[Recorded by Electronic Apparatus]
Tuesday, May 16, 1995
.0906 
[English]
The Chairman: Colleagues, we're again looking at the main estimates, future expenditures. We have the pleasure today of having with us Dr. Art Olson, Assistant Deputy Minister, Food Production and Inspection from Agriculture and Agri-Food Canada.
Welcome, Dr. Olson. I understand you have a short presentation and then would be willing to answer questions.
Dr. Art Olson (Assistant Deputy Minister, Food Production and Inspection Branch, Agriculture and Agri-Food Canada): Thank you very much, Mr. Chairman.
I would first like to introduce the people at the table with me: Dr. Claude Lavigne, Deputy Director, Animal Health in my branch; Dr. Anne MacKenzie, Director General, Food Inspection Directorate; Dr. Gaston Roy, Regional Director General for the Quebec Region, responsible for the delivery of our programs in Quebec; and Mr. Wayne Morris, Director of our Operations Policies Division in the branch.
[Translation]
Thank you, Mr. Chairman, for this opportunity to talk about the inspection and regulatory mandate of the department.
On the previous occasions that I have appeared before the committee we have had very useful discussions on changes that were either on the way or imminent for Canada's food inspection and regulatory system. Let me assure you that the system continues to evolve.
The Food Production and Inspection Branch is the regulatory arm of Agriculture and Agri-food Canada. The branch has a dual mandate than involves both health and safety and trade and commerce.
[English]
Our role in providing Canadians with a safe food chain is to require the agri-food industry to meet the health and safety standards set by government. Food safety, however, is a shared responsibility. The agri-food industry has the ultimate responsibility for the safety of its products. Consumers have a role as well. They are responsible for the safe handling of products after purchase.
Our people also protect Canada's valuable agri-food industry by eliminating or controlling the spread of foreign animal and plant pests and diseases.
We provide the inspection and certification required for agri-food products being traded at the interprovincial level.
We verify the certification of agri-food products for economically significant quality or grade factors.
We also safeguard our industry's access to international markets by verifying the technical requirements of foreign countries, and we negotiate with other countries to resolve technical trade irritants.
I might add that this function is becoming one of increasing importance as more and more multinational trade agreements come into play. The ability of countries to use traditional trade policy instruments such as tariffs and quotas is under pressure. As a result, countries are increasingly tempted to use non-tariff barriers such as sanitary and phyto-sanitary measures as a way to limit imports.
.0910
Fortunately we have negotiated close to 700 protocols with 150 countries in order to promote trade. These protocols have played a key role in the growth of Canadian exports of beef, cattle semen, cattle embryos, seed potatoes, and other commodities.
The branch also protects the wagering public through the supervision of pari mutuel wagering on horse races.
These two mandates, health and safety and trade and commerce, are closely linked. As outlined by Minister Goodale in his vision for the industry, Canada's excellent domestic and international reputation for safe and high quality food supply is the foundation upon which our agri-food sector prospers. It is the foundation for the many jobs and valuable exports this sector generates for Canada.
In carrying out these responsibilities the Food Production and Inspection Branch administers 14 acts and their associated regulations. The branch delivers 11 commodity-based programs and serves 8,000 federally registered and non-registered establishments across Canada. Our inspectors monitor agri-food imports and exports at over 200 ports of entry.
That summarizes our basic business, but while our priorities remain constant - food safety, the marketability of agri-food products, and controlling animal and plant diseases - the way we do our business is changing. It must evolve to take account of a wide range of internal and external pressures that are well known to all of us.
For example, an increasingly globalized marketplace means that our standards and procedures must continue to be internationally acceptable.
The industry we regulate is undergoing organizational and structural change. It must adapt to an increasingly competitive domestic and international marketplace. We in turn have to ensure that our regulations respond to these changes.
There are technological and scientific advantages we can use to our advantage. Improved testing to detect contamination, artificial intelligence, and electronic grading are just a few examples.
There is an increasing public demand that governments exercise fiscal restraint and deliver services more efficiently, more cost effectively, and without overlap and duplication.
To make sure that our inspection system keeps up with these evolving pressures the Food Production and Inspection Branch has been undergoing a series of major changes. All these changes have been the subject of extensive consultation with the industry we regulate.
For example, the regulatory review of 1992 is resulting in the application of fewer and better regulations. In some cases regulations were unnecessary impediments to the competitive position of Canadian business.
One of the best examples of what was accomplished in the regulatory review was the dropping of a regulation that said products bound for export also had to meet domestic requirements. It was effectively a barrier to the sale of Canadian products, because we were asking that products leaving the country meet a double standard. Exports now only need to meet the standards of the importing country.
Also in 1992 the branch launched the re-examination of the branch's role in the Canadian agri-food system for this decade and beyond. This resulted in recommendations related to who should pay for services and the need to more rapidly evolve our inspection and quarantine systems. The recommendations formed the basis of the branch business plan that was approved in early 1994.
In developing our consultations with industry we established a number of principles that have guided us through the process, and I would like to share these with you. We've talked about them before at this committee, but I would like to reiterate the points.
We strive for an open and transparent approach with a view to developing a partnership with our clients.
We will not compromise health and safety services.
We must honour our international trade agreements.
We must maintain adequate resources for regulated services to withstand third-party scrutiny from a legal liability point of view.
Our approach to program redesign is a blend of cost reduction, cost avoidance, and cost recovery.
Cost recovery will apply to those activities from which private benefit is attained.
Cost recovery will be applied equitably for similar activities and commodities of comparable risk.
Finally, we will strive to minimize the impact on the competitiveness of the agri-food sector.
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In terms of the impact of our budget, and through our approach on cost reduction, cost avoidance, and cost recovery, I think our system can adjust to the impacts of the budget and continue to provide the service that our mandate requires and our clients want.
The Food Production and Inspection Branch's operating budget will be reduced by approximately $70 million over the next three years. This is the result of previous budgetary reductions and those announced in the 1995 budget. This means an overall funding reduction of 1,283 full-time equivalent positions.
As a result of the new cost-recovery initiatives with industry and the target revenues of $46 million by the fiscal year 1997-98, it is anticipated that up to 836 of these full-time equivalents will be retained. Over the same timeframe there will be a reduction of at least 447 full-time positions. These reductions are being accomplished through efficiencies and program design, which we are discussing with industry and with our unions.
In late April and early May cost-recovery regulations came into effect for inspection, quarantine, and certification services provided under the branch's animal health, plant protection, red meat and poultry meat, and seed potato programs.
These regulations are the result of a three-year consultative process that included approximately 300 meetings with associations and individual clients across the country.
The principle of sharing the cost of services with those who derive a private benefit from them was endorsed in the 1992 regulatory review and the federal budgets of 1993, 1994, and 1995. The Auditor General's 1994 report also recommended that federal departments actively apply Treasury Board's cost-recovery policy to food inspection.
Sharing the costs of inspection services with those who receive a private benefit from them is not a new concept. It is consistent with approaches practised by Canada's major trading partners such as the United States, Australia, the European Union, and New Zealand.
Inspection services provided by the Canadian Grain Commission are already cost recovered at about a 95% level. The Food Production and Inspection Branch has been collecting about $13 million a year in revenue for a number of years against, by the way, a $300 million expenditure by government.
Now that the first set of regulations implementing cost recovery is in place, consultations are continuing on cost reduction, cost avoidance, and cost recovery with the clients of other branch programs and services such as dairy, seed, egg products and processed products. It is anticipated that cost recovery for services in these areas will come into effect in late fall and early 1996.
If industry is going to share the costs of inspection services, they want to know those costs are based on an efficient system. We recognize that how inspection services are delivered can be improved. We also recognize that these services can be delivered at a lower cost. Our commitment is to an inspection system that is both high quality and efficient.
In this vein we are moving ahead on the implementation of internationally recognized Hazard Analysis and Critical Control Point inspection system. The acronym is HACCP. You probably have heard it, Mr. Chairman, through the concept of GMP, good manufacturing practices. HACCP is the version applied to the food inspection area.
This moves the emphasis away from end product inspections to correcting problems before and during processing. The pay-off for consumers and for industry is a high level of food safety and reduced waste. It is also clear that HACCP systems are increasingly becoming prerequisites of doing business in the international marketplace.
Last month as part of the adaptation initiatives for the agri-food sector Minister Goodale announced $11 million in funding over the next four years for HACCP implementation in small- and medium-sized processing plants. So I think we have the ability to ensure that all of the players in the food processing industry have the ability to move to this kind of technology.
Industry's need for a more streamlined food inspection system is also being addressed on several fronts. We are developing various agreements with provinces to avoid duplication in the inspection services we provide. The federal government is also now examining the feasibility of implementing a single food inspection system that would incorporate the work of all federal departments involved in food inspection.
.0920
Going one step further, federal agencies are working closely with provinces and territories to develop an effective and efficient food inspection system for Canada. Harmonizing standards and developing a common legislative base for all the provinces and the federal government are among the expected outcomes of this discussion.
[Translation]
To conclude, Mr. Chairman, we take pride in the fact that Canada's food inspection and quarantine system is recognized internationally as being among the best in the world. Through changes I've outlined this morning, we will have a system that is even better. It will continue to provide Canadians with a safe food supply and provide our agri-food industry with superior access at home and abroad. And it will be more efficient, more technologically and scientifically based and less burdensome on taxpayers.
[English]
The Chairman: Thank you, Dr. Olson.
Colleagues, we will now move to a period of 10 minutes of questions and answers, one round each from the three parties, starting with Mr. Chrétien for 10 minutes.
[Translation]
Mr. Chrétien (Frontenac): Mr. Deputy Minister, you have talked about streamlining, duplication and overlap a number of times in your presentation.
In the next to the last paragraph of your text, under streamlining, you say that Agriculture and Agri-food Canada has developed various agreements with provinces to avoid duplication in the services it provides.
I would like to know, firstly, which provinces have signed agreements, secondly, what those agreements provide for and, thirdly, if you are talking to other provinces at present time in order to come to similar agreements to save taxpayers money, because they are the ones who have to pay eventually.
Dr. Olson: Excuse me if I speak English. I don't think I'm fluent enough in French to be able to answer such a question.
[English]
A process is involved that brings to the table all the departments of agriculture and all the departments of health in the 10 provinces and the Northwest Territories - 22 provincial departments of agriculture and health. At the federal level, we have Health Canada, ourselves, and, where appropriate, the Department of Fisheries and Oceans involved in that discussion.
The intent is to move to a set of national standards. The area with the most rapid movement - and I will answer that part dealing with the national treatment first - is in the generation of a national dairy code that would, if successful, replace the series of dairy laws that extend across Canada.
I am unable to confirm it, but I am told that a one-litre milk container in Canada is defined in 10 different ways. Each province has chosen to define the same container in a different manner.
What the national dairy code will do is create a consistent national standard for such items as containers, sanitation, and the handling of milk products. Tied to that same initiative is an investment of effort - we refer to it as an ``inverted pyramid''. We have been working with provincial governments and industry to reduce the number of agencies that carry out inspection in a particular plant.
.0925
In Ontario, for instance, we now have an arrangement whereby Agriculture Canada inspects plants that primarily have export business, but Ontario does some other plants. We don't go into their plants; they don't go into ours. They carry out the inspection to our standards; we do it to theirs. That means a processing plant has to deal only with one agency in the inspection of their operation, which makes the plant's job a lot easier.
Dr. Roy has been working with the Province of Quebec on a number of agreements. I believe last year we talked to the maple syrup issue. Perhaps Dr. Roy wishes to comment on the agreements we have with Quebec.
[Translation]
Mr. Gaston Roy (Director General, Quebec Region, Agriculture and Agri-Food Canada): Following an agreement between the Federal Agriculture Minister and his provincial counterpart, ancillary agreements were signed with the province of Quebec concerning maple syrup, and mainly grading for exportation. Similar agreements have been made for honey and eggs in order to make the province the only intervener in these sectors.
Other draft agreements have been drafted for milk products, fresh and processed fruit and vegetables and animal feed, and we are expecting a follow-up in these sectors.
Mr. Chrétien: Mr. Roy, let's take an example. A few weeks ago, we passed on second reading a bill on farm improvement loans, co-operatives... It had 16 words. I don't remember the exact title of the bill but the purpose was to lend money to farmers who wish to enlarge or improve their business.
And then next door we have the Farm Credit Corporation. Both organizations are attempting to help the farmers secure funds in order to enlarge their farms or improve it.
These are two different doors, two different systems with different public servants, and we all know how expensive it is. Transport only means 320,000 plane trips. Why don't we combine these two organizations? We would eliminate some FTEs while giving farmers better service.
Moreover, in Quebec, we also have the Société de financement agricole, a third level. With good co-operation, there could be one of these for the whole of Quebec, and the farmers would be much happier. I know them. They shop around. They go see one, then the other, then the third one, and they choose whichever seems more advantageous.
Mr. Roy: I cannot comment the point you raised, considering that these matters are outside the mandate of the Food Production and Inspection Branch.
[English]
Dr. Olson: That was the purpose of the pilot project I mentioned in terms of what we call an inverted pyramid, but not in the sense you're talking about, of combining organizations.
During the regulatory review, we kept being faced with the example of a dairy plant in the Ottawa Valley, which was concerned that it was being inspected daily by somebody from government. We decided that was rather odd. Dairy plants are one of the most advanced food processing facilities we have in the country. With the kind of technology they apply, our typical level of inspection of a dairy plant is about three visits a year.
We determined that Consumer and Corporate Affairs, which existed at that time, visited those plants about once every two to three years. Those functions are now part of Agriculture and Agri-Food Canada under Dr. MacKenzie's supervision. So we've done some combining in that regard.
We also determined that Health Canada visited the plant once every year or so and carried out an inspection. Health Canada has now agreed to audit and monitor us and to discontinue that inspection function. So there's one less agency involved in going to the plant.
.0930
Next is the provincial government. As I mentioned, in Ontario - and I think we've achieved the same in Quebec - the provincial government has agreed that it will do some plants and we will do others. In this particular plant, we do it. We do that inspection three times a year.
Where we ran into trouble was with the local public health officer. He didn't listen to any of the above agencies, and he still goes into the plant every day. We're trying to sort it through with that particular agency right now.
We have achieved some level of fusion of the inspection staff. You'll find in the budget plan a reference to the fact that government expects the agencies to carry out an analysis of the potential for a single food inspection system for Canada. That could possibly involve such a bringing together of all the agencies that carry out the actual functions of inspection. That's under discussion right now.
Mr. Pickard (Essex - Kent): One particular area I'd like to get your comments on has to do with the inspections branch and how it handles the horticulture industry in my area.
Horticulture is a very integral part of some regions of Canada, particularly southwestern Ontario. Our inspections branch has to inspect anything going out of or coming into the country and has all kinds of cross-border dealings with our facilities. Many of my flower and cactus people, whose products go back and forth across the border very often, deliver small quantities of goods from southwestern Ontario to different Detroit markets and communities throughout Michigan.
There was a lot of discussion on how rates would be set in order to allow them to move across the border. What concerned me a great deal was the fact that there were suggestions that they load up a truck, take it across to Michigan, dump everything at one location, and then distribute from that location across the border. We have talked about that in the past with some of your officials. Has that situation been resolved?
What I saw was a lot of paperwork. People actually came in and inspected quarantine areas, not regularly, but where there were major problems our department did an adequate job of inspecting them very often. Where there were no problems, there was less need to be physically in that plant daily, weekly, monthly or whatever.
However, the problem is if you have a $25 or $50 fee for each drop-off, one truckload may cost several hundred dollars for delivery of the same quantity as another truckload that's just dropping off at one location and therefore may cost $50 for delivery.
Economically, none of it seemed to come together in a rational way, from my viewpoint. Has that been resolved, and if so, how?
Dr. Olson: I'll ask Wayne Morris to respond more fully, but I think it's rather neat that, particularly in the Windsor-Leamington area, we have a flower industry that's aggressive enough that it's in the home delivery business in Detroit. That's kind of special if you think about it. That group of entrepreneurs has done something rather special.
They always have been subject to the requirement for a phyto-sanitary permit. That's a requirement the United States places on us and that we in turn place on the United States. That certification has always been there. The issue that's come up is how to deal with it where small orders come into play.
Perhaps, Wayne, you could mention what we've come up with in terms of doing bench audits in those kinds of greenhouses to resolve a good portion of that issue.
Mr. Wayne Morris (Director, Operations Policies Division, Agriculture and Agri-Food Canada): There are a couple of things to keep in mind when we talk about phyto-sanitary certification.
First, the rules and guidelines we work with are not set by our department. In the plant protection world our international obligations are to meet the requirements of the receiving country. So when we were putting together an approach to cost-sharing, as well as the administrative arrangements of issuing phyto-sanitary certificates, we had to keep in mind what those American requirements were.
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Any alternative arrangements that would take place would result from two things. One is our interface with the United States to see whether they would be open to alternative ways of issuing that particular certificate. The other thing that enters into the equation is industry changing its way of doing business in order to minimize the costs, both from a logistical standpoint and in the actual application of the fee.
The case you're referring to right now is rather different from normal commercial shipments in that a lot of individuals come over and visit certain establishments. It depends on which firm you're talking about.
Mr. Pickard: I'm talking about the general horticultural industry. They may do six drop-offs at different Franks Nurseries or retailers in Michigan, but they're delivering on a regular basis, and the same fee, paperwork, and so on apply to a transport load as apply to a small quantity.
The point I tried to make a little earlier is that two transport loads of equal size could go over, and the fee for inspection may be $500 on one transport and $3,000 on another transport, depending on where they're dropping it off, not on the quantity or the material.
Mr. Morris: Just to bring things into focus, are we talking about fresh produce?
Mr. Pickard: No, I'm talking about flowers and cacti. I'm talking about an industry that's probably the fastest-growing horticultural industry in Canada.
Mr. Morris: What we're talking about then is not the fresh produce aspect but, with cacti and what have you, the phyto-sanitary coverage we have. The fee is based on our time to do that inspection. It's rather low in that particular area; it's anywhere from $15 to $30, depending on the amount of time to issue.
If there were individual lots going on one shipment for distribution, we would charge the up-front fee along with a per-certificate fee, if the United States required it, and that is at a much reduced rate of only $5 a certificate to look after the added paperwork that might be dictated by the United States.
The other thing we have done is incorporated what we call a bench inspection system in greenhouse operations. If you're into enough quantity going over there, you could have bench inspections within greenhouses up to six times a year for a fee of $80. If you're under that bench inspection, then subsequently you could have your certificates issued at the minimum cost, which is only $15 for a phyto-sanitary certificate.
I'm not familiar with any loads whatsoever that would be of the magnitude you're referring to - $1,000 or $2,000. What we're talking about here is a bench inspection for one or two months for a total cost of $80, and then the issuance of phyto-sanitary certificates would be $30 for the initial load and then $5 thereafter.
Mr. Pickard: I can bring forward instances from Yoder Canada, Colasanti's, Sorensen's, and several others that have exactly the problem I have brought up. It has come to the ministry. I have phoned the ministry and discussed it with them. I'm quite surprised that you're suggesting the maximum fee might be as low as it is, because that's not the way it has been.
Mr. Morris: I think what you're alluding to then is the accumulated effect over a year.
Mr. Pickard: Again, the point I'm making is if they take a whole transport-load of product across the border, there's one inspection fee and one certificate fee. However, if they take one transport-load that's going to several different groups, they can apply the same fee to each group it's being delivered to.
.0940
As a result, some of them are considering setting up dummy operations in Michigan to receive everything. Instead of taking it out and delivering it, they'll drop it off at one place and then distribute it from one location in Michigan. I think that is ludicrous when we stop and consider that it takes Canadian jobs away.
Mr. Morris: I agree.
I have one final comment specifically on that point. That's where we decided we would reduce the fee per document, where the United States required additional documentation for drop-off points. The additional documents would be only $5 over and above the initial fee for the shipment.
Mr. Pickard: But there was also a $25-per-inspection fee.
Dr. Olson: We've been in contact with the Colasanti family about some shipments this past week in terms of clearance at the port. If it would be useful, perhaps Mr. Pickard could sit down with us and go through this in more detail after the meeting.
Mr. Pickard: That will be well worth while.
We talk a great deal about downsizing and what's happening within our employee brackets. As far as Agriculture Canada's employees go, are we taking strong measures to look at staff mobility and retraining in different areas to give present staff members the opportunity to take on new assignments? I know that isn't just within the inspections branch, but is also in the research branch and other areas.
People who are losing their positions with Agriculture Canada may be very qualified to go through a retraining program and do research in other places. If mobility is there, they may be able to move from one location to another without you having to go out and hire and train new people at different locations.
I've been told there is the potential for hiring new people and retraining them, for instance, in Saskatchewan in the research area.
Dr. Olson: I should note that right behind me is Mr. Larry Leng, the president of the Agriculture Union of the Public Service Alliance of Canada. Over the last year we've worked very closely with Mr. Leng and his counterpart from the Professional Institute of the Public Service. Our basic approach is we're not going to be laying off any staff.
I mentioned in my opening remarks that we're reducing by 447 people. The day of the budget I had 204 volunteers who wished to retire or cash out. We're in the process right now of surveying our staff to see how many would be interested in taking the early retirement initiative and how many would be interested in taking a cash-out.
That creates an interesting pressure from a management point of view because it leads right back to your question. Obviously some of the people who will leave will not be in the jobs we'll be discontinuing, and that means I have the responsibility to manage retraining and a movement of people. That has to be managed with a fair bit of class.
In terms of our inspection staff, with the closures of processing plants in Ontario, we've been using a reverse order of merit process to establish availability of jobs in the Ontario region. We've been offering jobs in other regions to the staff that are affected.
As I pointed out, we've had a significant number of volunteers for a cash-out. At this time we've been able to manage that reasonably well, without going to lay-offs. We'll use training and all the other opportunities we have. Where resources are available in other branches in a particular region, we'll do our best to do the same with them.
It's a complex process because we're dealing with a lot of people. Each one of them has aspirations, dreams, interests, and loyalties to regions and to communities. It takes an awful lot of what I guess you'd call negotiation-discussion to resolve that side of the operation.
Mr. Benoit (Vegreville): It's good to see you again, Dr. Olson.
.0945
When we're talking about the main estimates and the cost of inspection services, I think we would really be missing out on an important area if we didn't talk about federal-provincial overlap in inspection. It's something you didn't talk about in your presentation, but I think it's important when talking about the dollars, and for other reasons, which I'll bring up later.
You are from Alberta, so you would know this, but I believe Alberta has a very high quality inspection service provincially, and yet packing plants in Alberta, small packers in particular, can't ship across the border if their product has only been inspected by provincial inspectors.
These small plants are very important to the communities they operate in. You're talking about an awful lot of jobs in every town that has a small abattoir. I've had calls from four plant owners in the border area just recently complaining about different issues, but one is that they can't sell their provincially inspected product across the border. Is any progress being made on this issue? What do you see for the future, in terms of provincial inspections being allowed to be used in interprovincial trade?
Dr. Olson: There are two issues in your question. The first issue has to do with the movement of provincially inspected meat products across interprovincial or international borders.
The second one has to do with the use of provincial inspectors operating at the federal level.
In response to a question to the member from the Bloc Québécois dealing with maple syrup, in Quebec we are using provincial inspectors to carry out a federal inspection. In dairy plants in quite a number of provinces, provincial staff are in essence carrying out federal responsibilities. So you can have the staff themselves trained to a level, monitored at a level that satisfies federal obligations.
Mr. Benoit (Vegreville): Why hasn't that happened in meat inspection in Alberta?
Dr. Olson: That comes into the international treatment issue.
I should also mention that in Manitoba and Saskatchewan we carry out the domestic inspection for the province, using federal officials. Alberta has chosen to carry out their own meat inspection. They operate at a different level of.... I think the health and safety side is the same, but the processing environment is different. It doesn't meet the same set of standards that are in place for international and interprovincial movement.
There's a factor called ``national treatment'' that is an obligation under GATT.
If I could ask Randy Benoit to join me at the table, Mr. Chairman, we could perhaps spend a moment on that national treatment issue. In essence, ``national treatment'' requires that a facility that wishes to move product interprovincially meet the standards we've established internationally.
I'm thinking of a plant in Vegreville, Marchyshyn's operations. I think that's in Vegreville, the sausage operation. I wish I could buy the product here in Ontario. The way it's set up, the fixtures, the type of surfaces used in the building, the access to the retail outlet that I believe they had last time I was in the facility, do not meet the obligations we've incurred at the international level.
In essence, we have a two-tier system: a provincially inspected facility that is allowed to move product within that province, and a federal system that allows interprovincial and international movement.
The discussions we've been having with the provinces are trying to bring that closer together. There is in fact some law that suggests to us that eventually all of those plants will have to meet the federal standard, the international standard. It's related to some of the debate around beer shipments between Canada and the United States.
Randy, perhaps I could leave it with you then.
.0950
Mr. Randy Benoit (Director, Policy Analysis and Coordination, Agriculture and Agri-Food Canada): As far as national treatment is concerned, the requirement is that we have to afford to people who are exporting to Canada - that is, people we import from - the same treatment we afford domestic producers who ship interprovincially. If we were to allow provincial inspection to be the basis upon which meat moved from Alberta to British Columbia, or Alberta into Saskatchewan, then we would have to use that as the standard by which we accept our imports from some state in the United States.
Instead we have said that there is a national standard, that national standard will pertain to any meat that moves interprovincially and internationally, and that any country that wishes to ship product into Canada will move it on the federal standard and not on the provincial standard.
Mr. Benoit (Vegreville): Is the Alberta standard not good enough then? Is it not safe? Are Albertans eating an unsafe product?
Mr. R. Benoit: Not at all, but it's different. What has dictated what happens in the international sphere for the movement of meat is the third-country directive as set up by the European Union. It has been replicated in other countries - the United States, Australia, Canada. The major meat exporters are all moving product on the same international standard.
That international standard, as Dr. Olson suggested, has some environmental differences, largely to do with things like paving parking lots, keeping dust under control and different kinds of materials inside the plant. Although they don't directly impact on the safety of the product, they're part of what's called the production and processing methodology that has become the standard for acceptability of meat moving in the international forum.
Mr. Benoit (Vegreville): I have some concerns about this. But I would just like to take it another step here.
The forces base in Wainwright won't buy provincially inspected meat. If it is safe enough for people in the town of Wainwright, why isn't it safe enough for people on the base?
Dr. Olson: I assume you want to ask that question to the Department of National Defence, which is buying the product.
Mr. Benoit (Vegreville): Is it their policy, then, that is the problem here?
Dr. Olson: That's right. I would presume whether it's a problem or not, it's their policy. I presume from what you're saying they said that the Department of National Defence buys only federally inspected meat products.
That, by the way, is also true of a number of major chains. They will buy product only from federally registered establishments as it meets what they consider to be an appropriate level of facility environment and health and safety.
Mr. Benoit (Vegreville): So to get back to my first question, do you see movement in this area that will resolve this problem? This problem could well cause the closing of some of the plants around the base. You're talking about a big market.
Dr. Olson: I do see movement. I think it will take some evolution on some of those smaller plants.
If I remember correctly, one of the issues that creates problems for some of those plants is they have a direct connection between a retail outlet and the processing floor. With those kinds of changes they can move to a federally inspected plant with the proper wall coverings, with the proper kind of equipment, and with the isolation from the retail side of the shop, they can, as such, move into a federally inspected kind of environment.
Mr. Benoit (Vegreville): Dr. Olson, when you worked for Alberta agriculture, you were looking at things from a different...I think you certainly were more on the Alberta inspection side there.
I worked with inspectors, and the manager of inspectors - I forget what the title is - for northeastern Alberta worked out of the same office I worked out of for quite a few years. He worked as a federal inspector first and then as a provincial inspector. He is totally convinced that the inspection service provided by the province is every bit as good and reliable as the federal. It looks to me as though the federal government is making a bit of power grab into an area of provincial jurisdiction.
.0955
Dr. Olson: You remember, Mr. Chairman, that I share a number of common experiences, having worked for the Province of Alberta. From a health and safety side, the Alberta inspection system is equivalent to ours.
Consider the physical facility and sanitation. I'm thinking of the kinds of equipment, such as the use of stainless steel, wall coverings, and access to retail points. They have a system that doesn't meet the international obligations Randy Benoit just talked of.
I see an evolution happening in the implementation of HACCP in those small operations. When they move to that level of process control, many of them will be able to meet the federal standards.
The inspection itself, because of what we're trying to do with provinces, may well be carried out by a provincial inspector. But at this point in time, the facility does not meet federal standards.
Mr. Reed (Halton - Peel): Doctor, I'm interested in the savings you are projecting. The operating budget is to be reduced by approximately $70 million. I was wondering if you could maybe make a comment as to how much of that saving will be due to increases in efficiency, which you you have outlined here, and how much of that could be attributed to cost recovery.
Dr. Olson: I can do it two ways. I can do it in terms of manpower or I can do it in terms of dollars.
The budget reduction over a three-year period of time is $70 million, or 1,283 full-time equivalents. Of that, our current budget target is, through a combination of cost-reduction, cost-avoidance or cost-recovery, $46 million. The difference is $24 million.
That means the 447 full-time equivalents I talked about earlier, 204 of which have already left our service, and another roughly equivalent number who we're in the process of working with right now. That 447 is a cost reduction. It's 10% of our total resources. It's a bit more, in fact. We have a total staff of around 4,000, so that's a cost reduction.
We're doing that cost reduction through changes in programs as a result of the very high level of consultations we've had with industry through just basically getting out of businesses we no longer need to be in.
For example, in the consultations with the red meat industry that have gone on over the last year, we basically ended up accepting a series of recommendations from that industry that resulted in a $10-million cost reduction. In the red meat program, we have costs in total of about $130 million. The industry came forward with a series of recommendations for efficiencies that allowed us to reduce the cost of that program by $10 million.
We're also applying about a $13-million cost recovery against that program. So the reduction in the cost directly to the taxpayer is about $23 million in total.
Mr. Reed: So the red meat industry is specifically participating to the tune of about $13 million?
Dr. Olson: We will be recovering costs of about $13 million.
Mr. Reed: So the cost recovery is relatively modest in terms of the actual cost of the inspection service.
Dr. Olson: One of the things we looked at very carefully was the impact the cost recovery was having on our trading partners. Export operations in Australia, for instance, are essentially at a 100% cost recovery. We'll be at about 10% to 11%, depending on how you do the math.
Mr. Reed: Would that same ratio apply to poultry processing inspection too?
Dr. Olson: I believe it's slightly higher because the cost of poultry inspection is much more labour intensive. On the other hand, I think the technologies that are coming in terms of poultry inspection.... We had a very good meeting on Friday with that industry and some of the changes I see coming will over time allow us to make significant cost reductions there as well.
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Mr. Reed: That's very important information for the riding area I serve.
I have one other question that has to do with the standards of inspection vis-à-vis the GATT agreement. Can you explain how your department relates to the establishment of standards with the GATT?
Dr. Olson: It would be very nice, it would be ideal, if somebody set international standards and we all followed them, but every country has its own set of standards. There's a very direct involvement by our branch in a series of standard-setting organizations, such as CODEX Alimentarius. Dr. MacKenzie is a very senior player in that process of setting a variety of food standards. The Office international des épizooties deals with animal diseases. Dr. Norm Willis, who is Dr. MacKenzie's counterpart in the animal-plant health area, in fact, is the new incoming chairman. That sets the international standards for animal diseases. There's also a parallel organization that deals with plant protection.
Many of our standards exceed those international standards, and I think from the point of view of protection of Canadians we'd like to maintain those levels. But we are moving as rapidly as we can and we have a particularly strong effort moving in the pesticide area, the move to international maximum residue levels, to ensure that product can move efficiently between countries.
Mr. Reed: I keep telling my dairy farmers to keep their quality standards at the very high level they have at the present time because it can reflect in the GATT. Is that logical?
Dr. Olson: I think that's a fair statement. I would also say that people like Dale Tulloch of the National Dairy Council have been extremely important and valuable players on that international scene in terms of ensuring that the rest of the world moves in our direction in terms of their dairy standards.
Mr. Reed: Thank you very much.
The Chairman: Dr. Olson, I heard you say that Australia was at 100% in terms of cost recovery, and we were at about 10%. Is it your goal to move to 100%, and in what time period?
Dr. Olson: We have a $1.5-billion business with the United States. That's our big customer, for meat products in particular, so everything we've looked at in terms of cost recovery takes into account the global impact of the American cost recovery system. We were talking earlier about phytosanitary certificates. We're essentially a parallel system and our people have been more aggressive in moving into markets in the United States than perhaps some of their nursery flower producers.
In the meat area, the Americans have a high cost recovery on the grading side - much less on inspection - but the aggregate costs, we've tried to maintain our levels so that we're no higher than the American system.
The USDA has a bill before Congress right now that could involve the cost recovery of second shifts, which would bring the American level of cost recovery, if I recall correctly, to 29%, and we're talking about 10%, 11%, 12% or somewhere in that area. I think going above the U.S. level would have a very direct impact on our ability to compete in that market.
The Chairman: Under the Canada-U.S. Free Trade Agreement, we set up working groups to work on all of this. How is that progress going? There are always a lot of comments out there that there are still many differences between Canada and the United States in that regard. What is the progress of those working groups?
Dr. Olson: I think I'll turn that over to Randy Benoit, who acts as the coordinator for all of those technical working groups.
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Mr. R. Benoit: Mr. Chairman, there are nine technical working groups that were set up under the Canada-U.S. free trade agreement. When NAFTA was signed, CUSTA was subsumed under NAFTA. Through a letter exchange between Secretary Hills and Minister Wilson, the technical working groups remained intact where they might be useful.
Three or four of them have become trilateralized and have actually become committees under the sanitary and phytosanitary committee of NAFTA. The remainder of them have continued on looking at bilateral irritants.
Three or four of the committees have not made a great deal of success. They have not moved forward along the general challenge they had to harmonize standards. Some have moved along.
The Chairman: There are three or four of those.
Mr. R. Benoit: With respect to food additives and contaminants and nutritional labelling, in both cases the domestic legislation of the United States has precluded them from entering into any kind of compromises with us.
In areas like meat hygiene, animal and plant health, and veterinary biologics, there has been a considerable amount of progress made in resolving bilateral irritants that existed in our trade. If you look at the trade statistics, I think you will see that there has been a significant increase in trade in those areas since the signing of the Canada-U.S. free trade agreement and since the signing of NAFTA.
The Chairman: Thank you.
Mr. Easter, for five minutes.
Mr. Easter (Malpeque): That gives me five questions.
The first question I have is really one that I had hoped I wouldn't have to ask, and it deals with PVYn. I would rather deal with the future. This may not be a fair question to you, Dr. Olson, because it may be that this can only be answered at the ministerial level.
Producers are certainly getting antsy in terms of where the PVYn payment is. Producers are one thing; creditors to producers who called me are really wondering where the PVYn payment is, and when it is going to be made.
The other question I get from producers a lot is what is being done to hold accountable those responsible within Agriculture Canada. I know you've made some changes, but what has been done to hold accountable those responsible within Agriculture Canada for the errors?
I want to say that mistakes can happen, but the problem here seemed to be that when one mistake happened, it led to another. For whatever reason, it got to the point it did.
As part of that, what can be done to improve relations? Is there any strategy in mind to improve relations with at least P.E.I. potato producers as a result of this episode, because relations are bad? When an Agriculture Canada inspector comes out to a farm now, there's mistrust right off the bat rather than that original trust we used to have.
Dr. Olson: First, in terms of where the settlement is at, my understanding is that the matter is still before the courts. They are waiting for a decision. They need a court order that deals with the payment to the people who were party to the action.
There was a press release by the minister last week. I don't have a copy with me, but I think the next stage involves getting that court order through the system.
Second, in terms of testing errors, as you are aware Mr. Easter, there were more agencies than just Agriculture Canada involved in the set of decisions that resulted in the way that particular disease was handled. There were quite a number of other agencies involved at the provincial level.
I have just gone through a similar kind of testing issue with a porcine reproductive and respiratory syndrome.
Very few of the tests we carry out are 100% perfect. The TB test that you got as a kid, and that you probably have a scar from on your shoulder, is about 75% accurate.
That kind of test, when we apply it to plant or animal diseases, has a certain level of risk built into it. We can do as many tests as possible but there's always a risk that the test will not give you a correct answer.
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That happens, and it's unfortunate in the PRRS one I'm talking about, because it impacted on a couple of individuals who had an export opportunity. It's unfortunate that the set of events with PVYn resulted in the kind of time delays you are talking about.
What we can do from our side is ensure that: the testing methodology is as good as it possibly can be; the review of the test results is as complete and as visible as possible; and that international community accepts the testing methodology, which I think as you are aware was a problem with the American side of the equation during that period of time you're talking about.
All those kinds of things can be done, but there's still a significant potential in any biological test that you're going to have a problem. That's the reason, for instance, in tuberculosis in animals we take the entire herd. It's a test and destruction kind of policy. You can't find all the tuberculosis in an infected herd, so you take the entire herd. It's essential in terms of control of the disease.
Mr. Easter: I know you've made some moves within the department to make some changes in there and hold accountable people who throughout the system have, for whatever reason, made some errors in terms of this problem. That isn't known out there in the farm community. The farm community believes they are the only ones it has cost, and it has cost some of them their farms. That has to be known.
In terms of the cost recovery, you outlined quite a number of areas of cost recovery on page 40, and the user-pay system. One of the things this committee put forward to you last year was that we had to move forward to a system of not user-pay but benefactor-pay. The user-pay system puts the burden of costs on the primary producer.
Society as a whole gains from inspections, health and food safety, and so on, so the burden of costs shouldn't be with only the producers. I'm wondering how that user-pay system is being spread around to all the benefactors and not just going to be a cost borne by producers.
Second, on the full-time equivalents, the net 1,283, could you give us that in terms of numbers of people? I don't think you can answer me here, but I wonder if you could provide it under separate cover. I'm personally wondering if we're being penny wise and pound foolish, in terms of deficit-driven cutbacks.
First of all, can you really do the job with that number of people? In terms of the savings, when you lay off a person you sever them. In terms of the macro-economy in society, they're now retired; they're not producing in society any more. Are we really as a society any better off with laying these people off constantly instead of keeping them in productive fields doing jobs?
Dr. Olson: I'll start from the end and work back, if I may.
We are trying not to lay any people off. Our basic goal is to encourage volunteers, identify volunteers, so that we don't have to do lay-offs. To go back to an earlier question, that means a significant obligation to training, movement, and those kinds of things.
The user-pay by one name is also called beneficiary-pay by another. In the bulk of the services we provide, there's a very clear beneficiary, both public and private, that's identifiable. In a meat plant, in a processing facility, in the movement of a product across a border, somebody benefits from the service of government. There certainly is a public good side to that, but there also is a private good. We've tried to focus our cost recovery on the private good portion of those costs.
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The other part that's implicit in talking about beneficiary-pay or user-pay, or what we're doing through what we call a branch business alignment plan, is that many of the services we provide have historically been free services. They're free goods. There are no market forces. So what you get is demand for more and more services. By putting a fee against those services, we're finding that industry is identifying cost reductions to government, but they would not have identified these if they hadn't had to pay a small portion of that cost.
So negotiation on cost recovery in essence has two purposes. One is to establish market portions against the services provided by government, and the second one is to cover some portion of the cost. That's the basis of our negotiations. That's been the basis of 300 meetings over the last year or so with quite a range of industry.
In dealing with the animal and plant health area in particular, I think it would be pretty fair to say that the producers we're dealing with in that consultation have said they don't particularly like cost recovery, but recognize that the alternative is a reduced level of service.
They like the level of service, are prepared to pay a portion of the cost, and they also expect us to be as efficient as possible. So that combination is what we're trying to achieve right now.
[Translation]
Mr. Landry (Lotbinière): I thank the witnesses. I'd like to make a small announcement to tell you that 1995 is a very important year for our committee. It was on October 16, 1945 that was created the Food and Agriculture Organization of the United Nations. The goals were to better foods, standards of living, agricultural productivity and conditions of rural masses. An international symposium will be held on the subject of food security on October 11, 12 and 13, 1995.
The celebrations of the 50th anniversary will take place in Quebec City. Not only the decision-makers will be present; all the interested persons from the whole world will be there also. I am pleased that these manifestations will be held in my province and that's why I wanted that to be put on the record of our Committee on Agriculture and Agri-Food.
Thank you, Mr. Chairman.
[English]
The Chairman: Thank you, Mr. Landry.
Mr. Vanclief (Prince Edward - Hastings): Most of my concerns have been answered, but there are a few concerns that keep coming up out there in the industry.
Dr. Olson, you talked about cost recovery in Australia and that's fine, but you also said that our biggest customers are just south of the border. Could you touch again on the relative competitiveness that exists now and will be present as we go forward in cost recovery? Perhaps you could talk about this in relation to, let's say, a beef packing plant, a poultry packing plant or whatever in all areas with the United States.
I also understand some discussions are taking place and have taken place on who pays whom within the plant and on beneficiary pay, etc. I've had concerns raised that if health inspectors are on the payroll of the plant versus the public payroll, to whom are they responsible? I just wonder if you could clarify who's paying whose salary, let's say, for health inspectors versus graders, and so on.
Dr. Olson: I'll start with your second point. The inspection carried on in the plant is for health and safety reasons and to a large extent for trade and commerce. I will draw the line at the grading area, but that inspection will be done by government inspectors paid for by the Government of Canada.
A portion of the revenues that are necessary to pay those officials may come from cost recovery, but they are employees of the Government of Canada; they are not employees of the plant.
It is critical to our food inspection system that this line of command be clear. That's very much the key factor in the credibility of our inspection system.
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What complicates it is that industry has said there are things that are not health and safety that perhaps we can do better. Beef grading is an example. Beef grading is done as a buyer-seller kind of arrangement. We've been doing it historically, but technology is shifting very rapidly and the industry said we can probably do it cheaper than government can. We've said, ``Let's go for it, let's see what's possible''. They're in the process of walking through that and treating it as an opportunity right now. In the interim they've agreed to a higher level of cost recovery for grading.
In the long term I expect to see a good portion of that responsibility in the industry's hands. It is a mechanism for establishing price between a buyer and seller, and I fail to see in the long term why government would want to be in between. That area will move out of government, but the inspection responsibilities will stay with the Government of Canada or in the provinces that carry out inspection.
We looked very carefully at the cost recovery comparison with the United States. I think we have more knowledge about U.S. inspection programs because of our need, more than we had before, to look at their cost recovery system. We have tried very hard to ensure our level of cost recovery is equivalent or less than theirs. We have tried to take into account the kind of situation Mr. Pickard raised, where you have a specific niche opportunity. We've gone through that in quite a bit of detail. In the animal health area, in particular, we were able to achieve some adjustments that in fact put our cost below the American equivalent cost for bringing a product into Canada.
So that has been very much one of our drivers because of the danger that if we move past that line, we do damage to our own industry.
Mr. Kerpan (Moose Jaw - Lake Centre): We discussed at some length this morning standards and duplication. My first question is very simple.
Would you prefer to see the federal government become solely responsible for all food, animal, plant safety and health standards on inspection, and that the provinces would in fact get completely out of this area? It would seem to me that this would make some sense. It would remove some part of the duplication and one government body would be responsible for all that jurisdiction.
Failing that, why do we not in this country have a national accreditation program whereby we would have provincial inspectors and federal inspectors working under the same set of standards? As Mr. Benoit stated this morning, in a case like Alberta, for instance, where a provincial inspection team is taking the bulk of this work, they would live under the same standards as federal standards so that those products could move between provinces, and in the case of a national defence base, be completely open to it.
Dr. Olson: There are a number of questions built into that. First, we have national standards that apply to interprovincial and international movement. Those national standards do not necessarily apply at the provincial level. This is another factor of the concurrent jurisdiction between provinces and the federal government in terms of agriculture.
We carry out meat inspection on behalf of the provinces of Manitoba, Saskatchewan and the Lower Mainland of B.C. We also do a bit of that in the Maritimes. So there are those kinds of arrangements.
I think a two-tier system, as we have right now, has some advantages, because the small abattoir in a local community that doesn't move product out of the province or internationally isn't faced with the same environmental costs and the physical facility costs that a plant that wishes to do this interprovincial or international movement would face.
We currently inspect - and I'd be guessing, Dr. MacKenzie - about 90%.
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Dr. Anne MacKenzie (Director General, Food Inspection Directorate, Food Production and Inspection Branch, Agriculture and Agri-Food Canada): I think you're correct, Dr. Olson. It's possibly closer to 95% for federally inspected meat.
Dr. Olson: So we're already doing a very large percentage of the total volume in meat through federally registered establishments. The rest of the system I think works pretty well. We have excellent communication with the provincial departments. We are moving to accreditation. I used the maple syrup example earlier.
There's a lot of pressure for change right now. We're trying to take advantage of those resources, being mindful that our staff are pretty important people to us, and so are the provincial inspectors. We want to do this in as careful and well-managed a way as possible.
Mr. Kerpan: Thank you.
Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Thank you for coming, Dr. Olson.
What I want to talk about goes back to the HACCP situation. With the manufactured goods we put out of the country right now, we're seeing our manufacturing industry becoming ISO-effective in international standards of operation - ISO 9000. You're saying HACCP is going to be internationally recognized and we're going to see our inspectors at a level 2 or a level 3 by 1995-96. It seems we're heading towards an international standard within the food manufacturing sector of the economy too.
Is there in fact an international standard being developed right now for food manufacturing - something similar to the ISO situation? How are the primary producers going to be involved in the process as HACCP keeps evolving in this country? I'm wondering how the Department of Agriculture is going to monitor the changes the primary producer is going to go through.
Dr. Olson: I'll start with the last point again.
We had a very excellent meeting with the Canadian Federation of Agriculture, the Dairy Farmers of Canada and the Canadian Pork Council some weeks ago on the issue of farm-level HACCP systems. It's already an issue in feed manufacture, where you want to ensure that when there are antibiotics used in the feed, you have a record of which feeds they went into.
The pesticide registration system, the pesticide accreditation system that's used in a number of provinces, the documentation, the recording of pesticide use on crops and what have you are all steps in the direction of a HACCP-based system. We're currently discussing the possibility of changes to the farm business management curriculum that might bring HACCP on to the table as one more management tool that a farmer would use.
The reason those organizations wanted to talk to us is they're seeing a trend toward specification buying. We're already seeing that with milk. Pork is very close to that. Chicken is very close to that. Beef is starting to move in that direction. And as we move to full trace-back systems for beef animals, you'll see that kind of specification buying. That is implicit in a HACCP kind of system.
On the international level, though, I'll turn to Dr. MacKenzie and ask her to answer that part of the question.
Dr. MacKenzie: Thank you, Dr. Olson.
Mr. Calder, I think you have made some excellent points by noting that many of the food industries are embracing ISO 9000 principles. It is very obvious to us, as we work through our HACCP plan, that there are many parallels between the ISO 9000 system and introducing HACCP as a process control.
I think I should say that the basis for the introduction of HACCP is in fact a risk management decision. We are encouraging the industry in Canada, certainly the 1,732 plants that are registered with Agriculture Canada, to move towards systems that embrace HACCP as process control by October 1996. In the consultations we have had on an ongoing basis with the industry, we feel we have been very successful indeed.
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At the international level, the CODEX Alimentarius, which is the world standard-setting organization, is now putting HACCP forward as a basis for the production of a safe food supply. Canada recently hosted a HACCP policy-setting session; it was held in Vancouver and sponsored by the FAO. So Canada is very active in the promotion of HACCP concepts.
We feel we are very well positioned vis-à-vis our major trading partners. An indication of that is the frequent invitations some of the officials in our branch get to speak at technical conferences on HACCP and put up the Canadian model, which is recognized worldwide as a very progressive model.
So your linking ISO, which is becoming prevalent in the food-producing industry, to HACCP is a very pertinent point.
Dr. Olson: I would like to add one thing. There are two major pressures coming on HACCP and therefore on ISO.
One was the announcement a year or so ago by McDonald's that it would only buy product from plants that operate under a HACCP system. I'm told that at the meeting with McDonald's management in Chicago, one of the industry representatives in the room got up and asked what right McDonald's had to demand HACCP. The senior person from McDonald's in the room said ``We buy 20% of the meat in the United States.'' I think that was a fairly good incentive for everybody to cooperate.
Some hon. members: Oh, oh.
Dr. Olson: We have such plants in Canada. If you ever get an opportunity to visit Caravelle Foods in Toronto, I think you'll be very impressed with what a next-generation food processing facility will look like, and it's already there.
McDonald's sells an awful lot of hamburger patties, and it wants to make sure every one of them is as safe as it possibly can be. I think it is achieving that through HACCP.
The other major pressure is that the USDA has tabled something called a mega-regulation that in fact will require HACCP of all of the U.S. meat processing industry. That will probably lead to an import requirement by the U.S. government for HACCP on all imported products, and that's part of the reason many Canadians firms are moving as rapidly as possible to implement that kind of process technology.
Mr. Calder, I think that will automatically lead, in its own way, to an ISO-based system for international movement of foodstuffs.
Mr. Collins (Souris - Moose Mountain): I'm happy with the responses Dr. Olson and his group have provided. I only have one comment, and it has to do with the question from Mr. Benoit.
With this interprovincial inspection, we shouldn't leave the impression that we're at odds with the people of Alberta or anywhere else. They made a standard and that standard is set there, but if they're going to go into the national and international markets, they will have to upgrade their system.
I think there is a misconception that we have created a problem for them, and it should be pointed out very clearly that that's not the case. If they want to get into the international market or interprovincial trade, they'll have to upgrade.
I have one concern. How long will the downsizing take? Do you see it being projected over a period of years?
Dr. Olson: With the downsizing, the cost-reduction, cost-avoidance part of what we're doing is planned around a three-year timeframe, but the rate at which we will make progress depends on two factors.
First is the consultation with industry on what kind of blended package they'd like to work with in a particular commodity area. Second is the rate at which we can train and move staff around the country to ensure that in fact our regulatory responsibilities are carried out. That's the balancing act we're performing.
Going back to the earlier question, I have more volunteers for early retirement than I can afford to approve, and that creates a set of problems in its own right. I think there's a frustration with government. A number of staff have decided that this is the time for change. There is an opportunity here.
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I am not going to be able to let a number of them go. I need them to carry out our regulatory responsibilities. That's going to be quite frustrating for the employees involved.
I thank Mr. Collins very much for his comment regarding Alberta. We work very closely with the Province of Alberta. It's very aware of the export market. About half the beef slaughtered in Canada is in the province of Alberta, and a very large portion of that market is in the United States.
A good portion of the $1.5 billion I was talking about is meat moved out of Alberta into the United States and to other markets. I'm sure they are working with us as closely as possible to ensure we don't lose that. At the same time, we like to see these other smaller operations move to a standard that would allow interprovincial or international movement. I would like to see some of that product here in Ontario.
Mrs. Cowling (Dauphin - Swan River): I apologize for missing your presentation. I have at least a couple of questions.
Dr. Olson, I have had the opportunity to represent the federal government in Europe and the Asian Pacific Rim. There isn't any question in my mind that Canada's food inspection system is recognized internationally as being among the best in the world. In fact, many of the people I represent also have said to me that it increases their ability to be key players in the world market. I do have a couple of questions.
Are the labs testing foods, including the Department of Agriculture and Agri-Food, the Department of Health and private labs, required to be accredited? Are they required to meet standards for quality control? If so, should they be so required, and when should this happen?
Dr. Olson: Dr. MacKenzie could correct me, but we currently utilize about 170 private, accredited laboratories in our food testing program. Those labs are accredited by a process with checked samples. Our own labs carry out the technology development and are part of the checked sample process.
Some portions of those labs are gradually becoming accredited under the Canadian standards system, but the structure is designed to ensure that the kind of testing carried out and the methodologies that are used are as clearly defined and as accurate as possible.
Mr. Easter raised the point about PVYn and the problem that a testing failure created in his province. You can appreciate the cost to individuals of a failure in a particular test result, so we want to ensure that the testing methodologies are as accurate as possible. For that reason, we run this accreditation system.
In the long term, I expect it all will be operated under the Canadian Standards Council or the Science Council of Canada or some vehicle like that. That evolution is happening right now.
Dr. MacKenzie, do you have anything to add to that?
Dr. MacKenzie: No, you are very correct, Dr. Olson. We have a very rigid system of accreditation.
As well, as you mentioned, Mrs. Cowling, there are quality control systems, check samples, etc.
Dr. Olson: There is a very large volume of samples. I have a book in my office that I use rarely, but when I do need it, it's very useful. It's a compilation of all the tests carried out each year on every product we look for, from heavy metals through to pesticides to whatever.
The sheer volume that's carried out by us, Health Canada, and by all the provincial governments is quite astounding. It's a very effective network. It uses a lot of private laboratories. I am pretty proud of what we have.
Our level of testing is considerably higher than that of any other country, and that's critical to our food testing system.
The Chairman: Thank you, Dr. Olson, and your officials, for coming forward today. I just have one quick question.
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I read an article recently in which an Agriculture Canada official, who was speaking on the issue of rBST, said there was a lot of smuggling - he used the term smuggling - across the border of rBST, but in fact said it wasn't really smuggling because farmers had the right to go across to the States and buy rBST and bring it across the border and that Agriculture Canada could only regulate its use in Canada. I find that surprising.
Your department would be responsible for the importation of plant and animal matter in this country. Is what I read in that article right, or is it -
Dr. Olson: We don't regulate that particular product. That's regulated by Health Canada.
The Chairman: Why would that be?
Dr. Olson: It falls under the Bureau of Veterinary Drugs. We deal with veterinary biologics, vaccines and those kinds of things almost because of the history of the branch, but veterinary drugs, because of the close relationship between them and drugs used for human purposes, resides with Health Canada. My understanding is that the regulatory responsibility for that kind of product lies with Health Canada.
As far as movement across the border, I keep thinking of the volume of cigarettes that moves across the border and comparing it with the size of a box of rBST and I presume it would be relatively easy to move it across. That's just very unfortunate. It tells you how critical it is to deal with the issue.
It would be useful if there were a test, of course.
The Chairman: You're saying, then, that Health Canada would regulate the import of that product.
Dr. Olson: They regulate the registration of the product. In terms of import, I really don't have any information. But it does raise the issue. It's like all of the other things that come across the border. How do you manage them, particularly when, to my understanding, there is no available test or methodology for identifying the product?
The Chairman: In fact, I think this committee was told that there was a test.
Dr. Olson: My understanding is that there are people in Europe who say they may have a test, but there isn't one now.
The Chairman: We were told by somebody from the University of Guelph - I think it was Dr. Martin, I am not sure -
Dr. Olson: More power to him.
The Chairman: - that in fact there was.
Dr. Olson: There is a parallel issue that I dealt with in my previous role with pesticides, when it had to do with the smuggling of pesticides across the border. In that particular case, where we had a regulatory responsibility prior to the transfer to Health Canada, we were able to take action when we found people smuggling pesticides. We were able there to identify the existence of the product and we were able to make a case before a judge that in fact the illegal product was being used in Canada.
In the BST case, not knowing the available technology and what authorities lie with Health Canada, I really can't take it much further.
The Chairman: Okay, thank you.
Thank you very much for appearing before us. We appreciate your coming forward, and if we have any further questions, I hope we can approach you in the future.
Dr. Olson: Thank you very much.
The Chairman: The meeting is adjourned.