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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 25 - Evidence - Meeting of March 12, 2015


OTTAWA, Thursday, March 12, 2015

The Standing Senate Committee on Agriculture and Forestry met this day at 8:07 a.m. to study international market access priorities for the Canadian agricultural and agri-food sector; and to consider a draft report.

Senator Percy Mockler (Chair) in the chair.

[English]

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

[Translation]

I am Senator Mockler from New Brunswick, and I am the chair of the committee.

[English]

I would like to ask senators to introduce themselves.

Senator Beyak: Good morning. Senator Lynn Beyak from Ontario.

[Translation]

Senator Tardif: Good morning. Claudette Tardif from Alberta.

Senator Maltais: Good morning, Mr. Charlebois. Ghislain Maltais from Quebec.

[English]

Senator Unger: Hello. I'm Betty Unger from Alberta.

[Translation]

Senator Dagenais: Good morning. Jean-Guy Dagenais, from Quebec.

Senator Ogilvie: Kelvin Ogilvie, from Nova Scotia.

The Chair: Thank you, honourable senators. Mr. Charlebois, thank you for agreeing to participate in this study again. The committee is continuing its consideration of international market access priorities for the Canadian agricultural and agri-food sector.

[English]

Canada's agriculture and agri-food sector is an important part of the country's economy.

In 2012, the sector accounted for one in eight jobs in Canada, employing over 2.1 million people, and close to 6.7 per cent of Canada's gross domestic product.

[Translation]

Internationally, the Canadian agriculture and agri-food sector was responsible for 3.6 per cent of global exports of agri-food products in 2012.

Moreover, in 2012, Canada was the fifth largest exporter of agri-food products globally.

[English]

Free trade agreements, FTAs, between Canada and various countries have been signed or are already in force.

[Translation]

There are currently 12 agreements in force. Negotiations are ongoing with 11 other countries or groups of countries. Several of these agreements and negotiations concern activities related to the Canadian agriculture and agri-food sector.

Honourable senators, for our first witness this morning, we welcome via videoconference from Innsbruck, Austria, Professor Sylvain Charlebois, Associate Dean of the College of Management and Economics at the University of Guelph. On behalf of the committee, I want to thank you for your ongoing involvement in the agri-food sector. This morning, we have with us a Canadian who maintains close relations with Austria. There is no doubt in our minds that you are making Canada proud in Austria. Thank you for agreeing to appear before our committee. Following your presentation, senators will ask you questions, which you will have an opportunity to answer. The floor is yours, Mr. Charlebois.

[English]

Sylvain Charlebois, Associate Dean, College of Management and Economics, University of Guelph: Thank you very much, Mr. Chair, members of the committee. I believe this to be my fifth appearance before this committee. It has always been a privilege to be invited to speak about our country's future in food and agriculture. Therefore, I am honoured to be talking to you again this morning.

Spending a year in Europe as a visiting professor in Food Policy and Supply Chain Engineering at the University of Innsbruck has made it easy to be inspired by how much potential Canada has in agriculture and food, particularly in light of the Comprehensive Economic and Trade Agreement signed by our federal government a few months ago.

When looking at market access, several topics come to mind: processing competitiveness, subsidies, innovation, technology, trade agreements, tariffs, non-tariff barriers and more. For my opening statement, I have chosen to speak about food safety, traceability and risk intelligence. I would, however, be more than happy to answer questions from committee members related to any other market access topics.

Over the years, I have had the pleasure to lead many studies comparing Canada's performance on food safety with other countries from around the world. The results of our most recent study, in partnership with the Food Institute at the University of Guelph and the Conference Board of Canada demonstrates that Tier 1 countries perform very well compared with their international peers. Canada in particular earned excellent grades in most food safety performance metrics, though work remains to improve its performance by reporting on chemical risks in food consumption, TDSs, conducting more frequent nutrition and dietary studies and implementing additional improvements to traceability and radionuclide standards.

It's important to recognize that none of the countries included in any of our surveys performed in such a way that would suggest neglect by food regulators or the food industry. Italy and Belgium, for example, the countries with the lowest overall scores, still have very high food safety standards relative to the rest of the world. Benchmarking in food safety involves comparisons among countries that emphasize key patterns of similarity and difference. Results of this study should therefore be considered in relative terms. Indeed, the comparative analysis itself among countries included in the sample should be of value to consumers, industry and food regulators alike.

But the reality is, unfortunately, that many nations still use food safety as a false pretense to impose non-tariff barriers against each other. The will to manage fears or to show how a government can still protect populations from other countries is still exercised in reaction to such minor differences. Sanitary and phytosanitary measures reported to the WTO are increasing almost every year, now regularly reaching well over a thousand notifications per year — so non-tariff barriers, essentially.

In the area of food safety, Canada's performance is impressive. Since 2008, when we published our first report, Canada's performance has always been in the top tier. Results from the 2014 report, our most recent report, are consistent with the 2008 and 2010 reports, even if different metrics were captured. Island countries like Japan, Australia and the United Kingdom have historically been good performers over the years. This year, though, the report suggests that both Japan and Australia's performances have dropped from 2008.

Most federal food regulators included in our surveys have been affected in one way or another by the most recent global recession. Due to the fiscal restraints, the risk surveillance capacities of many countries have likely been adversely affected since the two initial surveys. In fact, I would add that Austria is actually a good example of that right now.

Prior to 2008, for more than a decade, budgets to support food safety policies and procedures increased significantly, but the global recession pressured most countries to re-evaluate how consumers were protected from potential food safety risks. However, establishing a strong correlation between budgetary re-adjustments and many food regulators' capacity to mitigate and communicate risks remains a challenge. Again, the current survey did not look at how governments were investing in food safety systems; it looked only at output and externalities.

Since the initial 2008 report, access to data has improved substantially. Given how important food safety accountability will become for industry, future surveys may include data from industry to assess involvement in food safety systems. The re-calibration of the public sector around the world may have compelled some countries not only to seek more sustainable and long-term effective options, but also to explore more affordable options like self-regulation and/or self-reporting. Even if such an approach remains controversial, many food regulators anticipate that industry will play a larger role in making companies more accountable. The difference between self-regulation and accountability is significant. Results of this survey suggest that the role of the state will likely remain central around the world, but industry may play a larger role in developing future risk intelligence strategies.

The horse meat scandal in Europe in 2013, for instance, has made a clear case for increased scrutiny on the supply chain. This can only be achieved by making the industry more accountable to itself without succumbing to a self-regulatory regime. Such an outcome is less than desirable, at least for countries included in our surveys.

Thank you very much for your attention. I now welcome any questions you may have.

The Chair: Thank you, professor. The chair will recognize Senator Tardif followed by Senator Maltais.

[Translation]

Senator Tardif: I want to thank Professor Charlebois for accepting our invitation. You are a regular in this committee. In the study you conducted in 2014 at the University of Guelph, entitled Comparison of Global Food Traceability Regulations and Requirements, you mention a number of countries. If I understand correctly, Canada rates average in several criteria. Can you tell us what measures Canada should take to improve the quality of its traceability systems?

Mr. Charlebois: Thank you for that question, which I find to be extremely important.

Food traceability is a major problem for Canada, especially since it's a big country. We have a large surface area to cover and, when we study food traceability, everything is obviously related to logistics. Tracing food to from farm to table and vice versa is not easy in Canada, and that partly explains the deficiencies in traceability.

The main reason is the lack of compatibility among the chain functions. In Canada, identification systems are developed for primary production — it is what we do with beef, specifically. During the processing stage, once the animal has been slaughtered, things get complicated. There is food traceability for processing, and then for distribution.

Food distribution in Canada works as an oligopoly. Loblaws, Sobeys, Metro, Costco, Walmart and other companies have their own traceability system that does not really affect the processing stage. In Europe — for example, in Denmark and the Netherlands — compatibility works well. Data sharing is fairly effective and successfully establishes a link between the consumer and the farm. That's basically what is missing in Canada.

The University of Guelph is a partner of the Global Food Traceability Centre, the GFTC, located in Washington. I am a member of that committee. The group was established two years ago to develop best practices in traceability, not only for one country, but for all countries, given that international trade is growing in significance and is influencing our domestic practices. The GFTC is trying to develop key practices for food traceability. I am proud to be part of that group, which counts Walmart and McDonald's among its partners. The U.S. government is also part of the group. It is a public-private partnership that I feel is working well at the moment. There is definitely much work to be done.

Senator Tardif: Thank you. Professor Charlebois, who do you think should take on a leadership role when it comes to that compatibility of functions? Should it be the government? The industry?

Mr. Charlebois: I think that the government has done its job. The government has created a framework for the industry. It is now up to the industry to do its part. My main concern is not really food safety. For years, we have been talking about food traceability in a context of food safety, but what is happening in Europe currently, with food fraud — you have probably heard about the horse meat scandal.

Senator Tardif: Of course.

Mr. Charlebois: Yet many Canadians think that this cannot happen in Canada. However, the University of Guelph carried out a study on fish about six months ago. We bought some 50 packages of fish in the Toronto region and discovered that over 35 per cent of those packages were mislabelled. That is a concern in itself. Fraud within the supply chain is a golden opportunity for further developing traceability. At the GFTC, in Washington, that is currently our main concern.

Senator Maltais: Good morning, Professor Charlebois. I would like to make an aside about safety. You probably know about the aquaculture problems at the Germany-France border — more specifically the problems with salmon and cod, as well as other species. It's a very serious problem for Europe. It's not an issue that involves traceability, but rather food quality. Although the products were labelled grade A1 on the European market, biologists and experts declared them to be almost unfit for consumption. What do you think about their system?

Mr. Charlebois: First, the context is different in Europe. The countries have been forced to work together, while in North America, we have the United States and then the rest. I have been here for two months, and I see that Canada is not really part of the discussions. The U.S. is monopolizing the bulk of the dialogue. The euro and the U.S. dollar are very current topics that are also discussed a lot.

European countries have been forced to work together more. Trade among countries is much more natural than it is in North America — at least in my opinion. That doesn't mean there is no fraud or poor practices. On the contrary, I think that the scandal from two years ago has been a wake-up call for the authorities to do more in terms of food traceability. In other words, more and more questions have been asked in Europe during negotiations with providers over the past two years. Manifests contain much more information than they used to, and there are a lot more guarantees, as well. Of course, all that has led to more lawsuits, too. That's what we have seen in Europe.

The context is very different in North America, especially for Canada because it deals a lot with the U.S. and with Asia. I think it's important for Canada to build on its brand. Canada's brand is excellent, in my opinion, and that is a significant benefit for the country's future.

Senator Maltais: I have one last question. I assume you are in Vienna, Austria. You are on the border with the east, with Eastern Europe. Are all the countries part of the European common market and are they all subject to traceability rules? I am thinking of Hungary, Poland, Czechoslovakia, Romania, Bulgaria and Transylvania. Are all those countries subject to the so-called international standards for modern Europe?

Mr. Charlebois: Europe obviously has its own rules. The European continental approach doesn't really work in Canada. Europe has a foundation that is lacking in North America. The European agri-food market is much more splintered than the North American one. There are many family businesses with long-standing practices, and there is an implicit trust in the products. However, when it comes to regulations as such, I think the standards are much more harmonized in Europe than elsewhere. That is extremely helpful for all economic sectors, including agri-food.

That is one advantage of the EU. There are 500 million consumers in Europe. That helps them get organized, and they don't have as much space as we do. So it is much easier to mobilize products.

When it comes to topography, Europe clearly has an advantage over us. Can we learn from Europe? Absolutely. If I may, I would like to come back to the case of mad cow disease reported in Alberta in February.

We often lack empathy in Canada, and we believe that risk is perceived in Canada in the same way as it is in the U.S. or in Japan. That is not at all the case.

Food safety is not really an issue in Canada. A survey we did in Guelph revealed that Canadians are not really concerned about safety. However, the Koreans, the Japanese, the Americans and the Europeans are concerned about it. If we are to focus on international trade, I think we will have to empathize more.

[English]

Senator Unger: Thank you, Mr. Charlebois. Very interesting. Just to follow up on your comment about the BSE case in Alberta, you say that Asia is more concerned about that issue — certain countries — than in Europe. Could that be because Europe reacts on science-based evidence, whereas perhaps that isn't necessarily the case in some countries in Asia? They may react more on political issues. I could cite a specific case of that, but I really don't want to. I'd like your comment, please. Do you think that people —

Mr. Charlebois: Thank you for the question. When you look at all federal regulators included in our surveys over the years, all of them actually claim that they have adopted a science-based approach, through surveillance and mitigation. I would include Canada in this. Actually, I sit on the national advisory board of the CFIA. We pride ourselves on adopting a science-based approach, but, often, when you look at these cases, things do get political at times. It doesn't really matter where you are around the world. Governments are always concerned if consumers express or register concerns about food safety. Some nations are more sensitive than others, and I would probably say that Asia is certainly included in that group. The reason why Asia is included in that group is that they are so dependent upon imports, unlike Canada. We have an abundance of food. We've never actually had any food security crisis over the years, except, of course, during the dust bowl, where things got really complicated. When you look at Europe, Ireland, different places around the world, food security was, at some point in their history, a very important challenge. So that really has had an impact on how people perceive risks when it comes to food safety.

In Japan, basically 80 per cent of what they eat they import, so they're at the mercy of practices beyond their borders. That's why I think it's important as a trading nation to be cognizant of the fact that food is perceived very differently from one part of the world to another.

Senator Unger: Thank you for that. Correct me if I am wrong. I don't think that Japan has put Canada on hold because of that one BSE case, so they obviously do look at a science-based approach, whereas other countries don't.

Mr. Charlebois: If I may, I'll be very blunt. Japan cares about the United States. Japan will follow the United States, essentially, because they buy a lot from the United States. For Canada, with cattle, for example, as long as Mexico, Hong Kong and the United States continue to buy cattle from Canada, Japan will follow. Yes, Japan didn't issue an embargo in February, but I would say it had a lot to do with how Canada managed its reputation and relationship with the USDA.

Senator Unger: So the U.S. didn't put Canada on this list, so that's the reason, in your opinion, that Japan didn't?

Mr. Charlebois: That would be my interpretation.

Senator Unger: Thank you.

[Translation]

Senator Dagenais: Good morning, Mr. Charlebois. My first question is about food traceability. You mentioned the major chains, such as Loblaws, Maxi, and so on. Do you feel that the food giants are reluctant to harmonize their food traceability methods? Is there competition in that area? Are they reluctant, or would they be prepared to harmonize their traceability methods?

Mr. Charlebois: Senator, when you talk about agri-food giants, are you talking about distribution, processing or both?

Senator Dagenais: I would say both.

Mr. Charlebois: Traceability has always been a sensitive topic in the industry. When we work with Cargill, Tyson, Loblaws or Sobeys, that is always a sensitive topic for two reasons. The first reason is data. Obviously, data has to be shared, and that is a sensitive issue within the industry.

The other reason has to do with costs — the costs of implementing compatible traceability. Cost sharing has never been clear. Who would pay for the implementation of compatible traceability? The most important thing is that, often, when a food item is recalled, the distributors have to handle the problem. For example, if lettuce or some sort of meat is recalled, consumers deal with distributors and retailers. They are the ones who manage the recall, while processors are often somewhat removed from the actual battlefield, and that creates tensions.

Let me give you an example. I wrote about the Maple Leaf recall caused by listeria in 2008. Maple Leaf is a company that never deals with consumers, but decided, on August 18, 2008, to deal directly with them. Michael McCain spoke directly to the camera and addressed Canadian consumers. That was a first. As we were able to see, that was an effective message.

At the other extreme, during the Alberta recall two years ago, we did not see the Nilsson brothers from XL Foods at all, and no one spoke for the company. They completely shrugged off any responsibility for what was happening with the beef recall. So when you develop a relationship with consumers, you give yourself a certain power in communications. The problem with Maple Leaf — and this was not reported much in the media — is that the recall created a lot of tension between Maple Leaf and the companies that do business with Maple Leaf, such as Tim Hortons and McDonald's, which also had to grapple with the problem. When we talk about food traceability, we often don't come to an agreement on who is responsible or why. In Washington, they try to resolve these contentious issues with several partners from the private sector.

Senator Dagenais: Let me turn to another issue: temporary workers. Many farmers and livestock producers hire temporary workers. There are programs, including in Canada, for the hiring of these workers, which sometimes creates problems for the renewal of contracts. In your view, would there be a better way to meet the needs of the agricultural sector in relation to the hiring of temporary workers? Last summer, I met a farmer who told me that he could no longer hire the same workers after two eight-month contracts. As a result, he loses an experienced workforce. Could the government take other steps to improve the hiring of temporary workers?

Mr. Charlebois: Absolutely. The four-year limit poses a problem, not only for agriculture, but also for the agri-food sector. For instance, in 2012, at XL Foods, many of the 2,500 employees were temporary workers who had difficulty speaking English. When it comes to the handling of meat, you need a workforce that has undergone rigorous training. XL Foods has invested a lot of money in training its employees to better master the meat handling practices.

To address the staff turnover problem, you need to invest more in training and recruitment. Clearly, this is a challenge for the agri-food sector whose profit margins are very narrow. If those costs could be avoided, so much the better. But for now, this is a problem.

[English]

Senator Beyak: Thank you, Professor Charlebois, for the expertise that you bring to our committee. We appreciate it very much. I'm following up with Senator Dagenais' concerns. I sit on three committees that are all very concerned with the temporary foreign worker shortage, especially in the agriculture field. I understand you've just written an article in the Times Colonist, and you have a lot of expertise in this area. For those watching at home who don't understand the challenges and don't understand solutions, or don't really know how to deal with it, could you give us a little bit more detail?

Mr. Charlebois: Certainly. I'm not a human resource expert. I just look at policies, and I look at supply chain focused challenges. When I look at this particular situation, I'm obviously deeply concerned because you're looking at positions that are really hard to fill. I personally used to work on farms when I was a child, when I was young, growing up in Quebec in the Eastern Townships. I used to work for strawberry growers, for dairy farmers. It was great but the reality today is that most kids, young adults, leave rural Canada to go to school, to go to university, and they do something else.

Recruitment or keeping talent in rural Canada is becoming more and more difficult. That's the reality. I know there are many people who believe that temporary foreign workers steal jobs from Canadians, but the way I see it is that it allows Canada to feed itself, because we need capacity in regions.

Of course, at some point we may figure out a way to use robotics to do everything these people are doing, but for the time being we are at the mercy of Mother Nature. When harvest comes along we need action, we need people in the fields, and these people serve a purpose. I would even add that these people come to Canada because they have a dream and they not only want to work here, they want to live here, and they want to understand the Canadian way of life. As Canadians, I believe that we often tend to forget how lucky we are to live in Canada, such a wonderful country, and when people come to Canada they realize how lucky we are. Just so you know, I'm in Austria. It's a great place to be, but I will come back.

Senator Beyak: Did your paper suggest recommendations to the government that we could work on? I know it's a concern to so many different ministries.

Mr. Charlebois: Essentially, it's to allow people to become permanent residents. That was my very high level recommendation. Again, I didn't dive into many details. I'm sure you're probably more knowledgeable than I am when it comes to options that could be provided to these people, but essentially I'm trying to say that we need them.

Senator Beyak: Thank you very much.

The Chair: Before we go to the second round, if you permit me, I have a few questions.

[Translation]

The Chair: Let's look at traceability and the order of reference that the Senate of Canada has asked us to study. We often talk about the competitiveness and profitability of the agricultural sector.

In relation to major international fairs — you probably have experience in the area — what do you think of the Canada brand initiative? At those major international fairs, does Canada have the means to showcase the Canada brand? What would your recommendations be to promote the Canada brand, considering its traceability and safety?

Mr. Charlebois: That's a good question. In all honesty, I have not looked into this issue. For now, the program is working well and meets specific needs. My first concern is that we have often relied on the sale of the Canadian brand based on its agricultural commodities and products, including maple syrup and wheat, which are sold around the world. However, Canada does not sell a lot of processed products internationally, not as much as I would like it to sell.

In recent years, many studies have been done on the food processing sector. Canada has lost 143 plants since 2007, which means 25,000 fewer jobs. Earlier, you said that the agri-food sector is very important. In my view, the food processing sector in Canada is in crisis. Canada is a very vulnerable country to multinationals that suddenly decide to consolidate their assets. That is what happened with Kellogg in London and Heinz in Leamington, among others. It is a problem. Canada should further promote its brand, beyond food products, such as canola. I was in China last fall. Of course, the people there know about canola, but they don't know that it comes from Canada and that canola means Canada oil. They know about our agri-food products, but they don't always know what their purpose is.

In terms of the Canada brand, we are seen as a country with an abundance of natural resources, but not as a country with a developed processing capacity that adds value to the primary products.

Let's take Germany for example. In terms of engineering, we are talking about BMW and all sorts of industries that have developed some truly outstanding expertise. Canada has the potential to do that, but it needs to take an orchestrated approach to branding its image internationally.

The Chair: When you talk about its brand, to quote you, are there some traceability mechanisms, such as product identification? We often connect those items to the Canada brand. We also see the markings on the box or the container, as well as various labels that indicate which Canadian region the product comes from to allow international consumers to recognize the Canadian product. On which of those four mechanisms do you think we should focus more to make Canada stand out?

Mr. Charlebois: We need to be careful. We are currently seeing an incredible fragmentation of markets. McDonald's is dealing with that now. Consumers are looking for something completely different. I am well aware that Canadians are increasingly looking for local products that come from Canada and from their regions. The same thing is happening around the world. We can sell a Canadian product with the Canada brand, whose quality is recognized, but when it comes to consumers in other parts of the world, I am not sure that they are very interested in buying Canadian products. They want quality products, but not necessarily Canadian products. We need to be careful. There is the B2B Ð business to business Ð model and the B2C Ð business to consumer Ð model. In terms of the Canada brand, when we sell to agents, brokers and importers, I think the B2B is crucial. That is a target market where the Canada brand can be beneficial for the country. However, I think consumers are a whole different story.

[English]

The Chair: The chair will recognize Senator Enverga.

Senator Enverga: I overheard earlier today that there's some sort of similarity between Canada and the U.S. food industry. The reason why Japan did not go against the Canadian imports is because of its relationship with the U.S.A. But in fact, when I was in South Korea and Taiwan, I overheard that the main competitor of Canada is the U.S.A. Can you maybe let us know how can we break from this Canada-U.S. identity? Are we the same or how could we separate from that notion from the other countries?

Mr. Charlebois: Thank you, senator. I don't believe we're the same. We're complementary. That's how I see the relationship between the Canada and the U.S. when it comes to food and agriculture. One serves the other and vice versa. Given what is going on with the so-called currency war around the world, not only in North America, it is very good to be close to the Americans right now. We're likely going to be selling more food products or ag-products over the next few years because our dollar has weakened. It will weaken even further versus the euro.

My concern when it comes to trade is that right now with the currency war going on, the Canadian dollar is dropping versus the U.S. dollar, but the euro is absolutely skydiving. We're talking about parity between the euro and the U.S. dollar. If that's the case, given the fact that they're actually right now negotiating an agreement like we did with CETA, Canada will be become less attractive for Europe, and Europe is a huge bloc. So Germany is really happy with what's going on right now because it's looking at the U.S. as a very good market.

Essentially, my concern with what's going on over the next, I would say, 18 months to two years, is that Canada actually may be forgotten because of the fact that other countries will take advantage of their weakened currency versus the greenback.

For Canada, it often supports what I consider a lazy ag-economy because when the dollar was at parity or even above parity it forced many companies in Ontario and across Canada to reinvest in their plants, and it made our industry more effective. My concern now, because the dollar is dropping, is that people will stop investing and will not be as competitive. I think we should continue to become competitive. One thing the government could do is encourage the processing industry to continue to invest in productivity, which is something we're missing right now in Canada.

Senator Enverga: You're talking about Europe, the U.S.A. and Canada. Don't you think we have a lot of advantage in the Pacific market now that the Canadian dollar is so low? The Europeans don't produce the same kind of products, ag-products, for Asia-Pacific. Should we focus on that particular market at this time?

Mr. Charlebois: Our reliance upon the U.S. is clear. It's there. Should we actually focus on other markets? Absolutely. It's called edging. I think we need to look at other markets, but frankly, I actually believe that our government is doing exactly what we should be doing — signing trade agreements. For the first time in many years, we've actually seen a federal government signing key trade deals. Of course, it takes years to reap the benefits from these trade deals, but it's happening right now. So other than that, it boils down to how industry will focus on productivity.

Senator Oh: You said earlier that the Canadian dollar is low and it hurts investments from coming in, but I thought it's the other way. If the Canadian dollar is low, you then attract more investment. I have friends who invested when the Canadian dollar was 71 cents. When the dollar bounced back to $1.01 against the U.S., just on the currency exchange, they made over 30 per cent. Low currency is good for our exports, and this is the best time for anyone who is going to invest in Canada; the Canadian dollar is low. But it's going to bounce back some day. Currency fluctuates up and down. To make investments, I would say this is probably the best time to come to Canada. What do you say?

Mr. Charlebois: It's always a good time to go to Canada.

If I may, senator, I can respond to your first question. I actually do believe that a growth supported by a weak currency is not a good idea for our country. I think we need to focus on our core competencies. We need to actually innovate and develop new products. This is one thing we actually haven't been good at is to innovate and develop new products.

We can't do like the Americans and focus on economies of scale. We just don't have the capacity to do that, but we can differentiate. To recognize the power of differentiation is actually key, moving forward, for the industry. Icewine is a perfect example. I wish we could do that with mustard in Saskatchewan. We actually export a lot of mustard grains, but we don't do anything with it. This is something we should be doing as a country — to innovate and develop new products for the world and not just export commodities and buy it back at five times the price, no matter what happens to the currency.

Currency fluctuations offer opportunities, but to actually build business models based on weak currencies is really a mistake.

[Translation]

Senator Tardif: I have a quick question. Mr. Charlebois, I think you said that the food chain surveillance capacities of many countries have declined since the financial crisis and due to fiscal restraints. In your presentation, you said, and I quote:

[English]

. . . the risk surveillance capacities of many countries have likely been adversely affected. . . . establishing a strong correlation between budgetary readjustments and any food regulators' capacity to mitigate and communicate risk remains a challenge.

[Translation]

What is the situation in Canada? Has Canada suffered budget cuts that are affecting its food chain surveillance capacity?

Mr. Charlebois: I think there have been budget cuts. I am not aware of the amount as such, but the Canadian Food Inspection Agency has experienced some restructuring. However, Canada is no exception; we have seen this all over the world. In fact, according to our 2014 survey results, Austria falls within the average. The European economy is not doing very well and everyone is doing the same thing everywhere: downsizing. That is when we need to talk about corporate accountability. The state cannot monitor everything. That is virtually impossible.

There are 3,500 inspectors in Canada, and the question I often ask the inspectors' unions is this: if 3,500 inspectors are not enough, what is the ideal number? I have yet to receive an answer, because no one knows exactly what the inspectors are doing on the ground, what they are doing with the information they gather and how that is all managed. We don't have a transparent system that would allow all Canadians to better understand what is happening out in the field. There is a complete lack of transparency. We are not recognizing the investment being made right now, so why should we invest more? Some years, we invest a great deal in food safety to meet a temporary need, because there is panic, such as the listeria in 2008 and then the BSE. Now, CFIA has a budget of over $700 million and more than 7,000 employees. I can tell you that most Canadians don't really understand what CFIA does. I think we need to look into that issue before we increase the staff. In the meantime, companies are well positioned to complement the agency's efforts in surveillance and to take responsibility themselves. Companies buy from other companies. If a company asks the wrong questions or gets into trouble, it's not good for the supply chain. This is what is currently being done in a very natural way. It is a reality. We have gone through a period of expenses, in light of what is happening in the world, before reinvesting more in food safety. States will think about whether they have to invest, what is the return on investment, and whether they need to invest more.

Senator Tardif: You raise some very important points. I don't think we can address them all today. The agency's accountability is important, and so are the reports, the follow-ups and the industry's accountability, in terms of figuring out whether we can rely on an industry that regulates itself.

The Chair: Mr. Charlebois, thank you again for taking the time to share your opinions and comments with us. Come back to Canada, we have tons of snow. You must not forget your roots.

Mr. Charlebois: I haven't forgotten. I wear my pin for two reasons. The first one is that I am proud to be Canadian, and the second is that you cannot talk to me in German.

The Chair: Thank you very much. Enjoy your stay.

[English]

Honourable senators, we will now reconvene for our second witness from GS1 Canada, Mr. Ryan Eickmeier, Senior Director of Public Affairs. Thank you for accepting our invitation, Mr. Eickmeier, and I would now ask you to make your presentation, to be followed by questions from the senators.

Ryan Eickmeier, Senior Director, Public Affairs, GS1 Canada: Thank you. I'm pleased to be with you today as this committee studies a very important topic in the Canadian agriculture and agri-food sector.

The focus of my comments today is the need for whole-chain traceability and how that affects international market access. Let me begin my remarks by introducing the organization I represent.

GS1 Canada is a global, not-for-profit, supply chain standards organization, and GS1 Canada is one of 114 GS1 member organizations worldwide. We are part of the daily lives of Canadians, perhaps best known as the authorized issuer of the global trade item number, the number found underneath the conventional bar code. GS1 standards are globally used 6 to 8 billion times daily to uniquely identify products, locations, assets and shipments, amongst other items.

To provide additional clarity around our role in the agriculture and agri-food sector, GS1 Canada has a long history of working with government and industry. In 2003, we were invited by Agriculture and Agri-Food Canada to lead a national food initiative called Can-Trace, the goal of which was to define the minimum standards and information needed for a one-up one-down traceability standard for the entire Canadian food industry. To realize that goal, GS1 Canada brought together all major commodity groups and stakeholders, from production through to distribution and retail, to collaboratively agree on a voluntary national traceability standard. That standard was rooted in GS1 global standards, which have reached mass adoption in the Canadian grocery and food service sectors. GS1 Canada's membership and governance consists of a wide range of agri-food and agriculture stakeholders, including distributers, operators, manufacturers, retailers and producers.

To ensure a common understanding, whole chain traceability is the ability to know exactly where agri-food and agriculture products are at any point in time, and why. This definition has evolved from the traditional one-up one-down understanding of traceability within industry and government to include the need to completely track forward to the consumer and trace all the way back to the farm.

Traceability is not a business application or process itself. It is a capability that allows a company to share specific production level information with other trading partners and supply chain intermediaries. Whole chain traceability is dependent on the ability to connect the upstream and downstream supply chain using unique identifiers. This has become a major priority for agricultural partners who are looking for ways to enhance product differentiation and consumer confidence, increase business development and improve productivity and cost efficiency.

The need for traceability is shaped by market drivers affecting the entire supply chain from farm to fork. Traceability by itself is not the outcome or the destination. Traceability is the enabler by which businesses align their collective capabilities, including systems and procedures, to respond to the following market drivers: The first is risk management, an example of which would be recognized product recall based on global standards that would allow you to identify specific products down to the granular level. A second example would be the ability to share third party audits and certifications.

A second market driver is that of supply chain transparency, and that's the need to adopt or communicate sustainable business practices or share information regarding product ingredients, production or distribution down to the actual batch level. The third is supply chain efficiency, the use of electronic data interchange for shipping, receiving and proof of delivery. The fourth is trading partner collaboration where you share production planning based on market demand from the consumers.

Through whole chain traceability, we believe the following overall benefits can be realized: The first is product differentiation and consumer confidence. Whole chain traceability creates opportunities for brand recognition and consumer loyalty by narrowing the scope of recalls and withdrawals to only those affected products and assuring consumers about the integrity, safety and security of products remaining on the market.

The second is business development. Increasingly, the capacity to track and trace product through the supply chain is becoming an actual condition of trade both between organizations and according to government regulation. Whole chain traceability enables compliance with such mandates, along with access to new markets and trading partners that trade only with enabled organizations.

Finally, there is productivity and cost efficiency. Whole chain standards-based traceability facilitates the flow of goods and information across jurisdictions by enabling cargo and chain of custody identification, reducing delays, expediting customs approvals, thereby generating cost efficiencies through decreased delays and administrative requirements.

Industry in Canada has already invested in the application of standards-based solutions within both the upstream and downstream supply chains and these investments should be applauded. What remains missing, however, is for these broad capabilities to be fully linked together so the entire supply chain becomes interoperable, thus creating new value for industries, consumers and government. GS1 Canada believes this is readily achievable.

In closing, the ongoing viability of Canada's agri-food industry is dependent on its ability to respond to these evolving market drivers. To view traceability as simply a means to satisfy risk management concerns undervalues its larger importance to both businesses and consumers. Canada's food industry hinges on the provision of sharing reliable and accurate electronic product information with industry and consumers, absolute visibility and traceability, and the ability to rapidly remove any product at any point in the movement from farm to fork.

Traceability should no longer be viewed as a cost but instead as an investment with a tangible return stemming from efficient business processes. GS1 global standards are used by companies worldwide to ensure safety, security and efficiency of supply chains, and they are foundational to whole chain traceability and effective product recall. They enhance consumer safety and secure the agriculture sector's competitive position in Canada and around the world. We would encourage this committee to dedicate a portion of your study to whole chain traceability in Canada as a step towards positioning Canada as a global leader in food safety, efficiency and information visibility.

I thank you for the opportunity to present this morning and welcome any questions you have.

Senator Tardif: Thank you, Mr. Eickmeier, for your interesting presentation. Our previous witness, Dr. Charlebois from the University of Guelph, indicated to the committee that the traceability system in Canada still had many challenges. He mentioned the words la transversalité. I'm not sure if that's translated into the interoperability, but I think his point was that there were still challenges because the systems don't communicate well with each other.

Do you agree with his comment? What could we do? Are you trying to increase the communication between the different systems?

Mr. Eickmeier: I would agree. I'll go back to what I said about upstream and downstream supply chain systems. GS1 traditionally works in the downstream supply chain from the point that a product becomes a consumer product through to the consumer. Our members are made up of the folks who traditionally work in that space.

In the upstream supply chain, you have organizations. In the livestock sector, there is the Canadian Cattle Identification Agency that has a defined standard and registries of that standard. What's missing is the link between the downstream and the upstream. I would agree there is no communication because when a live animal goes in for processing, the traceability is lost at the point when the ear tag is removed and there's no real connection to when GS1 standards are used to identify a consumer product. Building that level of communication, we call it cross-referencing standards. Our systems are built to cross-reference whether it's a product, and the agriculture space location is an important identifier as well. Cross-referencing established standards so as not to increase costs for the agriculture sector as a whole is where GS1 Canada and our sector partners believe whole chain traceability can happen.

Senator Tardif: Thank you. With the organizations that are part of GS1 standards, is it on a voluntary basis that people belong? There's no compulsory obligation to do so in Canada, is there?

Mr. Eickmeier: I'll pull this back 40 years to when the bar code was first created. The bar code was created because the grocery industry came together to agree upon a non-competitive issue, and the problem they were trying to solve was more efficient point-of-sale at the grocery store. That's how the bar code came together. GS1 has evolved globally to work on these non-competitive issues to ensure a common set of identifiers for industry worldwide to use.

In Canada, the retailers would say, "We've invested in GS1, we want to use GS1 standards." Those who trade with the retailers would purchase what's called a prefix licence, the first three numbers on any traditional bar code that uniquely identifies that company, but it gives them the ability to uniquely issue the bar code number. Not only are they issuing bar codes, but they're also using our data registry to share information with their trading partners all on a not-for-profit cost recovery basis. Any type of mandate or need to do it comes from the trading partners themselves, not from GS1. We're there to facilitate commerce.

Senator Tardif: Okay, but how will this link be improved? Who's going to take the initiative?

Mr. Eickmeier: I think the initiative can happen in a few ways. The federal government has invested in a new central traceability service. We applaud that. I think it's the same way that industry came together to create the bar code. It's looking at traceability as a non-competitive issue, as something that the entire agri-food market needs to invest in. It's looking at traceability and looking at our gaps. If our gap exists at the point of processing at the abattoir, is that where the standards need to be flowed back from our end or flowed forward through from the Canadian Cattle Identification Agency? The point of the abattoir, of processing is really where the gap exists today. As a not-for-profit organization, we work with industry to meet their needs, so we don't drive our own agenda. That's where we believe that the gap exists and where it can be filled using the cross referencing of standards.

[Translation]

Senator Maltais: Can you tell me whether, in the European Community, where traceability is in the regulations, all the countries have the same standards?

Let me repeat my question. In the European Community, there is a general and acceptable standard for all the countries. Do all the countries have the same traceability standards?

[English]

Mr. Eickmeier: Yes, so GS1 standards are part of that standard. The larger traceability system would be consistent across the European Union. Different capabilities and different levels of sophistication would vary amongst countries, but GS1 standards from a downstream supply chain standpoint are readily used across Europe and across the world. So the answer is yes.

[Translation]

Senator Maltais: Do the new countries that joined the European Community, like Romania, which joined seven or eight years ago, have the same traceability standards as Germany?

[English]

Mr. Eickmeier: Germany would be more refined. Romania would have a GS1 office, so they would have the consumer side of the standards, but the actual sophistication of those markets vary. So, no, they wouldn't have the same level of capability, but they would be trending towards it.

I think the big difference between countries is how they identify the upstream components. GS1 standards are not traditionally used at that point of the supply chain and we tend to work with the defined standards that are already established in those countries.

I'm not as familiar with the European market, but I would imagine they have different abilities to identify livestock or fresh produce.

[Translation]

Senator Maltais: We know that Europe is divided into many little countries. For instance, they have free trade for grains that feed cattle, hogs or sheep. Do they have a quality control system for the grain coming from various countries to feed those animals? You are close to the eastern countries; is there a way to check the quality of the grains?

[English]

Mr. Eickmeier: Not that I know of. The standard that was established as part of the Can-Trace program in Canada is actually being used as the international model for one-up one-down traditional traceability, the minimum amount of information you need. That does not include the grain side of it unless that grain became a consumer product.

So I don't know of a system that is in place that looks at the quality of the actual product. When you look at a whole chain connected system then that would feed into it because it would impact the quality of the meat that's being served as well. To us, that is part of a fully connected, whole chain traceability system.

[Translation]

Senator Maltais: Am I mistaken in saying that, in Canada, we can have a system to trace livestock feed?

[English]

Mr. Eickmeier: No, traceability is readily available for all components of the Canadian sector. We work with certification agencies that would certify a product as being kosher or grain-fed. That ties into a fully functioning system as well. GS1 standards are not used at that point to actually identify it, but our systems and our product registries accept that information. So everything from geographic location tied into provincial premise identification, if you flow that downstream, GS1 has a global location number that is a complementary identifier. So you can identify the farm as a total entity or you can get down to the granular level to identify the field, barn, chicken coop that is being used to raise those animals. If you scope it out from a risk management stand point, you would be able to actually pinpoint where that product is being recalled. All components of the supply chain are part of what we see as whole chain traceability, including the feed, the shipments and the movement. That is all-inclusive.

Senator Unger: Thank you, Mr. Eickmeier. Your presentation was very interesting.

I'd like to follow up on your comments about the broad capabilities that must be fully linked together. That issue, if I understand it correctly, speaks to the COOL, our Country of Origin Labelling issue and beef and pork products that are processed. COOL is really hitting Alberta farmers hard. In your opinion, is progress being made from the perspective of your organization, or are you even involved in this?

Mr. Eickmeier: Our GS1 U.S. office would be involved as well. We're not involved to a large extent, but the way that we view a safe food system in Canada would be that the ability to share information, the ability to connect to a common database which exists in the U.S. that uses the same system of identification that we use in Canada perhaps could offset something like COOL. It could build a stronger trade relationship and it could get rid of some of the risk that countries feel when they import products. Building that interconnected system is not just here in Canada; it could scope out to our biggest trading partners, including the U.S.

COOL is not something that we've worked exclusively on, but we believe this system could help offset the intent of COOL, which would be to position Canada as one of if not the safest food systems in the world and enable that interoperability across our supply chain and across international jurisdictions.

Senator Unger: So why are not you working with Canada's beef producers and processors to remove this COOL issue? It is costing our farmers and ranchers a lot of money.

Mr. Eickmeier: Yes, and we would agree. We're a unique organization in that we focus on the non-competitive issues. We believe that there is strong representation from the beef producers. There's a strong representation against COOL in Canada and it's also not our traditional market. We're there to support. We're not a traditional lobby organization, if you will. It's really not just one of our roles, but we're there to support them as they need us.

Also, quite frankly, our standards have yet to reach back to the actual producers themselves. Right now, our standards stop at the point of production. So our market ends there. It would be difficult for us to engage them on a one-off basis, and there are associations whose purpose it is to do that.

Senator Unger: One last question. You mentioned Can-Trace.

Mr. Eickmeier: Yes.

Senator Unger: What is the level of adoption? The standard was updated in 2006. Is there a more current update on Can-Trace?

Mr. Eickmeier: Can-Trace built the foundation of traceability. As I mentioned a few moments ago, that foundation is being leveraged worldwide to build traceability standards. That's the minimum level of information that we need to share. That hasn't changed, and it probably won't change for another number of years. When we look at whole chain traceability, that's the next step of Can-Trace. If Can-Trace was one-up one-down capability, whole chain is whole chain. That would be the next step of Can-Trace. It could be something where we replicate the model and bring together industry again to say that the foundation is here. I think what is unique in the Canadian market, and it leads to the thought that there are significant costs attached to traceability, is you have traceability systems that are being built in single value chains with a single company to its trading partners. That delivers benefits to them. It's worth the investment, but it's not whole market; it doesn't impact the entire agriculture sector. We're in discussions with our industry partners and what we're hoping to achieve with them is to build something similar to Can-Trace where it's Canada-wide, universally accepted and where we can work across multiple species, sectors and multiple commodity groups with industry and government at different levels to build that national whole chain standard. My opinion would be if Can-Trace's limitations were that it was one-up, one-down, the next step is full chain, and the Can-Trace model is a good one as an example to see how we brought industry together.

Senator Unger: So that could be used as emphasizing the Canada brand. Our last witness felt that not enough was being done, so something like whole trace or GS1, since it is a global organization, would really help Canada's brand to be promoted.

Mr. Eickmeier: Absolutely. The unique part of what GS1 does is we really work in the identification field — the standards field. You can leverage those standards to showcase almost anything. If you want to showcase the Canada brand, that's something that we can put into our system as a data field, and it can be used as a competitive advantage worldwide. In my opinion, whole chain traceability, if enacted in Canada, would position the country as the safest food system in the world, and perhaps the most open in terms of product visibility, movement and actual incident reporting. It's ambitious. There are a number of stakeholders involved, but it's something that would be the Canada advantage that we could leverage as part of Canada brand.

Senator Enverga: Thank you for your report. I just realized that this traceability goes only up to a certain extent and doesn't really go to the consumers. Do you think it's a good way to do it, maybe put it closer to the consumers, this traceability idea?

Mr. Eickmeier: I'll give you an example, and I'll use product recall. When a product is recalled right now, most of the time retailers will clear their entire shelf of that product without any idea as to which product may be affected. In our version of whole chain traceability, you would be utilizing not just product identification but batch identification all the way through. So when a product, for example a chicken breast, needs to be recalled, you would be able to identify which batches were affected by, say, some sort of outbreak at a processing facility. Consumers would have the confidence that the products that are meant to be recalled are recalled, and when you flow it all the way through to the actual consumer, retailers increasingly have loyalty programs that capture and monitor which products consumers purchase. It could be flowed into individual loyalty programs as well, so consumers could be notified after the fact that that product had been recalled. Perhaps they have not eaten it yet, so that notification system, end-to-end traceability, is what we're envisioning, and it can only happen through the use of a common standard and a common information sharing system, one that has already been invested in by the downstream supply chain.

Senator Enverga: I know that everybody has a smartphone. Do you think it's about time to change the bar codes into QR codes, something readily available for the individual consumer?

Mr. Eickmeier: The bar code, QR code and the RFID tag are what we call data carriers. The QR code has limited functionality. It's really a URL; that is the best way to describe it. The bar code is the data window into the hundreds of data points attached to that actual product that live within what we call "ECC net registry." It's Canada's national product registry, and it contains information about the products sold in Canada. With this whole chain system, manufacturers and brand owners could put identifiers on their products that would allow a consumer to go in, scan it and see all the way back to Joe in Saskatchewan who has grown this corn, it was harvested on this day, and it went through these different processing facilities. So that level of granularity is absolutely possible. It just depends on what information you would like to be shared and what information is important to consumers.

When we look at the information that we have in our system today, nutritional information is critical to consumers. Allergen information is critical to consumers. I spoke a little bit about certifications. Validating that a product is indeed kosher or halal and ensuring consumer confidence is critical to this whole thing. That's one of the market drivers that we see pushing whole chain traceability. The consumer side is incredibly important to this, and that's where some of the real brand value can be triggered.

Senator Enverga: You mentioned more traceability between corn and beef and maybe pork. Is there any chance that we can have traceability options for fruits, such as cherries we export or vegetables?

Mr. Eickmeier: Absolutely, and that's where Can-Trace succeeded. It built a minimal standard across all commodity groups. The traceability system differs a little bit between livestock and a fresh fruit, but the foundation is still the same. You're using the same type of identifiers. You're using batch level identifiers that actually get down to the granular level. Yes, you could have traceability across all commodity groups.

Senator Beyak: Thank you for an excellent presentation. Professor Charlebois told us that, unfortunately, many nations still use food safety as a false pretense to impose non-tariff barriers against each other. It would seem to me that your farm-to-fork and your whole chain traceability would go a long way to mitigating that. Both presenters also told us that there is a missing link between the upstream and the downstream. What steps have you taken to close that gap?

Mr. Eickmeier: I would agree completely that a whole chain traceability system would go a long way in positioning Canada as a leader in food safety. I think whether it reduces some of those tariffs would be a conversation for another day, but it certainly could.

We've been in discussion with stakeholders on the upstream and the middle chain. GS1 Canada has been an observer at IGAC, the Industry Government Advisory Committee, and it's unique because most of the parties at those tables are species groups, either government agencies or federal government employees. GS1 Canada is recognized as a fairly significant agriculture stakeholder, and we have started those discussions with the Canadian Cattle Identification Agency to lay the groundwork and say we're not competing standards. CCIA ear tags are never going to go into the downstream supply chain. Conversely, GS1 standards are not going to flow back to the actual live animal. We're building that common understanding and laying the foundation for these discussions right now.

We're also talking with the Canadian agriculture traceability service, Trace Canada, on what their mandate is from farm to point of processing and at a later date, when they're comfortable, seeing whether there is the ability to use that as a central repository for the cross-referencing of our standards. Right now, we're trying to determine where the cross-references happen — I think we've figured that out — and what information is shared, because that's something that the producers have strong feelings about. They want to be sure that their information is private, and it's not Big Brother looking over their shoulder following every step, and then, ultimately, what reaches consumer and government. We're very much at that stage.

It's a challenge because there are a number of stakeholders involved, particularly, when you go across commodity groups. They're not the same groups of people, but generally, we've been received positively and our industry that works with GS1 closely is in full support of this. It has become a priority of Sobeys, Loblaws and Gordon Food Service, and the large agri-food partners in the world see whole chain as a critical market driver for them.

Senator Tardif: To facilitate access to international markets, do you think that the use of traceability systems should be mandatory in Canada?

Mr. Eickmeier: I think mandatory would certainly make it go a lot faster. It depends what you're mandating. GS1 has always worked globally, as I mentioned, on non-competitive issues that don't drive costs to industry, that, in fact, do the opposite. They make industry realize cost efficiencies, whether it's at point of sale at a grocery store or in the simple listing of a new product. So the strength in the GS1 model is that retailers will drive their trading partners to use our standards, which creates that level of compliance and creates what we call the one-to-many model. Kraft Canada would load their product gate into a registry once and then they would share that with all of their trading partners in Canada. That's really a soft mandate from their trading partners.

I'll waver a little bit on the question and say that it depends on what you're mandating, but certainly it would, if done correctly, help to improve food safety and also help to improve individual business processes for every supply chain partner along the line. If that were the case, if there were positive cost efficiencies and process efficiencies that were realized, then the mandating of it would likely be positively received.

Senator Tardif: Do you have some reticence on the part of industry as to who is going to pay and who is going to be responsible for this?

Mr. Eickmeier: I think the benefit of the model we're looking at is that investments have already been made on each side, so there is no new cost for either side. The producers would really not have to do anything from a new investment standpoint. There may be some capabilities that they may need to update — and I think it depends on each producer's current capabilities — but the model that we envision is, "What is the least costly way to connect the two supply chains?" If you look at the point of abattoir, they're the ones right now who are mostly using what we call proprietary standards. So they're using bar codes. They're using RFID tags, but they're not GS1 and don't speak to the rest of the supply chain. If we were able to find a model where the abattoirs, that middle point of the supply chain, could begin using global standards that are tied back to, say, CCIA standards, that's where our sweet spot is, and the actual cost of that remains to be seen.

We have standards, like the global location number, that, quite frankly, there's not a lot of value for, say, a producer to leverage. But for us, it's foundational to that whole-chain traceability because we can track back to the granular level. There would likely be no cost to actually issue those. So there's some stuff that would happen behind the scenes in terms of issuing identifiers, and there's another one where you would likely need an abattoir to begin using global standards. Because they've already invested in the software, in the technology — we're not in the business of selling that; that's a third party service provider — they have the capabilities already. It's changing their bar coding schema to leverage global standards. That's really where the value is.

For your reference, I mentioned that we're a not-for-profit and operate on a cost-recovery basis. Just to kind of give the scale of the cost of bar codes or of becoming a member of GS1, at an individual licence level, if you wanted to issue a single bar code — identify a single product for use however many times you want to manufacture — it would be $60. That's an annual licence. If you scale up and have a larger company that requires over a hundred bar codes for their products, the cost would be upwards of $1,500 annually.

We have a model that's very cost efficient. Even with these numbers, we also have built what we call an SME — small and medium enterprise — focus, to ensure that all companies, regardless of size, regardless of capability, have the ability to engage in commerce in Canada with the biggest retailers, with the biggest food service operators.

Our model is successful because we maintain those standards and we are actually 80 per cent SME, which is, I think, a telling sign that our standards work, and that our systems and infrastructure that we've built are inclusive of those companies.

Senator Oh: Thank you for your excellent information. I was in a trade fair in Shanghai last year, a Canadian seafood fair, and I was surprised and amazed that they are now exporting freshwater fish from different lakes in Canada. Every fish has a tag in the mouth that you put on the scale. You scan it and know exactly when the fish was caught, which lake it came from, the weight. Amazing. Are you into this system?

Mr. Eickmeier: That's not part of the work we're doing at GS1 Canada. It may be our international colleagues, but I'm not sure, to be honest. But the concept is certainly replicable here in Canada. I know counterfeit goods, particularly in the seafood arena, are a considerable problem. What a system does, what our whole-chain system would enable, would be that accurate identification of those products. So, for seafood coming into Canada, even at the border, through the Canada Border Services Agency, you would be able to better identify counterfeit goods at the source and trace them back to where they came from.

Senator Oh: Yes, and you couldn't tamper with the tag. If the tag is broken, then you couldn't scan it anymore.

Mr. Eickmeier: That is one of the problems, but you could leverage other identifiers, whether it's an RFID tag or some sort of packaging label as well.

Senator Oh: So that means that that is good for our food safety inspection.

Mr. Eickmeier: Absolutely. The key is, taking those what we call "individual value chains" and connecting them so that that system does not just operate independently, so that there is some connectivity to government, connectivity to the regulatory agency and connectivity to the trading partner. The Loblaws of the world can confirm that that is indeed the fish that they are purchasing and not a common knock-off of it.

The Chair: Mr. Eickmeier, from GS1 Canada, if you want to add to the activities as we go forward, before we table our report, please do not hesitate to do so through our clerk. That said, thank you for accepting our invitation and sharing your information as we look at traceability.

We will take a short break in order to consider, before we adjourn, a budget item for fiscal year 2015-16. Mr. Eickmeier, thank you very much.

Honourable senators, a draft budget for fiscal year 2015-16 was prepared for our study on international market access priorities for the Canadian agricultural and agri-food sector and was distributed to everyone. This budget, honourable senators, is for two days of public hearings and one day of fact finding in Edmonton, Alberta. The purpose is to have the committee on-site to receive witnesses and do a few visits in the agricultural sector when we look at stakeholders of the industry.

This copy has been distributed to you. Do you have any questions? I want to be mindful that the figures you have and the cost of that trip are linked directly to economy fares, so now the chair would like to have your comments.

Senator Tardif: Thank you, chair. I think you just mentioned it, but I want to make sure that I understand correctly. These fares are an economy fare basis?

The Chair: Yes, it's all economy fares from Ottawa to Edmonton, Alberta.

Senator Tardif: Thank you. I support that.

Senator Ogilvie: I understand the objective. My question is: Why did you choose Alberta given the enormous range of products coming from the agricultural sector? Would there be other provinces in which there would be a much broader range of agricultural products that could be considered, or did you do this on the basis of volume in key areas?

The Chair: Thank you very much. That's a very good question, Senator Ogilvie. The committee is considering having similar fact-finding trips in other regions of Canada. We will visit Ontario, Quebec and Atlantic Canada.

Senator Ogilvie: So this is the first of a series?

The Chair: This is the first in a series of four.

[Translation]

Senator Maltais: The objective of this mission is to hear from witnesses, but did I understand correctly that there would be "farm tours"?

The Chair: The visits will be linked to processing plants or academic sectors that are related to the industries that are trying to break into the international market or are already doing business there.

Senator Maltais: We have already been. We have visited farms, slaughterhouses, processing plants. Mr. Chair, we need to make sure that we are not going to the same places again. I no longer have any interest in seeing pigs die. I know how they die.

The Chair: Thank you for your comment. The visit will enable us to meet with companies that are already part of the international industry rather than the domestic industry.

Senator Maltais: If memory serves, the slaughterhouse we visited was certainly not selling all its pork in Canada. They kill 10,000 pigs a day.

The Chair: These are not the same industries. The people we will be visiting are directly connected to the international market.

Senator Maltais: Fine.

The Chair: Thank you. Are there any other comments?

Senator Dagenais: When do you expect the visits to take place?

The Chair: They are scheduled for the last week of May.

[English]

Senator Unger: Do you have a list of plants and places that we will be visiting in Edmonton?

The Chair: That will be provided at the next meeting.

I don't see any other questions to be asked. Therefore, is it agreed, honourable senators, to adopt the budget, the economy fare of $80,936 for 12 senators and staff, to be submitted to the Committee of Internal Economy, Budgets and Administration?

Some Hon. Senators: Agreed.

The Chair: We do have agreement. Therefore, this was adopted.

Senator Ogilvie: I abstain.

The Chair: It's adopted with one abstention.

Were there any other questions? I now declare the meeting adjourned.

(The committee adjourned.)