing more milk. Certainly we have that objective. We want to be in business and always we want to improve the dairy business in Canada. However, we are looking to other countries to buy our product and we are not finding any buyers for our product. We must currently sell our milk at one-third of its value because we cannot find any new markets. Yes, we are looking for new markets, but we do not need increased production. If we need more milk production, we have the technology to provide it.
I was here in June when the company that makes this product testified that they developed it because the producers want to utilize it. I want to say, on behalf of the producers, that that is their word. I do not appreciate it when companies speak for us, the producers.
Senator Fairbairn: I understand that. That is very helpful. Thank you very much.
I am interested in the value that you place on the excellence of your product. In your brief, you go beyond that and talk about the public confidence in your product. Public confidence is built up over a long period of time. If you lose it, it will be very difficult to regain the stature that you have today.
Some comments made this morning were based on human safety, but also on the effects that this tool has on your cattle. You say you have never asked for rBST. I understood that quite clearly. In presentations to government, have you ever spoken against having rBST approved or are you waiting for that very technical decision?
Mr. Blois: We have always said that we would wait until it went through the veterinarian drug approval process, through Health Canada.
Senator Whelan: If I remember correctly, the Quebec producers have voted against the use of rBST. The dairy farmers in Quebec have voted unanimously to ban rBST.
Mr. Blois: I am not aware of that, but Ms Beauchamp may have more knowledge of that than I.
With pooling in this country, we all share the markets. It does not matter whether you are in Annapolis Valley, Nova Scotia; on the St. Lawrence River, or in Western Canada. We all share in the increases and the decreases of the marketplace. If markets are severely affected, that will hit every producer in this country. It would be crazy, and it would be silly economics, to spend millions of dollars promoting the product on the one hand, and lose consumer confidence on the other. We have said all along that the approval process for this product must be seen by the public to be very credible.
Senator Fairbairn: I do not think any government would be able to compensate the dairy farmers if they lost the confidence of the public.
Mr. Blois: If the approval process is flawed, or if questions go unanswered, we believe that would be the responsibility of Health Canada, because they are the only body in this country that can guarantee consumers and producers that the product is safe.
Ms Beauchamp: I am the vice-president of the Quebec Board of Dairy Producers. I represent 10,000 dairy producers of Quebec. We adopted two resolutions, in our general assemblies in 1994 and 1995, that we object to the licensing and the selling of rBST.
Senator Fairbairn: Although we are having a spirited discussion on this issue, this product has not yet been approved and there have been strong statements by the minister that it will not be approved unless the department is satisfied that there are no outstanding concerns regarding safety, both for animals and humans.
[Translation]
Senator Robichaud: In your view, is the growth hormone economically efficient? Will it decrease production costs? Could we produce the same amount of milk with less cows? Is it true that this hormone would help in terms of the economics?
Mrs. Beauchamp: As a milk producer and an agricultural economist, I will try to answer your question by referring to studies that have been done in Quebec on cost/benefits. There are many other ways to increase milk production in our farms. Injecting the growth hormone is costly. One study found that cost effectiveness is far from obvious.
It is true that the studies from the petitioner say otherwise, but other studies do not really demonstrate the cost effectiveness. This is not our major concern. Our major concern is how the consumer will react to all of this? Our client is the consumer. For the petitioner, the client is the milk producer. The petitioner is very little concerned with the rest of the chain. Even if Health Canada approves the hormone, we do not yet know how we will react. We hope that Health Canada will have a credible process and will do its job in reassuring the public sufficiently to dispense with labelling.
We are really concerned because we do not see any advantages at the farm level. We do not see any advantages at the consumer level. Did the price of milk to the consumer drop in the United States following introduction of this hormone? No study has established this. In this whole matter, where are the advantages, excepting the fact that the manufacturer sells his product?
Senator Robichaud: Why would American producers use this hormone, contrary to Canadian producers, when there are no advantages in doing so?
Mrs. Beauchamp: I cannot tell you if Canadian producers will use it or not. At the present time, it is banned. We know that in the United States only a minority of producers use it. So this answers part of your question.
[English]
Mr. Blois: I wish to add that the American and Canadian producers work on a different cost structure. Here, we work under a cost model of production. With benefits and efficiency, a portion of that is passed on to the consumer.
That only works if the whole industry uses it. I have no idea whether they would or would not use it. I believe they would not all use it if it were approved.
In the American system, their pricing structure is completely different, so any financial gain would be kept within the farmers' pockets, as I understand it. There is a fundamental difference in the pricing of the product, which is why one farmer may view it differently in one country than the other.
Senator Robichaud: You are not sure if there is a gain for the producers in using the hormone.
Mr. Blois: That is right.
Senator Robichaud: Has that not been established?
Mr. Blois: No.
The Chairman: I thank the representatives from the Dairy Farmers of Canada for appearing here today. We appreciate the insight and the information you have shared with us this morning.
Honourable senators, I welcome Tim Finkle, the vice-president of the National Dairy Council of Canada. He has a statement, and then we will go to questions. Please proceed.
Mr. Tim Finkle, Vice-President, National Dairy Council of Canada: I thank you all for asking the National Dairy Council of Canada to participate in today's discussion on rBST and its effects on the health and safety of animals and humans.
First, I would like to give you some background on the association I represent, the National Dairy Council of Canada. Our organization includes processing companies -- large and small, privately held, publicly traded, and cooperatively owned -- along with associate members who supply our industry with equipment, food ingredients, and other supplies and services necessary for the functioning of our industry.
Membership includes companies in every province, companies that process over 95 per cent of all milk produced by dairy farmers in Canada. Together, we added over $4 billion to the value of raw milk in 1997, processing greater than 72 million hectolitres annually in 270 establishments, with direct employment of more than 22,000 people.
The National Dairy Council of Canada is the voice of Canadian manufacturers and marketers of high quality and nutritious dairy foods.
rBST has been on our radar screens for more than 10 years. Since 1986, we have communicated our concerns to officials at Health Canada and the former Health and Welfare Canada. Those concerns have always centred on consumer acceptance of biotechnology in general and rBST in particular.
As early as April 1987, we wrote to then ADM of health protection branch, Dr. A. J. Liston, requesting assurances that the milk from rBST-administered research herds was safe for human consumption in every way and authorized for sale. We were given assurances that Health and Welfare Canada officials had determined that the milk was in fact safe for human consumption.
The issue of milk from research herds going into the general milk supply exploded onto the pages of newspapers in November, 1988. Although Health and Welfare Canada tried to assure the public that the milk was safe, consumers reacted by not buying dairy products from processors believed to be commingling safe milk with that of government research institutions. NDC immediately demanded all marketing boards in the country to cease purchases of milk from test herds using rBST.
NDC has received hundreds of letters on this issue over the past 10 years, and we have also been the target by numerous coupon and postcard campaigns objecting to the use of rBST in Canada. These latter campaigns generated in excess of several thousand complaints. In the history of the National Dairy Council of Canada, founded 80 years ago, we have no record of any similar crisis of such magnitude. If a consumer has taken the time to write, fax or call us and our member companies, we must respond to them. We cannot afford to dismiss so many complaints. Our livelihood depends on their confidence in dairy foods as nutritious, wholesome, tasty, and, most of all, safe.
For the last decade, the National Dairy Council of Canada has been an active participant in the numerous committees and task forces set up to examine the potential impact of rBST in Canada. We have met with many stakeholders, including consumers, in many meetings and workshops around the country. We testified on rBST before the House of Commons Standing Committee on Agriculture and Agri-Food in 1994. We were involved in the 1994-95 ministerially appointed rBST task force. We have written countless letters on this issue to federal and provincial ministers, and other government officials.
Some of our questions have been answered, to varying degrees, such as the analysis of the cost /benefit of rBST to the industry. Others have not, including the question of human or animal health hazards.
In early 1994, we asked for a two-year moratorium on the approval and use of rBST in order for the consumer to have an opportunity to be informed and to respond to the proposed introduction. Subsequent examination of rBST demonstrated little yielding from consumers regarding the introduction of rBST. As a result, we notified all members of Parliament in May 1995 that, if rBST is approved for use on Canadian dairy farms, it will be without the agreement of the dairy processing industry.
Common sense dictates that consumers must be heard and, therefore, offered a choice of milk with or without rBST. Offering this choice will increase the cost of milk due to segregation at pickup, delivery, and processing. These added costs should not be borne by consumers, but must be absorbed by farmers wishing to use rBST on their herds. We will not accept the American response to the introduction of rBST under any circumstances. In that country, consumers paid a premium for milk produced without the assistance of rBST.
Several studies have been conducted on consumer reactions to the introduction of rBST in Canada. Optima Consultants presented their findings to Industry Canada, called "Understanding the Consumer Interest in the New Biotechnology Industry," in November 1994. These concerns, whether based on fact or perception, cannot be dismissed, as some would like, as "whining from the lunatic fringe." To do so is contemptuous of Canadian consumer concerns.
NDC has not been involved in the current review of rBST health and safety concerns by Health Canada. While we have read numerous reports suggesting serious gaps in the scientific review, we have focused our efforts on behalf of our clients, the consumers. Our position, which was unanimously approved by the council's board of directors in 1997 and again this year, states that the NDC remains adamantly opposed to the use of rBST, not for health-related reasons, which is the responsibility of Health Canada, but for the following marketing conditions.
One, consumers continue to react negatively to the prospect of rBST use in milk production.
Two, due to supply management and administrative pricing, there are no demonstrable consumer or manufacturer/marketer benefits from the use of rBST in milk production in Canada.
Three, there are major negative impact possibilities from the stated intention of consumers to decrease or eliminate consumption. This has not been adequately examined and quantified. Consumers have told us that if rBST is used in Canada, they will stop drinking milk.
Four, Canadian dairy exporters have major concerns about consumer acceptance of rBST-derived product in the face of non-rBST competition.
Five, the implementation of a parallel milk production and distribution system to isolate rBST-derived milk is not financially feasible and, therefore, not a viable course for dairy marketers.
Thank you for this opportunity to explain our concerns and our firm conviction that rBST should not be approved for use in Canada.
Senator Spivak: Did you know that in recent surveys, 80 per cent of Canadians said they wanted rBST-derived milk labelled? Your position is that labelling would be impossible and not cost effective. What are we to do in such a situation? Is this a definitive argument that you are making against the use of rBST on economic grounds?
Mr. Finkle: There are many arguments against using rBST. The number one argument against it is that consumers do not want it.
We have looked at the other issues surrounding rBST introduction in Canada. One of those arguments is the segregation of milk and, therefore, the cost. We estimated that it costs around $500,000 per plant to segregate the milk, and that can only be done at a smaller plant. If you start adding up these cumulative costs for separate runs, separate packaging, and separate labelling, with no apparent benefit to consumers, we do not even want to get to the point where we have to start separating the milk.
Senator Spivak: I have another question, which we will ask government representatives. Have you received any indication from Health Canada or the Bureau of Veterinary Drugs as to their opinion? Some say the drug has not been approved and we are not in the process of approving it. In the meantime, there are people in the bureau who say that it is safe. What is their view as to labelling? Have you had any discussions with them on that issue?
Mr. Finkle: We have had some discussions with them on the issue. The issue of labelling has been looked at more closely by the Canadian Food Inspection Agency people in association with Health Canada. They have not stated a firm position. However, they do have some concerns with negative labelling claims such as "rBST-free."
Senator Whelan: First, is not the dairy industry in Canada -- I am talking about the farmers and the processors -- the healthiest in the world?
Mr. Finkle: I like to believe that we are a healthy industry, but we are always striving to be better.
Senator Whelan: Is it not true that the dairy processing industry is concerned about something happening 10 or 15 years from now for which they can be held liable?
Mr. Finkle: Yes. It is a big concern that we will have some responsibility down the road if we sell an unsafe product.
Senator Whelan: We have heard about printing a warning that rBST causes mastitis and therefore farmers will have to use more antibiotics. Is it not true that two or three years ago in Eastern Ontario, a tanker truckload of fluid milk was transferred to a cheese plant and they could not make cheese out of it because it had too much antibiotic in it?
Mr. Finkle: I am not familiar with that case. If a tanker is contaminated with antibiotics, there will be problems in the manufacture of cultured products like cheese, yes.
Senator Whelan: There was a big discussion about it, and I know it happened in Eastern Ontario. The farmer was fined. Many people are not aware of the fact that our standards have reached the point where you can transfer fluid cheese milk to a cheese plant. In the old days you could not do that because cheese milk was of a much lower quality.
Mr. Finkle: Yes. I do not know if the milk is segregated in the sense of particular milk going to a particular plant. It is a marketing issue, but not a high casein-content-of-milk issue.
Senator Whelan: It is serious, though.
Mr. Finkle: Yes.
Senator Stratton: If the dairy farmers and your association are not pushing for approval of this product, and are in effect opposed to it, what or who is pushing it in your view? I know it is Monsanto, but why would Health Canada go along with it if you oppose it?
Mr. Finkle: As I understand the process at Health Canada, once a company has made a submission for approval, I believe that they have to follow the request through to its completion.
In this instance, we do not want it used in Canada. We want farmers to say they do not want to use this, because consumers are saying they do not want to buy milk from herds that have been treated with rBST.
Senator Stratton: If subsidies are removed from the dairy industry and you are competing internationally, would there not then be a push for the use of rBST by your industry so that you could be more competitive internationally?
Mr. Finkle: I do not know how competitive the use of rBST would make the Canadian industry. The fact that we do not use rBST is currently a competitive advantage, because our products are more highly regarded on the export scene than those of other countries.
Our member companies that do export tell us that Canada is looked upon favourably because it does not use rBST. I would not agree necessarily that the use of rBST would make us more competitive if subsidies were reduced or eliminated.
Senator Taylor: I am a little puzzled by your remark on the third page of your brief. You say that consumers paid a premium for milk produced with the assistance of rBST. You also say that rBST-derived milk is not feasible and therefore not a viable course for dairy markets.
Is it not a fact that you can get both types of milk in the U.S., rBST or rBST-free, because they practice a free market system, rather than our system of supply management where everyone's product is compressed through the same distributor? How they can do it in the U.S., while we cannot do it here, despite the fact that they are probably paying more for rBST-free? Is it impossible to put out two types of milk?
Mr. Finkle: Let me respond to the first point about the system in the U.S.
When rBST was introduced in the U.S., if a manufacturer claimed that their milk did not contain rBST, they were then charging a premium for this otherwise naturally derived milk. If there was no label on the product, there was somewhat of an assumption that this milk could have been produced with rBST.
The previous tradition of milk then became a niche product, and therefore commanded a niche price. Therefore, rBST milk was actually cheaper than the non-rBST milk.
In terms of segregating milk in Canada, it would be extremely costly. Anything is possible, but money will be required to do that. If we have to start segregating milk in Canada and doing separate production runs, packaging, filling, pickup and transporting, there will be a huge cost associated with that. That will drive up the price of all dairy products. Potentially, consumption will drop as a result.
We see no economic benefit to the use of rBST in Canada as long as consumers are opposed to it.
Senator Taylor: Granted there is variation in the U.S., but their absolute price is not driven up. Quite often, milk is cheaper there. Why would you deny Canadians the right to buy rBST-free milk or, in other words, a choice?
Senator Whelan: Butter is twice the price in the United States now because there is a shortage of milk. Many dairy farmers went out of business down there.
Senator Taylor: We are talking about milk.
Senator Whelan: You are talking about a dairy product.
Senator Hays: May I ask a question? Someone said earlier that the processing industry is 98 per cent U.S. owned; is that right?
Mr. Finkle: No, that is not right.
Senator Hays: What is it?
Mr. Finkle: The cooperative companies in Canada 60 per cent of the Canadian milk industry. There is a large company owned by an Italian manufacturer, but it still employs Canadians. The figure of 90 per cent is grossly overstated.
Senator Hays: Perhaps I misheard.
Mr. Finkle: That was the quote, but it is incorrect.
Senator Hays: Would you say 40 per cent foreign owned?
Mr. Finkle: It might even be 30 per cent.
Senator Hays: The foreign ownership is not American.
Mr. Finkle: That is correct.
Senator Hays: If I hear you correctly, the position of the industry group is that even if Health Canada did approve it, you do not want it. You would be unhappy with that simply because of your perception of consumer opinion in terms of milk products?
Mr. Finkle: Yes, based on the faxes, the cards, the phone calls and the letters we receive, they are saying no. Our job is to respond to their demands.
Senator Hays: Can you comment on why it would be so different in the U.S.? Is it different in the U.S.?
Mr. Finkle: The initial reaction was very negative in the U.S. It was localized. Also, we must look at the time frame. Food safety is becoming a hot issue now. We are constantly reading in newspapers about food-borne illness. Consumers will be even more sensitive to the suggestion that there is something artificial in their milk that could harm them. If rBST had been introduced in 1998 in the United States, the reaction would have been even greater.
Senator Robichaud: If this growth hormone were to be licensed in Canada, would members of your council refuse to process milk produced with the help of that hormone?
Mr. Finkle: We have never had that discussion. One of the difficulties is that we cannot determine exactly where the milk we buy comes from because it is pooled.
If there is a problem, we can trace it back to the farm where it was produced. However, there is a potential problem if milk from a farm using rBST is mingled with milk from a farm that is not.
When we get the tanker, we would have to do testing later. We would not know at the time of pickup where that milk came from. Furthermore, there is currently no test. It would be very difficult to refuse because lack of a test is not much basis for such a refusal.
Senator Robichaud: In your case, it would have to be friendly persuasion of your producers not to use it, because there is no way to tell whether or not they did.
Mr. Finkle: Yes. We would hope that producers would listen to consumers, who have told them; no rBST in Canada.
Senator Robichaud: If only one were to use it, it could harm the industry in Canada?
Mr. Finkle: Yes.
The Chairman: Honourable senators, if there are no further questions, I wish to thank the witnesses for appearing here today. It has been a long but very informative day. We will meet next week at the same time.
The committee adjourned.