Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 32 - Evidence - Meeting of April 18, 2013


OTTAWA, Thursday, April 18, 2013

The Standing Senate Committee on Agriculture and Forestry met this day at 8:02 a.m. to examine and report on research and innovation efforts in the agricultural sector (topic: traceability).

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, and I am a senator for New Brunswick and chair of the committee. I would like to say on behalf of the committee a sincere thank you to the witnesses for accepting our invitation to share your vision and your professionalism with us. At this time I would like to ask senators to introduce themselves, please.

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

Senator Tardif: I am Senator Claudette Tardif from Alberta.

Senator Merchant: Pana Merchant from Regina.

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

Senator Buth: JoAnne Buth, from Manitoba.

[Translation]

Senator Maltais: Ghislain Maltais from Quebec.

Senator Dagenais: Senator Jean-Dagenais from Quebec.

Senator Rivard: Michel Rivard, The Laurentides, Quebec.

[English]

Senator Callbeck: Catherine Callbeck, Prince Edward Island.

[Translation]

The Chair: The committee is continuing its examination of research and innovation efforts in the agricultural sector. The topic of today's meeting is traceability.

[English]

We have two witnesses, Mr. James M. Laws, Executive Director of the Canadian Meat Council; and Mr. Jeff Clark, Manager of PigTrace Canada, Canadian Pork Council.

Thank you for accepting our invitation to appear. I am informed by the clerk that Mr. Clark will make the first presentation, to be followed by Mr. Laws. Questions will then be asked by senators.

The floor is yours, Mr. Clark.

Jeff Clark, Manager, PigTrace Canada, Canadian Pork Council: Thank you for the opportunity to present to you this morning. I have prepared two different pieces for you: One is a written submission and the other is a series of slides. I will be referencing both as we go through.

I manage the PigTrace Canada program, which is the swine traceability program designed and being built by the Canadian Pork Council. Our Canadian Pork Council board of directors has targeted traceability as a priority for the past 10 years. Through that time, we have gone through a series of design phases, some pilot projects and a negotiation with Canadian Food Inspection Agency on regulations.

It has been developed to provide protection, prosperity and peace of mind to the Canadian pork industry by providing traceability tools that enhance the ability to contain and eliminate potential issues affecting animal health, food safety and human issues. First and foremost, the goal of swine traceability is to mitigate foreign animal disease and ensure food safety.

We recognize there are certain market access, product attributes and information that could be relayed using a traceability system. I look at traceability as an information infrastructure.

We have traceability today; it is just not very good. It is paper-based. It is phone calls and going to farms. It is very labour intensive. We do not have a lot of people within animal health departments anymore, so we need to make use of technology and information sharing.

Also, the structure of the industry in Canada is very diverse and there are a lot of different ownership groups; it is not just one integrated owner, like they have in Denmark, where it is very small, integrated and easy to share information within the country. Canada is very diverse.

The big challenge is how to get all that information centralized so it is quickly referenced. How do we get that information into a centralized system in as quick a manner as possible so that we are avoiding unnecessary phone calls and delays if there is an issue, whether it be food safety or foreign animal disease?

From the industry perspective, timeliness mitigates financial losses. The quicker a trace-back can happen, the quicker we can help the CFIA or a provincial chief veterinary officer — whoever it might be — do their job to help us, and the fewer financial losses the industry experiences, which affects the rest of the Canadian economy. We view it as a Canadian public good.

As many of you know, the pork industry is heavily export dependent; almost 70 per cent of our production is exported, either as live animal or pork. I have some numbers here. The pork industry contributes $9.28 billion annually to the Canadian economy. Again, improved response to crisis events — and they can be many, including agro- terrorism — can minimize costly market disruptions and financial losses, as I said.

PigTrace aims to offer improved financial sustainability by maintaining or quickly regaining market access if something does happen. We recognize there may be a market disruption. How long that market disruption will be really depends on the quality of information we have and the response efforts by our animal health and food safety officials. That is really the target of what PigTrace is all about.

We do recognize some of the marketing parts of it, as I mentioned earlier, such as source verification and product attributes. As I mentioned, traceability can be an information infrastructure, much like the Internet. What you put on there is up to the user. If you are the Canadian Meat Council, maybe you care about meat attributes. How do you verify that for the consumer? You can use a traceability system, which is an information system.

We do recognize some of those values, but they are not in any way the primary focus right now; the primary focus is building a quality disease and food safety control system that will help our country in the event of a crisis. If we build that standard, all of those other criteria and market access will be satisfied. I believe in that.

I will give you a status update of what PigTrace is today and where we are. We have completed the Canadian Pork Council and our provincial member associations across Canada. We have completed the development of our traceability database, which has been a critical step forward and has taken a long time. We have been working closely with industry stakeholders throughout the pork value chain to really assess the needs and the ability to comply with the program that we are putting together. We have incurred about two years of delays, unfortunately, and that kind of got back on track February 2012. Today, we are poised for full implementation of the Canadian pork value chain. It is an exciting time for me to really see this get off the ground after being involved with it for eight years.

With that, we definitely look forward to the very generous Growing Forward 2 funding that has been announced. I have put in a funding application to Growing Forward 2. We are still trying to leave the development stage behind us and get into implementation and get going, so it is still a very immature program and we need assistance. I believe that once we are up and running, things will move smoothly.

I have talked with many producers across the country and the rest of the industry. People understand the need for a traceability system. I think people are concerned about potential costs. They are concerned about a potential burden on them. Therefore, my first goal is to develop a system that is as least burdensome as possible. At the very least, we can make this an easy thing to do for our industry.

Key priorities moving ahead this year involve a national awareness campaign that we are ready to launch. We are quite excited about it. It will go out to all of our industry stakeholders across Canada. With that, there will be an industry outreach effort to properly train and educate our industry, to get everyone onto the program, to become aware of what the requirements are and to understand what future requirements will be mandated under amendments to the Health of Animals Regulations, which we expect within the next year or so.

A high level of compliance needs to be attained well in advance of a mandatory environment. Timeliness is critical. We have less than a year left before this program is mandatory, so we really do need to get out in the field and get this program implemented. We need support staff out in the field, something for which I have applied for federal funding to support.

We have heard from producers that the only way we will succeed in implementing this program is people out and about in the field talking to producers. I can do it from a telephone, but it is not the same as being on the farm or meeting in a local district office.

Another big priority is preparing for the regulations that we expect to come. The Canadian Pork Council will be named the national program administrator under the regulations, which comes with quite a bit of responsibility as an organization. We will continue working very closely with the Canadian Food Inspection Agency on compliance and enforcement as we move forward with that. The message I leave you with is that PigTrace is an exciting vision. It is still a program in its infancy and it needs time and support to mature.

As a parting comment, there are five key messages on the back of our written submission, and this is part of our awareness campaign. First and foremost are emergency preparedness, financial stability, market access, business protection — and the last one I think really captures the essence of traceability — food security, value chain security and business protection.

We view PigTrace as giving the Canadian pork industry a competitive edge globally by offering pork buyers and importing countries improved production security that is resilient to market disruptions resulting from disease or food safety programs. That is still a philosophy right now, but my vision, even if we did have a crisis in this country, is that PigTrace can demonstrate that a value chain is free of that crisis and that value train could potentially continue to trade even though there is an issue in part of the country. I think if we have a good quality traceability system, geography will not matter: It is value chains that matter.

I leave you with that. An underlying theme is value-chain protection and eventually value-chain enhancement in terms of improved market access and trade.

James M. Laws, Executive Director, Canadian Meat Council: Good morning, everyone. My name is Jim Laws and I am Executive Director of the Canadian Meat Council here in Ottawa. I am pleased to speak to you today about traceability in the Canadian meat industry and to tell you about the many things we have been doing for years.

As you may recall, the meat industry is the second largest component of Canada's food processing sector, with annual revenues valued at over $24 billion and total employment of almost 70,000 people. The meat-processing industry includes over 400 establishments, providing valued jobs and economic activity in both rural and urban settings, with major concentrations of firms located in Alberta, Manitoba, Ontario and Quebec. Canada's meat- processing industry adds value to the live animals born and raised on Canadian farms, providing a critical market outlet and supporting the viability of thousands of livestock farmers.

I met with you last on June 28, 2012, when you were seeking our views on Bill S-11, the Safe Food for Canadians Act, which received Royal Assent in November 2012. The new act will replace Canada's Meat Inspection Act, Canada's Fish Inspection Act, Canada's Agricultural Products Act, and the food provisions of the Consumer Packaging and Labelling Act. The new act will come into effect when the new regulations have been written and put in place.

The new Safe Food for Canadians Act, Bill S-11, addresses traceability from two different perspectives: animal health and food safety. Moreover, the Safe Food for Canadians Act covers all food commodities. I cannot speak for all foods, but I can tell you that Canada's meat industry has strong traceability systems and has had them for many years.

The Safe Food for Canadians Act will amend section 94 of the Health of Animals Act, requiring persons to provide to the minister information in relation to animals or things to which this act or the regulations apply, including information in respect of their movements, events in relation to them and places where they are or were located.

The industry has very good systems for identification of live animals such as hogs, cattle and poultry back to the farm of origin. Animals received at the slaughter establishment must have identification. Live animals received at the processing establishment are inspected by veterinarians and inspectors. After slaughter, all carcasses are inspected. All meat in a federally inspected plant is inspected and deemed safe to eat.

Section 51 of the Safe Food for Canadians Act addresses the main pillars of traceability from a food-safety perspective. It states that the Governor-in-Council may make regulations for carrying out the purposes and provisions of this act into effect, including regulations respecting the traceability of any food commodity, regulations requiring persons to establish systems to identify the food commodity, determine its places of departure and destination and its location as it moves between those places, or provide information to persons who could be affected by it.

The Codex Alimentarius Commission, established by the Food and Agriculture Organization of the United Nations and the World Health Organization, develops harmonized international standards, guidelines and codes of practice to protect the health of consumers and ensure fair practices in food trade. Codex defines traceability or product tracing as:

. . . the ability to follow the movement of a food through specified stage(s) of production, processing and distribution.

The globalization of our food supply adds to the complexity of traceability systems. Our customers, such as retailers, have increasing demands of the meat industry, including the adoption of private standards, such as the Global Food Safety Initiative, or GFSI, which require independent audits.

What is absolutely critical from a meat industry perspective is the ability to ensure traceability from the perspective of a recall and having good supply-chain management and records and electronic systems. This is achieved in the interest of food safety and has been required for a long time already by section 60.2 of Canada's Meat Inspection Regulations. Those regulations specify that every operator or importer shall develop, implement and maintain written procedures for the recall of meat products that shall meet the requirements set out in the food safety enhancement manual and the manual of procedures. As well:

The operator or importer shall develop and maintain any product distribution records that are necessary to facilitate the location of products in the event of a product recall.

It also requires that:

The operator or importer shall review the product recall procedures and shall conduct a product recall simulation at least once a year.

On the request of an inspector, the operator or importer shall make available to the inspector, in a readily accessible location, a copy of the product recall procedures, the results of the product recall simulations for the previous year and the product distribution records. . . .

There is a requirement for how long that must be maintained.

The Global Food Safety Initiative also requires that its auditors verify that a food processor have in place strong recall procedures. They must prove that they have records of exactly to whom they sold which products.

Meat processors in Canada code all of their products, permitting effective identification and facilitating the recall of a specific product or lots. All ready-to-eat meat products are identified with a production date or production code identifying the lot. I brought with me some meat samples to show you. I brought shelf-stable ones, pepperoni. There is a lot of information on the package. You can see the best-before date, the establishment number, the time and the date, so there is a lot of information on that. I will pass one this way, and I have a couple more I will pass this way.

An Hon. Senator: Can we open them?

Mr. Laws: You certainly can. I had trouble getting through security, so I do not want to carry them back.

Members also maintain product distribution records to facilitate the location of products that need to be recalled. Records are maintained for a period of time exceeding shelf life and expected use of the product.

All Canadian packaged meat also has the Canadian Meat Inspection Legend on it, showing the establishment number. I believe you have a copy of this document that I passed around. The top one is the current Canadian Meat Inspection Legend applied by the Canadian Food Inspection Agency. The logo is a crown with a number on it. If you go on the Canadian Food Inspection Agency website and search that particular establishment number, you will know exactly where that product was manufactured. The logo below, which I like better, is the one used by the fish industry. There will be an opportunity when we combine the regulations for all food sectors to merge the inspection logo. That is interesting. There are not a lot of foods that have the identification of the plant number applied. They are able to inkjet the establishment number on the crown logo on the package.

Canada's meat processing industry is big business with total sales last year exceeding $24 billion. Companies maintain very advanced computerized process and inventory control systems. Mainframe computers with business enterprise software such as IBM's AS/400 operating system or SAP software are typically used to run their large business control systems.

They have very sophisticated equipment that can print out a unique multi-digit bar code on each individual box. I have handed out as well several examples of bar codes that are used. One of them has the explanation of how this particular company manages. As you can see, it is a very long bar code, much longer than a standard UPC that you will see just to identify a product. They can customize the information that they put into their computers. I have had it translated on the back as well for you. That is one example of a bar code and there are others that I passed around today. It is a very powerful tool that they use. They have the ability to code each individual box. Wireless, hand-held bar code readers enable forklift operators to place and find specific boxes in huge cold storage facilities. In the event of a product recall for food safety reasons, tracking the product back to the meat processing plant of origin is performed readily thanks to the records kept.

Businesses within Canada's meat industry need to determine the level of food traceability that is best suited to their operations. This means limiting the risk to human health by developing economically viable systems that can respond quickly and efficiently to food safety emergencies through recalls if required. If a meat company fails to demonstrate effective food safety and recall controls, it could well mean the end of their business. Meat processors keep records on more than just their meat. They know where they source their packaging and their ingredients, such as spices and salt.

We at the Canadian Meat Counsel support the ability to track meat from the carcass in the cooler to the farm of origin for all meat products. However, we believe that it is not practical, necessary or economically feasible to regulate a system to track meat from retail package all the way back to the animal or the farm of origin. This would be particularly true for a company that is manufacturing processed meat products, like the ones we passed around or sausages, because such products come from many animals that were mixed together. We cannot imagine how people in other sectors of the food industry, such as milk, cooking oil, bread or frozen pizzas, could possibly be expected to trace a product back to the animal or farm of origin without imposing unaffordable and unsustainable regulations on all food processors.

All meat in a federally inspected plant is inspected by the Canadian Food Inspection Agency and is deemed safe to eat. In the event of a product recall, tracking the product back to the meat processing plant of origin is sufficient, we believe. We cannot lose sight of the fact that the meat industry is but one component of the entire food supply chain. As such, our investment in traceability, which is very substantial, must offer maximum benefits while yielding net value to ensure that food safety and animal disease outbreaks can be detected and addressed quickly and accurately.

We also support the adoption of 100 per cent on-farm food safety programs where hazards, such as pesticides and farm fuels, are kept safely away from animal consumption. More work is being done on farms to control pathogens such as E. coli 0157:H7 in cattle, salmonella in pigs, and campylobacter and salmonella in chickens. Moreover, when antibiotics and other veterinary drugs are used on farms to keep animals healthy, records are kept to provide proof that proper withdrawal times are followed prior to sending animals to market.

I have mentioned that I passed around several products. I have also passed one example of one company — but there are many of them — that manufactures sophisticated, expensive and highly automated equipment that weighs and labels individual products. It is very fascinating. I understand that committee members have visited a meat processing facility, but if they have not seen one that has highly advanced labeling equipment, we would be happy to arrange a visit when it suits.

I would be happy to respond to any questions.

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

Senator Plett: Thank you, gentlemen, for being here this morning. You gave us a slightly different perspective with your feelings on how far we should trace our products. I am not in any way suggesting that I disagree with you, but as Mr. Clark pointed out, we are very dependent on export. European countries are demanding more traceability from farm to fork, if you will. Denmark, which was mentioned, has a system, but perhaps it is a lot easier to do it in a smaller country.

I understand some of the ways that we trace pork. To trace it from birth to the slaughterhouse is not that difficult because of our pyramid system — a sow and her weanlings are shipped in the same group. With the demands from European countries, will we not need to go further and trace from birth to the fork? If we are not doing it, is it because of the economics? As I suggested, we heard from your colleague here the other day. He painted a bit of a bleak picture of the hog market and could not afford to do more traceability than is being done.

Where do we go from here in order to keep up our exports? I would like both of you to respond.

Mr. Clark: There is a very important distinction between Mr. Laws' angle on this and my angle. I spoke to live animal traceability and Mr. Laws spoke to meat traceability. The bridging of those two is done at the processing plants. I would agree with Mr. Laws that true birth to consumption traceability should be consumer-driven. I would question how it improves our core infrastructure. I do live animal traceability as part of our critical infrastructure protection in Canada — food security, foreign animal disease, food safety issues. That should be standard across the country. Give us a very effective but bare bones response to foreign animal disease and food safety. Consumer-driven things, such as the EU wanting meat-to-birth traceability, do not give us any value in terms of emergency response. I cannot think of a situation where a meat product would have to be traced back to where the animal was born in terms of food safety or disease issues. I cannot envision that. From the plant, from the carcass to the birthplace, I can see that. That is critical; that is important. We need to be able to do that. Similarly, the meat product back to the processor is important because there is certainly secondary processing that happens to the meat product.

Again, I want to stress the distinction between live animal trade traceability that takes us up to the plant. The meat traceability that Mr. Laws spoke to goes further. It is a two-step traceability system. If the consumer globally cares about product-to-birth traceability, then let them pay for it. The whole country should not be regulated and forced to do that. We do not gain; industry does not gain. If a specific company or processor sees a small niche market — and I think it is a niche market — that wants that, let them go through their own pains to develop that and market it that way; all the power to them. We will do our part on live animal traceability to help them do that.

Mr. Laws: I certainly must agree. In fact, the label from this particular company in Alberta, for instance, is a smaller facility. It is a nice, new facility in Lacombe, Alberta, and they can do it. They can track the meat back to the live animal. People can do it, but it does add a lot of cost to the system. If you look at a country like Japan, it a very important market for Canadian pork products and hopefully will become more so for beef also. They have a great confidence in the Canadian system. They do not require it. We send a lot of pork to Japan, but what they are most impressed with is our on-farm food safety control systems, our in-plant sanitation systems and our ability to get fresh, chilled meat to Japan and still compete with meat sold in Japan because it is of such high quality. That is what is really important.

I agree with Mr. Clark. I have been trying to think of a reason one would need to track all the way back to the farm. If you were not confident in the farm sector's ability to keep animals away from dangerous materials like pesticides, et cetera, then maybe you would feel the need to do that. We are very confident and we have controls in place to check for antibiotics and for other residues. We know that is under control and that it is improving all the time.

Traceability is part of a food safety goal, but food safety, where you will get the most bang for your buck, is a whole other story. Traceability is certainly dependent on what customers are asking for. It is very sophisticated at the meat level. I was quite impressed. I go to members' facilities. You are in this very large warehouse and they have these wireless hand-held devices and laptops. They are given the order that they have to fill; they know exactly where they need to go to pick the boxes to fill that specific order. It is highly automated.

Senator Mercer: I think we are talking about two different tracks of traceability now, if I am hearing you correctly. We are talking from birth to the plant and then from the plant to the plate. Is that what you are suggesting, that there are two different tracks here?

Mr. Laws: Yes.

Mr. Clark: Yes.

Senator Plett: I certainly agree with the comment about it being consumer-driven. You talked about Japan, Mr. Laws. We had the occasion — and I know them well; they are from my home area — to tour the HyLife facility in Neepawa. They ship the majority of their product to Japan. Japan pays a premium for dealing with HyLife and getting that product. In that case their requirements are consumer-driven.

My concern, even though I do agree, is that if we are as dependent on the export as you suggested we are — and I believe we are — then we will have to find a way to meet their demands because they will just say, ``Well, we will buy from Korea because they have the traceability we want.'' Is that not the case?

Mr. Clark: In terms of global traceability in the pork industry — and Mr. Laws would be more familiar with multi- products — what we are proposing to do in Canada is world class. We do not want to outcompete ourselves. If we are going to take a monumental leap forward with a national traceability system, the U.S. is building a system that is quite different from ours, but it will get the job done. In the marketplace, though, ours is world-class.

Why would we have to take too many steps forward? Let us say we charge the end buyer a premium because we have to. Will they go to Brazil or to a different country? We have to be careful how far we go.

Senator Tardif: This question may have already been answered in your responses to Senator Plett's questions, but I wanted to get back to it. In your statement, Mr. Clark, you indicated that the current state of the traceability system for the pork industry was not where it should be, that it was labour intensive and that there was still a lot of work to be done. It was dependent on phone calls and though it could be a major information infrastructure system, it was not there yet.

However, Mr. Laws, you indicated that the state of the traceability system in the meat processing industry is state- of-the-art. Why these divergent views? Is it because we are dealing with two traceability systems?

Mr. Laws: Yes; I think that is the case. In the case of the hogs that come to the meat processing facility, there are tattoos on the animals that come from certain barns. We know exactly where they come from and now there is a different number for every farmer across the country, so that is not a problem. Cattle have radio frequency devices in their ear tags. We are able to read those electronically. When they ship loads of chickens, they have to arrive with a bill of lading that shows the flock. The farmer has to fill out that they have met all the veterinary drug withdrawal periods, et cetera, schedules. That would have to be the case; otherwise, farmers would not get paid for their animals.

Yes, we have improvements to make, but we know where those animals are coming from. We can get back to the farm very quickly.

I will let Mr. Clark speak about the farm level.

Mr. Clark: To clarify, there are multiple dimensions to this issue. Mr. Laws explained perfectly well that a given processing plant in this country will have a relationship with the producer. They can do one-step traceability. This notion of one-step traceability is probably something we have had for 50 years. Slapping tattoos on pigs going to plants has been a practice since the 1950s, I believe. There has been traceability. The issue is that Canada is such a big and a diverse country. We have a great number of processing plants and a great number of farms. That one-step traceability, as a country, quickly becomes a web, a network, and no one can pull that together in a readily accessible way. That is where the phone calls come in. If there is a foreign animal disease issue, yes, the HyLifes of the world will have very good traceability information, as will Maple Leaf, and the smaller provincial plants throughout Canada, of which there are many. There are all these nodes of information across the country, which are not integrated at this point in terms of information. How do you access that information? You are making phone calls or you go on site to look at a company's records or you go to farms looking at producer records. One-step traceability has been in place for a long time, but bringing that together as a country is the next big step.

In addition, the meat traceability side of it — Mr. Laws would speak better to this — is driven by food safety and how meat is processed in the plant. I think the need for plant-to-consumer food safety probably came before this additional need we are seeing, whether it is for on-farm contaminants like fertilizers or drug residues, foreign animal disease issues or what have you.

Senator Tardif: When you say that Canada's meat processing traceability is state-of-the-art, are you just referring to it from the meat processing point of view from the plant to the table and not from the farm to the plant?

Mr. Laws: Again, I do speak for the meat industry, but we will get better at tracking animals for animal health purposes. You are right that we are a very large country, but we are still able to get information very quickly. We are probably not the best in the world, but companies are getting new equipment all the time. Another company has developed a product that would print a QR code on each package of which you can take a picture with your smartphone. That would be linked to a system on the Internet that would contain a lot of information. That is probably the next big step that will be coming.

Senator Merchant: Who is the best in the world, then?

Mr. Laws: I really do not know who is the best in the world for traceability. I can tell you that Canada exported some $4.5 billion worth of meat to over 150 countries last year. The world sees Canada's meat as very desirable. Traceability in and of itself is not something that one sells as a fantastic attribute. Taste, shelf life and food safety are very important attributes. Traceability is just a function of what is needed in the event of a recall. Some may like to know where their meat comes from, and that is fine. Certain very small players can meet that need.

There is no way that you can trace the milk you buy back to a cow, unless it came from a very small processing facility. How would you trace peanut butter back to a farm? You would never be able to trace a loaf of bread back to a wheat farm in Manitoba. Do you want to do that? I do not hear anyone saying they want to do that, so I do not understand why some think we should be able to trace meat back to a farm.

[Translation]

Senator Rivard: Thank you, Mr. Chair. You answered Senator Mercer's question regarding the two traceability systems, one from the birth of the animal until its slaughter, and the other from the retailer to the plate; I would say up to when the consumer purchases the meat, because after that he is responsible for its preservation and for respecting the best before dates, and so on. Did I understand correctly that traceability in Canada is voluntary? It is not mandatory?

Mr. Laws: Firstly, regarding meat, federal meat regulations in Canada are very clear and state that each plant must have a system proving that it knows where its product is going. Yes, it is absolutely mandatory.

Senator Rivard: That means that if we conclude a free trade agreement with the European Union, we must have the same traceability standards as the countries that will be competing with us. So it will be a matter of quality, price, markets, et cetera. Traceability will not be used to discriminate against Canadian products?

Mr. Laws: I think that is correct. As it happens, the last time I was in Europe, I took the time to go into the stores to have a look. I did not see any evidence of traceability that would necessarily be better than ours. You saw on television that they had a lot of problems because of horse meat being mixed in with beef. Canada does not have that problem. In fact, we sell horse meat to the Europeans and we are proud to designate it as a Canadian product. When we hear that the Europeans are not even able to ensure that these products are kept separate, we feel quite confident in our abilities in this area.

Senator Rivard: We know that the pork industry in Denmark is not subsidized, as opposed to ours. The subsidies help us to be competitive and to get close to world market prices, and also provide income for our producers. How then can you explain that people say that we are not producing enough because the market is not big enough? Can you explain why Canada purchased 12.6 million dollars' worth of pork from Denmark in 2011?

Mr. Laws: That is a very good question. Indeed, the Europeans have a very high tariff on pork imports and that is why Canada is attempting to conclude a free trade agreement with the Europeans. The Danes have a protected market where they can sell their products. They are protected by these very high tariffs.

There may be a cut of the animal that they sell for less in Canada than in Europe.

Senator Rivard: It is a type of dumping, then; sales that involve a product that is less in demand and that we produce less. I see a rationale behind that. Right from the outset, all producers that we meet complain about production costs and would like to have higher subsidies. They tell us that the panacea is free trade with Europe, and then with China, Japan, and other countries. If we are as good as we claim to be, we have to wonder why we cannot produce enough to meet our own needs and also enough to export: statistics show that we purchased product from a producer country.

Your answer makes sense to me. I think we are indeed talking about a pork cut that is not marketed here. We are talking about twelve million, not billions, but it is surprising that Canada had to import pork from Denmark.

Mr. Laws: We do not really have to. Canada is a free trade zone for pork. We have no tariffs on pork imports from any country. This means that we sell almost as much meat to the Americans as we import from them. The Europeans do not function the same way. We are competing in the Japanese market, but at the same time, we cannot sell our products in Europe because their tariffs are too high. We are told that is not fair, but my father told me that life is not necessarily always fair.

[English]

Senator Mercer: Mr. Clark, you talked about two years of development and said it was an immature program, but on page 5 of the slides that you provided you show us a database and reporting tools which look pretty sophisticated. You show a hand-held device that is not unlike the one that we all have, a good Canadian product like this BlackBerry. This tool is supposed to be ready by May 2013. Perhaps you can also tell us how this hand-held device will work.

Mr. Clark: We have our core infrastructure such as these reporting tools. I am happy that you referenced them, because I skipped over them. It has taken a long time to develop them to this stage for multiple reasons — operational, legal and contractual. We finally got it to a stable position in late 2012. When I say ``immature program,'' it is the deployment of these tools. My target audience is about 8,000 stakeholders in Canada, which is a pretty wide web of people to hit. To date, we have been right across Canada through our provincial pork associations and talking to producers, assembly yards and abattoirs; but we have not truly deployed these tools.

Mr. Laws referenced some of the animal identification in the industry, such as the slap tattoo on a market hog, which has been in place for years. However, having it reported to a centralized database, such as the screen shots you see here, has not happened yet. When I get back home, probably starting next week and the week after, this will begin to happen. We are truly right at the cusp.

As for a mobile device, I am sorry, I do not have a BlackBerry; but we are very excited about this functionality. It is a simple interface. We are asking for the key elements of information. It is mobile-accessible as not everyone has network coverage. Without going into the technical details, it is a really nice interface; and I am quite happy with it. It is an infrastructure that we will be able to build on and we are looking forward to it.

Senator Mercer: Perhaps at some future date we might find out how it is working.

Mr. Laws, you talked about the necessity of having simulated recalls once a year, I believe you said.

Mr. Laws: Yes.

Senator Mercer: Are the results of the simulated recall made public? What are the penalties for failing the test? What are the repercussions?

Mr. Laws: The Canadian Food Inspection Agency reviews this with every facility at least once a year. It is a requirement. They have to pass the requirement or they have to prove that they can pass. Otherwise, the Canadian Food Inspection Agency will issue them a corrective action request and they have to fix it. If they do not fix it, their licence will be pulled; it is as simple as that.

I do not believe that the results are made public because if they do not pass, they will not be in business. Everyone passes because they have to pass. If they do not pass, they have to rectify the problem until they pass.

Senator Mercer: I guess that goes back to whether the information is accessible from the CFIA through some kind of access to information, which may not be in your purview to answer.

It is very useful to see some of these packaging logos that you spoke about earlier. I question this label because it simply says ``inspected'' and has the Canadian Maple Leaf on it but nothing else. You cannot trace anything with that. I am curious as to why we would have a label like that if it will not help us with traceability, whereas the others have numbers and codes.

Mr. Laws: That is a good question. Those two labels are for fish. They will have the option of putting the establishment number somewhere else on the package. For instance, this package does not have a number on it, which allows a company that manufactures this product at several facilities to use the same packaging for all their facilities. The information on the side of the packaging to identify the facility is applied by ink jet — for example ``establishment 522A.'' They use that simple label provided the establishment number is marked elsewhere on the package.

Senator Mercer: We are at the early stages in all of this, even though someone wisely pointed out to me that we have been able to trace cattle for a long time because they have been branded. Would it not be wise to come up with a standard format for the traceability of all products, not just meat, including fish?

Mr. Laws: That is a very good question and I believe that is absolutely right. The regulations and the identification that we have to have are very advanced, whereas other industries and food sectors do not have to apply the establishment number.

One of the things that really bothers me is that for certain imported products, such as peanut butter, a company can write ``imported for'' on the label, which tells you nothing. You do not know where it was made, but you know only who it was imported for. That is the case as well with certain frozen pizzas. If the pizza has meat on it, it must say ``product of'' and the country's name. Many of them come from Germany. If that frozen pizza made in Germany does not have meat on it, they can put ``imported for'' and that is all the consumer knows.

If you are trying to determine what type of information Canadians would like to know, that is a whole different story. In Canada we have a lot of work to do because there is a lot of discrepancy between the food sectors. The meat industry is way up here compared to other sectors of food, in particular Canada's federally regulated meat inspection. As well, there are provincially registered meat establishments in some provinces that are rarely inspected; but that is another issue that is of overall concern to us that goes beyond traceability.

Senator Mercer: My final question goes directly to your last comment.

Mr. Clark: Your question is more directed to the meat side, but I want to add something on the live animal side. There is a great amount of harmony and synergy among the many livestock groups and the federal and provincial governments through the Industry Government Advisory Committee on Canadian traceability. We have a very good national framework that we are building on. There is a great amount of similarity and synergy on the live animal side.

Senator Mercer: If I understand, pork is tattooed and beef is electronically ear-tagged. The system for beef is a little more technologically advanced than it is for pork.

Mr. Clark: The form of identification kind of suits the industry. Traceability is not identification, and the cattle system is an identification system to date. They have the ability, if they moved in that direction, to do true traceability, which is ``show me all the different farms and places this animal has visited.'' That has not happened to date in Canada, other than in the province of Quebec.

You are right that we have different modes of identification. The pork industry also sells an electronic tag voluntarily. We do not mandate it for the entire industry. We have the same international standard identification system as the cattle industry has. That same core infrastructure is there for all species, including dairy, bison and others.

Senator Mercer: Mr. Laws, we have heard over the last couple of years on this extremely important subject of food safety that CFIA has hired a large number of people. Without commenting on the numbers, because I will get into political trouble with some of my colleagues, are there enough people in the field doing the work, in your estimation?

Mr. Clark: I can respond first because I can attest to my experience with the new people that have been hired to head up this live animal traceability file. They are very well equipped and qualified.

When it comes to deployment, compliance and enforcement in the field, I have concerns about the number of inspectors. If we are going to do traceability in Canada under a federally regulated system, both taxpayers and industry will have to pay for it. It needs to be reputable. However, we do not have the number of enforcement agents and inspectors to truly audit, much like on the meat side. I worry that we will do all this work and not have the third party government-certified CFIA human resources to truly verify our live animal traceability system. I have to admit that when I hear about budget cuts to the CFIA I worry that we will not have a reputable enforcement agency to verify it for us.

Mr. Laws: The answer is yes if you have good people who are well equipped with good BlackBerrys, better electronics and good training. If any food facility has a system that is well designed and working perfectly, you should never need to have any inspectors or any testing for that matter — that is, if it is working perfectly. That is the goal we are trying to get to, namely, food safety programs at the farm, at the feed mill and at all the suppliers so that everything goes along well.

We have seen a lot of changes over the last 20 years. The shelf life of all kinds of food products is getting better, and I think Canada's track record is very good. Despite a couple of very high visibility media events that happened, we still have very few people in this country who have trouble eating the food.

Senator Buth: I have a couple of technical questions. We heard from Alberta Pork on Tuesday that they have developed their own system; you also referenced the system in Quebec in terms of traceability. Will PigTrace integrate with those two systems?

Mr. Clark: Certainly. I should clarify — it is a very important distinction — that Quebec as a province has done live animal traceability on other species. Years ago, when they saw that the Canadian Pork Council was moving in the direction of having a federal regulation, their provincial ministry backed away from doing a provincial regulation and a provincial system for pigs and fully supported doing a national federal system.

On the other hand, quite by surprise, about 2008 or so was at a period of time where on the national side of things we had stepped back because we were in negotiation with CFIA. I will not get into the specifics, but the appearance was that we stepped back. The Alberta government leadership as well as Alberta Pork was quite new. They stepped in. There was not a lot happening on live animal traceability on pigs at that time. They decided to forge ahead and do their own provincial system.

Now, that is a legacy piece that I have to deal with in terms of making sure that we bridge the gap in terms of what they are doing provincially and what we are doing nationally. Western Canada is very integrated on the pork side of things.

I will have to admit that communications is an asterisk. How do we communicate the program nationally when a province does something differently? Will they carry the same communication pieces and the stakeholder materials that will be going out nationally? I do not know. I work very closely with Mr. Fitzgerald and his staff at Alberta Pork; we have a good working relationship.

To clarify, Quebec with other species such as pork is fully part of our national system.

Senator Buth: There is less than a year left before the system becomes mandatory. Have you done analysis in terms of what the costs will be once you are up and running? I understand there are development costs, but what will the costs be for PigTrace? Who will pay, essentially?

Mr. Clark: First, I want to address something that Senator Mercer referenced earlier in terms of costs. Mr. Laws referenced information technology and good flow of information.

When I look at the U.S. system, there are a great number of human resources there. They have 10 times the population we have in Canada. The National Pork Board in the U. S. has designed their system to be more human resource intensive, so they are treating each state as an international boundary. Within the state they feel they have the human resource capacity to go on-farm, to make phone calls, to do those things. That is what they are doing.

On the Canadian side of things, we are putting our faith in technology. Technology can really reduce the amount of human resource needs involved. With cost to the industry, we have a great amount of faith in that same philosophy. The cost comes at the front end in terms of developing good, quality tools, and they will need to be maintained over time as technology changes. The way we have structured the live animal pig system, it is not as identification heavy as the cattle system, for example. Every beef cattle in Canada has to have an identification tag by regulation. It will not be that way in the pig industry. There are certain types of animals and certain types of movements that will require identification, so that is a lower cost piece there.

I truly believe the real cost will come up front within the time span of Growing Forward 2 in terms of our industry partners such as packing plants modifying their information technology so it can dovetail into PigTrace so we are not duplicating workload.

Educating producers, taking the time to train them and inform them how to forward information, is where I believe the cost will come. Once we are fully implemented and people understand what they have to do, what the requirements are and what the benefits are, I think the costs will be quite minimal. I do have actual numbers based on today's figures. What they will be in five years, there will be some inflation, but I am confident it will be quite a manageable amount. The true cost now is with development, deployment, education and innovation.

Senator Buth: You said you have current costs. Are you referring to cost per farmer, what it will cost on a farm basis?

Mr. Clark: I do not know if this is the forum to say numbers, but I am an honest person. If I look at what I need — and this is projecting forward — every farmer, assembly yard, slaughter facility, rendering plant, research facility, live animal fair grounds in Canada is on the PigTrace program, understands what they have to do, agrees with doing it and is fully compliant. If we are in that position, when I look at core maintenance costs to run a database, pay for all the software licences I need, the hardware, the disaster recovery that CFIA and the regulations require us to have, half a million dollars a year for all of Canada would be more than enough. Time wise, that is seven years from now. That is not what we need now to develop and grow this program, but long term, certainly industry and the public can cover that.

Senator Callbeck: When you say half a million, that is to maintain it, right? You said the big costs would be at the front, setting it up. How many dollars are we talking about there?

Mr. Clark: I should clarify. We are working together; that is, the provincial agency or service provider in Quebec, Agri-traceability Quebec; our service provider, the Canadian Pork Council; and also the Canadian Cattle Identification Agency, which is an administrator for cattle throughout Canada. Those two entities have an information infrastructure. They both have databases; they both have staff. It is not an efficient way to move forward. For a long time the Canadian Pork Council has been a big proponent of bringing those two together, having a truly Canadian multi-livestock species service provider — ``centre of excellence'' is the term I like to use. That will really reinforce our Canadian brand.

When I give these numbers, we are looking at cost-sharing multi-species. No one knows what that looks like right now. Those cost-benefit analyses are being done right now, multi-species. However, that is the way to go and this committee should know that. The need and the drive to move this forward cross-commodity is critical. None of us have enough resources, both human and financial, to go it alone.

In terms of costs now, I have put in a funding application for the next two years. A lot of that is for deploying our education campaign, having extension staff out in the field in each province or region, and also maintenance and continued deployment costs for our tools. Off the top of my head, I think I have requested about $1.5 million for each of next two years to continue to grow this program. This is a critical step. I have heard it loud and clear from our leadership both provincially and nationally, our producer board of directors, that if we do not have actual people out in the field pushing this program, traceability will be lost in the fog of other issues that this industry has to deal with. It is not that people are opposed to it, but we need to be out there with extension staff helping grow the program.

Senator Callbeck: If you have put in a request for the money for the awareness campaign and the outreach initiative, you will be out there talking to producers who will be asking you how much will this cost. What are you telling them?

Mr. Clark: I tell them it will cost their time. How long does it take you to pay bills to hydro? It is your time. That is how I see it. You are submitting information. Getting set up to submit that information in an efficient way is what we are doing right now. That is what takes time. Once that is happening in a seamless way, I view it as nothing different than paying a bill online or ordering an airline ticket. You are submitting information each time you do that. We have good information tools to do that in a quick way, and that is what we are building right now.

Senator Callbeck: When you talked about your awareness campaign, you said that before the regulations came into effect you would like to see total compliance, and I wondered what the percentage of compliance is right now. Do you have any idea?

Mr. Clark: I could answer that in a number of different ways depending on how you perceive compliance. Mr. Laws spoke to what I call the one-step traceability. People have been compliant with that for a great number of years. Most good production managers in Canada have traceability within their systems. HyLife Foods was mentioned. They know where all their pigs are. They have 80 farms in Manitoba and Saskatchewan. They know the flows. They know what is connected.

In terms of compliance to get that information into a centralized system, it is zero compliance. We do not have information in PigTrace from farms. That will happen and would have happened this week if I were not travelling, but that will happen immediately. We have producers ready to do this. Yes, they need to be nudged a little bit because they do not have to do it right now, and I sure do not want them to be waiting until they have to do it come regulation time.

Senator Callbeck: If it comes in and is mandatory, what will this traceability system mean for the consumer in terms of price? Do we have any idea what percentage or how much might be added to a pound of pork?

Mr. Clark: Mr. Laws referenced earlier that traceability in and of itself is not a product attribute. It is an information infrastructure. I used the mental image of a railway track, and Senator Mercer said he likes pictures. Traceability is a train track. The trains and cars you put on there is up to the marketplace. If Mr. Laws' meat representatives want to advertise a certain product attribute, a traceability system could help do that, but first and foremost it is a public good for emergency response. There is financial mitigation. If there is a large-scale foreign animal disease issue, the government is paying to respond to that issue. If we have poor quality information, we will be like the United Kingdom 13 years ago, with no information, animals moving all over the countryside, diseases moving everywhere, and the cost to eradicate that disease skyrockets.

The real focus for me is giving our animal health officials, government officials, good quality information so they can eradicate that disease issue or food safety issue on-farm as quickly as possible so we are not spending taxpayer dollars fighting it and we are not losing private sector dollars in lost opportunities.

The Chair: Honourable senators, we have a second panel. The chair would like to recognize that we also have three other senators with questions. If each one can ask a single question so that we can then move on to the second panel, I would appreciate it.

Senator Merchant: I am from Saskatchewan. Alberta and Manitoba were mentioned, and we have a vibrant pork industry in Saskatchewan.

Mr. Laws, you said that some things had happened that maybe give a negative impression of our industry in Canada. You did not specify what they were. Suddenly I was reminded of some of the images I have seen recently on television of the inhumane treatment of pigs. Is that an issue that you have to worry about?

Mr. Laws: That is an example of one single incident that happens in Canada that affects everyone, and that is just a really good example. Similarly, if there is one bad food safety event somewhere, it affects the whole industry. That is why it is so important that everyone have a really good food safety system in place. You are absolutely right.

Mr. Clark: I would add, Senator Merchant, that animal welfare, animal care, much like food safety and other product attributes, is just that. How do we verify that for the consumer? Right now, it is through word of mouth. It is through contractual obligations: ``I promise you I will do this.'' How do we know that? If you are a live animal buyer, a slaughter facility, if Japan asks you to prove it, how do you prove that?

A traceability system can prove that. You can say these are the farms we source from. You can visit them, or we have an animal care assessment program through the Canadian Pork Council. We could show Japan all of these farms that a given abattoir sources from and are all on animal care assessment. The have annual visits to verify animal handling. That is one example of us being able to verify something that the marketplace cares about. Using good quality information and traceability, PigTrace gives us that infrastructure to be able to build on that, much like the train track I mentioned.

[Translation]

Senator Maltais: Welcome, Mr. Laws. I think that our fathers had the same philosophy regarding the world not being fair. And mine used to add: ``and justice is blind.''

Regarding Canadian consumption, let us talk about the 30 per cent we did not discuss, and the export of seafood products.

We know that in Canada we have A1 quality aquaculture products. There is a twofold inspection for seafood, a federal one and a provincial one, in New Brunswick, Quebec, Nova Scotia, British Columbia — and I do not know about Prince Edward Island.

And so the product we export is recognized as being at the A1 quality level. In fact, Canada was one of the first countries to have signed on to the FAO charter concerning the quality of its fish exports.

I am intrigued by one thing. A lots of efforts are made in the fishery in Canada to ensure that, first, Canadians have excellent products; secondly, that our export products are recognized internationally. What is the situation with imported seafood? Who guarantees that when I go to the supermarket, the fish from this or that country is good, that it was fed properly, that its provenance or producer can be identified?

Mr. Laws: That is a good question, and I think that representatives from the Canadian Food Inspection Agency would be the best people to answer it.

Senator Maltais: I put the question to them and they referred me back to you.

Mr. Laws: Oh! I think that if you were to ask them, they would tell you that they visited the country and that they verified their system. But, again, this is not my area of expertise.

Senator Maltais: After all, we are talking about 30 per cent of the food Canadians consume, that is not negligible. It is not a spoonful of raspberries.

I would like to add — and very few people in Canada or abroad know this — that for seafood from Nova Scotia, New Brunswick, Quebec, Prince Edward Island and British Columbia, purchasers have their own inspectors on site. That is quite unusual. We do not see that for poultry products.

The provincial governments carry out an inspection, the federal government does so as well, but when we import products, we do not know what we are eating. It is a problem because it means unfair competition for our fishermen, and it is unfair to consumers who do not know what they are eating; traceability is impossible. We can track back to the grandmother of the piglet, but we cannot know the origin of the fish product, nor its owner.

One of these days, someone, some Canadian agency or other, is going to have to provide an answer. Canadians have to know what they are buying from supermarket shelves. Having said that, I thank you.

The Chair: Thank you; I am going to ask our clerk to follow up on that matter with the committee on fisheries, Senator Maltais.

Senator Dagenais: Thank you to our two witnesses. Mr. Laws answered one of our two questions on horse meat that wound up in spaghetti sauce in Europe.

To what extent are Canada's traceability criteria harmonized with those of the United States, so as to facilitate trade between the two countries? Can you answer that?

Mr. Laws: That is a good question. There are probably some very stringent requirements as to the information we have to produce before the truck arrives at the U.S. border. Both governments are making efforts through the Regulatory Cooperation Council. Serious efforts are made at the border to ensure that the information is passed on and that things go smoothly. We had hoped that more work would be done on that. We made efforts to urge the Americans, who have inspection stations at the border, to do what we do in Canada; here the product is allowed to go to the clients, to the facilities, where they are inspected again. We are still working on that. It is a big challenge because of the Americans' security priorities. We understand that, especially in light of recent events.

The work is ongoing, but it is true that the information is well shared. Moreover, we are waiting for the Canadian Food Inspection Agency, which issues our documents, our export permits, to produce an electronic version; it has been working on this for a long time. We are still using a paper version today. We need this project to be completed, because Canada is not world-class in terms of electronic exports. We hope that the project will come to fruition soon.

[English]

The Chair: The witnesses have heard this morning that traceability is an important subject matter for the committee. On this, you shared information that Canada is working toward going forward with a world-class traceability system. We thank you for your leadership.

Honourable senators, we now welcome Mr. Mike Sadiwnyk, Senior Vice President of Global Relations and Chief Standards Officer, GS1 Canada.

[Translation]

Thank you very much, Mr. Sadiwnyk, for having accepted our invitation to come and share your opinion and vision with us.

[English]

I invite you to make your presentation, followed by questions from senators.

Mike Sadiwnyk, Senior Vice President, Global Relations and Chief Standards Officer, GS1 Canada: Good morning. I am pleased to be with you today to share GS1 Canada's perspective on traceability across Canada's food industry and to highlight how the adoption of global supply chain standards is fundamental to the industry's response to new challenges.

Allow me to begin by introducing the organization that I am with. GS1 Canada is hardly a household name, yet it is part of the lives of all Canadians. GS1 Canada is not, however, a stranger to food retail, food service and the chain of supply that serves consumers with a continuous flow of product. GS1 Canada is one of 111 country or member organizations that together form the GS1 organization. GS1 Canada and the global GS1 organization are not-for- profit entities. We serve multiple industries by defining global best practices for how goods flow from raw materials suppliers through the various stages of production and distribution, finally reaching consumers.

GS1 standards are user-defined. That means they are not created by an individual or an expert group but are defined through a process of industry consensus on a global scale. You can think of GS1 standards as a suite of standards that enable the globally unique identification of products of companies and their locations. They enable those companies to express information in standard bar codes, meaning they can be created in one place, read anywhere in the chain of supply anywhere in the world.

We are familiar with the bar code that appears on consumer items and drives the checkout process; but that is only one example of a GS1 standard. Other GS1 standards simplify the process of data sharing with business partners as goods are created, ordered, shipped and received.

I would like you to think of GS1 standards as the global language of business. GS1 Canada's roles are to manage the assignment of bar codes in Canada to help Canadian companies of all scale to integrate global best practices into their supply chain operations and to ensure that unique Canadian requirements become part of the global standard.

GS1 Canada is industry-driven and for this reason has a unique governance structure. We have multiple boards representing the various industries using GS1 standards. The food industry is one of those priority industries. Each board defines the standards implementation priorities for that industry.

The conventional definition of ``traceability'' is, of course, a company's ability to understand the origins and characteristics of the inputs, the processes used to create those products and their further distribution. We have used this definition for over a decade and have consequently developed basic global supply chain standards to enable this sequential sharing of information up and sometimes down the supply chain. To realize farm-to-fork traceability requires that everyone is following the same methods for identification and for the sharing of information across the supply chain.

In 2003, GS1 Canada was invited by Agriculture and Agri-Food Canada to head up a national food initiative called Can-Trace. The goal of Can-Trace was to define the minimum information required for a one-up one-down traceability standard for the entire Canadian food industry. Can-Trace was unique in that to realize the goal, we brought together all major commodity groups and all major players from production, distribution and retail to collaboratively agree on a voluntary national traceability standard. That standard was rooted in GS1 global standards.

Honourable senators, the conventional definition of ``traceability'' is being replaced by the need for supply chain visibility. The difference is that visibility refers to a capability that goes beyond any single trading relationship in the chain of supply. Visibility is the ability for trading partners to see where products are or where they were anywhere in the supply chain and to understand why they are there. There is a greater emphasis on understanding and sharing information about supply chain events with more partners in the supply chain. Visibility is not a software solution. Rather, it is a business capability that is enabled by common standards and different technologies. What industry drivers are giving shape to the need for supply chain visibility?

First, the empowered consumer: Today's consumer has access to a world of information and demands accountability and a level of transparency that we have never seen before. Consumers expect retailers and brand owners to provide reliable and timely content about origin, production method, nutritional content, allergens and whether the product is traceable. These expectations require the entire food supply from one end to the other to be interoperable and to seamlessly share information. Consumer trust is on the line.

Second, heightened concern for food safety and quality: While Canadians are blessed with a dependable food industry, chains of supply are getting longer and far more complex. This demands that every company along those chains of supply have greater visibility of how products were created, handled and stored. In the event of a product recall, they require the capacity to identify products precisely and to act quickly. Those who are able to do this earn the trust of commercial buyers and consumers.

Third, the need to introduce sustainable business practices: If Canada's food industry is to brand itself sustainable, then along with this profile come new demands for information. What is the product's origin? What production methods were used? What resources were used? What journey did that product take? Product claims will require information from across the supply chain to substantiate them.

Fourth, the ongoing need to compete with other sources of supply that continues to challenge all companies in the food supply chain to find new efficiencies and lower operating costs: Supply chain costs are not exempt from that. With visibility comes a more efficient method for information sharing across all trading partners.

While there are success stories to be proud of and showcase, when we look at the capacity of the food industry as a whole, we find that many companies have only partially embraced global standards and many have not embraced them at all. We are not leveraging common standards from the beginning of the food supply chain all the way to the end. In other words, the entire food industry is not necessarily speaking the same language of business.

What do we need to do? We need to capitalize on an existing culture of collaboration within the Canadian food industry. This means bringing the entire food industry together to define solutions that enable the entire food industry to rethink how we share common information resources. Canada did this with the Can-Trace initiative; so it can be done. We need to focus on the needs of the smallest businesses. These enterprises typically do not possess the wherewithal to understand how to leverage global standards within their operations or how to find standards- compliant solutions. I can assure you that no one is calling them because they are too small. Small businesses need better access to both global standards and to enabling technology.

We need to deploy visibility solutions on an industry-wide scale. GS1 Canada has engaged with Agriculture Canada's Industry Government Advisory Committee, which is helping to shape the national agri-food traceability system. We believe that visibility across the food industry is achievable and requires stitching together existing sector investments so they are truly interoperable across the entire food supply — that they speak the same language of business.

This concludes my remarks. I welcome any questions.

The Chair: Mr. Sadiwnyk, thank you very much.

Senator Merchant: Is your company concerned about the traceability of imports? On the previous panel, Mr. Laws pointed out that you cannot tell where a jar of peanut butter comes from. What are you doing in that respect?

Mr. Sadiwnyk: The short answer is yes because global supply chains, by definition, apply to the entire food chain; and that applies to imported products. Certainly, we are seeing the leading retailers and distributors applying global standards in the way they capture information from importers.

Senator Merchant: More and more the large chain stores have whole sections dedicated to organic products, and Canadians are demanding more organic products. How are things labelled for us to know whether something is truly organic?

Someone called me this week who is very concerned that a new alfalfa will be approved for use in Canada. He is saying that this alfalfa is a perennial. It is genetically modified, and it will invade all of the organic fields in Canada because it is transported by bees or birds or through the air. Organic farmers are apparently very concerned because it will put organics out of business. Are you concerned about that? What can you tell us?

Mr. Sadiwnyk: I would say that different commodity groups and different products will make more claims, not just organics but also health and wellness claims, traceability claims, many things. The issue to the supply chain is not so much whether they are certified or not. The issue for the supply chain is how we capture the information that has been recognized and certified. How do we share and move that information along the supply chain? Those buying those products are increasingly asking the question: How do I know this to be true? Those are not questions for me to answer, but certainly, for the supply chain, they are. How do we know that we have the information that everyone along that chain of supply can at least validate, saying, ``I have the information that I need, that I have to pass along and that will, ultimately, get to consumers, who will ask their questions?''

Senator Buth: You are a global not-for-profit association, and you have 20,000 Canadian members. How are you funded?

Mr. Sadiwnyk: We are funded by our members. GS1, globally, is a member-driven organization and is funded by its members. In Canada, those organizations that require a barcode to put on their products would come to GS1 Canada, and we would provide that. That is our source of funding.

Senator Buth: You are responsible for allocating barcodes. What about QR codes?

Mr. Sadiwnyk: The short answer is yes. What makes a barcode unique is actually those numbers inside. If we were to hold a clinic on barcodes, it is a bit like Mr. Laws explained. If you look inside it, there is a lot of information in there. The part of that information that GS1 Canada administers is to make sure that, when we assign the barcode, it is globally unique; it points to a very specific company and brand owner. That is a piece of the information there.

Senator Buth: What about QR codes, the little squares that you see that you can take a picture of with your smartphone. Do you assign those too?

Mr. Sadiwnyk: Absolutely. There are really two types of QR codes in the world. Not to hold a clinic on QR codes, but some, I would say, are rather undisciplined and would give you a very bad answer. However, QR codes issued through GS1 globally have the rigour that I just described. They do have the capacity to point to a brand owner, to someone.

Senator Buth: You made the comment that you have been working with the government, I assume Agriculture Canada.

Mr. Sadiwnyk: Yes.

Senator Buth: On Can-Trace, since 2003. Where are you at with that program?

Mr. Sadiwnyk: Can-Trace was tasked, in 2003, to really do two things. The first task was to assemble the industry. As I described, it was not a modest ambition. The ambition was to bring everyone to the table — think of a matrix — all of those different commodity groups, through all of those different stages of production, to seek an agreement on the second deliverable, which was: Can we agree on what traceability has to look like from end to end? Can we agree on what the minimum amount of information is? That was achieved in 2006. I can tell you that some of those accomplishments, some of the conclusions that were reached in Canada, were actually put into global standards. Canada led. That work in 2006 ended because we fulfilled our mandate.

Senator Buth: Is Can-Trace done, then?

Mr. Sadiwnyk: Can-Trace is done, but I can assure you that all of the conclusions that were reached in Can-Trace in terms of a standard have become part of the global traceability standard. The best kept secret is that Canada really shaped what that global traceability standard looks like.

Senator Callbeck: You are a non-profit organization and are funded by your members. What is your budget?

Mr. Sadiwnyk: Our budget, in Canada, is about $20 million, and that budget is used to perform two major functions. The first is assignment or allocation of barcodes to companies in Canada.

Second, the food industry in Canada has asked GS1 Canada to manage a national registry of food products. It has a name. In the marketplace, it is known as ECCnet. The industry, not GS1 Canada, collectively agreed that this was necessary. We need a central repository for all products, and the industry asked GS1 Canada to operate that registry, on a cost recovery basis. The national product registry was created out of the need to pick up Canada's game to improve the efficiency of the supply chain.

Senator Callbeck: How expensive is it to get a barcode?

Mr. Sadiwnyk: If you are a very small organization, the smallest organization, $60. If you are a multinational organization, it is around $1,500 per year.

Senator Callbeck: You say you have multiple boards. Comment a bit about your structure.

Mr. Sadiwnyk: Absolutely. We have five sector boards. We have a sector board for what we would call grocery, for food service, general merchandise, apparel and hard lines — do it yourself — for pharmacy and for health care, medical devices. Why five boards? These five boards are concerned with the implementation issues in their own sectors. The pharmacy people really do not want to spend a lot of time listening to the general merchants. They want to have the ability to talk about their issues and to determine how they will to act as an industry and will deploy global standards.

Senator Callbeck: Are they all really independent, or is there an overall one?

Mr. Sadiwnyk: We have a board of governors that manages the governance of the entire organization, absolutely.

Senator Callbeck: In your last paragraph, you recommend that the government support the adoption of existing industry-developed global supply chain standards by integrating these standards into government policy. Give an example of what you are talking about there. Do you really want government to encourage this or legislate it? What are you really asking for?

Mr. Sadiwnyk: Where we see the exposure and where we see a role for government is really with the smallest organizations. Of course, some industries are doing a much better job than others, so this is not a broad-brush statement. We can say that what we have learned is that the smaller the organization, the less wherewithal they have. They are really disconnected. No one is talking to them, so we believe that there is a role for government to help the smallest organizations to get connected, to become visible. We think that is a role.

The second role that we see for government is in helping to bring all parties to the table.

Senator Callbeck: Give an example of how this would help a smaller organization.

Mr. Sadiwnyk: With a smaller organization today, if you ask them what technology they are using in their industry, they will say ``I have a home computer.'' If you ask, ``Are you using barcoding in any part of your business so that those receiving and handling your product can more efficiently understand what you are giving them?'' most of them will roll their eyes, senator. It is not within their capacity. We are certainly not saying that the government needs to go and buy all of this technology, but they are not exposed. These organizations are outside the conversation entirely, and we believe the government can help them get some visibility and become visible to those who have solutions.

[Translation]

Senator Rivard: Thank you, Mr. Chair. Over the past few months we had the opportunity to meet some eminent people in this area — researchers, professors, senior officials, people in our field, and today, we have the added opportunity of meeting with you.

I would like to go back to a statement made by renowned professor Sylvain Charlebois from Guelph University; he said before this committee that in order to be effective, a traceability system requires cooperation and information sharing among the various stakeholders in the supply chain. Do you agree with that perspective? Is such cooperation possible without interfering with the competitiveness among the stakeholders in the supply chain?

[English]

Mr. Sadiwnyk: Senator, my answer to your first question is yes. Perhaps it is ironic that last week at the Conference Board of Canada's Food Summit in Toronto, the professor and I both shared the stage on a panel where we were talking about this very subject. We agreed that it absolutely is possible and absolutely necessary that Canada step up its game to meet some of those challenges that I talked about, and I think he shared some of those views as well.

To your second question, there is always the issue of what is competitive and non-competitive. This is not a traceability question, but it is a question we face quite regularly. As you try to bring industry together — and you try for all of us to agree on a way forward — we have seen time and again that we have a culture of collaboration in this country. We can separate non-competitive from competitive. How I uniquely identify products anywhere in the world is not a competitive issue. How I execute my supply chains, on execution, is very competitive and that is always off the table.

The Chair: I have a question following on Senator Maltais.

Mr. Sadiwnyk, you heard the question he asked to the previous panel and you mentioned that you are responsible for five different bar codes within your organization, right?

Mr. Sadiwnyk: No. We take our governance from five different sector boards. The standard solutions are not different across sectors. The implementation priorities of what may be in pharmacy would of course be different from food and general merchandise.

The Chair: Have you ever had questions about looking at the fishing industry or fish products?

Mr. Sadiwnyk: I would answer yes, in this way: We are certainly hearing from the larger retailers and distributors. As they bring in product — and they are not distinguishing whether it is from Canada or from other locations — we hear that they are really expecting more. We are also hearing this from some of the global companies out there. They are expecting more information from companies everywhere and they are turning up the volume on what they expect.

The Chair: As per information?

Mr. Sadiwnyk: Yes, as per information.

[Translation]

The Chair: I see that Senator Maltais wants to ask a question.

Senator Maltais: You stated that you work with a five-digit barcode, if I understood your brief correctly? If some day you deal with fish, and I hope that that day will come, are you going to have a problem with the St. Lawrence striped bass?

Is it possible to work with barcodes on fish?

[English]

Mr. Sadiwnyk: I cannot see the day where we stamp a bar code on a fish, but in other parts of the world we see that as fish are harvested and caught, we are identifying where they were caught, the vessel, species and recording that batch or lot information in a very standard way. We are communicating that information in a very standard way. I have yet to see a bar code stamped on a fish.

The Chair: Mr. Sadiwnyk, as we go forward before we close our committee hearings, and during this evolution if there is something you would like to add to the committee's process, please do not hesitate to write to the clerk.

(The committee adjourned.)