Agriculture Committee on April 30th, 2013

[Derek Nighbor]

This all started probably about five or six years ago. Health Canada was looking to do something in terms of improved nutritional awareness and using the per cent daily value, the nutrition facts table.

Concurrently, we both did research to understand where Canadians are at and where the market is at. We both identified, independent of each other and then we came together, that the per cent daily value in the nutrition facts table is the area where a lot of people were really tripping up. They were trying to add it to a hundred or they thought 10% meant 10% of the product contained sodium. You got into some real confusion, so we did a campaign. We pulled 34 companies together.

Actually when Anne McLellan was the health minister, that's when the nutrition facts table came in. One of the things she identified was that McDonald's restaurants in Canada put it on all their tray liners. I remember Minister McLellan saying that more people were going to be in a McDonald's than were going to be talking to her and her staff. There was a real movement to try to push the information out there. McDonald's is one of the few quick-service restaurants that actually has the nutrition facts table on their products.

We partnered with them. A number of our members, especially in the cereal category, were using the full back panel to drive people to the website. I'd be happy to share some results of the campaign with you. It was really the first of its kind, the first kind of collaboration. Health Canada had ultimate veto power on all the messaging and all that kind of stuff. It also allowed us in the food and beverage industry to use our muscle in the advertising space to get more bang for the buck.

Health Canada was looking at running a $5 million to $10 million campaign, and it might have cost Health Canada $500,000 in the first year. We were able to leverage over $1 million of member money into a $4 million buy, plus our members were using their on-pack space to promote it.

I can provide some of the metrics after. Listen, it hasn't solved all the world's problems, but it has moved us some way along the line. I think we need to do a rethink in the next year. There are already talks about bringing the manufacturers and the big retailers together to really bang it out there.

[Libby Davies, NDP, Vancouver East, BC]

Do I have a little more time, because I'm sharing with Mr. Atamanenko?

[The Chair, Conservative, Merv Tweed]

You have a minute and a half.

[Libby Davies, NDP, Vancouver East, BC]

As you talk about advertising, as you know, in Quebec there are limits, in fact a ban on advertising to children. Of course, the whole issue of soft drinks is huge in terms of the sugar content.

I'm curious to know how your association has seen the situation in Quebec. It seems to me it's very well accepted there. It's seen as very sound public policy. How has the industry responded to that? I assume it's surviving and doing okay, but I'm curious for your reaction to that situation in Quebec.

[Derek Nighbor]

I think it's more about the result. So where are childhood obesity rates in Quebec? I'll tell you that the childhood obesity rates in the Lower Mainland of British Columbia and Alberta are lower than they are in Quebec, and there is no ban on advertising in those provinces.

Let me take this head-on. There needs to be responsible marketing and advertising to kids, and FCPC has worked on this with a number of our member companies. I believe Burger King and McDonald's are engaged, and they have made commitments through the children's advertising initiative, which is run by a third-party regulator, Advertising Standards Canada.

I think there are 16 to 20 big companies that represent the majority of the market. In addition to the children's code regulatory stuff and all the checks and balances, there are requirements in pledges and commitments made by industry not to advertise certain products on Teletoon or in daycare centres or schools. This has been in effect for about five years now. That's another thing I'd be happy to share with you. We're very proud of that program. In Quebec, obesity rates for children have more than doubled in the last 30 years. As you know, this is a really complex issue. There's not one silver bullet, and the Quebec ban has not driven the results that a lot of people think they have.

[The Chair, Conservative, Merv Tweed]

I have to thank you and move to Mr. O'Toole.

[Erin O'Toole, Conservative, Durham, ON]

Thank you, Mr. Chair, it's always a pleasure to join this committee.

I've enjoyed the discussion. I learned some great numbers on economic impact in Ontario. I'm proud to say there are pockets outside of Niagara, including my riding of Durham, where we have the Ocala Winery.

I have two questions and because we're in the shorter round I'll just put them out there. First, Ms. Zimmerman, with respect to the 25% Canadian content, is the industry ready for that when it comes to meeting all the volume demands and the demands in shelf if that requirement were put in place immediately? On the flip side of that, would the industry be open to the converse of that, which is levels? So as long as the consumer has a choice, where it is clear to them that this is 10%, 25%, or 50%. Is that also a solution for the area?

My last question would be more to Derek, and it has to do with faster regulation. As I know from my time working in the consumer products industry, the backlog in natural health products was dealt with by allowing some products to proceed to market while their applications were pending. Is there anything you can share with us about other jurisdictions doing that, or splitting off safety issues so that those would take longer and other issues could get to market faster?

[Debbie Zimmerman]

First, the minimum of 25% is something we can achieve now based on our grape supply. In 2008 we had 8,000 tonnes of grapes dropped on the ground and not purchased. At that point, we had 30% in the bottle. It has actually decreased to 25%. So we can more than achieve the expectations of the industry.

I think the bigger question for us is whether we want to be 100% Canadian. I think this should be a concern for consumers. If we can't get clarity on the term “Canadian”, there's no trust. If you put “Canadian” on the bottle and it only represents 10% of what's in the bottle, there's not a lot of trust from consumers about what else is in that bottle. We think that a minimum of 25%, as the grape and wine industry here today is saying, is an important component to build a strong trust in the industry, generally, around in the term “Canadian”.

We know consumers are anxious to see labelling changes so they better understand what is in the bottle. Currently, there is no country of origin listed on the label. That is a concern. We think that the 25% gives us a minimum content and then we can increase from there.

[Hillary Dawson]

I think it's important for our industry to support the growth of this 100% market, as Debbie noted. She quoted some economic impact numbers—that $39 a bottle. The economic impact study also said that number was for blended and 100% wines combined. For 100% wines, the number goes to $89 a bottle versus $39, which is the average.

I think if we're going to invest our time and effort, it would be to grow that category. But in the meantime—and I cannot stress this enough—if we're going to use the word “Canada”, there should be some substantial content in there. If you get the privilege of putting those wines in special sections in every liquor board across this country, let's put some actual content in those wines.

[Derek Nighbor]

Switching gears to product approvals, to innovative functional foods, as we hear them called in the marketplace, the natural health products framework that was developed in Canada really kind of got out of control. As industries innovated, there was no home for a lot of these products, so they got thrown into a natural health products classification.

In the last couple of years, Health Canada has really tried to say that if it looks like a food or beverage, and if it tastes like a food or beverage, it's a food or beverage, not a natural health product. There has really been an effort to kind of split those and do some work. As MP O'Toole mentioned, there is an ability—if there's no clear safety or health risk—to go through a temporary market authorization process to put it in the market and then provide data to Health Canada concurrent to that experience. That continues today.

As far as other markets go, I think that working with the U.S., the U.K., and Australia.... Once again, when I say the U.S., this is not about harmonizing to U.S. standards, regulations, and rules in the food space. That's not what we're advocating. There are a lot of things in the U.S. that I would not want in Canada, but we have seen a movement whereby Health Canada and the Food and Drug Administration in the U.S. are meeting more regularly to compare notes, and that in itself is starting to drive efficiencies in terms of not duplicating efforts.

I don't think there's any doubt that in Health Canada there are some issues in this area in resources, in terms of just bodies to do the work. There are some allocation issues. They're probably working in some areas and spending a lot of time on little rinky-dink things that probably aren't as important as some of these bigger things. We've been working with Minister Aglukkaq's office to try to work through that, but there are always going to be budget challenges.

I think the challenge for Health Canada is in trying to keep up with industry. That's what I'm hearing from the senior officials at Health Canada, that in the next couple of years they hope to at least be almost caught up to industry. Right now, they're so far behind, and it's a game of catch-up and hammering away at the backlog that's the big challenge there.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Atamanenko.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much, Chair.

There's just one question that I have for Ms. Zimmerman.

We've had presentations by the wine industry that support tax relief for this 25% domestic content. It seemed logical that if we had tax relief for the Canadian content of blended wines, that would increase the amount of Canadian content, yet I'm hearing from you that this is not a good idea. There seems to be a conflict between what the grape growers are saying and what the wine industry is saying.

Maybe I could get your comments on it also, Ms. Dawson. I'd like you to clarify that for me, please.

[Debbie Zimmerman]

Certainly, and again, I appreciate the question.

What is important to us has been stated. I think it's probably obvious. We believe in growing the 100% Canadian domestic market. We will never get there if 25% in the bottle of a blended bottle of wine is incented with excise tax relief.

I can only liken it to what's under discussion with the federal government currently with regard to the temporary foreign worker program. In fact, the federal government is stepping up and saying, “We want Canadian jobs.” Well, Canadian jobs come from 100% Ontario wine or 100% Canadian wine, not from 25% in the bottle.

We don't see that as growing the marketplace. We see it as stalling the marketplace. If they really want to show that the bottle of wine has growth, then go to 50%. Give it 50% federal excise relief; at least incent it upwards, not backwards, because that's currently what we see.

We're not supporting 25% excise tax relief. When the federal government came out with the 100% federal excise tax relief, we felt that was such a strengthening of the industry, because it put the focus on Canadians. It put the focus on jobs.

Seventy-five per cent in a bottle is coming in as finished product. It is not supporting processing facilities in this country. It's supporting Argentina, Chile, Australia, or other countries. It is not supporting the growth of the marketplace or of the labour force in this country. For us, 25% federal excise tax relief certainly won't do anything to encourage more Ontario content in that bottle of wine.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

A quick comment, Ms. Dawson, please?

[Hillary Dawson]

Yes. We don't support that either.

First of all, we're very realistic. Resources are limited. If you're going to put $5 million or $10 million in tax relief on the table, let's also look at the opportunities that you're forgoing to support 100% Canadian wines and to do some of the things that we think will drive better returns for the country, such as helping us get launched in other markets within Canada and reinstating our funding to support our export initiatives and to grow our reputation abroad, which is what all emerging wine regions need to do.

For us, it's about choice and it's also about supporting the reasons that Debbie is speaking to. Let's support “premiumization”. Let's support 100% of the bottle. That's the right choice to make when you have to pick one or the other.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much.

[The Chair, Conservative, Merv Tweed]

Madame Raynault.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

Mr. Nighbor, according to the document entitled “The Food and Consumer Products Industry in Canada”, the industry “contributes an estimated $100 million to charitable causes, including donating over 5 million bags of groceries to food banks in Canada” a year.

My hope is that, one day, it won't be necessary to donate so many bags of groceries and that Canadians will have the jobs and money they need to feed themselves. That was just a comment in passing.

As for the regulatory barriers, you say that “Canada's current regulations create significant barriers” and that “registering a product with Health Canada, for example, takes on average five years longer than in the United States”.

Do you believe those barriers protect consumer safety?

[Derek Nighbor]

I don't think this is an issue of safety or security. If it took more time to get something approved for marketplace for safety reasons, we would support that. This is not about fast-tracking or cutting corners on safety.

One example I provided...and this is the crux of the challenge of the food and beverage industry. Looking to respond to consumer demand, looking to respond to health professionals and non-governmental organizations to introduce healthier-for-you, innovative products, our hands are tied in a lot of cases because we can't commercialize the innovation.

Unilever, for example, is a multinational company that sells margarine. They introduced a Becel fortified with plant sterols, which lowers cholesterol and improves heart health. That Becel margarine, that innovative product, was approved in the U.K. in the late nineties and in the U.S. in the late nineties. It just got approved here about two or three years ago. The fortification of margarine with a plant sterols was not approved in Canada. That's one example of many.

It's fine now, but it was all those years of delay. They basically sucked the energy of any company to invest in R and D bodies, facilities, and innovation. You know, why would I go to the Guelph Food Technology Centre and spend a ton of money there, or why would I partner with the University of Toronto or the University of Alberta to do some work, when I'm not even going to be able to use it here?

We're now in a game of catch-up. I want to give some credit for progress, because we're starting to see progress. We've had support from all parties in recognizing that. But we're still playing catch-up. We need to send the message very strongly that Canada's open for business in this space.

There's another thing that I might just add to this. I think a big challenge, which Debbie alluded to, is the plant closures. I'm concerned about a lot of the aging plants we have in Canada, the retooling that's needed, and whether or not the energy is going to be there for reinvestment in those plants. In Ontario we've already seen 50 to 60 plants on the food and beverage side close in the last five or so years. That's really alarming. We're still the number one employment sector in manufacturing in the country, despite those closures, but the closures are continuing. Some are small Canadian operations. Some are multinationals deciding to go elsewhere. We need to better understand why that's happening. We're doing some work with a couple of folks in academia over the next number of months to really try to deep-dive into that.

I was chatting with a CEO of ours, of a mid-sized processing plant. He was visited in east Toronto by a delegation from the state of Georgia, offering basically to give him anything he wanted to relocate his plant there. I don't want to endorse a race to the bottom, or say that we need to give everybody no taxes, free water, and all that kind of stuff, but we need to clearly understand what we're up against. We're competing in a very tough marketplace, and there's some aggressive recruitment stuff happening south of the border.

In terms of any additional supports—I'm not getting into a debate about corporate welfare—we need to have a real discussion on it. The provinces have a role to play here too, in supporting R and D and innovation in our plants in Canada. I think it's an important discussion that the committee and the government really should consider having.

[The Chair, Conservative, Merv Tweed]

You have 20 seconds, Madame Raynault.

[Francine Raynault, NDP, Joliette, QC]

Ms. Zimmerman, in 2007, the Cadbury Schweppes Beverages grape juice facility was closed.

What happened to all those who supplied grapes to the facility? Did they continue producing juice grapes for export to the U.S.?

[Debbie Zimmerman]

Thank you for the question.

We were able to seek a program from the provincial government to pull out all of the juice grapes. Unfortunately, the only processing plants today for these types of products are in the United States or in British Columbia—SunRype. You can't possibly ship fresh fruit across the country to be processed. We're down to about 1,500 tonnes, and it's continuing to decrease.

It's very sad.

[The Chair, Conservative, Merv Tweed]

Thank you.

With that, I'll thank our guests for being here today. We appreciate your comments and your time. I'm sure you can look forward to seeing some of your suggestions in a future report.

I'll just refer to the committee. I'm asking that the committee approve a supplementary budget increase of $8,900 in relation to this study, and I would ask for a motion to do so.

Mr. Payne so moves.

(Motion agreed to)

Thank you very much everyone.

The meeting is adjourned.