Good morning.
The Consumer Interest Alliance Inc. would like to thank the committee for the opportunity to appear today and make some suggestions regarding the “Product of Canada” label and in particular its use on food products.
CIAI is an emerging organization of experienced consumer volunteers who are concerned with consumer issues and interests. CIAI is an incorporated not-for-profit organization, and it has been established to provide national consumer representation and research. CIAI works through cooperation, discussion, and representation with other players in the Canadian economy.
Its major areas of interest and activity include food and agriculture, health and environment issues as related to food and agriculture, national and international standards, and financial services.
CIAI welcomes the overall intent of the new food and consumer safety action plan that was announced following the November 2007 throne speech. In particular, we're encouraged by the intent to provide better safety information for consumers, build safety into industry supply chains, and require mandatory product recalls. There are many aspects of the action plan on which we have comments, but today we're addressing the need to improve communication with consumers relating to their food choices by making the “Product of Canada” designation more meaningful and less misleading.
The United Nations consumer bill of rights provides access to accurate information that is needed for consumers to make decisions. The proposed safety plan document devotes just one paragraph to the issue of “Product of Canada” and “Made in Canada”. However, CIAI believes that these labels and declarations are a critical basis on which to build and move toward product claims that are not misleading and that enable informed decision-making by consumers.
The need to provide Canadian consumers with accurate information on the source of their food is increasingly important, as events repeatedly draw attention to problems with some imported products. The current rules are unclear. CIAI would like to draw the attention of this committee to two issues that we believe require far better consumer communication. These are the 51% rule and the term “Canada grade”.
The 51% rule is permitted under the present legislation, as can be seen on the Competition Bureau website. It allows manufacturers and food processors to aggregate the value of processing and packaging to calculate that 51% of the value was generated in Canada. They can then state that a product is Canadian, even though for a food product this may mean that little if any of the nutritive value was grown in Canada. We would like to take the example provided by the CFIA website. Olives imported from Spain in bulk and repackaged in Canada in new brine become a product of Canada or produit du Canada, assuming that the 51% rule is satisfied.
The 51% rule is the policy adopted by the Competition Bureau, and quoting from that same web page, two conditions must be met in order to consider the product as being Canadian:
the product was created in Canada, i.e. the last substantial transformation was carried out in Canada, thereby resulting in a recognizably new final product, that is a product significantly different in appearance from the individual ingredients; AND the total cost of direct Canadian labour and/or additional Canadian ingredients represents at least 51% of the cost of production of the new product.
There are of course not many olive groves in Canada, and a consumer with reasonable geographic knowledge realizes that the “Product of Canada” term is hardly a description that will be understood or believed in either everyday official language.
Other examples are provided that are certainly less clear, even to a well-informed consumer. In reality, these guidelines address and drive economic added value and not food content value. Therefore, the value of processing and packaging in Canada has as much merit under the guidelines as the nutritive value of a Canadian-grown product. Under this guideline and its “Product of Canada” label, the Canadian food dollar is not about food but its role as an economic driver for the food processing and packaging industry.
To state our position, CIAI believes that when consumers purchase products that bear the Canadian name, they expect to purchase products that are actually grown or raised in Canada. The permitted identification of foods not grown here as “Product of Canada” is misleading to most consumers who, we believe, are more interested in the source of the ingredients than the manufacturing and processing.
Recent media coverage of fish products imported from Asia and processed on the east coast has raised consumer awareness of the fallibility of the 51% rule.
Such confusing and potentially misleading practices cause the consumer to lose faith in the relevance and accuracy of labels regarding Canadian origin. This lack of trust has unintended negative consequences, such as driving consumers to find other channels through which to find products that they believe are really Canadian—avenues such as farmers markets and direct purchase systems, which may bypass some of Canada's excellent food safety system. It also leads to encouraging the promotion of local food by provincial governments and/or agencies rather than creating a solid and reliable Canada brand, as was the intent of the first agricultural policy framework.
In addition, Canadian consumers are learning about food miles and the hundred-mile diet. Many want to purchase Canadian meat or produce wherever possible. The present practice of labelling products as Canadian may well drive consumers to purchase from sources not within the Canadian food safety regulatory system and thus take risks with their health, but even then, without getting the expected local product due to the 51% rule. Under the current system, a single-ingredient item that doesn't grow in Canada can be identified as a product of Canada and identified as being produced locally. For example, the “Buy Local” site provided by the Manitoba provincial government lists coffee as a local product.
CIAI therefore recommends that the 51% rule be allocated only to the value of the food content within the cost of production, as defined by the Competition Bureau, and also that the percentage be significantly increased.
We judge that exclusion of packaging from the transformation cost will have two principal benefits. First, it will connect the “Product of Canada” designation to the nutritive and food value of the purchase, and second, it will remove inducement to overpackage products.
In order to determine the appropriate percentage increase, the government needs to gather research data. One such source would be to determine what consumers understand by the term “Product of Canada” or “Made in Canada” and set appropriate guidelines to reflect this understanding.
In addition, the requirement of Canada's international trade agreements and the practices of its trade partners might provide guidance on transformation of products and values for import purposes.
In developing this requirement, CIAI would support the use of the national standard system to create a voluntary standard such as for organic production and then the referencing of the standard in legislation. This would not force producers and processors to identify Canadian product, but would ensure that if they do so, the identification would be accurate and not misleading. Such a standard could also be designed to ensure that any additional local identification, such as provincial, would be in the form of reliable consumer information. CIAI is not opposed to the concept of buying local, but an identification system must make it likely that consumers will indeed get local when the product is identified as such.
We support providing good information to consumers on the source of their food but do not support promoting the output of one province over another. We do not believe that to be in the best interest of Canada or Canadian consumers.
We would now like to turn to the concept of “Canada grade” and its potential for being misunderstood by the consumer. The recent concerns with honey imported from China and then blended into Canada grade honey and marketed as such has undermined the confidence of many consumers in products they believed to be Canadian. With the improvements in standards, increase in enforcement, and focus on consumer information that is being suggested in the food safety section of the action plan, we would recommend that one of the prime focuses of the communication effort be on explaining to consumers the real meaning of “Canada grade”.
Recent research performed by our organization has revealed some significant gaps in the ability of the CFIA to enforce the existing regulations that relate to food labelling, food advertising, and food standards. The new action plan describes better enforcement of food regulations with more tracking and tracing, new administrative penalties, greater transparency, less flexibility for information identified as CBI, and more power for the regulators. CIAI applauds all these initiatives, and we believe they will move us towards greater compliance.
Because I'm late, I'm just going to jump to our final recommendations.
We recommend that the regulations be put in place for the use of “Product of Canada” or “Made in Canada” declarations and that these declarations be simple, avoid the need for qualifying statements, and be the same for all consumer products.
We recommend that for food products, the 51% rule be allocated to the value of the food system to create a voluntary standard, such as for organic production, and then reference the standard in legislation. We recommend that the prime focus of the communication efforts be to explain “Canada grade”, and that it does not imply “Product of Canada”.
In closing, we applaud a lot of the actions that are being taken, and we'd like to encourage you to move forward, particularly with the consumer communication piece.
Thank you.