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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 20 - Evidence - Meeting of June 28, 2012


OTTAWA, Thursday, June 28, 2012

The Standing Senate Committee on Agriculture and Forestry met this day at 8:00 a.m. to study Bill S-11, An Act respecting food commodities, including their inspection, their safety, their labelling and advertising, their import, export and interprovincial trade, the establishment of standards for them, the registration or licensing of persons who perform certain activities related to them, the establishment of standards governing establishments where those activities are performed and the registration of establishments where those activities are performed.

Senator Percy Mockler (Chair) in the chair.

[Translation]

The Chair: I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.

[English]

Also, in welcoming the witnesses, I want to take this opportunity to thank them for having accepted our invitation to appear before the committee to help us with our study of Bill S-11. We say thank you very much, Mr. Horel and Mr. Laws, for appearing before our committee today.

My name is Percy Mockler; I am a senator from New Brunswick and chair of the committee. At this point I will ask all senators to introduce themselves.

Senator Mercer: I am Senator Terry Mercer from Nova Scotia.

[Translation]

Senator Robichaud: Fernand Robichaud, Saint-Louis-de-Kent, New Brunswick.

[English]

Senator Merchant: Good morning. I am Pana Merchant, and I am from Regina, Saskatchewan.

Senator Mahovlich: Frank Mahovlich, Toronto, Ontario.

[Translation]

Senator Nolin: Pierre Claude Nolin. I represent the province of Quebec, and I am from Montreal.

Senator Maltais: Ghislain Maltais, from Quebec City.

[English]

Senator Buth: Good morning. JoAnne Buth; I am from Manitoba.

[Translation]

Senator Rivard: Michel Rivard, the Laurentides, in Quebec.

[English]

Senator Eaton: Good morning. Nicole Eaton, Ontario.

Senator Plett: Good morning. I am Senator Don Plett and I am from Manitoba.

[Translation]

The Chair: This morning, we will continue our study of Bill S-11, the Safe Food for Canadians Act.

[English]

We will continue our study of Bill S-11, the proposed safe food for Canadians act. The Government of Canada introduced the safe food for Canadians bill in Parliament to make our food safety system stronger, as well as reducing overlap for Canadian food producers.

Honourable senators, the act provides clear, consistent, straightforward inspection and enforcement rules to industry so they can best meet their responsibility to put safe food on shelves for consumers.

[Translation]

Given that consumers want safe food, they would really like Canada to adopt the appropriate legislation so they can be assured that food safety in Canada is at its best.

[English]

Honourable senators, in this meeting today we will have two panels. Appearing on the first panel this morning is Mr. James Laws, Executive Director of the Canadian Meat Council, and Mr. Robin Horel, President and CEO, Canadian Poultry and Egg Processors Council.

Again, witnesses, thank you for accepting our invitation. I have been informed by the clerk that Mr. Laws will make the first presentation, to be followed by Mr. Horel, and subsequently senators will be asking questions of the witnesses.

I would like to take this opportunity to welcome Senator Peterson to the committee, as he is the critic for Bill S-11. Thank you for being here this morning.

Mr. Laws, the floor is yours.

[Translation]

James M. Laws, Executive Director, Canadian Meat Council: Good morning. My name is James Laws, and I am the executive director of the Canadian Meat Council. Thank you for the invitation to speak to you today about Bill S-11, the Safe Food for Canadians Act.

Our meat sector is the largest in the food processing industry. It employs 67,500 people. Its sales amount to over $21.3 billion. In 2011, our sector exported $1.3 billion in beef and $3.2 billion in pork to over 120 different countries around the world. In total, there are close to 740 federally registered meat establishments that slaughter, process, quarter, bone, package, preserve or provide storage for meat and are inspected by the Canadian Food Inspection Agency.

Food safety is the top priority of meat processors. We support measures aimed at consolidating and modernizing the agency-administered legislation governing food products.

The agency currently runs eight food inspection programs. Each of them uses different inspection methods and tools. The Safe Food for Canadians Act will improve food surveillance by instituting a uniform inspection regime for all food products and increased control measures for imported food products.

The government and the industry have known for some time that Canadian legislation governing food products needs to be modernized and strengthened. In July 2009, the independent body tasked with investigating the 2008 listeriosis outbreak recommended that the government simplify and modernize the federal legislation and regulations that have a significant impact on food safety. That is the very objective of Bill S-11.

We have long maintained that the meat industry in Canada is treated very differently from other food sectors. That is why we support the consolidation and modernization of the legislation presented in Bill S-11, which is causing the repeal of the following acts: the Fish Inspection Act, the Meat Inspection Act, the Canada Agricultural Products Act and certain provisions of the Consumer Packaging and Labelling Act. But the repeal of the Meat Inspection Act, a 17-page document, is replaced by this new act, a document of over 60 pages.

There are several notable sections. First, clause 39, which deals with offences, in the bill imposes:

A person who contravenes a provision of this Act [. . .], or a provision of the regulations — or fails to do anything the person was ordered to do by, or does anything the person was ordered not to do by, the Minister or an inspector under this Act, a fine of not more than $5,000,000 or to imprisonment for a term of not more than two years or to both.

This fine, which is 20 times more than the fine imposed in the Meat Inspection Act, is very severe.

Second, clauses 52 to 55 describe incorporation by reference. They state:

A regulation made under subsection 51(1) may incorporate by reference any document, regardless of its source, either as it exists on a particular date or as it is amended from time to time.

The meat industry is the most regulated sector in the food industry. Aside from the requirements that apply to meat and food under the Food and Drugs Act and its related regulations, and the Consumer Packaging and Labelling Act, we must comply with the Meat Inspection Act and its related regulations, as well as with the standard and comprehensive requirements of the Meat Hygiene Manual of Procedures, published by the Canadian Food Inspection Agency.

The manual has 19 chapters and over 1,200 pages of text, and is already incorporated by reference in the meat inspection regulations, which are themselves 120 pages. The agency often changes sections in the manual without consulting the industry. We hope that incorporation by reference will be applied through a well-defined consultation process for the initial incorporation of the document, as well as for its future amendments, since clause 55 of the bill states:

For greater certainty, a document that is incorporated by reference in a regulation made under subsection 51(1) is not required to be transmitted for registration or published in the Canada Gazette by reason only that it is incorporated by reference.

We think that this risks becoming a vicious cycle because at least the Canada Gazette process, which is slow, is clear and well-explained.

Lastly, we want to point out that the legislation applies only to meat processors that are inspected by the agency and that export or sell their meat through interprovincial trade. The new legislation will not create a unique standard, a national standard for meat inspection. We will continue to have hundreds of meat processors in Canada operating under different inspection regimes in the provinces. We think that all the provincial meat inspection standards should be consistent with the federal meat inspection standard.

Canadians should expect that all the meat products they consume are compliant with the same rigorous standards, regardless of where they live or make their purchases.

We are willing to work closely with government representatives and officials to make sure that the new act establishes a regulatory framework that will ensure that we are competitive in the international arena and will encourage the Canadian meat industry to attain the highest standards in food safety.

Thank you for your attention. I will be pleased to answer your questions.

[English]

Robin Horel, President and CEO, Canadian Poultry and Egg Processors Council: Good morning, senators. Thank you for the invitation to provide the committee and other interested parties the perspective of the Canadian Poultry and Egg Processors Council on Bill S-11, the safe food for Canadians bill.

The Canadian Poultry and Egg Processors Council is the national trade organization for Canadian chicken and turkey processors, hatcheries that produce day-old broiler chicks, egg-laying chicks and turkey poults, egg graders and egg processors. We are now in our sixty-third year and our council has member companies in every province of Canada. In addition to representing the interests of more than 170 Canadian poultry processors, egg processors and hatcheries, our membership includes over 50 national and international partners who have joined us as associate members.

Representing some of the largest agri-food corporations in Canada, our member companies process over 90 per cent of Canada's chicken, turkey, eggs and hatching eggs. This economic activity generates over $5 billion in annual retail sales. To accomplish this, our members have invested over $1.5 billion in plants and equipment and directly employ more than 19,000 Canadian workers.

Our industry has identified food safety as our strategic priority. Canadian poultry and egg processors have long been supporters of modernizing food safety legislation and regulations as a key element in the development of a national, coordinated and integrated approach to food safety. We applaud the government initiative to update and modernize legislation, regulations, manuals of procedures, guidelines and policy decisions that affect our sectors.

We understand that Bill S-11 is designed to, among other things, create a single act to replace the various inspection acts; harmonize enforcement powers; establish new authorities to make regulations in areas identified as critical to food safety and competitiveness; introduce new offences related to tampering and hoaxes; and enhance controls over imported foods.

Our council supports the reduction of inconsistencies between and within various segments of the Canadian food sector. This legislation will allow for the respective roles and responsibilities of manufacturers, importers/distributors and CFIA in ensuring safe food for Canadians to be more clearly defined. We endorse a risk-based approach to regulations and inspection, and we understand that is one of the guiding principles behind this legislation. We are certainly looking forward to draft regulations stemming from this legislation that respect the outcome-based recognition of systems of manufacturing, preparation, storage, packing, et cetera.

Our members recognize that the assurance of food safety is primarily the responsibility of industry. We believe that this act will allow for a shift in thinking by inspectors toward verification of the effectiveness of the regulated party's controls in providing safe and compliant food.

We very much appreciate the inclusion of the prohibition on tampering, on making threats regarding food commodities and on making hoaxes related to food commodities in this act. Our industry has had to deal with malicious tampering threats on a number of occasions over the past years. These are often, but not always, focused on turkeys for sale at festive seasons at retail. We have established a superb working relationship with farmers, retailers, CFIA and the RCMP, but specialized, highly expensive insurance policies, the establishment of rewards, and in some cases destruction of product, have proven to be very costly. Our experience to date has been that we have never found evidence of tampering, but the threat or the hoax has been the issue. We certainly applaud the potential for increased fines that will come as a result of this legislation.

We work very closely with Canadian farmers through Chicken Farmers of Canada, Turkey Farmers of Canada, Egg Farmers of Canada and Canadian Hatching Egg Producers to ensure that the poultry and egg products we produce are safe and compliant with Canadian regulations.

We are pleased to see enhanced controls over imported foods to ensure that these products are also safe for Canadian consumers. At the same time, we appreciate that this act will allow CFIA to acknowledge third-party standards and certifications in their inspection programs and incorporate documents into regulations by reference. Reducing regulatory burden for my members who import as well as produce products from domestic sources, while maintaining a high level of food safety compliance, is welcome.

We note the prohibitions on sending or conveying a food commodity from one province to another contrary to the regulations or without a licence or registration. However, these legislative changes still do not address the potential problem of a two-tier meat inspection system in Canada. There cannot be a lesser standard for food safety or, for that matter, animal welfare or animal health, between small operators and large operators or between provincially inspected or federally registered plants.

We have received concerns from members about the current drafting of clause 24(2)(e) of the proposed legislation that would appear to allow any inspector in any facility to commandeer any computer at any time to access any content that is either contained in the individual computer hard drive or on the company computer system. Although the desire to assure a means of access to compliance-related data is understood and accepted, the current unlimited provision appears to be more extensive than necessary or justified. At a minimum, an inspector should be required to declare reasonable grounds to access individual computers or company computer systems that may contain primarily personal and/or personnel information as well as other information that is unrelated to compliance verification.

We welcome the creation of an appeal mechanism, particularly as a mechanism for reducing inconsistency in inspector expectations and decisions.

Finally, Canadian Poultry and Egg Processors Council wishes to work in cooperation with government officials on the development of Bill S-11 implementing regulations, guidelines, manuals of procedures and policies.

I wish to thank the committee for the opportunity to present our industry's perspectives on this important legislation.

Senator Plett: Gentlemen, thank you for being here. You have answered many questions already. I am so pleased to be the sponsor of this bill, and I know that, as you suggested, you welcome it. We have heard from the minister that this is kind of the third kick at the can here. Both of our governments have made efforts to do this. Hopefully, the third time will be charmed and we will be able to get it through.

I want to talk a little more about the import-export that you referred to. I know that both of your industries — the Canadian food and agri-food sector — are largely export focused. Clearly, our government has been working on free trade. This legislation, I believe, will give the minister and CFIA possibly some more power with certification.

I would like you to talk a little more about that. We have heard that CFIA does not have the authority to issue export certificates. We have also heard that this is a critical issue for the market access. I know that your industries have some access to exporting food commodities. How important is the expanded export certification in this bill to other Canadian exporters, other industries?

Mr. Laws: From the meat standpoint, we do rely on the Canadian Food Inspection Agency to issue and sign the export certificate, so perhaps some other sectors that are covered under this will benefit from further powers in that regard.

However, we are looking forward to the agency further developing the electronic export certificates that we have been hoping for for quite a long time. Currently, the document is actually a paper document with multiple copies that they have to write through and they have to go and chase people to sign these things. If it were electronically-based, it would be faster. Countries like New Zealand already have that capability, and I believe Australia as well. It is great that Canada is moving in that direction because that is critical to us, and to have timely issue of the export certificates as well.

We have been asking for changes such as in other countries that only have to have an authorized or certified government representative to sign the export certificates. Currently in Canada it has to be a veterinarian. That provides challenges in facilities that only process meats and do not slaughter animals, because there is not a veterinarian at those facilities; they have to take the certificate to some other office and have it signed by a veterinarian. Most other countries have the inspector sign off on those, so we are looking forward to that rule changing here in Canada as well.

Mr. Horel: First, the industry that most of my members work in is supply managed. One of the things that binds my chicken, turkey, hatching egg and egg members together is that they buy their most significant raw material from supply-managed Canadian farmers. That limits the amount of export we do, but does not mean that it is not important.

We are doing more export than before. We are doing more export of higher-valued products than we were before. Within my group I have a number of hatchery members who are primary breeders, which means that by far the bulk of their interest is in the export world. It is important to our membership as well.

I agree with what Mr. Laws has said. We are looking forward to getting to e-certification, and anything that will streamline those exports will be good for our members as well.

Senator Plett: Before my friends opposite ask the question, we know that this will not affect supply management; that is not what this is about, so we need to be clear on that.

On the import side of it, in the case of beef and pork, the market is wide open, and in the case of poultry, the tariff regime still allows some product to come in, such as spent fowl. Our friends in the other place presented a recommendation in regard to the listeriosis outbreak and it was to eliminate the pre-clearance of meat products moving into Canada from the United States. Of course, when we talk about exports, we want it to be as free as possible. When we talk about imports, we want to ensure that we are all kept safe on this side. Could you explain the impact this has? This is a recommendation that was made and our government did implement it. Could you explain a little bit about what impact this has had on your industry?

Mr. Laws: That was more elimination of notification of who was going to be inspected at the border.

Senator Plett: Explain that, please.

Mr. Laws: Both Canada and the United States re-inspect approximately 10 per cent of the meat that crosses the border both ways. With respect to U.S. meat coming up to Canada, they would be advised a day or two prior whether or not that load would be chosen for re-inspection, but the Americans do not do that, and rightly so; you should not do that. CFIA did eliminate that pre-notification of selection for inspection.

Having said that, under the Canada-United States Regulatory Cooperation Council and Beyond the Border initiative, when a truck gets to the border, the back is opened and you see meat in a box. It is not a very good use of time and effort. We believe that a product that has already been inspected by the CFIA in a plant, where they are all the time, and the truck is sealed at that plant and it moves across the border, should not have to be re-inspected.

Senator Plett: It is customs-checked if the seal is on.

Mr. Laws: Absolutely. We agree that all trucks should be inspected for contraband of whatever source, but why is it that just meat is re-inspected at the border? It does not make sense. The Americans re-verify every Canadian load that crosses. They open the back of the truck and charge Canadian industry about $100 just for doing that. If the load is selected for re-sampling for micro work, it can cost upwards of $400 that the Canadian company ends up paying, whereas meat coming up from the United States can go directly to a registered facility for re-sampling. There is quite a difference. We are working hard on that and we hope that happens as well.

Mr. Horel: I would add two things. First, with regard to imports within our poultry sectors, because of supply management or despite supply management, we are actually net importers of poultry products, regardless of fowl. Set fowl aside; as Senator Plett mentioned, fowl comes and goes freely, but we are net importers of chicken, eggs and hatching eggs; there is no question. Imports are very important to us, and it is important that the product meet the same standards as the Canadian domestic product, which is 90-some per cent of our market.

Then to build on what Mr. Laws said, it certainly seems that in the year 2012 it is a much more effective use of resources to make sure we understand the system being used by the plant or the country that is producing, and to make sure we know what is coming, to make sure we understand that rather than to open trucks and look inside to see what it looks like from the outside. There is not much value in that.

Senator Peterson: Thank you, gentlemen, for being here. We are generally supportive of this legislation; however, as in all new bills, the devil is always in the details.

In an online letter signed by both of you gentlemen, when you referenced Budget 2012, you noted that:

Although Canadian processors must wait months for the approval of meat and fish packaging materials, innovative new materials . . . can be used in the meantime for imported products originating from countries such as the United States or Europe.

Could you elaborate on what "innovative packaging'' is, and do you feel that this puts Canadian processors at a disadvantage?

Mr. Laws: I would be happy to do that. For instance, a couple of years ago, one of our members, a manufacturer of canned meat, wanted to use a can made in Denmark. It was lighter, had a quick-release top, and was quite a bit cheaper than the can they were currently using. However, they had to get it registered under the current rules of the Canadian Food Inspection Agency. Under the Meat Inspection Act, it had to be registered. It was taking months and months. In the meantime, American meat was being sold across Canada, right here in Ottawa, in every retail store, in that new Danish can that we were not allowed to use.

We argue that that makes absolutely no sense, and I think it would not take anyone more than 10 seconds to agree that it does not make any sense. We argued that imported products should not be exempt from that requirement, and the agency argued otherwise. We did not go any further than that, but we were promised that it would be reviewed.

It has been about two years. It now is in the April 7 Canada Gazette Part I changes to the Meat Inspection Regulations that they will be amending that clause, which was section 92 of the Meat Inspection Regulations, to remove that requirement.

This was not only unfair because we were competing against imports; other Canadian products, such as dairy products and bakery, did not have to get their packaging pre-approved. Again, this is an example of how the meat sector is treated so differently. In the year 2012, as Mr. Horel said, it does not make any sense that it should be any different. It particularly does not make any sense when it was already on the shelves. We are being outcompeted because people would rather use that quick release than the one on the bottom that you have to break off and spin it, and for sure it breaks, and you cannot get the can open.

Senator Peterson: At the present time, it is my understanding that American firms do all their packaging; they manufacture it in Canada to meet the requirements that are set out. In this new legislation, they will no longer have to do that. They will go back to the United States, manufacture it there, and move it back into Canada at a much lower rate. Are you aware of any of those issues?

Mr. Horel: Certainly in the poultry business I am not aware of those issues. There are certainly some multinational companies that have business on both sides of the border, but I am not aware of American companies that have set up Canadian operations in the poultry business in order to produce products in Canada.

Senator Peterson: The government says they will also repeal regulations related to container standards to enable industry to take advantage of new packaging formats and technologies, while removing unnecessary barriers for the importation of new products from international markets. What is that saying?

Mr. Laws: That is related to standard container sizes. In the Meat Inspection Regulations, in one of the annexes at the back, there are a few meat products for which it says — for instance, for bacon — "thou shalt only sell bacon in Canada under the following sizes.'' That is all that that relates to. However, any imported product would still have to meet all the other requirements, such as bilingual labelling, a nutrition facts panel, et cetera.

That was purely related to the size. That does not mean that Canadian companies would have to change their sizes. They could keep using Canadian standard sizes on that one.

The only thing that concerns some of our members — and probably rightly so — is that we were not given much advance notice of when that was going to happen, but I guess it came in the budget bill.

[Translation]

Senator Nolin: Mr. Laws, I was going to ask you a specific question about that line in the budget plan appendix. Your answer left me even more confused. You have no objection to your businesses, the members of your organization, being able to continue to produce in a size they already produce, while the international competition is in other sizes? You have no objection to that?

Mr. Laws: No, that is not it. They are going to remove the requests that we produce only a specific product in a certain quantity. All the Canadian and international processors can use any size they want.

Senator Nolin: Let us take a can that contains meat. What size is that can in Canada? I assume that it is in millilitres and not ounces.

Mr. Laws: Yes, and that will not be removed. The quantities will still need to be there in Canada. For instance, all the other acts must be followed.

Senator Nolin: What makes you say that in reading the text? How can you come to that conclusion? Do not forget that it clearly says, "while removing an unnecessary barrier for the importation of new products from international markets.'' That does not concern you?

Mr. Laws: We put the question to the agency.

Senator Nolin: What was their response to you? Write to us?

Mr. Laws: They told us that only that section would be removed. The standard sizes, that is all. Not the other bilingual labelling needs, and so on.

Senator Nolin: You said that there will be meat products — we will ask other witnesses about the other types of food products processed in Canada — that will be in millilitre sizes and that will be offered to consumers, for instance, in 280-odd millilitre sizes, and cans of the same product from the United States, the largest importer to Canada, will be in ounces.

Mr. Laws: We do not think that will be the case. Since meat is a solid, it will be in grams because it is not really a liquid. At the same time, we have not yet seen the proposed regulated changes.

Senator Nolin: Did you ask to be consulted before the regulation comes into effect?

Mr. Laws: Yes, we sent a letter to the government recently, indicating that we would like these changes to be made as late as possible to give the industry a chance to adapt to the changes.

Senator Nolin: That is all you asked of them? You did not request an impact study?

Mr. Laws: In the letter, we also said that we understand that all the other regulations in place will remain the same, like the need for bilingual labelling and all the other Canadian labelling requirements.

Senator Nolin: If I may, Mr. Chair, I would like to ask one last question along the same lines.

The Chair: Still along the same lines as the questions asked by Senator Peterson.

Senator Nolin: When you wrote to the agency, you did not think it was important that they be convinced of the economic impact on your industry? You told them that you trusted them even though no one at the agency was concerned about the economic impact on you. If there was no impact, even better, but if there was, who will tell them before the regulations come into effect?

Mr. Laws: We also want to see what they are going to write in the Canada Gazette, Part I, because there is a requirement to explain what they are doing, why they are doing it and what the economic impact is. They must explain it. So, there will be another opportunity in the process to make comments.

Senator Robichaud: I would also like to ask a supplementary question, Mr. Chair.

[English]

The Chair: Senator Peterson, Senator Robichaud has a supplementary.

[Translation]

Senator Robichaud: Mr. Laws, in your presentation, you said:

We hope that incorporation by reference will be applied through a [. . .] consultation process [. . .] of the document, as well as for its future amendments, since clause 55 of the bill states: "For greater certainty, a document that is incorporated by reference in a regulation made under subsection 51(1) is not required to be transmitted for registration or published in the Canada Gazette by reason only that it is incorporated by reference.''

Does that not sort of contradict what you just said to Senator Nolin?

Mr. Laws: No because, in fact, the changes that the senator mentioned are now in a regulation. They are not in a document that is currently incorporated by reference. Since it is effectively a regulation, it must go through the Gazette process. In this case, we are going to have more information.

Senator Nolin: It will be late.

Senator Robichaud: You said that there might be the risk of a vicious cycle, right?

Mr. Laws: That is correct.

[English]

Senator Peterson: As you can see, we are getting to where the devil is in the detail. I am sure you both agree that consultation with industry, in particular, is good when defining public policy. Can you explain the consultation process to me? Were you consulted? Did you discuss with government this proposed legislation? Are you aware of an economic impact analysis being done in these matters? Where were you on that?

Mr. Laws: Are you referring specifically to the removal of the standardized container sizes?

Senator Peterson: I am talking about the role industry played in this new legislation with the government. Did you have any consultation with them? Did they call and ask what you think of this?

Mr. Laws: Bill S-11?

Senator Peterson: Yes.

Mr. Laws: Yes, and I am sure my colleague Mr. Horel will comment as well. We were consulted, prior to this, in general form. We did not have the details of the actual bill, but, yes, we have known it has been the intent of government for many years to get all of these different inspection regimes together under one act. The agency itself is really not that old, but they know it really needs to put food as food. It should all be under one act.

Mr. Horel: Our two organizations, along with a number of other food industry associations in Canada, belong to something called the Canadian Supply Chain Food Safety Coalition, another acronym.

The coalition certainly had, as Mr. Laws says, consultation in general form because we could not see the detail, of course. We were not surprised, in general terms, by Bill S-11.

Senator Peterson: You intend to play an ongoing role as this evolves?

Mr. Horel: Absolutely. As we have both said in our presentations, we are generally supportive, but I would agree with you, Senator Peterson, that the devil is in the detail as well. There is no question about that. The regulations and all of the enabling stuff that comes out of this is really where we need to be consulted.

Senator Peterson: In the safety aspect, which is very important to everyone, particularly you people, the CFIA, the budget is being cut by 10 per cent. Will that have an impact on front-line inspectors, in your opinion?

Mr. Horel: We were granted an audience with the President of CFIA less than two weeks after the budget came down, which I thought was terrific, actually. The entire reason for the discussion with him and his key staff was: What are the budget implications for CFIA? He went into what it would mean for our industries, but our question was exactly your question, and his response was "no change in front-line inspection.''

Senator Eaton: Did the outbreak of listeriosis and mad cow disease hurt our global brand for food safety?

Mr. Laws: Absolutely. On the beef side, for instance, we are still trying to fully recover all the markets nine years later. In Japan, for instance, we are not quite there; Korea, we are trying to get back.

Senator Eaton: That brings me to the next question, which you have segued right into. As we are going into free trade agreements with Japan, Korea and the EU, do they have the same high standards of safety that we are demanding of you, as Canadians demand from you guys?

Mr. Laws: Many of those countries in those areas absolutely do, but the CFIA does negotiate protocols between each and every country when it comes, in particular, to animal health and the movement of plants and animals. That is very important for disease control. On the food side as well, absolutely there are auditors that go and visit other countries.

Senator Eaton: Will you have a seat at the table? Will you be consulted?

Mr. Laws: We are often consulted, but when the actual negotiations are going on, we are not in the actual room. The government does a pretty good job of consulting with us along the way.

Senator Eaton: That is good.

Lastly, you brought up something, Mr. Laws, which has been one of my interests. You saw that, with a private member's bill now, we have lifted the interprovincial trade barriers for wine. When you talk about meat inspection, are interprovincial barriers political? Is it a lack of resources? What are your biggest hurdles?

Mr. Laws: Again, it is in the actual Meat Inspection Act that it is a legislative situation.

Senator Eaton: So it is a political thing?

Mr. Laws: Yes, but if you were to come and tour a federally inspected meat facility and then go to inspect some provincially inspected facilities, you would see quite a difference. There is quite a difference in the level of inspection and the level of complexity in some of those different provincial inspected plants. To remove that barrier, we think the solution is quite simple: Have everyone who produces meat in Canada register under this new act and be inspected by the Canadian Food Inspection Agency.

Senator Eaton: Thank you very much.

[Translation]

Senator Robichaud: To follow up on Senator Eaton's question, when you spoke about a single system, you said that there are many differences between the provincial and federal systems. Would it be very costly for the provinces' factories to adapt to the national system?

Mr. Laws: Actually, the Canadian agency has a project with close to 17 different provincial establishments across Canada that want to be inspected at the federal level. They have assessed the average cost for each of those establishments, and that information is on the agency's website. Yes, it will cost money, but at the same time, those that are operating in the system now have already invested a lot of money to be there and, frankly, we cannot really put the health of Canadians and the cost to them in the balance.

Senator Robichaud: I fully agree with you, but if there are two systems, it is likely that there are reasons somewhere that would prevent us from having just one system.

My question has to do with clause 51(1), which states:

REGULATIONS

51. (1) The Governor in Council may make regulations for carrying the purposes and provisions of this Act into effect, including regulations

[. . .]

(w) exempting, or permitting the Minister to exempt, with or without conditions, any item to which this Act applies, or a person or activity in respect of a food commodity, from the application of this Act or the regulations or a provision of this Act or the regulations;

What does that mean? We are giving all the powers to the minister, without limits and without any constraints, because the act allows it? Why do we need that?

[English]

Mr. Horel: Frankly, I do not know. It is something that I will need to go back and review in more detail, and I thank you for pointing it out.

[Translation]

Mr. Laws: I will answer the same way as my colleague; I will have to review the information to give you a proper answer to your question about that clause. It seems that it gives them the authority to do it in the regulations, but it would be very interesting to know about the details to understand the intention of that clause.

Senator Robichaud: I am wondering why we would need it. It is being done without consultation. It is only the minister's willingness that can be exercised by that clause, is it not? If you can analyze the information and let us know if we need it, we would appreciate it. Because if this could be a cause for concern, we could ask for it to be eliminated completely.

Senator Nolin: I would like it to be clear. Did the witness say "yes''? You are going to write to the committee before we have finished studying the bill?

Mr. Laws: Yes.

Senator Nolin: Perfect.

The Chair: You can send your letter to the clerk, and we will then forward it to the individuals concerned at the department.

Mr. Laws: All right.

Senator Rivard: Mr. Laws, in your brief, you mentioned that you do not understand why the maximum fine was $250,000 previously, when it is now $5 million. In the past 10 years, the largest fine has been $100,000. Do you think that this increase of the amount of the maximum fine will have a fairly deterrent effect so that all the companies, be they retailers or producers, will pay greater attention to the quality of the products?

Mr. Laws: Even if the Meat Inspection Act is eliminated, the act that will replace it is very important. The fines are very high. I understand that it is for those that do something bad clearly on purpose and this will basically be an act to prevent people from thinking about doing something on purpose, meaning something that could jeopardize the health of Canadians.

We are not saying that we are against these high fines, but we want people to know that the increase is quite significant and that it must be taken very seriously.

Senator Rivard: I am putting myself in the shoes of the consumer. We often hear in the media that such and such a manufacturer, producer or retailer has just decided to remove this or that product from their shelves or even that the manufacturer is recalling its products or destroying them at the factory.

In general, is this done after a third-party inspection, so by a government inspector? Or is it more often the producer itself, after noting the poor quality or the danger to the health of consumers, who wishes to remove the product? Do you have any statistics? Without giving details on the numbers, does this happen more often following an inspection or is it voluntary?

Mr. Laws: I do not have the details with me, but it is true that it is the industry itself that voluntarily removes products, but in communication with the Canadian Food Inspection Agency. What the agency does is very good; when they announce a recall, they state clearly that the recall is voluntary, and they post photos of the product on their Internet site, which help consumers recognize the product and determine whether it would be in their freezer or refrigerator.

Senator Rivard: Thank you very much.

[English]

The Chair: Senator Merchant had a supplementary.

Senator Merchant: You spoke about the fines and said that people will know that they are not to tamper. What does "people'' mean exactly? Is "people'' companies, persons, individuals? I would imagine that when a company has to pay a $1 million fine, they have insurance. While their brand is perhaps tainted, they still have means of dealing with it. When you say "people,'' do you mean individuals as well would have the same fines?

Mr. Laws: I really meant it is important for all Canadians who are watching the process of this bill evolve and go through Parliament to realize that it is a serious bill and it does have serious consequences — a $5 million fine. I do not know how many actually have insurance for all events, but we do take this very seriously.

Senator Merchant: It is the same for companies and individuals? Will the fines be the same?

Mr. Laws: I would have to read that specifically. It talks about imprisonment for up to two years, so definitely there would be an individual identified who would be facing the consequences of this, absolutely.

Mr. Horel: I would just add that there are two different parts of the bill, and the part that Mr. Laws was talking about was different than the earlier part that I was talking about regarding tampering. When it comes to tampering, we are big supporters of increasing fines and increasing all of that. Tampering is a different issue. It may be the same result, but it is a different issue. On the tampering piece, the bigger the better.

Senator Mahovlich: When we export our meat goods, we are dealing with 120 or so different countries. Do we accommodate every country? For example, Israel probably wants kosher meat. Do we have to deal with each country and what they demand, or do we just say, "Here is what we have and here is what you get?''

Mr. Laws: We do, but some countries will just say, "No, we take it exactly as — "

Senator Mahovlich: They are particular?

Mr. Laws: Yes, they are particular.

Senator Mahovlich: Some people like aged beef and we accommodate them.

Mr. Laws: We do. It is like customers here in Canada. They have certain requirements and certain products they like to buy, so that is the way it is. At the same time, though, if some countries have some requirement that we feel is perhaps not fair, then we have, for instance, challenged some of them that their particular requirements are actually impeding trade, so in that way we think that is not fair because they have not provided a very good reason. The World Trade Organization provides us with a forum to do just that.

Mr. Horel: It is the same for poultry products that we export. They are, as Mr. Laws said, customers, and so it does not matter if my customer is in Saskatoon or in South Africa.

Senator Mahovlich: Or China.

Mr. Horel: Or China. There are some places we are allowed to send product and some places we are not. That is a different issue. Setting that aside, my customer is the person I am trying to satisfy, and I will do whatever I can to satisfy the customer, assuming that there is a return and it is a good business relationship.

Mr. Laws: I would like to add as well that some parts of animals are valued much higher in other countries than in Canada. That does help us to get the most money, and then we can pay more to the farmers for the animals. It really does help to have foreign markets, whereas in Canada many parts would have to go to rendering and animal feed.

The Chair: I am looking at the time frame, and we have three additional senators, starting with Senator Buth. Please be short. If you want to answer the question in writing following other discussions, please do it through our clerk.

Senator Buth: Can you comment on traceability in your industry and whether or not this legislation will have any impact on requirements for traceability?

Mr. Laws: The act does actually allow the government to set regulations for traceability for animals and for food. Yes, it does have some implications for the future. We agree that for proper tracing we do want to see very good tracing of live animals back to the farm, for instance.

It is a little more complicated if we were to get too far down the road in requiring or mandating traceability of a particular product right at retail. That could add significant costs if the rest of the world did not yet do it, but we are able to trace very well. We know what meat we sent to what stores and we can get products back on recall very quickly. However, if the requirements were very stringent in wanting to know this particular package came from this particular farm, we could do it if we had to but the cost would be quite high.

Senator Buth: Do you expect to have consultations then on terms of the regulations regarding traceability when it comes through?

Mr. Laws: Absolutely, yes.

Senator Mercer: I want to go to the point of traceability that my colleague has raised. I have been on this committee for nine years so I was here for the BSE issue. I am assuming that we now only have traceability from the time the animal is born to the time the animal is slaughtered because of the complications in your industry, particularly with beef cattle moving back and forth across the border many times before final slaughter and processing. Am I right in assuming that and therefore Canadians understand we have traceability to that point? Am I correct in my understanding that once the processing starts it is difficult to say what animal the steak I bought last night at the local store came from, but up to the point of slaughter we know a lot about that animal?

Mr. Laws: Yes, you are correct.

Senator Nolin: I will ask the witness to answer the committee in writing because the answer could be very long.

Mr. Horel, you raised the issue of inspectors' powers. This is not the first time that a committee of the Senate is examining legislation that has extensive inspection powers. The reason for that is the fact that in the end we have the safety of consumers to be concerned about.

I would like to have any objections you may have in writing. If they are influenced by lawyers, do not hesitate to give us the opinions that they gave you because there is no point for us to adopt a law that will go to court and be struck down because it is too extensive. I may have the concern you have, and maybe we were wrong when we adopted other laws, but perhaps your lawyers have found something that we have not. Please write to us and we will examine this.

Mr. Horel: I will certainly write to you. I will say briefly that we have no issue with the goal. There is no issue with the goal of what is going on. The devil is in the details, as the other senator said.

Senator Plett: I would ask the witnesses, in their response to Senator Robichaud's question on clause 51, to follow up in letting us know whether this is a normal power that is already in the existing act. I believe it is already in the existing act and so I would ask that they clarify that.

[Translation]

Senator Robichaud: The fact that it is in this bill and that it is deferred does not mean that it should be. I would like you to comment on that.

The Chair: Please send us your comments through the clerk. Thank you very much.

[English]

On behalf of the Standing Senate Committee on Agriculture and Forestry, I want to thank Mr. Laws and Mr. Horel for being on our first panel.

The Standing Senate Committee on Agriculture and Forestry welcomes our second panel of witnesses this morning: Mr. Gordon Harrison, President of the Canadian National Millers Association; and Rory McAlpine, Vice-President, Government and Industry Relations, Maple Leaf foods.

Thank you for accepting our invitation to share your comments and vision on Bill S-11, the proposed safe food for Canadians act.

[Translation]

Rory McAlpine, Vice-President, Government and Industry Relations, Maple Leaf Foods: Senators, I would like to thank you for your invitation. It is a privilege to be able to share my comments on Bill S-11 with you.

[English]

For more than 25 years, agriculture and food sector organizations, consumer associations and health groups in Canada have worked with Health Canada and the Canadian Food Inspection Agency in efforts to modernize the Food and Drugs Act and regulations and several food-related laws under the authority of the Canadian Food Inspection Agency, but this has been a halting process. Most stakeholders have been frustrated by failed attempts to make enabling changes to the legislation that would allow for updated requirements for all aspects of compositional and nutritional standards, food safety, food inspection, consumer labelling and requirements for international trade.

Following the listeriosis tragedy of 2008, our company, more than most, knows the importance of the industry-government partnership in continuously improving food safety and the foundation that good legislation and regulation plays in this regard.

On May 3, Bill C-38 was tabled wherein the government introduced amendments to the Food and Drugs Act, and now we have Bill S-11, the proposed safe food for Canadians act, introducing important changes to legislation under the responsibility of CFIA. Together these legislative changes will address many of our concerns because they set the foundation for a stronger, more risk-based and responsive system of food regulation and enforcement in Canada.

What will the legislative changes accomplish? If you will permit me, I will say a few things about what is in Bill C-38 before I comment about Bill S-11.

The proposed amendments to the Food and Drugs Act found in Bill C-38 provide the Minister of Health with new authority and administrative tools to reduce the need for many formal regulatory amendments expediting the availability of foods, ingredients, additives, processing technologies and test methods that meet Canada's rigorous science-based, pre-market evaluation requirements for safety and efficacy. Of particular importance will be more rapid approval of ingredients and additives that enhance food safety and science-based dietary health claims, helping Canadians make healthy food choices. Food innovation in Canada will accelerate, bringing benefits to both consumers and industry.

It is particularly important to note that the amendments to the FDA will give the minister new tools, called marketing authorizations and incorporation by reference. Under the current system, regardless of whether Health Canada is evaluating a health claim, ingredient or additive, all are subject to pre-market evaluation to confirm their safety and efficacy, but final approval is a further 18-to 36-month regulatory process through the Canada Gazette. Based on our experience, some approvals, including those that would enhance food safety, have been delayed for many years while approvals in other countries, such as the United States, have been granted. This can now be avoided using the new tools.

Bill S-11 will replace and modify the four existing statutes governing food safety, packaging, labelling and inspection under CFIA's responsibility. As you know, that is the Fish Inspection Act, Meat Inspection Act, the Canada Agricultural Products Act, and the food-related provisions of the Consumer Packaging and Labelling Act. The consolidated act will clarify and strengthen CFIA authorities, allowing the agency to move more quickly and decisively to prevent food safety risks and respond when food safety breaches occur. Respective roles and responsibilities of manufacturers, importers/distributors and the CFIA in ensuring safe food for Canadians will be more clearly defined.

Importantly, the consolidated act could create powers to enhance controls over imported foods, which would reinforce the new import licensing regime that is coming into effect; it would be clarify and enhance inspector powers; impose tougher penalties for non-compliance, including, as we have discussed, deceptive practices, tampering and hoaxes; promote consistency of inspection across all foods, therefore mirroring the U.S. Food Safety Modernization Act. CFIA could respect third-party standards and certifications in their inspection programs. For example, the Global Food Safety Initiative standards, to which all our plants are certified, could now be recognized by incorporating certain international documents "by reference,'' such as the Codex guidelines which are set at an international level. CFIA would have a modern, risk-based tool kit to prevent food safety problems and promote compliance.

Why is this good for Canadian? Canadians are increasingly conscious of the relationship between their food choices and personal health and are paying closer attention to health-related product attributes when purchasing food products. Scientific understanding of diet-health relationships is expanding rapidly and food supply chains from farm to fork are responding. Consumers will be provided with new food choices more quickly, will be comforted in knowing that industry and the CFIA have better tools to prevent food safety problems, and can be certain of tough enforcement when food safety standards are not met. This, along with enhanced controls over imported foods and inspection consistency, will increase Canadian consumer confidence in food safety and nutrition information.

Why is this good for Canadian farmers and other participants in food supply chains? The legislative amendments will reduce the administrative and regulatory costs of bringing new products to market for food manufacturers and input suppliers of all sizes in Canada. This will allow for more rapid innovation and further growth in the food manufacturing sector. Canada will be a preferred place for investment. As food supply chains become increasingly global, Canada will have the opportunity to improve the alignment of food safety and nutritional standards and enforcement practices with international partners. As the food sector grows, so will the farming industry, which will need to increase production in order to meet the demands of companies like ours.

Some may question how we can be sure that the high standards of food safety and nutrition will be maintained. High standards will be maintained, in our view, because the scientific risk assessments to ensure the safety of new and innovative products will not be changed.

If new sources of food contamination are identified, standards such as maximum residue limits will be changed to ensure food safety. The fundamental obligations of section 4 of the Food and Drugs Act concerning food and the commodity acts and regulations under the CFIA will remain in place. New products will also continue to contain transparent information on ingredient content and nutrition, and all product claims must continue to be truthful and not misleading.

In conclusion, as a leading food processor in Canada, and as a company that cares deeply about food safety and quality, Maple Leaf Foods is pleased with the government's vision for the food industry in Canada, as reflected in these legislative changes. We look forward to further consultation with the CFIA and Health Canada on how the new approval processes will be structured, how new enabling powers will be exercised through regulation and how a modern food inspection system across all foods can be designed and implemented.

The Chair: Thank you, Mr. McAlpine.

Mr. Harrison, please make your presentation.

Gordon Harrison, President, Canadian National Millers Association: Thank you very much. What is there left to say? I want to thank you for the opportunity to appear before this committee. It is a wonderful opportunity, as is this bill, Bill S-11.

The Canadian National Millers Association is a national industry association that represents grain millers, millers of wheat, oats and some other cereal grains. Our industry manufactures ingredients used by the many food industry subsectors that are regulated and affected by Bill S-11 and the changes that will bring forward.

Bill S-11 is long-awaited. We have been trying to overhaul our federal regulatory framework for food since about 1990. Enormous effort has gone into that over the years on the part of both public and private sectors, so this is a long-awaited opportunity.

The bill is about more than food safety; it is also about food integrity. By food integrity, I mean the compositional standards and packaging and labelling. Mr. McAlpine has mentioned those aspects of it. It is important to note that we have many compositional standards for foods that reside within the Food and Drugs Act. They also reside within the many regulations pursuant to the Canada Agricultural Products Act in particular and elsewhere. I understand that a brief we prepared earlier in the year has been circulated prior to the hearing to the members of the committee. That brief was drafted before either Bill C-38 or Bill S-11 was introduced but initially drafted in the first half of last year. It sets out what we saw was an enabling architecture for overhauling the food-related legislation. We set out our recommendation for two companion bills or pieces of legislation. Bill S-11 is one of those two. It is almost exactly what we asked for or recommended as a coalition of food and beverage industries and associations.

It is very well drafted and it is very clear, when you compare it with other attempts in recent years to modernize legislation. It is also enabling. We have to emphasize that this bill is enabling. This will allow for and in fact requires a comprehensive review of the regulations that are pursuant to the existing act. This will provide for, as Mr. McAlpine alluded to, the migration of things currently in legislation into regulations and the migration of things like compositional standards into administrative lists that are much more easily managed and much more expeditiously. Things can be done differently, much more quickly. It will be more efficient. The savings of time to both public and private sectors will be enormous.

I must emphasize that incorporation by reference is a tremendous tool to be used going forward by industry and government in elaborating the new regulations. This in fact is in the Consumer Product Safety Act. I am sorry, I do not have the correct name of the bill that was passed in recent years, and incorporation by reference is provided for in the amendments to the Food and Drugs Act that are in Bill C-38. This is very important.

This bill, it is important to also recognize, emphasized that it will operate in parallel to the Food and Drugs Act. The Food and Drugs Act is very comprehensive, and there are sections of the Food and Drugs Act incorporated directly into Bill S-11, not the least of which is the definition of a food.

The amendments in Bill C-38 are also very enabling. They will allow for a comprehensive review of the Food and Drugs Act and regulations, also to migrate things in the regulations into administrative lists and standards and guidance documents. This will provide greater clarity to industry. It will modernize many standards that are pertinent and essential to the regulation of foods.

One major challenge that I must speak about in the context of this bill and also in the context of how it will work in tandem with an amended Food and Drugs Act is that in this country, and in the supply chains that represent the food and beverage sector — by a supply chain I mean farmers, primary processors, further processors, retailers — it is very important to distinguish between contaminants of certain kinds and other kinds. It is important that we are able to distinguish between intelligently managed things that are deliberately added to foods or are present that are not healthful or safe, whether they are added intentionally or not.

The other whole category of contaminants that we are interested in with regard to food safety would be naturally occurring substances that are unavoidable and unintended — examples are mycotoxins and heavy metals. There are two realms. This bill does not address that. That particular distinction is required in the Food and Drugs Act in section 4.

Notwithstanding the tremendous gains we will make thorough the Food and Drugs Act amendments that are in Bill C-38, we believe we will need to do more work with CFIA in particular. Ideally, we would have an amendment to Bill S-11 that will address this issue that I have just described and we would hope that it would be legislatively possible to have an amendment in Bill S-11 that would further amend section 4 of the Food and Drugs Act so that we can complete this work. It is not entirely clear at this time that Health Canada will be able to do this satisfactorily, so that it aligns with our major trading partner, the United States. There is very different language in section 402 of the U.S. act that aligns with the Food and Drugs Act. At this time, where we have the Food Safety Modernization Act in the United States, this is a critically important opportunity.

Senator Plett: Mr. McAlpine, I am a senator from Landmark, Manitoba, which of course is where one of your largest operations in Western Canada is situated. Being from there, we very much felt your pain in 2008. Clearly, we felt along with you and we know that in the aftermath of the listeriosis breakout that your company took full responsibility for breakdowns that it had had in the system, and we commend you for that.

The report of an independent investigator also showed that there were some breakdowns in what government had needed to do, and we have implemented, as a government, all 57 recommendations of the Weatherill report.

First, as a company that was somewhat in the eye of the storm here, can you give us your perspective on what has improved as far as food safety is concerned in Canada since the listeriosis breakout? Has Maple Leaf fully implemented everything they promised to do, and what further action could be taken to improve what we are already doing?

Mr. McAlpine: Thank you, senator, for the question. I think I can say there has been a transformational shift in the approach. Certainly within our company we have taken complete responsibility and acted on all the recommendations that were directed at industry in the Weatherill report.

Well beyond that, we recognized the need to significantly increase the resources, the systems, the testing regimes, and the third-party certifications and audits. We began by hiring a new Chief Food Safety Officer, who is an absolute world-class leader in this area. Based on actual data measurement, we have brought our plant food safety performance up to levels that are truly world leading, and we publicly shared that. It is well documented, based on the rigour of the testing we are doing within our plants.

I can sit here today and confidently tell you that there has been a tremendous step forward, and I think I can say it is true across our industry. There was a lot of learning from our misfortunes and a lot of new effort, particularly in updating the listeria policy, which the government mandates, but beyond that, the sharing of best practices and the development of a new listeria best practices guidance document by the Canadian Meat Council and the CPEPC.

If you talk about where do we need to go further, this legislation is certainly a very important element of that, because what we did recognize coming through the listeria crisis is that the tool kit and resources that the government inspectors have had have been insufficient to address some of these more progressive and emerging challenges, such as listeria monocytogenes.

I think this legislation will set the foundation for a lot of better things in that regard. The resourcing, of course, has been tremendously increased on the part of government in terms of inspections, laboratories, and so on.

The one area where I would encourage government to think more about is in harmonization of approvals between Canada and the United States, particularly. We have some good steps promised under the Regulatory Cooperation Council, but we still have a situation where various food safety interventions, test methods, new food safety antimicrobial ingredients, and so on, are being approved and used in the United States much sooner than they are being approved and used in Canada. That is putting Canadians' health at risk, it is compromising nutritional standards in some cases, and we would advocate a much greater cross-border harmonization and mutual recognition of approvals of technologies to ensure we are not being left behind.

Senator Plett: This is a question possibly for both of you, surrounding feed mills. One of your largest feed mills is in my community, and I know how diligent they are in making sure they do everything correctly. However, there are a lot of on-farm feed mills. Possibly you do not have those; maybe you use your own.

Is there something that could be improved in the regulatory system of the feed mills, smaller operators? What could be done to possibly improve some of the issues with this legislation or to improve this legislation? I would be happy to hear from both of you.

Mr. Harrison: I would comment that separate from this legislative initiative and the regulatory review that accompanies this is a comprehensive review of the feed regulations. The feed regulation review has already begun. The Animal Nutrition Association of Canada has developed discussion papers and is actively engaged with CFIA to overhaul those regulations. I do not speak for them, but the concerns of the feed industry are, oddly enough, about compositional standards and the overly prescriptive nature of the feed regulations.

In order to manufacture feeds in the modern economy, you have to have many options, and you have to have many options of formulating feeds so that you achieve the nutritional characteristics. This is true of a commercial mill and an on-farm mill.

In the case of on-farm feed milling, typically it uses fewer ingredients sourced outside of the farm, on to the farm. It is typically simpler, and a farmer is able to do on-farm feed milling with premixes and other ingredients that have been prepared in registered facilities that specialize in providing those ingredients to a farmer.

They are quite different, and the farmer is typically taking advantage, particularly in Western Canada, of grains produced in his own operation or in nearby operations that historically have been marketed differently. They are quite dissimilar, but in the modernization of the feed regulations, both CFIA and industry know what the opportunities are. That is why it is one of the first sets of regulations, among the many that CFIA has, to be addressed.

Senator Peterson: Mr. McAlpine, I noticed that after the listeriosis outbreak in 2008, your company made a dedicated effort to improve the safety by going above and beyond industry standard regulations. In fact, you are striving towards more of the Global Food Safety Initiative. In that respect, do you think that the Canadian government should go towards that same standard, and are we moving towards that now?

Mr. McAlpine: Thank you for the question. There are, of course, different intergovernmental organizations that set food safety standards and animal health standards and so on. There are also private sector standards that are respected globally.

Certainly, as it is now, Canada is very active in those global intergovernmental organizations that are setting food safety standards, such as the Codex Alimentarius, and, where relevant, will reflect Codex standards and guidelines in Canadian regulations, which of course is very positive because it helps facilitate global trade.

When it comes to international private sector standards, or standards from ISO, the International Organization for Standardization, or the standards that are now being recognized under the system known as the Global Food Safety Initiative, this is an important development because these private sector-driven, standard-setting bodies generally can move more quickly and can adapt standards to science and risk more rapidly.

We, as a company, as I mentioned, have certified all our plants, both on the protein and bakery sides of the business, against the British Retail Consortium standards, which are part of the GFSI-recognized system of food safety standards. I do believe that if governments can recognize companies that are prepared to invest in certification against those standards and accept the third-party audits that go with that, then that is a big boost to food safety and it can be a way to relieve government resources from the need to so rigorously oversee that kind of operation, as compared to another company, let us say, that is not certified to such a global standard.

This is a very positive development, and this is why having in legislation the ability to incorporate standards by reference can be helpful, because it means that if government wants to directly incorporate into regulatory requirements standards set by Codex or by a GFSI standard, then they have the legal and administrative mechanism to do that.

Senator Peterson: Minister Ritz has made comparisons between Bill S-11 and the U.S. Food Safety Modernization Act. Under the American act, the U.S. food and safety department is a part of that, whereas Bill S-11 will just be CFIA and the Minister of Agriculture. Do you think Health Canada should be a part of this legislation?

Mr. Harrison: For a time during the drafting of Bill S-11, there was an initiative and a hope on the part of Health Canada and CFIA to actually have a single statute brought forward to modernize. This is a very challenging thing to do because the Food and Drugs Act is criminal law, and the statutes that are being consolidated in Bill S-11, generally speaking, are trade and commerce law, so they are quite different.

The Minister of Health and Health Canada will continue to have the authority over the Food and Drugs Act. The Food and Drugs Act will still influence how CFIA deals with the private sector and food safety and inspection, to a certain degree.

It is important to note that CFIA has this basket of laws, some now being consolidated by this bill, but the CFIA will continue to do the compliance and enforcement activity for the Food and Drugs Act. I personally do not see any kind of jurisdictional, authoritative or administrative constraint here.

Under our legislation that has been in place before the Food Safety Modernization Act, I think it is fair to say that Canada had a legislative framework in place functioning for many years that already achieved what is in the Food Safety Modernization Act itself. As the Food Safety Modernization Act being articulated through rule making, which we call regulations and which is a compressed process that they are also going through, what we have already will compare favourably with what will be developed and implemented under that U.S. law. That law will also operate in parallel with the U.S. Food, Drug, and Cosmetic Act. It is a similar situation, if you will.

Health Canada is working so closely with CFIA in recent years, there is no question there is an involvement, I would suggest to you. It is not all in one statute. If it were, I would argue that the Minister of Agriculture is well positioned with resources to preside over that statute, but that is not what is occurring. We will continue to have a food and drugs act. I hope that is helpful.

Senator Peterson: Under the U.S. drug and safety act, there is very strong whistle-blower protection, Mr. McAlpine. Would you support the same thing for Canadian employees?

Mr. McAlpine: To clarify, do you mean within government; that is, allowing government officials?

Senator Peterson: Protection for the employees of your company, for example, whistle-blower protection.

Mr. McAlpine: Within our company we have a strict set of policies that encourage any employee with knowledge to come forward or to question. Certainly in the case of food safety, for example, we empower our employees, right at the plant level, to literally order the stop to production if they have any concern about food safety, irrespective of any direction from senior management.

From a corporate perspective, absolutely it is important to encourage employees to be accountable for reporting wrongdoing that may occur. I really would not be in a position to comment about government employees and the rules that might apply to them.

Senator Peterson: No, but I was thinking of the government enhancing that protection for employees. You would be supportive of that as well?

Mr. McAlpine: Yes.

Senator Peterson: We had the minister here and we talked about Ms. Weatherill and the recommendations she put forward. One of them is the idea of an annual or semi-annual audit to ensure that there are sufficient inspectors and resources to make sure the safety of the act is being carried out. Would you be supportive of that?

Mr. McAlpine: Yes, I do certainly support the idea of periodic audits. Just as a company recognizes the value of both internal and external audits in all of its activities, I would absolutely support that. In the case of government, obviously the Auditor General has played an important role. In fact, I believe they are currently doing some evaluation that relates to food safety and the interface between government and industry on application of food safety enforcement; absolutely.

Mr. Harrison: I would like to add that Mr. McAlpine alluded to industry-led standards. To give you an example, in our industry, the mill that produces wheat flour and other ingredients from wheat could be subject to as many as 24 third-party independent food safety and food defence audits, meaning the security of the facility audits, annually. In one mill in particular, the most senior officer in that mill spends about 40 per cent of his time working with auditors who are there on behalf of retailers and further processors such as the baking industry. It has always been the case that CFIA and, prior to CFIA, Health Canada has performed an audit function. This is part and parcel of how industry and government need to work on food safety and integrity in the future, namely, with an audit function on the part of the federal government. However, also of critical importance is to recognize industry leadership and all of the training, infrastructure and services that exist performing that audit function. This is already integrated within CFIA's approach to work with accredited food safety auditors.

Senator Buth: My interest is in traceability. There are two sections in the act that take a look at traceability. Can you both comment on traceability within your company and within the industry, and then tell me what you would like to see or comment on potential regulations that might be developed in terms of traceability.

Mr. McAlpine: A previous witness commented about the challenges of traceability from the point of food manufacturing out to retail in that you have multiple channels. What is absolutely critical, though, is the ability to ensure traceability from the perspective of recall and having good supply chain management and records and electronic systems, such as was so vital, for example, in the case of the listeria crisis, where we were in the mode of having to recall many different types of products from across the country.

The point made previously is entirely correct that when it comes to food safety integrity back to the farm, for example, in the hog industry there is a well-advanced system now of animal traceability. It is being pushed further into premise identification and actual real-time information exchanged, knowing exactly where animals are. Again, it is very important in the case of a foreign animal disease outbreak that you can identify where animals are and where they have moved in the recent past. We support that.

The question of making traceability mandatory is very challenging. Again, we have been part of many consultations that have moved it to the point that it is. I personally would believe there must be a continued voluntary approach. Obviously, the integration of data systems and information sharing is critical. There is a lot happening on this internationally. As food supply chains integrate globally, your traceability has to interface with the global systems. These are huge challenges, and I am not sure that making it mandatory will achieve a good outcome if it is done prematurely.

Senator Buth: Were your traceability systems in place for recall adequate during the listeriosis outbreak? Have you made any changes to those since?

Mr. McAlpine: Yes. They were adequate, but could they be better, for sure. We have made a number of improvements. In fact, as a company, we are in the process of implementing SAP, the standard, the best-known informatics platform for a consumer goods packaging company like ours to much better integrate data collection and information management. Today we are in a much better place than we were then. We were certainly able to recall all the products very rapidly, but it took a lot more manpower and a lot more phone calls, and so on, out across the country than would be necessary today just by virtue of the systems that we have in place.

Mr. Harrison: In our industry, the grain processing industry, relatively speaking there are few direct-from-farm deliveries to processing facilities. There is a bit more in the case of oat processing in Western Canada, but our supply chain typically is a bulk handling and transportation system that operates by many farmers delivering into many different primary grain elevators. This is true both in Eastern and Western Canada. Grain arriving at a facility operated by one of our members typically is being supplied by many producers thousands of kilometres away in some cases, and traceability is very difficult to do. One too is identity preservation.

If there is an absolute requirement for traceability or there is a particular food composition or safety standard, this has been used for many years.

However, the other thing that is very important to note is that not only do we have the origination of grains going to processing facilities from many, many farms in many growing areas, but once that material reaches a mill, a mill is not built to segregate individual lots of grain. The opposite is true. A mill is built to segregate only classes of grain and classes of grain of different protein levels, for example, for their functionality. As soon as a lot of grain is deemed to be acceptable for unload at a mill, by whatever certification or on-site testing, it is typically immediately blended. Of course, when you go into the milling process, the ability to trace 10 kilograms, 40 kilograms or 1,000 kilograms of unprocessed grain is utterly lost. There are other measures that need to be taken and are being taken in the cereal grain supply chain that will accomplish food safety.

Fortunately, in our sector, we typically are not dealing with human pathogens in the commodities, and we have a distinct advantage, so traceability will need to be approached in a different fashion.

Senator Mahovlich: Maple Leaf Foods has been around since I can remember, so 50 years or so. How many incidents such as that has Maple Leaf Foods had prior to 2008?

Mr. McAlpine: Certainly nothing at all of that scale.

Senator Mahovlich: Not one?

Mr. McAlpine: No. We had had certainly events periodically occur. Frankly, there are always situations that can arise, and there had been previous recalls, but small, and in no case had a Maple Leaf product been identified and linked to a human illness or death. Other events may have occurred. We have also had hoaxes and tampering. We have had events like that, but nothing at all like what occurred in 2008.

Senator Mahovlich: Strange.

Thank you, Mr. Chair.

Senator Robichaud: Mr. McAlpine, in your presentation you mentioned that in Canada, under the current system, regardless of whether Health Canada is evaluating a health claim, ingredient or additive, all are subject to pre-market evaluation to confirm their safety and efficacy, and the final approval is 18 to 36 months later because of the regulatory process. It takes a while. I would think this period of time would be sort of a safety shock absorber, would it not, to give time to ensure that things are — I see Mr. Harrison is nodding in the negative fashion.

Mr. Harrison: I apologize.

Senator Robichaud: That is quite all right. We are here to hear what you have to say. In your answer to Senator Plett, did I understand correctly that this shorter process in the States might not protect Canadians like it should?

Mr. McAlpine: No, I think I am saying the opposite. The key point I would make is that the scientific risk assessment that Health Canada uses to determine whether a submission meets regulatory standards and can be deemed safe for inclusion in a food product or in a plant environment is not at all affected. It is very rigorous and world class.

The issue here, though, is why are we adding another 18 months or 2 years onto that process to go through the standard regulatory procedures of the Canada Gazette, particularly when the submission involves a food safety advance? We can argue about other types of approvals of additives, let us say, that are more of a commercial interest and may be of less significance from a health and safety point of view. For example, Health Canada has to approve official test methods that are recognized for mandated tests for food safety in food plants. Right now, there are rapid test methods that are available to our competitors in the United States that allow them to much more rapidly identify a pathogen and act on it to mitigate the risk than we have available for use in Canada. That disconnect, in my view, not only gives potentially a commercial advantage, but more importantly, it gives those operators a food safety advantage. Those disconnects are partly because Canada is a small market and the suppliers of these technologies generally only pursue an approval in Canada after they have achieved approval in the United States or larger countries. Any delay is very unfortunate and negative for the interests of Canadian consumers.

In the case of what I was mentioning to Senator Plett, no, it is an issue of having harmonized approaches. That is really what I wanted to say. We should have the ability to recognize as soon as an FDA or a U.S. approval of the intervention is given in the United States, and we would like to have the immediate ability to use the same in Canada.

Senator Robichaud: Mr. Harrison, would you like to explain your nodding?

Mr. Harrison: I would indeed. Thank you very much.

There are three points. I will make them very quickly. The first is Canada's pre-market evaluation system for food additives and health claims is somewhat different, but sometimes there is a claim associated with an additive. They have already been modernized. Canada's pre-market evaluation framework for health claims is world class. It has been benchmarked against that of the United States, Japan and the European Union, and Agriculture and Agri-food Canada has done much work on this. That work is available to the committee on request, I am sure.

The food additive pre-market evaluation process and the standards are also world class. They have been extensively modernized. What is required is quite clear, if you want to go into the process. It is an expensive process. It can take years. It can take perhaps as much as $20 million to $30 million to support an approval or health claim, because of its significance and its rigour, so that is vitally important.

Going through cabinet committee twice and the Canada Gazette process is wasteful. It is an improper use of resources once all those scientific requirements have been met, and it is simply delaying getting to market things that are important, either from an international competitive point of view or from a food safety point of view. Eighteen to thirty-six months is kind. Health Canada and CFIA have both had regulatory amendments that they wish to make for various purposes that have been delayed by as much as six years because of the backlog of things that go through the cabinet committee process.

Finally, there are other ways of meeting our international trade obligations that are met through the gazette process. Those are done all the time by other jurisdictions. They notify trading partners under the agreement, under the WTO. We do not need that process to meet our trade obligations either.

With respect, I do not believe there is any safeguard or additional period of sober second thought provided by that process that is meaningful, helpful and of net benefit to Canadians at the consumer level or the economy.

Senator Robichaud: That then means you are quite comfortable with whatever processes and audits are made, in this case in the United States, on the new processes that come forward, because when those are approved, after a while, people have to look at the method and how it is done. You are quite satisfied with that, are you?

Mr. Harrison: Let me comment on that. Canada's food regulatory framework and our agencies responsible for that are very competent, and there are a number of countries around the world who are likewise competent. The U.S. is one, the U.K. is another example, as are Australia and New Zealand. Our systems and our administrative law are very similar, but what is vitally required is a mutual recognition, meaning the scientists and the pre-market evaluation systems of the U.K., the United States, Australia and New Zealand. We need much greater use of mutual recognition. If Canada invests a lot of money to do that pre-market evaluation, it should be recognized as having integrity and could be used by other jurisdictions. Likewise, we need to do the same in Canada. I hope that helps.

Senator Robichaud: I think you mentioned an amendment to the bill that is before us. Would you provide the committee with the substance of that amendment so that we could study it and see how it could be incorporated? Would you supply us with that, please?

Mr. Harrison: Yes, I will do that. I will do in a comparative fashion with section 4 as it is to be amended under Bill C-38. I will do a comparative text as it might be further amended to accomplish what I am talking about. This will serve as input to CFIA as well and to Health Canada. I would be pleased to do a written submission. Thank you for the invitation.

[Translation]

Senator Nolin: Mr. McAlpine, the committee knows about the modernization of the inspection process that the agency has undertaken. If someone needs to be convinced of it, we need only look at the Department of Finance's budgetary plan that indicates that, in the next four years, the agency will save close to $120 million.

What would your reaction be if these cost reductions took the shape of a decrease in the number of inspectors?

Mr. McAlpine: We are not in favour of a decrease in the number of inspectors. We recognize the role of inspectors, but we also value the importance of an approach that involves the verification of systems.

[English]

They have a compliance verification system. We value inspection, but it must be a modern approach to inspection where we do not necessarily need an increasing number of inspectors. We need better trained inspectors, better systems, better data management and capture, such that we can identify food safety risk trends that are occurring in a plant environment for example. We need to have an appropriate balance of responsibilities established between the inspection function and the obligations of the operator of the facility.

We have been very happy to see that in fact there have been more inspectors hired. More importantly perhaps, there is also better training, better qualification, better tools and better laboratory facilities being invested in. That is the future of modern food inspection from our point of view.

[Translation]

Senator Nolin: And they are going to reduce their costs, despite everything?

Mr. McAlpine: Yes, it is always possible to reduce costs. It is a question to ask the government but, to my knowledge, they have found ways to share the administrative costs between, for example, the Department of Agriculture and Agri-Food Canada and the Canadian Food Inspection Agency. However, that does not have an impact on the presence in our factories.

[English]

Senator Nolin: In Canada we enjoy interprovincial barriers. To what extent are you concerned by that?

Mr. Harrison: We see few interprovincial barriers in many further processed food subsectors. It is important that we distinguish between interprovincially marketed foods and those that are not. This is one of the reasons the Food and Drugs Act is so important and why for now it will continue to exist, because it essentially overrides in terms of human health and safety. It is important to note that this remains in the federal jurisdiction.

Interprovincial trade is much more in Mr. McAlpine's domain.

Mr. McAlpine: The comment was made previously by witnesses about the two-tier meat inspection system. That is a problem. The point is that it does inhibit interprovincial trade but, more to the point, as was stated, to have two tiers of food safety in meat consumption is something that I do not think Canadians deserve. They should have higher expectations.

The issue perhaps more than anything, as a national company operating in several provinces of Canada, is frankly not so much the notion that there are actual barriers to the movement of our products. There are not so much. However, there is tremendous regulatory fragmentation. Whether you talk about environmental standards, labour law, pension administration or food safety administration in the case of the meat inspection that I mentioned, when trying to operate supply chains that are national and achieve cost efficiency and minimize regulatory compliance burdens, it is very difficult in this country, particularly as we now compete with a par dollar.

I am going beyond food safety but this is a commercial reality that is very real for the food industry in Canada.

Senator Peterson: The food industry in the next while will see a number of changes in the matters of canning, labelling and packaging of products. The suggestion is this will bring economic benefit to Canada. There is also the suggestion that now processors will be able to move outside of the country for economies of scale and ship the excess product back here at a very much reduced rate. Is this issue real or not?

Mr. McAlpine: Yes, it is real. There is a very real competitive threat. Imports of processed foods are growing rapidly and plant closures in Canada are occurring rapidly. One company, a Canadian company, Maple Leaf, is currently in the phase of investing $575 million over four years to modernize and scale up our Canadian plants so that we can be competitive.

There is absolutely a phenomenon where plants are closing in Central Canada, production is shifting south of the border and then imports are growing. It is a very real commercial situation and one that puts the industry at long-term risk.

Mr. Harrison: I would quickly add that Mr. McAlpine has alluded to the complexity of operating a food manufacturing business and supply chain in this country by virtue of all kinds of regulation outside the purview of CFIA and Health Canada. All of those influence investment decisions. I would also comment that Canada has and retains North American product mandated facilities. It is not that we have lost them all. We have some very good facilities and those, too, have good economies of scale. Major multinational corporations that operate globally continue to maintain product mandated facilities that service the U.S. and Mexico. It is always a threat. You have to look carefully at the regulatory framework. I can speak from our industry perspective that we have regulations we deal with on other fronts that are inconsistent with those in the United States. This is always of concern. We would like to be better aligned.

Senator Plett: Mr. McAlpine, I think you may have answered the question but I would like to comment for the record. We have, over the last number of years, increased by between 600 and 700 net new inspectors. For the record, again, would you be able to tell us whether you are happy with the direction that we are going in as far as the inspection process is concerned and, indeed, we are not cutting back on inspectors, we are improving what we have already done?

Senator Robichaud: I could answer that for you.

Mr. McAlpine: Certainly we appreciate that investment. It is very valuable. It has also been important because U.S. expectations for continuous presence in our plants allows us to meet U.S. requirements and that is important, not only for food safety but for economic opportunity in our export situation. We value that very much.

Mr. Harrison: I personally am encouraged by the opportunity for better clarity and better training in particular. What industry would like to have is consistency among regional offices of the Canadian Food Inspection Agency. It goes beyond the continuous presence issue. It is much more important to have people who are well trained and able to administer these statutes and regulations consistently across the country.

The Chair: As we conclude, we wish to thank the witnesses. As we have seen, the Standing Senate Committee on Agriculture and Forestry will continue to be very persistent in ensuring due process on Bill S-11 will be given and utmost consideration with fairness and diligence with the Government of Canada and all stakeholders in order that we have the ultimate objectives so the act will provide industry clear, consistent, straightforward inspection and enforcement rules so they can best meet the responsibility to put safe food on shelves for Canadians across Canada.

Witnesses, we thank you for your comments.

(The committee adjourned.)