Thanks very much, Mr. Chairman and members of the committee. It's a great pleasure to be here today. I thank you for inviting us to appear.
Food and Consumer Products of Canada is the national industry association that represents the manufacturers of food, beverage, and consumer products in Canada. Our members range from small, independently and privately owned companies to large, global multinationals, all of which manufacture and distribute in Canada.
Just some quick stats on our industry. In 2005, the food processing industry in Canada employed 291,000 Canadians. We're the largest employer in the manufacturing sector. Manufacturing is often discussed in terms of steel or auto or other sectors because some of those productions are local, but we're a national industry and we employ a lot more people, and sometimes that's forgotten. It's worth noting that we generate $24 billion of GDP annually and operate just under 6,700 facilities across the country. That's 2002 data. Most importantly, perhaps, to members of this committee, our members purchase 43% of Canada's agricultural output.
We've reviewed with great interest the transcripts of previous hearings the committee has held on this issue and have noted the strong degree of consensus that the rules around the usage of “Product of Canada” need to be clarified. However, the committee has clearly got its work cut out for it, as we've also noticed there isn't a strong degree of consensus around what needs to be done to clarify those rules.
By way of background, FCPC has long lobbied for additional resources for CFIA enforcement. One of the most common concerns expressed by our member companies relates to an uneven playing field created by inconsistent enforcement of existing rules and regulations. This common theme has been expressed by a number of witnesses who have appeared before you during your review of “Product of Canada” labelling. We have serious concerns when consumers feel they're being misled by labelling rules, especially rules that the committee has heard have been in place for close to 20 years and were introduced by government, not industry.
Food processors in Canada are prohibited from making false or misleading statements by two separate pieces of legislation: subsection 7(1) of the Consumer Packaging and Labelling Act and subsection 5(1) of the Food and Drugs Act.
As members know, enforcement responsibility for the food aspect of the Consumer Packaging and Labelling Act was transferred from Industry Canada to the CFIA upon its creation in 1997. The CFIA then produced a 200-page guide to food labelling, which includes the policy reference we are discussing today as it relates to food being eligible to carry the term “Product of Canada”.
Just to paraphrase briefly, to be eligible to make this statement on our label, food products must meet two conditions: the last substantial transformation of the good must have occurred in Canada, and at least 51% of the total direct costs of producing or manufacturing the goods are Canadian.
The last substantial transformation concept is widely used internationally and probably should not be changed. However, if the 51% rule has been shown to be confusing to consumers and the committee sees fit to recommend that percentage be raised higher, FCPC would not object.
It is our understanding that the government has committed to an in-depth consultation as part of the food and consumer safety action plan--I believe I have the name right; that's the plan the Prime Minister announced before Christmas, and the subsequent legislation was just tabled at the beginning of this month. The government has committed to consultation on ways to address concerns related to “Product of Canada” on food labels. We think that's the right way to go, because, as I will provide some examples momentarily, food labelling is fairly complicated, and seemingly simple changes can have wide-ranging and often counterintuitive results. Having all stakeholders at the table to troubleshoot proposed changes can only improve the net result, from our perspective.
I think this is a message the committee has often heard from a wide range of stakeholders. I noted with interest the testimony of Mel Fruitman of the Consumers' Association of Canada, who noted the difference between products with one or two ingredients, when it comes to “Product of Canada”, and multiple-ingredient products. He also stressed the importance of defining the goal when making changes to the rules and pointed to the difference between a consumer information and product safety goal and a market development and economic goal for Canadian producers.
As I mentioned, FCPC would not object should this committee or the government see fit to raise the percentage value of Canadian content to qualify for “Product of Canada”. However, we would note that state-of-the-art processing, handling, and packaging that our members do when they make products does represent a significant value-add, in terms of the safety, quality, and nutritional value of the products, but also, as I mentioned at the outset, in terms of the employment and spinoff benefits for the country. I think you've heard from a number of witnesses around the importance of retaining food processing jobs in Canada, especially when dollar parity gives us less of an economic advantage than we enjoyed previously.
Any changes to the rules need to allow for some acknowledgement of the value the processors add. This is especially true in an era when the focus on product safety and integrity is top of mind and resulting regulations are expected to increase costs for food processors.
Product safety is number one for our members, obviously, and we're happy to comply with any and all new rules and regulations. But the value added that we make should not be totally excluded from acknowledgement.
That said, it should also be noted that much of the concern the committee has heard results from confusing quality standard descriptions with country of origin descriptions. For example, the pears from China are designated “Canada Choice”. Grading terms like “Canada No. 1”, “Canada Fancy”, etc., are not without value. They allow consumers to compare prices of similar grades and quality of products.
As I mentioned earlier, the issue of the use of “Product of Canada” mostly applies to single-ingredient products or ones with a handful of ingredients. I noticed the Horticultural Council has a number of examples there, and they mostly have single or a couple of ingredients. But the large portion of my FCPC membership makes multi-ingredient products, like frozen entrees, pizzas, canned soups, or what have you, and don't use “Product of Canada” on their labels.
As the committee has heard from numerous witnesses, the rules around food labelling are very prescriptive and are often different for various food categories.
Here are three quick examples. For fish, paragraph 6(2)(c) of the fish inspection regulations requires the name of country of origin to be clearly identified on any label of any fish or fish product imported into Canada. But understandably, this rule presents challenges for CFIA. If a fish is caught in international waters, filleted in China, substantially transformed into a frozen fish entree in Canada, with fish being one of multiple ingredients, how should this product be labelled?
For meat, all meat labels in Canada require pre-approval by CFIA before they are approved for the marketplace. In the instance of meat products, CFIA has to sign off on the label prior to it even being used, so enforcement is less of an issue with meat than it is with other commodities.
For honey—I heard this mentioned previously by a witness around the labelling of imported honey—only honey that is pure honey and that is produced in a federally registered establishment for interprovincial or export trade is covered by the honey regulations. These regulations have no requirement for country of origin. However, the grade of domestic honey reads “Canada No. 1”, whereas imported honey would read only “Grade No. 1”. Blended honey, which is the vast majority of honey these days, is required to carry the tag, “A blend of Canadian and”—the name of the country whose honey it's blended with—“honey”, and the sources must be named in descending order of their production.
When the honey is an ingredient in a multi-ingredient product, however, the consumer would not know the origin of the honey. And I revert back to my earlier testimony about the complexities in labelling the country of origin of the food product, with 30 ingredients, in this day and age.
To summarize, there have been a number of suggestions made by various witnesses and MPs about the possible improvements to clear up confusion. We're open to these suggestions and will work with the committee and with the government during the upcoming consultations to ensure good public policy results.
We certainly agree that any changes should be voluntary in nature. I think the committee has heard about voluntary versus mandatory and some of the challenges there.
If Canadian producers want to pursue a “Grown in Canada” label, which I believe the Federation of Agriculture has raised with the committee, we'd support that fully.
As mentioned previously, if the committee decides to recommend that the government increase the percentage to qualify for “Product of Canada”, we would support that as well, provided the percentage allowed for some acknowledgement of the value added by Canada's food processors. We just need to ensure the changes recommended serve to educate the consumer and not create any confusion.
Thank you.