Agriculture Committee on Nov. 22nd, 2012

[The Chair, Conservative, Merv Tweed]

Good morning, everyone. Welcome to the Standing Committee on Agriculture and Agri-Food, meeting 58.

Our orders of the day are pursuant to Standing Order 108(2). We have the study of agricultural and agrifood products supply chain—grains and oilseeds.

Joining us today as witnesses we have, from Pulse Canada, Mr. Gordon Bacon, chief executive officer; and from Quorum Corporation, Mark Hemmes, president. Welcome.

I know for one of you it's a first appearance here, so we appreciate that.

I'll start with Mr. Hemmes, please.

[Mark Hemmes, President, Quorum Corporation]

Thank you, Mr. Chair, and good morning to the standing committee. I would like to thank you for the invitation to appear before you today.

I will address two subjects: the current performance of the prairie grain handling and transportation system, or the GHTS, as we refer to it, and then speak generally on the subject of system performance measures and their use and importance to both government and industry.

Before I begin my statement, though, I'd like to introduce myself, our company, and its role in the grain and transportation industry. I am Mark Hemmes, president of Quorum Corporation, which is one of the independent subsidiaries of the Quorum Group of Companies, of which I am also a founding partner. I have spent over 35 years involved in the transportation and logistics sector, including 23 years with Canadian National, where I held senior management positions in the marketing and operations functions.

I live and work in Edmonton, Alberta, where Quorum is based. Quorum has been under contract with Agriculture and Agri-food Canada and Transport Canada since 2001 to act as the grain monitor. We're set up as an arm’s-length monitor for Canada’s prairie GHTS. In that role we report to government, and by extension to the industry, on changes in the efficiency, reliability, structure, and operation of the grain handling and transportation system, as well as what the impacts are on producers.

First, on the topic of the performance of the grain handling and transportation system, over the eleven and a half years that we've been monitoring the GHTS, we've seen significant change, as borne out through the roughly 240 measures that we manage.

Some important indicators of that change include the following.

The proportion of cereal grains that were marketed under the mandate of the Canadian Wheat Board has fallen from 68% to less than 56%, continuing a trend of diversification into crops such as canola and peas.

On the time that grain remains within the system, one of the key performance measurements that we use in the monitoring program has fallen to just over 47 days, from a high that reached over 80 about 10 years ago. The number of elevators has dropped from about 1,200 to just over 350, and the size and the ability for loading 100-plus cars has also been dramatically increased. At the same time, elevator churn ratios have improved significantly, to 6.3 times annually, on average, from as low as 3.7 times.

One key area of focus for both the program and the shippers of grain is railway performance, and the program tracks that in two ways: one, by measuring the total cycle time, and two, by the loaded transit time. Both measures gauge how efficiently the railways utilize their fleets. Railway car cycles, for instance, have fallen to under 14 days from over 21 days 10 years ago.

An important measure for the GHTS performance is loaded transit time. It has fallen from a high of over eight days to under six days—a 25% improvement. This productivity improvement benefits the railway in the form of reduced capital costs, as fewer assets can be used to move the same volume of traffic, or through increased revenues, as a fixed asset fleet can move more traffic. The shippers benefit to the extent that the railways should be able to make more empty cars available for loading with a fixed fleet.

A measure more important, though, to grain shippers is the consistency or the reliability of the service. While the ratio we use to gauge that has improved as well—falling from 0.55 to 0.41—it must be viewed in the proper context, because in a practical sense, this means that transit time varies considerably around this average six-day transit. To plan for this variation, a shipper who gets an average transit time of six days actually needs to be prepared for a variation of between three and ten days, excluding periods of extraordinary disruption when that transit time can be longer. That kind of variability makes planning logistics very challenging for all the grain stakeholders.

I would also note that the cost of service inconsistency accrues directly to the shipper and ultimately to the producer.

Overall, we can safely state that the prairie GHTS has seen significant performance improvements over the last 12 years. That said, there are periods where one part of the supply chain or another experiences a regression in performance, and when that occurs it can extend for long periods, adding costs to the system and damage to Canada’s trading reputation.

Real change takes time to show itself. While we've seen improvement in a number of measures over the last four to five quarters, there remain areas of concern among stakeholders, such as vessel time and demurrage at port, the consistency of rail service, and the availability of railcars in the country, which is an area that we do not presently measure.

Now a few words about the current crop year and the performance that has been seen in the new post-single-desk era. While much of the base data we use in the monitoring program is not available to us yet, there are some indicators we can follow. Most significantly, the three major western ports have experienced higher overall volumes so far this year—about 5% in Vancouver, 16% in Prince Rupert, and about 20% in Thunder Bay. Also, two grain companies have reported to us that the current crop year has allowed them the ability to increase unit train loading to slightly over 80%, which is a 10% increase over last year.

I have a few quick words on Churchill. The total movement in 2012 is estimated at 430,000 metric tonnes. That's about 19% below the five-year average of approximately 500,000 tonnes annually. Part of the cause is their shipping season started more slowly than normal, as the industry adjusted to new logistics plans and alternatives. This delay has been an impediment for Churchill this year. It hurts when the shipping season is already so short. A positive for this year's movement to Churchill is the diversification of shippers, as four shippers used the facilities this year, exporting wheat, durum, barley, and canola.

With regard to the system's performance this year, it is too soon to say that the system is trending toward continued improvement based on the last 15 weeks, or that improvements that we have seen are a direct result of the removal of the single desk. Exceptionally good harvest conditions and a mild fall period have contributed to the ease of movement. Add to this the exceptional market conditions, high grain prices, and the drought in the U.S., and you can see more than a few reasons why this year might constitute a distorted benchmark for future comparison. Nonetheless, we are off to a good start.

Now a few words on measures programs in general. First, I would say that Quorum appreciates the role we have been given over the last eleven and a half years in providing relevant data and intelligence to government and industry. We feel this is vital for the continued improvement and competitive success of the industry. By now it is probably cliché to say this, but the Canadian grain supply chain is at a pinnacle of change. We have never seen as many significant initiatives, events, and challenges happening almost simultaneously as we see right now: the rail service review and its impending regulatory changes, the removal of the single desk pending changes to the Canada Grain Act, industry consolidation, as well as the entry of new entities into this market.

The GMP has also seen a transition from the simple provision of base measures 10 years ago for just a select few in government to a broadly used historical compendium of facts and figures. It is used extensively by the full range of stakeholders, from producers and producer groups to grain companies, railways, academics, bankers, and exporters. Those who are directly involved in the supply chain use the measures as benchmarks and to understand their competitive position in relation to others. Those on the periphery most often look to understand the performance and the competitive position of the Canadian supply chain and its various parts.

We have also noticed over the last 11 years that as industry has gradually transitioned to a more commercial environment, the demands of both government and industry have been maintained, and in some cases increased, to have available data on grain supply chain performance. In order for industry stakeholders to become more competitive in the global marketplace, it is essential that they fully understand their position in it. These are best accomplished by having easy access to data and statistics on the markets in which they operate and the relative performance of their supply chains.

An example can be seen in the U.S., where several government agencies support and operate a myriad of data and statistical programs—the USDA and its subordinate groups, such as GIPSA, the Surface Transportation Board, and the Federal Railroad Administration, to name a few—provide exceptional, current, and historically detailed statistical services, which are available through the Internet, that cover everything from market volumes and grain prices, to railway and shipping line performance, to freight rates and costs, and country and terminal utilization levels. These are used by all industry stakeholders so that they can better understand their competitive position.

This is the type of information that provides the necessary edge for competing in world markets and can make the GHTS as a whole more efficient.

In the course of our work, we had the good fortune to spend a great deal of time with a broad cross-section of the stakeholder community. What we hear from them is an emphatic desire for more frequent and timely reporting of the GMP measures. We have also heard from shippers on areas of concern that we do not currently measure. One of the prevalent items is that of access to rail capacity. The supply of railcars continues to be a subject of consternation, and one example of the areas we do not presently measure in the program.

Mr. Chairman, this concludes my formal remarks. It's a pleasure and honour to be given this opportunity to share some of what we do with you, and I look forward to any questions the members may have.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Bacon, welcome.

[Gordon Bacon, Chief Executive Officer, Pulse Canada]

Thank you, Mr. Chairman.

Good morning, Mr. Chairman. Good morning, members of the committee. I have asked the clerk to circulate a one-page diagram, which I'll make brief reference to during my presentation.

Success in the pulse industry is measured in a number of ways, but for any business the bottom line is the bottom line. Profitability is the measure by which every business can gauge its success.

At the macro level, the field crop supply chain has three elements. The crop is grown, the crop is moved, and the crop is used. So grow, move, use. Using that grow-move-use model, I want to highlight where the opportunities are to look at what can be done to make the Canadian egg supply chain more profitable. During my comments I'll address Pulse Canada's view on the role of the federal government in addressing challenges and issues and in creating the opportunities to improve the competitiveness and profitability of Canadian agriculture.

An overarching theme in grow-move-use supply chains is continual improvement. What you do now will never be good enough if you want to continue to be competitive into the future. Even in areas where we may see ourselves as the world's leader, the challenge is to identify what we can do to be even more effective.

If you go to the first page, the second slide, on the bottom of the diagram we talk a bit about efficiency at the farm level. Efficiency at the farm level is related to yield—controlling the variability of yield and optimizing efficiencies on inputs, including machinery. Because diseases and pests continually adapt, genetics and the focus on crop genetic improvement and inputs need to keep pace on a continual basis. We want to have increasingly safe products from Canadian agriculture and we want to make continual improvements to our production practices.

The question for the federal government is to outline a vision for your role in the partnership of investing in crop development. Research is a long-term investment, and while funding can be allocated in five-year blocks, the vision needs to be laid out for the next 20 years.

From a regulatory perspective, the question of the federal government is what additional things need to be done to ensure that Canadians have ongoing access to new technology. An example is the role of the PMRA in registering new crop protection products and the role of PMRA in working with other regulators around the world to ensure that what can be used in Canada will result in crops that will be accepted in other markets.

In our view, resourcing questions exist at the PMRA that need to be addressed. The positive changes of Canada's involvement in global joint reviews, changes to policy regarding registration of generic chemicals, and the collaboration undertaken by PMRA and EPA in the Regulatory Cooperation Council are all really good examples, but they have created demands at the PMRA that need to be addressed if the agency is to keep pace with the demands that we're now putting on it to be part of a modern chemical registration system.

Let's move to the third slide.

The “move” part of the equation, or what we've labelled “efficient distribution”, will mean something different to everyone. If you're a railway, you'll have metrics that speak to gross ton miles, cars processed for switching hour, and car velocity. If you're a port, you'll look at things like terminal unload capacity utilization, out-of-car time, and average days at berth. The grain monitor report that Mark is the author for reports measures such as car cycle time and transit time. If you're a shipper, the measures that matter most are car order fulfillment, car spotting performance, transit time variability, and overall responsiveness.

In other words, of what a shipper has ordered, how much did the railway allocate? Of what the railway allocated, how much did the railway deliver? When did the railway deliver it, and did they deliver it when they said they would? Then, when the shipper releases the product, did the railway get it to the destination within a predictable timeframe? And during all of these important interactions, did the railway communicate with the shippers to ensure that any changes could be accounted for down the supply chain?

All of these measures are important and reveal something about efficiency to the specific stakeholders looking at the measure. And while each stakeholder expects to see maximum efficiency within their operations, we know that in order to ensure the overall system is putting products on the right vessels, at the right time, and without delay, we can't be looking at each operation in isolation of the others.

After all, there's a customer on the other end of the supply chain that cares about one thing only: did Canadians deliver the product when they said they would get it to them, and get it there on time? If we're doing that consistently and reliably and doing it within a reasonable timeframe and at a reasonable price, Canadian exporters will be competitive in the global marketplace.

The government committed to tabling a bill that should go a long way to supporting that goal. With rail being central to movement of products in this country, establishing service-level agreements is key to ensuring that expectations and commitments between railways and their customers are defined, agreed upon, and upheld. This in turn will help ensure that we can enhance the predictability with which we make a sales commitment.

But service-level agreements are only one tool in the tool box. Across the system, supply chain stakeholders have to be vigilant in the search for ongoing improvements. Greater predictability and meaningful commitments between railways and their customers will allow for improved communication with downstream supply chain partners, and we have to encourage greater collaboration across the whole supply chain. All players will need to embrace the idea that we need to take collaboration to the next level.

Pulse Canada believes that the federal government has an important role to play, and we were pleased to hear Minister Ritz's announcement on Tuesday of this week of the new mandate for the crop logistics working group to improve the performance of the grain industry's supply chain by focusing on innovation, building industry capacity, and increasing stakeholder collaboration. Perhaps most importantly, performance measurement will be a priority. This is essential for the industry and is the key role for the Government of Canada as we plan for a future that includes an enhanced legislative environment and a greater emphasis on continuous improvement from all. We need to ensure that we're measuring the right things and that they're telling us something meaningful about the overall competitiveness of Canadian companies in the export business.

Pulse Canada is committed to working with the federal government and all stakeholders to ensure that the right tools are in place. We're committed to ensuring that the industry has the capacity to use the tools and has forums in place to continue the search for ongoing improvement. We're committed to ensuring that measurement systems become more integrated, report more frequently, and report the measures that matter most. Longer trains and more gross ton miles don't mean anything if the shippers aren't getting cars when they're committed, and record unloads at port don't mean anything if vessels continue to be backlogged at anchorage. Most certainly, if we're not fulfilling customer orders on time, none of these efforts or measures matter.

Let me be clear: the theme in “move” is that we're not there yet. We know that new solutions are being introduced, and we are anticipating some of them from the federal government. We know that a number of different groups are collecting a wide range of measures, but we simply aren't there yet.

Getting there is a process; it's not a one-shot deal. We need to continuously gather facts and evidence on performance. We need to assemble the right players and then have them analyze the evidence and look for ways of continuous improvement, as we did with the rail freight service review. We need to test those solutions in the real world, and we need to ensure that the right measures are in place so we can tell if the solutions are leading to improvement. The bottom line is that everything we do ought to create a measurable improvement in performance of the system.

The final point to make on this slide is on the issue of access to markets. The government plays the lead role in signing trade agreements and in working to find bilateral and multilateral solutions to the many issues that impact trade.

Mr. Chairman, as I'm running out of time, I'll just make one final, quick comment on the last slide, on “use”. The Canadian pulse industry is proud to be the world's largest producer and exporter of pulses. The challenge in front of us is to ensure that we have a strategy that ensures we maintain that enviable position. In addition to growing a crop that has the attributes that farmers need, we need to grow crops that have the attributes that consumers want. Attributes desired by consumers around the world include food that's healthy, nutritious, and, as consumers are increasingly interested in knowing, produced in a sustainable manner.

Mr. Chairman, there are clear examples of where the federal government needs to play a leadership role and clear examples of where government can partner with industry through programs like Growing Forward 2. It's through programs like Growing Forward 2 that we hope to take our strategic plan and work plan, partner with the government, and put it to work for the betterment of the industry.

With that, Mr. Chairman, I'll conclude my remarks.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Allen.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair. Thank you to both of you for being here today.

Mr. Hemmes, you mentioned, and I think Mr. Bacon carried on with, the theme of measuring things. How do we figure out whether we're doing as well as we need to be doing? If you don't measure it, you really don't know. It becomes anecdotal evidence, which is a wonderful story around the coffee table, but not necessarily worth anything at the end of the day when you're trying to accomplish something.

Of course, one of the things we constantly hear about—I think Mr. Bacon actually was articulating that to a degree—is railcars. You said we don't actually measure that at this particular moment in time. It's not part of the mandate that was given to you to do. Is it something you should be doing?

[Mark Hemmes]

I couldn't agree with you more. We measure the performance of the railways in how they move the cars, how they deliver it, and the consistency of service, but we do not measure the supply of railcars. It's commonly referred to as order fulfillment. I think we believe we should be measuring how many cars were ordered by customers, how many orders were cancelled by customers, how many cars were committed to by the railways, and then how well they actually performed when it came to delivering those cars, both the number of cars and the reliability with which they delivered them. For instance, did they deliver them on the day they said they would? That's what I think we should be measuring.

[Malcolm Allen, NDP, Welland, ON]

Mr. Bacon, do you want to comment further on the railcar issue? You don't get a lot of time, clearly, so let me just give you an opportunity to spend an extra couple of minutes talking about that. It's extremely important for the committee to hear the issue, and clearly your organization now has a strategic plan for how you'd like to see things move forward. Perhaps you might want to articulate some of that for us.

I'll be happy to share some of my time with you. How's that?

[Gordon Bacon]

Well, I agree with Mark's comment in terms of a key measurement element that we can add to that. As I said, once the cars are filled and ready for pickup, then we need to continue to monitor, as we are now, looking at transit time by different corridors.

Our supply chain, especially in pulse and special crops, is very complicated. It's a move that involves steamship lines, it involves container lines, it involves transloading facilities at port position. When we have problems—and I like to use the example of a comparison to air traffic. It's like trying to make connections through multiple airports. When you have a problem early on in the voyage, it has ripple effects on down the line. We want to be measuring all of these elements together. I'm looking at vessel rollovers of containers. We want to be looking at cancellation of container bookings on through.

The key theme is that the focus shouldn't be on any one particular element. The railways clearly play a key role because of the movement to port. But our focus is not about simply looking at one element; it's about looking at all of these elements integrated together. I think this is the challenge.

The question the committee is asking is about the role of the federal government. Our view is that the federal government can play a very important role in monitoring system performance so that we're continuing to focus on becoming better.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that. Ultimately it's a holistic system. You're going to get from point A to point B, wherever that end user is. Some of it is internal to the country; a lot of it is external to the country. As you're suggesting, certain modes of transportation can only take it so far, whether we're trucking it, training it, or shipping it in some form of container.

It reminds me of what Toyota did in the 1950s, when Mr. Toyota actually came to North America. He didn't go to Ford's Dearborn plant; he went to the grocery store. He witnessed the fact that when somebody takes a can of Campbell's soup off the shelf, another one materializes, and that became “just in time”. That's how he developed “just in time”. He didn't learn it from Ford in the 1950s; he learned it from the grocery store in the U.S.

There are things about how the value chain works that we can actually look to, and other chains where they actually can move things and have that throughput. At the end of the day, this is really about throughput and how we manage to do that, and it's about interconnectivity, which is complicated; it's not simple. We all need to be engaged in it. I thank you for the sense that we have a role to play as policy-makers, not in doing it, but in measuring it and then saying, “You know what, we can do better if we do it differently”, in talking to the players.

Do you see, either one of you, because I'm probably running out of time...or have I run out of time, Mr. Chair?

[The Chair, Conservative, Merv Tweed]

You have, but you can put your question.

[Malcolm Allen, NDP, Welland, ON]

Do either one of you see any immediate challenges now or down the road as we try to find a way to make this throughput actually become a reality? It's not quite there yet.

[Mark Hemmes]

I don't know whether there's enough time to start on that.

[Voices]

Oh, oh!

[Malcolm Allen, NDP, Welland, ON]

I think the chair just said my time is up, Mr. Hemmes. Throw out an idea. We don't need the actual analysis. You can send us that.

[Mark Hemmes]

Right now we go through ebbs and flows, the peaks and valleys, where we go from good performance to bad performance. One of the real tests, as we go into winter, for instance, in the grain industry is that the snow will fall, the trains will start to bog down, and there will be derailments. Come spring, we'll find landslides and all sorts of challenges for the railways. On the west coast we'll have wind; we'll have rain that will inhibit loading and will delay ships.

The one thing that we can't always measure or monitor or understand is how all of those external things have an impact on our supply chain. How can you be prepared for it, and what's the right level of preparation? I think one of our biggest challenges is to make sure there's enough surge capacity within the system so we can recover from those events quickly. Historically, that has been our biggest downfall. When you have one domino fall, as Gordon said, the whole thing can crash in, and then we go for months and months where it just never recovers. I see that as one of our weak points. We've got to be really good at what we do, because we're not the low-cost provider; we are the quality provider in what we do.

I think that's it, in general, and then you can dive into the other....

[The Chair, Conservative, Merv Tweed]

Thank you.

It's interesting that you've mentioned the climate and the way things are changing. As someone who travels a lot in the wintertime, I know that you get almost so that you start to expect the delays. It's no one cause. It's either weather or luggage or time delay. It makes it very challenging, I can see.

Mr. Lemieux.

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

Thank you very much, Mr. Chair.

I'd like to thank Gordon and Mark for being here. I'd also like to thank you for really focusing your comments on the supply chain. I thought that was really well done. We got a whole 10 minutes of different aspects of the supply chain, which is exactly what we're studying. That's much appreciated.

I wanted to ask a question about contamination of product, because in the supply chain a number of the processes you were talking about are common to all products. For example, when you look at trucks, railcars, elevators, conveyor belts, they're all moving different product. I know there's a concern between, for example, organic farmers and organic product, that it gets contaminated with non-organic product. Then, of course, there is the GM product as well, which would be separate from non-organic.

I'm wondering if you could talk to me or explain to the committee how that works, how is it that things can move through the system with, let's say, a low risk of contamination or cross-contamination, and, secondly, what you think the penalty might be on the system for whatever mechanisms you're going to tell us about. Is that a worthwhile price to pay, and is that where innovation can play a role? There are lots of questions there.

[Gordon Bacon]

Yes, that's a huge area. I'll maybe focus in on one area, again where I think the federal government can be playing a lead role in this.

We actually have the Canada Grains Council semi-annual meeting on right now, just down the street. Following that, Thursday afternoon and Friday, we have the grain industry round table. And a low-level presence policy and Canada's position, both domestically and then also taking a leadership position on the international market, is key to this.

The solution has to be that we can play a leadership role in defining reasonable and tolerable levels for all of these products. I'm going to speak specifically about low-level presence policy. It simply is not possible to guarantee zero. We have to find...respecting human safety and environmental safety in all of our priorities. As someone in the food industry, I can say it is at the top of the list. But we have to recognize that from a government regulation perspective, most of our market access problems are not related to health or safety; they're regulatory gaps, where one regulatory body, we'll say the European Union, has not moved through regulatory approvals of a product that might have already received approval in Canada or the United States.

Because we can't ensure that there is never cross-contamination, what we have to do is work very hard to make sure that the regulations are up to date—

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

I'm sorry, and this is great, but let me jump in here with a supplementary question.

I think you're right. It's almost impossible to 100% guarantee zero contamination all the time. How is that handled now? Is it very subjective, whereby someone sees a bit of cross-contamination and says we're not going to worry about it this time, but next time we might, or another country might worry about it and that's what injects uncertainty into the supply chain, the fact that there are different answers depending on the judgment of a regulatory body or an inspector, depending on a number of different factors that aren't necessarily in black and white?

[Gordon Bacon]

Mark may weigh in here. From a company's perspective, the reputation and continued operation and liabilities for problems are so enormous that there is a lot of focus put on ensuring that there isn't contamination. This is in everybody's interest along the supply chain.

Even with all of the due diligence and care that's taken, we have had examples where dust from the crop that was handled previously by equipment.... With measurement sophistication being able to detect things down to parts per billion, and if in the absence of a regulation that defines an acceptable level the tolerance level is zero, we can almost go through and find that you will find some residue, which again is not a health or a safety concern; it's a regulatory gap.

Mark, I don't know if you have comments.

[Mark Hemmes]

The specifics of LLP and everything are outside of my bailiwick, but it is something that we've studied and it's something that we've watched.

I don't have a lot to add to what Gordon had to say, but I would say that the focus has to be at the beginning of the supply chain, and currently it is. But as Gordon said, sometimes with dust in a railcar, for instance, from a previous load, you end up with a little bit of GMO. I think that's probably what happened in the flax case. You don't know. It comes into the system.

I think the zero tolerance issue is what makes it almost impossible.

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

Yes, it's untenable really.

As I say, I can think of multiple places in the supply chain where you're using common transportation containers. For example, a truck that moves product from the farm gate to the first elevator would be used again the next day at a different farm with different product, so the whole thing has to be purged. Was it 100% completely purged or was there a little bit stuck in the corner or stuck in a conveyor belt? And then the whole system gets repeated at an elevator, where you're using conveyor belts to load up bins. Then do you completely purge the bin to take in something else? What if it was not completely purged?

So there are entry points here. I'm sure the industry is well aware of it, and certainly it's good to know your view on low-level presence.

I have had a meeting with a number of different.... Well, I meet often with farm groups and farm organizations, and there was one sector that was very concerned that if low-level presence was undertaken as a policy, that in fact would sort of condone a certain level of contamination. I want to know what your comments might be on that. I don't know if you hear what they're trying to say. They're trying to say that if low-level presence becomes a policy and it becomes sort of the modus operandi, then in a sense it somewhat condones a certain level of cross-contamination. There might not be any feedback reporting mechanisms to the issuer, like the farm gate. It could be a particular elevator saying, “This was your level of cross-contamination”, because it's all within the bounds now.

I didn't agree with them, but I would like to know what your thoughts are on that aspect.

[The Chair, Conservative, Merv Tweed]

As brief as you can be, please.

[Gordon Bacon]

Safety is number one. What we are talking about are tolerance levels that are realistic. Even in something like gluten-free foods, there are tolerance levels, because you can never ensure zero.

I wouldn't look at it as condoning. It's ensuring that you have margins that are well within safety boundaries, but respecting and understanding that you can never ensure zero. The only way you ensure zero is by just not going there at all.

I think it's safety first, but levels that are reasonable based on those safety guidelines.