Agriculture Committee on Feb. 15th, 2012

[The Chair, Conservative, Larry Miller]

We'll call our meeting to order.

I'd like to thank all of our witnesses. We have Mr. Kingston and Ms. Ventin with us in the meeting place here. Joining us by video conference from Guelph, we have Evan Fraser and John Cranfield.

Just in case we have technological problems, I think we'll hear first from Mr. Fraser and Mr. Cranfield.

Mr. Fraser, you have ten minutes or less. Can you hear me okay?

[Dr. Evan Fraser, Associate Professor, Canada Research Chair, Department of Geography, University of Guelph, As an Individual]

Thank you very much.

I can hear you fine. Can you hear me okay?

[The Chair, Conservative, Larry Miller]

Pretty well, Mr. Fraser, but if you could speak really close to the microphone for our interpreters....

Thank you very much. You can go ahead.

[Dr. Evan Fraser]

Thank you for the opportunity to speak to you again.

I have to preface my comments. When the invitation to speak arrived last week, I undertook some conversations with some colleagues. So some credit is due to John Smithers, Rod MacRae, and Phil Mount for what I'm about to say, if there's any credit due from what I'm about to say.

My primary message to you today is quite simple. In my opinion, there's a rising consumer demand for locally sourced products, ethnocultural foods, and vibrant cultural food systems. I believe that the Growing Forward 2 platform can help farmers meet the demand for these products in three targeted ways. First is through the promotion of a mid-sized processing industry. Second is through the promotion of programs geared toward enticing a new generation of people, and in particular new Canadians, to enter farming and meet the rising demand for ethnocultural foods. Third is by creating the infrastructure through which small- and medium-scale farmers can better market their produce through enhanced connections with large customers, including grocery retail chains.

Before I expand on these three points, let me give you a little bit of background that I think is important.

It's recognized across North America that there has been a hollowing in the middle in terms of farmers. The commercially viable but still small- and medium-scale farmers have all but vanished as part of the rural landscape. Farmers have either become committed to a high-debt, high-capitalization, export-oriented model or have been essentially relegated to the margins, selling their wares in niche venues or by relying on ad hoc value-added activities.

Nevertheless, I think considerable evidence shows that these mid-sized commercial farms have a lot going for them. They tend to be higher in terms of biodiversity. They are more likely to be able to integrate crop and livestock into a single agri-ecosystem and hence typically have better soil and water health. And they generate more vibrant rural communities. This last item, vibrant rural communities, I think is extremely important, as it's been asserted in recent years that to a huge degree, agriculture and rural communities have sort of lost touch with each other, both economically and socially.

So in my opinion, losing the mid-sized farm is a mistake not only because of its impact on the environment but also because it's these farms, these mid-sized farms, that I feel are most efficient at producing local, culturally appropriate types of foods for which demand is rising.

I've been involved in an OMAFRA-funded project over the last year that's explored these issues in some detail. I say without any exaggeration that there is a huge and growing demand for the food that comes off these local but still commercially viable farms. The arguments are being picked up by large retail chains. From conversations with Galen Weston and Loblaws VPs Bob Chant and Paul Uys, I can also say with confidence that the retailers are aware that food that comes from these farming-in-the-middle farms, for which there's a huge demand, commands a higher price.

But there are bottlenecks in meeting this demand, and three in particular I'd urge your committee to consider. The first one is the loss of the rural processing industry. One of the most impressive or important changes in rural Canada over the past 20 years has been a large decline in food processing. I did my Ph.D. on the west coast, where I documented the loss of vegetable processors in the Fraser Valley. I looked at the effect this loss had on local farmers. In that case, as one processor after another closed, farmers found that the selection of crops they had markets for was shrinking.

Also, for many horticultural crops, perhaps only 20% of a harvest is suitable for fresh sale. This is due, perhaps, to minor blemishes that mean a tomato isn't suitable for fresh harvest or due to the fact that a harvest all comes at a single time, so there's too much at a given point in time. As a result, maybe as much as 80% of a farm harvest has to go to processing. With the loss of the local processing opportunities, farmers around Vancouver were obliged to abandon crop rotation and become much more specialized. This process contributed to some very serious environmental problems associated with soil compaction and water runoff and it drove farm consolidation and the reduced vibrancy of rural communities.

Hence, I would argue that the loss of the local processing industry represents a serious bottleneck that prevents local food processors from meeting the demand for local food. Helping promote local processing industries is one key area in which I believe the federal government could take a proactive and constructive role.

If it were possible to use Growing Forward 2 to create opportunities to invest in small- and mid-scale processing infrastructure, I think it would go miles towards helping local farmers access growing markets for local products. For instance, there are some successful models of mobile abattoirs that are operational on the west coast. They help medium-sized livestock producers meet the demand for local meat. There are also individual quick-freeze facilities, such as the one in Simcoe, Ontario, that offer a mid-sized, flexible processing industry for fruit and vegetable producers. At present, these types of processing facilities are struggling to find a place in the market due to the regulatory environment and high startup costs. I would urge the committee to consider this as an area the Growing Forward 2 program could focus on.

The second issue I would like to raise today is that of the aging rural population. The aging farm population--the average age of farmers today is in the late fifties--means that for demographic reasons alone, farms have consolidated and are becoming much more specialized and larger-scale. This too hurts the medium-sized farms that are best suited to meeting this rising demand for local produce.

A huge number of younger people would like to farm and meet these markets, but are prevented due to the high capital costs of starting farms, the challenge of getting access to markets, and some somewhat peculiar regulatory barriers.

I think there are ways around this. A number of small NGOs, including one called FarmStart in Guelph, are developing incubator farms that help farmers develop the agronomic and marketing skills required to launch their own enterprises. In particular, FarmStart has found traction in a new market—that of ethnocultural foods—and is finding that many new Canadians arrive in our country with a strong background in farming, who are linked to growing immigrant populations and are therefore well suited to meet the rising demand for these ethnocultural foods.

These farmers are finding major barriers. Many of these new types of arrangements that link new farmers with retiring farmers are quite informal, and as such the new farmers often don't have what are traditionally considered farm assets. This lack of clear farm assets makes it difficult for these new farmers to qualify for government programs, business loans, etc., even if they have a credible business plan. Here too, I believe the federal government could play a leadership role by developing policies and frameworks that help redefine what a farm enterprise is, build on the success stories such as FarmStart's, and recognize that by connecting new immigrants to aging farmers, it may be possible to bridge two of the core issues that confront the rural landscape today.

The third bottleneck that I would like to address is that within the grocery sector there are structural barriers to trade in local food. Even if aspiring farmers have access to land and processing, farmers have to either produce at a large scale, big enough to satisfy the demands of our large-commodity retail chains, or they have to commit to a small-scale level of production that allows each farmer enough time to develop direct markets on their own. This is another issue that I believe the federal government could help tackle.

First of all, the federal government could commit efforts to developing regional food hubs as a way of connecting small producers with large consumers. In case the phrase “food hub” is something you are not familiar with, and I'm reading here,

The USDA defines a food hub as ‘a business or organization that is actively coordinating the aggregation, distribution, and marketing of source-identified locally grown food products from primarily small to mid-sized producers.’

The OMAFRA project that I mentioned a few minutes ago has surveyed over 100 such initiatives, and here I say again with confidence that there is a tremendous network across Ontario—and I would assume across other provinces as well—that is looking at these sorts of innovative ways to solve some of the mid-scale infrastructure issues. Food hubs are one of the fastest-growing trends in the North American food retail market, in part because the USDA recognized over a year ago that helping small and mid-scale producers gain access to larger buyers makes sense on a bunch of levels. Hubs develop new markets for local producers, allow them to aggregate their products to satisfy larger consumers, and ultimately help keep more money within regional economies, thus arguably promoting growth.

By working together, people across the food chain tap into larger opportunities than they could on their own. The USDA research on food hubs shows that, on average, they become financially self-sufficient after about three years. Using online marketplaces and other flexible infrastructure, these hubs can require comparatively little in the way of capital, infrastructure, and coordination. But this very little is often a critical gap, and it's this very little that stands in the way of innovation.

The committee could recommend that the federal government establish a dedicated fund offering start-up capital for food hubs for the purpose of fostering this missing and critically important piece of infrastructure that would help link small and medium-scale producers with larger-scale consumers.

In short, I believe that through a proactive policy geared at promoting the local processing industry, investing in new farmers—and in particular, new Canadian farmers—and reducing the barriers that prevent small and medium-sized farmers from marketing to larger customers, we can help shore up what has traditionally been called the family farm: that medium-sized but still commercially viable farming operation. In doing so, we can help stop or even reverse the process of hollowing out the middle of the Canadian agricultural landscape. If we do that, we will see a number of key benefits. I think we'll see a better ability to meet consumer demands for local and ethnocultural foods. My feeling is the research shows us we will also see a more diverse and better integrated rural landscape. Ultimately, this will result in a more cohesive environment in rural communities.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Fraser.

Mr. Cranfield, you have ten minutes or less.

[John Cranfield, Member, Management Team, Consumer and Market Demand Network]

Thank you very much.

Good afternoon, committee members, and thank you for inviting me to appear before you today.

As you know, I'm a professor of food and agricultural economics at the University of Guelph. My research focus is on consumer demand for food and food products. I'm also on the management team of the consumer and market demand research network, one of the five agricultural policy networks established under the Growing Forward framework.

My comments today are my comments alone, but they are informed by my interactions with my colleagues both here at Guelph and at other institutions, as well as those involved in the consumer and market demand research networks.

To contextualize my comments today, I'd like to highlight some results coming from consumer research in my home department. In particular, a recent consumer survey undertaken by me and a number of my colleagues shows that three factors dominate what consumers feel is important when buying food: health and nutrition, safety of food, and taste. These three factors are followed closely by: cost, where food comes from, the availability of choice, ethical issues, the behaviour of food companies, and convenience.

The fact that we've identified health and nutrition, safety of food, and taste is not unique. Indeed, many other studies have found the same. These studies aren't limited just to Canada but are found in other countries in different parts of the world. Nonetheless, these studies all point to the importance of these aspects in shaping the purchase decisions by the food gatekeeper to the home and by the consumption decisions of many.

I'd like to focus on two of these aspects in my opening remarks, in particular, health and nutrition and food safety. This is not to suggest that the other factors are unimportant but that these two aspects speak squarely to the purpose of today's meeting.

The health and nutrition dimension is, in my mind, a bit of an awkward dimension to consider when discussing Canadian agricultural policy. I say that not because the health and nutrition dimension doesn't belong in the context of agricultural policy, but largely because our previous generations of agricultural policy have focused squarely, but not entirely, on stabilizing a variety of economic measures such as prices, gross margins, whole farm incomes, and trying to offset the effect of untoward climactic incidents on things like yield. The addition of health and, implicitly, nutrition may seem odd to some, but I do think it reflects the broader notion that agriculture gives us food, food provides nutrition and shapes our diet, and our diet, in conjunction with a number of other factors, shapes our health outcomes. As such, the connection between agriculture and health I think is immutable.

Moreover, the connection between agriculture, food, and health is one that has provided a motive for the development of Canada's functional food and natural health product sectors. These are food products or derivatives of agricultural commodities that have bioactive compounds that can serve to enhance the health of those who consume them. The functional food and natural health product sectors are responding to emerging markets that reflect, in my opinion, a population that wishes to maintain and enhance their quality of life through their choice of functional foods and natural health products.

In this respect, the challenge to providing those Canadians who wish to purchase such products is not about how the industry will respond, but with respect to the cohesion between agricultural policy and health and nutrition policy. Moreover, it has to do with whether these policies and their implementation are at odds with one another. The former—i.e. agricultural policy—is the purview of federal and provincial departments of agriculture. The latter, health and nutrition policy, is largely in the purview of Health Canada.

In this respect, I see a need for greater integration of the policy objectives across these different domains, but in a manner that ensures new food products and natural health products are both safe and effective and are also available to Canadians and non-Canadians—that is, people outside of Canada—who may wish to purchase these products.

With respect to food safety, I'd like to point out a couple of facts from some of Agriculture Canada's own research. Agriculture Canada has undertaken a number of surveys related to gauging consumer reaction to food safety and quality in Canada as well as to functional foods and natural health products.

One survey in particular has been quite important and has been repeated over time, and that's Agriculture Canada's food safety and quality tracking study. The most recent study, Wave 3, which was undertaken in 2010, indicates that the lion's share of Canadians are confident that food in Canada is safe. In particular, over 50% of surveyed Canadians reported that they were completely confident or very confident in the safety of Canada's food. A further 35% said they were somewhat confident.

I am of the opinion that such confidence stems from an expectation held by the broad citizenry that food safety control systems managed by both the public and the private sector are effective. As an example of this, I'd like to remind the committee of the speed with which industry and various federal and provincial departments acted when BSE-infected cattle were discovered in Canada in May of 2003.

I would also like to point out that we agricultural economists actually saw an increase in demand for beef—that is, beef consumption—after the BSE event, an outcome that some, including myself, have attributed not just to economic forces, but also to consumer confidence in light of how the crisis was managed.

A further example, I think, is the listeria crisis that happened in 2008. The speed with which the Canadian Food Inspection Agency and Maple Leaf Foods reacted, and the public relations campaign that came about from that, had a positive effect in terms of how quickly Canadians readjusted their consumption back to their base levels prior to the listeria recall.

I have a couple of other points I would like to add.

I agree wholeheartedly with Dr. Fraser's comment on ethnocultural foods. We're a country that's largely made up of immigrants. Increasingly, we're relying on immigrants coming to Canada as a way of populating our country. And what is interesting from a consumer point of view is something that we call “aculturization”, in particular, food aculturization.

When new Canadians come to Canada they bring their cuisines with them. We then adopt those cuisines and make them our own in different ways, shapes, and forms. At the same time, many new Canadians, not necessarily those who have newly immigrated, but the first-generation Canadians, then adopt a Canadian diet.

I think that “aculturization” speaks to the importance of the growing need to recognize the diversity of the population, both in terms of where people originate from, ethnically, but also the diversity of their own diets.

Lastly, I'd like to point out something that I think is very important with respect to consumers, and that has to do with what I've called in the past the fragmentation of the consumer landscape. It used to be that number 2 yellow corn was number 2 yellow corn, and anyone could grow number 2 yellow corn and sell number 2 yellow corn. Now we actually are looking for a type of corn that has certain characteristics and traits that are unique to particular lines and varieties. The reason we're looking for those particular traits and characteristics has to do with the fact that there is a consumer or a customer who has a very specific and targeted need, and that product is designed to fill that need.

We've moved from a commodity world to a product world, and those product worlds are very difficult to navigate because we don't deal with a single consumer demographic; we deal with a near-infinity of consumer demographics where each consumer household could be viewed as having unique tastes and preferences. That makes it very difficult for the food industry to respond to those growing demands, but it also presents some important opportunities the Canadian agricultural sector could be poised to act on with enhanced programs such as Growing Forward 2.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Bob Kingston of the Agriculture Union, for ten minutes or less, please.

[Bob Kingston, National President, Agriculture Union]

Thank you, and thanks a lot for inviting us here.

We represent all the technicians and inspectors who work at CFIA, Agriculture and Agri-Food Canada, the Canadian Grain Commission, and basically most of the people under the agriculture portfolio, as well as those in education in the public service through the Canada School of Public Service, the academy at DND, and that sort of thing.

We are here to talk about Growing Forward. Originally, the comments were going to be focused primarily on the funding aspects of it, but I have added another piece, given some testimony you heard on Monday.

We are concerned about the way Growing Forward 2 is now shifting the focus of its funding. It is aiming at facilitating better collaboration of the private sector and the academic sector with public research. We don't have a problem with that. The concern is that the pie they're carving this up from is becoming smaller and smaller. I'm guessing that after the next budget it will be smaller still.

Part of the problem also with the new funding model they have is that you're looking at four- to five-year funding cycles. Bench research, the foundation on which agriculture in this country was based, including some of the best breeding programs in the world, is usually on anywhere from an eight- to 12-year cycle. It's becoming very difficult to plan projects, to get approval for projects. As we speak we have both researchers and technicians sitting around twiddling their thumbs, waiting for funding approvals to come in. I suspect those are being withheld pending the upcoming budget, and based on the rumour mill, I'm not sure that funding will ever come.

We're very worried that long-term research, which is the forte of public research in this country, will suffer in the near future, given the funding dilemma. That type of research is the basis for a lot of Canada's ability to lead the world in terms of its agriculture. We're talking about things like promoting consumer confidence in products, and the ability of Canadians to produce those products. I guess one of the things we're concerned about is losing that edge. Right now we import approximately 30% of the food that Canadians eat. That's over double what the Americans produce, and some of that's based on climate. We're very concerned that if we start losing our basic research edge, we will start increasing the quantity of imports. I'm going to get to the problems associated with that later.

Right now, we're concerned that the innovation needed and encouraged by the concept of Growing Forward, in terms of enabling collaborating partners to come to the table, will in fact be undermined by the government's own ability to be a partner in that process. Right now, if you take a look at the way Growing Forward is designed and the way research funding is designed, it's on a bit of a tightrope. It wouldn't take much to push it over the edge and make it non-functional. That's our concern in terms of delivering on that public end of the research equation.

I know the committee has heard a lot of testimony about the value of public research and why it's needed and the nature of it and why it's expected that government should deliver that part of it. I really hope they take that into consideration with the next budget.

The testimony you heard the other day from CFIA kind of changed the nature of what I was going to say here. I've read the transcripts, and I hate to say this, but you've been seriously misinformed on a number of very important issues.

On the sunsetted programs and funds, I understand that's all still up in the air. It probably should be if they're really planning on doing away with the additional inspection that was brought about because of the listeriosis crisis. CFIA had been hoping to convince the USDA to lower its standards. Based on that lowered standard, they accordingly set funds to sunset on March 31, 2012. So all the funding that was set aside for additional daily inspection in the processing plants is now set to vanish March 31. We have been in touch with the USDA, and they have no intention of lowering their standards. In fact, they were shocked to find that there was a misunderstanding, in that CFIA hadn't been delivering to their standard all along.

CFIA has never completed a study on the impact of such a lowering of the standards. They began a study around the time they introduced CVS—the compliance verification system—and they shelved it. To the extent that the study was complete, it clearly showed that compliance was directly related to the frequency of inspector presence. Their own data showed very clearly and distinctly that the more often inspectors were present in the plants, the higher the compliance level.

We're seriously concerned, and we'd like to know why they are trying to reduce inspection frequency, when the information they have shows that it would be detrimental to food safety.

Regarding import inspection and testing, the committee was led to believe that the rules are the same for both imports and exports, that producers in Canada have a level playing field, and that this is administered evenly.

Nothing could be further from the truth. There is one set of rules, but they're certainly not applied the same way. Export inspection always get top priority, because when you don't do it, the exports don't move. Imports are discretionary, and they get slid off the table in many cases. The ratio is approximately 100% of exports being inspected to about 2% of imports being inspected.

If they think that is an equal playing field, I have a problem with their math. Predominantly, offshore imports are not looked at for human health and safety reasons, even when they are looked at; they're looked at for animal and plant health reasons.

As for dealing with the stuff at the borders, about which you were told the other day, this responsibility was in fact given to CBSA in 2004. CBSA employees made it clear at the time and still make it clear today that this work is not their priority. This has been confirmed in discussions I've had with the vice-presidents of operations at both CBSA and CFIA.

CFIA and CBSA had a memorandum of understanding that required interceptions of serious pests and diseases to be referred to CFIA for confirmation and advice. At the two busiest ports in the country, where I worked for 25 years and supervised this program for 15 years, we received absolutely zero referrals from CBSA once they took over the program. That is still the trend today. I confirmed this with a phone call to inspection staff at those busy ports literally minutes before walking into this room.

This presents to Canada a ticking biological time bomb that is being ignored by both departments. It also clearly represents an uneven playing field for Canadian producers. When products go down to the United States or to virtually any other country, they are inspected. They have inspection stations just across the border, all along the American border. In fact, the head of the organization that runs those inspection stations called me last week. He was alarmed at some of the talks going on involving the committee that is looking at opening the borders and at what effect this will have.

They do look at a lot. They find large numbers of non-compliance. With the small amount that we used to look at coming the other way, we found the same thing. We are concerned about that.

As for pesticides and chemicals being looked at and regularly monitored when coming in, that is quite frankly nonsense. The amount being sampled is minuscule, and the results come back months after the products are consumed. The targeted chemicals are not often the ones that are likely to be used by foreign producers anyway.

I was involved in supervising the sampling in that program, and I used to complain about the list of chemicals that PMRA was asking us to sample. I also worked with farmers for 30 years, and I know that a lot of the chemicals they were sampling for would never have been used. They were sampling, in our view, for the wrong ones. They were monitoring trends, anyway.

As I said, the program was never designed to be used to intercept products coming into the country. The only chemicals that are declared on imports coming into the country are the ones that we require to be applied in our regulations. We say that if you're importing certain products, you're required to treat for a certain list of pests, and we need verification from you that these have been professionally applied, etc. Those are the only ones they have to tell us about.

Shippers often—I mean “often” as in the majority of the time—add pesticides to avoid disease and infestation damage in transit, and these appear on absolutely no documentation whatsoever. I helped start a monitoring program for the wood packaging program that Mr. Mayers referred to on Monday. When we started that program, we expected to do some testing to verify that everything was fine from the chemical point of view so that we could stop doing testing. Instead, what we found was that most containers coming into the country had chemicals in them more than 100 times higher than the legal limit.

That monitoring is still going on. Every container that is inspected by customs is monitored for the presence of fumigants and chemicals before a customs officer is allowed inside it. When they do that they have professional pesticide applicators professionally aerate the containers before they're even allowed to look at them.

When CFIA inspectors do these inspections at warehouses they're aware of these risks, and they can put on gloves and dust masks. Very frequently when you open a box of produce there's a white powder all over it. It's usually cosmetic fungicide put on there so the stuff won't rot in transit. Once in a while you also get insecticide because it will be ant season. We can deal with that, but consumers and other workers inland can't; they don't even know about the risks.

Regarding Weatherill, there are still a lot of outstanding issues. I was surprised to see they feel it's all wrapped up. Their audit did not include us. We pointed out several major problems with the assumptions they used to do that audit, yet that audit still seems to stand. The technology Weatherill recommended.... A lot of inspectors still don't have access to computers, never mind the hand-held technologies that Weatherill was promoting.

Regarding red tape reduction--I'm trying to rush through them now--

[The Chair, Conservative, Larry Miller]

That's your last point; you're well over.

[Bob Kingston]

We fully support doing what we can to promote small growers and small producers. We believe, like some of the previous speakers, that they're an important part of the sector and an important part of the economy. A statement by Mr. Mayers talked about deregulation as far as it would apply to these people. That is not what that project is looking at. I've also been involved in that. What we're looking at is how we can receive from them the way they're going to achieve their goals and design our inspection systems around what they say they're going to do to achieve those goals, but we still will be doing systems inspections with these people.

[The Chair, Conservative, Larry Miller]

You can enlarge on that in questioning.

The last presenter is Ms. Ventin, please. You have ten minutes or less.

[Carla Ventin, Vice-President, Federal Government Affairs, Food and Consumer Products of Canada]

Thank you.

Food and Consumer Products of Canada welcomes this opportunity to contribute to the Standing Committee on Agriculture and Agri-Food’s study on Growing Forward 2, specifically as it relates to meeting consumer demands.

We are the voice of Canada’s leading food, beverage, and consumer products companies that manufacture or distribute the products that sustain Canadians and enhance their quality of life. Founded in 1959, our industry association is a trusted source of information about the industry and the products that people enjoy and rely on every day. From an employment perspective, our industry provides high-paying jobs to approximately 300,000 Canadians in both rural and urban areas in every region in the country. We are, in fact, Canada's largest employer in manufacturing, larger than auto and forestry. Our members represent almost 80% of the products you find on grocery store shelves.

The Canadian food processing industry, as stated earlier, is a key component of the food value chain. We depend on Canadian farmers to grow crops for our 6,000 manufacturing facilities across the country. Likewise, Canadian farmers depend on us to purchase the crops that they grow. FCPC member companies are committed to policies and programs that contribute to a competitive, profitable, and sustainable agrifood industry in Canada.

My presentation is divided into two sections. The first discusses what the food processing industry is doing to meet consumer demands and the second is how the government can help reinforce our efforts through Growing Forward 2.

First of all, how is the industry meeting consumer demands? Through food safety. First and foremost, Canadian consumers rightfully demand that the food they eat is safe. Food safety is, and will remain, the number one priority of our member companies. Our industry is proud that Canadians enjoy some of the safest food in the world. FCPC fully supports the recommendations in the Weatherill report, in addition to the government's ongoing efforts to modernize and simplify Canada's food safety laws and regulations.

And there's consumer education. Consumers are increasingly interested in learning about the food they eat as they take greater control of their health through diet. To help consumers make more informed food choices, FCPC and our member companies have made terrific strides in helping promote nutritional literacy among Canadians. For example, since 2005 food manufacturers have provided the government-regulated nutrition facts table on all food products you find on grocery store shelves. Starting in August 2012, consumers will also see labeling specific to allergens on food products.

In order to help consumers better understand the nutrition facts table, FCPC and Health Canada launched a collaborative and award-winning initiative called the nutrition facts education campaign in October 2010. This is a multimedia educational outreach initiative that is based on a partnership between 34 member companies and Health Canada. The purpose is to help Canadians make more informed food choices for themselves and their families. Building on the great success of phase one, phase two has now been launched.

Consumers are also increasingly demanding that their food be grown and manufactured in an environmentally responsible way. Industry needs to keep pace with these demands at the food processing level, and FCPC member companies are doing their share.

We recently conducted a survey to identify our members' environmental policies in order to promote and showcase our industry's collective achievements in environmental sustainability. The survey revealed that the majority of our member companies have environmental sustainability strategies in place focused on waste reduction, sustainable packaging, water conservation, energy conservation, and greenhouse gas reduction.

As for healthier-for-you products, Canadian consumers are also increasingly interested in a wide range of selection of healthier-for-you and niche products, as mentioned earlier, as they become more proactive in managing their health through diet. A recent FCPC survey revealed that 92% of our member companies have launched or reformulated products that you find on grocery store shelves to make them healthier. For example, we have reduced sodium and we have reduced transfat in many of our products. We're committed to continuing our efforts in these and other areas.

Consumers are also increasingly demanding products with health attributes, referred to as functional foods. The global functional food market is growing at a rate that is outpacing the traditional processed food market. This has become a multi-billion-dollar industry, and estimates within Canada suggest that the Canadian functional food industry has the potential to grow to $50 billion U.S. This represents an enormous opportunity for our sector, and it is also the future of Canadian food processing. Food processors in Canada, however, are discouraged from bringing new, value-added, healthier-for-you products to market. This is because current food regulations are unable to accommodate the types of products that consumers demand.

My second part briefly touches on what government can do to support our efforts and meet consumer demand.

It is our view that the most important issue that needs to be addressed in Growing Forward 2 is to rapidly modernize Canada’s food regulations. This is needed if we want to meet consumer demand for innovative, healthier-for-you products, which are readily available in most industrialized countries. To provide perspective, our food regulatory framework has not been updated in a meaningful way since we were watching Hockey Night in Canada on Saturday nights on black and white television. These regulations have not kept pace with changing technologies and the development of new products, and the impact of Canada's regulations are felt by Canadian consumers because there is less choice, and also it has an impact on business in Canada.

There is also an impact on farmers. Without a Canadian food-processing industry to buy the food the farmers grow, farmers need to find new markets farther away. Farmers who sell directly to retail outlets face the same regulatory barriers as the food industry. Moreover, food security in this country depends on food that is both grown and processed in Canada.

In summary, I hope this presentation has provided a sense of how FCPC and our member companies are stepping up to the plate and providing the types of products that consumers demand. The most important way that Growing Forward 2 can meet the demands of consumers, as well as support the future of Canadian farmers and food processors, is to prioritize the modernization of Canada’s food regulations.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to questioning. First we have Ms. Raynault, for five minutes.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair. I want to thank our witnesses for being here today. My question is for Ms. Ventin.

In your presentation, as well as in your document, you said that consumers are increasingly interested in learning more about the food they eat as they take greater control over their health through diet. You said that, beginning in August, consumers will also see labelling specific to allergens on food products.

I have two questions about that. First, what kinds of allergen information can they expect to see? Second, will those changes have an effect on labelling as well as food prices?

[Carla Ventin]

Thank you very much for your question. I appreciate that.

You're specifically asking about the allergens and labelling of allergens on food products. That will start in August 2012. I do not control the individual pricing of our member companies, but I don't expect there to be a specific price increase because of those labelling changes.

[Francine Raynault, NDP, Joliette, QC]

This is still directed at you, Ms. Ventin.

Your document also states that Canada's current food regulations create significant barriers to operating a business in Canada. You added that there is also an impact on farmers, that without a Canadian food processing industry to buy the food that Canadian farmers grow, farmers need to find new markets farther away. Could you give some examples of that? What do you mean by farther away? Farther away in Canada or beyond our borders?

[Carla Ventin]

The biggest challenge that food processors have is being able to get their products approved through Canada's regulatory system. If we have food manufacturers that are employing Canadians and creating new and innovative products in Canada, that's the first step. The second step is having to put these products on the market.

We have found numerous examples where our member companies have tried to get one of their products approved through the regulations and it has taken up to ten years sometimes. We've done a study on this--I'll be happy to send it over to you--and food approvals in Canada take, on average, five years longer than in the United States.

When I talk about food approvals I'm not talking about products that have been declared unsafe in other countries. As I said, food safety is always the number one priority of our member companies. These are food products that have been approved for five or ten years in other developed industrialized countries, such as Australia, New Zealand, the EU, etc.

[Francine Raynault, NDP, Joliette, QC]

That is quite a long time to wait.

Do I have any time left, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You have a little less than two minutes left.

[Francine Raynault, NDP, Joliette, QC]

Very well.

My question is for Mr. Cranfield.

Canada is said to import large quantities of organic products to satisfy the strong domestic demand. What kind of support do you think the government should provide to encourage organic production and ensure an adequate supply of Canadian organic products?

[John Cranfield]

That's a good question. I think the programs that need to be put in place are those that attract people to see an economic incentive to convert, and provide the resources needed to facilitate transition from conventional production to organic production.

Currently under the organic standards it can take at least three years to convert a conventional farm to an organic farm. During that period of transition the producer is not allowed to call what they grow organic. So they're growing in a way that reflects the organic production system, which typically incurs a higher cost of production. They also have to pay for the certification process during that time, yet they're not able to market their product in a way that allows them to realize the premium typically associated with organic products.

So part of what is needed is programs that help support that transition period, and programs that help support the cost associated with the conversion to organic.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

[The Chair, Conservative, Larry Miller]

I'll move to Mr. Lemieux for five minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thanks very much, Chair.

Mr. Kingston, I must admit I was very surprised by some of your comments. You said that government officials seriously misled this committee. That's almost a direct quote of what you said. That's a very serious allegation. These members were in front of committee just last week.

I want to know if you have the courage to say that outside this room, where you're not protected by parliamentary privilege. If the answer is no, then I would ask you to withdraw that remark.

[Bob Kingston]

My answer would not only be yes, but I've told them the same concerns. I've discussed it with senior officials in CFIA. I'm not saying they purposely misled you. The individual who spoke here simply might not be aware of how those programs work in the field. That frequently happens, and you were seriously misled.