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37th PARLIAMENT, 1st SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Tuesday, February 26, 2002

0905

The Chair (Mr. Charles Hubbard (Miramichi, Lib.))

Ms. JoAnne Buth (Vice-President, Crop Production, Canola Council of Canada)

0910

The Chair

Mr. Geoff Golder (Senior Manager, KPMG Consulting)

The Chair

0915

Mr. Geoff Golder

0920

0925

The Chair

Mr. Quentin Martin (Member of the Board, AGCare (Agricultural Groups Concerned about Resources and the Environment))

0930

0935

The Chair

Mr. Ed H. Guest (Executive Director, Western Grain Elevator Association)

0940

0945

The Chair

Mr. Geoff Golder

The Chair

Mr. Geoff Golder

The Chair

Mr. Geoff Golder

The Chair

Mr. Paul Mayers (Director, Food Policy Integration, Food Directorate, Health Products and Food Branch, Department of Health)

0950

0955

1000

1005

The Chair

Mr. Hilstrom

Mr. Paul Mayers

Mr. Hilstrom

1010

Ms. JoAnne Buth

Mr. Hilstrom

Ms. JoAnne Buth

Mr. Hilstrom

Ms. JoAnne Buth

1015

Mr. Howard Hilstrom

The Chair

Mr. Gagnon (Champlain)

Mr. Paul Mayers

1020

Mr. Gagnon (Champlain)

Mr. Paul Mayers

The Chair

Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.)

1025

Ms. JoAnne Buth

The Chair

Mr. Paul Mayers

1030

The Chair

Mr. Dick Proctor (Palliser, NDP)

Ms. JoAnne Buth

Mr. Dick Proctor

Ms. JoAnne Buth

Mr. Dick Proctor

Ms. JoAnne Buth

Mr. Proctor

The Chair

Mrs. Rose-Marie Ur (Lambton--Kent--Middlesex, Lib.)

1035

Mr. Paul Mayers

Mrs. Rose-Marie Ur

Mr. Paul Mayers

Mrs. Rose-Marie Ur

Mr. Paul Mayers

Mrs. Rose-Marie Ur

Mr. Geoff Golder

Mrs. Rose-Marie Ur

Mr. Geoff Golder

1040

Mrs. Rose-Marie Ur

Mr. Geoff Golder

The Chair

Mr. Rick Borotsik (Brandon--Souris, PC/DR)

Mr. Geoff Golder

Mr. Rick Borotsik

Mr. Geoff Golder

Mr. Rick Borotsik

Mr. Geoff Golder

Mr. Rick Borotsik

Mr. Ed Guest

Mr. Rick Borotsik

Ms. JoAnne Buth

Mr. Rick Borotsik

Ms. JoAnne Buth

Mr. Rick Borotsik

Mr. Geoff Golder

1045

Mr. Rick Borotsik

Ms. JoAnne Buth

The Chair

Mr. Paul Steckle (Huron--Bruce, Lib.)

Mr. Paul Mayers

Mr. Paul Steckle

Mr. Quentin Martin

1050

Mr. Steckle

The Chair

Mr. Anderson (Cypress Hills--Grasslands)

Mr. Geoff Golder

Mr. David Anderson

Mr. Geoff Golder

1055

Mr. David Anderson

Mr. Geoff Golder

Mr. David Anderson

Mr. Ed Guest

The Chair

Mr. Quentin Martin

The Chair

Ms. JoAnne Buth

The Chair

1100

Mr. Geoff Golder

The Chair

Mr. Mark Eyking (Sydney--Victoria, Lib.)

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 052

1st SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, February 26, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Good morning, everyone. Pursuant to Standing Order 108(2), this morning our committee is looking at a study on the labelling of genetically modified foods, along with impacts of voluntary and mandatory labelling on agricultural producers and the rest of the agrifood industry.

We have representatives of five different groups here as witnesses. Rather than introducing everybody first, I think we'll just go one by one. We'll hear all five presentations and then begin our rounds of questioning.

First of all, from the Canola Council of Canada, we have vice-president JoAnne Buth.

Welcome, JoAnne. You have about ten minutes for your presentation.

Ms. JoAnne Buth (Vice-President, Crop Production, Canola Council of Canada): Good morning, everyone, and thank you, Mr. Chairman, for the opportunity to make a short presentation today on behalf of the Canola Council of Canada. I have provided a paper on our position, and would like to just cover the highlights briefly this morning.

The Canola Council of Canada is an industry association composed of exporters, growers, and crushers of canola, along with other industry stakeholders, including the grain handling and transportation system, the biotechnology industry, the seed industry, and the crop protection industry.

Canola is Canada's most important oilseed crop. About 10 million acres of canola were grown in 2001, producing 5.1 million tons of seed valued at $1.5 billion. Approximately 75% of the crop is exported as seed, oil, and meal. The entire canola industry is valued at over $6 billion.

The transgenic canola varieties that are registered in Canada have been modified to give them resistance to specific herbicides. Since 1995, when the first transgenic variety was introduced, growers have readily adopted this technology. In 2001, 60% of the canola grown was transgenic. Growers use transgenic varieties because of the benefits of effective weed control, higher yields, and reduced herbicide and fuel costs. A recent independent study commissioned by the Canola Council of Canada found that the direct benefit to growers from 1997 to 2000 ranged from $58 million to $215 million per year. In addition, transgenic canola has allowed growers to reduce their herbicide use and reduce tillage operations on over 2 million acres, resulting in a fuel savings of 31 million litres.

During the development of transgenic varieties we recognized the importance of our international markets, and we were cautious in the commercialization of these varieties. Since 1995, the industry has voluntarily operated on the basis that no transgenic varieties will be commercialized in Canada until they have acquired the appropriate regulatory approvals in our major markets, as in Canada, the U.S., Japan, and Mexico. Most recently, we added China to this list of countries. Other than the recent regulatory requirements announced by China, transgenic canola is accepted in our major markets, and we are confident we'll be able to meet the regulatory requirements in China, given time.

The council supports the current regulatory system in Canada that requires mandatory labelling of novel foods when a compositional, nutritional, or allergenicity change has been made to the food. We recognize that there is public concern over and increasing interest in the labelling of GM products, and have participated in the development of the voluntary standard for GM foods in Canada, under the Canadian General Standards Board. We supported the recently distributed draft standard as outlined, because it appears workable as a voluntary standard. Voluntary labelling will provide a choice for consumers if consumer demand is strong enough to develop the market.

The council supports the narrow definition of GM food—that is, food products that contain recombinant DNA or protein. This definition is consistent with our trading partners and with the Codex Committee on Food Labelling. In this voluntary system, negative labelling would satisfy the consumer's desire to know and purchase a product that was not produced through the transfer of genetic material. It would also allow for positive labelling for companies that may wish to promote the benefits of a production method or specific trait—for example, a product produced with less pesticide or a product with a specific quality trait.

A tolerance must be set in order for labelling to be verifiable. We believe a 0.1% or 1% tolerance is not achievable with our current bulk handling and transportation system. We support a 5% tolerance as being reasonable and consistent with the ongoing negotiations surrounding the UN's Cartagena Protocol on Biosafety.

Any labelling, mandatory or voluntary, must be supported by a verifiable process of primary product testing, identity preservation, or end-product testing. We do not support labelling for highly refined food ingredients, such as vegetable oils or syrups or similar products. These products do not contain any genetic material; therefore, a tolerance could not be set and verification is not possible.

An identity-preserved system with tracking and audits similar to the organic system would be required for voluntary labelling for these products. Under a mandatory scheme, this would require a comprehensive system to ensure identity preservation throughout the food production processing chain. In addition to the costs associated with performing primary product testing, such a system of product segregation would add significantly to the costs of rail and road transportation, hopper storage, and processing.

¿ (0910)

The costs of segregation to the industry for any labelling system are difficult to estimate. We really will not know what the costs will be until the industry is required to segregate to meet specific tolerances.

Any system for labelling GM foods should be developed with an appreciation of the global market for these products and how they are regulated in other countries. Other countries that are looking at finalizing or have finalized their labelling requirements are looking, first, only at rDNA, and second, at producing exemption lists that do not require labelling.

Initiatives other than mandatory labelling, such as greater transparency in the regulatory system and continuing effective consumer education programs, should be emphasized as alternative mechanisms for addressing the public perception of the safety, testing, and regulation of GM foods.

I'd be pleased to answer any questions you have on the canola industry and our position. Thank you again for the opportunity to be here today.

The Chair: Thank you very much, JoAnne.

From KPMG, we have senior manager Geoff Golder.

I tried last night to analyse some of your report—and I hope members had it—so maybe you can go through that with us. The floor is yours.

Mr. Geoff Golder (Senior Manager, KPMG Consulting): Thank you very much, Mr. Chair.

I'm not surprised it took a little longer than a night. It took us a little longer than a night to write it, too.

The Chair: I used the word “tried”.

¿ (0915)

Mr. Geoff Golder: I hope it's not a function of the writing.

What I'd like to do briefly is perhaps just comment on some of the highlights of our findings concerning the bases or the assumptions on which that information is based.

I should say at this stage that KPMG is an accounting and professional services firm. We did this as a consulting assignment. It was an exploratory study for a consortium of interested industry and university stakeholders. The work was done in 2000, with the objectives of documenting the key process requirements that mandatory labelling would entail, and providing some indicative estimates of the costs and impacts that labelling might have. The starting-point assumption was that it would apply to food products, essentially applying the Novel Foods Regulation as it is now: really intended to ensure the safety of food rather than to require labelling. Our focus was on corn, soybeans, and canola, because they're the product areas in which genetic modification biotechnology has made the greatest inroads.

Several caveats are also necessary. This report is indicative. Many of the people we did speak to were not able to make very reliable estimates of the costs, because until much more work is done to actually establish the systems required, no reliable cost information will be available. Over time, I think these sorts of estimates will improve greatly.

The other key points to note before I get to the actual conclusion—which was that mandatory labelling obviously would impose significant costs—were the sorts of preconditions or requirements of any process that mandatory labelling would require. I think you've already heard reference to some of these from JoAnne, so I won't spend too long on them.

The key variables as we saw them were what threshold levels would be established for the advantageous presence of either a biotech product in a non-biotech commodity or vice versa. The industry view seems to be that if a 5% level is established, that is quite manageable, but if a 1% level is established, essentially the difficulty goes up geometrically, so the costs also go up geometrically. It's a very significant target or threshold to comply with.

As a second necessary step, regulatory systems would be needed to ensure compliance and provide enforcement. The principal steps there would be related to the actual testing standards and the approval of facilities or labs that actually do tests, as well as to the structure and systems used for sampling and monitoring compliance through the system.

The two biggest areas after that, particularly from a cost perspective, are the establishment of identity preservation or segregation systems, and the supporting testing and certification systems. Identity preservation systems would potentially require separate, dedicated handling, transport, storage, processing, and manufacturing lines right through the supply chain. Some people instead say that chain is really a web because the many different sources of supply and the many different hand-offs through the system make it a very complex system to manage.

Having said that, as the agriculture industry moves more towards a value-added industry, identity preservation systems are going to become more prevalent anyway, regardless of whether it's for a biotech product or another product. If products are products rather than commodities, they need to have their identity preserved. Since this a change that will affect the industry, biotechnology is probably forcing some of that or is providing the impetus to really examine the needs and costs of IP systems.

¿ (0920)

The other thing is testing and certification. It is possible to test to determine if there is protein or DNA present, but those tests have been developed for laboratory applications. As of yet, they're not well developed for high-volume, quick-turnover agricultural applications. Some of that testing has a cost. It certainly requires trained personnel to use it, and it really is also at a stage of development.

It's also important to note that as products become further refined and further processed, the ability to act confidently and actually determine if a modified material—either DNA or protein—is present at, above, or below a target level, becomes much more difficult. Testing and certification would therefore really be concentrated at the primary production handling and elevator end of the system.

Not least, some other requirements come into effect. People would need to make sure their operators are trained, since dependence on people working the system will be very important. As you move toward the food manufacturing and retailing end of the supply chain, those companies will have to create additional stock keeping units in their inventory management systems and in their shelf management systems at the retail end. Potentially, if you have a biotech variation of a product and a non-biotech variation of a product sitting side by side on the shelf, you can see that this will create space management issues.

Finally, there's liability insurance. If you have a mandatory labelling system in which there are legal liabilities, then insurance will be a necessary option for prudent operators.

Certainly, those were the major considerations, but other factors would have an effect on this subject. Really, the cost impact of some of these implications was beyond the scope of our work, but these certainly need to be noted.

One such impact is the definitions of “biotechnology” and “genetic modification” that are used, and whether they're the narrow definitions or broader definitions currently in the regulations. There's the question of whether you include or exclude processed products and derivatives, such as processing aids, flavourings, and additives. Essentially, those are products whose processing typically removes DNA or protein. The product that is used is not genetically modified, it just happens to have come from a product, some other part of which has been modified.

The inclusion of those products under a labelling regime would potentially mean that...I think the estimates range from 70% to 85% of processed products that would be subject to labelling. This is an area in which international harmonization is a consideration. In the Australian labelling system, for instance, these products are not required to be labelled unless there is genetically modified material present. There's a relatively narrow application of the labelling requirements there, and that would reduce that percentage of products considerably.

¿ (0925)

Those are the main parameters or process requirements. According to the information we were able to obtain from interviews and from background research, the cumulative impacts, from seed production through to production processing, manufacturing, and retailing, would mean about a 9% to 10% increase in the retail price or cost. If you turn that around into a cost impact relative to the price the farmer gets for, say, canola or corn, that is equivalent to about 35% to 41%. Based on the assumptions in our report, that's a significant amount that equates to an annual cost of between $700 million and almost $1 billion per year, which represents almost 2% of the total expenditure on retail food products in Canada.

I'd be happy to expand on some of these points later.

The Chair: Thank you, Geoff.

From AGCare—the full translation is Agricultural Groups Concerned about Resources and the Environment—we'd like to welcome Quentin Martin and Brenda Cassidy.

Quentin, are you going to make the presentation?

Mr. Quentin Martin (Member of the Board, AGCare (Agricultural Groups Concerned about Resources and the Environment)): I am.

Good morning, and thank you, Mr. Chairman, especially for articulating the acronym. I stumble over it myself sometimes.

My name is Quentin Martin, and I farm about half an hour west of Guelph, Ontario. I have been involved with the AGCare organization in Ontario for a number of years. It's a coalition of about seventeen farm organizations in Ontario that are involved in crop production or horticultural production. As the acronym suggests, we're involved with issues around modern technology and farm production, crop protection, and nutrient management.

We're here today to talk about the labelling issue, but I'll start off with just a little bit on grower background. In Ontario, we've seen a growing acceptance of the technology by the farming community, starting off with Bt corn, then herbicide-tolerant soybeans and canola. It's estimated that, in the 2001 crop, about 30% of the soybeans were GM, as was 40% of the corn and probably closer to 80% of the canola.

As a seed grower myself, I get to watch this acceptance happening within the farm community. It hasn't been a bandwagon effect. The technology is one to three years behind its uptake in the U.S. I would say Ontario farmers have spent a lot of time kicking the tires of the technology and assessing it, and they're taking their time accepting it.

Around the regulatory aspects of labelling, as you're well aware, since 1994, under deregulation of the Canadian Food and Drugs Act, all new genetically modified crops must be thoroughly assessed to ensure their safety for human and animal health and for the environment before they can be grown in Canada or be used in foods marketed here. I think that's a point that is missed completely by a lot of people, and especially by those choosing to take a lot of surveys of people's opinions.

I'd almost be willing to bet the farm that probably 90% of Canadians don't understand that very fundamental point around labelling: that we do in fact have a mandatory component in place already. This system, as it is, is more comprehensive than that used in most other countries. It's recognized and has the support of a number of international agencies.

Labelling genetically modified foods is a complex issue. Under current Canadian law, genetically modified foods must be labelled if they are significantly different from their conventional counterparts in terms of their nutritional composition, or if they pose a health or safety risk. It is imperative that the current approach to mandatory labelling for GM foods that may pose health or safety concerns for consumers be maintained.

Labelling foods based on their production method—such as organically or by use of GMs—in order to enhance consumer choice is not a health and safety issue. This type of labelling has traditionally been voluntary, and it should remain so. In order to provide consistency and prevent consumer fraud, such labelling must be based on clear and meaningful standards. AGCare is very supportive of a voluntary approach and is an active participant in the Canadian General Standards Board process.

In every other country where mandatory labelling of GM foods is either in development or in the early stages of implementation, regulators have allowed for an extensive network of exemptions and loopholes in order to make sure the labelling is practical and relatively inexpensive. As a result, many food ingredients obtained from GM crops are exempt, and foods that are classified as non-GM may actually contain a significant percentage of ingredients that come from GM sources. Consumers who buy such foods on the basis of their non-GM classification are therefore being misled. For example, the labelling in Japan only worries about the top three ingredients by weight, assuming that someone who has a concern about it isn't worried about the fourth item. And there are other examples in the U.K. as well, where they're starting to see that the practicality, affordability, and enforceability of the mandatory system are starting to show cracks.

¿ (0930)

The totally mandatory labelling of GM foods is unnecessary. There is no evidence to suggest that GM foods approved for sale or use in Canada pose any health or safety risks. If such risks are to be discovered, the products should not labelled, they should simply be removed from the marketplace. In their investigations of Canadian regulatory approaches to GM foods, both the Royal Society of Canada and the Canadian Biotechnology Advisory Committee took the position that there is no scientific justification for mandatory labelling.

We've just heard about the cost implications. I won't dwell on those, but the cost implications also extend into the regulatory aspect as well.

There are also trade implications to a mandatory labelling system. With our major trading partner to the south of us, thousands of truckloads of food product move back and forth on a daily basis. There is no question that if there is a difference in labelling approach, there will be trade issues. I would suggest that this is not a place where we want to express our uniqueness from our nearest neighbour.

Mandatory labelling of genetically modified foods may actually reduce consumer choice. For example, we had the Bt potato, and then we didn't have the BT potato. I don't farm potatoes or sweet corn myself, but I believe those were two crops that should have been accepted and actually would have had a very positive benefit environmentally. It was through the choice of one or two very large corporations on the manufacturing side...they even expressed that it was not due to science, it was purely due to optics that they chose not to engage in the use of the Bt potato. Because of their market presence, they were able to effectively have that product discontinued. It's the same with Bt sweet corn. That technology seems to have stalled out for a similar reason. So, in effect, a mandatory system would lead to fewer consumer choices.

Others have addressed the aspect of information. We agree there is a role for labelling in order to help to provide information to those consumers who want to know more about food production practices, but that need would be better satisfied through a voluntary labelling system that could be clearer.

There are also several other advantages to a voluntary system. Labelling can be reserved for products for which the origins of all ingredients can be clearly identified. Increased costs of differentiated products would be borne by those who derive the benefits from the labelling. Trade would not be disrupted—and I don't think we need any more agenda items on that issue. Those who want to choose products based on the process by which they are produced would be able to do so.

In conjunction with a multi-stakeholder group, the Canadian General Standards Board is developing a standard for labelling genetically modified foods. This is not a short-track speed skating event, this is a marathon event. It has been on the go for two years so far, and we are continuing and will continue in that process.

Voluntary labelling is not enough. Tied to that is information. We need toll-free numbers and websites, a lot of which are available now. In conjunction with voluntary labelling, these types of measures would provide background information necessary for informed consumer choice, albeit consumers must choose to inform themselves.

¿ (0935)

In summary, GM crops play an important role in crop production in Ontario and Canada. Canada's current approach to the regulation of novel foods is superior to that used in many other jurisdictions in the world. The definition of “genetic modification” used for labelling purposes should be consistent with the definition of “genetic modification” used in Canada's Food and Drugs Act. Mandatory labelling of GM foods that pose health and safety concerns for some consumers already exists and must be maintained. Mandatory labelling of all GM foods is impractical and unnecessary. Efforts in other jurisdictions to institute mandatory labelling have resulted in misleading labelling practices. Voluntary labelling based on clear and concise standards must be combined with other methods for providing meaningful information to consumers.

Thank you.

The Chair: Thank you, Quentin.

From the Western Grain Elevator Association, we welcome Ed Guest.

Mr. Ed H. Guest (Executive Director, Western Grain Elevator Association): Thank you for the invitation to appear today, Mr. Chairman and honourable members. Western Grain Elevator Association members do appreciate the opportunity to appear before you.

It's not our intention to address issues concerning agricultural biotechnology itself. Rather, I'd like to address key issues, strengths, and weaknesses related to Canada's grain transportation and handling sector, issues that must be addressed when consideration is given to any mandatory labelling regime.

Briefly, our association was established in the late 1800s. Our members collectively own some 90% of all primary elevators. We own the terminal elevator in Prince Rupert, all of them in Vancouver, all but one in Thunder Bay, and terminal elevators or transfer elevators in the St. Lawrence Seaway.

Our members are responsible for some $30 billion worth of economic activity annually. We buy between 30 million and 50 million tonnes of product directly from farmers on an annual basis. For the most part, we handle that tonnage twice, first in our primary elevators, and since they're exported for the most part, we handle them again in our terminal elevators. The short version is that the purchasing, handling, management, and marketing of 90% of western Canada's agriculture is our primary business.

At the onset, our members support freedom of choice for both consumers and farmers as it relates to the consumption and production of food through biotechnology. People must understand, though, that those who are seeking to impose greater consumer information onto the marketplace also tend to have a very limited understanding of the grain handling and transportation system. So, unfortunately, you politicians, along with industry and consumer representatives, must be keen to try to find out just what does happen in our section of the industry. For example, during each of the last two crop years, our primary elevators received and shipped, on average, 31 million tonnes of grain. That includes only the six major grains, and doesn't include such things as peas, beans, and lentils.

WGEA member companies do engage in quality segregation for a variety of grains and oilseeds. This practice is commonly referred to as IP systems. Marketplace demands have developed our handling system as it is today. We are generally capable of quality segregation within agreed tolerances. We absolutely cannot handle 100% purity of anything, and this is particularly true of grains and oilseeds that are not visually distinguishable.

We have been involved in product segregation since grain was first grown in Canada; however, in the past, these grains have all been what we call KVD, or kernel-visually-distinguishable. Our members do have the ability to segregate grains and oilseeds within our present system using KVD methods; however, all of these grains have a tolerance.

Liabilities associated with handling products of biotechnology, and the transfer of these liabilities throughout the chain, are critical elements for us. Whether it be contamination of others or the violation of patented DNA, liabilities are a critical concern for us.

WGEA recognizes that there are potentially enormous benefits to producers—as we just heard—and the grain industry as a whole because of advances in plant breeding that have been made possible through biotechnology. Such grains as fusarium- and midge-resistant grains are a couple of examples, and I'm sure there will be many more as time goes by. Unfortunately, though, there are several challenges that we must address. Some GMOs produce seeds that are visually indistinguishable from existing seeds, and the quality characteristics are also very different. Methods are required to ensure that no two products are commingled, as this usually results in large financial losses. Just imagine a 20,000-tonne boat of anything valued at a couple of hundred dollars per tonne, with that load valued at nothing all of a sudden because of a product in which you can't see any difference just by looking at it.

¿ (0940)

Breeding technology currently is way ahead of testing. As we heard from KPMG, testing can be done in labs staffed with highly trained technical people, but it cannot be done by the farmer, it cannot be done in the driveway, and it cannot be done in any kind of timely fashion. Our members have spent some $1.5 billion to build new high-throughput elevators. If we had to stop every truckload in the driveway, we wouldn't have a system in western Canada.

As new varieties become registered and customers demand more and more custom specifications, there will no doubt be increases in the total number of segregations required. If this means a move away from a bulk handling system of any kind, we're in big trouble. In the absence of cost-effective technology to readily identify the product, an alternative system of segregating products of biotechnology from those not derived through biotechnology would have to be developed. Most alternatives seem to involve some form of affidavit or declaration, supplemented by actual testing at some stage in the chain. I think it would be fair to say that our actual experience with an affidavit system will determine the practical applicability of segregating gains and oilseeds on a non-KVD basis. Essentially, the system will only be as good as the information provided.

We must ensure that we do not develop and invoke labelling rules that will make it impossible for our bulk handling system to function. Our system of production and handling foodstuffs is in bulk. I noted earlier that we handled in excess of 31 million tonnes of product. Consider that it was handled in the 2000-01 crop year, at 627 primary elevators. The year before, we had 848, and we had 976 the year before that. It looks like we'll end up having somewhere around 300 to 350 primary elevators down the road.

That product arrived in our elevators in trucks ranging from 10 to 44 tons—and a regular farm truck to a 44-ton is a B-train, for those who don't come from Mr. Borotsik's part of the world. They go into primary elevators that have bins raging in size from 90 tonnes to 1,000 tonnes. Currently, it takes minutes to unload a tonne, determine its grade, and move it up to a bin, at which stage it's commingled and prepared for cleaning or shipping.

If each truckload required off-site testing for traits not visually distinguishable, it would effectively bring the bulk handling system to a standstill—not slow it down, but bring it totally to a standstill. The arithmetic is pretty simple if you divide 10 tonnes into 31 million and then take two or three days to get a test done for each portion—and I submit it would probably be five or six days by the time you transported a sample to a lab, had it tested, and sent the results back.

While grain is in the primary elevator, it may contaminate or be contaminated at some twelve to fifteen crossover points. A number of these stations, such as the receiving leg, could never be cleaned to 100% purity, so product could not be 100% pure thereafter. Our operations people advise that we would have to shut down an elevator from two to four days in order to attempt to get close to 100% purity.

Grain handlers cannot and will not comment on additional costs for producers, processors, or consumers. It's our job, however, to advise you in absolute terms that the bulk handling system in western Canada cannot segregate grain without some commingling occurring. If a label were to read “Does not contain genetically modified organisms”, the bulk handling system in western Canada would be paralysed to the market, and probably all markets. As noted earlier, again, it's impossible to segregate grains within an elevator, terminal, or country, without some commingling occurring. And notice that I've repeated that about five times in the last four breaths, because it is extremely important.

Many experts, such as KPMG, some professors in Saskatchewan, and some folks in the U.S., have attempted to determine an exact dollar-per-tonne cost to segregate in IP products. In general terms, we agree with KPMG that this is impossible. Each additional segregation slows down the system, and that results in a cost. The larger the program, the greater the cost, unless the program becomes large enough that it can be handled in its own absolute facilities, but I don't see that happening for an awful long period of time.

Our member companies support consumer information that is accurate, verifiable, understandable, and not deceptive. However, the marketplace demand for greater consumer information should be the principal driver behind any labelling regime. The WGEA believes the best way to promote public understanding of biotechnology is to create an environment in which food companies voluntarily describe the attributes of their product that consumers are seeking information about. This is the same basis for other standards, such as organic food labelling, which we've heard about from our friends with me here.

Mandatory labelling of foods derived through biotechnology, on the other hand, will disrupt current, non-segregated commodity trading and shipping practices, and erode consumer confidence in our food regulatory system. It will also have significant ramifications for our grain handling and transportation systems.

¿ (0945)

Having stated the obvious, we again stress that given that many GMO grains are not kernel-visually-distinguishable, or KVD, and given that testing has not kept pace with technology, western Canadian agriculture would be seriously harmed if a labelling regime, voluntary or mandatory, did not allow for a reasonable tolerance.

I understand that you folks were out in western Canada last week. It's too bad you won't be there next week, because I'm going to offer you now—and would have offered this to you then—tours of some of our facilities, so that we can actually show you what goes on, how the system works, and where contamination can take place.

I certainly would be pleased to answer any questions you may have. Thank you, members.

The Chair: Thank you, Ed.

Paul, I hope you caught your breath. You came in a little bit late.

Paul Mayers is from the Department of Health, colleagues.

With all of this, everybody is talking at the same table about what kind of foods and what kinds of produce we're talking about, and how it's happening. Out there, there seems to be a lot of confusion about other systems. How many products are we basically talking about with this, Geoff?

Mr. Geoff Golder: Do you mean how many products there are now?

The Chair: Yes. I don't mean manufactured products, but basic food commodities.

Mr. Geoff Golder: Potentially 70%-85% of processed food products—

The Chair: No, I'm talking about the basic ingredients. We're talking about literally—

Mr. Geoff Golder: Genetically modified canola, soybeans, and corn would account for the vast majority of genetically modified products grown in Canada. There were genetically modified potatoes, but I don't think they're available now. There were genetically modified tomatoes that are no longer on the market.

Elsewhere, there is genetically modified cotton in the U.S. and other parts of the world. Genetically modified papaya is found in Hawaii. Many other products are probably in the pipeline, but they are not approved for production. They're very much bulk commodities.

The Chair: Thank you very much.

Paul, are you ready?

Mr. Paul Mayers (Director, Food Policy Integration, Food Directorate, Health Products and Food Branch, Department of Health): Absolutely.

Mr. Chairman and members, thank you very much for inviting Health Canada to appear. I do apologize for arriving late. I had some other commitments that were impossible to get out of.

What I propose to do is take a very short time to provide the committee with some background regarding Health Canada's role in the regulation of genetically modified foods and, in that context, current labelling positions. I realize that within the context of a study of the implications of labelling for the sector, the regulatory context is important. We trust that the committee will find the background that we hope to provide useful in its deliberations. In response to questions, I certainly hope I will be able to provide you with even deeper insight than the presentation itself.

At the federal level, both Health Canada and the Canadian Food Inspection Agency, the CFIA, are key partners in addressing the safety of genetically modified foods. Under the Food and Drugs Act and its regulations, Health Canada is responsible for provisions related to public health, food safety, and nutrition.

With regard to foods, Health Canada establishes the science-based policies and standards relating to the safety and nutritional quality of foods, including those derived from biotechnology. As my colleagues from the Canadian Food Inspection Agency have already indicated in earlier presentations, the CFIA is responsible for the federal enforcement of these standards.

In regard to genetically modified foods, in terms of crops to date, these are the products that have been so far commercialized. We do have experience in the regulation of these crops. We also have experience in the regulation of enzymes derived from genetically modified organisms. Before any of these assessments for foods, and particularly those derived from plants, the Canadian Food Inspection Agency is involved long before Health Canada becomes involved at the level of proposed commercialization. CFIA is involved, of course, in reviews regarding any potential negative impacts the source crop might have on the environment. They do that through the authorization of field trials, as you've heard.

In order to address the human safety of novel foods and food ingredients, including those derived from biotechnology, under the Food and Drugs Act and its regulations, there is a regulation—the Novel Foods Regulation—requiring that pre-market notification for all novel foods be provided to Health Canada, so that their acceptability as food can be determined prior to sale.

The Novel Foods Regulation includes foods derived from genetically modified organisms, of course, but it is not solely focused on genetically modified organisms. In addition to the products of genetic modification, the regulation encompasses foods that may have undergone changes in composition or nutritional value as a result of a manufacturing or packaging process—novel processes applied to food, for example—or any substance that does not have a history of safe use as food—a truly novel food, something we have never consumed, such as a single-cell protein that is proposed for use as a food, for example.

Mr. Chairman, in terms of the approach we take to that safety assessment responsibility, let me just briefly overview it. We take a comprehensive and rigorous approach to the assessment of the safety of each of these foods. In terms of genetically modified foods, our scientists consider how the food was developed, and include a careful review of the genes introduced and the source of those genes, while also considering the genetic manipulation at the molecular level. We consider the composition of food both in terms of considerations related to the chemical constituents and in terms of the nutritional impacts of those constituents in terms of composition.

¿ (0950)

As an extremely important part of the assessment of each product, we consider the potential for the food to be toxic, the potential for it to include components that have the potential to cause toxicity, and the potential for components to cause allergic reactions. This information is considered through data submitted by the petitioner, as required under the Novel Foods Regulation. That data is reviewed by a team of scientific evaluators representing expertise in molecular biology, toxicology, chemistry, nutritional sciences, and microbiology.

We believe it's important to recognize that no product is subjected to review by a single person, because we can't embody in a single person sufficient expertise to cover the range of issues relevant to food safety. The assessment of each product is therefore conducted by a team. The course of that review includes consideration of the need for additional research or testing, and we do have the ability to ask for additional data if we are not satisfied at any stage in the safety assessment process.

The approach I've just described is outlined in our 1994 publication entitled Guidelines for the Safety Assessment of Novel Foods. These guidelines are based on scientific principles that have been developed over the last ten years or more, through expert international consultation with agencies within the UN family, the World Health Organization, and the Food and Agriculture Organization of the United Nations, as well as work undertaken within the member countries of the Organisation for Economic Co-operation and Development, the OECD.

This approach, as described, is similar to the safety assessment approach followed by regulatory agencies in countries around the world. The approach described in the guidelines is similar to that described in similar guidance pieces from Australia, New Zealand, Japan, the United States, and the European Union. I realize it is often raised that there are differences between ourselves and the European Union, and I'm sure there are, but there's a very high degree of consensus scientifically at the technical level in terms of the assessment of these products.

Therefore, when one considers that assessment, it's only when Health Canada's scientific evaluators have reached a point of no concern regarding the safety and nutritional quality of a novel food that it's permitted in the Canadian marketplace. These are the products we are considering when the issue of labelling is raised, so I raise the safety assessment context in order to put in context the products that are in the marketplace and are therefore considered in terms of labelling.

As pointed out earlier by my colleagues from the Canadian Food Inspection Agency, the responsibility for labelling policy under the Food and Drugs Act is indeed divided between Health Canada and the Canadian Food Inspection Agency. Health Canada's responsibility for food labelling falls within our mandate for health and safety. The Canadian Food Inspection Agency's responsibility is for the broader food labelling policy and for regulation issues not related to health safety. In particular, they are responsible for protecting consumers from misrepresentation and fraud with respect to labelling, packaging, and advertising, and for prescribing the basic food labelling and advertising requirements.

¿ (0955)

In the Health Canada context, we focus specifically on labelling as it relates to health and safety. In considering products, if we identify a nutritional or compositional change in the course of an assessment, this is where we will require it to be identified on the label in order to alert consumers. Similarly, in the course of the assessment, if we do indeed identify a health or safety concern and there is sufficient evidence to demonstrate that it can be mitigated through labelling, then we will require that special labelling to equally address that particular concern.

Let me mention the current guidance concerning labelling. I noted for you Health Canada's specific approach in terms of health and safety labelling regarding compositional change or labelling to address a particular health or safety concern. In addition to that, labelling must be understandable, truthful, and not misleading. Our federal policy does permit manufacturers to voluntarily label foods as being either derived from or not derived from genetic modification, provided that the approach in terms of labelling is truthful and not misleading.

Mr. Chairman, along with other federal departments, Health Canada does recognize that the labelling of foods derived from biotechnology is an important issue for consumers. We have therefore contributed to important work in several national initiatives that have examined mechanisms to provide information, in an effective manner, on foods derived from biotechnology. One of those initiatives, of which this committee is very aware, is the development of a national voluntary standard for foods derived from biotechnology, something that is currently being facilitated by the Canadian General Standards Board. Health Canada has been and will continue to be actively involved in that process, and we hope to contribute to the continued development of an effective standard.

We realize that issues related to consumer choice are part of a broad range of concerns that include social and ethical considerations, as well as human and environmental safety issues. It's important to note that these issues are being studied by the Canadian Biotechnology Advisory Committee, the committee of experts established to provide independent advice to seven ministers on biotechnology issues. In addition to its broad activities, the Canadian Biotechnology Advisory Committee is concluding a special project that it undertook, and which concentrates on the regulation of foods derived from biotechnology. The committee has been going through a process of research and public consultation, and it is preparing a report, along with recommendations. We are looking forward to that, and we expect that it might be released this spring. We are aware of the interim report that was the subject of consultation, and we contribute to the discussion within CBAC by providing them with any information and briefings that they request.

An additional issue that often comes up in this context or is tied to labelling and does relate to Health Canada's responsibility, is the issue of post-market monitoring. I would like to touch on that briefly.

There is much debate regarding the desirability of monitoring for any possible long-term or unintended effects associated with genetically modified foods once they're in the marketplace. For Health Canada, of course, the priority is effective assessment before products reach the marketplace, but we recognize that as part of any effective stewardship program, we must consider both the pre-market and post-market considerations. We have therefore been actively considering strategies for an effective surveillance system through a project we have entitled the Biotechnology Surveillance Project, which was initiated in the fall of 2000. Its objective is to develop a surveillance system that would monitor potential human latent health effects of biotechnology products regulated in Canada. Genetically modified foods would be included amongst those products.

I will now wrap up.

À (1000)

The identification and measurement of potential long-term health effects in the absence of any identified health concerns is a tremendous challenge, and we recognize that. We need to identify and track exposed populations, and the issues of availability and quality of data are particularly of issue. We recognize that future generations of biotechnology products will require post-market monitoring, because they are intended to have nutritional impacts that are different. They will also have functions that we will want to monitor in terms of the efficacy of those products, so we are working forward.

In conclusion, Mr. Chairman, we hope we have provided some information that will be helpful to your discussions. We note that, on our website, we provide decision summaries on each product that we assess and permit into the marketplace. Of course, the regulations and guidelines are all available there as well, along with fact sheets.

Thank you for your indulgence, Mr. Chairman. I look forward to the discussion.

À (1005)

The Chair: Thank you, Paul.

Howard, would you like to lead off the questions?

Mr. Howard Hilstrom (Selkirk--Interlake, Canadian Alliance): Yes, sure.

About two years ago, I gave some positive criticism to the David Suzuki Foundation over a bit of what I considered to be scaremongering. It was really interesting to hear Mr. Suzuki say the other day that the foundation still has some concerns in regard to environmental issues—I do too—while also indicating very clearly in their report that biotechnology is going to have a big place and a big part to play in feeding an ever expanding population in this world. I was quite pleased to hear that, and I think it's an indication that movement is being made in a positive way to get this issue of the safety of GMOs out of the way and get on with feeding the world and ourselves.

Paul, this is my question: As of 4 o'clock yesterday afternoon, have you or Health Canada received any complaints or any proof or evidence that anybody has gotten sick from GMO foods that have been consumed by people, or any complaints that GMO food has made them ill?

Mr. Paul Mayers: Thank you very much for the question.

In terms of any products reviewed and permitted by Health Canada, we have no reports of any adverse reactions. There is no evidence of illness associated with the products. But in response to the question, I think it's important to perhaps answer it a bit more broadly than in terms of just Canada.

You may have seen a report of an occurrence in the United States in which some groups credited genetically modified bacteria with illnesses associated with a dietary supplement. I want to raise that so it's on the table. I will note that the particular product, which some had associated with an ailment, was very thoroughly investigated by the Food and Drug Administration in the United States. They did identify that the product was indeed associated with the illnesses, but they noted in their assessment that the issue related to the product was some changes in the manufacturing process that eliminated some key purification steps. In the FDA report, it was noted that the application of genetic modification to this particular bacterium was not, in their assessment, associated with the illnesses, but I think it's important that this issue is on the table when one considers the issue in the question you raised.

Mr. Howard Hilstrom: Exactly, and that's the point. Health Canada has received complaints and has documented evidence and solid proof that people have in fact become very ill from eating organic alfalfa sprouts and those sorts of things because of that contamination aspect. It was not the sprouts themselves, but contamination from another source. I want to have that out on the table, because, like you say, this scare campaign of the anti-GMO lobby group is what's causing the problems. It's not based on science, but that's why we delve into these things. The health risks are acceptable for any kind of food, GMO or non-GMO.

In terms of the costs associated with segregation and everything, a voluntary labelling system will take care of those, because the costs will be applied where the marketplace determines that doing so is necessary. If it's going to add to the cost of our food because consumers demand that voluntary labelling, that's fine. Hopefully the cost will fall on the consumers of those products that they want labelled in that certain way.

Two issues are really not settled. One is the clarification of the trade impact of us moving out of lockstep with our North American trading partners. Canola comes across the border from the United States into Manitoba for crushing, and goes back and forth. I've seen Mexico take fifty-carload trains out of our high-throughput elevator north of Winnipeg.

JoAnne Buth, is there a trade implication to Canada saying we will have mandatory labelling and will try to enforce it on imports from other countries? We've heard the chairman of the health committee saying to worry about the trade implications, but that they're secondary to the health of Canadians by a long way. That was in committee just the other day.

À (1010)

Ms. JoAnne Buth: Most of the canola is destined for the export market, but you're correct in terms of being in sync in North America. Seed from the U.S. is coming into the Altona plant in Manitoba, and Mexico is becoming a more important market for us. If we go to a mandatory labelling system in Canada, I think it puts our market in the U.S. and Mexico in jeopardy.

But I should back up for a minute. The U.S. is our largest market for oil and meal. That market is worth over $500 million per year, and we hope to continue to expand that market on the basis of canola oil being healthy oil.

Mr. Howard Hilstrom: Part of the problem is that we may force other countries exporting food into our country to set up the same segregation system to verify, under a mandatory labelling system, that their foods meet our requirements. If they're incapable of doing that, they're going to consider the fact that we have mandatory labelling to be a non-tariff trade barrier, are they not?

Ms. JoAnne Buth: Definitely. If things aren't based on science and there isn't a health and safety reason for a mandatory labelling scheme, that would be perceived as a non-tariff trade barrier.

Mr. Howard Hilstrom: We're talking about $27 billion in agricultural exports a year as a figure that I think is very accurate.

The last issue that needs to be addressed is the questions that are always brought up about rogue plants being uncontrollable because they're resistant to chemicals and those sorts of things, and about the organic farmers saying pollen is drifting into their plants. The environmental issue seems to be the only one that I see as being any kind of a stumbling block to GMOs right now, and it is one that is the subject of a lawsuit by the sod people from Saskatchewan. Could you just quickly comment on that?

Ms. JoAnne Buth: When transgenic canola was first introduced into Canada, we knew there would be pollen flow. That was documented, so CFIA put in requirements in terms of isolation distances in regard to the levels that could occur in non-GM seed. We knew there would be some gene stacking as well, but CFIA felt at that time that it would be manageable.

We have had some instances across western Canada in which we do have some multiple-resistant volunteers. We do have pollen flow, we know that, but the information that we have to date says it's being managed, and is being managed very well. The first field was found in Alberta. Since that time, Alberta has come close to completing a survey and has commented publicly that they don't think it's as big an issue as they originally thought it was going to be. So there is some evidence that it's happening, but we expected it and it's manageable.

In terms of organic production, one of the difficulties is that the organic growers have set their tolerance at zero. Interestingly, though, they don't set their tolerance for pesticides at zero. Zero is virtually impossible to meet in this day and age; however, I should tell you that I'm aware of at least four fields that, last year, were produced under a different production system called integrated pest management. They were tested at the end of the year and were found to be non-GM, so I think it's also possible to produce our canola organically.

In terms of the GM issue, it's very difficult to produce canola organically because of the pest and disease issues. It's not an easy crop to produce organically. As a result, we have very little organic production in Canada anyway.

À (1015)

Mr. Howard Hilstrom: Thanks, Mr. Chairman. Those were great answers.

The Chair: You got beyond the pale with us, though. You had a lot of time.

We're now going to move to Marcel, s'il vous plaît.

[Translation]

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chair

When we listened to our guests this morning, it seems to be an almost impossible situation for the consumer who is concerned about being able to chose non-GMO products in the future. When you speak of an increased production cost of about 30 to 35 percent, that is to say, an increased cost to the consumer, that is fairly significant to have the level of safety that many consumers are demanding. In any event, personally, it bothers me a bit because I have always thought that it wasn't the human being who should adapt to technology but the technology which should adapt to the consumer, to the human being. However, in light of your testimony, that seems to be difficult.

I'm addressing myself to Paul. What can we tell a consumer to make him feel safe? You say that we are monitoring toxicity, allergies and the nutritional value of foods and that we are also monitoring after the sale and after the consumption to see if the marketed item is nutritious and effective. Is there some way to tell the consumer that products containing GMOs are not damaging or unsafe in the long-term? Is it possible to give the consumer who wants to eat properly, a guarantee so that he knows, with certainty, that we won't tell him in five, ten or twenty years that we made a monumental mistake in the case of the product he is consuming and that there are some illnesses arising from the genetic transformations we made him go through?

Mr. Paul Mayers: Thank you. If you will permit me, I will continue in English.

[English]

You ask a very important question. We apply a pre-market approach to assessing these products in order to provide consumers with the confidence that the products in the marketplace are, in fact, as safe and nutritious as other foods.

When we're dealing with foods, we recognize that unlike other consumer products, the food supply is not without certain inherent risks. We know some people have allergic reactions. We know products are occasionally contaminated with pathogenic bacteria. We recognize that plants, as part of their normal defence mechanisms, produce compounds that can be toxic if not carefully considered and controlled. These are all parts of the background that we work within.

The issue of long-term safety is very important. In fact, it is a key consideration in our safety assessments. Does that equate to an absolute guarantee? No, it doesn't. We cannot guarantee absolute safety. What we can do is provide what we believe is a very high degree of assurance that we understand the product and its potential for interaction in the body. Through that process, we can provide a confident assessment of the potential for any short-term or long-term risk, but it's not an absolute guarantee. I don't want to give you the wrong impression that it is an absolute guarantee.

We will continue to improve techniques for assessing the issue of long-term safety. We will continue to develop strategies for monitoring to allow us to better predict things. But we are dealing with a product that is relatively new—the first products were introduced in 1994—and it will take time for consumers to develop confidence in the products and in the regulatory systems, as well.

We hope Canadians have an appropriate level of confidence in Health Canada in terms of our ability to asses these products, but we don't want to give a blanket response that all products of biotechnology are safe. In fact, we wouldn't do safety assessments if we believed there wasn't a potential for risk. At the same time, we do believe we have a very effective system that allows us to assess that potential for risk and, if indeed there is a risk, to prevent those products from going into the marketplace or to mitigate that risk in the marketplace if it is possible to do so.

À (1020)

[Translation]

Mr. Marcel Gagnon: How much time passes between the moment a genetic transformation is performed and the moment where the product, in your opinion, offers sufficient guarantees that it can be allowed to be used and to be put on the market? How long does that phase last?

[English]

Mr. Paul Mayers: Thank you very much.

Perhaps those closer to the industry know this better than I do, but the information that we've tended to see with the more than fifty products we have assessed is that, from the first work in the laboratory through to a product being proposed to Health Canada to be permitted as a food, the average time is in the order of ten years of development time, including field trials to the development of enough seed to be a commercial possibility.

In terms of our own assessments, we are looking at data collected over several years of that period, once they have a candidate that they believe does have commercial potential. That isn't from day one of that ten-year period, but over the last four to five years, data is certainly being collected for the human safety assessment. We're therefore looking at a data set that is generated typically over four to five years. In our experience, though, it's usually about double that in terms of total development time.

The Chair: Thank you, Marcel.

Murray.

Mr. Murray Calder (Dufferin--Peel--Wellington--Grey, Lib.): I want to deal with definition. If we're going to get into this business of voluntary labelling, we're obviously all going to have to be singing from the same hymn book, but I don't see that right now. I see the Europeans working on draft labelling and a draft definition of what a GMO is. The United States is also working on one. We've come up with a very broad definition that falls along the lines of an organism exhibiting novel traits not previously observed in the organism, regardless of the method used to obtain those new traits. That's using a pretty wide paint brush there.

First off, I'm wondering what your opinion would be about us, as a government, moving towards.... We're in the WTO negotiations right now. Should there not be an international definition of what a GMO is, if we're going to get into voluntary labelling? That's my first question.

Secondly, should we tighten our definition here at home? Currently, under the European definition, we have Roundup Ready canola and we have a pesticide tolerant wheat, and both of them were created through a chemically induced mutagenesis process. The Europeans consider Roundup Ready canola to be a GMO, but not the wheat. There's no consistency there, but there has to be consistency within the definition if we're going to have voluntary labelling.

Finally, I'll ask a philosophical question. When does a GMO become a plant breed?

À (1025)

Ms. JoAnne Buth: I'll actually address your second point first. Just as a correction, though, it's the CLEARFIELD system that was derived through mutagenesis. It's CLEARFIELD canola that would be accepted as a product of mutagenesis; the Europeans would accept it, whereas they wouldn't accept Roundup Ready or Liberty Link canola because they're transgenic, meaning that there has been a transfer of genetic material.

In terms of your first question, should there be an international standard for the definition of genetic modification? It's still under some discussion, but under the Codex Alimentarius, there is a definition. Actually, in the draft voluntary standard, the narrow definition that they're using—called “gene technology”—is consistent with the Codex definition. In the draft voluntary standard, there is another definition called “genetic modification”, which is a very broad definition pointing to any modification of any part of a plant or animal in terms of inheritable traits. So we're a little bit off in Canada in terms of what we're calling things, but within the voluntary standard, we actually do have a narrow definition that is consistent internationally.

And your last question was on when a GMO becomes a variety. The scientist in me says that it's when you pass the recommendation from the recommending committee in the west and it actually becomes registered in Canada.

The Chair: Thank you.

Paul.

Mr. Paul Mayers: Thank you. I appreciate the opportunity to add something in terms of the response, because I realize part of the challenge is introduced by the Health Canada regulation in terms of genetically modified organisms. I therefore thought it would be important to share some of our thinking with you.

This is where we need to separate our consideration of health and safety from considerations like labelling. Scientifically, when discussing a regulatory approach for novel foods, we had tremendous difficulty justifying why, in Canada, we would assess one of those examples you raised, while permitting the other into the marketplace without any specific oversight in terms of health and safety.

If you take that example in which you have two herbicide-tolerant products, one developed through recombinant DNA technology and the other developed through a mutagenesis event that will have caused multiple changes in the genome, we could find no justification for why one of those products would be automatically safer than the other. Given that the focus in our safety assessment is assessing the impact of modifications at the genetic level having contributed to new traits in an organism in terms of their impacts on human health, we thought it was therefore important that both of those products be subjected to safety assessment.

We realize that is indeed out of step with our counterparts in other countries, and we have discussed it with them and raised the issue with them. While many countries respect the approach Canada has taken as being the most scientifically defensible, I haven't heard any of them suggesting they're going to shift to ours soon, because it would have implications for them in terms of products that have already reached the marketplace.

We continue to believe that if we are truly going to build a system that is not based on the process by which novelty is introduced, but a system on which the novelty itself is based, we must include a definition that allows us to focus on that novelty, i.e., the presence of a new trait that is carried through inheritably at the genetic level, rather than just the fact that the particular process applied happens to be recombinant DNA technology.

À (1030)

The Chair: Thank you, Murray.

Dick.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair.

Ms. Buth, you mentioned in passing the regulatory requirements that China has recently put in place. Can you just expand on those a little bit? Tell us what you think is happening and what we'll do in terms of finding other markets for canola.

Ms. JoAnne Buth: China has become a major market for us in the last three years. Last year, the Chinese indicated to us and to the world community that they were going to be introducing legislation for approval and labelling of genetically modified organisms. We saw the draft of that and knew there were going to be some issues in terms of how they were going to do it. There were a lot of unanswered questions.

As you're fully aware, China also came into the WTO. When they did that, they set their tariff rate quotas for oil quite a bit higher than anybody expected. We suspect that what they did was actually set them for a two-year period without realizing it.

Shortly after that, they brought in implementing regulations for their GMO legislation that gave us some very short timelines. They were brought in in January, and indicated that we could no longer export canola into China as of March 20 without safety approvals and without a safety certificate. Looking at the process, it's a two-step process that could take anywhere from nine to twelve months to get approvals. Although we don't have any qualms with China bringing in GMO regulations—we've obviously met regulations in other countries—the fact is that the timelines are so tight that they essentially will shut us out of the market in terms of exports to China. And it also impacts the soybean industry as well.

We're working with the Department of Foreign Affairs, with Agriculture and Agri-Food Canada, and with our members within the industry—the exporters and the crushers—to try to get information from China on how we can meet the regulations in a timely fashion, and on whether or not we can actually bring in a phase-in period so that we have some time to meet the regulations and still not disrupt trade. But I can tell you that trade is going to be disrupted. We already have some indications of that.

Mr. Dick Proctor: You said selling into China had grown a lot in the last few years. What percentage of our exports would have been going to China in the recent past?

Ms. JoAnne Buth: We've produced anywhere from 6 million to 7 million tonnes over the last three to four years, depending on the year. Last year it was just 5 million. Three years ago we would have sold China 1.2 million tonnes, and it was about the same the following year. Last year, though, China actually became our number one seed customer over Japan. Japan is a very consistent buyer of canola seed and usually is our number one seed customer, but China surpassed Japan at 1.9 million tonnes. China has become a very important export market for us.

Mr. Dick Proctor: Are there any offsets for that? Where else are you looking for this year?

Ms. JoAnne Buth: We've done some expansion in the Mexican market, and we're always looking at trying to expand in the U.S. market, where there is a tremendous potential because of canola's healthy image in terms of low saturates. But we do have some serious concerns about the potential delay in terms of meeting China's requirements, and we may end up this year by going into next year with more carryover until we can meet those regulatory requirements.

It's also interesting that China also has what we think may be an opportunity to allow import certificates. Because of the translation, though, some of the regulations are unclear. From what we see, however, they could give an importer a certificate to allow imports into China, so if they truly wanted Canadian canola, they could potentially offer an import certificate and bypass the system.

Mr. Dick Proctor: Okay, thanks.

The Chair: Thank you, Dick.

Rose-Marie, do you—

Mrs. Rose-Marie Ur (Lambton--Kent--Middlesex, Lib.): Yes, I have some questions as well.

In your presentation, Mr. Mayers, and in answer to a previous question on whether or not there was any evidence that someone became ill from eating a GMO product, you said you had no information about that, but you went on to say something was found in the United States. The fact of the matter is that nothing has happened here in Canada in regard to that. You also said information was being fed to consumers by Health Canada. In what fashion are you relaying that information to consumers?

À (1035)

Mr. Paul Mayers: We have primarily focused on providing neutral information on the decisions on each individual product in terms of a summarization of our assessment of each product.

Mrs. Rose-Marie Ur: These fifty products that you—

Mr. Paul Mayers: Yes, the over fifty products that we have assessed, that's correct.

We also believe it's important that we provide some background about the technology and issues related to the technology, so we have included fact sheets and so on.

We've also worked with our colleagues in the Canadian Food Inspection Agency on other information pieces that we have jointly developed in terms of communicating to consumers about food biotechnology, in order to build a better understanding about the technology and the regulatory system that's applied.

The other strategy that we've employed—and it has been largely at the request of the provinces and territories—is to interact with officials in the provinces and territories who are receiving questions and requests for information, so that we can foster a greater common understanding of the approach applied at the federal level in conjunction with all of our provincial partners. We have routinely responded to those requests by having several of our officials interact with them to share that information.

Mrs. Rose-Marie Ur: I think it's really important to get the right information out so that we quell some of the fears of the scaremongers out there.

Just as a quick question, are seedless grapes considered to be GMO-altered?

Mr. Paul Mayers: They are not. They are novel, but they were already in the marketplace before the Novel Foods Regulation was developed. In fact, our famous example of canola is itself a genetically modified product for which we did in fact do an assessment, even though we did not have the Novel Foods Regulation at the time. It was done on an ad hoc basis.

Mrs. Rose-Marie Ur: Right.

Geoff, your brief provides an excellent presentation. I have to confess that I haven't gone through your brief, but there is some good information in it and I will hopefully get through it some time.

In your assessment and in your information here, you have indicated that labelling would cost consumers between $700 million and $950 million per year, which would mean a 9% to 10% increase in food costs. Do you think they would be happy with having the mandatory labelling if we had to go that route, given the cost effect of such labelling? They would have to absorb the costs, hopefully, and not the primary producer.

Mr. Geoff Golder: Yes, it's an explicit assumption that these costs would be passed on to the consumer and would affect probably about 20% of the food that they buy, on average, given patterns of expenditure. Whether they would be willing to pay that extra is one of the $64 questions. The most recent survey that I can recall would suggest that people indicated in a hypothetical way that maybe 40% to half the population would be prepared to pay up to a figure approaching that 10%.

Mrs. Rose-Marie Ur: That's just what I'm saying. It seems to add—

Mr. Geoff Golder: But I think the surveys are notoriously unreliable in this area, because this area is not actually connected to the purchase decision or commitment. There's really no or very little evidence to go on directly in this area. There are partial indicators or proxies if you look...if we go back to, say, the situation with rBST in milk, surveys in the U.S. said a high percentage of people would not buy milk that came from cows treated with rBST, but the reality has been quite different. Maybe when Australia gets a little further on with their labelling, or some of these other countries do, some of that information will become more transparent.

I think the situation is just too complex an issue to reduce it down to whether or not people would pay more, and whether they would pay this much or not, because food price increases come from multitudes of sources.

À (1040)

Mrs. Rose-Marie Ur: But I think it's an important question to ask when it lands on their plate rather than.... You can ask for the pie in the sky as long as it's not going to affect your pocketbook, but when it starts affecting your pocketbook, you sometimes think a little bit differently in the process.

Mr. Geoff Golder: Yes.

The Chair: Thank you Rose-Marie.

Rick.

Mr. Rick Borotsik (Brandon--Souris, PC/DR): Thank you.

Again, on the additional cost, in the KPMG study, you've indicated plus 10% for retail, and plus 35% to 45% potentially for the farmer. Is that based on a 1% tolerance or is it based on a 5% tolerance?

Mr. Geoff Golder: When we started, it was an attempt to base the answer on a 1% tolerance, but the situation was that people were really probably not in a good position to comment on what a 5% impact would be.

Mr. Rick Borotsik: I'm going to get to that, because you also say in your study that the industry says 1% is unattainable, but they view 5% as being manageable. We have costs in your report and don't know whether they're based on 1% or 5%, but industry is now saying 5% is manageable. Are you saying that if it's manageable at 5%, the costs would be reduced?

Mr. Geoff Golder: No, I don't think it can connect the two.

Mr. Rick Borotsik: Okay, so the costs would be the same at 5% or 1%, then.

Mr. Geoff Golder: I imagine so, yes.

Mr. Rick Borotsik: Okay.

Based on that, then, Ed, you said in your presentation that it's impossible to guarantee 100% purity. Are you able to guarantee a 95% purity in canola particularly—and we'll talk about canola, because right now 80% of canola has a GM component. Are you able to say you're able to deliver a 95% pure product?

Mr. Ed Guest: Unlike me, I'll give a very short answer: No. However, if there is a tolerance of, say, 5%, each individual company would stand up and say it's willing to take the chance, or not, to try to produce something that's 95% pure.

Mr. Rick Borotsik: I want to go to JoAnne.

You just heard the tolerance levels. We know 80% of the canola produced now has a GM component, and has for a long time. It has been said by Paul, in fact, that canola has been a GM product going way back to its inception. In saying that—and I'm going to ask you a question you may not want to answer—is the horse out of the barn? We have people insisting that we want to get back to mandatory labelling. Is one of the options to go back to a non-GM product, or is that horse out of the barn now? Is the product here forever?

Ms. JoAnne Buth: First of all, I want to comment on the fact that people are saying all canola is genetically modified. It was produced through traditional breeding methods, through crosses and back-crosses. If you're talking about mutagenesis or if you're talking about transgenics, canola was not produced through mutagenesis or through transgenic means. The herbicide-tolerant varieties were, and they constitute 60%. Another 20% that's also herbicide-tolerant is considered to have been produced through mutagenesis, but we tend to define a transgenic canola as being the GM canola.

Mr. Rick Borotsik: But we've just heard that Ed can't differentiate between the two. He said he can't segregate, he can't guarantee 95%. So my question is whether or not the horse is out of the barn. We can't turn back that clock, can we?

Ms. JoAnne Buth: Producers will grow what the market demands. If there is a demand for conventional canola and a demand for labelling, they will grow it. Can our handling system do it at 1% or 0.1%? We don't think so. Can it do it at 5%? We think so, but we have no experience doing it that way yet. It's speculation that we can do it at 5%.

Mr. Rick Borotsik: Going back to KPMG, 75% to 80% of the processed product we now have on our food shelves contains some component of GM. I suspect canola, soy, and corn are those main components, so we're talking about 75% to 80% of those products. Can that go back? If they had to, could those processors guarantee that they could go back at some point in time and not have a GM component in those products?

Mr. Geoff Golder: I imagine right now that they wouldn't. And you're right that 70% to 85% is the estimate of products that would contain GM products. They're in corn starch, soy oils, canola oils, or parts thereof. Some manufacturers are doing work to in fact go back to their suppliers, and essentially to their suppliers' suppliers too, to determine the source of supply and whether or not those products may contain or come from genetically modified plants. I don't know the extent to which that is happening.

À (1045)

Mr. Rick Borotsik: JoAnne, in Europe, are they complying with the mandatory labelling standards that they've set for themselves?

Ms. JoAnne Buth: My understanding is that they are, but their labelling standards are essentially for products that contain rDNA. At this point, they do not have standards for products derived from rDNA, but they're looking at introducing them. It's going to be interesting to follow this to see whether or not they can actually enforce those standards and whether or not they're going to actually be able to provide something to consumers that's truthful and not misleading.

The Chair: Thank you, Rick.

Paul.

Mr. Paul Steckle (Huron--Bruce, Lib.): Thank you, Mr. Chairman.

I'm going to begin by saying that, as I see it, there are really two issues here: the people's right to choose in Canada; and trade. I would view the trade issue.... Until we have the acceptability of a universal standard worldwide, something we all work towards, we won't know what we can work towards in terms of production and in terms of how we set up our shipping facilities so that we can accommodate that kind of requirement. That is one of the issues.

The other is the right of someone to be able to choose. Well, in labelling, we already have the right to choose. Tobacco products are an example. We have mandatory labelling on the dangers of using the product—and if there are those in the room who use that product, you know what I'm talking about. Alcohol and other products on the market today give people a clear indication of what the consequences of the use of that product may be. Labelling doesn't stop people from using a product while knowing full well that there may be consequences.

I'm really wondering about this. Given the miniscule number of examples that can be given or the dangers in the miniscule ways in which people are becoming sick using GMO products, we're expending a lot of time, energy, and costs in trying to get to the bottom of this.

Paul, you mentioned in your presentation that there are examples of manufacturers that are now voluntarily labelling their products. How acceptable are those products in the marketplace? Are they more acceptable than a product that isn't labelled? How successful are these companies in marketing their products against those of others that are not choosing to label their products? Can you give me any stats on those? You mentioned that this kind of activity was going on.

Mr. Paul Mayers: Just to be clear, I hope I didn't give that impression, because I certainly don't know if manufacturers are choosing to label. I'm not sure whether someone else noted that, but I have no indication of whether or not some are choosing to voluntarily label their products. It's difficult to tell. Perhaps the only information I might share is, I believe, too overly dated to be terribly useful at this point.

Before the media interest in these products in the U.K., they did have a product on the shelves that was identified. It was a tomato paste that happened to have a small cost benefit because it used tomatoes that were more solid, and that benefit was passed on to the consumers. At that point, that tomato paste product was outselling others even though it was identified, but that changed quite dramatically shortly after the media interest started.

So it's difficult for me to assess what the potential impact of the labelling would be in terms of consumers' interest in the products. I don't know if others have more insight than I do, though.

Mr. Paul Steckle: Mr. Martin, you indicated that in cases in which mandatory labelling is in place, they have found ways by which they can circumvent that by giving exceptions. Do you want to cite an example for which that is being done? If mandatory labelling is fixed, how can there be the option to circumvent that mandatory requirement?

Mr. Quentin Martin: In response to that, I'd use the example of oils, in a case in which you have either canola or soybeans. If I produce a truckload of Roundup Ready soybeans, if it's ten tonnes, roughly two tonnes of that will be oil and four tonnes will be protein. From a purely analytical standpoint, that two tonnes of oil would not contain any of the genetic material, so that oil isn't involved in the labelling process in a lot of countries. That's where the debate starts around a voluntary system in terms of whether that kind of stuff is in or out.

If a consumer, for whatever reason, has a concern about consuming GM, do they distinguish which part of that truckload the beans came from? That's the risk of the mandatory system. Yes, it's all about choice. You can choose to go into the drive-through lane at the fast food place to get your oil-fried potatoes. The potatoes probably aren't GM, but the oil they're fried in may have come from a plant that was genetically modified. Theoretically, though, the protein isn't in the oil.

That's why this is complex.

À (1050)

Mr. Paul Steckle: Okay, thank you.

The Chair: David.

Mr. David Anderson (Cypress Hills--Grasslands, Canadian Alliance): I just wanted to mention a bit about what Paul had talked about in terms of this being a trade issue. I think China's a primary example of that.

I don't know if you wanted to say more than you did, Paul, but they buy seed canola from us and then close the borders to that same product, basically using it as a trade issue. I think we're going to see more of that. We have it here. People are using a phoney health issue to promote this thing, not realizing the trade implications that we're going to face from this.

I wanted to talk a bit about the cost to farmers. I took a bit of a look through your report last night, Geoff. You made some comments in there that said changes would have to be made on the farm, including the establishment and maintenance of records relating to the adoption of more stringent production methods—buffer zones and those kinds of things that add quite a bit of time and effort to farming; adoption of rigorous cleaning protocols for machinery and handling and storage equipment—this would again make it a whole lot more difficult on the farm; additional storage capacity; longer trucking distances to move this stuff; and testing.

Have you done any studies on what it would cost on-farm, what it would cost the producer? You use the figure of 14% here, and the grain handling system is another 10% to 11%. They usually pass those costs on to the producer, so you're looking at 25% in those two areas alone. Have you done any specific work in that area?

Mr. Geoff Golder: The only work we were able to do is basically in the analysis that we presented in there, that being one that has a weakness in the sense that it's a very specific example that we've generalized from. Nonetheless, it certainly illustrates the likely magnitude of having to do these certain sorts of things, such as, perhaps, the need to have separate storage facilities and to then ship the product to a different elevator that accepts the modified or the non-modified products.

We have not done any other studies that look at the costs in other productions situations—say, for corn versus canola versus soybeans. Some studies have been published, mostly in the U.S., that do attempt to put some estimates on that. They tend to be in that same range, but there are a wide variety of assumptions or variables that can move those costs out of that range very quickly.

Mr. David Anderson: Typically, producers are price takers, do I think we need some studies on the consequences of producers having to take a 25% to 40% cut in their income. For the most part, the agricultural community is just barely surviving now, and that would finish off a lot of producers. It's all right for urban MPs to take this up as a cause célèbre or that type of thing, but there's going to be a big cost to be paid in rural areas.

Mr. Geoff Golder: Yes, I think that's another significant issue. It's a cost issue, but it goes beyond that in that, in the way we've defined it, mandatory labelling assumes all the costs are flowed through to the consumer. That's an assumption.

À (1055)

Mr. David Anderson: Have you done any study on the costs of liability—and this may be for Mr. Guest as well—in terms of what the cost to the producer's liability would be, and what it would be to your organizations?

Mr. Geoff Golder: No.

Mr. David Anderson: Nothing at all.

We already have a case in western Canada that has arisen over a durum seed that was accidentally mixed and has been promoted and sold as something different. Apparently there are going to be some liability issues over that.

Mr. Guest, have you done anything on that?

Mr. Ed Guest: No, we haven't, but I'm going to take this opportunity to repeat that if you go to mandatory labelling and zero tolerance, we won't have a bulk handling system in western Canada.

Anytime railways go on strike, terminal folks go on strike, or whatever, the House is called back if you're not sitting, and there has almost always been legislation pretty quickly. It shows how important agriculture is to western Canada. If you want to kill it, just put in a system where we can't handle grain in bulk.

In terms of what that's worth when it comes to liability, each of my members will probably be out of business and most farmers will be out of business, except for maybe the organic folks.

The Chair: Thank you, Ed and David.

We do have a vote in the House in about 10 minutes.

To conclude, recently the committee heard something to the effect that those involved with the production of genetically modified foods have an economic advantage over other producers. They've brought something into the system, something by which they hope to improve their yield or avoid certain problems the natural species might have. Their argument was that if we're going to label, the labelling should be mandatory in terms of the costs being incurred by those who use the genetically modified system. Would anyone like to make a comment on that attitude?

Quentin.

Mr. Quentin Martin: Thank you.

I would comment about our experience in Ontario with soybean production. Prior to the introduction of genetically modified beans, a premium sector known as the white hilum sector was offering a premium to the grower or growers, who would decide whether the effort required was worth the premium.

When the GM soybeans entered into the production field, there was a second level of premium offered. It was not as much for the food-grade beans as had been the case historically, but it was for any bean that was not genetically modified, and it was usually a smaller premium. So there was another choice element on the producers' side. Again, though, the whole question was whether the premium was worth the cost. Some farmers chose that route, while other farmers chose to use the GM beans.

In another year or so, we're apparently going to have another choice in the soybean sector—and all this stuff gets segregated, by the way. While there's another choice offering coming forward, it would also be a GM soybean with a premium available.

So the situation in Ontario in regard to soybeans is interesting, because there is a lot of choice at the producer level.

The Chair: Why would you think the producers are so opposed? For example, we talk about French labelling and English labelling. In Canada, there was a great debate over what it was going to cost, but apparently it didn't cost very much.

If 75% of our products are involved with GMO, if you simply had a moon, a star, a blue dot, a red dot, or something like that on it, why would those manufacturers be so opposed to putting that dot on their product when it's in the supermarkets? Why all of this, JoAnne?

Ms. JoAnne Buth: I would go back to the food manufacturers' association that looked at what impact different labels would have in terms of consumers. They perceive that products containing GM essentially relate back to a health and safety issue, so if you're talking about something mandatory, you're talking about providing consumers with information that would essentially be misleading in terms of their perception, in terms of what that label actually is.

The Chair: So you think there would be a fear amongst consumers if they saw that red dot, blue dot, green dot, moon, or star that showed the product was....

As chairman, I have difficulty understanding what all this is about, because whether they're in China, Korea, Japan, Iran, or wherever, it's the consumers who will decide. We seem to want to bypass the consumers and not allow them to be the people to decide if it's GMO or not GMO, if it's good, or if it's bad. The marketplace should dictate this.

The time is getting short, but let's tackle this consumer thing, Geoff.

Á (1100)

Mr. Geoff Golder: I was just going to say that the mandatory labelling requirement, whether it's a dot, a statement, or a panel, does not appear to cost much on the surface of it. It's the consequences that this would have for the industry to be able to actually document and warrant the claim made on the label, whether it's that their product is GM-free or contains GM.

The Chair: Well, I was using the reverse argument.

I want to go to Mark, because he has a couple of—

Mr. Mark Eyking (Sydney--Victoria, Lib.): It's more of a statement than a question.

Usually, in the laws of economics, the more supply there is, the less demand you have. With the world food supply, it seems to be that the more supply there is, the more demanding it is on the growers. We've seen it with McCain's and the potato thing, and with China now on the canola thing.

I'm worried about the farmers, because I'm a farmer. I'm concerned that Canadian farmers are going to be caught with their pants down a bit here. They're going to have this scenario in which Loblaws wants GMO-free produce because that's the best way to sell produce, so a whole area of California is going to focus on doing that. Or Japan will want GMO-free canola, and places in Australia are going to be designated for that.

On Mr. Hubbard's comment, the consumers, the buyers, are going to drive this thing, whether it's a trade barrier or something to make them sell the product. We should watch out for the fact that certain parts of our food industry or our country should maybe be looking at GMO-free products, or we're going to be shut out of a lot of markets either at home or abroad. It's just that kind of thing.

I've seen it on my farm, and I've seen it with the organics. Everybody said that wouldn't work, but now you have major farms in California, and you have Loblaws with a big sign on their building that says “Organics”. So it happens. It's here, and now we're having courses and that for farmers for organics and whatnot.

I'm just hoping we're forward-thinking enough in our agricultural industry to know that this is going to happen, in order that we're ready for it. It might be a problem with certain elevators, but this might be a reality and we might not be ready for it.

I guess that's more of a comment.

The Chair: Mark, with that, I'm going to have to conclude this morning's session. We have several votes, and the orders are out.

This is a very difficult topic, and I hope we don't get caught too much with trying to be too pure. I guess that's what someone mentioned here. If you try to become too pure.... Even Ivory soap wasn't all that pure, was it?

Thank you for coming. We may be back to you again for more information.

With that, we'll adjourn our meeting and hit the trail.