AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 27, 1997

• 0902

[English]

The Chairman: Before we begin our review of the Canadian Food Inspection Agency, pursuant to Standing Order 108(2), I want to say that a week from Tuesday, December 9, 1997, the minister will be a witness. I said the estimates will be reported by then, but it will be a general interview or questioning of the minister on what he's doing, where he wants to go with the department, and so on. It'll be at an unusual hour, between 12 o'clock and 1.30 p.m. on December 9, but that's the only time we could get him.

The other thing is that next Tuesday morning, at 9 o'clock, we want to have an in camera meeting with the whole committee to discuss how we will proceed with our look into international trade, leading up to the next round of world trade negotiations.

This morning I'd like to welcome Dr. Olson, along with Mr. Ron Doering, the executive vice-president.

You have other people with you, Dr. Olson. If you want to introduce them, we will then take your opening remarks and go to questions and answers.

Dr. Art Olson (President, Canadian Food Inspection Agency): Thank you very much for the invitation, Mr. Chairman. We—and Mr. Doering in particular—spent a lot of time with this committee last spring as the legislation that created the agency was put through the House. I thank you very much for an opportunity to come back to give you a bit of a snapshot of where we are, and a picture of the kinds of activities we have under way.

With me is Dr. André Gravel, who is vice-president of programs with the Canadian Food Inspection Agency; and Bob Ray, who is the vice-president of public and regulatory affairs with the agency.

The Chairman: Nothing to do with the New Democratic Party, though.

Dr. Art Olson: No, he's the real Bob Ray. There are some names that make you want to talk to your parents, but it's too late—right, Bob?

• 0905

Some hon. members: Oh, oh!

Dr. Art Olson: I have a short presentation, Mr. Chairman. We've provided copies of that to you as well as a briefing package.

In my presentation today, I want to cover a number of topics. First, I want to remind all of us about how and why the agency was created. I then want to do a brief summary of the programs that the agency delivers and the activities that are under way to continue to improve the agency's effectiveness and efficiency.

Canada's food, animal and plant health inspection system is one of the best in the world. However, it operates in an extremely complex jurisdictional context involving federal, provincial, territorial and municipal authorities.

At the federal level, responsibility for food safety and inspection has historically been spread across at least four departments: Agriculture and Agri-Food Canada, Health Canada, Industry Canada and the Department of Fisheries and Oceans. This shared responsibility presents a problem of co-ordination within Canada and with our trading partners. Given the overlap on legislation, there was of course some overlap in duplication of activities.

More effective delivery of food inspection services within the federal government is a long-standing issue and was raised by a variety of sources over the past decades. While attempts were made to resolve the matter, the problem of bringing together health and safety and trade and commerce powers of government made solutions difficult.

The agency's creation stems from a different approach, one of accepting that the responsibility for the setting of standards for human health and safety clearly belongs in Health Canada's hands and that the responsibility for all food inspection activities could rest with an agency.

As I mentioned, the need for more effective delivery of food inspection services within the federal government is a long-standing issue that was examined in the 1994 program review and the Auditor General's report. The need to resolve the effectiveness issue was identified in the 1995 budget and began a consultative process to determine the best option for reorganizing federal food inspection.

Based on the feedback from extensive consultations, the Government of Canada opted for the creation of a single food inspection agency. The plan to consolidate all federally mandated food inspection programs and animal and plant health activities in a single agency that would report to the Minister of Agriculture and Agri-Food was announced in the 1996 budget speech.

This committee reviewed the draft legislation, made a number of amendments and recommended approval. The enabling legislation for the creation of the agency was given royal assent in March 1997.

When the agency began operations on April 1 of this year, it took responsibility for all federal food inspection activities, including food emergencies and recalls. The agency is responsible for the administration of twelve inspection-related acts and their regulations. We've prepared an information package, which we will be leaving with you, that outlines all of the acts administered by the agency. If there are any questions about the agency's legislative and regulatory responsibilities, we'll be pleased to respond to those at the conclusion of the presentation.

The Ministry of Health remains responsible for establishing policies and standards for the safety and nutritional quality of food sold in Canada. The Ministry of Health is also responsible for assessing the effectiveness of the agency's approach to food safety.

Our ongoing consultations in preparing the agency's first corporate business plan have resulted in a proposed mission statement of “safe food, market access and consumer protection”, six words that define the kind of mission we see for the agency.

To meet the challenge of the mission statement the Canadian Food Inspection Agency has two basic programs: inspection and quarantine.

First, let me briefly cover food inspection. The agency is responsible for monitoring the safety and, in some cases, the quality of food products to verify compliance from slaughter or harvest right through to the retail level. The program also issues emergency food recalls, investigates food-borne illnesses and manages risk in food-related incidents.

• 0910

The trend in food inspection and, for that matter, in all of our inspection is moving away from hands-on inspection to integrated inspection systems primarily based on the hazard analysis and critical control point, or HACCP, system.

HACCP is an internationally recognized system that examines critical control points along the production process to prevent potential problems before they occur. It also deals with the real risks of microbial contamination.

The quarantine program of the agency plays an important part in market access and the safety of agricultural inputs. The animal and plant health programs prevent the introduction of economically significant diseases and pests that could impair our ability to trade. The animal and plant health programs facilitate the export of an estimated $32 billion of trade in food, fish, animals, plants and their products, including lumber.

We have an excellent laboratory supporting the delivery of inspection programs. Laboratories will have a key role in the agency as our inspection programs become increasingly science based to deal with microbiological risks. Our commitment to science will continue as we further assess the laboratory capabilities created by bringing labs and three departments together at the agency.

If any of the committee members would like more detailed information on the agency's programs and activities, we will be addressing these during the question time.

As I already noted, the Canadian Food Inspection Agency will be changing inspection programs to be more science and risk based, so we are better equipped to deal with pathogens like salmonella and E. coli. The creation of the integrated inspection system for the agency is an important step and will position the agency to continue to work on the Canadian food inspection system.

Just as a comment, when you're selecting acronyms for programs and systems, a word to the wise for all of us is not to pick acronyms that look alike. We've had a really difficult job explaining the difference between the Canadian food inspection system and what became the name of the agency, the Canadian Food Inspection Agency. I can spend an amount of time describing how names get created, but this one has not necessarily been useful some days because of that confusion.

We're trying to put the system together with nearly 30 different government departments and agencies across the country. These departments and agencies administer 80 pieces of legislation, and a food inspection regulation and quarantine security is rather critical for Canada.

This Canadian food inspection system implementation working group recently accepted the Canadian dairy code, and we will be working with the federal and provincial governments on implementation. Progress is also being made on the food retail and food services code and the meat and poultry code.

We are also looking at our legislative base as a logical next step in our development, and hope to seek your advice this coming year. The agency is in the process of developing its first corporate business plan, which will outline the strategic direction of the agency. We intend to continue to consult with consumers, clients and the committee about the implementation of the business plan, including questions of our resources and cost-sharing of program delivery.

In conclusion, with the Canadian Food Inspection Agency, the many strengths of Canada's world-class federal food and fish inspection and animal/plant quarantine system are retained. But there will be a more integrated and uniform approach to the delivery of these services. This makes it easier for consumers, industry and the provinces to deal with the federal government on food inspection matters.

The agency maintains and enhances Canada's excellent reputation for food safety and quality, giving Canadian exports a valuable competitive edge in the international marketplace.

Again, thank you very much for the opportunity to be here before you. My officials and I would be pleased to answer any questions you may have.

The Chairman: Thank you Dr. Olson. Is the Canadian dairy code just a set of standards for dairy products?

Dr. Art Olson: One of the earlier meetings of the committee, when we first put the concept of the Canadian food inspection system forward, involved a discussion of some of the idiosyncrasies of the food inspection system that result from having 30 federal and provincial jurisdictions and 80 pieces of legislation. The example was used that there are 11 different definitions of a one-litre milk container in Canada. What the dairy code is designed to do is to provide a framework for consistency right across the country.

• 0915

Ron Doering has been very much involved with the federal-provincial process. If I may, I'd like to ask him to elaborate.

Mr. Ron Doering (Executive Vice-President, Canadian Food Inspection Agency): Mr. McGuire, the actual impetus for the change came from the fact that a Quebec producer had their UHT milk exports to Puerto Rico stopped on the basis they couldn't prove that this was some kind of national standard that met the American standard. So this led to the provinces really taking a lead to say we should have a single standard both for processing and production of dairy products, fluid milk.

The technical committee that existed at that time, the national liaison committee, sat down and started working on how we could have a single set of regulations for both production and processing of dairy products. That network was gradually assumed by the Canadian food inspection system, the federal-provincial-municipal initiative, and after nearly four years of work they were able to come up with a consensus position at the technical level, the officials level, for what these standards and regulations could be.

We don't make laws; we simply work at harmonization. It's now up to the individual jurisdictions to adopt those regulations and guidelines. We hope they'll do that over the next little while. Most provinces now have a full consultation process under way to complete this. Manitoba is the first out. They actually have the draft bill proceedings, as I understand. Quebec is consulting, as are a variety of others. We hope by the spring we'll actually have a single national dairy standard and regulations for all of Canada. It would be quite an achievement. There are very few precedents for that.

The Chairman: Thank you very much. We'll go now to questions.

Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): I'd like to thank the officials for appearing before the committee this morning.

We've heard increasing concern over the past couple of months about the safety of the food, the fact that in the view of some, we're moving towards the fox being in charge of the hen house type of situation.

When the bill to enact the CFIA came before the House, there was talk that by eliminating the overlap there would be savings of some $44 million projected to the taxpayer, starting in 1998-99. First of all, I wonder, if we're on track for those savings, do you see that reduction in overlap?

Secondly, do you feel that you have adequate inspection and penalties in place and are starting to enforce them? We've had, as I say, some increasing concerns about some truckers, for example, who might be transporting a mixed load, with food and some hazardous goods. What are you doing to address those types of concerns that we increasingly hear from the general public?

Dr. Art Olson: If I may, I think you really have two questions: the first one has to deal with the issue of savings; the second one deals with taking those savings into account and whether I can make you comfortable with the kind of service that's being provided.

We live in an interesting time, where the quality of communications tools available to us is sometimes overwhelming. We also live in an environment where there's a tremendous amount of movement of people and product and resources around the world.

We've seen in the last year or so some of the consequences of that in terms of a variety of diseases or microbial problems that have cropped up in various countries. We've seen product moving from one country to another with microbial loads that have caused health problems.

We've seen some pretty significant reactions with, unfortunately, I guess one would say, the potential to move an awful lot of press. We've seen that particularly in the United States, but it has happened around the world.

• 0920

About a year ago, Mr. Chairman, we briefed this committee on the situation that's going on in the United Kingdom and the European Union on bovine spongiform encephalopathy, mad cow disease. Add to that the problem they've had in Europe with salmonella enteritidis, the recent problem they've had with hamburger disease. That increasing pressure obviously is one that we have to live with and manage.

We have a good system in Canada. We have a complex system, though, that involves many different agencies. The quality of co-ordination becomes a key factor. It has taken some number of years to put together the dairy code that Mr. Doering was talking about. There is a strong sense of the need to co-operate. So I'm comfortable in an overall sense that we're going in the right direction.

We were asked by the provinces to get the federal act together. The federal act, as it was defined, ensured that the health and safety standards were appropriately set and that the inspection function was clearly mandated and directed.

There have been significant impacts of the decisions that you in fact supported. I'll give you an example of the mandatory recall authority of the agency. I can get into the statistics on recall. We've been very well positioned compared to many of our trading partners in terms of the unfortunate circumstances around a recall.

Mr. Jay Hill: With all due respect, we don't have a lot of time. I only have about seven minutes, in this first round at least, to question you.

Specifically, can you support the position of a year ago that you're on track to save the taxpayers some $44 million annually?

Dr. Art Olson: The $44 million has already been saved. The fiscal framework has been booked. We're now trying to determine how we answer your second question, which is how we can maintain the level of services and programs that are necessary to carry out the food safety obligation.

We set food safety as our first priority, but we also have, as I indicated in the initial statement, a responsibility for market access and consumer protection. Consumer protection, writ large, includes the economic fraud aspects.

We've been going through a consultation, a framework document—we included a reference to this in the material we provided you—over the last number of months. We think in fact that we have an effective way of dealing with the amendments to the fiscal framework and the obligation we have in terms of food safety, market access, and consumer protection.

Mr. Jay Hill: I'd like to move to the issue of the record-keeping of feed for ruminants. I've had a considerable number of complaints come in from customers about the bureaucratic red tape, if you will, involved with that now. They see a lack of notice in complying with these regulations.

My understanding is that the notification was primarily left to the Canadian Feed Industry Association. This is the information I've been given. I would ask if you would agree with it or not. While the regulations came into place on August 4, there wasn't actually a press release sent out by the CFIA until September 5. There seemed to be some heavy onus placed on the Canadian Feed Industry Association to notify their customers.

I guess the complaints I've heard centre on two things. One is that the customers didn't know about it. So they were a bit surprised when they came to buy a bag of feed and found out that they had to give a certain degree of information for purchasing a bag of feed. Second, a lot of the customers find the regulations to be quite intrusive, at least in their view.

I wonder if you would agree that CFIA perhaps relied a bit heavily on the feed manufacturers association to get the word out to the people so the proper notification was given. What was done about some of the smaller manufacturers who weren't necessarily members of the Canadian Feed Industry Association so that their customers as well would have been notified?

The Chairman: We'll take your answer to that, Dr. Olson, then we'll go to Mr. Chrétien.

• 0925

Dr. Art Olson: There are two sets of regulations that affect the feed industry. One set has already gone through, which deals with the feeding of mammalian tissue back into the system. These are the regulations that were put in place to avoid a repetition of the problem that has happened in the United Kingdom. Those are in place and operative, and they're in tune with our trading partners. They were put in place last summer.

We have a second set of regulations, done in consultation with the feed industry, that deal with the use of antibiotics in feedstuffs. As you can appreciate, with the concern about antibiotic resistance being generated by misuse of antibiotics, either in the hospital or in feed products that are entering the food chain, there is a concern in that regard.

Some weeks ago, for instance, we had a problem with campylobacter, which apparently was triggered in the United States by the use of fluoroquinolone; I believe that is the antibiotic series. There is a strong concern about the use of those in the feed system. In Canada, that product is not approved for general use; it's only approved under veterinary approval. We'd like to know where it's being used, because if in fact there is a human health problem, we want to be able to trace back and determine the source of the problem. That's the reason for the regulations.

But my understanding—and Dr. Gravel can correct me—is that those regulations are still under discussion with the industry.

The broader issue is consultation. We consult as broadly as possible. The Canadian Feed Industry Association basically has taken the position that they represent the feed industry. We have taken it beyond that, through our regional offices, to ensure that the smaller manufacturers are also part of that discussion.

The Chairman: Okay.

Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): Mr. Olson, our time is very limited, so I won't waste much of it congratulating you on your appointment as head of the Canadian Food Inspection Agency. You have earned an excellent reputation, and I hope your work with the Agency will do nothing to change that.

I have four questions, which I will put as succinctly as possible. I would urge you to answer them as simply as possible but also as straightforwardly as possible.

From 1995 to 1997, and especially in the past few months, imports of butter oil, mainly from New Zealand, have shot up at a dizzying rate. Can you guarantee that the Agency is inspecting all containers of butter oil and that we are not ingesting rBST when we eat ice cream?

[English]

Dr. Art Olson: I thank you for your confidence. I always operate in an honesty mode. This is too complex an area to get into any prevarication, and it's very science-based. In fact, it becomes rather critical that the truth be on the table.

One of the complications with rBST, or bovine somatotrophin, is that there in fact is no test for its presence. It becomes very difficult to carry out an inspection for a product that you're not able to detect as such, or to distinguish in fact between the rBST and the non-genetically modified version thereof.

In terms of butter oil, perhaps Dr. Gravel might wish to comment, but we would carry out our normal sampling process with regard to products coming into the country.

[Translation]

Mr. Jean-Guy Chrétien: So you cannot assure the Canadian people that they are eating ice cream that is free of rBST. I understand.

I listened attentively to your presentation just now. You said that the Agency is world-class and that Canada's inspection system is the best in the world. If we're the best in the world, there must be countries where they're eating some pretty bad stuff, since at this time you are unable to guarantee that there is no rBST in Unilever's ice cream, even though rBST is banned here. This raises some serious questions. That was my first question, and I thank you for answering it so promptly.

• 0930

Contrary to one of the premises of the legislation creating the Canadian Food Inspection Agency, inspection fees in slaughter houses have been increased, which has led to a significant rise in the exporting of live pigs. How do you explain this increase in inspection fees, which were supposed to go down? If we export live pigs, there is no value added here—instead it happens next door.

[English]

Dr. Art Olson: To comment on your statement regarding rBST, I also can't guarantee that milk produced in Canada does not contain rBST, because there in fact is no test. It's difficult to make the statement on imported product when you can't even make it within the country. We are exploring the potential for a test, because it's a rather critical factor with this particular product.

In terms of inspection fees, maybe I can give a very quick history. Some of you will recall a 1991 report called “Regulatory Review”, which was carried out on all the regulations we have within our organization. The group that carried out the challenge responsibility—which was made up of representatives from the Canadian Cattlemen's Association, the Canadian Federation of Agriculture, provinces, the University of Guelph, farmers, business consultants, l'Association des consommateurs du Québec, and the grain industry—recommended that we—

[Translation]

Mr. Jean-Guy Chrétien: Mr. Olson, since I only have seven minutes, I would prefer that we stick to the question of exporting live pigs. You are an experienced man and can talk for 20 minutes, but my time is running out. What remedy are you proposing to apply so that the exporting of live pigs is curtailed so that value gets added here and not in some other country?

[English]

Dr. Art Olson: That was the point I was trying to make. Industry itself recommended that the beneficiary of the services we provide pay for those services. We're carrying out that policy, and it was confirmed again in the 1995 budget. That is the policy of the Government of Canada.

We've been negotiating with those groups over the last number of years. We're in the third round, if I'm correct, Bob, on that negotiation of the level of fees levied against a particular service we provide. What we're dealing with here is the reality that a beneficiary should pay for some portion of the service. It generates a means of dealing with the free good problem that many of our government services face.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Olson, they haven't given you a Mission Impossible to perform, although it may be an extremely difficult one. That's why I said a little earlier that you have an excellent reputation and I hoped you would keep it.

Your Agency was preparing a pilot project in Joliette. Since the Agency came into being on April 1, I have not heard one word of praise for it. Should we conclude that silence gives consent? I have heard a number of criticisms of it.

I would like to focus on the Flamingo slaughterhouse in Joliette, where two inspectors were given the job of inspecting 8,500 chickens coming off the line every hour. They couldn't see the viscera, the slaughtering process, the colour of the birds. They didn't see the birds at all until they had been washed at high pressure and the entrails removed by machine. I'm sure you've visited this kind of slaughterhouse. If you inspect 8,500 chickens an hour, imagine what that means per second. It's not humanly possible. If that's the kind of inspection system that is proposed for the whole country, your Agency is heading for a monumental failure. Tell me in a few seconds where we are now with your Joliette project. Is it still going? Has it been shelved? Do you intend to try again with a similar project?

• 0935

[English]

The Chairman: After Mr. Olson we'll go to Mr. Steckle.

Dr. Art Olson: I have three points. First, the quality of chicken produced in this country is so good that we very seldom see any physical defects. The real problem in terms of chicken produced in this country, as it is in many other countries, is the microbial contamination.

I don't know if any of us has good enough eyesight to be able to see microbes on the line. What we're doing is focusing our energy on the hazard analysis and critical control point methodology to ensure that the temperatures and the microbial levels are appropriate. In so doing, both the Joliette pilot project and another pilot project are part of how we get to the answer.

This in part goes back to a question raised earlier in terms of balancing off the resource limitations we have with the obligation we have from a food safety point of view. These pilot projects are being done for that purpose.

Dr. Gravel, perhaps you can comment briefly.

[Translation]

Mr. André Gravel (Acting Vice-President of Programs, Canadian Food Inspection Agency): I'll explain some of the details of the Joliette pilot project and another project in another plant.

As Mr. Olson mentioned, the quality of poultry in Canada has improved greatly in recent years, so that we now have a product that is virtually free of defects and diseases. What has not changed much is contamination by bacteria like salmonella and campylobacter.

The pilot project we set up in the other plant I mentioned clearly proved that our new inspection system has resulted in a reduction of rates of contamination by salmonella and campylobacter. From the public health standpoint, that pilot project indicates that we heading in the right direction. You have to bear in mind that in the 1970s—

Mr. Jean-Guy Chrétien: Is the Joliette pilot project still functioning?

Mr. André Gravel: The Joliette pilot project is in the process of being modified to reflect the inspectors' observations.

I just wanted to point out that in the United States, in the 1970s, the National Academy of Sciences was already recommending to the American Department of Agriculture that it modify the inspection system to concentrate more on bacteria reduction than on detection of problems of quality.

Mr. Jean-Guy Chrétien: But 8,500 chickens an hour—

[English]

The Chairman: Mr. Steckle.

Mr. Paul Steckle (Huron—Bruce, Lib.): Good morning, gentlemen. I want to direct my questioning along different lines for a moment.

I think you'd find consensus around this table that the safe food and the inspection of food products into and out of Canada have given us a tremendous reputation throughout the world in terms of our exports. I would like you to comment on the view I hold that those who benefit...and I think you yourself, Dr. Olson, made the comment this morning that the beneficiaries of a program ought to be in some way contributing to the cost of that program.

Given that all of us would agree that the benefits of safe food benefit all of us, would it in your opinion be in the interests of all Canadians to share in the cost?

Now, I was away from this committee for a number of months, so I missed some of the discussions that went on in the last year and a half. But would it be fair to say that some of the cost recovery is coming out of the pockets of the producers rather than there being a fair distribution of the cost of that inspection generally taken care of by the general public?

The total cost comes under Health. Is that correct, or is this appropriated from the various other departments, as it was previously? How is this department funded?

What I'm getting at is whether Canadians generally, all of us, are paying for this cost rather than having it tagged back on the backs of the producers who, in many cases, have no way of recovering that cost?

Dr. Art Olson: We provide a very wide range of services. A portion of those deal with health, but a potion of those also deal with market access.

If I could use the example of a meat slaughter plant, my estimate is that about 30% of the activities we carry out in that plant have to do with actual health and safety. Almost everything else in that plant deals with trade-related certification to satisfy our trading partners' needs.

Obviously the product must be safe or we can't trade in it, but that 30% of our time, of our expenditures, is a relatively small portion of the total cost. The certification and all of the other processes that go on are a more important and far larger part of the cost.

• 0940

We have focused our cost recovery on the other 70%. In the case of meat slaughter, it varies from plant to plant, obviously depending on where their market is and on the type of product. My understanding is that the range of fees is in the order of 15% to about 25%, which is comparable with the kinds of costs that are levied by the United States, but they're considerably less than the costs levied by Australia or New Zealand, for instance. So we've tried to take that into account in the process.

By putting a fee against the service, what it has done—and it's probably the most complex part of the process—for the person impacted by the regulation is, for the first time, make them pay attention to the regulation. They look at their potential for efficiencies, how they can reduce their costs. They look at the actual regulation and ask why we are doing that.

That whole process of challenge, of dealing with free good, has been very critical. It has also meant that over the last three and a half years we've had 500 and some meetings with various industry groups as we've walked through this process. And as I mentioned earlier, Mr. Chairman, we're now in the third round of those discussions.

The other way to look at this is to look at our overall revenue base. The taxpayer continues to pay some 80% of the total cost, so a very large portion of that cost for health and safety, for market access, for trade certifications, for consumer protection and that kind of stuff, is still carried by the Canadian taxpayer.

Mr. Paul Steckle: So in your estimation, then, there's a fair appropriation of costs distributed to those people who would benefit from them.

Dr. Art Olson: Quite frankly, it would be much easier to manage this organization if we didn't have to bring this pressure of cost recovery against our services. On the other hand, we wouldn't see any evolution whatsoever on the industry's part or on our part if the taxpayer continued to pay the entire bill. So it is an effective policy tool in that regard, as well.

Mr. Paul Steckle: Under what ministry does this budget fall?

Dr. Art Olson: The budget is under the portfolio of the Department of Agriculture and Agri-Food. We are a separate budget line under that portfolio.

Mr. Paul Steckle: I guess that was my point. It's impacting on the dollars that are expended at Agriculture, so it's directly affecting the agricultural budget rather than—

Dr. Art Olson: Excuse me for interrupting, but it was in fact part of the budget before moneys from Health Canada and Fisheries and Oceans were transferred to that budget.

Mr. Paul Steckle: But were dollars flowed with that transfer? I think we're either missing each other, or we're intentionally missing each either, but I'm not sure. I'm not accusing anyone here, but I think it's fair to say that the agriculture sector always feels it's paying just a little more than its share. We want to pay our share, but if agriculture is going for cost recovery and we're getting cost recovery from the sources that are receiving the benefit of inspection, that's one thing. But if Agriculture is also paying the other, that's also coming out of Agriculture's budget, which could be expended in R and D and in other ways. So I'm asking for further clarification on that.

My second question would then be somewhat different. Our friend from Quebec has indicated that he was concerned about the value-added going out of the country. I'm more concerned about live hogs coming into Canada from states in the U.S. that are now known to have pseudorabies. How carefully are we monitoring that situation, and what assurances...? I realize we've done a good job, but the Canadian Swine Council has asked for live hogs to be brought in, so it's not as though government is making the intervention. It's as though a farm organization or a farmer-related organization has made that direct intervention. I'm asking where we are on that question, because those questions, I'm sure, have arisen in all of our constituencies. I'd like a further clarification on that.

Dr. Art Olson: The agency's budget was made up really of four blocks of money. The biggest block of money was moneys that were directed to the food production and inspection branch of Agriculture and Agri-Food Canada. Those dollars, plus an overhead sort of figure, were transferred to the agency. Similarly, a block of dollars that dealt with the inspection carried out by Health Canada and by the Department of Fisheries and Oceans was transferred into the books of the agency. It's a separate line of budget. On top of that, there were some dollars added to help us to get through the transition period during this first year. And a small number of dollars were contributed by the Treasury Board to give us the ability to get up and running.

• 0945

That makes up the budget. It happens to be a separate budget line within the portfolio the Minister of Agriculture and Agri-Food is responsible for. It's not part of the department's budget, it's part of the portfolio's budget.

If you recall, this legislation originally came to this committee with the minister to be named by the governor in council. This committee amended that legislation to have the agency report to the Minister of Agriculture and Agri-Food. I report directly to the Minister of Agriculture and Agri-Food.

In terms of live hogs, the regulation is not through. We can get into more detail if you wish. We have a consultation next week with the industry. There continue to be concerns. Some members of the industry also have concerns in terms of their various relationships around the countervail actions. We're going to go through that discussion again this coming week.

The Chairman: We'll have to go now to Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chairman. Welcome, gentlemen.

Your organization has only been in existence for a year and a half and yet user fees have already gone up substantially. Was it always planned that there would be a second round of increases, or was this something that caught you unaware?

Dr. Art Olson: We've been in existence since April 1 of this year, so that's eight months. In terms of user fees, a commitment was given that we would not bring into place any new user fees until after 2000.

The user fees that are coming into place right with the regulations that are going through the system or just coming into authority are ones that had already been negotiated and planned per se. They are part of a series of regulations that were outlined in our previous presentations before this committee.

Mr. Dick Proctor: The CFA is complaining that farmers can't afford them. There is a letter on file to the Minister of Agriculture. They say these fees are going to make them unable to compete with farms in the U.S. and elsewhere.

The meat processors are unhappy with them too. They've estimated the changes announced in the Canada Gazette in September will cost the red meat sector an additional $2.5 million per year. We certainly heard that last night when we had a presentation from the Canadian Pork Council. My friend Mr. Chrétien was referring to shipping live hogs.

How do you justify these increases, especially in your mission statement about market access, when farmers say they can't afford them and the industry says they're a hardship?

Dr. Art Olson: We've always taken the position on cost recovery that if you can provide information indicating there is competitive hurt, we're prepared to look at it. That has been an ongoing request to the industry.

Obviously we've had a pretty extensive consultation with players that are part of the industry. It goes far beyond just agricultural producers and includes the lumber industry and a number of other industries, such as the fish industry, in terms of coming to our fee structure.

Cost recovery is one of the issues people don't like. It has a policy value. I think you'll want to look at our total cost recovery. Our goal is $63 million; that's what we were asked to achieve against the value of the industry. We're talking about a contribution from the Government of Canada of some $130 million to the meat industry in terms of services. In return, the contribution from industry toward the cost of those services is less than $20 million.

Mr. Dick Proctor: It seems to me that when the agency was established there was a commitment to create an advisory group. In your statement this morning there have been several references to consulting with everybody, but I didn't hear any mention of an advisory group. Where are we on that one?

Dr. Art Olson: The legislation sets up a ministerial advisory board of 12 members and generally indicates the kinds of industries or areas those members should come from. My understanding is that the minister is going through that process. As you can appreciate, with the number of different interests in Canada, we deal with about 350 different lobby organizations, and there are somewhere around 3,500 to 4,000 different registered establishments. A number of different interests would like to see themselves represented on that board, and I am sure the interest they're showing to the minister is pretty daunting.

• 0950

I'm anticipating that will be in place in the near future, and it will be a very effective and useful tool in terms of ensuring that we're getting policy direction and advice.

The Chairman: Mr. Keddy, welcome to the committee.

Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman. I'm replacing Rick Borotsik this morning, in case anyone wonders what I'm doing here. Rick gave me a bunch of questions, and I'm not going to ask any of them.

Some hon. members: Oh, oh!

Mr. Gerald Keddy: I am asking my own.

The Chairman: You only have five minutes.

Mr. Gerald Keddy: Don't waste your time, right?

I have several questions, and if I may, I would like to make a comment first. I am one of those people among the great public of Canada who have lived within these guidelines for a number of years—the food inspection guidelines, the Agriculture Canada guidelines and the plant inspection guidelines. Many times we have felt left out of the process. I realize you guys have done your consulting work, but we still have felt left out of the process. I would like to bring to the attention of this committee—and if I waste all my time and don't get my questions in, so be it—the fact that there is a very real issue at stake here.

What industry has been saying for a long time is that we have a service here that has provided for safety and protection for Canada's indigenous plants from foreign pests and for our food products from contamination. It also protects foreign countries from our pests and from contamination in our food products. Is this a government responsibility or is this a producer responsibility? Should we be looking at downloading $44 million worth of costs to the consumer? It will come back to you guys in the end.

I'll give you a little example. I'm a Christmas tree farmer. And a lot of guys ask what that has to do with any inspections, but there are some serious inspections. It's an industry that is worth around $100 million in Canada. Most of the exports go to the U.S. We have seen inspection fees increase from $1,200 to $12,000. That's a dramatic increase in some of our exports. A lot of industries haven't increased that much, but some have, and obviously they're the major players.

For a little farm-gate operation, as a sideline I happen to raise a few lambs. I butcher about 75 to 90 lambs a year. My inspection fees for those lambs have increased from $6 a few years ago to $8 to $10. That's what I pay the butcher to have them butchered. The inspection fee is not that much, but he is incorporating it into my cost. I have the option to sell uninspected farm-gate lamb, which I can do legally in Canada, and which any farmer in Nova Scotia can do legally. So are we promoting inspection here or are we promoting something different altogether?

There is a responsibility here for safety, and I think the responsibility comes back to the Government of Canada, not necessarily to the producer. We're not talking big costs. Cutting $44 million in government costs for safety...this is not a large amount of money.

The other thing I want to talk about is the consumer. The price of that lamb has gone from $2.50 in the last three years to $3.25. It goes back to the consumer. It's not going to go anywhere else.

I have a specific case for you—and you can comment on anything I've mentioned here—which deals with an agricultural product in Nova Scotia, high-bush blueberries. High-bush blueberries do not require inspection at the border. They never have required inspection at the border. They require inspection, but they transmit no pest, so the high-bush blueberry producers, of which there are only a couple in Nova Scotia because it is a fledgling industry...we're trying to support small business. The original fee for high-bush blueberry producers was $750. We have lobbied and had that lowered to $175.

• 0955

But why should there be any fee at all? All you have to do is change the wording of the regulations to simply say that for a commodity requiring inspection, a licence fee would be required. If there's no inspection required, why should they be paying a $175 licence fee?

There is room to accommodate these guys. You have already recognized that there has been a problem, because you've lowered the original fee from $750 to $175. Can we go the rest of the distance here?

Dr. Art Olson: Perhaps Dr. Gravel has the information. We have a problem with blueberry maggot in the maritimes. I presume you're referring only to the low bush?

Mr. Gerald Keddy: Yes, only to low-bush wild blueberries.

Dr. Art Olson: Okay. What I don't know, in response to your question, is what certification obligations are placed against the product—for instance, if it moves into the United States.

Mr. Gerald Keddy: It does.

Dr. Art Olson: Okay. I'll be prepared to go back and look at that. It's obvious from the modification that Bob's people have already done so.

With regard to the lambs, is that a provincial plant or a federal plant?

Mr. Gerald Keddy: It's a provincial plant.

Dr. Art Olson: Okay, because that's outside of our jurisdiction, in Nova Scotia. That's carried out by the province, so you might want to direct that question to them.

Mr. Gerald Keddy: Yes, but the issue is, it's a bigger problem. The question was asked: where would the costs end up? They will end up in the lap of the producer or the consumer.

The Chairman: Do you want to elaborate? No?

We'll go then to Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

The CFIA's mission and objectives were to provide inspection services and protect consumers by promoting safe and wholesome food supply and accurate product information. I think our farm producers and processors are certainly maintaining that.

As Mr. Hill said in the outline of his statement, though, several people have brought it to our attention that these products are number one quality when they enter transportation trucks, trailers, or whatever, but when they get to border crossings, it appears that there is more than just food on these trucks. What does the CFIA do to block those kinds of situations? They do happen. Trucks that go through with holes in the bottom of the trailers—what happens then? The product is good, but the transportation....

Dr. Art Olson: I think you're probably talking about the Windsor port?

Mrs. Rose-Marie Ur: Yes.

Dr. Art Olson: My understanding is that some 3,500 trucks a day come through that port. We deal with about 3% of them. A very large portion of the product coming through has either been pre-inspected by the United States, and is equivalent to Canadian product, or has been pre-inspected by another country, and so in fact moves straight to destination, where it's inspected.

There is a product that moves in in individual truckloads and sometimes mixed loads. In the case you're talking about, some number of years ago somebody threw a case of photocopy fluid, I think it was, in the back of a truck. One of our inspectors caught that. That's why they're there at the border. But the very large portion of product now coming into Canada moves to destination.

Quite frankly, we don't want to open a refrigerated truck at the border, because we don't have the ability to handle it. We want to do that opening in an environment where we have cold storage so we can preserve the quality of the product and ensure that we don't add to the risk that is involved with handling the product. In that particular case I think you're talking about, in fact the inspector caught it. That's why we're aware of it.

Mrs. Rose-Marie Ur: I don't know whether it's really helping the consumers...or we would feel that much more comfortable when 3% of the 3,500 trucks are being checked. Is that what you're saying?

Dr. Art Olson: No. There are 3,500 trucks, containing all things, coming through Windsor a day, with the figures going up every year, obviously. A very large portion of those contain car parts and that kind of thing to service our automobile industry. Of those, 3%, or about 150, are trucks that carry food or some kind of biological material that we are responsible for inspecting. We have an off-site facility there.

If we have an equivalence agreement, as we have with the United States—and in fact we have agreements with them where they carry out inspection on our behalf and we do the same—the product will flow through to destination where it's then looked at by our inspectors. Otherwise, we have to open a truck. Windsor gets pretty hot in the summer, and I really don't think it's a good idea some days to open trucks when they're full of lettuce that is going to get damaged, frankly, by the fact that you're opening them.

Mrs. Rose-Marie Ur: I can appreciate that, but I hope the people who are loading the trucks also realize that and it comes through in the same manner.

Regarding your agency, are you within your budget and the number of people you said you were going to hire, after eight months?

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Dr. Art Olson: I think the simple answer is no, because we have not yet sorted out the issue on resourcing. We're desperately hoping to cash manage ourselves through the end of this fiscal year. Working on that, we've just met with our staff. We walked through our fiscal pressures. Our management team knows they have to manage the issue, and they will do so. But it's going to be tight this year, and we know that.

Mrs. Rose-Marie Ur: What numbers do you have working within the agency?

Dr. Art Olson: Right now, we have about 4,500 employees.

Mrs. Rose-Marie Ur: I have another quick question. You made the statement this morning that the CFIA has to satisfy trading partners' needs. So what should the agency's priorities be with international trade, to maintain our Canada No. 1 standards or whose standards?

Dr. Art Olson: First, obviously, is to ensure the product is safe. But each country has somewhat different standards in terms of how they want the product handled, or processed, or what have you, and we will certify to their requirements. But our priority is safe product.

Meeting their trade obligations can be done in a variety of different ways. Currently we have 1,400 existing bilateral agreements with other countries dealing with commodities, so it becomes a complex process of certifying to meet their obligations.

Earlier, for instance, one of the members here talked about Christmas trees. The obligations in Christmas trees moving out of Nova Scotia into the United States are quite different from the Christmas trees moving into Mexico. I know producers don't like it because it adds a complexity to their life that is difficult. But we're exporting, they're importing, and they do have a right to set what they want to have coming into country, as we would want to have in the same way.

The Chairman: Thank you.

Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): Thank you, Mr. Chairman, and good morning, gentlemen.

Mr. Olson, I only have five minutes to ask questions and for the responses, so if you could keep the responses concise, I'd really appreciate it.

I want to go back to a question Mr. Hill asked earlier. When this agency was set up, taking services from four different departments, the promise was that there would be a cost saving of $44 million. Has that saving in fact happened?

Dr. Art Olson: To government, yes. The moneys have been booked. They're out of our budget. We're now trying to determine how we'll achieve those savings in terms of what change to our statutory program or level of service we will be making. A portion of that savings was achieved by Health Canada and by Fisheries and Oceans. We're in the process of dealing with the other part of it.

Mr. Leon Benoit: So the total saving has been achieved. Has there been a saving passed on to the people who are using the services?

Dr. Art Olson: The saving is to the fiscal framework of the Government of Canada; that's how that's passed back to the users. Obviously the level of service will drop as a result of the fact that we have to make these reductions.

Mr. Leon Benoit: So the cost saving isn't directly to the users of the service in any way.

I think you've answered the question. You said the departmental spending has been reduced by the $44 million, so taxpayers are funding $44 million less.

But you also said that this $44 million was budgeted for without any increase in user fees. You said the user fees that have been put in place so far, the cost recovery, was planned before this legislation was put in place.

Dr. Art Olson: What was said is that we're not planning to introduce any new cost recovery until after the year 2000, but the existing cost recovery that was already identified and in negotiation, in fact, is what we're proceeding with. We will again not reach that target either.

Mr. Leon Benoit: For that original cost recovery, though, the process was in place. The savings to the department, let's say, were already planned around this schedule of cost recovery being implemented.

Dr. Art Olson: I would put it this way: the moneys have already left our budget in the case of the cost recovery, and the $33 million, which is the share that's been apportioned against the agency out of the $44 million—the other goes back to the other two parent departments—will also leave our budget as of April 1 this coming year.

We're trying to deal with what level of service we'll provide with the available resources we'll have, bearing in mind the commitment we made not to introduce any new cost recovery until after the year 2000.

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Mr. Leon Benoit: In fact, the cost recovery you say was scheduled before this new agency was established is still being implemented incrementally. It hasn't all been implemented yet, so there still will be further user fees put in place leading up to the year 2000.

Dr. Art Olson: There will be no new fees put into place. There will only be the ones that have already been identified and that we've been in discussion on.

Mr. Leon Benoit: There will be new costs to be borne by industry, by users.

Dr. Art Olson: They will be traditional costs in most cases.

The Chairman: Thank you very much, Mr. Benoit.

Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Olson, I want to return to a question asked just now by Rose-Marie Ur, who by the way continually asks excellent questions.

Canadian newspapers, both English and French, all gave very wide coverage to an article with a headline that went something like "New food inspection system—tainted meat can enter Canada". The article said that almost 50 per cent of trucks are not inspected. You sketched an answer earlier for Ms. Ur, but I would like to read you two very short paragraphs from this article.

The newly created Canadian Food Inspection Agency has imposed draconian changes on inspection methods in an effort to reduce costs and cut down waiting times at the border.

Admirable. But what follows is less admirable.

Inspectors, who spoke on condition that they not be identified—

You'll tell me that's easy, but I want to go on—

—say they have found chemicals, batteries, automobile parts, pesticides, paint and solvents stacked beside poultry, sides of meat and fresh fruit and vegetables.

In the past, food inspectors at border posts such as Windsor, Ontario—

That's what Rose-Marie was talking about just now—

—opened virtually every truck bringing in poultry or meat from the United States.

Can you say from where you sit that everything in this article is false?

[English]

Dr. Art Olson: The first thing I'd say is the fact of the matter is that they found the product, which is what we're there for. It's critical that they do in fact find this. What it doesn't say is that we've moved most of the inspection of those kinds of products either into the hands of our trading partners—for instance, the United States—or to the destination where those products are going, the slaughter plant or cold storage, as I mentioned, for logical health reasons. In return, the United States has also done the same thing with us. In red meat, for instance, if you continue to provide a quality product, the inspection level is random and is done on, I believe, about 1 in 15 loads. They depend on our inspection, we depend on theirs.

I hope that answers the question you've raised.

[Translation]

Mr. Jean-Guy Chrétien: I have another question, and I would like to return to rBST, but as you know, the time available to me is very very short. In the eight months that your Agency has been in operation, has inspection deteriorated in this country?

[English]

Dr. Art Olson: In the first place, my understanding is that the product is still under review. It is not approved for use in Canada at this point in time. In addition to that, as I indicated earlier, there in fact is no methodology—

[Translation]

Mr. Jean-Guy Chrétien: No, I'm not referring to rBST. Before we get back to that, I wanted to ask you if you thought that overall, food inspection at Canada's borders has deteriorated, remained stable or improved.

[English]

Dr. Art Olson: I think it's improved. The reality is that we're focusing far more of our energies on the real risks. The government asked us to make the organization risk-based, to allocate our resources on the basis of risk, and the primary risk we face with most risk products is microbial. We're dealing with that through the kinds of systems I talked about earlier. Visual inspection doesn't do the job on some food products.

[Translation]

Mr. Jean-Guy Chrétien: Without being rude, Mr. Olson, I would now like to go back to the subject of rBST.

Mr. Chairman, long before you became the Chair of this Committee, I can recall sitting on a joint committee with the Department of Health on rBST. We had formed a large committee that met two or three times. Mr. Olson, you are aware that in 1997 a lot of things can happen and that we are capable of identifying rBST in milk. We can do it, even though it takes a few hours and costs a lot of money.

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Just now you said that it is not possible to verify whether there is rBST present. I have to doubt this, Dr. Olson, unless someone was pulling the committee's leg some years ago. But I think my memory is good and I did check again. The presence of rBST can be detected; the process costs between $2,000 and $3,000 and can take several weeks.

Now, to get back to the imports of butter oil that are coming into this country, mainly from New Zealand. The information I have obtained about New Zealand indicates that the standards they observe, especially at the farm level, are quite a bit lower than our standards here in Canada, and that they are less stringent there.

So here again is my question, put a little more insistently. Can you guarantee that over the coming months you will be checking to see whether there is any trace of rBST in the butter oil we are importing, in large part from New Zealand, which is used mainly in the manufacturing of ice cream?

[English]

Dr. Art Olson: Two points. First, my understanding is that New Zealand has not approved rBST. So they're in the same situation we're in with regard to product.

Second, a $2,000- or $3,000-per-sample test is not a practical tool from an inspection point of view. I have seen a paper published by, I believe, one of the staff of one of the companies involved, indicating that under very special—

[Translation]

Mr. Jean-Guy Chrétien: Where human lives are concerned, that doesn't matter. When we're talking about human life and health, $2,000 to $3,000 isn't very much.

[English]

Dr. Art Olson: My understanding is that Health Canada has indicated that on the basis of the review they've carried out thus far, there is no risk to human health and safety. They're currently looking at the implications from an animal health point of view. So I can't square the circle we've just been talking about in that regard.

The Chairman: Mr. McCormick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Thanks, gentlemen, for being here. I want to make a brief comment on the rBST, as it was put on the floor here the other day. Probably the new leaders in North America in putting it back on the front pages, or more prominently on the front pages, come from a small ice cream company that started up with a $5 catalogue on how to make ice cream, Ben & Jerry's Homemade. We haven't yet seen it happen here in Canada, but they're going to put it back on all our plates.

In terms of the butter oils and the sugar blend, you mentioned that you do use a normal sampling process. I have great faith; I appreciate the fact that we have the best and the highest-quality, safest food in the world. But the other day in committee, on a separate issue, I asked Revenue Canada how often a product is tested for content, referring to the butter oils and sugar blend. They said, well, it was random testing.

You know, we hear horror stories of new schemes to circumvent tariffs. Golf balls, for instance, are being shipped in with whatever dairy product, and then they drive the balls back across the border, and ice salt.

When a new product appears—and this is basically a new product, this butter oils blend—would a flag go up that it would be tested more often?

My point is that it looks as though the butter oils have been shipped to a cheese factory in Ontario. It doesn't seem probable to most people that this product would be used in cheese. So some people are suspicious that they might have changed the product a bit. I'm interested in the safety, if they start playing games here.

I wonder if you could comment on that for me, please.

Dr. Art Olson: It's difficult to deal with allegations in that kind of context. My understanding is that we have a number of sources for butter oil products to used—for instance, in ice creams and those types of things—as thickeners and texture changers and what have you. My understanding is that this is what they're being imported for.

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In terms of the overall importation of products into Canada, I can assure you that there are a lot of creative people out there who are trying to find neat ways to bring things in. The kind of product that is coming in in this particular case, though, is a food product, and I'm sure the New Zealand government and the people who are moving the product around are very aware of the implications it has for their future trading opportunities if they were to play those kinds of games.

So I have a great deal of confidence that the product's being used appropriately, but if you have more information I'd be very glad to look at it.

Mr. Larry McCormick: We're possibly getting close to the information, but keep in mind that this product, which is being discussed by a lot of different departments on the tariffication or possible tariffication, is 6% coming out of the United States only, but 30% out of Mexico. I have a lot of personal Mexican friends, but we have a lot of problems along the border there. So when you get 30% out of Mexico it means that 36% comes out of the United States. This is where the product has come to a cheese factory to be tested. So I'm concerned and would hope that a flag would go up with the excellent system that you have to check and confirm the health.

I have one other question on the cost recovery. I believe you mentioned that at a meat processing plant about 80% is paid by the taxpayer. For my lack of information and knowledge, what about the crops, whether it be fruit or vegetables or grains of whatever? Would this 20% to 80% be roughly the same throughout the commodities?

The Chairman: Answer him, and we'll go to Mr. Coderre.

Dr. Art Olson: Basically it relates to the level of risk involved with the crop, and with many of these crops the only service we provide is a quality...or certification. In the case of meat, the foreign country requirements are such that it takes a much larger investment. About half of our entire budget in fact is devoted to meat.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): Hello, gentlemen.

My first question deals with the hazard analysis and critical control point system, or HACCP. It's a little like the ISO system— it's a tool for achieving quality. I would like you to explain a little to me how the HACCP system works. It has seven basic principles, and you want them to be implemented just about everywhere in the food industry. How long will that take, and what process will a firm or a producer have to follow to get an HACCP rating?

People have come to see me and told me their reservations about HACCP, ISO and the consultants who may be offering them their services in getting the HACCP rating. They tell me that your Agency could offer those services through contractors or private companies. Apparently some civil servants who are retiring may have special access and will be able to offer these services, which would create a situation that would not necessarily be equitable between private consultants and former civil servants.

Can you explain to me a little how it works?

[English]

Dr. Art Olson: I'll just respond on the last point and then I'll ask Dr. Gravel to talk to the other ones.

When one of our staff retires we have a period of time, depending on the level of the position and the kind of position, when they're expected not to get into that kind of situation you're talking about. But after that time's over, they have the right as a citizen to get into an area of activity where they feel there's a business opportunity.

I am quite pleased, in fact, those people are available, because the implementation requirements, if only to meet the U.S. timeframe.... For instance, December 18 for fish, to have a fully implemented HACCP system in Canada, and January 21 or 22 for all red meats, is a pretty tight timeframe. If we didn't have people who were prepared to come back out of retirement, quite frankly, it would have been very difficult to get the job done. That is a pretty significant resource.

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One of the areas I'd like to see more of in Canada, in fact, is a much broader consultative industry. Hopefully, that will happen over time. I expect that some of the players in that will be staff who have been with this or who have retired from us.

Dr. Gravel could talk about HACCP.

[Translation]

Mr. André Gravel: To explain the HACCP system in layman's terms, you could say that there are two ways of checking whether a product is in compliance. The first consists in testing the finished product and the second consists in establishing a system that will eliminate hazards during the development or manufacturing of the product.

You asked about implementing an HACCP system and the time this would take. That depends on the plant's complexity, because you have to have an HACCP system for every type of production in a given plant. For example, if a plant produces both sausages and ham, for example, its HACCP plan will have to cover both types of production. The time required for implementation depends to a great extent on the company's previous quality control system and, to a certain extent, on the prior existence of certain requirements.

Mr. Denis Coderre: Could we say a year? Since it's a question of quality, it naturally takes a while. It wouldn't be possible to confirm an HACCP standard just like that, after five months. There have to be detailed plans and procedures; I imagine it would take at least a year or a year and a half.

Mr. André Gravel: Once the systems have been put in place and reviewed and approved, inspections in the plant are at increasingly infrequent intervals. As we become more and more confident that the plant's compliance has reached an acceptable level, we cut back on inspections. After a six-month to eight-month cycle, we have a good idea of how the plant is complying with HACCP standards. If we observe that the plant is not in a position to meet the standards, the inspection system, including the frequency of inspection and monitoring, is automatically stepped up.

[English]

The Chairman: We'll start the third round now, the final round. The names I have are Mr. Hill and Mr. Calder. Those are the only names I have so far—and Mr. Keddy.

Mr. Hill.

Mr. Jay Hill: Thank you, Mr. Chairman.

I'd like to return to the issue of border inspections. You said during your remarks—I believe it was in reply to a question raised by Mrs. Ur—that you moved the inspection to the United States. In other words, you're utilizing the trading partner, as they do with us, to accomplish some of the inspection.

But I think what I was getting at in my initial round was this: what penalties are in place for those who are caught? We had these reports in the media about those truckers who are obviously caught putting the health of Canadians at risk. What penalties are in place? What steps have been taken to ensure that it doesn't happen again?

Dr. Art Olson: I can do it anecdotally. That would be the easiest way. I think you're aware of a very large meat packing plant in southern Alberta that had a positive some weeks ago for E. coli 0157:H7. They had one load of hamburger that was picked up in the United States. They tested it themselves. With the nature of hamburger, they took a sample from somewhere else in the load, and they found a problem with E. coli.

That plant is extremely worried because the quality of their product moving to the United States is 50% or 55% of their total production. So we've been back in and we've worked with them. We're in continual discussion with them to ensure that they have in place the systems that are necessary to produce quality product.

Mr. Jay Hill: What I'm referring to, and this is what I think Mrs. Ur was referring to, is that in many cases our understanding is that the product, whether it's going for export or being imported—I was being more specific on the importation of food products—is a quality product when it leaves the plant, wherever that might be.

Yet if the contamination occurs during the transportation in the truck, what penalties are taken against the trucking companies? Have you some sort of a red flag system, whereby if you have some repeat offenders you flag them? This is so that when you're inspecting on a random basis, you have sort of a list of bad guys. You know there have been problems in the past, so you specifically make sure those trucks are inspected for at least a certain period of time to make sure they're complying.

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Dr. Art Olson: We have a variety of tools. We currently run somewhere between 350 and 500 legal actions in carrying out our various regulations. In addition, this committee reviewed last year and we're now putting in place something called administrative monetary penalties, which give us the ability to put a fine against those kinds of operators you're talking about.

We had a recent situation, for instance, with animal welfare, where the trucker obviously wasn't carrying out its responsibility. The company I think has chosen to take appropriate action in dealing with that particular problem.

So there is a variety of levels of tools. Individual truckers, the drivers themselves, the owners of those companies, and the people who have contracted for the trucks all carry some of that responsibility.

The Chairman: You still have two minutes.

Mr. Jay Hill: Thank you.

To follow up on that, in this new spirit of cooperation that you refer to—and it may not be new; maybe it's been going on for quite some time—in the sense that the U.S. does some inspections for us....

I appreciate the comment you made earlier about how easy it would be to effectively ruin a load of product by opening a refrigerated van when it's 110 degrees outside. But in the spirit of new cooperation, is there an exchange of information? If the U.S. inspectors who are doing some of the inspections on our behalf before the product leaves the United States find a recurring problem with one or two different trucking firms, is there an exchange of information? Is there a way in which we find out about that and therefore can also pick up on that particular problem to ensure it doesn't happen in the future?

Dr. Art Olson: The answer is yes. We're taking it one step further by trying to put in place a North American recall system for product that shouldn't be in there and to keep track of the people who, frankly, don't play the game in a safe and appropriate manner.

The Chairman: Mr. Calder and then Mr. Keddy.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

About a year or a year and a half ago, when we were starting to talk about this, my phone was ringing from the small abattoirs in rural Ontario. Basically the issue at that time was that we were going to have to pave our parking lots and put heating on our kill floors and everything, because we were going to be working by federal jurisdiction. I know part of the problem was solved by just where the product out of these abattoirs was going, whether it was going to stay in the province or whether it was going to go outside the province. So my phone has quit ringing for now.

I just wanted a basic update on where we are on this. Should I expect my phone to start ringing sometime in the future again, with some other problems related to this?

Dr. Art Olson: If I can, I'll ask Mr. Doering to respond to this. I did mention the meat code that we're working on, but it's a bigger issue in terms of what I see as a shifting responsibility between who does what within the inspection systems, between us and provinces and between provinces and municipal governments.

Mr. Ron Doering: Mr. Calder, I remember the time you were getting those calls, because there was some confusion about whether or not the creation of the Canadian Food Inspection Agency was changing the jurisdiction for food inspection. Of course it can't. The federal government can't change its own jurisdiction by a single act. So all we were doing was getting the federal act together by bringing activities that were formerly done by four government departments into one agency with some flexibility to do a better job.

But during that time there was quite a lot of concern about product in provincial facilities and whether or not they were going to have to meet some new federal standard. Of course the answer to that all along was no. So long as they're provincial facilities, that's a matter for the provinces to deal with.

On the other hand, when we created the agency, we undertook to try to do the very best we could to work co-operatively with the provinces to deal with that line between what the feds do and what the provinces and municipalities do. It's really important for us to try to harmonize if we can, just to generally enhance the food safety for Canadians.

One of the main initiatives to do that, since the agency was created and has taken on a new impetus under Dr. Faisal Bedwei, one of our veterinarians working with the provinces, is to create a harmonized meat code with the provinces that they could live with, so there would be a similar standard. It may not be as onerous as the federal standard, but there would be a similar standard, and all provinces would then bring laws into effect to bring it up to that place.

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This has happened already in some provinces that have had problems. In the case of Ontario they actually moved in the other direction. There are fewer inspectors now working for the province doing inspection. They do it more through the use of private sector veterinarians and others. I think in some way that issue has calmed down. The meat code, it's important to remember, actually has industry people on it; both the poultry council and the meat council are working with all provinces and the federal government to develop this harmonized standard. If this comes into phase in a way congenial to the interest of these small producers, it will raise the general level of food safety for Canadians.

Mr. Murray Calder: So my rural abattoirs in Ontario should be relatively relaxed about the whole situation right now.

Mr. Ron Doering: Nothing is being imposed on them, but we hope that if they're not engaging in good practices they'll be less relaxed if the standard can be moved. But that's not a federal matter.

The Chairman: Mr. Keddy.

Mr. Gerald Keddy: I have a couple of questions. I would like to say that the people I've talked to in the industry certainly support one-stop shopping, if you wish to use those terms. But there's a serious concern that it's the responsibility of the government, not the responsibility of the producers. We don't mind seeing some cost recovery. I want to mention that again. We don't mind seeing some cost recovery, but we don't expect to pay for it all. We don't expect to have to pay for 30% or 50% of it. It's too important an issue for the government to deny responsibility for.

I have a couple of questions, and I'm sure you have the information to answer them. The first question is how many foreign pests come into Canada every year?

Dr. Art Olson: I'm very tempted, Mr. Chairman, to answer the question and ask for further definition about whether you're talking plant, animal or human.

Mr. Gerald Keddy: Let's just stick to plant and animal for now.

Dr. Art Olson: As few as possible, I think would be the only way to answer that, because the ones we know about, the ones we worry about, we try to keep out of the country.

Mr. Gerald Keddy: Yes. You see a lot of statistics, but it's somewhere around 60, isn't it?

Dr. Art Olson: You're talking about the—-

Mr. Gerald Keddy: Plant and animal diseases, foreign plants, indigenous pests and insects.

Dr. Art Olson: I think you're talking foreign plant introductions at that figure. I think, for instance, in Vancouver there is a continual load of product coming into Canada with potentially Asian gypsy moth on the outside of the containers, insects in the dunnage and so on. One day you could have that many introductions, and what we have in place is a system for dealing with that.

By the way, weather is very useful. Whether I like the cold or not, one of the advantages Canada has is that everything tends to freeze in the winter.

Mr. Gerald Keddy: Absolutely. But take the Asian gypsy moth as an example. We have potential damage to a multi-billion dollar forest industry in B.C., let alone the west coast of North America. Who should be responsible for paying for that and protecting us against it?

The other question is how much of your budget is devoted to inspecting imports?

Dr. Art Olson: In terms of who should be paying for Asian gypsy moth, that was a joint process with the B.C. government, industry, ourselves, a variety of nursery trade and what have you. It was a joint effort. I'm not sure there's a clean definition. It depends on, in this case, which pest.

Mr. Gerald Keddy: Yes.

Dr. Art Olson: In terms of the percentage on import, as I mentioned, we spend approximately $130 million—which is approximately 45% of our budget, if I recall correctly—on the inspection of red meat produced in Canada. A good portion of our effort is focused on product produced in Canada, on making sure it meets other countries' standards. We expect their product coming in here to do the same. That's why there are the 1,400 bilateral agreements.

I'd have to come back, Mr. Chairman, with a figure, unless Bob has one. I don't have it handy, I'm sorry.

Mr. Gerald Keddy: The point I'm making is that it's very difficult to get cost recovery on import inspections. We expect that we're going to have to use data generated in the U.S., or generated in Puerto Rico or Mexico or wherever, and trust that data when we get it, just as we expect them to trust ours. But it's hard to get cost recovery from import inspection.

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Dr. Art Olson: In terms of what we charge for imports—and that's directly related to the level of inspection—that's an easy figure. Sorry, I misread your question—

Mr. Gerald Keddy: Okay.

Dr. Art Olson: —in terms of wanting to know what the total cost of our programs were, just in the import area. But we can give you a figure, Mr. Chairman, in terms of the percentage of cost recovery applied against imported products.

The Chairman: Thank you.

We go now to Mr. Benoit, who I cheated the last time. I should give him a little leeway this time.

Mr. Leon Benoit: I sure thought you had. I was cut a little short.

Mr. Olson, you're familiar with the meat processors and their concern about fees they're being charged that aren't being charged by the Americans, who, of course, compete directly with them for meat processing. One of the issues is that inspectors work seven and a half hours and then they charge overtime, while the plants operate on an eight-hour shift. So they're getting huge overtime costs that aren't charged by their American competitors.

There are some other issues there. You're familiar with the package they have been working on for a long time, trying to work those out with you. Could you comment on those and the progress on that and what you see happening over the next little while?

Dr. Art Olson: We're an exporting country. We have to meet the importing country's requirements. Many of the plants in the United States in fact don't export, and I think the investment that's involved by government is somewhat less.

In terms of level of fees we apply against our industry on those similar kinds of operations, the figures provided by the American Meat Institute and the Canadian Meat Council are quite similar.

The U.S. charges for all their overtime. We used to charge for that extra half hour, but we've managed to arrange our shifts in such a way that the overtime now only comes into play when somebody wants the extra two hours in a day to make a ten-hour shift, or that kind of thing. So we've pretty well dealt with that seven-and-a-half-hour versus eight-hour kind of day.

But the Americans do charge for overtime, and they charge a series of other things. They run a different system, and their fees are different. But looking at the American Meat Institute figures versus the Canadian Meat Council figures, the net cost to industry is essentially the same.

Mr. Leon Benoit: The meat council in fact says that they are being charged fees that the Americans aren't and the overtime is a concern.

You're right, it's more the block of overtime when they want to extend hours, but surely your agency can accommodate more flexibility with inspectors without the industry having to pick up charges that aren't picked up in the American industry. Quite frankly, they are very, very serious on this, as you would know, and they're very concerned about this. They say they are paying more in costs of inspection and so on than their competitors across the border. They say this is a serious threat to the industry here in Canada.

Dr. Art Olson: Again, I go back comparing the counterpart to the meat council, the United States figures. The meat council's figures are comparable.

The Americans charge a different kind of fee. They charge for all their overtime. We did have overtime, but we rearranged people's shifts and schedules so they came in on staggered hours, and we've pretty well done away with that overtime, except where it goes well beyond the eight hours. The Americans charge about the same level of fees for the same kind of operations.

I appreciate the point. Again, we've been asking the meat council to come forward with the impact and competitiveness and those comparable figures. I don't think we have received that yet.

Mr. Leon Benoit: Well, I received a copy of a letter regarding this issue, and I'm almost certain it was sent to your agency. This is an issue they have been pursuing. I first heard from them on this probably two years ago, before the agency was established.

Dr. Art Olson: The United States and Canada are two different countries. They have a different regulatory framework than we have. What we tried to do is ensure that our fee structure, in terms of total impact, is similar and not exceeding the United States' level of fees. That has been the challenge.

The meat council and others have chosen to cherry-pick and compare one fee that's applied in Canada against a different kind of system in the United States. We're looking at the total cost against that particular industry.

Mr. Leon Benoit: You're saying that the total costs in fact are the same in both countries.

Dr. Art Olson: They're comparable in both countries.

Mr. Leon Benoit: Comparable, meaning...?

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Dr. Art Olson: Size, scale and export orientation, for instance, versus strictly domestic reduction. I think we're pretty comparable.

We're prepared to continue that debate with the industry. They're obviously sending copies of the correspondence to you with a purpose.

Mr. Leon Benoit: You made the point of saying the American industry is more of a domestic industry, whereas Canada of course imports a large amount through the United States. Why did you mention that? How does that fit in here?

Dr. Art Olson: There are many plants in the United States that do not export at all. They only operate within the American framework. They voluntarily delist themselves for export. When they export to Canada, we feel they should meet our criteria in terms of product that we would allow for sale interprovincially in Canada. They should meet that same standard.

When you compare a plant in Canada that is exporting product with a plant in the United States that is not exporting product, there can be a pretty significant difference in the level of service provided by government. That's really what I was saying.

Mr. Leon Benoit: Could a plant choose to have a certain part of its processing time—that would probably be the only way it could operate—that would put out a product only meant for the Canadian domestic market, and therefore not have to pay those types of fees?

The Chairman: We'll take your answer, and then have the final word from Mr. Chrétien.

Dr. Art Olson: I think it's a question of scale. But our fees are not totally directed to export, they're also for the provision of services within the country.

Mr. Leon Benoit: But you said the reason that our fees are considerably higher than the United States' fees is that more of our product is aimed at the export market.

Dr. Art Olson: That's not what I said. I was talking in terms of comparable operations and relative levels of fees. If you have a plant that wishes to export and compare it against a domestic plant in the United States, you're going to have a difference. If you're going to compare that domestic plant with a domestic plant, they could be somewhat more similar.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Olson, when Bill C-60 was passed, a number of my then colleagues cited the example of Australia. It has been observed that since the introduction of deregulation of meat inspection in Australia, the number of cases of fatal poisoning has been going up steadily and regularly. Could that happen here, given that 18 months ago we were being compared to Australia, and that their system would seem to have serious shortcomings?

[English]

Dr. Art Olson: Australia had put forward a product proposal—proposal 2, they call it—for the essential withdrawal of government inspection staff from the line. We had some pretty major concerns with it. So did the United States. The net result is that I don't believe they're pursuing movement of product from that system into Canada.

That's quite different from what we're talking about in terms of the Canadian inspection system. What we're talking about is removing visible defects from the line before they get to the inspection staff. There's no point, if there is a visible defect....

Let me step back. On a chicken line, you have somebody looking at 90 birds a minute. That's an awful lot of birds going by. If you have somebody identifying those that have defects, you can focus your inspection attention to the one with defects. We've chosen to use that system in our pilot project. We're looking at it in terms of the kinds of advantages it gives, because it allows us to focus our energies on microbial testing and those kinds of things.

Australia did not do that. They moved that inspection function totally into the hands of the industry. We've chosen not to support their approach.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Olson, I want to make sure that I have understood you correctly. I'm going to try certain phrases or words, and if they don't correspond to what you meant, I would like you to correct me.

I asked you about the importance of butter oil. Obviously I'm concerned about the presence of rBST, but I am also concerned about the fact that importing butter oil undermines our dairy producers' supply management system. That is what worries me most.

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Mr. McCormick said that butter oil could be used to make cheese. I realize that rBST is banned in Canada at the moment, but it has to be acknowledged that it is used in other countries. I asked if you could guarantee us that in the days to come there will be no rBST in [dairy] products, and I think you replied that Health Canada said there were no risks for human health. Is it the butter oil that according to Health Canada poses no risks for human health or the rBST?

[English]

Dr. Art Olson: The setting of health and safety standards is the responsibility of Health Canada. My understanding is that their review is ongoing, but on the basis of the data they've seen they have not identified a human health and safety issue.

The question that I believe you asked me had to do with the inspection of the product. As I was saying to you earlier, an inspection test that costs $2,000 or $3,000 and takes a significant period of time is not terribly practical for inspection. Besides, to my knowledge, the methodology is not commercially available or usable in a form we'd be able to apply.

[Translation]

Mr. Jean-Guy Chrétien: I would like to leave you with some food for thought. You say that $2,000 to $3,000 is not practical. Yesterday we received the Krever report; he found many things that people thought were impractical, but today, as a result, a number of our fellow citizens find themselves in a very unenviable situation indeed. If people had been prepared to go deeper into the heart of things, this could have been avoided.

[English]

Dr. Art Olson: Mr. Chairman, I think that deserves a response.

We're dealing with a situation where there's already been an indication that a health and safety matter is not involved. We're dealing with an area where the discussion that's currently ongoing has to do with the impact on animal health, which is quite different. I very much appreciate the point with regard to the Krever commission, but I don't think the two examples are comparable.

In this particular case, what I have seen in terms of the methodology is one scientific paper that has identified a method that might detect rBST in blood serum from animals. It does not detect the product in the milk itself; it detects it in the blood serum. In order to be able to do the kinds of tests you're talking about, you would require blood samples from the animals that might have produced that butter oil. It gets a little complex at that point in terms of providing what you're asking for.

There is a test, I understand, that's under discussion at Cornell University, but we have relatively little information. We are hopeful that they will come up with that miracle test, because when all is said and done, Mr. Chairman, we're in a situation where we will be responsible for the enforcement of that portion of the responsibility after Health Canada makes a decision with regard to the health and safety standard.

The Chairman: On a point of privilege, Mr. McCormick.

Mr. Larry McCormick: Yes, on a point of privilege, please, Mr. Chair, I certainly have dairy farmers in my riding who would like to use rBST so they can be part of a level playing field. But also, many people who have talked to me personally do not believe we need this product today to increase production, and they are concerned about the possible fallout for their personal health. I just have to say that on their behalf.

Thank you, Mr. Chair.

The Chairman: Thank you, and thanks to our witnesses for a very informative morning. I'm sure we'll be seeing you again.

I'm wondering about the Manitoba dairy code. Is that very complicated? Maybe we could have a look at that to see what's in it and what it looks like.

Mr. Ron Doering: It's not very complicated, but it's fairly long, about 100 pages. We would be more than happy to give you copies for everybody.

The Chairman: Okay, just so we have some idea of what you're doing there.

Mr. Ron Doering: Okay.

The Chairman: Thank you very much.

We stand adjourned until next Tuesday morning at 9 o'clock.