Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 31 - Evidence - Meeting of March 19, 2013
OTTAWA, Tuesday, March 19, 2013
The Standing Senate Committee on Agriculture and Forestry met this day at 6:18 p.m. to examine and report on research and innovation efforts in the agricultural sector (topic: traceability).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Welcome to the Standing Senate Committee on Agriculture and Forestry. I would thank the witnesses for accepting the invitation from the Standing Senate Committee on Agriculture and Forestry to come and share your views and comments and recommendations on the order of reference that we have, developing new markets domestically and internationally and enhancing agriculture sustainability and improving food diversity.
Honourable senators, I would ask that we introduce ourselves and then move immediately to presentations, first by Mr. Charlebois and then by Mr. Fruitman.
I will now ask the deputy chair to begin the introductions.
[Translation]
Senator Robichaud: Good evening. Senator Fernand Robichaud, Saint-Louis-de-Kent, New Brunswick.
[English]
Senator Callbeck: Catherine Callbeck, Prince Edward Island.
Senator Merchant: Pana Merchant, Saskatchewan. Welcome.
Senator Buth: Senator JoAnne Buth from Manitoba.
Senator Eaton: Nicole Eaton from Ontario.
[Translation]
Senator Maltais: Senator Ghislain Maltais, Quebec.
Senator Rivard: Senator Michel Rivard, The Laurentides, Quebec.
The Chair: The clerk tells me that Dr. Sylvain Charlebois, Associate Dean of the College of Management and Economics at the University of Guelph will give the first presentation.
[English]
He will be followed by Mr. Mel Fruitman, Vice-president of the Consumers' Association of Canada.
[Translation]
Mr. Charlebois, the floor is yours.
[English]
Sylvain Charlebois, Associate Dean, College of Management and Economics, University of Guelph: Thank you, Mr. Chair and committee members. It is a privilege to be here this evening to discuss food safety and food traceability. These are important matters, as far as I am concerned, for this country, and I am privileged to have been asked to provide some advice and my comments to the committee.
Food traceability is undeniably a very powerful tool to mitigate risks across food supply chains. However, make no mistake: Traceability does not guarantee food safety. Even so, the challenge of tracking food products and ingredients upstream and downstream touches on the core of what is required to manage risks posed by the new normal in the business of food and agriculture.
This proverbial new normal presents a number of fascinating issues to contend with, among those being designing comprehensive strategies in the field that are built to effectively cope with climate change; the question of economic trends, subsidies and currency wars; and ever changing federal regulations on food packaging, labelling and safety of trade negotiations.
None of these factors can ever be controlled by farmers or corporations, insofar as they create tremendous volatility in the marketplace, rendering predictability a rare commodity in decision making. Obviously, all choices in this field have always been inherently multi-dimensional, but the erratic macro environment of the field has made it an ongoing challenge to remain strategically focused in agribusiness.
The politics of food is also at the forefront of agribusiness and food safety. Food, agriculture and policy have never been mutually exclusive entities, and companies are now compelled to appreciate how one variable can have a significant effect on another while worrying about the next quarter. More consumers are now eating with a conscience and as such are looking for fair trade products and organic or locally sourced foods and ingredients.
The ethical treatment of animals has also caught the attention of some executives in the field. To complicate things further, the global food security agenda is also exercising some pressure on modern food systems. The objective of keeping input costs down and profit margins up is no longer enough to deal with these problems. In food production, we have now entered the era of sound partnerships, efficient networks and global outreach.
The new normal in food and agriculture will demand more collaboration between stakeholders. This entails that competing businesses will need to share data and costs as well as build strategies set on converging interests. While it is quite exceptional for corporations to conduct business in this manner in this country, in the future, sustainability methods in agribusiness will require such a paradigm shift. In the end, effective food traceability methods will rely heavily on increased teamwork amongst former rivals.
Our food safety agenda is affected by all of these shifts currently, both large and small. The same can be said of food systems themselves, which are also being fundamentally challenged. Over the last few years, Canada has witnessed, per year, over 2,700 food safety investigations and over 250 food recalls, on average. Indeed, over the past four years, the number of food recalls has increased by more than 200 per cent. We must also take into consideration the number of unreported incidents. These statistics clearly indicate how different our approach to risk management must now be.
Moving forward, we need to decide carefully how to monitor risks. What we gain in food surveillance we may lose in food distribution efficiencies. In other words, with more food safety regulations and food traceability, we may see a rise in the price of food in this country. Nevertheless, in following the tide of the new normal, food traceability should remain a priority for our country, as suggested by Canada's framework in agriculture, Growing Forward 2. We risk too much by ignoring the potential consequences.
Up to 2009, we experienced what I would call the era of crises in food safety, including mad cow, salmonella, botulism, listeria and E. coli just recently with XL Foods. Since we were focused more on managing fears than managing risks, politics continually trumped economics in these incidents. The following years marked an era of learning and prevention, from approximately 2009 to 2012. We witnessed a developing synergy between industry and government and health and agriculture that remains ongoing to this day.
In 2013, this year, we are now at the dawn of what I would consider to be the era of accountability in food safety. Given our government's limited capacity to create new food safety programs, the industry is now compelled to become more accountable to government. We also need to find ways to make government more accountable to the public, but most important, we need to make sure that the industry is more accountable to itself, which is why traceability is imperative for the future of global food safety systems. Indeed, our ultimate objective should be transversal food traceability systems connecting both ends of the food safety continuum so that we can trace and track products and ingredients around the world in real time. It is technologically possible.
A recent phenomenon, however, has made the case for more robust food traceability even more compelling: food fraud. In light of the European horsemeat scandal, food traceability is now being considered an ideal mechanism to safeguard consumer trust. For years, food traceability has been almost synonymous with food safety, but the tides of consumer expectations are rising rapidly, and we should prepare to manage and direct that flood.
In conclusion, while the system has solved many aspects of traceability, significant challenges remain to provide cost-effective protocols for market assurance and product improvement. Based on economics alone, the time to improve our systems will be set by consumers, and that time, evidently, is now.
Mel Fruitman, Vice-President, Consumers' Association of Canada: Thank you. The Consumers' Association of Canada is pleased to have this opportunity to present its views to the Standing Senate Committee on Agriculture and Forestry with respect to traceability.
For over 65 years, the CAC has represented the interests of ordinary Canadians in their role as consumers of goods and services as provided by both the public and private sectors. Our mandate is to inform and educate consumers on marketplace issues, to advocate for consumers with government and industry and to work to solve marketplace problems in beneficial ways.
The recent passage of Bill S-11, providing the capability for regulations to be made regarding the traceability of any food commodity, along with the previously made announcement of the Canadian Agri-Traceability Services, CATS, has the potential to ensure that the food we Canadians consume is "safe."
From our perspective, traceability is the keystone to a fully functioning regime of consumer protection. Without it, the potential exists that when a harmful situation is identified, we do not get to the root of the problem. It would be somewhat like a doctor informing the patient that he or she has removed the visible manifestation of cancer but has no way of knowing where it originated or if there are more cells waiting to proliferate.
Again, our perspective is that of the consumer, the person who actually consumes what the agri-food industry produces. As Senator Duffy has noted in previous testimony, we want to see a system that goes all the way from the farm right to the fork so that it can be triggered instantly, as soon as something comes up.
We are concerned that the driving perspective is one from the industry, with consumer protection being almost an afterthought. In fact, in recent testimony before this committee, after much time had been devoted to why traceability is good for the industry, it was not until Senator Robichaud noted that this also has a consumer protection aspect that the term finally appeared.
Industry and much of government, including the CFIA, focus on "food safety" in the context of keeping all doors open for the sale and export of our foodstuffs. Most of the discussion has related to meat, primarily beef. While there is nothing inherently wrong with the profit motive, as the driver it colours the approach to finding a solution.
Some would argue that food safety and consumer protection are one and the same. There is no question that there is significant overlap. However, the different perspectives can and do cause confusion. It is most likely that any national traceability system that comes into being will be administered by the CFIA. We have previously expressed our concerns that the CFIA is hampered in the administration of its duties by having two mandates: promotion — food safety in the current context — and consumer protection.
The preamble to the Canadian Food Inspection Agency Act in the second listed "whereas" states:
. . . consolidation . . . will contribute to consumer protection and facilitate a more uniform and consistent approach to safety . . .
Further down it notes:
. . . the Government of Canada wishes to promote trade and commerce . . .
In conversations with senior CFIA personnel, we learned that currently consumer protection falls under food safety, but they are considering having it as a separate subactivity within food safety. They have got it backwards. Consumer protection is the prime overreaching term and it is all-encompassing. It should not be subsidiary to anything that CFIA does, and food safety also obviously falls within the aegis of consumer protection.
While we recognize that devising a tracing system is not a simple problem, it is probably not as complex as it would appear to be judging by the number of committees involved. In fact, we fear that that multiplicity is a hindrance. Each group trends to approach the problem with a different emphasis and, indeed, bias depending on the composition of the group and its sponsors. Unfortunately, one immediately thinks of the billions of dollars wasted by the federal and Ontario governments in recent years developing systems that still did not deliver the desired results. Only somewhat facetiously I would suggest these are all systems that could probably have been designed by three or four teenaged hackers during their summer vacation.
There are currently many organizations tracking the movement of shipments, some as big as box cars and others as small as auto parts. FedEx, for example, tracks over 3.5 million packages worldwide per day while the much larger UPS ships over 15 million per day. Surely there are enough similarities between the various requirements to learn from existing systems without great expense and spending years of time in development.
From our reading of existing documents it appears as though the cattle industry has been working on traceability since 1998 when it established the Canadian Cattle Identification Agency, with much of the emphasis being placed on tags. It has been stated that the three pillars of traceability are animal identification, premises ID and animal movement. A previous witness noted that "the industry sees traceability as an insurance premium" and, further, that it will "hopefully open up trading faster." He also stated that "it is important that we not slow down commerce at any stage." It appears that the current focus on tags and traceability does not go all the way to the fork, but, as stated, "once it gets to the packing plant, that is as far as we go. What happens inside the plant will be up to the individual companies."
It is quite apparent that the objective of the traceability system is to protect producers, not to provide consumer protection. Even the aforementioned CATS announcement indicates purely an industry perspective. In the words of Mr. Lemieux, "This investment will help track information, ultimately protecting the bottom line of our . . . animal producers."
It is our fear that this limited focus, including that on the three pillars, is in fact inhibiting any creative thinking on what a good traceability system should look like. It appears that development is process rather than results driven. I am sure the industry would disagree, but their result is proving to out-of-Canada buyers that their animals are safe and should continue to be purchased. We suggest that focusing instead on consumer protection would retain more of a focus on and a more imaginative approach to determining what information elements are necessary to backtrack to the source of a problem. The five Ws that we always hear about in terms of the media would apply here: who, what, where, when and why, supplemented by how.
We do not dispute that the three pillars are and would be essential pieces of information and that a tag of some sort is necessary, but shifting focus away from the tag as the prime element to one of its being a means to the end of having an information database suitable to deal with all situations and all livestock would better serve both industry and consumers. It would also facilitate development of the linkage between producer and processor tracking systems and even have utility with respect to other foodstuffs.
As a last thought, the role of government with respect to industry should be to create an environment for growth and profitability benefiting all Canadians and not to introduce impediments. As far as we are concerned, consumer protection is apolitical, hence pressure group neutral, while protecting industry introduces a major political element. My colleague touched on that a bit as well.
Thank you for the opportunity to present our thoughts. I would be pleased to answer your questions.
The Chair: Thank you, witnesses.
Senator Plett: I apologize for being late. I missed half of your presentation, but I will certainly read it.
Mr. Fruitman, I agree with you that the end game should be consumers. I do not think anyone disagrees that it is the consumers who need to be protected. You were quite clear that it should not be driven by profitability. However, in my opinion, that kind of makes the world go around, and being profitable should not be wrong. You intimated that CFIA is not the correct organization to administer the program, and yet CFIA, clearly a government organization, would not be driven by profitability.
You told us a whole lot of things that should not be done, but I did not hear any positive suggestions on what we should be doing, how we should protect the consumer and where we go with traceability in protecting the consumer. You have the five Ws there, yet you did not come up with any answers. I would like you to give us a very short Reader's Digest version of what you think we should be doing instead of what is being done wrong.
Mr. Fruitman: First, I did not say there is anything wrong with profitability or the profit motive. I am a good right winger; I fully promote that. However, in this context, when profitability is overshadowing consumer protection, there could be a problem.
In terms of solutions, I do not purport to have the answers. I do have some thoughts, which would take me a while to explain, but I am not an expert on traceability by any means; I am not an expert on how the system functions. My reading suggests to me that, having developed the tag, they are wed to that system as the mainstay of how we track movement, rather than going to the end and identifying the types of problems that we have. We have E. coli, BSE, salmonella and whatever else there is. We should then identify the factors that cause these problems and how they are transferred from one animal to another. We should then build a database that allows one to work backwards through the system. If something is transmitted during commingling of animals, one needs to know where the animals were commingled. Database capabilities are such that you could easily go into the system and find out where the animals came together.
I am trying to give a quick overview, as you asked.
It just seems to me that work is being done. Again, I may have missed something in my reading over the past few days, but they are building on a system and thinking that started out 15 years ago, without perhaps realizing, as is often the case, that if you are working in incremental steps, what is the next thing we do to try to achieve our objective without sometimes going back and saying, "Well, there was a fork in that road; we did not that take that fork." Maybe we should reinvestigate whether that was an appropriate fork to take.
I am not getting the sense that they are looking at it from a total system perspective possibly because of the various interest groups, and that they have not really taken into consideration all the developments in technology that have taken place in the last 15 years.
Senator Plett: In light of time, I will not even have a supplementary question. I do suggest strongly, sir, that if you have a list of suggestions that we could pursue, you give us through the clerk five, six or eight bullets about what direction you think we could go, and we would be happy to look at that for the report.
Mr. Fruitman: Certainly.
Senator Callbeck: Thank you both for your presentations. Dr. Charlebois, you mentioned here that consumers are now eating with a conscience and as such are looking for fair trade products, organic and locally sourced foods and ingredients. Do you have any facts to back that up? I have heard it said a survey will make it look as though that is the trend, but when people get into the grocery store price is the number one issue.
Mr. Charlebois: I cannot disagree. Price remains the number one driver when it comes to decisions in grocery stores, absolutely, but the market is fragmenting more and more. I could actually add on halal foods and kosher. If you go to Toronto you can see what Canada looks like today. Canada is a very complicated marketplace, considering we are only 34 million people, so distribution channels are quite complex to serve only 34 million people. Down south they have 300 million consumers to serve. Of course with population density it is much easier to serve fragmented markets per se, but there is a trend towards fragmentation. The evidence is quite clear, actually, when you look at different studies. Consumers are looking for different things for different reasons, more and more, and that complication actually filters through the entire supply chain up to the producer. More and more, when I travel around the country, I see more and more farmers starting to become more interested in what goes on here in grocery stores. Twenty years ago, farmers really were not that interested. They were probably a little bit interested or intrigued, but now they are actually looking at the data to see what they should grow, how they should grow it, to actually respond to market needs more efficiently.
Senator Callbeck: Do you have any comment on that, Mr. Fruitman?
Mr. Fruitman: Only basically to agree with Mr. Charlebois that sometimes what people say they want and what they do are quite different. When they go into the grocery store they do shop by price, although more and more of them are paying attention to these various elements. Maybe part of it also is a realization that as food has become an international commodity, and there is this locavore movement, people realize that maybe food is not as good as it used to be. All of these things that Mr. Charlebois has mentioned are coming together, which increases the complexity of the marketplace. Every supermarket can survive only by knowing exactly what its clientele wants because it is probably different from the ones two miles away.
Senator Callbeck: I want to ask about the new norm in food and agriculture that will demand more collaboration amongst stakeholders, and you talked about sharing data and costs. Why do they have to share costs?
Mr. Charlebois: I appreciate that you picked up on that because that is an important issue in traceability. The number one concern that I have with traceability is that you are dealing with diverging interests. When you look at supply chain management you look at farmers, processors, distributors, wholesalers and retailers. They all have different interests, and they are dealing with different market dynamics. Some of them are price takers; some of them are price setters. To build consensus around food traceability has been challenging not only in this country but also around the world. We are not alone in this. All across the world countries have gone through the same process.
The challenge we have in Canada is that we do not have population density. We live in one of the largest countries in the world. Logistics go hand in hand with traceability, and we do not have logistical capacity in Canada to serve consumers well. It costs money to run highly efficient logistical systems.
All these things put into one basket makes consensus building around food traceability very challenging. There are government-funded programs to identify livestock, for example, which has been helpful over the years, but traceability is not just identification. It is more than that. It is about sharing data across the continuum, and I would include the consumer. In my mind, a consumer who has yogourt in his or her fridge that has become rotten should know. We should have a label telling the consumer that that yogourt is not safe to eat. That technology exists. The issue is that it costs money, and when you have conversations around cost with farmers, distributors, all the stakeholders and the supply chain, you can never get consensus on who is going to pay. That is a huge challenge.
The one recommendation I would provide to this committee right now would be to set up fiscal incentives to build that consensus. If we do not do that, we continue to nurture that culture of punishment in food safety — if you do not obey the rules, if you do not follow the regulations you will be punished. I would argue that we should reverse that trend and reward those who do want to behave correctly in order to build that consensus around costs and data sharing.
Senator Callbeck: Have you had any discussion with the stakeholders in the industry?
Mr. Charlebois: Yes, many times. I am sure many of you have witnessed these discussions on food safety and food traceability. I have been involved with OnTrace in Ontario, and in Quebec as well, ATQ, Agri-Traçabilité Québec, and it has always been a challenge to build some consensus. It is producer-driven with their own agenda and saying, "How dare you not follow our system." Of course you have the channel captains, the ones that really dictate how we eat in this country, which are the distributors and retailers, including Loblaws, Sobeys, Metro, Safeway and Costco. Eighty- five per cent of everything we eat is right there. They have to get along with everyone else. Right now I am afraid they do not.
[Translation]
Senator Maltais: You know that Charlebois is a well-known name in Quebec in other fields. You are a distinguished researcher and a major contributor to the food guide that is very useful for a lot of Canadians.
I just have one question. We are on the eve of a free trade treaty with Europe. If we look at what the French put on their plates, I wonder if they might do well to read your book Not On My Plate.
Is the traceability in Europe at the moment the same as ours, or better?
Mr. Charlebois: We have asked ourselves that question, starting in 2006, when food safety started to become a major focus for the media. I was in Saskatchewan at the time and we asked ourselves the same question: whether we are better or worse than other industrialized countries.
The answer is no. In food traceability, Canada is behind Europe in general.
Senator Maltais: I am going to stop you there and tell you that our mandate is to study innovation in the agricultural sector. We are relying on Canadian researchers — you are not the first one we have had here — to guide us in our search for an outstanding method of traceability. I am not talking about the other part, I am talking about traceability, which is very important because things are now moving between continents. We are relying on researchers such as yourself, from universities like Guelph, Montreal, Winnipeg, all Canadian universities. Can we achieve a method of traceability equivalent to the one in Europe in a reasonable time?
Mr. Charlebois: That will need a lot of hard work. My view is that the government has to play a facilitating role in innovation. We need technologies to achieve effective traceability. The problem, as I mentioned earlier, is the cost.
Last week, I gave a presentation to about 400 food safety experts from across North America. I was talking about food prices, about free trade, about all sorts of things. Next to my room was a room full of suppliers, companies that have developed some amazing technologies allowing effective traceability from producers to consumers. We have the technology. We have a number of them.
In the report I submitted to you, I mentioned some of them, but there are hundreds. IBM was probably one of the first companies to extol the merits of its system. There are so many systems, but the problem is that the industry is not committing to one particular technology because of various competing interests. Whether they develop something internally or whether they buy it, they are going to keep it for themselves and the information will not be shared from the top to the bottom of the chain.
Senator Robichaud: Mr. Charlebois, you have sung the praises of the European system. Senator Maltais asked you what we need to get there. My question is a simple one: have we found the horse that started the horsemeat affair in Europe? They got to a certain point, but then things stopped, am I right?
Mr. Charlebois: Absolutely. Agri-Traçabilité Québec is a system funded by Quebec taxpayers and producers to the tune of $22 million over five years. The system is extremely expensive, but it is effective.
Senator Maltais: We would have found the horse together.
Mr. Charlebois: You know, once the animal itself is off the hoof, if you will, once it is in the slaughterhouse, the system no longer works. Things get complicated. The ground meat in the stores can easily come from five or six different animals.
Senator Robichaud: They are not more efficient than we are?
Mr. Charlebois: The advantage in Europe is that rural areas and urban areas are closer together. They also have a continent-wide approach to food safety, which we here in North America do not. We still cannot come to an agreement with the Americans on the safety of jujubes. That is a simplistic example, but it is true. When I talk to the Americans — the USDA, the FDA — they claim that their standards are better than ours, and it is like that all around the world. When I published my ranking list of countries, I got mail from the country at the bottom of the list, Italy. They took offence. I am not suggesting that you can die from food poisoning in Italy; I am just saying that the practices seem better elsewhere.
We in Canada cannot preach to anyone about traceability. We must not forget that we are just to the north of the United States and our economy is very closely tied to theirs. So if we are going to put a traceability system in place in Canada, the Americans have to follow suit because we import a lot of food here in Canada.
[English]
Senator Merchant: Are you aware of any initiatives — and you touched on this just now — to at least harmonize traceability between the U.S. and Canada? You are talking about food moving across the globe; but even just with our best trading partner to the south, are you aware of some initiatives that are being undertaken?
Mr. Charlebois: There are some, and the Global Food Safety Initiative could be one. Most of these initiatives have been commodity-based, generally, and have not been particularly systemic. The CFIA is in talks with our American friends all the time. The problem comes down to economics: Who will pay for the system? What standards should we implement? Which stakeholders in the supply chain should use these standards? To build consensus around these issues has been very challenging. We have been working on this for 30 years. If we had a solution, we would have implemented it by now. The problem comes down to one thing — cost.
One thing that we should underscore this evening is the fact that consumers — sorry, Mr. Fruitman — implicitly put a tremendous amount of pressure on food systems because they expect low prices and affordable foods. If you look at grocery baskets around the world, you will find that the cheapest grocery basket is in the United States. The second cheapest is in Singapore and the third, you guessed it, is in Canada. Of the top three countries in the world, two are in North America: Canada and our neighbour to the south. Slowly we are seeing evidence of consumers wanting to invest more in nutrition, but that slope is not very steep. There is momentum in that consumers are paying more and more for food but not nearly enough to warrant more investment in food traceability. That seems to be the issue.
Senator Merchant: Younger consumers are much more aware of these kinds of things, but perhaps they do not have as much money to pay for the foods that they would like to eat. I have noticed with children and their friends that they are much more interested in organic foods. You never talk about traceability with fruits and vegetables — we always talk about animals. Why do we not pay some attention to the traceability of fruit and vegetables?
Mr. Charlebois: We do that. The biggest challenge is identifying what a lot is for the various products, such as beans, lentils and others. It is always difficult to agree on what a lot is when you trace and track products across supply chains. When you get into processing, things get really difficult to handle. Livestock is a different beast, no pun intended, than vegetables or fruits. Of course, these industries are quite significant for us, and the stakes are very high.
[Translation]
Senator Eaton: Following up on the question from my colleague Senator Maltais, is the topic of agri-traceability in free trade contracts part of the negotiations with Europe?
Mr. Charlebois: Not that I am aware of. I know that the BioLibrary is involved, tracing GMOs, that is; there is a lot of talk about that. We do not hear about traceability per se, but better traceability guarantees that we are eating exactly what the label says.
Senator Eaton: That is pretty important.
Mr. Charlebois: It certainly is.
Senator Eaton: Especially if we are getting into negotiations with Japan, Korea and the other countries of the Pacific. You say that Europe's traceability standard is very high, but are those other countries at the same standard as Europe?
Mr. Charlebois: Let me take Denmark as an example, because I feel that Denmark is currently the model to follow in the world.
Senator Eaton: Denmark is a small country.
Mr. Charlebois: It is just to give you an example. Of course, we are not there and our geography is very different. But in Denmark, for any food recall, they can trace and trace back any food product in four hours.
Senator Eaton: Yes, but the whole country is the size of the city of Toronto.
Mr. Charlebois: Yes, it is. But they have been working on it for years, even longer than us. For us, theirs is practically an ideal situation. In my opinion, if we want to operate an economy that is wide open to the world, in other words, if we want to hang our hat on free trade, we should be doing it.
Senator Eaton: More and more, it is the way to go.
Mr. Charlebois: We have to have traceability. Let us say, for example, that we want to guarantee a GMO threshold, because the European market is very sensitive to the use of GMOs, so we have to do it. We have done it with organics. In Canada, we have imposed very strict standards on organics given that Europe did not want our products anymore because our standards were not consistent.
Senator Eaton: Does it not surprise you that it is not part of the negotiations?
Mr. Charlebois: Actually, it may be part of the negotiations, but I have not seen it. It is a good question.
Senator Eaton: Perhaps it could force us to change our way of doing things.
Mr. Charlebois: The problem is that we need a partnership with the industry.
Senator Eaton: Yes, but if it is in their interests, so that they can sell their food Ð
Mr. Charlebois: The government is going to the negotiating table without necessarily knowing that the industry will be there to deliver the goods, and I do not think that the industry is there. Take Loblaws or Sobeys, for example; they have a good traceability system, but their system does not communicate with the others. You can guarantee that each purchase authorization comes with limits, and that is where the problem lies.
Senator Tardif: Professor Charlebois, you mentioned that, in recent years, the number of recalls of food products in Canada has considerably increased. You indicated a 200 per cent increase in four years. Do you have any reasons that could explain that increase?
Mr. Charlebois: We are managing the risks differently. Personally, unlike a number of other people, I am reassured by the fact that the number of food recalls has increased. We could get alarmed by the thought that there are more food recalls, but our collective wake-up call came with Maple Leaf in 2008. I believe that it was the first food recall that really hit home for us as Canadians; we had no one else to blame.
With mad cow, we pointed the finger at Europe. With the salmonella, the E-coli in the spinach and so on, we said each time that it came from the United States. Maple Leaf was ours, and ours alone. That recall caused 22 Canadians to die. Since that time, people have been working with the Canadian Food Inspection Agency and I can tell you that the risk management methods are very different from five years ago.
I hope that, in five more years, we will manage risks differently again, because the risks in the system are constantly changing.
Senator Tardif: Can you give us any more details about what you mean by risks? For us, the point is that we are more reassured because we are more vigilant. Is it reassuring to see an increasing number of food recalls?
Mr. Charlebois: First, there are risks in the system, including the import of food because of free trade. Once again, we want to serve the consumers, to provide a greater variety. Climate is changing and climate is a huge issue in food safety. We do not see it often, but it has a huge effect on our way of producing food.
For example, there can be an E-coli outbreak more easily because of heat. That is one aspect that changes the risk level. The other factor is our tolerance threshold. I believe that the average Canadian consumer is less tolerant and more demanding. Consumers would not put up with getting food poisoning.
They will report it if ever they fall ill because of something they have eaten at a restaurant or at home. My opinion is that they are more and more inclined to report it than previously because it is something they hear about more and more.
Senator Tardif: Thank you. Mr. Fruitman, do you have anything to add on that subject?
[English]
Mr. Fruitman: No, I cannot expand beyond what Mr. Charlebois said.
Senator Buth: I am curious about the comments about European systems having better traceability and especially about Denmark kind of having that ideal system. Is their food any safer than Canada's?
Mr. Charlebois: I cannot speculate, really. First of all, we look at third-party data. We do not assess; we do not go out and run surveys or anything like that. We go with 10-year trends, so we look at traceability practices and policies. What we try to assess is how countries behave or react to new systemic risks in general. I would say, looking at Canada with mad cow, for example, that I think we did a poor job from 1996 up to 2003. We saw Britain being hit hard by mad cow. When you look at our policies, we did not really make significant changes to how we were assessing the chances of being hit by mad cow up until we were hit ourselves. Then, $4 billion or $5 billion later, we made some significant changes.
Those are the kinds of things we assess. We saw, in the case of Denmark, that they really focused on one commodity, which was hogs. The hog industry was used as a model to implement traceability across all of the commodities in Denmark.
Going back to your question, of course Denmark is way more manageable than Canada, and of course Europe is more of a closed market than we have here in Canada. In essence, it is much easier to implement, but we can learn from what they do there. I think they do it well.
Looking at North America, as I said earlier, we have access to sound technology in this country. It is already there, and every week I have a private company calling me to showcase what they have done or developed, asking my advice or my opinion. I have to admit that I am always impressed with what I see.
Senator Buth: Does that go back to your comment about balancing traceability or food surveillance with the price of food? There might be innovations out there, but why are they not coming to market?
Mr. Charlebois: Because traceability is arguably the first concept in agriculture that is forcing stakeholders to get along, to share sensitive data. If a recall occurs, what is going to happen? Who is going to be accountable toward the consumer in the end?
Senator Buth: What I am getting at is the following: Why is the technology you are seeing on a regular basis with the companies coming in not being adopted?
Mr. Charlebois: The scope of the technology goes beyond the corporation interested in that technology; you see? You are dependent upon sharing of information, and sometimes sensitive information.
Senator Buth: Competitive information.
Mr. Charlebois: Exactly. Industry is very sensitive to that. If all goes well, and if the tool is utilized to market the supply chain, then the tool is formidable. However, if something goes wrong, do you believe that wholesalers or processors are willing to bear the burden of a food recall as much as what Loblaws is doing right now? When there is a food recall, regardless of the product — XL Foods, for example, last fall — it cost a lot of money to retailers because they were the ones dealing with the consumer in the end. XL Foods does not transact with consumers. When I go back to dynamics and different realities within a supply chain, that is what I mean. That is why you need consensus on what kind of data you will share and who will pay for them.
Senator Buth: Does that occur in Denmark?
Mr. Charlebois: Yes.
Senator Buth: How do we get that in Canada?
Mr. Charlebois: As I said, I think the government does have a role to play as a facilitator. I do not think the government should be paying for the system, because if you allow the government to pay for the system, you will not have stakeholders who will care about the system. I would argue this is the case in Quebec with ATQ; stakeholders have this system in place and there are tremendous amounts of data, but there is no central buy-in in ATQ. You may talk to someone else and they may argue something different, but I do not see it.
You need industry buy-in. They will make it happen; they will deliver. However, you need the government to facilitate that consensus-building process.
Senator Buth: Who pays in Denmark?
Mr. Charlebois: It is mostly industry. It goes in cycles. With food safety, we are dealing with cycles and eras. That is why I talk about eras. When it comes to innovation, government always bears the cost at the beginning, and then the industry takes over. That is exactly what happened with Denmark. The government basically was utilized as a catalyst for change.
[Translation]
Senator Rivard: We have to understand that the traceability system in animal production works pretty well in Canada, even though it is not perfect.
But a month or so ago, we became aware of a report about pre-washed lettuce that Health Canada had tested in Waterloo, Ontario. Out of 544 bags, more than 10 per cent were totally unfit for consumption and could cause intestinal problems with all the difficulties that can bring about. Of those 544 bags, 500 came from the United States, 30 or so came from Canada and the rest came from Mexico. The percentage that was unfit was about the same. If we are successful with our traceability with animal production, should we not impose the same system for other food products, whether Canadian or imported?
Mr. Charlebois: Once again, a food traceability system is not a 100 per cent guarantee of food safety. We must not make the mistake of thinking that it will guarantee anything. It gives us the tools to recall food more quickly and more effectively, so we can trace foods and the ingredients they contain upwards and downwards. That is what traceability does. It could not prevent what you mentioned from happening. I am aware of that report and I believe that there are underlying infrastructure problems. Basically, the lettuce was washed with dirty water, so there you are with another food safety problem. Food traceability must be imposed for good reasons. To start with, it is about providing better transverse management of the food industry, but there is also the question of the integrity of the food itself.
At the moment, we may chuckle a little about the horsemeat and the scandal in Europe. I am often asked about whether it has ever happened in Canada. My answer is simple: I do not know. But I can say with confidence that there is presently nothing to prevent it happening, and traceability could.
Senator Rivard: My other question is precisely about that good old horsemeat. I was surprised to hear about the scandal in France when they found out that there was horsemeat in their lasagna instead of beef or some other meat.
Mr. Charlebois: In England, yes.
Senator Rivard: My question is mostly for the professor, but why are consumers so squeamish about horsemeat? Is it because it tastes different than beef or is there a sympathetic reaction because a horse is practically a pet for a lot of people who like to ride for pleasure or as a sport? Can eating horsemeat harm your health; does it taste really different from beef?
Mr. Charlebois: Horsemeat poses no food safety risk. I am from Quebec and we eat horsemeat in Quebec. It is just a taboo, you know. But food fraud is showing a lack of respect to what consumers are looking for. Even though horsemeat is normally more expensive than beef. Economically, what happened in Europe makes little sense and I cannot wait to read the reports of the investigation. At the moment, consumers are staying away from meat in Europe. A few weeks ago, I was having a bite with two industry people from England; their sales are down 40 per cent in some areas.
So first, there is a loss of confidence among consumers. Then — and this will do even more harm — there is a loss of confidence in the food chain. Trust is lost and more detailed product descriptions are being demanded. For more detailed product descriptions, you need food traceability. Tesco is one of the biggest distributors in Europe. The first thing their president said to the media was that they were going to improve their food traceability, but that it would mean having to pay more for food because it was going to cost money.
Senator Rivard: So it is a taboo. I suppose we can compare it to some countries in Asia where they eat cats and dogs. It would never occur to us to eat meat from animals that are our pets.
Mr. Charlebois: Because it is a culinary taboo for us. We were not brought up that way. In Canada, if the label says "cat" or "dog," we have the freedom to choose. That is not what happened in Europe; there the consumer was deceived.
[English]
Senator Duffy: Thank you very much, Mr. Chair, and thank you to our witnesses for coming and helping us with what looked like a simple issue when we began, but it becomes more complex with more witnesses.
Mr. Fruitman, I would like to bring you in on this from the consumers' point of view. First of all, does the CAC at the moment have any concerns about what people are eating tonight on their plates? This is just getting back to all of what we have heard about that happened in Europe and so on. Are you generally satisfied with the state of the food that we have in Canada?
Mr. Fruitman: I would say that, generally, yes we are. However, as Canadian consumers, we are under the delusion that everything that we do, everything we buy in the marketplace, whether it be food or anything else, is safe and is not going to do us harm. We assume because it is allowed to be sold that somewhere back there in the government someone has determined it will not do us harm.
Senator Duffy: I am reminded, hearing this discussion tonight and previous meetings, about the argument over seat belts: If we are going to put seat belts in cars it will raise the price of cars; it would not be good for consumers. Now no thinking person would drive without a seat belt, and it is part of our daily lives. Do you see a parallel here in terms of educating the industry that sometimes there are changes you have to adopt if your product will continue to be acceptable to consumers?
Mr. Fruitman: Yes, definitely. I am not sure I would use seat belts as a parallel, but yes, I agree. I also agree with similar points that Mr. Charlebois made about the industry needing the fiscal incentives. Somehow we must overcome the element of competition between the suppliers of the information, but also because anyone who thinks they will go it alone will incur some sort of cost on their own, which will put them at a competitive disadvantage to someone else.
I also think this whole discussion about cost is very much overstated. I think that we are —
Senator Duffy: How much could it be per unit of whatever it is we are buying?
Mr. Fruitman: Yes, how much would it cost to set up a system? What is the capital cost to set up a proper, functioning system, and then what are the ongoing maintenance costs? I suspect that in context it is very nominal. It will not mean that our food prices will go up 10 per cent, 5 per cent, and I doubt even a fraction of a per cent.
Senator Duffy: It seems to me this is the wave of the future. When I look at this bottle, someone paid over $1 to buy a bottle of drinking water. Twenty years ago would anyone have believed that consumers would be prepared to pay money for this kind of product? Obviously the market decided there was a market for this because people did not feel that what they were getting under the old system was to their liking or guaranteed to be of the standard they wanted.
Mr. Fruitman: Or it is good marketing.
Senator Duffy: Is there a marketing opportunity here for the food industry? I fear the next time we have an outbreak — and one will come because no system is perfect — we will once again see this 40 per cent downturn as we saw in Europe. Do we have to wait for another crisis to get the industry to get together?
Mr. Fruitman: I certainly hope not, and I really am concerned about the time frames the industry seems to be talking about. They are talking about another five years before they get anything much going, and still it will not be a complete system. Again, there this element of competition that obviously exists, and there is nothing wrong with competition by any means, as there is nothing wrong with profit. However, I fear — and I alluded to it earlier — that this multiplicity of committees seems to me to be an impediment rather than a means to an end. They are going to stop things from happening because everybody is going to be taking their own parochial position vis-à-vis everybody else. Will they come to any real conclusion or consensus?
Senator Duffy: What should this committee recommend, in your view? Farm to fork?
Mr. Fruitman: Absolutely farm to fork, but I will come back to what Mr. Charlebois said. I think there are stumbling blocks here, and Mr. Charlebois has mentioned most of them. There needs to be some way of basically kicking the industry in the butt and saying, "Get on with it. Do not keep putting up impediments. Do not say you cannot incur the cost," because ultimately if the costs are shared, I think they will be nominal. Let us sit down, maybe even throw away a good part of what has been done before.
I think they started on a path 15 years ago and are continuing down that path without stopping and asking if we are doing the right thing and if our approach is the right one. Should we be looking at this in a different context and in view of what else has been done by other industries with respect to tracing products, items as they move through the system? It seems to me there is so much more available now than there was when this process started, and I do not think it has been properly taken into consideration.
Mr. Charlebois: I have two comments.
The Chair: We will recognize your comments, sir.
Mr. Charlebois: Going back to your question, senator, there are such things as best practices around the world when it comes to food traceability. I have been to Italy, France, Britain, Finland, the United States and all the countries that we have included in our survey. Every time I heard the same thing from regulators, those paid to protect consumers. I have heard on many occasions there is no such thing as best practices because in our country we know best. It is true. For them to say, "Let us benchmark our performance with other countries, shall we" is something that is absolutely unnatural to them, to us. Even for the CFIA it is absolutely unnatural. When I talk about paradigm shift, we need to do that, open up and see what goes on elsewhere.
My last comment is about food prices, and I really want to make a very solid case on this point. I want to use the example of Loblaws, which is our biggest food distributor in the country. Last year, Loblaws hovered around $33 or $34 a share forever, for months. When you look at Loblaws' books and at their real estate portfolio, in essence their real estate portfolio is worth about $32 or $33 a share. Just think about that. This means that the market is telling Loblaws that their food business is worth barely $1 or less. In December, Loblaws spun their real estate business and created a real estate trust. Now their share is at about $42 today. They created value not because of food, but because of real estate.
I am using this example to show this committee the amount of pressure the industry is under. If we are to look at food traceability — which I think we should — we need to keep that in mind.
The Chair: Mr. Fruitman, do you have any comments on the last remarks?
Mr. Fruitman: I was going to offer a facetious comment. Mr. Charlebois, are you suggesting that Loblaws should get out of the business and turn it all over to Walmart?
The Chair: We will not go there, but in concluding the committee tonight, the last question is to Senator Robichaud.
Senator Robichaud: I have a very short question, Mr. Fruitman. You say there are a few committees and everyone has their own way, and somehow someone should do some kicking to get things started. Who should kick-start the process?
Mr. Fruitman: Obviously the work of this committee will help that. Perhaps you can come to some conclusions after hearing more witnesses and getting more information. Perhaps the starting point is to say here is a path which can be taken. We have already gotten some suggestions from Mr. Charlebois that are helpful, and maybe it also needs people like him. I am not part of the industry; I am a consumer.
Senator Robichaud: You want protection. You are a consumer, but you also want to be protected.
Mr. Fruitman: You are asking how this can get kick-started. They need to be brought to the table and somehow told that it is in everyone's best interests to get on with this, to stop dilly-dallying and to not drag this out forever. Somewhere along the way you will get hit with another XL, another Maple Leaf Foods, another BSE. I think you said BSE cost us a billion dollars. That is a lot more than the traceability system will cost them.
The Chair: Thank you very much. On behalf of the Standing Senate Committee on Agriculture and Forestry, we want to thank Dr. Charlebois.
[Translation]
I would like to thank Mr. Charlebois for being with us this evening. It was a great presentation.
[English]
Mr. Fruitman, thank you for sharing your thoughts and also demonstrating that you are there to listen to the consumers as we move forward in agri-food.
(The committee adjourned.)