[Recorded by Electronic Apparatus]
Tuesday, June 13, 1995
.0809 
[English]
The Chairman: Order.
Colleagues, this morning we have the opportunity to have with us the rBST Task Force.
Dr. Morrissey, welcome. I understand you have a short opening statement and would be willing to answer some questions on this issue.
.0810
As you know, we've looked into this issue, and it was through a report of this committee that your task force was set up. We thought it was important, now that you have reported to the minister, for you to come back before the committee and allow members an opportunity to question you on your findings.
Dr. Brian Morrissey (Chairman, rBST Task Force; Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-Food Canada): Thank you, Mr. Chairman.
[Translation]
Mr. Chairman, members of Parliament, ladies and gentlemen, I would like to thank the Committee, and on my own behalf and on behalf of my colleagues, for this opportunity to submit comments on the issue of bovine somatotropin.
[English]
In early 1994, as you're well aware, Mr. Chairman, this standing committee held public hearings on the subject of rBST. In April 1994 this committee issued a report containing your findings, together with a series of recommendations. Among these recommendations was a proposal that there be a one-year moratorium on the use of bovine somatotrophin in Canada, that a period of adjustment be allowed, and that the need for more public information about rBST be addressed.
In addition, the committee recommended that the one-year moratorium be used to review in greater detail the impact of synthetic BST on the costs and benefits for the Canadian dairy industry, animal health, including the stress placed on target animals, animal genetics, U.S. consumer reactions, and any outstanding human health issues.
The standing committee also recommended that a government industry task force be struck to carry out the tasks to be performed during the one-year moratorium. The committee's recommendation was that the review by the task force would require cooperation among federal departments and that the pharmaceutical industry and dairy industry be involved.
In August 1994 the Government of Canada responded to the chair of the standing committee, over the signature of Minister Goodale, and agreed to create a task force and undertake the tasks suggested by this committee. The two companies involved agreed to a voluntary delay on the sale of rBST up to July 1, 1995.
Government's response tasked Agriculture and Agri-Food Canada with reviewing the costs and benefits for the dairy industry, including an estimation of costs in the possible establishment of a dual delivery system. It tasked Health Canada with the provision of a paper on the safety of rBST for animals and human health. In addition, it tasked Agriculture and Agri-Food Canada and the Genetic Evaluation Board with the review of the impact of rBST on animal genetics. Finally, it tasked Industry Canada and Agriculture and Agri-Food Canada with tracking U.S. consumer reaction with regard to trends in milk consumption.
The government's response indicated that the task force would be composed of single representation from the National Dairy Council of Canada, Dairy Farmers of Canada, Agriculture and Agri-Food Canada, Industry Canada, the two manufacturers, and the national Consumers' Association.
This group, Mr. Chairman, was charged with overseeing the performance of the tasks identified and reporting to the minister of Agriculture and Agri-Food prior to the expiry of the delay period. The four tasks, which involved collecting the best available information, were assigned as directed in the government's response of August 1994 to Agriculture and Agri-Food in the case of the cost-benefit study; to Health Canada in relation to animal and human health; to a team of university scientists through a contract issued by Agriculture and Agri-Food for the impact of rBST on animal genetics; and through a contract with a scientist at the University of Guelph, issued under the auspices of Industry Canada and Agriculture and Agri-Food Canada, to track U.S. consumer reaction with regard to trends in milk consumption.
.0815
The members of the task force, who were nominated by their own organizations, were: Dale Tulloch, from the National Dairy Council of Canada; Peter Oosterhoff, from the Dairy Farmers of Canada; Brian Morrissey, representing Agriculture and Agri-Food Canada and chairing the task force; David Head, from Industry Canada; Terry Clark, representing Provel; Ray Mowling, representing Monsanto; and Ruth Jackson, representing the Consumers' Association of Canada.
The task force met monthly, Mr. Chairman, from September 1994 to the issuance of the final report in May 1995. In addition, during March 1995, the task force made a short trip to upper New York state to visit animal scientists and nutritionists at Cornell University, state officials, as well as dairies and a supermarket trying an rBST-free line of milk. In addition, two farms were visited.
The task force report provides public information about rBST, as the standing committee suggested in its April report. It has been widely distributed; in fact, we've had to run a second printing.
The cost-benefit study suggested that, overall, the effects would likely be phased in over several years, and the change in variables are in many cases in the 3% to 4% range and often less than 1%.
On the animal and human health issues, a review was not received from Health Canada, since its review of health and safety issues related to rBST is not complete. Consequently, Health Canada advised us that it was not possible to provide positions on animal and human safety as part of the overall report. However, Health Canada has indicated that, when a decision is made on rBST, a public document will be released that will address the health and safety issues.
The report on animal genetics indicates that the availability of rBST will have an impact on genetic evaluation. However, other environmental variables already have an impact on genetic evaluation. Consequently, the conclusion offered is that a decision concerning a notice of compliance for rBST should not be contingent upon the potential impact of rBST on genetic improvement in Canada. Several approaches to reduce the potential impact of rBST and other environmental factors were identified in the report.
In relation to U.S. consumer reaction, the report indicates that, during the first full year of rBST use, aggregate fluid milk consumption increased by 0.6% in the U.S.
[Translation]
Mr. Chairman, Members of Parliament, Ladies and Gentlemen, this concludes our overview of the taskforce's activities. With your permission, Mr. Chairman, the members of the taskforce will try to answer any questions you might want to ask them about their work. Finally, Mr. Chairman, with your indulgence, I'll ask our experts who carried out these studies and who were named in our mandate to respond to questions concerning the substance of their work.
[English]
If it is acceptable, Mr. Chairman, I would ask, with your permission, that the experts who conducted the individual studies be permitted to respond to specific questions on their studies. Perhaps, Mr. Chairman, again with your permission, I will introduce those members of the task force who are here today, together with the specialists who wrote the individual studies found in the report.
The Chairman: Yes.
Dr. Morrissey: Ruth Jackson, from the Consumers' Association of Canada; David Head, Industry Canada; Ray Mowling, Monsanto Canada; Peter Oosterhoff, Dairy Farmers of Canada; George Brinkman, University of Guelph. George did the study on the U.S. consumption trends on milk.
.0820
As well, Jack Dekkers, University of Guelph, was a member of a team of four university scientists who looked at the genetic evaluation and potential impact of rBST.
Brian Davey, Agriculture and Agri-Food Canada, was part of a team of economists who did the cost-benefit work within Agriculture Canada.
I am Brian Morrissey with Agriculture and Agri-Food, and it was my task to chair the task force. We have two members of the task force who could not be with us today and qui présentent leurs excuses, Terry Clark of Provel, Eli Lilly, and Dale Tulloch of the National Dairy Council.
The Chairman: Thank you, Dr. Morrissey. We will now move to a 10-minute question round.
First, Mr. Daviault.
[Translation]
Mr. Daviault (Ahuntsic): Thank you, gentlemen. I'm going to focus my questions on health issues, since I'm the assistant health critic.
I'm somewhat surprised that your report did not make mention of certain aspects found in the committee's initial recommendations about animal health or human health. You told us that it was up to Health Canada to handle this issue.
Even so, I think that your report should have taken account of these recommendations, which still have not been tabled. Why did you table this report at this particular time? If you had followed the debate going on with this distinguished institution, our Parliament, you would realize that every day we face two ministers who are each trying to pass the buck, telling us that it's up to Agriculture Canada to make the final decision, once the health studies have been done. Why didn't you wait for the health studies before tabling your report and making a definite recommendation?
How can you come to conclusions if you don't have the results of these studies?
Mr. Morrissey: I see three questions there. I'll try to answer all three, if you don't mind.
First of all, you ask me why we did not receive a response from the Health Department. I find myself in the embarrassing situation of having to respond on behalf of another department. I'll do so as best I can.
According to what I understood, we did not have access to the Health Department's confidential documents. We did not have any more access than the standing committee did. These people are protected under the Access to Information Act. The response we received from the Department was that it had not finished its studies on animal health or on human health, or on the entire health issue. Consequently, it was unable to prepare a report on a matter that it had not finished looking at.
Why did we table our report at this time? Because under our mandate, we had to respond within 60 days prior to the expiry of the July 1st moratorium. So we had a set deadline.
Unless I misunderstood, your third question was whether the final decision comes under the jurisdiction of Agriculture Canada or Health Canada. It is up to the Health Department to approve or not approve our BST, but Agriculture Canada undertook these social and economic studies, which were primarily intended to provide the information that this committee asked for.
Mr. Daviault: So you had to analyze the impact of this productl. You decided to travel to the United States, with representatives from Monsanto, to visit farms that do business with Monsanto, rather than analyzing at least a few of the 800 complaints that the American Food and Drug Administration has received about this product.
.0825
Don't you think that doesn't make much sense?
Dr. Morrissey: We went to visit Cornell University and some farms in the United States. One of these farms had just started to use our BST, while the other farm had used it in the past and had stopped using it. We visited dairies as well as a retail outlet. It was on this committee's recommendation that we went to visit American farms.
We did not study the health issues: that is to say, the group that's here did not study it. We did not look at the health issue because this task was not within these people's area of expertise, as set out in the mandate that the committee set. Consequently, the Health Department was given this task, because it had both the documentation and the expertise. So we - the other members of the team - were unable to carry out that particular task.
Mr. Daviault: Did you assess the impact of our BST on producers and processors operating within a dual milk collection system? If our BST were approved, that's what would have to be set up.
Dr. Morrissey: That was part of our mandate, and was studied by Brian Davey and his team. With your permission, Mr. Chairman, I'll ask Brian Davey to answer that question.
[English]
Mr. Brian Davey (Member, rBST Task Force; Director, Farm Economics and Regulatory Policy, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman.
Yes, the economic impact analysis studied the impact of rBST on Canadian dairy producers at the aggregate or dairy industry level. It also examined the impacts of rBST under a variety of management assumptions for individual dairy farmers and there was a much more qualitative type of assessment of the implications of a dual collection system in Canada.
Some members of my economic analysis team were able to collect some information on the dual system in the United States and the additional costs associated therewith. They reported in the study, but we were not able to make any quantitative estimates of the additional costs that would be incurred in a dual system in Canada.
The Chairman: Final question.
[Translation]
Mr. Daviault: So you weren't able to answer that question, which surprises me somewhat. If this product were recognized, this system would have to be put into place. I would like to focus on one of the committee's recommendation that you probably must studied. It's recommendation 4 from the Agriculture and Agri-Food Committee, which states:
- That dairy products be labelled so as to indicate that they conform with the moratorium that
Canada has imposed on the use of RBST.
Dr. Morrissey: I'll let Brian Davey answer the question dealing with the duo collection system, but first of all, I'd like to respond to the question about recommendation 4.
The task force did not study this particular recommendation, because its mandate only dealt with the first three recommendations, mainly, the Agriculture Canada moratorium, the creation of a task force and its four duties.
I could answer the question about labelling but I'll have to put on my other hat, and answer as an official from the Department of Agriculture.
.0830
At the time of the Standing Committee's recommendation, the countries using th RBST were identified and a list of those countries has been published. Since the labelling was already mandatory to identify the country of origin, it was possible to identify the country where the products possibly containing RBST were coming from.
[English]
Mr. Davey: In terms of the costs of the dual system, in the report we do present some information on the additional costs of collecting milk separately from farms in the United States, the cost of separate storage facilities and so on in the processing plants, and some information at the retail level as well.
Mr. Daviault: Tell us about it.
Mr. Davey: At the farm level, there are the additional costs of certifying the milk as being produced from herds not treated with rBST, about half a cent a gallon, just over one-tenth of a cent a litre. The milk collection costs are 20¢ to 50¢ a litre. In the processing plant there are separate storage facilities, tracking procedures, labelling costs and so on, about 0.3¢ a litre, and then some additional costs at the retailing end, which resulted in some capture of the additional costs for milk from rBST-free herds up to maybe 20¢ a gallon higher cost, or about 10% on the retail price for the rBST-free fluid milk in the United States.
The Chairman: How would you compare the two systems? There are two different systems. They don't pool milk. How would you compare it with a Canadian system?
Mr. Davey: That was a point also, Mr. Chairman, that was discussed in the report, because the members of my team who looked at the dual collection system did so on the basis of some discussions with a number of Canadian dairy processing companies. There are no estimates of the additional costs that could be obtained, but the qualitative comment was that the additional costs in Canada could be perhaps a little bit more substantial than in the United States. One of the reasons for that was the different system we have here with Canadian processing companies accessing their milk through milk marketing boards, assigning supplies to the particular company as compared with the United States' situation, where the processing company can arrange directly -
The Chairman: Contract directly, yes.
Mr. Davey: - for a full product.
The Chairman: Thank you.
Mr. Steckle (Huron - Bruce): Mr. Chairman, through you to Dr. Morrissey and the task force members, it is my privilege to be here this morning to put a few questions before the committee.
As we went into the investigation, the mandate that was given to the task force, certainly one of the issues, of course, was the health issue. Perhaps the greatest issue of all is the health issue, not only animal health but particularly the human health aspect. The task force provided a review of the costs and benefits of rBST. We have that. It has provided a review of the impact of rBST on animal genetics and it has also provided us a document on U.S. consumer reaction to rBST usage.
However - and my colleague has already alluded to part of this question - the terms of reference also called for the following: a discussion paper on the safety of rBST to animal and human health to Health Canada. In my few opening remarks, in the preamble, I want to simply lead up to the question.
Health Canada provided the task force with a statement indicating that rBST as a new veterinary drug would increase milk production in dairy cows. They also indicated that several pharmaceutical companies have submitted submissions for approval by the department for sale and use in Canada. The letter to the committee outlined the procedure by which new drugs are approved.
.0835
However, on the issue of addressing the concerns of human and animal health and BST, Health Canada provided the following statement: ``Since this review is not complete, it has not been possible to provide positions on animal and human safety in this report.'' However, Health Canada has indicated that when a decision is made on BST, a public document will be released that will address health and safety issues.
Given the fact that the question the committee is attempting to resolve is whether rBST is generically safe in terms of its impact on human health, and not whether any of the submissions presented to the department for evaluation meet these standards, the failure of the department to respond is disturbing.
What makes the fact even more disturbing is that on at least two previous occasions, officials of Health Canada have made direct reference to the health issues.
During testimony before the Ontario Farm Products Marketing Commission on June 18 and 19, 1990, Dr. Bill Drennan of Health Canada made the following statement with respect to the use of rBST: ``[Health Canada] has judged there is no demonstrable risk to the human consuming milk...from test animals''.
On March 9, 1987, in a letter from G.A. Mitchell, the director of the Bureau of Veterinary Drugs, to a Dr. McBride at the University of Guelph, it was stated: ``There is considered to be no human health hazard from the consumption of milk from treated animals.''
Can you, as the chair of the task force, explain how it is that Health Canada could be so categorical on at least two previous occasions that there was no risk to human health, and yet the department is not now prepared to provide such categorical statements?
Dr. Morrissey: I find myself in a difficult position, speaking for an empty chair. However, let me comment insofar as I have information.
The terms of reference, as you're well aware, did call for a review of health and safety issues for humans and animals. We within the task force were not able to access that information, just as you on the standing committee were not able to access the information.
I can't really comment on the quote from Dr. Drennan that there was no health risk, other than to say I'm party to the same public comments you are.
However, the other piece of information I'm aware of is that Health Canada has not at this point in time issued a notice of compliance, which means - and this is an assumption on my part - they still are examining something related to human health, animal health or the efficacy of the product, because that's the mandate within the Food and Drugs Act.
Irrespective of what Dr. Drennan may have said publicly, I'm working on the assumption that there are still outstanding issues related to human health, animal health or efficacy.
Let's suppose for a moment that Dr. Drennan made this comment and at a subsequent date new information arose of a health and safety nature, related to either humans or animals. That would have to be investigated.
I simply don't know if that's the case.
The Chairman: Mr. Steckle, as you know, on Thursday we will have an opportunity to hear from Health Canada.
Mr. Steckle: I'm going to ask one further question following on the last one.
Are you aware of any ongoing studies by the Department of Health on this particular issue? Are you aware of any efforts being made or any ongoing clinical studies, or are you not privy to that kind of information?
Dr. Morrissey: I have no information on how the review is proceeding within Health Canada.
Mr. Steckle: In view of the information that's been given to us and that's been presented to you as the chair of the task force, do you consider the response from Health Canada to be adequate in addressing the mandate your task force was given? If you do not feel it is adequate, should there be a further delay in the moratorium, in your opinion?
Dr. Morrissey: Is Health Canada's response reasonable? I can only cite the things I know, because there are things I simply do not know and therefore can't quote from. I do know Health Canada is bound by the Access to Information Act not to provide information that could provide a financial advantage or disadvantage to a third party.
.0840
I also assume that Health Canada has not finished its review of animal safety, human safety and/or efficacy. Assuming those positions are in fact true, it would appear reasonable to me that Health Canada not put itself in breach of an act of Parliament that binds it to confidentiality. Again, these are based on assumptions on my part, and I really don't know how founded those assumptions are.
On the question of whether the moratorium should be extended, personally, as chair of the task force, I don't have an opinion on that. My role as chair of the task force was to attempt to deliver, in as neutral a fashion as possible, the factual findings of the task force insofar as we could generate them.
Mr. Ray Mowling (Member, rBST Task Force; Vice-President, Legal and Public Affairs, Mosanto Canada Inc.): Putting on my company hat for a moment, I might add that we in fact received clearance on the human health aspect in 1990, so the focus of the work is on animal health and safety.
We're not aware of nor have we been notified that there is any new information that might come to bear on the human health and safety side. In fact there's an overwhelming body of scientific work already done, not just in Canada but outside of the country. The World Health Organization and other groups like it would open the file, as they have in other cases, if there were any new evidence about human safety. But they're not going to come out with a partial approval. They will approve once the NOC is complete on total efficacy, animal and human safety. Then an NOC would be granted.
Mr. Steckle: My question is to Mr. Mowling and Dr. Morrissey. If Health Canada is absolute in its determination that this is a safe product - and I think that's really the reason for us going through this process - then why do we not have all this other information forthcoming? Why cannot this report be made public at this point in time? Should it not be included in the final analyses as we come to a determination on this issue?
I think we're leaving a veil of doubt. There's something being shrouded here. For all people in your industry, in the farming community and in the dairy industry - indeed for all the public - should not this be cleared before we have a final approval of this product?
Dr. Morrissey: The question asks us to speak for Health Canada, and we're really not in a position to do that. You have in the documents before you as much information as I, as a member of the task force, have on Health Canada's position. I really have no more information than that.
Mr. Benoit (Vegreville): Welcome, ladies and gentlemen.
I'd like to start with the Health Canada approval, and Health Canada ultimately issuing a notice of compliance.
The Chairman: Again, Mr. Benoit, as you know, Health Canada will be coming Thursday.
Mr. Benoit: Yes.
I understand that the approval from Health Canada, as you already stated, could be held up right now due to either animal health concerns or the efficacy issue - is this product economically worth while?
To me it doesn't seem to make any sense at all that Health Canada or any other government agency would hold a product off the market because it might not make economic sense. It should be the role of the people producing the product, the people using the product and the people who might choose to either buy the product or not buy the product to decide whether they want it. The role of the regulatory agencies, in this case Health Canada, should be just to determine whether it's safe.
I think I'll direct this first to the Consumers' Association. Does it make any sense that Health Canada or any other government agency is holding up a product because they are studying the economic viability? Why not let the marketplace...? As long as the information is available, the rules are there to make the information available, accurately, then why would we hold the product up due to economic viability?
.0845
The Chairman: Before you respond, and Dr. Morrissey you can correct me if I'm wrong, but efficacy does not mean the economic viability, as I understand it. Efficacy means whether or not the product actually does what it says it does. Health Canada would not be looking at the economic questions.
Would you respond, Dr. Morrissey?
Mr. Benoit: Yes, it's my mistake there. It's whether the product does what it says it's going to do, and that is legitimate. I apologize for that.
The economic study was what I was going to get to next. In terms of Health Canada holding the product off the market due to animal health issues, or determining whether the product does what it says it's going to do, there's been a lot of testing on this in the past. I would like your comments on that, and then Mr. Morrissey.
Ms Ruth Jackson (Member, rBST Task Force; Consumers' Association of Canada): I agree that it's not the role of government to make decisions that the marketplace should make, but the government should make sure the full information is there and the marketplace is fair. Then the marketplace should decide whether or not there's a place for the product, once it's safe.
Mr. Benoit: I'll go on next to the economic analysis, which is really what I wanted to talk about. This economic analysis was based on the assumption that the supply management would be in place pretty much as it is now into the future. Would the results of the study that was done have been different had it been acknowledged that the supply management system most likely will change in the future? We don't know when, we don't know how, but whether we like it or not it probably will change. There probably will be, or there will be more competition from the United States and there will be a much larger market available for Canadian farmers in the United States.
If that has been taken into account, a change could be brought on by either new GATT negotiations after 2000, due to the panel determining that NAFTA has precedence over GATT on this issue, which would certainly allow more competition, or maybe even Chile coming into NAFTA. There may or may not be negotiations surrounding that. If the supply management system as it is changes fairly rapidly, wouldn't the study that was done be pretty much irrelevant?
Dr. Morrissey: I wonder, Mr. Chairman, if we could reply in two parts. I could try to reply to some of the questions raised earlier and then share the response with Brian on the economic issue.
Going back to the earlier question about concerns on health and safety, my understanding of any of the registration processes, whether it's human health product, veterinary vaccine or the feed or fertilizer, is that the examination of submissions takes time and quite often the time involved has nothing to do with concerns; it's simply the time involved in reviewing. So I really don't know at this point whether Health Canada has concerns or whether Health Canada is simply taking the time necessary to review the documentation submitted.
My second comment is on the efficacy issue. My understanding, Mr. Chairman, is that your interpretation is quite correct, that efficacy in this instance means: does the product do what the product purports to do? The argument I've heard over the years is that in the United States there is a tendency toward allowing the marketplace to decide whether the product is efficacious or not, caveat emptor.
In Canada the tendency - and sometimes built into legislation - is that the state looks at efficacy. I'm not saying this is right or wrong, I'm simply saying that's the state of play in the two countries. The argument I usually hear about the role of the state in looking at efficacy is that for the market to work, to avoid a case of market failure, purchasers or consumers require the information necessary to make an informed market decision.
.0850
So some people would make a case that in those instances in which ex ante information is required to make an informed market decision, there might be a role for the state in determining efficacy or providing information.
Maybe we'll stop there, Mr. Chairman, and ask Brian if he has comments.
Mr. Davey: I guess I'd comment by just providing a bit of background as to how we do this type of economic analysis, because I think it's germane to the question that was asked.
To do this type of work, we make a forecast or projection along a baseline situation for the dairy industry in which we make the assumption that current dairy policy does not change. Then we look at the particular scenario that we were asked to examine - in this case, the impact of adopted rBST in the Canadian dairy industry. The impact is the difference between the results for the scenario and the results for the baseline assuming no policy change.
Yes, we could look at the situation in which there were changes made to the supply management system. That would in effect be changing our baseline of comparison. To be able to do that, we would have to know in fairly precise terms how the supply management system was going to change, and then we would have to make an estimate of the rBST impact accordingly.
You have to separate the two. Otherwise, you would not know how the situation was evolving or changing or whether it was due to the policy change, the change in the supply management system, or the introduction of rBST. As I said, we could do an analysis, assuming some changes in the supply management system, if they were specified to us.
The other comment I would make, though, is that we did include in the economic impact study a little assessment or cost of production comparison for Ontario and New York state milk producers, whereby we assumed that rBST was not being used in Canada but was being used in the United States and there was a widening of the current competitiveness gap that exists of 3% or so. That is, in a way, getting at the competitiveness question that you raised.
Mr. Benoit: Okay. Thank you.
In the United States, at the standing committee meetings when we were talking about rBST, there were some witnesses who predicted a dramatic decline in milk usage in the United States. In fact, the study done found a 0.6% increase in consumption since rBST has come into use. Do any of you have any reason to believe that the situation would be any different or much different in Canada?
Dr. Morrissey: Mr. Chairman, with your permission, I'd ask Professor George Brinkman from the University of Guelph if he could respond to that question.
Dr. George L. Brinkman (Department of Agricultural Economics and Business, Ontario Agricultural College, University of Guelph): The question you raise has several dimensions. One is correctly addressing what's happening in the United States and then relating that to the conditions in Canada.
Let me back up and cover some additional information on the U.S. position first, because there were questions raised, I think in a press release, indicating that the U.S. consumption figures likely were higher than they would have been had there not been a multi-million dollar advertising campaign.
First of all, I would like to clarify that, because there is a campaign being promoted by a check-off for processors that will represent about $35 million in advertising, which is designed to target primarily women from 24 to 44 years of age to promote milk as a safe product. However, it is very important to realize that our study looked at consumption in the United States from February 1994 to January 1995, which was the first full year of rBST use, and the promotion campaign did not start until January 1995.
.0855
It normally takes two to three months to have any impact from advertising, and in my view and in the view of the people in the USDA with whom I've talked, it has had no impact on the first-year figures we reported. So the figures we reported were in the absence of this additional promotion campaign and would represent, then, the response.
The response pattern we found in the United States is that there was considerable concern in the initial months and that consumers did raise many issues. However, as they became more comfortable with the pattern of purchases and the availability of the product, and by literally seeing the product on the shelf without any adverse effects, the concerns did decline.
The overall impact at this time is that likely less than 1% of all milk sales in the Unites States is identified as rBST-free. However, there are differences between fluid milk and manufactured milk. About 2% of fluid milk and virtually no manufactured milk is sold as rBST-free identified milk.
The question you raise is, can you extrapolate that to Canada. I think it is difficult to say whether or not Canadians would choose a 1% level consumption of rBST-free labelled milk, but I do believe it would be similar to the U.S. in the behavioural pattern, in that, as milk would be available under this product, consumers would become more comfortable with it and some of the concerns being raised would be reduced as people were able to get used to the product.
Mr. Benoit: So you have no reason to believe, then, that there would be a decrease in consumption in Canada, whereas there was a slight increase in the United States, whatever caused the increase?
Dr. Brinkman: Well, it depends in part on the systems you use. The two areas in the United States where there were substantial concerns were Vermont and Wisconsin. The issue there was partly whether or not there was a dual system for marketing milk. With a dual system for marketing milk, consumers had a choice and could choose an rBST-free product or a product that was undifferentiated between rBST-free or rBST-used. That certainly reduced a tremendous amount of the concern consumers had and enabled consumers to make the choice they wanted to make.
With that availability, however, a lot of the concern about the rBST product was reduced, and even people having concern apparently had then begun consuming the undifferentiated product.
The Chairman: Dr. Brinkman, reading through the report, it states that - talking about this 0.6% increase in fluid milk consumption - ``the use was not achieved by price reductions or lower price increases than in the previous year, but by maintained demand for dairy products''. So it actually wasn't the drinkable fluid milk consumption. Was it due to an increase in products, or was it -
Dr. Brinkman: No, the 0.6% increase was of fluid milk products. It was not of all dairy products; it was just the fluid milk products. I should indicate that, in the figures I have there, there will be some revisions for the consumption in California. I've been in contact with the USDA. Those figures will indicate a slight decrease in the consumption figures for California because of sales of milk that were inaccurately represented and sold to Mexico. Nevertheless, I do not feel that will change the impact overall for the consumption for the year, because you will find that most of the other areas in the regions reported had a slight increase and the impact would be only in California. But there will be a revision coming to milk sales in California.
If you look at the pattern for 1993 to 1994, there was an increase in milk consumption, but from 1992 to 1993 there was a 1.8% decrease.
That's a very substantial decrease, and it's a momentum due to concern about fat in milk. The consumption in 1994 had to overcome that momentum of declining sales, so literally, if you had even maintained the same decrease, you would have had a percentage trend variable that would have indicated continuing declining interest.
.0900
The consumption in 1994 overcame the changes in consumption patterns that occurred in 1993 and maintained basically the same level. So it's not just a matter of maintaining the consumption at the same level. It is also a matter of changing a declining consumption trend, which is often hard to do.
Mr. Vanclief (Prince Edward - Hastings): Thank you very much, task force members, for coming before the committee today. I have two or three questions, which can hopefully be answered briefly so we can get them all in. But I will ask them one at a time.
We hear varying comments on whether there is a test for rBST in milk. I guess putting it in practical terms, is there a test available, or is the committee aware of a test available in the offing to see whether the cattle that the milk in a farmer's tank came from have been treated with rBST? Is there such a test available in the world today?
Dr. Morrissey: We investigated three tests that were suggested to this committee by a witness some time back, and the information we got from our scientists was that none of them was usable as a test in the way you've described.
We also asked Dr. Bauman when we were in Cornell in the United States, and he told us that to his knowledge, there was no test to differentiate. We have heard - and I'm speaking from memory now - that there may be another test that's being investigated, and we have somebody looking at that at the present time. I'm speaking from memory, and my memory says something is being looked at, but to the best of our knowledge, there's now no test.
Mr. Vanclief: Comments have been made this morning and statements have been made that, to date, Health Canada has given clearance, I understand, in writing to the manufacturers that there is no concern about human health due to the use of rBST in cattle. The efficacy statement has been made that the industry will probably decide that, if they have the opportunity to use the product. I just want it clear...and I know this is a health issue, but did I understand that there is no knowledge from the committee members of anything new that has come forward in the last number of months that has not been known to the world as far as studies on the effect on animal health? Are there new studies that may have come forward to help that you are aware of?
Dr. Morrissey: I will attempt to respond, and if any other members of the task force have other information, please feel free to respond.
On the human health issue, there are publications coming out regularly on rBST. From amongst those, I'm not aware of anything that would have raised significant questions in countries such as the United States, the European Union, or here. Papers come out every other day, but I'm not sure of any paper coming out that has raised a major issue. I'm not privy to the information that health would have, but in the public domain, I'm not aware of any.
Mr. Mowling: Again, I might add that, from my company's position, there is certainly not any evidence of new studies. We've had no conversations or requests from Health Canada to provide any data in that area. Again, to the chairman's point, there is a lot of information that's available now for people to access reports on human safety and animal safety as well.
.0905
I might add there have been some claims, some of them false, quite frankly, and some misinformation about the potential effects, which again have not been backed up by the accepted scientific practice in our country, one of the leading practices in the world. It looks at peer-reviewed scientific information to make its determinations.
Mr. Vanclief: Mr. Chairman, I have a couple of questions for Mr. Oosterhoff. I recognize from the start that some of what I am saying is hypothetical, but I think they are thoughts that have been going through all of our minds.
If this product were given a notice of compliance - and by saying that, I think we all understand that it will not get a notice of compliance unless it meets all of the standards and the testing and requirements of Health Canada - some of the claims are that it would produce efficiencies etc. My understanding is that the dairy industry has always passed those efficiencies on to the consumer in their part of the production chain.
Does Mr. Oosterhoff see that the use of this product would be of benefit to the producer, of benefit to the consumer? I want to state again, that's if it receives notice of compliance. If there is notice of compliance, but if there was any way, or if the industry decided not to use the product, what would that do to the competitiveness, if anything, of the Canadian dairy producer?
Mr. Peter Oosterhoff (Member, rBST Task Force; President, Dairy Farmers of Canada): There are a number of questions here, but I think they are all related and they deal with the competitiveness of the Canadian dairy industry. I think some of the points Mr. Vanclief makes are absolutely valid when he indicates that the Canadian dairy industry, through its pricing methodology, which is based on public policy in place in this country, certainly passes on the efficiency gains that are made in the industry to the consumer.
For those around the table, I think we need to understand that our pricing methodology is based on a cost of production survey, a random survey across producers in the major producing provinces. When we take that cost of production survey, we delete 30% of the highest cost producers. So we only retain 70% of the lowest cost producers. We then take the average of that survey cost so that, in effect, if you take half of the 75% left over, there are only about 37.5% of producers who actually attain the survey cost of production in this country. So there is a tremendous pressure on producers to become more efficient in order to survive. High-cost producers will not survive in the industry. There is a market orientation within supply management that is quite often overlooked.
There is a pressure on producers to use technology, and we have done that over the years. I've been in the dairy business probably longer than many producers. We have always picked up on new technology that becomes available. We use ration formulation, we use new rations, we use new corn, new alfalfa and about anything that comes on the market, new buildings, new milking equipment, etc. So here is a new product that if it were efficient and would lower the cost of production, producers would want to use it, except we have something here that is probably new, it's new biotechnology, it has become controversial, so people will be looking at this and evaluating basically whether there is an effect on human or animal health - and that's out of our realm - and also the effect on consumer acceptance or resistance to using the product.
.0910
Your question, Mr. Vanclief, is whether producers would use it in order to remain competitive. I think that would be a decision for individual producers to decide. Some producers have adapted more technology than others. In the long run, I think those who adapt technology over time will be those who will survive in the industry. I think this biotechnology is something that needs to be sorted out.
I think it is regrettable that we don't have a report from Health Canada in our report, because it detracts from the completeness of the report.
We had a timetable to meet, and we had directions to report to the ministers two months before the end of the voluntary moratorium on rBST. We met our timetable. Unfortunately, Health Canada, for their reasons, could not meet that timetable, and we're waiting for the completion of their report.
I regret from my perspective that in the industry, producers, and I think that extrapolates to processors, are discussing an issue that could have perhaps a beneficial but also a detrimental impact on the industry, and we don't have all the answers.
The Chairman: A final question, Mr. Vanclief.
Mr. Vanclief: I have one question. I wonder if there is anybody on the committee who could enlighten us on this situation and the use of rBST. I will refer to the European area - and I am not familiar with it.
I have no proof, but I have heard that there has been approval of the product for health - in other words, a notice of compliance - but there is also a moratorium on the sale of the product or on its use. What is the situation there? Do you have any knowledge of how that was handled, if what I have said or heard is the truth, or what the truth is on the use of rBST? I think we all refer to it as Europe, the European Union, or whatever.
Dr. Morrissey: With your permission, Mr. Chairman, I will try to answer the question. If Mr. Mowling has further information, perhaps you will allow him to assist.
My understanding, Mr. Chairman, is that the European Union prior to some months back had put in a moratorium on the use and sale of BST within the European Union. My understanding is that the competent authorities in the European Union had said from a health and safety point of view the product was not a concern. The European Parliament decided that for social and economic reasons, one group in society wanted the product, one group in society did not want the product for social and economic reasons, and new technology tips the balance economically in favour of one group and less in favour of another.
On areas of health and safety, my understanding is that the product was not questioned in the European Union. The moratorium was put in place for social and economic preference reasons.
The moratorium was reviewed some months back in the European Union, and a decision was made to extend the delay on the sale of rBST out into the future. Again my understanding is that the reasons were precisely the same as they had been for the original delay: health and safety were acceptable; efficacy was acceptable; but social and economic questions related primarily, as I understand it, to consumer concerns on the social side, to surplus of dairy products on the economic side, and potential effect on small farms.
My further understanding is that in the extension of the moratorium in the European Union, new permission has been granted that had not been granted for controlled use in the past. For example, member states have been allowed in the new decision to conduct trials within their own countries on the use of BST over the extended or future delay period.
Mr. Mowling: The only thing I might add is that this product has been approved in 36 countries around the world. It's not being used in all 36 countries, primarily for commercial or marketing reasons. It has not been turned down by any country on human and animal safety reasons or for efficacy. It is correct, the EC approved it years ago on terms of human and animal safety, and for other reasons.
Mrs. Cowling (Dauphin-Swan River): My question is with respect to the 36 countries that in fact use the rBST. How long have they been using the product? I am wondering what impact that has had on the cow herds and how many farmers may well have gone out of business. Has there been a study done, or do you know the results of that?
.0915
Dr. Morrissey: I don't have information on what's happened to the cow herds in the 36 countries.
If it's useful, we have looked at what might be the impact for Canada on the number of animals in this country over the next period of time. Perhaps we could ask Brian Davey to provide that information.
Mrs. Cowling: Excellent. Yes, we would like to have that information.
Mr. Davey: Let me just comment first on impacts in other countries. There have been a number of studies done in the United States, and one particular study, which I think was in a way a synthesis of a number of pieces of work that had been done. It was done by what I think is called their general accounting office, where they looked at the overall impact.
I think they concluded that there would be a reduction of 1% in total income of dairy farmers in the United States after a period of years when rBST was introduced. I can't recall offhand whether they made any estimates of the size of the national cow herd, but they would have forecasted it to have been somewhat smaller than what it would otherwise have been, which is the same situation we have estimated here in Canada.
If we look at the medium adoption scenario for rBST as an average type of situation, the number of dairy cows in Canada after the full adjustment period would be down by about 1%, compared with what it would have been without rBST. Making some assumptions about how farmers in their farm management choose to apply rBST on their farms, I think that converted into a decline of 500 or so in the number of dairy farms due to rBST.
I think it's important to put that in context of the structural change that's been taking place in Canadian dairy farming over the last several years, many years in fact, where there has been a pretty steady decline in the total number of dairy farms. Dairy farms, like all other types of farms, are becoming fewer in number and larger in size over time. We would see rBST having a very minimal impact on that general trend within the dairy sector.
Mrs. Cowling: I would like to just follow up with another question with respect to that. What model did you use? It's somewhat like comparing apples and oranges when you do the measurements. Could you expand on that? Because it's my understanding that it is an open market in the U.S., and ours is quite different here.
Mr. Davey: We did our analysis on the basis of the Canadian supply management system continuing in place as it operates at the present time. The Americans, of course, would do their analysis on the basis of their particular situation in the dairy sector there.
Mrs. Cowling: Thank you.
[Translation]
M. Landry (Lotbinière): Dr. Morrissey, Mrs...
Mr. Daviault: A representative of the company would like to take the floor.
[English]
Mr. Mowling: Because we're selling in the United States, we know from our sales that over 55% are to farmers with fewer than 100 cows. That may address some of the issues that have been raised about whether this is friendlier to larger herds than smaller herds.
I think the answer that was raised by Mr. Oosterhoff is that good herd management is where this product is the most effective and it doesn't matter about the size of herds. In fact, there have been some models done in Canada recently at the University of Guelph that illustrate some of the economic benefits that come back with a 45-cow herd.
[Translation]
Mr. Landry: Dr. Morrissey, witnesses, I am quite pleased to see we have here four dairy farmers from my Lotbinière riding in Quebec. Welcome.
.0920
My question is directed to the representative of the milk consumers in Canada. Madam, I'd like to know if you've made a survey of the milk drinkers and how people react to a possible clearance of somatotropin?
[English]
Ms Jackson: I believe there have been three surveys done that we have looked at. One of them was in the U.S. and two were in Canada. The one that was done in Canada was quite recent.
It's very difficult for consumers to give an honest answer when you ask them what they would do in a certain situation. In that respect, the results of the most recent survey, which was really a poll by Angus Reid, seemed to be very different from the other two.
The Hoban in the U.S. and the Optima study in Canada did not have that much concern by consumers. I guess the main thing was consumers were not too knowledgeable.
The Angus Reid survey has indicated that consumers have at least heard the terms, but I don't know whether or not they understand them. This survey, which was done at the end of May 1995, raises much more concern by consumers. It indicates more concern than I would have expected.
[Translation]
Mr. Landry: Mr. Chairman, I would like to ask a very short question to the representative of milk producers of Canada.
What percentage of milk producers are willing to adopt this hormone and why?
[English]
Mr. Oosterhoff: We don't have any figures as to what percentage of producers would want to use this product in Canada. We have not done any surveys and, frankly, I don't know how effective a survey would be on whether people would adapt to a different technology. I think those things change over time.
People try it, and if a product is a failure, the neighbours won't pick it up. If a product works well for some people, then the neighbours quickly jump on the band wagon. I think at this stage it's a ``wait and see'' attitude. Obviously there are producers in this country who would want to use the product, but we really have no idea as to what the numbers would be.
I think polls and surveys can be very deceiving. You may be aware that I'm from Ontario and we had a recent provincial election. All the surveys and polls indicated a month before the election that we were going to have one party forming a majority government. Within a month the whole picture changed, and we had a majority government of another stripe.
I have become a little jaundiced about polls, surveys, and all these things. There's only one final poll and that is the reality.
[Translation]
Mr. Landry: Thank you. Since you do not have any percentages concerning your producers, I would like to know if you and your organization would be ready to adopt somatotropin tomorrow morning? Yes or no and why?
[English]
Mr. Oosterhoff: Our position is that we still have a concern. We adopted this position in Winnipeg in January at our policy conference. We reiterated our concern about the impact at the market and consumer concerns and suggested that the moratorium should be extended for another year.
.0925
We'll be going into our annual meeting in July and obviously the issue will be raised again. We have an opportunity in our organization to review this issue twice a year.
This is a dynamic one. It appears things are moving except in Health Canada. But other than that, there is a progression. Obviously, as you expected, some producers will be wanting to use this product, and I expect we'll have a lively debate at our annual meeting in July in St. John's, Newfoundland.
The Chairman: Colleagues, we only have until 9:30 this morning and I still have two more members, Mr. Reed and Mr. Collins.
Mr. Reed (Halton - Peel): Thank you, Mr. Chairman. I just have one very brief question.
This product has been accepted in 36 countries, although all 36 are obviously not employing it. I just wonder if you could comment on what impact the adoption of BST and the use of it may have on those countries' ability to export into other countries that would choose not to use the product.
Dr. Morrissey: Mr. Chairman, if it's acceptable, the questions could be divided between Mr. Mowling and myself, since he may have some detailed information I don't have.
The large market that comes to mind is the European Union. The European Union has placed a moratorium on the use of BST within the four corners of its own borders. However, the European Union has placed no restrictions on the importation of products that may contain BST from other countries.
So at least in that large market they have allowed trade to progress, which has given them a degree of protection against the likelihood of a GATT or WTO action against them. So trade is allowed to progress even though they have restricted the use internally.
Do you have anything in addition?
Mr. Mowling: No, that's correct.
Mr. Reed: Thank you, Mr. Chairman.
Mr. Collins (Souris - Moose Mountain): I apologize for being late.
Just to go back to what Mrs. Cowling said, I want to ask two quick questions. When we are talking about BST and the factors that may cause herds to become downsized, I think we should take a look at all those factors. I'm sure you have put them in so that we're going to look at all of them. Let's put them in the proper context of what impacted on the change of herds, the size of herds and those going out of business.
The other thing I would like to say is to Mr. Oosterhoff. I agree with you totally. I think we have polls and projections, and we almost have seances on where we're going. At the end of the road I'm not so sure that we might as well have not used the Ouija board as well.
But having said that, sir, I wonder if you are aware of any in your industry who are now using BST, however they might be using it in Canada.
Mr. Oosterhoff: I have two points, Mr. Collins. On the size of the industry and the number of producers we're losing, I think that was answered by Mr. Davey. We're probably looking at 1% for producers and cow numbers.
For the last 10 or 15 years and probably beyond that the attrition rate in the dairy industry has been at the rate of 3% to 4% per year. That's the number of producers we're losing.
Still the average herd number in Canada is probably about 45 cows. In the U.S. it's around 67. It's not drastically different. We hear about large herds in the U.S. So there are some differences in the state of the industry between the two countries, but they're not dramatic.
Our organizations have never had any policies that we need to keep all producers in business. I think the nature of the game is that there are changes in the economy.
It has drastic effects on the rural economy and in the countryside; we all have to have concerns about that. At the same time, if we were still at 15-cow herds today, the price of milk would have to be at such a level that people wouldn't be able to afford it. So we have to try to strike a balance there.
You asked if I am aware of anybody using it. That question was asked of me when we appeared before the committee previously. Again today I have to state unequivocally that I am not aware of anybody using it.
.0930
I know that rumours abound. In fact, I've been approached by your chairman. He asked me outright whether I was using it because that was the rumour in Ottawa. In fact some of my colleagues have been approached by their MPs. I hope those rumours didn't start at the committee level -
Some hon. members: Oh, oh!
Mr. Oosterhoff: - but perhaps they worked up to the committee level. I can unequivocally say that I'm not using the product and I'm not aware of anybody else using it.
But as I said before, we have a leaky border with the U.S. We haven't been able to keep liquor, tobacco or anything else out. The danger is that if we have a product available in the U.S. and not available in Canada, there could be people using it. I think I want the powers-that-be in Ottawa to be aware of that situation.
The Chairman: I'm wondering -
Dr. Morrissey: Mr. Chairman, I believe Mr. Davey had a comment, if you wish to hear it.
The Chairman: Certainly.
Mr. Davey: I just have a brief comment, if I may, on the breadth of the analysis in looking at the situation of different dairy farmers.
In the part of the study where we looked at the impact on an individual dairy farm rather than at the industry as a whole, we looked at a number of circumstances. The first one was where a farmer would maintain his herd size and acquire additional quota in order to be able to cover off the additional milk production, clearly a farmer who would benefit from the adoption of BST.
We also looked at the situation where a farmer would maintain his production, but reduce the size of his herd because the yields per cow would go up. Those farmers would benefit - not as much - provided they used the resources on the farm that are freed up by reducing the herd size for some other enterprise like growing grain or corn for sale, or something like that.
Then we looked at the situation of farmers who, for whatever reason, would not adopt BST. They are clearly losers in the situation because they would be selling the same volume of milk, but at a lower price.
When it comes to the structural change that would take place, you know, maybe fewer farmers in total, a very minimal reduction in the number, as a result of adopting BST, the comment made in the report is that one might expect the decline to be focused on the group of farmers who don't adopt BST because they are the ones who will come under a little bit of economic pressure.
The Chairman: Thank you.
Colleagues, we've now come to 9:30 a.m. We allotted the time until 9:30 a.m. because we have Bill C-86 to deal with in clause-by-clause today.
Dr. Morrissey, almost all members have indicated they wish to ask second-round questions on this. So obviously there are still a number of questions that people have.
I'm wondering if you could make yourself available over the next few days for members to call you if they have questions. Maybe you could make phone numbers of your colleagues available to members. There still are a lot of questions on this.
Colleagues, we'll have some time after Thursday, when we see Health Canada, to further discuss this in committee. I think though that we should move on to Bill C-86.
Before we do that, Mr. Mowling, I have one question on your product in the U.S.. How is the demand for the product? Has there been a great demand? Is it increasing? Is it decreasing?
Mr. Mowling: Well, we're selling to about 15,000 dairy farmers. To put that in perspective, that's close to half the total of dairy farmers in Canada.
It's been on the market since February 1994. It's doing quite well, contrary to what we were expecting.
As Mr. Oosterhoff pointed out, whenever you have a new technology like this, there's support needed to work with dairy farmers so you have the early adopters. That's the stage we've gone through with the market now.
It's used right across the United States. We're satisfied that we're meeting our current targets. I think 18 million doses have been sold. So we're on track as far as our goals are concerned.
.0935
The Chairman: Again, Dr. Morrissey, thank you for coming.
Colleagues, we'll take a 5-minute break.
.0945
The Chairman: Okay, colleagues, we can begin.
Mr. Benoit: Just before we get started, I'd like to ask for unanimous consent of the committee to allow one or two dairy farmers - I understand there's a veterinarian and an informal group who have come here today from across Canada - five minutes in total to state their case on the BST.
.0945
They feel they haven't been heard and I think it's important that our committee does hear from farmers, individual farmers. I know the farm groups have been well represented, and that's good, but there are farmers who would like to state their case as well. So I'd like to ask unanimous consent of the committee for this five minutes.
The Chairman: Mr. Benoit, as you know, that isn't how we handle things here. You seem to be leaving the impression that we haven't heard farmers on this issue when in fact you realize that we've heard a number of farmers on the BST issue.
We've now moved into the issue of C-86. We're not on the BST issue and as I look around the room, I don't see unanimous consent.
Colleagues, we have with us today Kempton Matte from the National Dairy Council.
Welcome back to the committee. You have a brief statement, I understand, and then you would be willing to answer questions.
Mr. Kempton L. Matte (President and Chief Executive Officer, National Dairy Council of Canada): Thank you, Mr. Chairman. Merci, monsieur le président.
We have come really to wave the solidarity flag for the dairy industry and with the dairy industry. We're here as dairy processors to assure the committee that we support the amendments to Bill C-86 so that the Canadian Dairy Commission Act can properly reflect the changes that are taking place in the reorganization of the dairy supply management system.
It came to our attention, Mr. Chairman, that some thought we were opposed to these types of changes. In fact we are not, and I wanted to make that very clear. That is the only purpose of our appearance here today, although I would have loved to have taken questions on our BST.
Some hon. members: Oh, oh!
The Chairman: I figured you probably would, but as you know, Mr. Matte, we're on the issue of C-86. Unfortunately your representative on the task force couldn't be there today.
I will turn to a list. Mr. Chrétien.
[Translation]
Mr. Chrétien (Frontenac): I apologize, but I had my mind on other things. I'll let someone else speak.
[English]
The Chairman: Mr. Benoit.
Mr. Benoit: Thank you, Mr. Chairman. We're not into clause-by-clause yet. May we have some general discussion first, Mr. Chairman?
The Chairman: That's right.
Mr. Benoit: We'll just do general discussion now.
The Chairman: The National Dairy Council is a witness. Then we will move to the Dairy Commission and Mr. Vanclief representing the minister.
Mr. Benoit: Yes, thank you.
On clause 3, I've had some concern expressed from Alberta, but I understand other provinces have also expressed the concern that this legislation will really interfere in provincial jurisdiction, either giving too much power to the federal government or the Canadian Dairy Commission.
It has been suggested that section 9 of the act be amended to ensure that the area of provincial jurisdiction isn't inadvertently eroded. The strong feeling from Alberta is that this legislation will do that. They suggest there be an amendment that puts a ``subject to'' clause at the beginning of section 9, subject to provincial agreement, subject to the agreement of that province. I'd like your comments on that.
.0950
You've heard this, of course, as I understand it has been brought up by several provinces in discussions.
Mr. Matte: Frankly, our belief is that this concern is greatly overdone. Now, I am not a constitutional lawyer, but the whole purpose of the amendments is to make the national system workable. The way the national plan dovetails into the act, it's virtually impossible for the commission to override the particular concerns of a province. I don't see anything proposed that would change that.
I can understand a general concern about transfer of powers or an intrusion into provincial jurisdiction, but I don't think that concern is warranted.
Just as an aside, I could tell you that if you take other clauses, you will find, for example, relative to our own sector of the industry, that the commission has enormous powers of influence over dairy processing, but fortunately they choose to use those powers with a great deal of discretion.
The way the national milk marketing plan is written and signed on by the different provinces and the relevant producer groups in those provinces makes that kind of abuse very remote, if even possible.
Mr. Benoit: From the way you answered the question, that concern is overblown. You've heard the concern before from six provinces.
Mr. Matte: This is always a concern. It's fair to say that anyone who attends any of the Canadian Milk Supply Management Committee meetings will hear those concerns from all nine of the signatory provinces. So the checks and balances come into play immediately.
On a practical basis, being very honest and even crass, I don't think it's an issue.
Mr. Benoit: Why do the provinces continue to be concerned about that?
Mr. Matte: Again this may sound irreverent, but frankly I would say there are very few people who examine the dairy supply management system who actually understand how it works and how the checks and balances come into play.
Once they get into this process, those who do the very difficult task of attending the CMSMC realize very quickly the amount of power they actually possess. Don't forget, among the supply-managed systems, this is the one that functions on unanimity and chose to continue to function decision-wise on the basis of unanimity - not consensus but unanimity. So in effect every province has a veto over decisions of the CMSMC.
That's why I say that while I understand the concern, on a practical basis I don't think it's an issue.
Mr. Benoit: Thank you.
Mr. Vanclief: Very briefly, Mr. Chairman, I would like to thank Mr. Matte and Mr. Nadeau for coming this morning and again emphasizing to us and to the industry as a whole the importance of the fact that the decision to go this route has been a total industry decision so that the industry can best meet the opportunities that are out there at the present time.
Just on the comments on the last issue, I thank Mr. Matte for being very frank and clear on that concern. That concern is always there, but it's fully addressed, Mr. Chairman, and the reality is that even though it may be a concern, it just can't happen.
[Translation]
Mr. Chrétien: You represent the National Dairy Council.
Obviously, my colleague from Lotbinière and myself will support Bill C-86. The clause by clause review of the Bill should proceed smoothly since no amendments are being presented. Only two were submitted to us up to now. So there should be no problem.
.0955
However, something bothers me. The milk industry operates under the principle of supply management. No more than 15 minutes ago, a group of milk producers from the Lotbinière area was sitting behind us, they supported the use of BST and were telling us that the processing plant in Victoriaville had to import milk from the States because there is not enough of it.
If I had only heard that this morning, I might have pretended not to hear it, but last week, a processing plant in the eastern part of Montreal called my office to ask the same type of question. We don't have enough milk. You're going to tell me that it's a class 5 product, but we don't have enough of it. On Monday morning, the member for Drummond, the neighboring constituency to Lotbinière, met another milk processor who complained about a lack of raw product, milk that is.
So, we have a supply management system. I am all for it, but it seems that demand is stronger than supply.
Within the last week I heard three comments from processors, maybe in an indirect way like this morning when a farmer told me what was taking place at the Lactantia plant in the Victoriaville industrial park.
Of course, we may be digressing a bit from Bill C-86, but this is still directly linked to the milk industry. Is there a lack of milk only in this region, or is it a chronic problem everywhere?
Mr. Matte: Good question! However, let us be specific. No raw milk is imported in Canada for processing; it just doesn't happen. However it's quite understandable that some processors say they would like to obtain it.
The Canadian system was set up to meet the Canadian demand based on our consumption of fats, of butter. There is, and will always be, a constant debate on the issue of knowing if there is actually a lack of milk resources in the whole country or in certain regions. It is quite clear that it can happen at the regional level, which does not necessarily mean that there is a national shortage. This is a rather regular occurence, especially in the residual categories such as category 5 or for powdered milk or butter, in particular. Another emerging problem is that there is competition between the processors.
When you talk about supply management, you talk about primary production, farm production. There is no quota on the product itself. It is the plant directors themselves who decide on the volume of their production, based upon their market projections.
So, at any time, there may be a shortage of a certain type of product. That is part of the system and it is unfortunate. The processors keep asking for more milk, but it does not necessarily mean that there is a shortage in the system because these companies compete for their share of the market. One must be aware of the difference.
Mr. Chrétien: When you say this morning that no raw milk is imported from the United States, you are really putting your head on the block.
Mr. Matte: There is certainly none.
Mr. Chrétien: Are you quite sure? No cream is imported either?
Mr. Matte: If there is any, it is clearly illegal and outside the system.
.1000
I can tell you that if such dealings are suspected, they will be investigated by the law enforcement people.
Mr. Chrétien: To your knowledge, have processors who might have illegally imported tankers of 35% cream ever been sued?
Mr. Matte: I think that it did happen.
Mr. Chrétien: Is there a heavy penalty?
Mr. Matte: I don't know. There were also imports of raw material mixes which were absolutely legal; they were recognized and were stopped because of the pressures that were exerted. It was not illegal, but it was stopped.
Mr. Chrétien: In which province?
Mr. Matte: In Ontario. Generally speaking, it behooves the milk processing industry of any province to see to it that a system remains in place. If not, it creates chaos on the market.
Mr. Chrétien: If we go back five years and if we consider the projections for the next five years, that gives you a ten years perspective. For the past, it would show retrospectively the increase or reduction of milk products consumption, and for the future, it would allow you to make a projection.
Mr. Matte: The milk industry is a mature industry. It tries very hard to maintain a rate of increase of the consumption that reflects the population increase. It is a very hard task.
Currently, for example, there is a downward trend of natural product markets in general, with a few exceptions only during the last few months. Convincing the consumers of the product value is a constant struggle. That is why there is so much controversy, for example, concerning BST. In spite of the fact that milk products offer good value, consumers think that they are expensive. Whether it's true or not, that is their perception. Today we must make major marketing efforts to influence the consumers.
Mr. Chrétien: Thank you.
[English]
The Chairman: Thank you, Mr. Matte, for appearing this morning. We appreciate it. I'm sure you will be available in the not too distant future to members who still have questions on rBST, but unfortunately we can't ask them here today. Thank you again for appearing.
Colleagues, we can move on. We have with us today the parliamentary secretary to the minister, Mr. Vanclief, and the Canadian Dairy Commission. They are here to answer any questions on Bill C-86 before we go to clause-by-clause.
Mr. Benoit, to start off, do you want to ask Mr. Vanclief the same question you asked Mr. Matte?
Mr. Benoit: I could ask for a response to the same thing, sure.
The issue I brought up with Mr. Matte was the possibility of the Canadian Dairy Commission getting enough control under this legislation that provincial jurisdiction could be infringed on. It's a concern I've had expressed to me. The provinces feel uncomfortable with the way this is written.
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Mr. Lyle Vanclief (Parliamentary Secretary to the Minister of Agriculture and Agri-Food): I think Mr. Matte made very clear the situation regarding concerns that undoubtedly have been raised and likely will continue to be raised from time to time about the way in which decisions are made at the Canadian Milk Supply Management Committee. He made very clear that even though it may be a concern, it's not a realistic or valid concern and not one that needs to be an issue.
Maybe Mr. Prégent has a further comment, being very close to the issue.
Mr. Gilles Prégent (Chairman, Canadian Dairy Commission): It is not uncommon that provinces are concerned about provincial jurisdictions. We are aware of the concern, and that's why we had discussions with legal people from all provinces.
We know the minister for Alberta made some comments on the subject that were to the point and that Saskatchewan indicated it was also concerned about the subject. I think the other provinces were satisfied with the information we gave them on the subject.
We must always remember that whatever powers are in any bill or act of Parliament, they are always within the confines of jurisdictions as they are separated by sections 91 and 92 of the Constitution, which stipulate clearly that interprovincial trade is a matter of federal jurisdiction and that intraprovincial trade is a matter strictly of provincial jurisdiction.
We therefore do not need to stipulate in every act of Parliament that all intraprovincial trade is reserved to provincial jurisdiction. It goes without saying in this act, as in all acts of Parliament or different legislatures. That's the legal point of view.
In practice, you heard the previous witness indicate how the Milk Supply Management Committee comes to its decisions about where these will be exercised. I can assure you that the nine provinces - as we all know, Newfoundland is not part of the agreement - are present around the table, including representatives of the provincial governments. It takes unanimous consent to come to agreement, so you can be sure that even if the commission wanted to go beyond what the act stipulates, nine provinces would be reacting to us.
I can assure you we're very concerned with this subject. We make sure not only that the committee doesn't go beyond its jurisdiction, but that it doesn't look as if it's going beyond its jurisdiction.
But there is a field of federal jurisdiction that has to be covered by the action we have put into place, and that is interprovincial trade, which, as we indicated in previous hearings, accounts for about 2% to 3% of the milk sold interprovincially. It is thus necessary to act at that level and to have the power to exercise these functions at the interprovincial level.
[Translation]
Mr. Chrétien: Before I ask my first question, I just want to say that I really didn't fully understand what you were saying about unanimous consent.
.1010
As things now stand, six provinces have ratified the agreement. The other three have yet to do so. You said that unanimous consent was required when decisions are made. Would you mind quickly going over that again, for my benefit? I've never heard that before.
Mr. Prégent: Two agreements were recently signed by the parties' representatives around the negotiating table. I should point out, however, that even though these agreements have been approved by the representatives of all the parties, they have not yet been signed by the ministers. Apart from that, though, two agreements were indeed recently signed with a view to implementing the proposed changes to the system. This system has been in place for some 30 years now.
The basis of the whole system is an inter-provincial agreement called the National Plan which was signed 25 or 30 years ago by all Canadian provinces, with the exception of Newfoundland, of course. That system has been managed over the past 25 or 30 years by a management committee that requires consensus in order to act. When this committee meets under the chairmanship of the commission - only in its capacity as committee chair - decisions are made around the table where all the provinces are present, as well as the representatives of both producers and processors. Decisions are made on the basis of unanimous consent or group consensus.
Mr. Chrétien: So we're talking about consensus?
Mr. Prégent: Yes. In other words, there is no opposition.
Mr. Chrétien: As far as I know, the agreement signed by provincial dairy producers was ratified by six provinces. Last Thursday, at the Sub-committee on Agriculture, there was a suggestion that British Columbia was about to sign - I don't know whether it did or not - leaving only Saskatchewan and Alberta, if they have not already signed. If the two or three remaining provinces have not yet become parties to the agreement, could you tell us what the major reasons are for these Western provinces not ratifying the agreement?
Mr. Prégent: With you permission, I would like to first state that all the provinces, except for Newfoundland, have signed an agreement with a view to determining the size of the pool. We have a basic agreement that has been signed by nine provinces - I'm not including British Columbia, as it has not yet decided which of the two agreements it will be part of - that will make it possible to establish a pool as well as new special classes across the country. Everyone has accepted that agreement. There is no problem in that regard. The agreement that has been accepted by six provinces is intended to go even further than the basic pool, by creating a pool for all the milk. That is the only difference between the two, although I should point out that even Saskatchewan and Alberta have signed the basic agreement and will be part of the special class pool.
.1015
Mr. Chrétien: Could the fact that Alberta and Saskatchewan are prepared to go further with the provincial pool arrangement trip up the other six or seven provinces by acting as an impediment to the current process?
Mr. Prégent: I do not believe that will prevent the six or seven other provinces from accomplishing what they have set out to accomplish. The six provinces are well aware of the views of the other provinces. They know that Alberta and Saskatchewan will probably not join a comprehensive pool for the first couple of years, but they intend to put their system in place anyway. They have already made that commitment and they will be in a position to do so starting on August 1st.
Mr. Chrétien: Mr. Prégent, as chairman of the Canadian Dairy Commission, do you not think this could be detrimental to dairy production in those provinces that refuse to sign the agreement?
Mr. Prégent: There is no doubt is would be preferable - and the commission and six provinces do in fact recognize this - for all provinces to be part of a pool encompassing all the milk. It goes without saying that we would certain prefer to have the same rules everywhere.
Having said that, in no way does that prevent us from achieving our goals, and in so doing, allowing us to fulfill our obligations under international agreements. Even if Alberta, Saskatchewan and perhaps British Columbia decide never to join the group of six - and this is purely hypothetical - and to only be part of the special class pool, we feel that would be adequate to allow us to meet our obligations under various international treaties. That is why we are going ahead with these changes and signing these new agreements.
Mr. Chrétien: How much of Canada's current milk production comes from these six provinces?
Mr. Prégent: Eighty percent.
Mr. Chrétien: Thank you, Mr. Chairman.
[English]
Mr. Vanclief: I just want to comment to sum things up. We want to make it clear that we have spent a lot of time discussing this bill, as far as what needs to be done in the dairy industry, of the levies being collected at the present time versus doing it with the pooling so that the same thing is accomplished in a different way, but not by the producers paying the levy and then having the rebate, etc.
On that portion of the milk, the special classes that will be used by the processing industry and by the further processing industry for export in their export market, there is total agreement on pooling that milk in all provinces. It's just that six provinces have agreed and are willing to go further. As for the others, one is considering it, depending on what happens there.
There is total agreement by all the provinces on the main issue at the present time that Bill C-86 is addressing, but Bill C-86 does allow the industry to go further when they desire, as far as the pooling of all milk.
The Chairman: Thank you, Mr. Vanclief.
Colleagues, can we turn to the bill now?
.0915
Clause 1 agreed to
On clause 2
Mr. Vanclief: Mr. Chairman, we gave two technical amendments for clause 2 to the chair at the last meeting. I believe they have been circulated.
They are technical amendments to change the wording to make things a little clearer. I would recommend that the committee please move and pass those, Mr. Chair.
The Chairman: Can we have a mover for those two amendments?
[Translation]
Mr. Chrétien: Could you please take a copy of both amendments to the interpreter?
[English]
The Chairman: Mr. Collins moves that clause 2 of Bill C-86 be amended by striking out line 21 on page 1 and substituting the following:
- respect of the marketing of milk or cream including
All those in favour?
[Translation]
Mr. Chrétien: Mr. Chairman, I have a question on the amendment. I have no desire to slow things down, but I just want to be sure I have the right amendment. Are we talking about this one: that clause 2 of Bill C-86 be amended by striking out line 21 on page 1 and substituting the following:
- respect of the marketting of milk or cream, including
- Is that the amendment we're talking about now? I would move that the wording of the French
version be changed to read as follows:
- thèmes de mise en commun des revenus provenant de la commercialisation du lait ou de la
- I think it's important that the wording of the bill be clear. I don't know whether Mr. Prégent
would have any objection to this or not. The phrase ``des revenus provenant de la
commercialisation du lait'' would replace ``pour la commercialisation du lait'' in the French
version.
[English]
Mr. Vanclief: The two official languages, Mr. Chairman, are treated equally, so I think it's important that the meaning taken from both is the same. If the English and the French are not equal, and if the meaning is not the same, I think it's important that we make them so.
[Translation]
Mr. Chrétien: As a means of improving Bill C-86, I would move - and I don't know whether this would be considered to be in order or not at the Agriculture Committee - that we add four words and remove the word ``pour'' in the French version. The amendment would then read as follows:
- tèmes de mise en commun des revenus provenant de la commercialisation du lait ou de la...
Mr. Vanclief: Mr. Chairman, I would ask Mr. Prégent, Mr. Barton, and our legal people to comment. I certainly can't pass judgment on whether it's the same meaning, but I emphasis, Mr. Chrétien, that it's important in using two different languages that they be as close together as possible. I guess that's the full intention.
.1025
So Mr. Chrétien is saying the proposed text in French is not saying the same thing as it says in English, is that it?
A voice: No.
The Chairman: I'm wondering if we could have our research people comment on this.
[Translation]
Mr. J.-D. Fréchette (committee researcher): I understand your amendment, but if you read on, you will see that the proposed rent states:
- cream, including distributing money to producers of milk or cream received from the
marketing...''
- You would just be repeating what is already stated here.
Mr. Fréchette: In fact, where it states ``distributing money to producers of milk or cream received from the marketing'', it is clearly referring to revenues from the marketing and pooling of both milk and cream. In other words, we would be saying the same thing twice in the same paragraph.
Mr. Chrétien: Is there anything wrong with that?
Mr. Fréchette: No, I see nothing wrong with it. On the other hand, I cannot see much point in repeating that money, or revenues, to use your expression, received from the marketing of these products will be pooled. The English version makes a distinction between the two. Mr. Vanclief can correct me if I'm wrong, but it seems to me that the English version refers first to pooling the milk.
[English]
First we're pooling the milk and the cream and then we're pooling the revenues.
[Translation]
Then it talks about pooling their revenues.
[English]
That's what it says in French. First you pool the milk and cream and then you pool the revenues.
Mr. Vanclief: Yes, that's right.
Mr. Fréchette: In French the text says exactly the same thing. First you have to pool the milk and cream, and after that you pool the revenues.
[Translation]
And then money received from the marketing of these products is distributed to producers.
[English]
The translation would be ``we distribute the amount of money coming from the pooling of the milk and the cream, which is a pooled revenue''.
Mr. Vanclief: Which comes from the marketing of the product.
Mr. Fréchette: That's right.
The Chairman: Mr. Chrétien, are you happy with that explanation?
[Translation]
Mr. Chrétien: Personally, I would prefer that it be made clearer and that is why I would like to see the word ``pour'' replaced by the four words I have suggested. I certainly don't claim to be an experienced linguist, but if you can guarantee me, Mr. Fréchette, that the two versions mean exactly the same thing, I would be prepared to accept your opinion.
Mr. Fréchette: I cannot give you any formal guarantee. All I can say is that with your amendment to the French version, milk and cream will no longer be pooled; only revenues will be pooled. Your amendment will have the effect, in the French version, of stating that only revenues will be pooled, but not milk and cream.
Mr. Chrétien: Well, if that's the case, let's just forget it.
[English]
Amendment agreed to
Mr. Vanclief: There's an additional one, Mr. Chairman.
.1030
The Chairman: It's moved by Mr. Steckle that clause 2 of Bill C-86 be amended by striking out lines 26 to 28 on page 2 and substituting the following:
- cream, necessary for the competitive international trade in, and the promotion and facilitation
of, the marketing of dairy products,
[Translation]
Mr. Chrétien: I would just ask that you give me a few moments to look at this more carefully, because again there is a word in the French version that I find a little out of place. It's the word ``dans'', that appears on the second line - line 20. I'm referring to the part where it states, in the French version:
- de ceux-ci - nécessaires pour promouvoir et favoriser le commerce international de produits
laitiers et la commercialisation de ces produits
- I'm having a hard time following in French, because the lines don't correspond. The problem is
the word ``dans''.
- de ceux-ci - nécessaires pour assurer la compétitivité des produits laitiers vis-à-vis...
- In French, you rarely see that kind of construction.
- ...le commerce international et pour promouvoir et favoriser la commercialisation de ces
produits...
- That wouldn't change. The problem is with the word ``dans''.
Could I make a suggestion? Would it not be better to simply say: ``sur la scène internationale''? There are in fact two possibilities: either ``pour assurer la compétitivité internationale des produits laitiers et pour promouvoir'', in which case we would simply remove the phrase ``dans le commerce international'', or ``pour assurer la compétitivité des produits laitiers sur la scène internationale''.
Mr. Prégent: My personal preference would be option two: ``sur la scène internationale''.
[English]
The Chairman: Colleagues, if there is agreement to have a subamendment on that, we will have our researchers work on it and then come back to it. We'll skip clause 2 altogether and come back to it afterwards. We thank our translators for their help on this.
Amendment allowed to stand
Clause 2 allowed to stand
On clause 3
Mr. Benoit: I've already asked my questions on this and stated my concern. I'll be dealing with it more at report stage, so I'll leave it for now. I have no amendment.
.1035
Clauses 3 to 8 inclusive agreed to
The Chairman: We'll just take a minute.
The Chairman: We have somewhat of a draft, and we'll run it by everybody to see if they're happy with it.
[Translation]
The clerk of the committee: Mr. Chrétien, the subamendment would read as follows. It is moved that clause 2 of Bill C-86 be amended by striking out lines 20 to 22, page 2, of the French version, and substituting the following:
- de ceux-ci - nécessaires pour assurer la compétitivité des produits laitiers sur la scène
internationale et pour promouvoir et favoriser la commercialisation de ces derniers
[English]
Mr. Charles Birchard (Director, Strategic Planning Policy and Communications, Canadian Dairy Commission): Mr. Chairman, did you say on page 3?
The Chairman: Page 2.
Mr. Vanclief: Lines 20 to 22?
[Translation]
The clerk: Yes, lines 20 to 22 of the French version.
Mr. Birchard: Could you please repeat the subamendment?
The clerk: The amendment would read as follows, and I include therein the proposed subamendment:
- de ceux-ci - nécessaires pour assurer la compétitivité des produits laitiers sur la scène
internationale et pour promouvoir et favoriser la commercialisation de ces derniers
[English]
Subamendment agreed to
Amendment agreed to
Clause 2 as amended agreed to
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Shall the bill carry?
Some hon. members: Agreed.
The Chairman: Shall I report the bill, as amended, to the House?
Some hon. members: Agreed.
The Chairman: Colleagues, thank you very much. That was a lot quicker than we thought it would be.
We're adjourned.