Agriculture Committee on April 10th, 2008

[The Chair, Conservative, James Bezan]

I call this meeting to order.

I want to welcome everyone here this morning as we continue on with a very interesting study that we're doing on “Product of Canada” labelling and “Made in Canada” and where we go from here.

We welcome to the table today someone who's no stranger, Jim Laws, who's here with the Canadian Meat Council. From the Further Poultry Processors Association of Canada we have Robert de Valk. From the Canadian Poultry and Egg Processors Council, we have Robin Horel, president and CEO. From the Fédération québécoise des producteurs de fruits et légumes de transformation, Claude Lacoste is here as president, and Gilles McDuff. Welcome to both of you. From the Conseil de la transformation agroalimentaire et des produits de consommation, we have Sylvie Cloutier and Christine Jean. Welcome, both of you, to the committee.

I would ask all witnesses to keep your opening comments to ten minutes or less so that we have plenty of time for discussion. And just for the information of members, at the end of the business today we'll need about ten minutes to deal with a motion from Brian Storseth.

Mr. Laws, you have the floor.

[James Laws, Executive Director, Canadian Meat Council]

Thank you very much for inviting us to present to you this morning. As you'll recall, we at the Canadian Meat Council have been here before. We represent the largest of Canada's agrifood sectors, with gross sales over $20.3 billion. In fact, last year Canada exported $1.24 billion worth of beef and $2.39 billion worth of pork to over 60 countries.

I presented to you last in November, when I was expressing our concern about the challenges to the industry, and those concerns remain. We're still faced with a very strong Canadian dollar, labour shortages, rising fuel prices, and with an increase in the amount of pork and beef that's being sold here in Canada, directly at retail, from the United States.

As well, according to Agriculture Canada, the pork imports from the United States so far, year to date, are up 16%, to 22.5 thousand metric tonnes. Last year, at the end of the year, imports from the United States were up 8.4%, at 94,000 metric tonnes.

Imposing or looking at any new regulations makes us nervous. We saw that, because last year we were faced with the new specified risk material regulations for the beef sector. On April 1, Gencor announced that they were closing their doors and declaring bankruptcy protection.

Looking at this particular regulation makes us want to make sure that we're looking at this properly. It's our understanding that you're looking at the recommendation you made of implementing a minimum 51% domestic agrifood content rule that would provide better protection for the integrity of “Product of Canada” designation.

Let me begin by pointing out that Canada's meat industry is the most heavily regulated of all Canada's food sectors. We have a very good record of compliance with these rules. And not only do we comply with domestic rules, but many of our members comply with export rules, various rules in different countries, that differ from our own.

We also know a lot about labels. I've got several meat samples here I'm going to pass around, and hopefully I'll have time before my ten minutes run out.

In Canada, all labels intended for immediate containers of prepared edible meat products are required to be pre-approved by the Canadian Food Inspection Agency before the product is sold in the market. Currently the label registrations are required for all pre-packaged meat products and processed vegetables and fruits only. Other food products, such as dairy, honey, bakery, egg, fish, etc., here in Canada do not require pre-registration. They're still subject to relevant labelling regulations, but they don't have to wait for label approval as the meat industry does before we can market our product. This has serious implications for the competitiveness of our sector compared with other Canadian food industries that are not constrained by these regulations.

That approval costs us money. Each and every food label.... For instance, for Piller's sausages and delicatessens--and they have a lot of product--each and every new label costs them $100 for registration and $45 if they want to make a minor change to something on this label. It's $45 for a minor change. So take all of the meat companies in Canada, multiply it by all the labels that we produce, and that's a problem.

We understand, as well, that competitors in the United States wait no longer than seven days and that they have a generic system of approvals for labels that allows them to make minor changes without government approval. Our label approval process has been frustrating our members for years.

Introducing new legislation or regulations on “Product of Canada” makes us wonder how it will affect our businesses. Now all products that are pre-packaged for sale by Canadian meat processors must carry the meat inspection legend. When I started in this job four years ago, I didn't really quite know what it meant either, but what it means is that it is inspected by the Government of Canada. That's what it means. It's got this crown on it, and the establishment has to put their number either immediately on the logo or somewhere on the package.

I'll pass this one around, and you can see that here's Piller's pepperoni, an excellent product. It's got the logo here. They've actually put their establishment number up here in the corner, establishment 522, but they've got all the information, totally bilingual, and it shows the best before date. We'll pass that around. We'll open it at the end of the session and you can have some of that.

Of course, the meat inspection legend is the national trademark, and unauthorized use of that national trademark is subject to prosecution under section 21 of the Meat Inspection Act. Only meat processed in a Canadian federally inspected facility may use the trademark, but we are not required to use “Product of Canada”.

You'll see on the various products that we pass around.... And I'd better start passing these around, or you'll be looking at them while Robin or someone else speaks. That's an example of a fully cooked chicken product. In all of these products you'll find the crown, but you will not find the declaration “Product of Canada”. It's not required.

Actually, our association raised the issue of “Product of Canada” late last year with the Canadian Food Inspection Agency because we saw an increasingly large number of large cuts of meat, especially at the warehouse club stores, that in the past have been cut at retail, appearing for direct sale with several labelling violations, such as lack of bilingual labelling, lack of a meat inspection legend, no code dates, no “packaged on” dates, and especially non-compliant U.S. meat with no “product of” information.

We got a response from them in writing on February 11, 2008, and they said to us:

Section 123 of the Meat Inspection Regulations requires the words “Product of” followed by the name of the country of origin on the labels of all pre-packaged, imported meat products. In addition, Section 31 (2) of the Consumer Packaging and Labelling Regulations requires that pre-packaged products that are wholly manufactured or produced outside of Canada be labelled with the identity and principal place of business in Canada for which the pre-packaged product was manufactured or produced for resale. The identity and principal place of business shall be preceded by the words “imported by” or “imported for”, as the case may be, unless the geographic origin of the pre-packaged product is stated on the label. Meat products that are cut or otherwise processed and re-packed at the retail level are not required to provide an indication of the geographic origin of the product or that they are imported.

I'm just going to reach for another product. Here is a product I picked up yesterday at Costco here in Ottawa. It's a Hormel product. It's clearly identified “Product of the United States”. This particular package is actually fully compliant.

But this one, interestingly enough, unlike Canada.... And in my mind--this is my personal opinion--the United States label is clearer. Here they say, “U.S. inspected and passed by Department of Agriculture”. That's what their stamp says. Our says “Canada” with a crown and a number, and theirs says “U.S. inspected and passed by Department of Agriculture”. I'll pass this around. It's fully cooked, so we can have some of that too.

So if a retailer sells an intact muscle cut, such as a pork loin, from the United States in a vacuum-packed plastic bag and simply attaches a price on it, he's in violation of the current meat inspection regulations if they don't indicate “Product of the United States” on it. We brought this to the agency's attention because we feel this is a current regulation and it should be enforced. However, if the store takes that loin out of the plastic packaging and they cut it up into ten pieces and put it out for retail, they do not have to put “Product of the United States” on it.

We have to be careful, though. There is a growing “case-ready” market here in Canada where retailers, for food safety and efficiency reasons, no longer have an in-house butcher who cuts up the meat. Instead, the retailer is supplied daily by a specialized meat cutter who wraps, cuts, weighs, and labels the meat for the retailer.

This actually often results in a superior product with longer shelf life. One of our members, for instance, who specializes in this is a veal processor who has production farms and meat processing facilities on both sides of the border. He sometimes needs to bring in meat from just across the border from his own farms and processing facilities just to fill his product orders here in Canada because he can't get enough veal here. How will his business be affected by the proposed rules?

As well--and I'll be wrapping up shortly--how does a company like Piller's,which has been in business for a great many years as a family-owned business with really high-quality product.... They have been sourcing meat from Canada, the United States, Australia, New Zealand, and Uruguay. How will these regulations affect their business?

Of course, as we debate this issue here in Canada, we can't forget that the Americans are putting in place country-of-origin labelling in which they have taken no regard for international regulations. It's been a long process; it's been a clear process. We don't like the process, and we don't like what's happening, but we're going to be severely disadvantaged probably around September of this year.

We fully supported the Government of Canada's opposition to this. Nevertheless, of course they're moving forward.

In wrapping up, of course there are several rules and regulations that are affecting the meat industry. There is the Uruguay Round of WTO harmonization of rules of origin. There is the Canada Customs Tariff Act of 1997. There is the Consumer Packaging and Labelling Act. There is the Meat Inspection Act, the meat inspection regulations, the meat hygiene manual of procedures, which is about 1,200 pages long. So if you are ever bored and can't sleep at night, you can read that.

So it's a very complicated issue. It sounds simple, but we urge you to do an in-depth review of all this and to take into consideration what real life things are happening before the decisions are made.

I will pass around a few other products. There is a fully cooked pork product made right in Toronto, a fantastic product. Here are some wieners, some Maple Leaf bacon. What could be more Canadian than that? Pass that around and see if you see any “Product of Canada” on it.

There is some lovely ham kielbasa. Again, it has the meat inspection legend on it but no “Product of Canada”.

Thank you very much. I look forward to your questions.

[The Chair, Conservative, James Bezan]

Thank you, Jim. I let you go a little bit over because you were passing around food. We all love to eat around here.

We will turn it over to Mr. de Valk.

[Robert de Valk, General Manager, Further Poultry Processors Association of Canada]

Thank you, Mr. Chairman.

Thank you for the opportunity to present our views on this important subject. We certainly agree it's worthy of a look at this whole issue, and I agree with what my colleague has already given you in terms of some of the issues surrounding it.

I don't think I need to remind committee members of the importance of the food industry to Canada, but given what's happened to the dollar recently, I just want to remind you that this is our second-largest industry in Canada. It has tremendous opportunities. We're in a golden age of agriculture right now, and certainly we're as nervous as anyone about making any wholesale changes to labelling regulations that could add costs while we're in this opportunity around the world and with Canadian consumers as well. The landscape is definitely changing, but we always have to keep our eye on the cost side when we're doing things.

Current Canadian labelling regulations support a variety of widely accepted practices, which for the most part are well understood by consumers. The labelling regulations that we have in Canada today are based very much on international practices, and often Canadian labelling regulations are copied in other countries. So Canada is a bit of a leader when it comes to labelling, and that's good.

These labelling practices are not unique to agriculture and food. Another important fact to understand here is that a lot of the things we're talking about when it comes to labelling, the principles that underline our labelling legislation, are very much founded somewhat in our tax laws and in our tariff codes and those kinds of things. So what you find in food, you would also find in furniture, for example, and automobiles. So this 51% business really didn't come from the food industry; it really came from the automobile industry and the furniture industry and some of the other industries where foreign content was a big issue and became a policy issue.

For example, if you look at “Made in Canada”, the general perception is that at least 51% or more of the content by value or material is Canadian, and that's widely understood. Just because you say “Made in Canada” or “Made in China”--all the gifts that we get at Christmas-time made in China--doesn't necessarily mean that all the ingredients came from China. I can understand consumers wanting to know where the ingredients come from, but that's not exactly what we're talking about here.

The “Made in Canada” label or statement on the label, the claim on the label, is simply saying that it's manufactured in Canada, and I think most people understand that. Tariff rules are based on this concept. And similarly, if a food--and I think Jim's already talked to you about that--has 51% foreign content, it's usually labelled that way, and it should be labelled that way. If it isn't, it's an enforcement issue.

Then you look at that grade A inspection stamp that appears on a lot of products, or Canada grade of some kind, and the Canada inspection legend, which all of you have seen on these packages that Jim's been passing around--that indicates there's been some Canadian oversight to that particular product. That Canadian oversight means the product met the Canadian rules or there was a Canadian inspector in the plant where the product was produced. So that gives consumers confidence that there's Canadian oversight, but it doesn't convey the idea that it's Canadian content in terms of 100% Canadian content. It may very well be, but that isn't what this is trying to say.

Imports can become Canadian. You've recognized that, and certainly that happens in our plants all the time. This again is a very well-established international kind of approach where we, in the food industry at least, have some kind of understanding internationally now that when you have a chapter change in the harmonized code, so you bring in your meat in a fresh form, uncut, maybe in big chunks, and you then put it in a Canadian plant and you cook it, you wind up cutting it, you wind up processing it, you wind up putting it in pieces and bags and all those wonderful products that you've just seen, that becomes Canadian in the sense that it now can bear the Canadian inspection legend and it can be called a product of Canada, but in most cases we don't bother with that claim. It is simply produced with the inspection legend on it and as a result imported product can appear to be Canadian, at least to some people.

“Product of Canada”, the just-revised chapter 7 of the manual of procedures--and I mean “just”, like last week, so I encourage you to take a look at it, because that chapter is the labelling chapter--encourages federal plants to show the words “Product of Canada”. So CFIA is now telling us to please start using these words “Product of Canada” because a lot of importing countries are demanding that you do this, and of course it's up to the exporting country to meet the importing country's rules. And of course our plants will start to do that, because you don't want to have one label with “Product of Canada” on it and the other label not with the “Product of Canada”.

One of the most expensive things we can do in our industry is to segregate, so if you're forced to make two labels for two markets that's a huge cost for a plant. Segregation means big problems. So we definitely want to avoid that.

You've been recently hearing a lot, certainly from the Canadian Federation of Agriculture and grassroot agricultural organizations, that maybe we need something called “Grown in Canada”, and certainly the U.S. is now looking at “raised” and “born” in the U.S. We're going to see more and more countries start to work in that area, and we certainly have no difficulty if you want to look at a new label, a new claim that says “Grown in Canada” or something to that effect, communicating 100% Canadian.

We would urge you to use the organic labelling exercise, which took three years to get to. This organic label that Canada now has and is now being used is an excellent example of how you can go. What it means is that we have a voluntary organic label and we've got a third-party verification backing it up so that you know as a consumer that the word “organic”, when it comes on the label like that, has something backing it up.

It's the same thing here. If we want a 100% or 95% or 80% Canadian label, we need something to back that up, especially if you want to start saying this is a good quality product, it's a safe product. You can't make those kinds of claims on there if you don't have something backing it up. So you need that third-party verification, and we would think that's a good way to go, but it will take certainly some good thinking to get there.

I think the other thing that is very clear from you having to have hearings on this subject and the kind of input that you're getting from various organizations is that no matter what we have as labelling right now, and what we're going to try to do in the future, it needs an effective communication strategy along with it, because we need to let the consumers know what we're doing and what the labels mean. I don't think we've done a good job in that area.

I'd leave it there, Mr. Chairman.

[The Chair, Conservative, James Bezan]

Thank you. That was very interesting.

Mr. Horel.

[Robin Horel, President and Chief Executive Officer, Canadian Poultry and Egg Processors Council]

Thank you, and thanks very much for this opportunity.

I would like to relay to you that there's a lot of interest and debate within the Canadian poultry processing sector about this issue. In fact, I received two e-mails this morning as I was sitting in the chair behind me, one from a chicken processor in Newfoundland and one from an egg grader in Nova Scotia. I guess they are first up, so I'll probably get some more during the day.

I just relay this so that you understand there's a lot of interest within our group, and also to let you know that as of now I don't have consensus as to where we should actually go. I understand the position you're in, but we will need more discussion. We will need more debate. We will need to stay engaged.

Briefly, I'll describe who the Canadian Poultry and Egg Processors Council is. We're the national trade organization that represents the interests of more than 170 Canadian poultry processors, egg processors, and hatcheries. In addition, our membership includes over 60 national and international industry partners who have joined us as associate members.

Representing some of the largest agrifood corporations in Canada, our member companies process over 90% of Canada's chicken, turkey, eggs, and hatching eggs. This economic activity generates approximately $5 billion in retail sales. To accomplish this, our members have invested over $1.5 billion in plant and equipment and directly employ more than 17,000 Canadians.

Our poultry and egg processing members purchase the majority of their agricultural raw inputs, the live chicken, the live turkey, the eggs, from Canadian farmers who operate in a supply-managed industry. In addition, though, our members supplement these inputs with imported chicken, turkey, and egg products in amounts that are limited by Canada's WTO and/or NAFTA commitments.

Now I want to quickly discuss the current “Product of Canada” labelling, at least as we understand it. And it will be very much a high overview, because I don't want to just repeat what my friends here who have preceded me have said.

Canadian poultry and egg processing companies understand that the basic requirements for the current “Product of Canada” label are really twofold: one, at least 51% of the total direct manufacturing or processing costs must be Canadian; and two, a final significant processing must have been done in Canada.

For example, in our egg sector, if one of my members brings in ungraded eggs from the United States, washes, candles, grades them, sizes them and packages them and puts them into retail, although that's covered the 51% hurdle, it has not covered the final significant processing cost issue, and therefore it cannot be labelled “Product of Canada”; it must be labelled “Product of the United States”.

If he takes those same eggs, brings them in, breaks them, further processes them somehow into mélange or dried product or whatever, that now can become a product of Canada. That's our understanding.

There are varying levels of support for the current “Product of Canada” labelling from within my group--from the definition of significant processing is too strict, some people believe; to support for the current regulations the way they are, because they are understood and they make sense; to a belief that there should actually be a requirement for the chicken, turkey, or eggs to have been grown or produced in Canada. That's where I am.

However, it is important that the current labelling rules be strictly enforced. Mr. Laws explained that. We would like to reinforce that. Whatever is there has to have integrity and it has to be enforced.

Supporting arguments from among CPEPC members for the current “Product of Canada” labelling requirements include the argument that our imported chicken, turkey, or egg raw material is subject to equivalent standards for food safety. When we import from countries that are allowed to send product to us, that is equivalent product for food safety--not equal, but equivalent.

The ability to import additional product to augment our domestic production within the supply management environment is critical. Putting it through our processing and further processing systems with our HACCP, our own company QA systems, CFI federal inspection, etc., and then labelling it as product of Canada is consistent with Canadian and company food safety and quality goals. It dovetails with company and private label branding programs.

Our members have a big investment in their brands. That means a commitment to quality and food safety, and that's what it says when you've got a “Product of Canada” label. It is valuable for the protection of investment and jobs in Canada, particularly for the production of non-ICL products that are allowed to enter Canada without tariff in the poultry business.

Those are supporting arguments for continuing with the current “Product of Canada” labelling as we understand it, as I explained earlier.

Supporting arguments from among CPEPC members for a revision to the “Product of Canada” or alternative wording label regime based on the origin of the primary agricultural ingredient or the product--i.e., the chicken, turkey, or eggs must be grown in Canada--include that it gives an advantage to products produced with Canadian ingredients, which is the vast majority of what my members use. The vast majority of what my members buy are Canadian ingredients. This could become even more important, depending on the results of the current Doha round of negotiations at the WTO, future bilateral trade agreements that are always ongoing, fluctuations of the Canadian dollar, etc. So I've got both sides of the coin.

I'll turn briefly to the concept of a “country of origin” type of label. It appears that consumers place value on knowing where products are raised or grown. That's fine. An alternative that has been promoted by various organizations--as Mr. de Valk has mentioned--such as a “Grown in Canada” label could get industry support. The big question in my mind is, should it replace the current “Product of Canada” label rules, or should it be in addition to? Either way--just to stress this again--the importance of standards and label integrity must be preserved.

Mr. de Valk's idea of using a third party to establish this is a good idea as far as I'm concerned. It should be audited. It must be enforced. When Mr. Laws finds an example of a situation that is not enforced, that's not right. No matter how we use this label--over and above, or as a substitute for what we've got today--it has to be enforced. If it is to be in addition to the current “Product of Canada” label and rules, then it could be modelled after some existing provincial programs: Foodland Ontario, Taste of Manitoba, etc. We have models that we could use. It would certainly be voluntary.

We must be careful that it does not undermine the current “Product of Canada” label for poultry and egg products. We cannot allow it to make marketing claims regarding superior food safety or quality, because that's just not the case. It cannot either mislead or confuse customers. You cannot say it's superior food quality or food safety. As I explained before, our members put their brands on these products. The raw material coming in is equivalent. The product that is being produced today is safe, wholesome, and is of good quality.

It cannot add additional cost to Canadian food processing companies--the whole idea of segregation, etc., that's already been mentioned.

It can't confuse consumers either. The issue is if we have two labels--the “Product of Canada” label today and then a new “Grown in Canada” label--and they're side by side, is that going to be confusing? That's going to be a challenge. Therefore, another comment Mr. de Valk made that I would also like to support is that we're going to need a well-thought-out communication plan as we go forward on this.

At the end of the day, we appreciate the opportunity to engage in the discussions concerning this topic. We'd like to continue to be involved as the issue progresses. As I noted at the outset, there's a lot of interest and engagement by my members. We plan to fully debate this over the course of the next coming months, try to arrive at a consensus, and if we do, we'll certainly be back to let you know about that. Either way, we'd like to stay engaged.

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Lacoste is next.

[Claude Lacoste, President, Fédération québécoise des producteurs de fruits et légumes de transformation]

Good morning, everyone. I want to thank you for inviting us to appear. Since I'm having a small problem with my throat and it's difficult for me to speak, my General Manager will be making the presentation.

[Gilles McDuff, General Manager, Fédération québécoise des producteurs de fruits et légumes de transformation]

Good morning, everyone.

The Fédération des producteurs de fruits et légumes de transformation administers the Joint Plan of Producers of Vegetables for Processing. The vegetables covered under the joint plan are green peas, yellow and green beans, sweet corn and cucumbers. We represent some 500 producers who produce 130,000 metric tons of product over an area of 17,000 hectares, for a farmgate value of $23 million.

Our vegetables are delivered to industry firms…

[The Chair, Conservative, James Bezan]

We can get the translation. There's a little bit of a problem with the reception. Is it okay now?

Yes. Go ahead.

[Gilles McDuff]

Our vegetables are delivered to industry firms to be processed—either frozen, canned or marinated. In Canada, that represents 20 per cent of cucumber production, 30 per cent of sweet corn and peas, and 60 per cent of beans.

Of course, globalization, coupled with the weakness of the U.S. dollar, has impacted our industry. Three of our plants have closed in the last two years, two of which belong to Kraft and another to Smucker's (Bick's).

Most of the products that were processed in these plants now come to us from Asia under the brand names of our major Canadian distributors. The economic impact of these closures is enormous. It represents a loss of approximately 18,000 jobs and economic losses at the farmgate of approximately $7 million. However, considering that the agricultural raw material represents only about 8 to 10 per cent of the retail price, total losses amount to $90 million for the Quebec economy as a whole.

Why does the “Product of Canada” designation need to be redefined? To our knowledge, the regulations governing the definition of “Product of Canada” are over 40 years old. As you will no doubt agree, the agri-food trading environment at the time was in no way comparable to what it is today. We did not have either GATT or the WTO.

[Gérard Asselin, Bloc, Manicouagan, QC]

Could you please slow down, because our interpreters will be unable to follow you.

[Gilles McDuff]

Is it too fast?

[The Chair, Conservative, James Bezan]

Slower is better.

[Gérard Asselin, Bloc, Manicouagan, QC]

It will be a jumble of words coming through the mike!

[Gilles McDuff]

So maybe I will be able to have 12 minutes, rather than 10. That's what I think. Okay, let's go for that agreement.

So, it is indispensable to review Canadian designations used in labelling, in order to adapt them to today's realities.

The current definition of “Product of Canada” is obsolete and leads to confusion as to the real origin of products identified with this designation.

Under current regulations, a product may be labelled “Product of Canada” if 51 per cent of the total cost of producing the product is Canadian. A multitude of products containing imported raw materials can thus be labelled “Product of Canada”, even though they may only be processed and sometimes only packaged in Canada. These regulations mean that there is no difference on grocery store shelves between cucumbers imported from Asia or produced in Canada. As long as they have been processed in Canada, imported products can be labelled “Product of Canada”.

As for products grown and processed in Canada, they will not necessarily be labelled “Product of Canada”, because it is optional for the industry to identify them as such, at least in the marinade industry.

How can the consumer figure all of this out? And, what about the hotel, restaurant and institutional sector? For example, the purchasing policy of several governments, including the Government of Quebec, is based on the purchase of foods identified as Product of Canada”. However, if the term “Product of Canada” is not well defined, people will be buying imported products labelled with an inaccurate designation.

In order to ensure that consumers have an accurate and clear understanding of the origin of a product, only products grown and processed in Canada should be labelled “Product of Canada”.

Moreover, under the current regulations, if there were to be a food safety problem with an imported product, all Canadian production would be affected.

The same is true for the grading regulations. Currently, frozen products imported in bulk and packaged in Canada are sometimes labelled with the real origin of the producing country, but also indicate “Canada Fancy (A)”, “Canada Choice (B)” or other grade. Once again, use of the term “Canada” to identify the grade may confuse consumers, who believe they are buying a Canadian product, when that is not at all the case, if they carefully check the label.

A product of foreign origin should be labelled “Fancy (A)”, “Choice (B)”, or “Other grade”, and not be associated with the term “Canada”. The changes requested to the definition of the “Product of Canada” designation and the use of “Canada” grading standards are intended to provide consumers with consistent and accurate information.

This proposal is in no way intended to diminish the economic contribution of Quebec and Canadian processors who process or package products containing imported raw materials. We are of the opinion that these products should be labelled “Prepared in Canada” or “Packaged in Canada”, but not “Product of Canada”.

We would like to make the following recommendations. To respond to consumer requests for credible and accurate information, our suggestion is that the designation “Product of Canada” be reserved for products whose raw materials have been grown and processed in Canada.

The designation “Prepared in Canada” or “Packaged in Canada” would be reserved for products whose raw materials come from outside Canada, but that have been prepared or packaged in Canada. Those products should also indicate the actual origin of the raw material.

Finally, we are asking that the grade “Canada” be reserved exclusively for products that meet the actual definition of “Product of Canada”.

We are also proposing a second step, which is to adapt the « Canada Brand » to the Canadian domestic market. This concept, which was developed for export markets, could serve consumers well by making it easier for them to purchase goods on store shelves. Once again, in order to respond to the needs expressed by consumers, we are recommending that the “Branding Canada” concept be adapted to the Canadian domestic market. The use of this identifier would be permitted only on products meeting the criteria for the redefined “Product of Canada” designation.

Furthermore, we are proposing that a consumer awareness campaign be undertaken. Surveys show that consumers want to encourage local industries and are asking that it be easier for them to choose products in the store, through better identification of Canadian products.

We are also seeking a partnership with the federal government, in order to carry out a Canadian consumer awareness campaign on the importance of buying products of domestic origin.

It is essential to make consumers aware of the advantages of buying locally: food quality and safety; job creation and the economy; protection of the environment and support for sustainable agriculture; and, maintenance of our food sovereignty.

I'm sure you will agree that the agri-food sector deserves special attention when it comes to the identification of its products. Our food, even our health, are at stake. Let's not forget that. The measures we are proposing are cost-effective for the government, beneficial for Canadian agriculture, and address repeated requests by consumers, who are demanding that it be easier for them to identify Canadian products on store shelves.

Our brief provides some examples that illustrate today's discussion. In the section entitled “Aberrations”, there are pictures of products with the “Canada A” label on them. If you look at the picture located directly to the right of that one, you will see that this product is actually from China. The same holds true for the second example. In this case, it is a bag of green peas with the label “Canada A”, although the product is actually from Poland. These kinds of aberrations confuse consumers when they are buying products. They don't take the time to study the labels. The last example is the most egregious one. These are olives that are supposedly a product of Canada. However, we have yet to find any place in this country where olives are grown.

I referred earlier to plant closures and the fact that products that were replaced by other products from elsewhere still use the private brand labels. That is the case for a variety of Canadian trademarks. If you look on the back of this jar of cucumbers, for example, you can see that the product is from India. The problem is the same in the retail stores. When consumers choose a product on the shelf, for them it is just another product, whether it's from Canada or Thailand.

The “branding” that we're proposing would be that Canadian products be sufficiently well identified on the visible part of the package for consumers to quickly identify them on store shelves.

On the last page, we are suggesting that Canadian products be better identified on store shelves, that the term “Product of Canada” be redefined, that the use of grades be limited to products that are really Canadian and that, finally, the term “Canada Brand” be used as well, although a consumer awareness campaign would be necessary in order to promote Canadian agriculture.

What I am suggesting here is not impossible. At my local grocery store, I found salmon products that use the term « Canada Brand ». The problem is that, because of the current definition, I have no way of knowing whether the salmon in the container actually comes from Canada. It may, but it may also come from somewhere else.

As regards the term “Product of Canada”, once we have cleaned things up, a designation such as this will ensure that no one makes a mistake.

Thank you for your kind attention, and hope that this will yield positive results.

[The Chair, Conservative, James Bezan]

Thank you very much.

Ms. Cloutier and Ms. Jean, please.

[Sylvie Cloutier, Vice-President, Communications and Public Affairs, Conseil de la transformation agroalimentaire et des produits de consommation (CTAC)]

On behalf of the Conseil de la transformation agroalimentaire et des produits de consommation, or CTAC, we want to thank you for inviting us today to present the position of our industry.

CTAC represents a consolidation of industry forces. Its members include the Association des manufacturiers de produits alimentaires du Québec, the Conseil de la boulangerie du Québec, the Association des abattoirs avicoles du Québec, the Conseil de l'industrie acéricole and the Association des viniculteurs négociants du Québec. CTAC represents more than 400 businesses with annual sales of $13 billion. For the industry as a whole, it's almost $20 billion. The food processing industry represents more than 70,000 direct jobs, and 125,000 indirect jobs in Quebec. For more than 85 per cent of agricultural production in Quebec, this industry constitutes the primary commercial channel.

I would now like to turn it over to my colleague, Christine Jean, who is our Technical Director.

[Christine Jean, Technical Director, Conseil de la transformation agroalimentaire et des produits de consommation (CTAC)]

Good morning everyone. Thank you for the opportunity to appear before you today and present our position.

I would like to point out, right from the beginning, that CTAC has already provided its feedback on the food and consumer product safety action plan to the Department of Agriculture and Agri-Food, as well as the Department of Health. Therefore, we will be covering the same points relating to the identification of products of Canada.

On the one hand, we believe it is now essential, in a globalized world where there are more and more questions being asked about the origin of products, to provide credible information. Processors are aware that consumers want to be better informed with respect to the origin of the food products they purchase. The current definition of the designation used to identify products of Canada must be reviewed, because it does not identify the origin of the content of the products consumers purchase. At the present time, when 51 per cent of the production costs are Canadian, a product can be labelled “Product of Canada”. That is the reason why many processed products are labelled “Product of Canada”, even though, in reality, the primary raw materials come from outside the country.

The same applies to designations of grades in the processed food and vegetable sector. Apples imported from the United States are processed into apple sauce that is then labelled both “Canada Fancy”, and “Product of Canada”, based on the 51 per cent rule. This term relates to the grade, but its interpretation can lead to confusion. Identification of the grade should also be revisited, in order to ensure consistency with new regulations relating to the designations “Product of Canada” and “Prepared in Canada”.

Furthermore, it is our belief that, when food safety problems occur or a food product is recalled, it is important for products that have been processed in Canada to be easily differentiated from imported goods, the raw materials of which do not come from Canada. Consumers have to be able to more easily identify Canadian products, and not confuse them with imported ones. A credible and consistent policy would reassure consumers and encourage them to make enlightened choices. For example, contamination of carrot juice produced in the United States should not have repercussions for all carrot juices produced and sold in Canada.

How are processed products identified? With respect to agricultural products that are sold as is, it is simple enough to distinguish between something labelled “Product of Canada” and something that is not a product of Canada. The situation becomes more complicated when products from different countries are mixed together in a single package. There the proportion of Canadian content must be identified in order for the product to be labelled a “Product of Canada”.

The problem is no different for products processed in Canada. What products are allowed to be labelled “Product of Canada”? Based on what percentage of Canadian content should foods processed in Canada be authorized to use that designation? As regards “Product of Canada” and “Prepared in Canada”, we are proposing definitions similar to those used for “Product of Quebec” and “Prepared in Quebec”, which are accepted by the food industry.

The “Product of Canada” designation should be used for any product that is entirely Canadian or 80 per cent of the main ingredients of which are of Canadian origin, and for which all the processing and packaging are carried out in Canada. We believe that the standard of 80 per cent Canadian content is both an accepted and realistic one, considering that most blended foods contain exotic ingredients, such as olive oil, wine or other ingredients not available in Canada. The 80 per cent standard also comes from a consumer study. That study concludes that 80 per cent Canadian ingredients is an acceptable threshold for a food to be identified as “Quebec food product”.

One could consider a food to be “Prepared in Canada” when at least 50 per cent of its ingredients are of Canadian origin and at least 80 per cent of the costs associated with its manufacture are incurred in Canada, and the processing and packaging of the product also occurred in Canada. If the raw materials are not available in adequate quantities or are not of adequate quality in Canada, they may come from somewhere else. In that case, all the processing, preparation and packaging must be carried out in Canada.

In order to arrive at a realistic identification concept, certain conditions have to be set before a new policy for identifying Canadian products can be introduced. To begin with, a guarantee of the origin of the ingredients is absolutely essential in order for product origin to be traced.

That means ensuring that processors have comprehensive and functional systems for retracing the origin of all ingredients. That way, country information on packaging would be verifiable.

Producers who use the designations “Organic” and “Controlled Designation” are already required to ensure the validity of their claims through traceability mechanisms. The same should apply to claims related to origin.

Another point is extremely important: the identification of the source of imported ingredients. A very wide variety of ingredients purchased by Canadian companies transit through many different countries. As a result, it is not rare for ingredients, sub-ingredients of ingredients, or a proportion of ingredients purchased in the United States to actually come from China, Mexico or other countries, even though it is not mentioned on the package. Identification of their origin would allow processors to make enlightened choices and would facilitate proper enforcement of the designations “Product of Canada” and “Prepared in Canada”

Thank you.

[The Chair, Conservative, James Bezan]

Thank you very.

I thank all the witnesses for their interventions this morning.

With that, we're going to turn it over to Mr. St. Amand for seven minutes, please.

[Lloyd St. Amand, Liberal, Brant, ON]

Thank you very much, Mr. Chair.

Thanks to all of you for your very compelling presentations.

Mr. Horel, with respect, I don't want a lengthy explanation of this, but I was a little bit taken aback or struck by your comment “not equal but equivalent”. To me, equal is equivalent, but apparently there's some wordsmithing being done. What does it say to Joe Public that it's equivalent but it's not equal within the context of a raw product coming in from elsewhere? Can you just briefly explain that subtle distinction?

[Robin Horel]

The point I was trying to make is that at the end of the day the food safety of the product is the same, is equivalent. It's not equal, because our systems are not, for example, completely harmonized with the United States system. For example, for poultry they use different inspection regimes, different regulations, etc. CFIA has looked at the USDA, the HIMP system, whatever, and has said it is equivalent.

[Lloyd St. Amand, Liberal, Brant, ON]

So it's similar but not identical.

[Robin Horel]

Exactly.

[Lloyd St. Amand, Liberal, Brant, ON]

All right.

To you, Mr. McDuff, I find your proposal, frankly, very persuasive. If I may say so, it's the responsibility of government to lead, to be out in front of trends, not to be tugged and pulled into a recognition that something should be done. And I think we're there. I think the government needs to understand there is a growing sense among Canadians that as consumers we want to know what we are consuming, where the product to be consumed has come from, and where it's been processed.

If I could ask everyone but Mr. McDuff, everyone who has presented, to look at page 5, if you have it—perhaps you don't have it—of Mr. McDuff's presentation. Mr. McDuff, or his association, has suggested that the new labelling be “Product of Canada” or “Prepared in Canada” or “Packaged in Canada”, and then “Canada Fancy” and other grades.

I would like a comment from all of you whether that's objectionable to your sectors. If it is, why is that proposal from Mr. McDuff's association objectionable, or why wouldn't it find favour with your various groups?