Agriculture Committee on Nov. 21st, 2007

[Dr. Brian Evans]

I apologize for that.

[The Chair, Conservative, James Bezan]

We can always return to that. I think we have lots of time on the agenda for today.

Monsieur Roy, cinq minutes.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chairman.

Good afternoon, Mr. Evans.

[Dr. Brian Evans]

Good afternoon.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

I am not satisfied with part of your answer and I would like you to clarify. You said that there is reciprocity with the US about the specified risk materials regulations, which would mean that they are implementing the same regulations as us. Have I understood correctly?

If Americans do not implement the same regulations as us and if they do not dispose of SRMs in the same manner, that gives a competitive advantage to their producers. In effect, if they do not implement the same rules, their costs are probably lower than ours and their SRMs still have some commercial value, which is not the case in our country. This would mean that our producers are at a disadvantage in relation to their American competitors. Furthermore, in the US, some SRMs can still be used to produce animal feed. It might even happen that some of that feed ends up in Canada. Am I right or not?

[Dr. Brian Evans]

I would like to make sure we have a very clear understanding on the issue. In 1997, when the original feed bans were brought in between Canada and the U.S., they were deemed at that time to be equivalent, but in fact the U.S. had certain exemptions in their feed ban that we did not provide in Canada. So our feed ban with the U.S. in 1997 was in fact somewhat more restrictive than that of the U.S., and that had the support of the industry of the day.

With the amendments that were introduced in 2006 and came into force in July of this year, in fact, we went further down the road than the U.S. had gone at that point in time. I was making reference to the fact of two points.

One fact is that, in light of our requirements, U.S. feed is not eligible to enter Canada unless it's produced under the same requirements to meet Canadian requirements. That has not changed. So they are not able to export feed to us unless they have instituted parallel measures.

The other point I was making to the committee was that we were notified earlier this week that the U.S. has gone forward now at the FDA level to their Office of Management and Budget, at the centre of the U.S. administration, with a proposal on further enhancements to their feed ban that would bring them either closer in line with us or move them somewhat closer to where we have gone. We don't have the specific provision to that and we will get that at the point that the OMB posts that proposal on the website for public consideration.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

That is...

[Dr. Brian Evans]

So they are not where we are, but they have now moved to propose a rule that we will assess in terms of the relevant—

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

This means that Canadian producers have been disadvantaged in relation to American producers since the coming into force of those Canadian standards. We might get a more level playing field soon, in the next few weeks. I have your answer to my question.

My other question relates to the disposal of SRMs. You have said two things. We have invested money to bring our slaughterhouses to standard. Of course, this disposal requires additional work and additional equipment in the processing plants. It also means that the costs related to those upgrades have been transferred to the producers by the plants through price reductions.

Have we provided help to the producers for this adjustment? A producer disposing of those specified risk materials in a burial site has to assume a rather high cost since the work is not done free of charge. We are talking about trucks transporting 4,000 tons of SRMs each week, which is a lot, and operating such sites is very costly. So, our producers are also disadvantaged at that level. Have they received any help from the Canadian government?

[Dr. Brian Evans]

Let me back up one moment on the SRM requirement.

Again, it was recognized going in that there were economic analyses done as to the impact on the sector, what it would cost per animal and how those costs would be distributed across the chain. That was part of the gazetting process. Although there was not unanimity around the overall outcomes of the feed ban, nevertheless there was very strong industry support and consensus that this was a necessary step in order for Canada to both achieve recognized controlled status, to manage the disease in the most effective way, to maintain domestic and international confidence, and to regain international market access.

As I said in my remarks, I think we have seen the benefit of that since the coming into force of the feed ban in July. In fact, we have seen a broader range of products being now accepted internationally for trade purposes. Markets that had been previously closed to Canada have now started to open their markets to Canada. We've also benefited not only on the meat side, but we have in fact achieved significant live cattle exports, some 8,000 head to Russia, exports to Kazakhstan, and exports to other countries.

Having achieved that, is that relief uniform across the sector? No, it is not. Are we stopping at this point in time? No, we are not. We will continue to do everything possible to restore international market access there.

With respect to the costs associated with this, the money that was put forward by the federal government, and then cost-shared with the provinces, with provincial investment as well, some of that money was made available to the capitalization for infrastructure adjustments by the packing houses. They did have access to some of that funding to achieve some of the needs they had to meet.

Again, we also benefited from the reality that this rule in and of itself was not a rule that came into force quickly. In fact, it was the result of almost three and a half years of consultation. We had, I think, on the part of industry, a recognition that they were able, over time, to mitigate some of those costs because it was not an immediate impact. They were able to amortize some of those costs and make adjustments in advance of the rule coming into effect.

I would be the first to state, as well, that we do recognize that the capacity of the small abattoir versus a large commercial outfit isn't equal, so those have been some of the adjustments we've made by giving an extension for smaller abattoirs to come fully online with some of the parameters of the rule.

As I say, at the end of the day, this was a rule that, challenging as it has been, has been well accepted by industry. They have worked hard to be in compliance and they have worked hard to implement the rule. We are continuing to work hard with them to continue to ensure that, as their processes can be adapted to achieve those same outcomes with less cost to them or less waste to them, we in fact are moving in that direction for those discussions in December with the round table.

[The Chair, Conservative, James Bezan]

Thank you, Dr. Evans. The time has expired.

Mrs. Skelton, you're on.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Dr. Evans, first I'd like to know how many veterinarians you have in the field across Canada.

[Dr. Brian Evans]

When the agency was created, we had approximately 470 veterinarians working with us. The most recent survey we've done of our staff puts us between 630 and 640. So we have grown our veterinarian cadre over the 10 years of the agency. It represents about 10% of our inspection force.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

How many staff do you have?

[Dr. Brian Evans]

Around 6,500.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

What percentage of CFIA funding comes from user fees?

[Dr. Brian Evans]

It's less than 10%. I can get you the precise number. Our financial officer is here and we can provide that to you.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I'd be interested in that. I also have some more questions about the performance report, revenue and everything.

[Dr. Brian Evans]

Mr. Chairman, this is Gord White, chief financial officer for the Canadian Food Inspection Agency.

[The Chair, Conservative, James Bezan]

Welcome to the committee, Mr. White.

[Gordon White, Vice-President, Finance, Administration and Information Technology, Canadian Food Inspection Agency]

Thank you, Mr. Chair.

Our cost-recovery fees are in the order of about $56 million a year, and that equates to between 8% and 10% of our budget.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Some of your categories were underestimated in your performance report. Protecting consumers and the marketplace from unfair practices, you forecast about $2 million—I'm just rounding off numbers here—and your actual revenue was $4 million. Certifying exports, your forecast was $10 million, and your actual revenue was over $13 million. You estimated that, and you underestimated those two. With regard to protecting Canada's livestock, your forecast revenue was $5 million, and your actual revenue was $2 million. And in terms of assessing agricultural products, you forecast $1 million, and your actual revenue was $371,000.

Could you explain why you have those differences in those four very important sections?

[Gordon White]

Mr. Chair, the forecasts are put together some time, as you know, before we come to a conclusion in a fiscal year. A lot of our increases, where we're over on our forecast, are due to incremental volume. Our fees, obviously, haven't gone up, due to the moratorium, but we have incurred more volume, more throughput, through those processing plants. Therefore, our fees do go up with that volume.

In regard to a couple of the other ones, I don't recognize them off the top of my head, so I'd like to get back to you on those, if I could.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

On the protecting of Canada's livestock, you overestimated on that one. You estimated $5,474,000; your actual revenue was $2,095,000. And on assessing agricultural products, you forecasted $1,078,000, and your actual revenue was $371,000.

These are two areas that I think are very important, and there's quite a discrepancy.

[Gordon White]

Yes, there is. Again, off the top of my head, I can't give you those answers right now.