Agriculture Committee on April 29th, 2008

[The Chair, Conservative, James Bezan]

I'm going to call this meeting to order. We're continuing with our study on “Product of Canada” labelling.

We're going to welcome to the table John Masswohl, who is no stranger here, from the Canadian Cattleman's Association. He's joined by Lisa Mina from the Beef Information Centre; Mike Dungate from the Chicken Farmers of Canada; Lynne Markell and John Anderson from the Canadian Co-operative Association; and Don Jarvis, president and CEO of the Dairy Processors Association of Canada.

Mr. Masswohl, if you'll kick us off....

[John Masswohl, Director, Governmental and International Relations, Canadian Cattlemen's Association]

Thank you.

Thank you for inviting us to appear today to provide the Canadian cattle industry's views on “Product of Canada” labelling.

Indeed, the Canadian Cattlemen's Association, as the only national voice for nearly 90,000 cattle producers, is always pleased to appear before the committee.

With me today is Lisa Mina, the executive director for marketing of the Beef Information Centre. The Beef Information Centre is the market development division of the Canadian Cattlemen's Association, mandated to maximize demand for Canadian beef products in Canada and the United States.

To give some context to our comments that follow, it's important to understand the relative significance of imports and exports within the Canadian cattle and beef marketplace.

Canadian federally and provincially inspected facilities slaughtered approximately 3.4 million head in 2007. All of those, except for 5,053 head--that's 0.15%--were Canadian cattle, so we don't import many cattle for immediate slaughter. On the other hand, we exported over 1.3 million head of cattle to the United States in 2007, about 800,000 of those were for immediate slaughter and about half a million for feeding.

On the beef side of the equation, Canada imported 186,000 tonnes of beef in 2007, about two-thirds of that from the United States, and we exported over 360,000 tonnes, with about 80% of it going into the United States. If you take those numbers and you convert live cattle to beef equivalents and you total all that trade, we figure we're exporting between three and four pounds of beef for every pound we import. This is down from about a 6:1 to 7:1 ratio a few years ago.

With respect to product of origin or country of origin, we have had some opportunity to contemplate country-of-origin labelling initiatives in recent years. In particular, we have taken strong positions with respect to mandatory country-of-origin labelling proposals currently hanging over our heads in the United States. I don't intend to go into that issue in my presentation, but I would note that we have consistently explained to our trading partners that origin labelling is not a food safety measure, and we maintain that view domestically as well.

We do not believe that safety is a function of a food's or an ingredient's origin. Safety is a function of the regulations under which the food is produced, whether those regulations are up to Canadian standards and whether the product complied with the regulations when it was produced. If food regulations in a given country do not meet our Canadian standards, the offending product should not be available for sale in Canada, period. If other countries have appropriate standards, there should be adequate inspections and enforcements to ensure that food is produced in compliance.

We see the issue of “Product of Canada” labelling as distinct from country of origin labelling. Our understanding is that what the committee is examining is not a proposal to create new requirements to label products with their country of origin; rather, we understand the relevant issue before us is to determine what products may be identified and promoted as Canadian. And we would agree with that approach. To be clear, we would not support the creation of any new mandatory labelling requirement. CCA recommends a voluntary labelling approach, employed only when marketers determine that Canadian beef is of value in the marketplace.

Our second criterion is that any labels of promotional material identifying beef as Canadian must be lawful and truthful. We are aware of many instances when imported beef has undergone minimal or no processing in Canada but has been misrepresented as Canadian. When this occurs, the consumer may end up with a substandard experience, thus damaging the reputation of Canadian beef. Under existing law, the Meat Inspection Act, beef that is imported and not processed in Canada must be labelled with its country of origin when sold at retail. If imported beef undergoes some minimal process in Canada, it does not have to be labelled with its origin, but it is not Canadian. We believe that a greater enforcement effort is required to achieve compliance with these existing provisions.

Our third recommendation is that any rule to define what beef may be called Canadian must be consistent with the trade obligations by which we expect other nations to abide. We do not support designating Canadian origin on the basis of a percentage of value-added in Canada. This is an antiquated approach that is no longer meaningful in today's environment of global sourcing of inputs and is not necessarily supported by our trade agreements.

When NAFTA was negotiated in the early 1990s, it was the first comprehensive effort of the governments of Canada and the United States to define the origin of goods made partially or entirely from imported inputs via a specific production activity.

For beef and other meats, the NAFTA rule of origin specifies that the slaughtering of animals to produce meat is a substantial process that results in the meat having the origin of the country where the slaughter occurred. Therefore, we believe that any beef produced in a slaughter facility in Canada should be entitled to bear the “Product of Canada” label, regardless of the birthplace of the animal and without calculating constantly changing production values.

NAFTA also has another category of origin called “wholly obtained and produced”. This rule lists a number of activities, including animals born and raised entirely in a country. We believe that beef produced from such animals should be entitled to be voluntarily labelled as “Grown in Canada” should producers and processors be willing to adopt practices enabling them to prove that the product so labelled was indeed entirely born, raised, and processed in Canada. Those who cannot demonstrate a link from Canadian beef to a Canadian farm would nevertheless be entitled to label their beef as “Product of Canada”, if they wish to do so and the beef comes from animals slaughtered in Canada.

There are also relevant provisions in the WTO agreement that I will submit in my written comments to the committee, but in the interests of time, I won't read them.

For the remainder of our time, I am going to ask Lisa Mina to describe the Beef Information Centre's efforts to promote Canadian beef in Canada.

[Lisa Mina, Executive Director, Marketing, Beef Information Centre]

Thank you, John.

The Beef Information Centre markets Canadian beef in Canada and the United States. To date, our domestic market has always been the largest and most secure market for Canadian beef. In 2006, 64% of Canadian beef was consumed here in Canada, while 29% was exported to the U.S.

Increasing the demand for Canadian beef in Canada is one of our key mandates at BIC, and BIC has been committed, since 2003 specifically, to promoting Canadian beef to the Canadian public and industry partners. These efforts support Canadian consumers' loyalty to Canadian products.

In support of this, we completed a domestic survey of about 1,000 Canadian consumers in 2007. The survey indicated that just over 75% of Canadians considered “Produced in Canada” as either a very important or somewhat important attribute when choosing and buying meat. BIC fully concurs with CCA's recommendation to support the use of “Canadian” as a voluntary marketing tool.

This concept is not new for the Canadian beef industry. In 2003 we introduced the “Make it Beef” logo, which includes the red maple leaf to promote Canadian beef and some beef products in consumer advertising. For example, key retailers and food service partners have utilized the logo in recognition of Canadian content.

When BIC funding allocations occur, the use of the logo is linked to Canadian content where the supply of beef has been verified. As the Canadian beef industry is market driven, supply changes are dynamic; hence, it is important to maintain voluntary use of the Canadian logo link to content.

At this time, the Canadian beef industry is developing a new brand identity for Canadian beef. To maintain the integrity and value of the new brand logo with trade partners and the Canadian public, a set of specific logo use guidelines will be developed. The guidelines will include how the logo can be used and what it will specifically represent.

In addition to Canadian content, the logo may represent other attributes that build a meaningful value proposition for the respective target markets.

A further recommendation that we have today is to ensure that government has sufficient resources to monitor and enforce product labels. The Standing Committee on Agriculture and Agri-Food's own concern about the misleading nature of the current “Product of Canada” label will not be alleviated by only changing its definition.

Currently there are several laws and regulations that govern the labelling of beef products, including the Meat Inspection Act, the Consumer Packaging and Labelling Act, and the Meat Hygiene Manual of Procedures.

Despite the array of labelling regulations, we are aware of the activities of some operators in the industry who misrepresent beef as Canadian.

Another problem that we have identified is that many people incorrectly assume that the Canadian inspection mark signifies Canadian origin. All beef processed in Canada must bear the Canada inspection mark. This symbol means that the product has been inspected—and really nothing more than that. It does not refer to origin, but many consumers are likely under the impression that it does indicate Canadian origin.

In an effort not to mislead consumers, increased investment in effective monitoring and enforcement as well as consumer and trade education should be considered.

To conclude, we are committed to the promotion of Canadian beef products. However, the tools used to achieve this goal should be voluntary, should be consistent with Canada's international trade agreements, and should be meaningful to the Canadian public.

Persons voluntarily labelling beef as Canadian should be held accountable as to the veracity of their claim, and greater education should be undertaken so that both the trade and the public are not misled by the meaning of the inspection of grading marks.

On behalf of Canada's beef producers, we would like to thank the Standing Committee on Agriculture and Agri-Food for giving us the opportunity to comment on behalf of Canada labelling, and we look forward to staying engaged in any future consultations on this important issue.

Thank you.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Dungate.

[Mike Dungate, General Manager, Chicken Farmers of Canada]

Thank you, Mr. Chair. Thank you, committee members, for the opportunity to come before you and talk about “Product of Canada” labelling.

I am representing the Chicken Farmers of Canada, which is the national organization that represents Canada's 2,800 chicken farmers. As our board of directors and organization is made up of farmers, processors, further processors, and restaurateurs, the views around our table take into account the major stakeholders in the chicken industry.

CFC also has a mandate for managing supply in Canada, and we would like to take this opportunity to express our thanks and appreciation to all parties for their support for our industry.

The Canadian chicken industry is responsible for around 50,000 jobs and about $9.5 billion in economic activity. It has been a growing business over the past 30 years. In fact, we reached a milestone in 2007 when we crossed the billion kilogram mark in production. I think that is a pretty significant accomplishment.

We have done this by building the confidence of our consumers and providing them with product that informs them about safety, how we raise product on our farms, and how we process it. We guard that confidence jealously, because without consumer confidence, the consumption of chicken, or of any Canadian product, would plummet.

We are primarily focused on the domestic market. About 94% of what we produce and process is marketed in Canada. This is our primary market, though it doesn't mean we're a closed market. We're the ninth largest importer of chicken in the world, so there is a significant amount of chicken that comes in and plays on the reputation we have established in this marketplace.

Our first concern is that imports should not come in at all if they don't meet our requirements for food safety and the other standards we have. That is the first part of this “Product of Canada” labelling. It doesn't matter what content provisions we come up with here. What we don't want to do is provide product that doesn't meet our standards, that at times gets mislabelled, and that introduces more risk. We are not concerned about the production in other countries. We are concerned about the production in Canada because we are the ones who are marketing the product in Canada.

In respect of consumer views, we have done surveying since 1995. We conduct full omnibus surveys for Chicken Farmers of Canada, and consumers have made it clear that they want to know where their food is coming from. That is a key concern.

I would suggest that this is becoming more of a concern—not just because of food but also because of other import issues, like toys with lead paint on them. It becomes more of a discussion item in the consumer psyche, so we have to be more vigilant in what we do.

It is interesting that over the last decade our surveys have shown that the percentage of Canadians who want to buy Canadian chicken has risen from 70% to 89%. In other words, there is a difference in consumer trust here with respect to Canadian and imported product. That is why it's so important that we get this right. We need to determine exactly what can be labelled “Product of Canada”.

One other issue that has been raised is avian influenza. With outbreaks in Asia and concerns about bird-to-human transmission in Asia, there has been a greater awareness of potential impacts. There is now a greater suspicion about imports and more trust in domestically produced product. That's another factor that builds into this.

We bolster that consumer confidence by making sure we deliver on food safety, biosecurity, animal welfare, traceability, and our impact on the environment. We are doing these things to maintain that confidence.

I want to make a distinction between two issues. One is “Grown in Canada” and one is “Product of Canada”.

We support the idea of a “Grown in Canada” label, but see that as distinctly separate from “Product of Canada”. It is essentially a marketing concept, while with the “Product of Canada”, what we're examining here is the truth in labelling and where does the product come from.

We see both as voluntary. If you want to label your product as “Product of Canada”, then you have to meet those guidelines. If you want to market it as “Grown in Canada”, that is a separate initiative, and if you so choose, that is your decision to do that.

In terms of the “Product of Canada”, in our view, the guidelines that currently exist should be changed. It doesn't make sense that food could be labelled as “Product of Canada” and not one part of the food content--call it a packaged food product--is from Canada. In our view, the label should reflect the food and not the packaging. Packaging and advertising, therefore, should not be included in the equation to determine what is a product of Canada and if it meets Canadian content requirements. In fact, if companies are trying to meet the Canadian content requirement by putting in additional packaging, maybe we'll help the environment by taking packaging out of the equation.

In terms of how you would label products and call them products of Canada, our view is that it's important that the essential character of the product being purchased is Canadian. That is the term we have used: “essential character”. For example, when a consumer buys a Canadian chicken cordon bleu product, which is a stuffed chicken with some ham and some cheese inside it, the consumer would expect, at a minimum, that the chicken is Canadian. They are buying chicken cordon bleu. However, when a consumer purchases a Canadian lasagna with chicken meat, the consumer is not necessarily expecting that the chicken is Canadian. They're buying a lasagna and they're expecting, I would suggest, that the product is being processed in Canada and put together, that you are making the lasagna in Canada. So we need to look at what the essential character is. A pizza would be different from a boneless piece of breast meat. It is the essential character that is important.

We've tried to come up with an idea for how you could break down this essential character. In our view, we put forward the proposition that a single ingredient meat product—that would be chapter 2, “Meat” in the harmonized tariff system—would have to be 100% Canadian in terms of production and processing.

You need to understand that in the chicken business, our birds are not travelling from one farm to another. They don't have a long life span, and therefore it is going from one farm into one processing plant. So if you have one piece of meat—and you can't really stick two pieces of meat together, it has to be one whole piece of meat—our view is that that should be produced and processed in Canada. At the same time, a majority of the food value, whether or not you call it the production and processing value, must be Canadian.

If you have a meat product containing more than 20% meat, that is chapter 16 in the harmonized tariff system. Our view is that because you are buying a meat product at that point--this is the essential character--a majority of the food value and a majority of the chicken value would have to be Canadian.

Any products outside of that, with less than 20% meat content--in chapters 18, 19, 20, or 21 of the harmonized system--would only need to have a majority of food content to be labelled Canadian. There is no longer an essential character of those products that chicken or meat is the essential product.

We support as well what Lisa was saying in terms of communication and education absolutely. If we are going to make changes here, it is not going to be enough only to make the changes. There needs to be an education component to this. We need to get out there and add an enforcement aspect.

To conclude, Mr. Chairman, these are the recommendations of the Chicken Farmers of Canada.

A “Product of Canada” labelling requirement would be that imported foods must be subject to the same standards at the outset; they don't get in if they're not.

Packaging and advertising should not be part of the claim in determining what “Product of Canada” is. The essential character of the product would be the dictating point in what portion would have to be Canadian.

And there must be a positive, pro-Canadian, not anti-import communications strategy that is tied with that.

Thank you very much. I'm prepared to answer any questions you may have.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Anderson.

[John Anderson, Director, Government Affairs and Public Policy, Canadian Co-operative Association]

Thank you very much.

My name is John Anderson. I'm the director of government affairs and public policy for the Canadian Co-operative Association. The Canadian Co-operative Association is a national association for cooperatives. We represent more than 9 million cooperative and credit union memberships from over 2,000 cooperative organizations across Canada.

Our members operate in many sectors of the economy, but for today's topic we represent the large retail co-ops that sell foods and agrifood supplies, such as Federated Co-operatives, United Farmers of Alberta, GROWMARK, and Co-op Atlantic, as well as some of the large dairy co-ops, such as Gay Lea Foods, Scotsburn, and Northumberland.

There are many food-oriented co-ops that either market, process, or retail food. The organic food sector is growing rapidly, as are local food initiatives that promote and support growing, processing, and selling food within the same geographical region.

Our agricultural co-op development initiative, which we jointly manage with our francophone sister organization, the Conseil canadien de la coopération, is helping new value-added agricultural co-ops to get started. Currently we are helping co-ops involved in meat processing, blueberries, apples, specialty cheeses, and organic grains and pulses, as well as farmers' markets.

The current regime for labelling food products is confusing and inaccurate. We are pleased that this government is committed to reviewing current policies related to voluntary “Made in Canada” or “Product of Canada” claims and that this committee is conducting this study. The confusion in food labelling is hurting our Canadian farmers, and it misleads consumers.

While you all have used your own personal examples of food products that you find confusing, we would like to present a co-op example. I have it right here. Bee Maid Honey is the brand name for honey produced by the honey co-ops of western Canada. It's owned by 2,000 beekeepers. There is no other honey company in Canada that sources all of its honey from its owners.

There are two brands of honey on the grocery shelves. Bee Maid is 100% Canadian honey, while Billy Bee contains a blend of Canadian and Argentinian honey. In this example, the confusion is not created by the use of “Product of Canada”, because Billy Bee does not use “Product of Canada” on the label. But it does imply that it is a Canadian product by saying “Canada's favourite honey”, and the use of the grading designation, “Canada No. 1 White”, on the front of the label.

When consumers see “Canada No. 1”, they think it's Canadian honey, while the regulations relating to Canadian honey say that “Canada No. 1” can be either 100% Canadian honey or repackaged and graded imported honey. According to Bee Maid, the use of Canada in the grade name, and the requirement that it be on the front of the label while the country of origin of the honey can be on the back of the label, leads to a loss of sales and confusion in the marketplace.

There are many reasons to address proper food labelling and many factors to be taken into consideration. The first key issue is Canadian confidence in the food we buy. A study commissioned by the Canadian Food Inspection Agency recently to understand how Canadians view the safety of Canada's food supply revealed an anxiety about the “Made in Canada” label and general frustration and mistrust about food labelling in general. Their report said that the “Made in Canada” label had low credibility. It was questioned because it was thought to guarantee nothing and was worrisome to consumers. This is a Government of Canada report.

Connected to this is consumers' demand for Canadian food. The same CFIA study, which undertook focus groups in November 2007, reported low confidence in imported food. Participants were concerned that some imported foods were more likely to contain higher levels of pesticides and were less safe than domestically produced food. As a result, more Canadians are actively looking for Canadian products and want to know the origins of the ingredients in their food.

A third issue is the sustainability of the Canadian agricultural industry. Accurate labelling of Canadian-grown food will help the farmers who produce it. We believe that proper labelling that shows the source of the food will encourage food processors to buy more Canadian ingredients, thereby increasing farmers' incomes. If proper labelling leads to increased demand for Canadian food, this could help our food processing industry and create more jobs.

The last reason is to reduce the environmental impact of transporting goods from other countries. The long-range transportation of food has a significant impact on climate change and the amount of air pollutants released in the atmosphere. In Canada, the transportation sector accounts for one-quarter of Canada's greenhouse gas emissions. Also, as the distance food travels increases, so does the role of chemicals and the use of irradiation and processing to reduce spoilage before the food reaches the marketplace.

As a multi-sectoral association, we're not specialists in food labelling, so our recommendations to this committee are general. We believe the exact details of the revised food labelling regulations must be worked out in consultation with the major stakeholders.

Here are our major recommendations.

We recommend that the federal government create a system of labelling country of origin for the major ingredients or raw materials used in all processed foods sold in Canada. This will give consumers the information they require to make informed buying decisions.

We recommend that the federal government develop regulations for the use of a “Product of Canada” label, with a minimum percentage of the ingredients or raw materials from Canadian sources. We recommend the “Product of Canada” label refer to the content of the food rather than the costs of packaging or manufacturing.

We recommend that the federal government revise the grading system used for food products so that only products that meet “Product of Canada” criteria can use “Canada” in their grade name. So using examples of honey products, if a criterion for “Product of Canada” is 80% Canadian raw ingredients, then the Billy Bee blended honey would have to have 80% Canadian and 20% Argentinian before it could say “Canada No. 1”. Otherwise, it would simply say “No. 1”.

We recommend that the federal government undertake an educational campaign to inform Canadian consumers about the content of food labels and encourage Canadians to buy Canadian food products.

We recommend that the federal government broaden its activities and programs beyond the labelling issue in the following ways.

Develop a strategy for domestic food sustainability, ensuring that we grow and process more of our food needs within Canada. The growing costs of transportation, world food shortages, and consumer demands for safe food require the federal government to take some long-term action. This can be done within the Growing Forward agricultural policy framework or as a horizontal initiative involving federal departments.

Stimulate and support more food processing in Canada by bringing together producers and manufacturers to communicate needs and opportunities and continue the work being done by value chains.

Provide support to local food initiatives and food systems that create ways for consumers, community organizations, and farmers to work together to ensure more locally produced food.

Continue the funding with the agricultural cooperative development initiative, the AgCDI, which provides advisory services, learning opportunities, and capacity building for emerging value-added agricultural co-ops. This program ends in March 2009 and could continue to help more co-ops get started.

Thank you very much for the opportunity to present our position.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Anderson.

Mr. Jarvis, you can bring your comments now.

[Don Jarvis, President and Chief Executive Officer, Dairy Processors Association of Canada]

Thank you, Mr. Chairman.

I will respect the patience of the committee members, and I'll certainly stick to eight or nine minutes with my introductory remarks.

Mr. Chairman and committee members, the dairy processors welcome the opportunity of assisting your committee in its study of “Product of Canada” labelling. Our members support the objective of ensuring Canadian consumers get as much information as is practical on their food labels and that only foods, including dairy products, that are of Canadian origin should carry “Product of Canada” declarations.

Here's a little bit about the Canadian dairy processing sector. After the meat industry, we are the second largest employer in the food processing industry, with about 26,000 employees. There are almost 300 federally registered plants across Canada producing fluid milk, cheese, yogourt, ice cream, sour cream, and other standardized and non-standardized dairy products.

DPAC's members include Saputo, a public company; Agropur, the largest cooperative in the country; and Parmalat, an international company with a very successful Canadian operation. These three companies process 75% of all the milk produced in the country. Our other members include Gay Lea, a large Ontario-based co-op; Kraft Canada; the major Atlantic provinces co-ops, Scotsburn and Farmers; ice cream manufacturers like Unilever Good Humor; the two major yogourt manufacturers, Danone and Ultima; and other domestic and international cheese manufacturers.

Together these businesses take just over $4 billion worth of milk produced by Canada's dairy farmers and transform that milk into dairy products worth in excess of $12 billion in the Canadian market. Our customers include, of course, all the major retail, food service, industrial, and further food processors across Canada.

Mr. Chair and committee members, when it comes to the “Product of Canada” designation on dairy products, the dairy product regulations are very clear, and there are very detailed information requirements regarding the ingredients, the place of manufacture, and other information prescribed for all Canadian dairy products. The Canadian dairy processing industry goes to great lengths to display that information on its labels. Let me very briefly describe those requirements:

...every prepackaged dairy product shall be labelled on the principal display panel of the container—

—that's the front of the label—

—with (a) the common name of the dairy product; (b) a declaration of the process of manufacture shown in close proximity to the common name...; (c) a declaration of net contents as required by the Consumer Packaging and Labelling Regulations; (d) a percentage declaration of moisture and milk fat in cheddar cheese; (e) a percentage declaration of milk fat in the case of partly skimmed milk powder, dairy spread, and calorie-reduced butter; (f) a percentage declaration of skim milk powder and whey powder in the case of blended skim milk and whey powder and blended whey and skim milk powder; (g) a statement as to the source of the milk—

—what the dairy product consists of and whether it came from a cow, a ewe, or a goat.

There are four or five specifications required on the front panel of every Canadian dairy product, and

(k) the words “Product of” followed by the name of the country of origin, in the case of cheddar cheese prepackaged in Canada from imported bulk.

On the other part of the label, not the principal display panel or the front of the package:

...every prepackaged dairy product shall be labelled on any other surface, other than the bottom of the container, with (a) the list of ingredients and components—

—according to the food and drug regulations and the dairy product regulations—

...(b) the durable life date and instructions for proper storage of the dairy product...; (c) the words “Product of” followed by the name of the country of origin in the case of an imported dairy product; and (d) the words “Product of Canada” when packed for export from Canada.

...every prepackaged dairy product shall be labelled on any surface of the container....

There's another list of very prescriptive requirements: the registration number, for example, the establishment, where the dairy product was prepared; and the registration number of the establishment in which the dairy product was prepared, with some other specifications, plus a batch number, code number, and lot number identifying exactly the production of that product.

Finally, it reads:

The labelling requirements of this section do not apply in respect of prepackaged individual portions of dairy products that are for sale from automatic vending machines or mobile canteens, or that are served by a restaurant or other commercial enterprise [...].

As you can see, dairy products in Canada provide an immense amount of information already to the consumer. As well, DPAC and its members believe that when it comes to dairy products and the misuse of “Product of Canada” statements and labels, or in advertising, this is already covered by subsection 5(1) of the Food and Drugs Act, and that Bill C-51, which is before the House now, and the changes there clarify and strengthen that important legislation--especially since the word “origin” has been added.

In conclusion, we agree with this study and its objectives and the need to perhaps clarify the guidelines that will ensure consistency of use of “Product of Canada” statements across all food products.

Those are my introductory remarks. Thank you, Mr. Chairman.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Jarvis.

With that, we're going to go to seven-minute rounds, and I'm going to hold everybody to seven minutes.

Mr. Easter, you're going to kick us off.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair, and thank you, folks, for coming.

I guess, Don, my first question is to you. I never really thought of it before, but when you go into a grocery store--not a place I spent a lot of time until we started this--it is a lot clearer on the dairy products end. You can tell where the product comes from.

I took three pieces of pork tenderloin before committee the other day. Two of them were labelled properly and one wasn't, which comes to the enforcement issue.

I guess in terms of the dairy industry mainly, do you see any implications for your industry in our making changes to the “Product of Canada” statements? I take it not.

[Don Jarvis]

No, not really. I think the concerns are more oriented to other commodity groups--the horticultural area and so on--and there is not abuse or misuse or confusion when it comes to dairy products, either by the suppliers or at the consumer level.

My only comment, though, is that of course for any changes, you have to be careful with respect to the voluntary nature of the change, in terms of what you make mandatory versus what's voluntary in terms of “Product of Canada” labelling.

[Wayne Easter, Liberal, Malpeque, PE]

Yes. I guess we'll see as we go down this road. Given country-of-origin labelling--COOL--in the United States and our concern about that, I don't believe we're looking at going in that direction. What we're really looking at is truth in labelling, and as others have said, the “Grown in Canada” voluntary label would also be another option or an addition.

To the Canadian Co-operative Association, I think you did put your finger on a problem, and that is, regardless of what we do on “Product of Canada” labelling.... I think what we're trying to get to is that we're actually dealing with the product and the package, and Mike's comments are well taken on that.

On a grade label, do you have any suggestions about what can be done there? I think people will want to know if it's “Canada No. 1” or “Canada grade”. I will admit it's absolutely confusing. When you look at that Canada label, you assume in your head that it is a Canadian product, to a certain extent, and that it's not a grade label. Have you any suggestions in that area to make it less confusing?

I think you said “No. 1”, but--

[John Anderson]

I think we have to separate the “Canada” from the grading. There has to obviously be a grading system. It's very important, but allowing products that are not from Canada to have the “Canada No. 1” label on there.... We propose just “No. 1”. It could be some other form of labelling, as long as it differentiates products that are made in Canada from Canadian processed and grown ingredients.

I think that's essential, to separate those two, and to have a grading system that doesn't imply that it is made in Canada from Canadian-produced ingredients. We're not experts in labelling, but there are different ways of doing that.

[Wayne Easter, Liberal, Malpeque, PE]

Don certainly pointed out that there is, I guess, considerable variance in what's allowed on the front of the label and what's allowed on the back of the package. Is that a possibility of a way to go?

[John Anderson]

Yes, definitely.

Lynne, did you want to answer that?

[Lynne Markell, Advisor, Government Affairs and Public Policy, Canadian Co-operative Association]

I think in the past grades were even more important, but it may be that the way consumers are looking at labels today, whether something is grade one or two doesn't have as much importance. I know the higher requirements require that the grade be on the front. It may be that we need to have grade, but the grade could also be on the back so that it could be less confusing.

So it's two things: where it is on the label and when you add “Canada”. Our suggestion is that we say “Canada No. 1”, or whatever, when it is truly a Canadian product, to link the two together.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

I have a question for John on beef supplementals. We hear a lot, and we get a lot of requests to not allow supplementals. I don't think supplementals are coming in currently or have been over and above the threshold since rBST. What's your comment on that, just so we're clear?

[John Masswohl]

My understanding is that since 2003, only two supplemental import permit requests were approved. I think both of them were in 2004-05 and they were for very small quantities. I think it was about a half a tonne.

[Wayne Easter, Liberal, Malpeque, PE]

I don't think either of you really said you were in favour of or opposed to making changes to the “Product of Canada” definition. Is the beef industry onside with changing the “Product of Canada” definition along the lines that we think we're looking at it?

[John Masswohl]

I think so. I think what we tried to express is that we do not favour a definition based on a percentage of value.

I can give you an example. If you're producing, say, 1,000 tonnes of ground beef and it has perhaps 800 pounds of imported meat and maybe 200 pounds of Canadian trim, the imported meat is 10¢ a pound and the Canadian trim is 40¢ a pound; yet in the Canadian expenses you can have a product that's 80% imported meat but 60% Canadian by value. In fact, the cheaper the imported material, the easier it is to meet that standard.

So we think--probably very similar to what Mike said--it's the process of what it is, the substantial process. If you're taking an imported animal, an imported cow, and converting that into beef, we think that's substantial. If you're doing a lot of processing and changing the essential character, we think that's how the rules should be qualified.

[The Chair, Conservative, James Bezan]

Your time has expired. Time flies when you're having fun.

Monsieur Bellavance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you.

Mr. Masswohl, you raised a very interesting point. In your remarks, you said that imported beef was still being used in mixtures and that the final product could nevertheless be labeled "Canada". What surprises me is that you are still suggesting—and the same is true for the poultry producers and Mr. Dungate—that the standard not be mandatory.

While you condemn the use of the "Canada" label on products which, in many cases, are not very Canadian in reality, you say that the industry should be given the leeway to put a "Grown in Canada" label on its products or not. In passing, we are still discussing what should be used: "Product of Canada" or "Grown in Canada".

I am surprised. In Quebec, producers' associations seem to be unanimous that the standard must be mandatory. If you open the door to the possibility of using the label or not, once again, consumers will probably be lost. They may well be confused by the label on a product, not to mention that there are also categories like "Canada A1", etc.

I wonder what advantage there is to having a standard that is not mandatory. In whose interest would it be to not write "Grown in Canada" when the product is grown in Canada? When it is not, the label should indicate that the food was grown elsewhere. I would like you to explain your position to me. I feel there's a contradiction.

Mr. Dungate, I would also like to know your views on that.

[John Masswohl]

In the context I tried to present at the beginning, most of the beef in Canada is Canadian beef, and most of it comes from cattle that are produced in Canada.

What we wanted to establish were two levels: “Product of Canada” and “Grown in Canada”. Each of these requires some trace-backs and some costs. That's why we think everything that comes out of a Canadian packing plant—and over 99.8% of it will be Canadian, all the way back—should be labelled “Product of Canada”. If somebody wants to go to the extra expense of identifying which animals were born in Canada and make that connection all the way back to the farm—the real trick, once you get into the packing plant, is identifying all the different pieces of the animal that go in different directions and down different production lines—we're certainly in favour of allowing that to be labelled “Grown in Canada”. But ultimately, as soon as you start making things mandatory, you lose the value. If there is a marketing advantage in the marketplace, you lose that value by making it mandatory.

The other thing we're cognizant of, which may be different from the dairy industry or the supply managed industries, is that we have to compete in an open market environment. We have to compete against imported products. We do export about 60% of our production, and we compete in the global marketplace. We accept that opportunity to compete, so we don't want to create mandatory regulations that add costs.

I think where most of the confusion comes in is in what things like.... I have a picture of the Canada inspection mark. Any meat that is processed in Canada has to have this mark on it to be sold. Basically it's just a circle with a crown and the word “Canada” in it. If meat comes from South America and is processed, it has to have that mark on it. So I think where we'd like to put a lot of effort is in communicating what this mark means, or maybe even looking at changing the mark itself so that what it means is a little clearer.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Dungate, could you tell us why you are not in favour of a mandatory standard for labelling?