FEDERAL REG

Safe Food for Canadians Regulations

PROPOSED FEDERAL REGULATION - VIA PART I OF THE GAZETTE

Proposed
January 22, 2017


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Executive summary Issues: Recent decades have seen significant changes in the global food environment. Advances in science and technology, the emergence of highly integrated food supply chains and changing consumer preferences require Canada’s federal food regulatory system to keep pace in order to protect the h... (Click for more)


Published on February 8, 2017

Bill Summary

Safe Food for Canadians Regulations

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Executive summary Issues: Recent decades have seen significant changes in the global food environment. Advances in science and technology, the emergence of highly integrated food supply chains and changing consumer preferences require Canada’s federal food regulatory system to keep pace in order to protect the health of Canadians. The increasingly global marketplace for food commodities has created more opportunities for the introduction and spread of contaminants that may put Canadian food safety at risk. Food-borne illness continues to impose significant health and economic costs on Canadians and recent food safety incidents in Canada have demonstrated where the current federal food regulatory framework must be strengthened. This framework must also keep pace with prevention-focused international food safety standards so that Canadian food exporters have access to foreign markets and remain competitive internationally. Currently, foods prepared (see footnote 1) in Canada or imported into Canada are not all subject to the same regulatory requirements, and some food safety requirements do not reflect advances in technology, science and food safety best practices. Description: The proposed Safe Food for Canadians Regulations (the proposed Regulations) would strengthen Canada’s reputation as a leader in food safety by establishing consistent, prevention-focused requirements for food that is imported or prepared for export or interprovincial trade, and would also include some requirements applicable to food that is traded intraprovincially. The proposed Regulations would consolidate 13 food commodity-based regulations plus the food-related provisions of the Consumer Packaging and Labelling Regulations (CPLR) into a single and more outcome-based (see footnote 2) food regulation under the Safe Food for Canadians Act (SFCA). Some requirements for certain food sectors would be phased in to reflect business size and different levels of industry readiness. Plain-language tools and guidance would be provided to support small businesses that are involved in importing food, or preparing food for export for interprovincial trade, in meeting the requirements. Cost-benefit statement: The estimated benefits of the proposed requirements would have an annualized value of approximately $137.3 million. These benefits would be associated with the traceability of food and the licensing of businesses as well as the consolidation of food regulations. In comparison, the estimated costs of the proposed requirements would have an annualized value of approximately $138.2 million. These costs would be associated with the use of preventive controls (i.e. food safety requirements) and preventive control plans, the traceability of food, the licensing of businesses and the Canadian Food Inspection Agency (CFIA) regulatory implementation. The estimated net annualized benefit (i.e. benefits less costs) of these impacts would be approximately –$0.9 million. In addition to these estimates, other qualitative benefits would include a reduction in food safety risk for consumers, a more level playing field for Canadian businesses, increased international and domestic regulatory alignment, and sustained market access for Canadian exports. It will also expand the CFIA’s food safety regulatory coverage, bring a consistent and more effective approach to inspection and oversight for food safety by the CFIA, and enhance Canada’s reputation as a global food safety leader. “One-for-One” Rule and small business lens: The “One-for-One” Rule would apply. The estimated total administrative cost increase would have an annualized value of approximately $11.4 million. The small business lens would apply and the CFIA would provide a flexible option for small businesses that are involved in importing food, or preparing food for export or for interprovincial trade. As a result, the estimated total cost savings for these small businesses from the flexible option would have an annualized value of approximately $53.2 million. Domestic and international coordination and cooperation: The proposed Regulations would be well aligned with similar modernization efforts among Canada’s key trading partners. In addition, the proposed Regulations would provide a foundation for consistent federal oversight of food that better reflects internationally recognized food safety practices. Background Evolution of food safety risk Canada has one of the best food safety systems in the world but this system must continue to strengthen the oversight of foods that are increasingly at risk of contamination. These high-risk foods include fresh fruits and vegetables and prepared foods that do not fall under the current commodity-based regulations (i.e. foods from what is known as the non-federally registered sector [NFRS]). As consumers demand more convenient, ready-to-eat products (e.g. bagged salads), the risk of exposure to hazards also increases since these products are intended to be consumed without further cooking. Consumers also increasingly expect foods to be available year-round, which increases demand for imported foods (especially fresh fruits and vegetables) that are often sourced from countries with underdeveloped food safety systems (e.g. from some countries in South America). The volume of fresh fruits and vegetables and NFRS foods being imported into Canada has approximately doubled, from $11.7 billion in 2006 to $22.8 billion in 2015. With respect to fresh fruits and vegetables, a 43% increase in imports of these products from South America has been observed over the past four years. Over the same period, an increase in food safety issues has been observed from all domestic and foreign sources. From 2011 to present, there have been 84 recalls related to fresh fruits and vegetables as well as 1 573 recalls related to food from the NFRS. Together, these represent more than 70% of all recalls over this period. The new risks with fresh fruits and vegetables are of particular concern, as a preventive food safety oversight program does not currently exist for this sector in Canada. As a result, identification of a food safety hazard is often only possible after illnesses have been reported, rather than through early detection and intervention prior to the entry of food into the retail market. A 2013 study in the Journal of Food Protection demonstrated that from 2001 to 2009, 27 fresh fruit and vegetable–related outbreaks occurred in Canada and resulted in over 1 500 cases of illness. The import-related aspect of this risk was illustrated by an incident that resulted in a Canada-wide Salmonella outbreak in 2014. This outbreak was linked to numerous products derived from imported chia seeds and prepared in Canada. It required the recall of 24 products from 9 different manufacturers, with many of these products being from the NFRS. This comprehensive recall was made more complex because of the absence of licensing, preventive control, and traceability requirements for those who imported and prepared these products. The absence of such requirements made it difficult for the CFIA to identify affected food businesses and ensure that the products were removed from the marketplace. In addition, high-profile food safety incidents have also been associated with food from federally registered establishments and have highlighted other areas where the food safety system could be strengthened. For example, a listeriosis outbreak over the summer and fall of 2008 spanned five provinces and resulted in 57 human illnesses and 23 deaths. The costs (including medical costs, non-medical costs, productivity losses and federal government costs) associated with this outbreak were estimated to be approximately $242 million. The outbreak was eventually linked to ready-to-eat meat products and a subsequent independent report on the outbreak contained several recommendations for the CFIA. These included suggestions for simplifying and modernizing regulations in accordance with preventive food safety practices and for requiring regulated parties to make the CFIA aware of food safety issues in a timely manner. A 2012 E. coli outbreak associated with meat products resulted in the largest beef recall in Canadian history, involving the recall and disposal of 12 million pounds of meat products. There were 18 confirmed illnesses and significant economic effects (costs estimated at between $16 million and $27 million) associated with this outbreak. The recommendations that were generated following this incident noted that, among other things, the CFIA did not possess the power to compel regulated parties to provide adequate documentation in the event of a significant food safety incident. These events have highlighted the scale and interconnected nature of current production systems, and have also shown that contamination can occur at any stage along the import, preparation and distribution chains. These events also underscore the value of preventive approaches (e.g. licensing, preventive controls, and traceability) and the central role that industry has in producing safe food by preventing incidents before they occur rather than dealing with contaminated food once it is on the market. In light of these challenges, supporting public health and instilling confidence in Canada’s food system remain key priorities for the CFIA’s Food Safety Program. This program aims to mitigate risks to public health associated with diseases and other health hazards related to the food supply system and to manage food safety emergencies and incidents. The Program achieves its objectives by promoting food safety awareness and verifying compliance by industry with science-based regulations. The program also delivers initiatives to ensure that consumers receive food safety and nutrition information, and to mitigate unfair market practices that affect consumers and industry. Collaboration with other governments and stakeholders further enhances the Agency’s ability to track, detect and mitigate risks associated with food and the food supply system, including food-borne illness. Legislative and regulatory context Five pieces of legislation govern this program: the Canada Agricultural Products Act (CAPA), the Consumer Packaging and Labelling Act (CPLA), the Food and Drugs Act (FDA), the Fish Inspection Act (FIA), and the Meat Inspection Act (MIA). The regulatory framework underpinning the CFIA’s Food Safety Program is composed of 13 different regulations (plus 2 additional regulations: the Food and Drug Regulations [FDR] and the CPLR). These include regulations made under the CAPA, the FIA, and the MIA, which cover nine food commodities (i.e. dairy, fish and seafood, fresh fruits and vegetables, honey, maple products, meat, processed eggs, processed [fruit and vegetable] products, and shell eggs). For each of these food commodities, the CFIA operates separate food safety, consumer protection, and inspection programs. With respect to foods, there are additional requirements found in the Licensing and Arbitration Regulations (LAR), the Livestock and Poultry Carcass Grading Regulations, the Icewine Regulations, and the Organic Products Regulations, 2009. When it comes fully into force, the SFCA, which received royal assent on November 22, 2012, will repeal and consolidate the CAPA, the FIA, the MIA and the food-related provisions of the CPLA. Once the SFCA is fully in force, all food in Canada within the mandate of the CFIA would be regulated by two federal legislative regimes — the SFCA and the FDA. International context Internationally, the CFIA leads the Government of Canada’s implementation of the World Trade Organization’s Agreement on the Application of Sanitary and Phytosanitary Measures, and plays a significant role in the three official international standard-setting bodies (ISSBs) to promote science-based international standards. In the case of food, Codex Alimentarius (Codex) standards provide the foundation for robust domestic regulatory systems and contribute to a predictable trade environment, reducing business risks and facilitating market access. These international approaches to food safety are changing quickly. Codex maintains food standards, guidelines and codes of practice that promote the use of systems-based, preventive approaches to food safety that include Hazard Analysis and Critical Control Point (HACCP) (see footnote 3) principles, Good Manufacturing Practices (GMPs), and Good Agricultural Practices (GAPs). These approaches address safety and quality along the entire food production and distribution continuum by identifying and controlling hazards in order to prevent food safety problems. These systems-based approaches recognize that those who prepare or import food have the primary responsibility for the safety of their products and must implement preventive programs to identify and control hazards. Other countries have made significant progress adopting the approaches described by Codex as they modernize their own food safety systems. For example, the United States (U.S.) has introduced the Food Safety Modernization Act (FSMA) and associated regulations that grant new and expanded authorities to the U.S. Food and Drug Administration to enhance the safety of the U.S. food supply. Canada and the United States are working together to harmonize regulatory approaches between the two countries where possible, including approaches on food safety. Under the Regulatory Cooperation Council (RCC), the CFIA has been working with its counterparts in the U.S. Department of Agriculture and the U.S. Food and Drug Administration on a number of food safety initiatives, some of which will be furthered by the proposed Regulations. Issues Food-borne illness remains a significant public health concern in Canada that causes approximately four million illnesses annually (one in eight Canadians), which results in approximately 238 deaths and 11 600 hospitalizations. A conservative estimate of the annual economic cost to Canadians, the national economy and the health care system is $2.8 billion. (see footnote 4) Recent food safety incidents have demonstrated that changes in consumer preferences and production and distribution systems have produced new food safety challenges. Today, when problems occur, they can affect more products more quickly, and cross into different sectors, into different countries and affect businesses regardless of their size. Canada’s current federal food regulatory framework has varying requirements and approaches for nine specific food commodities, and has not been regularly updated or streamlined since the CFIA’s creation in 1997. It has no federal requirements for registration or licensing, preventive controls or traceability for food prepared in or imported into Canada other than for some of these nine specific food commodities. As a result, foods prepared in Canada or imported into Canada are not all subject to the same regulatory requirements, and some food safety requirements do not reflect advances in technology, science and food safety best practices. For example, all food is subject to the FDA, which contains a broad prohibition against the sale of unsafe food; however, this Act does not require licences or registrations for food businesses. It also does not require all food businesses to put in place preventive controls or preventive control plans that are based on HACCP principles. This means that the large majority of foods prepared in Canada or imported into Canada are not subject to preventive approaches. Examples of foods in this category include spices, snack foods, bakery products, fats and oils, and infant formula. In practice, this means that preparation and import of these foods, which can be as risky as the preparation of foods of federally registered establishments (e.g. meat), are not subject to the same requirements given that the applicable legislation does not include the same requirements or inspection tools. These differing approaches among food sectors pose a significant challenge to the CFIA’s goal of managing risks consistently across different types of establishments and foods. Differing approaches also mean that businesses involved with multiple food commodities need to meet varying requirements in different regulations, which places an additional burden on these stakeholders. Further hindering the creation of a level playing field for all Canadian food businesses is the requirement that food businesses producing food that incorporates more than one commodity (e.g. a pepperoni pizza) have to comply with multiple sets of applicable requirements (e.g. requirements for grading, labelling, container sizes and weights) in regulations made under the CAPA, the FIA, the MIA and the CPLA. Also, with respect to many exported food products, the CFIA does not have the legislative authority to issue certificates that may be required by foreign countries. This may impede market access for some Canadian businesses. Canada must also keep pace with international food safety standards, and changes to the food safety systems of Canada’s trading partners so that Canadian food exporters can continue to enjoy access to foreign markets. Taken together, these factors are hindering the creation of a level playing field for all Canadian food business establishments, and have highlighted areas where the current food regulatory framework could be modernized. Objectives The key objectives of the proposed Regulations are to apply internationally recognized standards for food safety to food that is imported into or prepared in Canada for interprovincial trade or for export. This would better prevent food safety incidents and assist in rapidly removing unsafe food from the market when incidents occur; support market access for Canadian exporters by keeping pace with food safety modernization efforts in other countries, such as the United States, who are moving to systems-based approaches, and strengthening Canada’s reputation for having a world-class food safety system; and consolidate 13 food commodity-based regulations plus the food-related provisions of the CPLR to a single set of more outcome-based requirements (i.e. requiring an expected result instead of listing steps to achieve the expected result), where appropriate. This would improve consistency, enable innovation and flexibility, and level the playing field across foods and between importers and domestic preparers of food for export or interprovincial trade. Description The proposed Regulations contain 17 parts and would include requirements respecting the following: Trade; Licences; Preventive Control Measures; Traceability; Commodity-specific Requirements; Recognition of Foreign Systems; Ministerial Exemptions; Inspection Legends; Packaging; Labelling; Grades and Grade Names; Seizure and Detention; and Organic Products. Some of these requirements would be phased in to reflect different levels of industry readiness and the concerns of small businesses that are involved in importing food, or preparing food for export or for interprovincial trade. The SFCA also provides for authority to incorporate by reference in the Regulations documents that are internally or externally generated as of a particular date or that may change over time. The flexibility to change an incorporated document would allow the CFIA to make its regulatory framework more responsive to concerns of industry and consumers by responding more promptly, where necessary, to modern science and innovations, which might otherwise require regulatory change. Before making changes to internally generated, incorporated documents that may change from time to time, the CFIA would consult with stakeholders in a similar way as consultations for regulatory changes and in accordance with the CFIA’s Incorporation by Reference (IBR) Policy. (see footnote 5) Key food safety elements The proposed Regulations would establish three key food safety elements: (1) Licences: Under the proposed Regulations, licences would be required for food importers, for persons (e.g. food businesses) preparing food for export or for interprovincial trade, with some exceptions (as described in the section “Exceptions and Exemptions”), and for persons slaughtering food animals from which meat products for export or interprovincial trade may be derived. Licence applications would require certain information from the applicant regarding their identity (e.g. business name) and business activities, which would inform risk-based oversight. The proposed licence would be valid for a period of two years for a fee of approximately $250, and could be suspended or cancelled in cases of non-compliance. Regulated parties would be able to apply for one or multiple licences. (2) Traceability: The proposed Regulations would apply the international standard for traceability established by Codex to persons importing, exporting and interprovincially trading food, as well as to other persons holding a licence issued under the SFCA, and to growers and harvesters of fresh fruits or vegetables that are to be exported or traded interprovincially. Electronic or paper records would be required to be prepared and kept in order to track food forward to the immediate customer (e.g. a retailer or another food business) and backwards to the immediate supplier (i.e. one step forward, one step back along the supply chain). Retailers would not be required to trace forward their sales to consumers. The proposed Regulations would require that traceability information be provided, upon the Minister’s request, within 24 hours, or some shorter period, if the information is considered necessary to identify or respond to a risk of injury to human health, or some longer period if the information is not considered necessary for a recall that is or may be ordered. The information would need to be provided in French or in English and, where electronic, in a format that could be imported and manipulated by standard commercial software. The information would need to be accessible in Canada. (3) Preventive controls and preventive control plan (PCP): The proposed Regulations would require food subject to the Regulations and activities (e.g. importing, preparing meat products for export or interprovincial trade) to meet food safety requirements and that those activities be conducted in a manner that is consistent with internationally recognized agricultural and manufacturing practices (i.e. GAPs, GMPs and HACCP). The proposed Regulations would address the following key preventive control elements: sanitation, pest control, and non-food agents; conveyances and equipment; conditions respecting establishments; unloading, loading and storing; competency (i.e. for staff); hygiene; communicable diseases and lesions; and investigation and notification, complaints and recall. In addition to the three key food safety elements, certain commodity-specific requirements for food safety would remain in place where appropriate. For example, the current regulations require imported meat products to be sourced from a country with an inspection system that is approved by the Minister under the MIA. This requirement would be maintained in the proposed Regulations. With some exceptions, regulated parties would be required to produce and maintain a written PCP demonstrating how the preventive controls and other requirements (e.g. for packaging and labelling) are met. Where appropriate, regulated parties would have the flexibility to apply the preventive controls and other measures on an outcome-based approach that demonstrates that their operations and food products comply with the proposed Regulations. The steps related to the preparation of a PCP would be based on HACCP principles and would include, where applicable, a description of the biological, chemical, and physical hazards that could contaminate the food, the measures used to prevent or eliminate those hazards, and evidence that the measures are effective; a description of critical control points (steps at which a control can be applied and that is essential to prevent or eliminate the hazard), their related control measures, and evidence that they are effective; a description of the critical limits (i.e. the limit at which a hazard is acceptable without compromising food safety) for each critical control point; the procedures for monitoring the critical control points in relation to their critical limits; a description of the corrective action procedures for each critical control point; a description of the procedures used to verify the implementation that the PCP meets the requirements of the SFCA and the proposed Regulations; and documents that demonstrate that the information has been recorded and that the PCP has been implemented with respect to the foregoing. Subject to certain exceptions (described in the subsequent section entitled “Exceptions and exemptions”), a written PCP would be required for every licence holder who imports food or prepares food to be sent or conveyed from one province to another; every person who grows or harvests fresh fruits or vegetables to be exported or to be sent or conveyed from one province to another; every licence holders preparing fish products or meat products to be exported; and every person, including a licence holder, exporting food who requires or requests an export certificate from the CFIA. Exceptions and exemptions Based on an analysis of the food safety risk, an exception and several exemptions are set out in the proposed Regulations. An exception from the written PCP requirements is proposed for some regulated parties that generate $30,000 or less in annual gross food sales (i.e. micro-sized businesses). This exception would not apply to regulated parties that slaughter food animals from which meat products for export or inter-provincial trade are derived, or that prepare meat products, dairy products, fish, eggs, processed egg products, or processed fruits and vegetables, or if an export certificate is requested. Exemptions from licensing, preventive controls, and written PCP requirements are also proposed, unless an export certificate is requested, for alcoholic beverages; food additives; and some unprocessed foods that will be further prepared (e.g. grains, oilseeds, pulses and other foods such as green coffee beans and hops). These foods must be labelled with the words “For Further Preparation Only”, and may not be prepackaged food for consumers. These foods are listed in a schedule to the proposed Regulations. The proposed Regulations would also include certain exemptions similar to those that exist in current federal regulations, such as food for personal use, food carried on any conveyance that is intended for the crew or passengers, or food for analysis, evaluation, research, or a food exhibition provided that the food is part of a shipment that weighs 100 kg or less or, in the case of eggs, is part of a shipment of five or fewer cases. Food that passes only in transit through Canada is also proposed to be exempt, provided the shipment travels in bonds. Importation of non-compliant food or interprovincial trade of non-compliant food to be subsequently brought into compliance (e.g. through relabelling the food) would be permitted provided that the food is imported by a licence holder, is clearly labelled with “For Further Preparation Only” and is brought into compliance within three months from the day on which it was imported or traded interprovincially, unless a longer time period is granted by the Minister. Export Under the SFCA, the Minister may issue export certificates. The proposed Regulations would provide the process by which a regulated party may request an export certificate where one is requested to, for example, fulfill a foreign government requirement. Under the proposed Regulations, exporters would be permitted to meet foreign customer requirements that differ from certain requirements of the Regulations, if those differences are substantiated by documentation (e.g. a contract or a description of a foreign government requirement). Membership requirements for buyers and sellers of fresh fruits and vegetables The Licensing and Arbitration Regulations would be repealed, and the proposed Regulations would require that buyers and sellers of fresh fruits and vegetables be members of the Fruit and Vegetable Dispute Resolution Corporation (DRC) to obtain an exemption from the trade of fresh fruit or vegetable provisions in Part 2, Division 2 of the proposed Regulations. The DRC is a non-profit, membership-based organization serving the produce sector that offers dispute resolution services (e.g. mediation and arbitration) to its members. It should be noted that over 80% of fresh fruit and vegetable buyers and sellers are already members of the DRC. Meat Proposed changes to existing requirements for meat would increase alignment with requirements for other foods regulated by the CFIA to the extent possible given meat-specific food safety risks. For example, current mandatory inspection requirements for all imported meat products would be removed, and replaced with targeted inspection requirements based on risk. Also, mandatory licensing of meat storage facilities would be removed except for persons who would handle and store imported meat products for inspection. Exemptions from some existing meat product–specific requirements are proposed for meat products that contain a mixture of ready-to-eat meat and other non-meat ingredients (e.g. frozen pepperoni pizza). The proposed Regulations would treat these meat products more similarly to all other prepared foods. Recognition of foreign systems The proposed Regulations would prescribe the standards to be met for the Minister to recognize a foreign system of inspection for meat products and shellfish, and to recognize systems for preparing meat that are used in meat product establishments. The proposed Regulations would also provide for circumstances in which ministerial recognition must be suspended or cancelled. When the SFCA fully comes into force, systems that are recognized under the MIA or FIA would continue to be recognized under the proposed Regulations. Ministerial exemptions The authority for the Minister to exempt food from requirements for the purpose of test-marketing a food that is new or of alleviating shortages would be expanded to all foods. Ministerial exemptions could be granted only when they would not result in a risk of injury to human health and, with regards to test-market exemptions, when they would not confuse or mislead the public or disrupt the normal trading patterns of industry or the normal patterns of food pricing. Inspection legends Provisions related to inspection legends that exist in current commodity-specific regulations made under the CAPA, the FIA and the MIA would be carried over under the proposed Regulations. Container sizes and standard weights Requirements for standard weight and container sizes that currently exist in commodity-specific regulations under the CAPA, the MIA, the FIA and the CPLA would be included in the proposed Regulations. Labelling and standards of identity The proposed Regulations would make some changes to requirements relating to labelling and standards of identity provisions (e.g. for processed eggs). Proposed changes would group similar provisions together and reduce duplication and differences where possible. Labelling provisions would be included in the body of the proposed Regulations whereas standards of identity would be incorporated by reference in the proposed Regulations and maintained by the CFIA (in accordance with CFIA’s Incorporation by Reference Policy). Existing requirements of the CPLA and its regulations apply to prepackaged food sold in Canada, including food sold within a province, and have been included in the proposed Regulations. The intra-provincial application of these requirements would be maintained. Grade requirements Grade requirements in existing regulations would be consolidated into two documents (noted below) that would be incorporated by reference in the proposed Regulations: The proposed Beef, Bison, and Veal Carcass Grade Requirements would be maintained by the Canadian Beef Grading Agency (CBGA) according to conditions outlined in a Memorandum of Understanding between the CBGA and the CFIA; and The proposed Canadian Grade Compendium would consolidate all other Canadian grade requirements in a single document organized by commodity and maintained by the CFIA. Organic products Under the Organic Products Regulations, 2009, only producers of organic products and anyone labelling and packaging organic products are required to be certified. The proposed Regulations would expand certification to also include other service providers to allow organic integrity to be maintained along the entire supply chain. In addition, the proposed Regulations would include the organic certification of aquaculture products. Regulatory and non-regulatory options considered 1. Status quo The SFCA would not come fully into force and the strengthened authorities provided by the Act would not be put in place. Moreover, the opportunity to streamline and consolidate the existing varying requirements would be lost. Maintaining the status quo would not address new risks facing the Canadian food safety system posed by the continued globalization of the food supply, new products and processing methods, lessons learned from recent food safety incidents, and changing consumer preferences. In addition, the Canadian system would not incorporate new food safety approaches that are internationally accepted and being adopted by Canada’s trading partners which could result in market access issues for Canadian producers. 2. Regulatory option The regulatory option was chosen, as it is the most effective way to respond to the challenges and opportunities posed to the food safety system as the food industry, global trade in food, food safety risks and food safety risk mitigation approaches all evolve. While this would place additional costs on certain sectors of Canadian industry, the regulatory option is the best means for protecting Canadians from food safety risks while creating a more level playing field for Canadian food businesses. Benefits and costs The cost-benefit analysis assessed the potential incremental impacts of the regulatory proposal’s coming into force. The potential impacts (i.e. costs and benefits) represent the incremental differences between the baseline and regulatory scenarios. The baseline scenario describes the situation under the current regulatory framework and what it would look like in the future if the proposed Regulations do not come into force. The regulatory scenario describes the future situation if the proposed Regulations do come into force. Due to the scope of the proposed Regulations, baseline and regulatory descriptions of only the most significant elements of the proposal are presented here. All of the baseline and regulatory descriptions have been documented in a cost-benefit analysis report, which is available by request. Baseline Overarching description Current regulations under the CAPA, FIA, MIA and the food-related provisions of the CPLA would continue to exist and be enforced. Foods that are not covered by the current regulations under the CAPA, FIA and MIA would continue to be covered primarily by the FDA and FDR. Licensing In general, the CFIA registers some establishments and maintains requirements for some importers and operators to be licensed. The current licensing and registration requirements as they exist under the CAPA, FIA and MIA regulations are as follows: Dairy Products Regulations — dairy establishments are registered and cheese importers are licensed Egg Regulations — egg (shell) establishments are registered Processed Egg Regulations — processed egg establishments are registered Processed Products Regulations — processed product establishments are registered Fresh Fruit and Vegetable Regulations — voluntary registration for certain warehouses. This covers packers of potatoes (grown in and shipped from Nova Scotia, New Brunswick, Prince Edward Island, Quebec and Ontario) and apples (grown in and shipped from Nova Scotia, New Brunswick, Quebec, Ontario and British Columbia) Honey Regulations — honey establishments are registered Maple Products Regulations — maple establishments are registered Meat Inspection Regulations, 1990 — meat establishments are registered and every operator of a registered establishment is licensed Fish Inspection Regulations — fish establishments are registered and fish importers are licensed Non-federally registered sector — these commodities (i.e. food other than that subject to regulations listed above) are not subject to the current regulations under CAPA, FIA and MIA and therefore have no registration or licensing requirements. There are no required intraprovincial licences or registrations administered by the CFIA. Preventive controls and preventive control plans (PCPs) Some food sectors have implemented food safety plans, based on HACCP principles, to demonstrate how they achieve compliance (for example voluntary Food Safety Enhancement Program [FSEP] and Quality Management Program [QMP]) with regulatory requirements. These are the current industry practices based on regulatory coverage: Dairy Products Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Egg Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Processed Egg Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Processed Products Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Fresh Fruit and Vegetable Regulations — some fresh fruit and vegetable primary producers and packers voluntarily use CanadaGAP® (a food safety plan that uses HACCP principles); other primary producers and fresh fruit and vegetable handlers (e.g. packers, fresh-cut operators) may have food safety systems implemented due to customer requirements (e.g. supermarkets) Honey Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Maple Products Regulations — voluntary registration for the FSEP. Once recognized, the FSEP requirements detailed in CFIA manuals are mandatory Meat Inspection Regulations, 1990 — every operator of an establishment registered under the MIA and Meat Inspection Regulations (i.e. slaughter, processing/boning/cutting/labelling, etc., and storage — dry/cold) is required to carry out control programs in accordance with the FSEP Manual and the Meat Hygiene Manual of Procedures (MHMOP) adequate for their activities. Additionally, no meat product (as per requirements of the MIA and Meat Inspection Regulations, 1990) may be exported unless it meets the export requirements (e.g. it needs to be prepared in a registered establishment in which valid control programs [FSEP, MHMOP] are implemented and maintained) Fish Inspection Regulations — all fish processors (interprovincial) are required to have QMP. Some importers voluntarily follow QMP (i.e. they are not required to). As for exporters, most exports come from QMP establishments and those from non-registered establishments use voluntary protocols Non-federally registered sector — these commodities (i.e. food other than that subject to the regulations listed above) do not fall under the CAPA, FIA, or MIA regulations and therefore are not subject to mandatory preventive controls or preventive control plans. Traceability While many regulated parties in the food sector have implemented voluntary traceability systems, others do not have the necessary practices, including record keeping, to facilitate timely food safety investigations, recalls or withdrawals. The resulting information gaps within the food supply chain may lead to less efficient and inaccurate responses to a food safety incident. Currently, there are some traceability regulatory requirements for the fish and meat sectors. It should be noted that the CFIA Act provides the Minister with the authority to order a food recall. Regulatory scenario Overarching description The proposed Regulations under the SFCA would come into force and replace the current regulations under the CAPA, FIA, MIA, and the food-related provisions of CPLA. Foods that are not covered by the current CFIA food regulations under the CAPA, FIA and MIA would be covered by the proposed Regulations (as well as the FDA and FDR, as is the case with all food). Licensing The definition of “food commodity” in the SFCA is broader than the definition of “agricultural product” under the CAPA, “fish” under the FIA and “meat product” under the MIA. The proposed Regulations would extend licensing requirements to encompass all regulated parties who import food or prepare them for interprovincial trade or for export. This means that some regulated parties that prepare food destined for interprovincial trade or for export that are not currently regulated under the CAPA (e.g. cookies, cake mixes) would be required to have a licence under the SFCA. Also, all importers of food would be required to be licensed. The proposed Regulations would no longer provide for registration of establishments since licence holders would be subject to requirements related to the establishment where the food is being prepared. Additionally, anyone requesting an export certificate would require a licence. PCP A PCP is a written document that sets out how food safety and other regulatory requirements would be achieved. Preventive control requirements are a combination of control measures (including a PCP) that, when taken as a whole, provide for a science-based approach to managing risks posed by hazards and contribute to achieving compliance with other regulatory requirements. Anyone who imports or prepares food commodities destined for interprovincial trade would be required to develop, document, maintain and implement a PCP as well as comply with the preventive controls applicable to their activities. Additionally, anyone who prepares food for export or exports food and who requires or requests an export certificate would be required to have a PCP. Note that fresh fruit and vegetable primary producers (i.e. persons who grow or harvest fresh fruits and vegetables regardless of how they are packaged) would be considered to be preparers of food when it comes to the proposed PCP requirements. Some regulated parties would not be required to have a written PCP but would still be required to comply with the preventive control requirements. These parties include micro-businesses (i.e. less than or equal to $30,000 in annual gross sales) in the non-federally registered fresh fruit and vegetable, honey, and maple sectors; and preparers of food, other than fish and meat products, for export only that do not need or request export certification. Traceability The international standard for traceability established by Codex calls for tracking of food commodities forward to the immediate customer (e.g. a retailer or another food business) and trace materials / food commodities backwards to the immediate supplier (“one step forward, one step back”). The proposed Regulations would apply the Codex standard to every stage of the food supply chain, from production to retail (excluding direct sales to consumers). This means that all licence holders and persons exporting or trading interprovincially would have to adhere to the traceability requirements. The requirements would also apply to growers and harvesters of fresh fruit or vegetables for export and interprovincial trade. Affected stakeholders Based on the differences between the baseline and regulatory scenarios, the following stakeholders would be affected by the proposed Regulations’ coming into force: Food industry businesses Preparers of food for interprovincial trade Preparers of food for export Food importers Food exporters Interprovincial traders of food Fresh fruit and vegetable primary producers Organic food industry, including certification bodies and conformity verification bodies Canadians (i.e. consumers) Government CFIA Health Canada Canada Border Services Agency (CBSA) Public Health Agency of Canada Provincial/territorial governments Descriptions of the affected stakeholders have been documented in a cost-benefit analysis report, which is available by request. Identified benefits and costs This section provides a list and descriptions of some potential benefits and costs that the significant elements of the proposed Regulations may impose on affected stakeholders. These potential impacts represent incremental benefits and costs (i.e. those above and beyond the baseline). The listing is broken up into categories based on benefits/costs that were monetized or benefits that were described qualitatively by the analysis. It should be noted that all significant costs were monetized by the analysis, so no qualitative costs are documented in the Regulatory Impact Analysis Statement (RIAS). The descriptions of all of the potential benefits and costs have been documented in a cost-benefit analysis report, which is available by request. Monetized benefits Review time of CFIA food safety regulations In the baseline, there are 13 separate sets of CFIA food regulations that need to be reviewed by the food industry, plus the food-related provisions of the CPLR that may need to be reviewed by the food industry (in addition to the FDR). In comparison, in the regulatory scenario, there would only be a single set of CFIA food regulations to be reviewed. As a result, businesses would only need to review one set of regulations instead of potentially multiple sets (e.g. a meat industry business would no longer need to consult the Meat Inspection Regulations, the Livestock and Poultry Carcass Grading Regulations [if applicable], and the CPLR). Additionally, the proposed regulatory text would be current, and it is expected that the regulatory review time would be reduced, as some of the current CFIA regulations were drafted decades ago and use regulatory text that is outdated and that differs from regulation to regulation. An example of this is in the Fish Inspection Regulations where, unlike in the Meat Inspection Regulations, the definition of exports also includes interprovincial trade. No establishment registration applications Establishments that are currently required to be registered under the CAPA, FIA, and MIA regulations would no longer need to be registered in the regulatory scenario. Therefore, establishment managers would no longer have to take the time to register. Registration requirements vary across the current regulations, but generally, establishments are required to renew their registrations annually. Note that the analysis included currently licensed fish or cheese importers in this benefit. Streamlined/integrated export certification process Currently, export certification processes differ across the various food commodities. One commonality is that export certification applications are submitted to the CFIA via fax or email. With the current system, applicants receive application status updates by contacting the CFIA and receive their export documents from the CFIA. The proposed licensing requirements would be supported by a new automated electronic system that would streamline the export certification process. Licence holder information (e.g. licence number, name of licence holder, address[es] of establishment[s]) would be integrated into an online export certification application form. This would provide consistency and efficiencies for both exporters and the CFIA. Additionally, this integration would allow applicants to receive status updates online and print issued certificates online. More efficient and effective food safety recalls and investigations As a result of the proposed traceability requirements, recalls and investigations would be conducted in a more efficient and effective manner, which would minimize economic losses for affected businesses. Traceability information would be more readily available and precise. These factors would reduce the duration of recalls/ investigations and minimize unnecessarily wasted food through improved targeting of affected products, in comparison with the baseline scenario. CFIA produce licence no longer required Under the proposed Regulations, fresh fruit and vegetable dealers would not be required to have a CFIA produce licence. Therefore, dealers would no longer have to take the time to apply for a licence. However, this benefit would be diminished by the fact that the affected stakeholders would have to apply for DRC membership. Qualitative benefits Reduced food safety risk There are approximately four million cases of food-borne illness annually in Canada. This means that one in eight Canadians is affected by food-borne illness every year. Annually, these illnesses result in 11 600 hospitalizations and 238 deaths. A conservative estimate of the annual economic cost this imposes on Canadians, the national economy and the health care system is $2.8 billion. The proposed Regulations would have stronger food safety rules than the current regulations under the CAPA, the FIA and the MIA to mitigate the risk of food-borne illness by actively promoting the prevention of food safety incidents. Some examples of proposed requirements that would help achieve this are requirements for written preventive control plans in food sectors where none were previously required (e.g. currently the non-federally registered and fresh fruit and vegetable sectors). While the magnitude of the positive impact that these stronger rules would have on the food safety risk for Canadians is uncertain since there was a lack of sufficient information to conduct a proper risk assessment/analysis, it would be reasonable to assume that these measures would reduce the risk to some degree, for the following reasons: preventive controls and PCP requirements would use a HACCP-based approach to food safety that is systematic and preventive (i.e. catch potential food safety issues before they happen) traceability requirements would enable a more rapid response to food safety issues, resulting in less unsafe food reaching consumers licensing requirements would provide the CFIA with a means of communicating with all regulated parties, which would facilitate an improved emergency response when food safety issues occur. This reduction in risk would mean that the number of food-borne illnesses across Canada would be reduced when comparing the baseline scenario to the regulatory scenario. This would in turn reduce the costs to Canadians reduced number of premature deaths, cases of illness, chronic conditions (i.e.sequelae) reduced drug treatment costs, caregiver costs, recovery costs the national economy reduced productivity loss from worker absenteeism and workers coming in sick and not performing optimally reduced number of food safety recalls that businesses need to address the health care system reduced number of physician visits, hospitalizations, emergency room visits, clinic visits reduced drug treatment costs. Increased international regulatory alignment Major trading partners, such as the United States, are adopting preventive controls in their regulatory approaches. Therefore, businesses that develop new PCPs (and/or follow the corresponding food safety HACCP-based requirements) due to regulatory implementation would benefit from increased alignment with international food safety requirements. Also, international regulatory alignment would increase as a result of the move from differing prescriptive-based regulatory approaches for each regulated food commodity in the baseline to a single outcome-based (where appropriate) regulatory approach for regulated food commodities. The increased international regulatory alignment has the potential to increase trade opportunities for the food industry as it would maintain existing market access opportunities for Canadian businesses and support their expansion. Without the proposed PCP and food safety requirements, Canada would be out of step with its major trading partners that are moving to a preventive control regulatory approach to food safety, and this would put market access at risk. Outcome-based regulatory approach (where appropriate) The current regulations under the CAPA, the FIA and the MIA primarily take a prescriptive approach to food safety, which has the potential to limit the way a food business can operate. In comparison, the proposed Regulations would reduce, where appropriate, the current prescriptive food commodity-specific requirements, by moving to a system of requirements that articulates the expected outcomes as they relate to food commodities. This outcome-based approach would provide businesses with the opportunity for innovation without having to wait for regulatory changes to allow for it, which could lead to reduced compliance costs (e.g. processing costs) over time as businesses find more efficient/effective methods of compliance. More level playing field for food industry Currently, some food importers and preparers of food for interprovincial trade or for export have to comply with commodity-specific regulatory requirements while others do not. Also, some of these regulatory requirements, such as establishment registration and food safety plans, vary between different commodities. With the proposed Regulations, the CFIA would move to a single-food regulatory approach. In general, this would mean that there would be a levelling of the competitive playing field for all regulated parties across commodities. Imports would be held to the same standards and requirements as domestic food. Enhanced food safety reputation for Canada The proposed Regulations would implement stronger food safety rules than are currently in place. The strengthened rules would generally apply, with some exceptions, to importers, and preparers of food for export and interprovincial trade and cover all food commodities. This would enhance Canada’s international reputation as a global food safety leader, which has the potential to lead to increased international trade opportunities for Canadian food businesses by helping to maintain their access to existing markets and support the development of new market access opportunities. Reduced production costs for processed egg businesses The processed egg standards of identity would require less egg solid in processing than is currently required. This would reduce production costs for a business that prepares processed egg products. Additionally, this change would assist in improving the industry’s international trade competitiveness. Improved CFIA knowledge of food industry Currently, the CFIA is knowledgeable about food establishments that are registered under the CAPA, FIA and MIA regulations, but has limited to no knowledge of food establishments not covered by these regulations. As a result of the proposed licensing requirements, the CFIA would have improved knowledge of the entire food industry. More specifically, the Agency would know who is importing food, preparing food for interprovincial trade or export, or exporters who require export certification. This would provide the CFIA with a means of communicating with all regulated parties, which would facilitate an improved emergency response when food safety issues occur. Additionally, the CFIA would be able to more strategically and efficiently focus its food safety efforts based on risk as a result of this improved knowledge. Moreover, the CFIA would have improved knowledge of the food industry, as the proposed PCP requirements would allow for a consistent single-food inspection approach. This would facilitate a more comprehensive assessment of Canadian food safety, as inspection findings from different food commodity sectors would be directly comparable. Monetized costs Licence applications In the regulatory scenario, all food importers or preparers of food for interprovincial trade or for export would be required to obtain a licence from the CFIA. Additionally, exporters that need export certification would need a licence. In order to obtain this, a business would have to take the time to apply to the Agency. Licences would be required to be renewed every two years. It should be noted that the licensing fee was not included in this cost, as fee charges are considered to be transfer payments and should not be regarded as economic costs, as per Treasury Board of Canada Secretariat (TBS) cost-benefit analysis guidance. (see footnote 6) Development and documentation of PCPs All food importers or preparers of food for interprovincial trade, and preparers of meat and fish products for export, subject to certain exceptions, would be required to develop and document a PCP in the regulatory scenario. The analysis assumed that this would be done at the establishment level. Costs associated with this would include the time needed to complete the plan and potentially hiring external expertise for assistance. It is also expected that the costs associated with PCP development and documentation would increase with the volume and the complexity of the activities being carried out by a food business. When an export certificate is requested, the exporter and the preparer of the food for export would be required to have a PCP. Implementation of preventive controls and PCPs (i.e. food safety requirements) Once a PCP has been developed and documented, it would have to be implemented. Costs that would be associated with this would include implementing new preventive controls, training and education for employees, equipment changes, verification that preventive controls are working and record keeping. As mentioned above, the magnitude of this cost would increase with the volume and complexity of a food business. Some stakeholders who are not required to have a written PCP would still be required to have preventive controls (i.e. food safety requirements) in place. Maintenance of PCPs Where a PCP is required, it would need to be maintained in order to comply with regulatory requirements, and adapt to new or changing establishment practices. It is assumed by the analysis that this would occur on an annual basis. Development of traceability systems In the regulatory scenario, persons importing, exporting and interprovincially trading food, as well as other persons holding a licence issued under the SFCA, would be required to maintain traceability records. Therefore, traceability systems would need to be developed by these businesses. This would include the costs associated with developing traceability procedures and policies, and tools to be used with the system. The magnitude of this cost would be dependent on the current traceability practices of stakeholders and the scale and size of industry operations being considered. Implementation of traceability systems Under the proposed Regulations, businesses would be required to have a traceability system in place. In general, these systems would need to be implemented at the establishment level. (see footnote 7) Implementation means that regulated parties would have to prepare and keep records on the food commodities supplied to them and the food supplied by them, as well as the locations to which they move foods, and incorporated or source food commodities, before supplying a food to another person. CFIA regulatory implementation For the CFIA, regulatory implementation would transform and modernize the Agency’s approach to food safety. However, the CFIA would not require any additional food safety program or inspection funding or resources from current levels, as the proposed Regulations would allow the CFIA to operate more efficiently and redistribute its food safety resources more strategically. That said, there would be some additional CFIA resources required for compliance promotion and industry engagement when the Regulations come into force. Methodology This section briefly describes the methodology, data sources and key assumptions used to estimate the monetized (and quantified) benefits and costs. The entire methodology has been documented in a cost-benefit analysis report, which is available by request. Number of affected food businesses and establishments The following data sources were used to estimate the number of affected businesses: CFIA registered establishment and licence holder lists; Statistics Canada’s Business Register data taken from the TBS Regulatory Cost Calculator; and CBSA importer databases. The estimated number of affected businesses are presented in the table below. Estimated number of affected businesses by the year the business would have to review the proposed Regulations This table presents the estimated number of affected businesses by the year the business would have to review the proposed Regulations. 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 TOTAL 21 025 7 467 36 791 2 339 2 368 2 398 2 429 2 458 2 489 2 520 82 285 The analysis estimated that on average there are approximately 1.25 establishments per business. Current industry practices The analysis had to account for current industry practices in order to estimate the impacts of moving from the baseline to the regulatory scenario. For example, if a business or establishment is already implementing preventive controls and a PCP, then no costs or benefits would be realized by the business or establishment when the proposed preventive control and PCP requirements would come into force. Accounting for current industry practices was based on data and information from the following: CFIA data on registered establishments that currently implement a HACCP-based food safety plan; CanadaGAP® data; Conference Board of Canada reports; and U.S. Food and Drug Administration (U.S. FDA) cost-benefit analysis. Note that the analysis only used U.S. data in cases where no Canadian data was available. Annual growth and turnover in the number of businesses and establishments CFIA data for registered establishments and licensed importers from 2013 to 2016 was used to estimate the annual growth and turnover in the number of affected businesses and establishments. Number of small and micro businesses Data from the Business Register was used to estimate the number of small businesses impacted by the Regulations (i.e. businesses with less than 100 employees). Model parameters and assumptions The basic assumptions and parameters that were used in this cost-benefit analysis include the following: The analysis covered a 10-year time period from 2018 to 2027; Discount rate = 7%; All monetary values are represented using constant year 2012 prices; and Wage rate data was from Statistic Canada’s Labour Force Survey (2012) and was obtained via the TBS Regulator Cost Calculator Wage rates were increased by 25% to account for overhead costs, consistent with the methodology used by TBS. Monetized benefits and costs These were the general methodological models used to monetize the most significant impacts: Benefits — More efficient and effective food safety recalls and investigations The costs of recalls and investigations for affected businesses would be reduced because of the proposed traceability requirements The following model was used to monetize this impact: CANRC × RSCOPE × NRC × (1 – TCOMP) = impact CANRC — the cost of a Canadian food recall was estimated using a food industry article (see footnote 8) found in a literature review, which was adjusted to the Canadian context The cost of a recall presented costs for a mid-sized processor ranging from $246K to $33.4M in U.S. dollars. These costs were converted to the Canadian context (e.g. size, distribution, productivity of Canadian businesses), which resulted in a range of $139K to $18.8M in Canadian dollars The CFIA classifies recalls into one of three categories based on risk to public health of the unsafe food. It was assumed that a business involved in a low-risk recall would incur the low end of the cost range (i.e. $139K) high-risk recall would incur the high end of the cost range (i.e. $18.8M) medium-risk recall would incur the mid-point of the cost range (i.e. $9.5M) RSCOPE — percent reduction of the cost of a food recall due to traceability was estimated using a report produced for Agriculture and Agri-Food Canada in 2013 The report stated that traceability can reduce the scope of a recall by 50% and in some cases by 95% These percentages needed to be lowered to account for the differences in the traceability information that would be required by the proposed Regulations and those presented in the report The analysis assumed that implementing the proposed traceability requirements would reduce the cost of a recall by 25%. That said, there are currently traceability requirements for preparers in the meat and fish sectors. So it was assumed that the cost would be reduced by 12.5% in these sectors NRC — the number of primary recalls (i.e. number of recall incidents, which may have resulted in one recall or multiple recalls) is based on information from the CFIA recall database The estimated number of primary recalls for the base year (2014) was based on a 4-year average (2010−2013) Class I (high risk) — 77 Class II (medium risk) — 85 Class III (low risk) — 102 TCOMP — the percentage of businesses that currently have traceability systems in place was based on a Conference Board of Canada report The report stated that 66% of preparers of food for export or inter-provincial trade and 56% of food importers, exporters and inter-provincial traders have a traceability system in place The analysis assumed that 66% of affected businesses have a traceability system in place and this was used as a proxy for the percentage of recalls where a traceability system would be in place (i.e. no benefit from the proposed requirements) Costs — Development and documentation of PCPs These costs represent the time needed to complete the initial plan. The estimated average annualized costs for an impacted business to develop and document a PCP are $260 The standard cost model (SCM) was used to monetize this impact (TIME × FREQUENCY × WAGE × POPULATION = impact) TIME — estimates based on data/information from a USFDA cost-benefit analysis on the proposed Preventive Controls rule FREQUENCY — this would be a one-time cost for establishments WAGE — assumed a manager would perform this task POPULATION — based on estimates of affected stakeholders Costs — Implementation of preventive controls and PCPs These costs would include capital costs, training costs, activity costs and record-keeping costs. The estimated average annualized costs for an impacted business to implement preventive controls and a PCP are $6,370 The SCM plus additional capital costs were used to monetize this impact TIME — estimates based on data/information from the USFDA cost-benefit analysis on the proposed Preventive Controls rule FREQUENCY — these would be ongoing costs for establishments WAGE — there would be multiple tasks associated with these costs. Depending on the task, it was assumed a manager, supervisor or worker would perform the task POPULATION — based on estimates of affected stakeholders Additional costs — one-time costs (e.g. possible equipment purchases), which were estimated based on data/information from the proposed Preventive Controls rule cost-benefit analysis For those businesses that would not be required to have a PCP, there would still be costs associated with preventive control requirements. The estimated average annualized costs for an impacted business (i.e. eligible for the exception) to implement preventive controls are $3,826 all preventive control implementation costs would be carried by these businesses the costs for these businesses are included in the “Preventive Controls for businesses exempt from PCPs” costs category in the Estimated Annualized Values of the Significant Impacts table in the “Estimated Results” section of the RIAS Costs — Maintenance of PCPs These costs represent the time required to maintain a PCP. The estimated average annualized costs for an impacted business to maintain a PCP are $464 The SCM was used to monetize this impact TIME — estimates based on data/information from the USFDA cost-benefit analysis on the proposed Preventive Controls rule FREQUENCY — these would be ongoing costs for establishments starting in the second year the PCP was in place WAGE — assumed a manager would perform this task POPULATION — based on estimates of affected stakeholders Estimated results The results for all estimated costs are presented as negative values (e.g. –$1), while results for all estimated benefits are presented as positive values (e.g. $1). The estimated annualized values of the significant impacts detailed in the Methodological section are presented in the table below. Estimated annualized values of the significant impacts (in Canadian dollars [CAD], constant year 2012 prices, 2018* present value [PV] base year, 7% discount rate) This table presents the estimated annualized values of the significant impacts detailed in the Methodological section. Impact Category — Description Annualized Values Benefits Benefits Review time of CFIA food safety regulations: Avoided time to review current regulations $660,627 LICENSING LICENSING No establishment registration applications $151,817 Streamlined / integrated export certification process $1,170,009 LICENSING TOTAL $1,321,826 TRACEABILITY More efficient and effective food safety recalls and investigations $136,435,001 TRACEABILITY TOTAL $136,435,001 CFIA fresh fruits and vegetables produce licence no longer required $3,761 Costs Costs Review time of CFIA food safety regulations: Proposed Regulations -$1,139,190 LICENSING Licence application -$150,135 LICENSING TOTAL -$150,135 TRACEABILITY Development of traceability system -$15,371 Implementation of traceability system -$3,638,286 TRACEABILITY TOTAL -$3,653,656 PREVENTIVE CONTROLS and PCPs** Development and documentation of PCP -$3,626,047 Implementation of preventive controls and PCP -$88,888,284 Preventive controls for businesses exempt from PCPs -$32,925,281 Maintenance of PCP -$6,481,033 PREVENTIVE CONTROLS and PCPs TOTAL** -$131,920,646 CFIA regulatory implementation -$2,468,809 * The analysis covered a 10-year time period (2018–2027). ** Note that the benefits associated with preventive controls and PCPs, such as a reduced food safety risk, are included as qualitative benefits in the analysis. The table below provides a summary of all of the potential benefits and costs associated with the regulatory proposal. Cost-benefit statement (in millions of CAD, constant year 2012 prices, 2018* PV base year, 7% discount rate) This table provides a summary of all of the potential benefits and costs associated with the regulatory proposal. Costs, Benefits and Distribution 2018 2019 2020 2021 2027 Total (PV) Annualized Value A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS A.1 Quantified Impacts ($) — BENEFITS Food Industry — Small Businesses $57.7 $59.7 $156.7 $160.0 $162.7 $943.6 $134.4 Food Industry — Medium / Large Businesses*** $1.3 $1.3 $3.4 $3.5 $3.5 $20.6 $2.9 CFIA $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Total Benefits** $59.0 $61.1 $160.1 $163.4 $166.3 $964.2 $137.3 A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS A.2 Quantified Impacts ($) — COSTS Food Industry — Small Businesses -$42.8 -$106.6 -$97.4 -$198.3 -$167.5 -$948.2 -$135.0 Food Industry — Medium / Large Businesses*** -$0.2 -$0.6 -$1.0 -$0.8 -$0.8 -$5.0 -$0.7 CFIA -$3.3 -$4.2 -$4.1 -$4.1 $0.0 -$17.3 -$2.5 Total Costs** -$46.3 -$111.4 -$102.5 -$203.2 -$168.3 -$970.6 -$138.2 NET BENEFITS NET BENEFITS NET BENEFITS NET BENEFITS NET BENEFITS NET BENEFITS -$6.4 -$0.9 B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts B. Quantified Impacts (in non-$) — Positive Impacts Small Businesses — Number of new preventive control plans (PCPs) developed annually 3 563 2 909 1 257 3 098 540 13 915 1 392 Medium / Large Businesses — Number of new PCPs developed annually*** 13 10 10 1 1 39 4 TOTAL — Number of PCPs developed annually 3 576 2 919 1 266 3 099 541 13 955 1 395 NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. NOTES: * The analysis covered a 10-year time period (2018–2027). ** Numbers may not add up due to rounding. *** Medium / large businesses would not be as impacted by the proposed Regulations as small businesses since most medium / large businesses are already in compliance with the proposed requirements. C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts C. Qualitative Impacts Consumers Consumers Consumers Consumers Consumers Consumers Consumers Consumers Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Positive Impacts Reduced food safety risk for Canadians, which would reduce occurrences of food-borne illness and thereby reduce costs to Canadians, the national economy and the health care system Increased confidence in the safety of domestic and imported food Increased knowledge of the food industry Increased compliance of imported food labels with Canadian food labelling requirements (e.g. bilingual labels) Increased confidence in organic aquaculture products and potentially increase consumer access to these products Food Industry Food Industry Food Industry Food Industry Food Industry Food Industry Food Industry Food Industry Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Positive Impacts Level playing field regardless of the food commodity or whether it is domestic or imported food Enhanced reputation for Canada as a global food safety leader, which could lead to increased international trade opportunities as well as help maintain existing and support opportunities for new market access Increased international regulatory alignment with major Canadian trading partners (e.g. United States), which would help maintain existing and support opportunities for new market access Increased federal regulatory alignment with provincial/territorial food safety regulations in some cases, which has the potential to lead to domestic trade opportunities Increased opportunity for innovation (i.e. find more efficient and effective compliance methods) without having to wait for regulatory changes to permit it Regulatory ability to respond more rapidly to changes in industry and international grade standards Reduced communications with the federal government due to inconsistencies, misalignments, and interpretations of requirements from multiple sets of regulations Increased knowledge and self-awareness of their processes and production Food products that are a mixture of ready-to-eat meat and other non-meat ingredients would not be subject to all federal meat-specific requirements Reduce production costs for preparers of processed egg products Ministerial exemption application process would be streamlined, transparent and use a common approach system Market access could potentially improve for food sectors that could not previously be licensed or have access to formal CFIA export certificates Improved financial protection for fresh fruit and vegetable dealers Increased opportunity for organic certification and ability to market products with the Canadian Organic Logo Negative Impacts Currently the non-federally registered sector would have to label non-compliant food products when they are imported or conveyed to another province and would be brought into compliance through further processing Customs brokers that do not use the Integrated Import Declaration system of the Government of Canada’s Single Window Initiative would have to adjust the Automated Import Reference System (AIRS) codes used to provide information to the CFIA Federal Government Federal Government Federal Government Federal Government Federal Government Federal Government Federal Government Federal Government Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Positive Impacts The CFIA would take a consistent approach to food safety inspection and oversight, which would allow the Agency to be more effective and efficient Expanded food safety regulatory coverage to include all food commodities whether domestic or imported, which would improve the Agency’s knowledge of the entire food industry and its practices The CFIA would be better able to trace and sanction fraudulent and deceptive practices, which can have food safety consequences, and other issues of regulatory non-compliance The Canadian Border Services Agency (CBSA) could benefit from a more streamlined approach at the border for food importers as a result of consistent admissibility requirements Health Canada and Public Health Agency of Canada (PHAC) would receive more accurate and timely information when specific food issue cases arise Reduced communications and discussions for Health Canada with industry and the CFIA due to inconsistencies, misalignments, and interpretations of regulatory requirements Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Negative Impacts The CBSA would have to assist importers at the border that do not use electronic clearance and do not have a licence Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Provincial and Territorial Governments Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Positive Impacts Increase regulatory alignment with provincial/territorial food safety regulations in some cases Negative Impacts Need to update provincial/territorial regulatory references to CFIA food safety regulations Sensitivity analysis A sensitivity analysis is the portion of a cost-benefit analysis that attempts to deal with the uncertainty that is inherent in predicting the future. Sensitivity analysis involves changing key parameters and assumptions and assessing how this affects the costs and benefits of the regulatory proposal. Given the scope of this cost-benefit analysis, there were many uncertain parameters and assumptions that could be varied for the sensitivity analysis. However, the analysis chose to focus on two key parameters and assumptions that affect basically all of the estimated impacts discount rate (3%, 7% and 10%); and annual industry growth rates (estimated growth used in the analysis +/- 3 percentage points). In the case of the food industry growth rate, a higher rate would increase the estimated number of affected businesses, while a lower rate would decrease the number. As for the discount rate, a higher discount rate would place relatively less emphasis on estimated future impacts, while a lower rate would place relatively more emphasis on future impacts. Note that the medium discount rate and medium food industry growth rates were used to estimate the base results of the cost-benefit analysis (i.e. the results presented in the Cost-Benefit Statement) Sensitivity analysis — Cost-benefit summary table (CAD, constant year 2012 prices, 2018 PV base year) This table presents th sensitivity analysis cost-benefit summary in canadian dollars with constant year 2012 prices, and 2018 PV base year. Discount Rate Food Industry Growth Rate Annualized Benefits Annualized Costs Total (NPV) Annualized Value Low (3%) Medium (annual growth rates) $140,845,432 -$141,612,425 -$6,542,611 -$766,994 Medium (7%) Medium (annual growth rates) $137,282,025 -$138,193,247 -$6,400,040 -$911,222 High (10%) Medium (annual growth rates) $134,595,781 -$135,611,496 -$6,241,128 -$1,015,715 Low (3%) Low (annual growth rates -3 percentage points) $104,683,462 -$102,190,503 $21,265,454 $2,492,960 Medium (7%) Low (annual growth rates -3 percentage points) $102,844,957 -$100,527,494 $16,276,897 $2,317,464 High (10%) Low (annual growth rates -3 percentage points) $101,409,112 -$99,221,914 $13,439,382 $2,187,198 Low (3%) High (annual growth rates +3 percentage points) $188,989,219 -$196,073,050 -$60,426,520 -$7,083,832 Medium (7%) High (annual growth rates +3 percentage points) $182,800,561 -$189,866,397 -$49,627,478 -$7,065,836 High (10%) High (annual growth rates +3 percentage points) $178,228,444 -$185,278,187 -$43,317,618 -$7,049,743 The results of the sensitivity analysis suggest that the potential impact of the Regulations would be dependent on industry growth as the net impacts are positive in a low-growth scenario and negative in the medium- and high-growth scenarios. Additionally, the sensitivity analysis examined the impact on the estimated results based on varying an assumption used for the benefit of more efficient and effective food safety recalls and investigations because of traceability (see table below). The assumption is that affected recalls would be evenly distributed among the risk classifications (i.e. low, medium, high). This assumption was made as food can become unsafe at any point along the food chain and the CFIA does not have information to indicate that the impacts on recalls would vary based on the different risk classifications. For the sensitivity analysis, the assumption was varied where only low-risk recalls or high-risk recalls would be affected (see table below). Sensitivity analysis — More efficient and effective food safety recalls and investigations (in millions of CAD, constant year 2012 prices, 2018 PV base year, 7% discount rate) This table presents the sensitivity analysis with more efficient and effective food safety recalls and investigations in millions of canadian dollars with constant year 2012 prices and 2018 PV base year at a 7% discount rate. Distribution of Impact on Recalls by Risk Classification Distribution of Impact on Recalls by Risk Classification Distribution of Impact on Recalls by Risk Classification Even Distribution Only Impacts Low-Risk Recalls Only Impacts High-Risk (and Some Medium-Risk) Recalls Net Annualized Value -$0.9 -$135.0 $134.7 This analysis shows how the estimated results are dependent on the assumed distribution. However, it should be noted that it is highly unlikely that all of the affected recalls would be either entirely high- or low-risk. This contributed to the rationale used by the analysis in choosing an even distribution. Distributional analysis In addition to the distributional impacts on small business presented in the Cost-Benefit Statement table, the analysis also examined the distribution of costs across the currently registered, fresh fruits and vegetables, and non-federally registered sectors. The annualized costs of the proposed Regulations are estimated to be distributed across these sectors as follows: federally registered sector — 23%, fresh fruits and vegetables sector — 35%, and non-federally registered sector — 42%. The provincial/territorial distribution of establishments for food manufacturing and fresh fruit and vegetable producers is as follows: Alberta — 7%, British Columbia — 21%, Manitoba — 3%, New Brunswick — 4%, Newfoundland and Labrador — 2%, Nova Scotia — 4%, Ontario — 31%, Prince Edward Island — 3%, Quebec — 22%, Saskatchewan — 3%, and Northwest Territories, Nunavut and Yukon — 0.1%. Conclusions By focusing on the significant impacts of the regulatory proposal, the cost-benefit analysis estimated the annualized value of the costs and benefits would be approximately -$138.2 million and $137.3 million, respectively. In addition to the significant impacts that the analysis monetized, there would be numerous qualitative impacts including, but not limited to, a reduction in food safety risk for consumers by putting in place requirements that will support the prevention of food safety incidents before they occur; increased international and domestic regulatory alignment that will support the maintenance and expansion of market access for Canadian exports; an outcome-based regulatory approach (where appropriate) that results in a more level playing field for food industry businesses that provides them with opportunities for growth and innovation; a consistent and more effective food safety approach to inspection and oversight by the CFIA; the CFIA’s food safety regulatory coverage expanded to include all food commodities; and an enhanced reputation for Canada as a global food safety leader. The estimated monetized net benefit (i.e. benefits less costs) of the regulatory proposal would have an annualized value of approximately -$0.9 million. However, this is a conservative estimate, as the principal benefit of a reduced food safety risk for Canadians was not included as a monetized benefit since there was a lack of sufficient information needed to quantify it. Nevertheless, it would be reasonable to assume that the proposed stronger food safety rules would reduce this risk for Canadians to some degree supporting the prevention of food safety incidents before they occur and supporting more efficient and effective responses when food safety incidents do occur. This change in risk would reduce occurrences of food-borne illness, thereby reducing costs to Canadians, the national economy and the health care system. For example, if the proposed Regulations reduced the occurrences of food-borne illness by 1%, the estimated annualized net benefit would increase to approximately $27 million; 5%, the estimated annualized net benefit would increase to approximately $138 million; and 10%, the estimated annualized net benefit would increase to approximately $277 million. In addition to an expected reduction in the occurrences of food-borne illness, the stronger food safety rules would increase the confidence Canadians have in the safety of domestic and imported food. Also, consumers would have increased knowledge of the food industry as they would have access to a list of all licence holders. Additionally, consumers would start to see an increase in the compliance of imported food labels with Canadian requirements (e.g. bilingual labels). Finally, regulatory organic requirements would be extended to aquaculture, which would increase consumer confidence in organic aquaculture products and potentially increase consumer access to these products through expanded equivalency arrangements for imports. The significant changes resulting from regulatory implementation would result in significant benefits for affected businesses. The estimated annualized value of these benefits is $137.3 million. The main driver of the benefits is that the proposed traceability requirements would enable food recalls and investigations to be conducted in a more efficient and effective manner, which would minimize economic loss for affected businesses. While the benefits for affected businesses would be significant with regulatory implementation, businesses would also carry significant costs from the above- mentioned changes. The estimated annualized value of these costs would be approximately -$138.2 million, which represents less than 2% of the $7.3 billion in net revenues realized in the Canadian food manufacturing subsector. (see footnote 9) As with any new additional business cost, there is the potential for the business to attempt to “pass along” the cost to buyers (e.g. consumers). For the food industry that would be impacted by the proposed Regulations, it is a competitive industry where a significant portion of businesses are already compliant with the proposed requirements. Furthermore, because Canada is a small open economy in the global market, imported products coming from the United States (where businesses are already meeting the equivalent requirements such as the preventive controls) further intensify competition in the Canadian market. As a result, it is probable that impacted businesses in Canada would rather absorb the additional costs to at least maintain their current market share. These factors would mitigate the potential impact that the business costs would have on consumer prices while increasing the likelihood that a business would have to absorb the majority of the costs. The main drivers of the costs are the proposed requirements for affected businesses to have a PCP and follow preventive control requirements. The main benefit for businesses that develop PCPs and follow preventive control requirements would be a reduction in the food safety risk of their product, which would contribute to potential purchasers of their food having increased confidence in its safety. Additionally, these businesses would directly benefit from having increased knowledge of their processes and production and increased alignment with international food safety requirements. This would help to maintain existing market access for Canadian businesses and support the development of new market access opportunities. Also, without the proposed broadened application of preventive control and PCP requirements, Canada would be out of step with our major trading partners who are moving to a preventive control regulatory approach to food safety, which would put market access at risk. Medium/large businesses would be less affected by the proposed Regulations since most are already in compliance with the proposed requirements. Small businesses would be affected to a greater degree by the proposed Regulations if they are involved in importing food, or preparing food for export or for interprovincial trade. For the CFIA, regulatory implementation would transform and modernize the Agency’s approach to food safety. However, the CFIA would not require any additional food safety funding or resources from current levels as the proposed Regulations would allow the CFIA to operate more efficiently and redistribute its food safety resources more strategically. Therefore, regulatory implementation would essentially be cost neutral for the CFIA with the exception of compliance promotion and industry engagement, which were estimated to be an annualized cost of approximately –$2.5 million. Note that as a result of CFIA compliance promotion and industry engagement the costs of dealing with importers at the border for CBSA would be negligible. The entire cost-benefit analysis report is available by request. “One-for-One” Rule The “One-for-One” Rule applies and the regulatory proposal would be considered an IN under the Rule since there would be an overall increase in administrative burden. The additional burden would be primarily associated with the licensing application requirements and the record-keeping associated with the PCP and traceability requirements. However, businesses would benefit from some reduced burden (i.e. administrative relief), which would be primarily a result of the CFIA no longer requiring the registration of certain establishments and the integration of the proposed licensing system with the export certification process in the CFIA’s new automated electronic system. The following table presents all of the requirements included in the analysis that would impose administrative burden on or provide administrative relief to businesses: This table presents all of the requirements included in the analysis that would impose administrative burden on or provide administrative relief to businesses. Impact Category Task Description Why is it an "Administrative Burden"? Administrative Burden Imposed or Relief Provided Overarching Review time of CFIA food safety regulations Familiarization with information obligations Burden imposed Licensing Licence applications Authorizations Burden imposed Licensing No establishment registration applications Authorizations Relief provided Licensing Streamlined/integrated export certification process Authorizations, filling out forms, compiling data Relief provided Preventive controls and PCPs Implementation of preventive controls and PCPs Collecting and retaining data Burden imposed Traceability Implementation of traceability systems Collecting and retaining data Burden imposed Requirements for fresh fruit and vegetable dealers CFIA produce licence no longer required (includes DRC membership requirement) Authorizations Relief provided The estimated costs of the administrative burden were based on information gathered from a literature review, cost-benefit analyses from other jurisdictions (e.g. the U.S. Food and Drug Administration), reasonable assumptions and consultation with stakeholders and CFIA subject matter experts. The following assumptions were used to estimate the administrative burden impacts: Administrative relief — No establishment registration applications Almost all of the estimated benefits associated with no longer requiring establishment registration would provide administrative relief (i.e. the time no longer required to obtain or maintain registration) SCM variables used to monetize this relief: TIME — estimated based on number of data fields required in the application forms (varies based on food commodity and the application type [new, amendment, or renewal]). It was assumed that it would take an individual an average of 15 seconds to fill out a data field. Also, it was assumed that it would take a small business an average of 5 minutes and a medium/large business an average of 15 minutes to obtain and make a copy of any document required for submission (number of documents varies based on food commodity). Finally, the analysis accounted for the fact that application packages can be submitted by mail, fax and email. Also, if required, there can be on-site reviews of food safety plans and construction design layouts FREQUENCY — after the initial registration, registration renewal requirements vary by food commodity, but the vast majority require annual renewal (with amendments as required) WAGE — it was assumed a manager would perform this task plus a 25% markup for overhead costs POPULATION — based on annual estimates of affected establishments used in the cost-benefit analysis Administrative relief — Streamlined/integrated export certification process All estimated benefits associated with a streamlined/integrated export certification process were considered to provide administrative relief (i.e. reduced time to submit information to the CFIA) SCM variables used to monetize this relief: TIME — it was estimated that an exporter would save 10 minutes of their time per application FREQUENCY — this is an ongoing task based on applications for export certification WAGE — it was assumed a manager would perform this task plus a 25% markup for overhead costs POPULATION — The CFIA estimated that there are 165 000 export certificates issued annually. Since the CFIA does not track the number of applications (i.e. successful and unsuccessful), it was assumed that this represents 95% of the total number of annual applications. The annual growth in the number of applications was based on the estimated growth of the food industry used in the cost-benefit analysis Administrative relief — CFIA fresh fruits and vegetables produce licence no longer required Only the estimated benefits associated with the differences in the time to apply, amend or renew a CFIA produce licence versus DRC membership for fresh fruit and vegetable dealers were considered to provide administrative relief (i.e. reduced application time) The SCM plus other costs were used to monetize this impact: TIME — estimated based on number of data fields required in the application forms (varies between CFIA and DRC). It was assumed that it would take an individual an average of 15 seconds to fill out a data field. Also, it was assumed that it would take a small business an average of 5 minutes and a medium/large business an average of 15 minutes to obtain and make a copy of any document required for submission (number of documents varies based on food commodity). Finally, the analysis accounted for the fact that application packages can be submitted by mail, fax and email FREQUENCY — after the initial application, CFIA fresh fruits and vegetables licences require annual renewal whereas DRC membership does not need to be renewed WAGE — it was assumed a manager would perform this task plus a 25% markup for overhead costs POPULATION — based on estimates of affected stakeholders used in the cost-benefit analysis Administrative burden — Review time of CFIA food safety regulations Existing and new businesses would have to take the time to review the proposed Regulations. However, new businesses would not have to take the time to review the current (applicable) CFIA regulations that would be repealed The SCM was used to monetize this impact: TIME — estimated based on consultation with CFIA subject matter experts FREQUENCY — this would be a one-time cost for businesses WAGE — assumed a manager would perform this task POPULATION — based on estimates of affected stakeholders For the TIME variable, the following table provides CFIA estimates of the time required by a food preparing business (based on employee size) to review a regulation. Review times for a food preparing business to review a regulation This table provides CFIA estimates of the time required by a food preparing business (based on employee size) to review a regulation. Business Size Review Time for a Regulation (Hours) for a Food Preparing Business Review Time for a Regulation (Hours) for a Food Preparing Business Review Time for a Regulation (Hours) for a Food Preparing Business Number of Employees Minimum Maximum Average 1 to 4 3 40 21.50 5 to 99 3 40 21.50 100 to 500 3 40 21.50 More than 500 3 40 21.50 The underlying assumption that explains why the times are the same for every business regardless of size was that reviewing (i.e. reading and understanding) a regulation does not include time to develop compliance strategies (e.g. preventive controls) and therefore would not vary due to operational complexities. These estimated average regulatory review times represent the starting point used to estimate the times required for all food businesses based on the type of operations. In order to make the estimations, the following assumptions were made: 1. The time required to review a regulation would vary based on the operations of the business Businesses that do not prepare food would take less time to review since their operations are apt to be less complicated and not all of the regulatory provisions would be applicable Compared with the review time for businesses that prepare food, the time would be reduced by 75% for importers and exporters the assumption being that these businesses do not prepare food at all — i.e. simple operations 95% for interprovincial traders the assumption being that these businesses only have to comply with minimal requirements 0% for fresh fruit and vegetable (FFV) primary producers the assumption being that these businesses have complicated operations 2. For the proposed Regulations, the CFIA would have interpretive guidance, model systems and plain language examples to help reduce review times Additionally, the CFIA would target these documents to specific stakeholder categories (e.g. importer), which would allow stakeholders to only review what would be relevant for them These documents would reduce review times by 50% 3. For the proposed Regulations, the CFIA has conducted extensive industry consultations on the proposed Regulations, which would help further reduce review times Based on this, it was assumed that all large businesses (more than 500 employees) have been reviewing CFIA regulatory consultation material and are already aware of the majority of the provisions as a result their review time would be reduced by 50% some medium-sized businesses (100 to 500 employees) have been reviewing CFIA regulatory consultation material and are already aware of the majority of the provisions as a result their review time would be reduced by 25% a few small businesses (less than 100 employees) have been reviewing CFIA regulatory consultation material and are already aware of the majority of the provisions as a result their review time would be reduced by 12.5% Based on these assumptions, the following table contains the estimated average review times for a single regulation in the baseline and regulatory scenarios for all stakeholder categories: This table presents the review time for a regulation in hours. Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Review Time for a Regulation (Hours) Business Size BASELINE Regulations BASELINE Regulations BASELINE Regulations BASELINE Regulations BASELINE Regulations PROPOSED Regulations PROPOSED Regulations PROPOSED Regulations PROPOSED Regulations PROPOSED Regulations Number of Employees Preparers for interprovincial trade or export Importers Interprovincial traders Exporters FFV primary producers Preparers for interprovincial trade or export Importers Interprovincial traders Exporters FFV primary producers 1 to 4 21.50 5.38 1.08 5.38 21.50 9.41 2.35 0.47 2.35 9.41 5 to 99 21.50 5.38 1.08 5.38 21.50 9.41 2.35 0.47 2.35 9.41 100 to 500 21.50 5.38 1.08 5.38 21.50 8.06 2.02 0.40 2.02 8.06 More than 500 21.50 5.38 1.08 5.38 21.50 5.38 1.34 0.27 1.34 5.38 It was assumed that the percentage of time required to review the proposed Regulations that would be related to administrative burden requirements would be 90% for food retailers 90% for interprovincial traders 10% for all other impacted stakeholders For the current regulations, the percentages were assumed to be 0% for food retailers 0% for interprovincial traders 5% for all other impacted stakeholders Note that for the fish and meat sectors, it was assumed that 10% of the time required to review the current regulations would be related to administrative burden requirements as these regulations have similar requirements as the proposed Regulations (e.g. licensing/registration and record keeping for food safety and traceability). In cases of multi-food businesses that deal with meat and fish, it was assumed that 7.5% of the time would be related to administrative burden. Administrative burden — Licence applications All of the estimated costs associated with licence applications would impose an administrative burden (i.e. the time required to become or maintain a licence) The SCM variables used to monetize this burden: TIME — it was assumed that all applications would be submitted electronically via the CFIA website. The time estimated was based on the number of data fields required in the application form (varies based on food commodity and the application type — new, amendment or renewal). It was assumed that it would take an individual an average of 15 seconds to fill out a data field. Also, it was assumed that the form would be “dynamic,” in the sense that some questions (i.e. data fields) would only be presented to the applicant if applicable. For example, questions regarding the types of fish products that an establishment deals with would only be asked to establishments that stated that they deal with fish. Finally, it was assumed that it would take an individual an average of 5 minutes to find the form the first time and 2.5 minutes on subsequent occasions (the underlying assumption being that the CFIA would provide a direct link to the form on its home web page) FREQUENCY — after applying for the initial licence, licences would be required to be renewed every two years (with amendments as required) WAGE — it was assumed that a manager would perform this task plus a 25% mark-up for overhead costs POPULATION — based on estimates of affected businesses used in the cost-benefit analysis Administrative burden — Implementation of PCPs and food safety requirements Only the estimated costs associated with PCP record keeping would impose an administrative burden The SCM variables used to monetize this burden: TIME — see the table below for the assumptions used for this variable PCP implementation — Data on administrative burden time by business size (i.e. number of employees) This table presents PCP implementation with the administrative burden time data by business size (i.e., number of employees). Description Less than 20 employees 20 to 99 employees 100 to 499 employees Greater than 499 employees Process Controls Process Controls Process Controls Process Controls Process Controls Number of processes per facility 2 2 6 10 Average hours to generate calibration records per process (manager level) 0.335 0.335 0.335 0.335 Number of calibration records per process per year 24 24 24 24 Average hours to document monitoring of process controls per record (working level) 0.05 0.05 0.05 0.05 Monitoring records per process per year 365 365 365 365 Average hours to generate verification instrumentation calibration records per process (manager level) 0.335 0.335 0.335 0.335 Number of calibration records per process per year 24 24 24 24 Allergen Controls — label application review Allergen Controls — label application review Allergen Controls — label application review Allergen Controls — label application review Allergen Controls — label application review Frequency of review per hour per line 1.5 1.5 1.5 1.5 Hours of operation per day 8 16 24 24 Days of operation per year 357 357 357 357 Hours per application record keeping (working level) 0.013 0.013 0.013 0.013 Number of production lines per facility 3 7 13 18 Sanitation Controls — monitoring and verification Sanitation Controls — monitoring and verification Sanitation Controls — monitoring and verification Sanitation Controls — monitoring and verification Sanitation Controls — monitoring and verification Total hours per year for monitoring record keeping (supervisor level) 11.125 22.375 133.875 133.875 • FREQUENCY — these would be ongoing annual costs for establishments • WAGE — depending on the task, it was assumed that a manager, supervisor or worker would perform the task • POPULATION — based on estimates of affected establishments used in the cost-benefit analysis • For those businesses that would not be required to have a written PCP (i.e. no record keeping), there would be no administrative burden costs Administrative burden — Implementation of traceability systems The SCM variables used to monetize this burden: TIME — estimated based on data/information from a USFDA cost-benefit analysis on the Establishment and Maintenance of Records Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 rule. Reductions to the time estimates were made since the U.S. rule requires the recording of significantly more information in cases where an establishment would have to trace both forward and back, it was assumed that an individual would require approximately 6.5 hours annually for traceability record keeping. In cases where an establishment would only have to trace either forward or back, it was assumed that an individual would require half as much time FREQUENCY — this would be an ongoing cost for establishments WAGE — assumed an administrative support worker would perform this task POPULATION — based on estimates of affected establishments used in the cost-benefit analysis In the table below, the results for all estimated new administrative burden (i.e. costs) are presented as negative values (e.g. -$1), while the results for all estimated new administrative relief (i.e. benefits) are presented as positive values (e.g. $1). Estimated annualized values of administrative impacts for the “One-for-One” Rule (CAD, constant year 2012 prices, 2012 PV base year**, 7% discount rate) This table presents the Estimated Annualized Values of Administrative Impacts for the One-for-One Rule. Impact Category Task Description Annualized Values Overarching Review time of CFIA food safety regulations -$108,150 Licensing Licence applications -$100,041 No establishment registration applications $99,598 Streamlined and integrated export certification process $779,626 PCP Implementation of PCPs -$9,658,028 Traceability Implementation of traceability systems -$2,424,343 Requirements for fresh fruit and vegetable dealers CFIA produce licence no longer required (includes DRC membership requirement) $2,492 Total annualized* administrative impact on all businesses Total annualized* administrative impact on all businesses -$11,408,846 Estimated number of affected businesses Estimated number of affected businesses 82 285 Average annualized administrative impact per affected business Average annualized administrative impact per affected business -$139 * Numbers may not add up due to rounding. ** The analysis covered a 10-year time period (2018–2027). The estimated total annualized increase in administrative burden to all businesses would be $11,408,846. This would equate to an average annualized administrative cost per affected business of $139. Since 2010, the CFIA has consulted extensively with businesses and industry associations on potential food safety regulations. In general, businesses have been supportive of the proposed preventive control, PCP, and traceability requirements, which are the requirements that would impose the most administrative burden. However, concerns have been expressed related to the knowledge and capacity of some small businesses in meeting the proposed regulatory requirements given the amount of potential burden. Based on these concerns and the fact that businesses would carry significant additional administrative costs, the CFIA has designed flexibility into the proposed Regulations (e.g. staggered coming-into-force dates for preventive control, PCP, and traceability requirements) and a comprehensive suite of compliance promotion products for small businesses, to reduce the burden they face, while maintaining proposed food safety standards. The entire “One-for-One” Rule analysis is available on request. Small business lens Since 2010, the CFIA has consulted extensively with small businesses (including a targeted consultation in 2015), associations that represent small businesses and that serve specific ethnic communities, and organizations that represent and assist small businesses on potential food safety regulations. Feedback has been generally supportive of the proposed regulatory framework; however, concerns were expressed related to the knowledge and capacity of some small businesses in meeting the proposed regulatory framework. Given these concerns and the fact that small businesses who are subject to the proposed Regulations would carry significant additional administrative and compliance costs due to the proposed Regulations, the CFIA worked on the development of the proposed Regulations and the accompanying compliance promotion products to lower some of the costs faced by small businesses while maintaining proposed food safety standards. The small business lens compares the estimated costs that would be faced by small businesses in an “initial” regulatory option with a “flexible” (i.e. lower cost) regulatory option. This comparison is done in the Regulatory Flexibility Analysis Statement. Estimates of the costs were based on information gathered from a literature review, cost-benefit analyses from other jurisdictions (i.e. U.S. FDA), reasonable assumptions, and consultation with stakeholders and CFIA staff. For the purposes of the small business lens, the proposed Regulations would represent the flexible option. This flexible option would include (but would not be limited to) “Model systems” that would provide examples of processes demonstrated to achieve compliance with the regulatory outcome; Plain language guidance documents that would further assist with compliance; PCP templates available for small businesses to assist with compliance; Staggered coming-into-force dates for certain requirements for food sectors where no registration requirement for establishments currently exists (e.g. non-federally register sector), which would provide additional time to understand the proposed requirements and delay the costs for compliance; and An exception from the PCP requirements for businesses with annual gross food sales of $30,000 (see footnote 10) or less for businesses in the non-federally registered, fresh fruits and vegetables, maple or honey sectors. However, exempted businesses would still have to adhere to preventive control requirements. For the small business lens, the initial option for the design of the proposed Regulations would not have any model systems, plain language guidance, PCP templates or exception from PCP requirements. Additionally, there would be a single coming-into-force date for all regulatory provisions. In the table below, the results for all estimated costs are presented as negative values (e.g. -$1). Note that the small business lens only analyzes costs (i.e. no benefits are included). Regulatory Flexibility Analysis Statement (CAD, constant year 2012 prices, 2018 PV base year**, 7% discount rate) This table presents the Regulatory Flexibility Analysis Statement. Initial Option Initial Option Flexible Option Flexible Option Short description — No model systems provided to businesses — No "plain language" resources provided to businesses — A single coming-into-force date — No micro-business exception from PCP requirements — No PCP templates available for businesses — No model systems provided to businesses — No "plain language" resources provided to businesses — A single coming-into-force date — No micro-business exception from PCP requirements — No PCP templates available for businesses — Model systems provided to businesses — "Plain language" resources provided to businesses — Staggered coming-into-force dates for certain food sectors — Micro-business exception from PCP requirements — PCP templates available for businesses — Model systems provided to businesses — "Plain language" resources provided to businesses — Staggered coming-into-force dates for certain food sectors — Micro-business exception from PCP requirements — PCP templates available for businesses Number of small businesses impacted**** 83 179 83 179 80 923 80 923 Initial Option Initial Option Flexible Option Flexible Option Annualized Value ($) Present value Annualized Value ($) Present value Compliance costs Compliance costs Compliance costs Compliance costs Compliance costs Review time of CFIA food safety regulations*** -$838,753 -$5,891,053 -$313,959 -$2,205,114 Development of traceability system -$16,525 -$116,063 -$15,011 -$105,432 Development and documentation of PCP -$8,764,144 -$61,555,678 -$3,606,662 -$25,331,683 Implementation of preventive controls and PCP -$135,542,504 -$951,993,828 -$73,898,441 -$519,031,725 Preventive controls for businesses exempted from PCPs $0 $0 -$32,925,281 -$231,253,399 Maintenance of PCP -$9,650,149 -$67,778,610 -$6,462,298 -$45,388,477 TOTAL compliance costs* -$154,812,075 -$1,087,335,231 -$117,221,652 -$823,315,831 Administrative costs Administrative costs Administrative costs Administrative costs Administrative costs Review time of CFIA food safety regulations -$282,749 -$1,985,909 -$160,256 -$1,125,574 Licence application -$164,828 -$1,157,682 -$142,951 -$1,004,029 Implementation of traceability system -$4,225,343 -$29,677,042 -$3,548,142 -$24,920,662 Implementation of PCP -$29,202,482 -$205,106,015 -$14,407,359 -$101,191,264 TOTAL administrative costs -$33,875,402 -$237,926,649 -$18,258,709 -$128,241,529 Total costs (all small businesses) -$188,687,477 -$1,325,261,880 -$135,480,361 -$951,557,360 Total cost per impacted small business -$2,268 -$15,933 -$1,674 -$11,759 Risk considerations Having no model systems, plain language tools or PCP templates combined with a single coming-into-force date for all regulatory requirements would make it more difficult for small businesses to comply. This would put food safety at risk. Having no model systems, plain language tools or PCP templates combined with a single coming-into-force date for all regulatory requirements would make it more difficult for small businesses to comply. This would put food safety at risk. Model systems, plain language tools and PCP templates combined with staggered coming-into-force dates for regulatory requirements would assist small businesses with compliance. This would reduce food safety risk. Excepted micro-businesses would still have to comply with food safety requirements. Also, the exception would only apply to very small businesses that would typically have less complex food operations (i.e. less risk of food contamination) than small, medium or large businesses. Model systems, plain language tools and PCP templates combined with staggered coming-into-force dates for regulatory requirements would assist small businesses with compliance. This would reduce food safety risk. Excepted micro-businesses would still have to comply with food safety requirements. Also, the exception would only apply to very small businesses that would typically have less complex food operations (i.e. less risk of food contamination) than small, medium or large businesses. * Numbers may not add up due to rounding. ** The analysis covered a 10-year time period (2018–2027). *** The review of the Regulations, which was classified as a benefit by the cost-benefit analysis, was included in this cost-based small business lens analysis, as small businesses would carry significant short-term costs due to this impact, which caused its annualized value to be negative (i.e. a cost) over the 10-year time period. **** It should be noted that the number of small businesses impacted in the initial option was greater than in the flexible option. This was due to the fact that the initial option has a single coming-into-force date in 2018, whereas the flexible option has staggered coming-into-force dates (i.e. not all small businesses in operation in 2018 would continue to be in operation by the dates in 2019, 2020 and 2021). The flexible option is recommended for the design of the proposed Regulations by the CFIA. It was estimated that this option would reduce the average annualized cost per affected business from approximately $2,268 (i.e. initial option) to $1,674 (i.e. flexible option). This would result in an estimated average annualized savings of $594 per affected small business. The total savings for all small businesses would have an annualized value of $53.2 million. It is estimated that approximately 8 606 businesses that do not already have a PCP would be eligible for the exception from the PCP requirements. For small businesses in the food manufacturing sector, the average net profit/loss was +$18,600 in 2014. So the estimated costs per impacted small business would represent about 9% profits. That said, in this sector 70% of businesses are profitable versus 30% that are non-profitable. The profitable businesses have an average net profit of $64,000, so the impact of the costs on profit would be less (2.6%). The non-profitable businesses have an average net loss of $85,000 so the additional costs would not significantly increase these losses. The completed Small Business Lens Checklist is included as an appendix to the RIAS. The entire small business lens analysis is available by request. Consultation The CFIA undertook significant engagement with stakeholders as it developed the proposed Regulations. This included hosting two major food safety forums since 2013 that were attended by industry, academia, consumer groups, and other stakeholders. The CFIA also released discussion documents in 2013, 2014, and 2015. Since 2013 the CFIA has participated in over 300 external stakeholder events where the proposed regulatory framework was presented and discussed and has reached thousands of individuals through webinars and face-to-face sessions. Stakeholders, including other federal departments and agencies, provincial and territorial governments, international trading partners, food businesses, industry associations, and consumers, have responded by sending in over 100 detailed submissions in relation to the proposed regulatory framework. Overall, industry is supportive of the proposed direction, which is seen as being consistent with global approaches to food safety and aligned with the U.S. FSMA. The CFIA’s most recent consultations were in response to concerns that were expressed in previous consultations about the ability and capacity of small businesses to meet the proposed requirements. In April 2015, the CFIA launched a targeted consultation with micro and small businesses on options for reducing costs that would be imposed by the Regulations. This engagement occurred through multiple channels including face-to-face sessions, webinars, and an on-line survey. In addition, a version of the draft preliminary regulatory text, as it then read, was released publicly for stakeholder review and comment in April 2015. Key messages and themes expressed by stakeholders Stakeholders expressed support for the proposed regulatory approach Moving to a single set of regulations that covers all food would significantly improve regulatory consistency and reduce regulatory duplication and complexity; Having the same regulatory requirements for domestic food businesses and importers would create a more level playing field that allows for innovation and flexibility; Allowing businesses to hold multiple licences that are structured to their needs would allow them to meet the proposed requirements while still maintaining diverse business models; Having a consistent approach to the promotion of compliance with the proposed preventive control and PCP requirements would be consistent with U.S. approach to compliance promotion with its own HACCP-based system of preventive controls and PCPs; and Outcome-based regulations would allow for innovation and flexibility, but would require additional training for inspectors to ensure that interpretation of the proposed Regulations is consistent. Support was expressed for the HACCP-basis of the preventive control requirements as long as those requirements align with internationally recognized standards, and as long as those requirements are consistent with the requirements of existing CFIA-recognized HACCP-based systems (e.g. the Food Safety Enhancement Program, the Quality Management Program for fish). Support was expressed from the domestic and international fresh fruit and vegetable industry for Proposed new food safety requirements at the farm level, as they would reflect the industry’s work to date in implementing CanadaGAP®; (see footnote 11) and A requirement for membership in the DRC to replace the LAR. This would address a Canada–United States RCC commitment to address financial risk mitigation in the trade of fresh fruits and vegetables by eliminating the dual licensing system for fresh fruit and vegetable dealers in Canada. Consumers were generally supportive of the proposal and felt that licensing and consistent food safety requirements across all sectors are a step in the right direction. Some did express concerns that this could lead to higher prices for food products. Concerns A number of concerns were highlighted during the consultations. 1. Many importers currently operate from outside of Canada. A requirement to have a Canadian fixed place of business could result in significant costs associated with setting up an office in Canada. CFIA response: The proposed Regulations would allow for importers who do not have a fixed place of business in Canada to hold a licence if they have a fixed place of business in a foreign state that has a food safety system that provides at least the same level of protection to that of Canada. Canada has such an arrangement with the U.S. Food and Drug Administration, which was signed in 2016. 2. The proposed regulatory approach could present a significant burden to small businesses that are currently not familiar with the CFIA, or have limited knowledge of HACCP. Several associations representing small business recommended that the written PCP exception level be raised significantly from $30,000 in annual gross sales, but this represented a minority of stakeholders that provided feedback during the CFIA’s 2015 consultation on this subject. In contrast, strong support for the proposed exemption amount was expressed by the majority of industry stakeholders during the consultation. This view is supported by recent FDA research which suggested that food risks/hazards are not dependent on the size of an operation. (see footnote 12) Indeed, some industry stakeholders expressed the view that there should not be an exception at all. CFIA response: The proposed Regulations would include an exception from the written PCP requirements for businesses in some sectors with annual gross food sales from the previous 12 months of $30,000 or less at the time of applying for the licence. This threshold is consistent with the goods and services tax / harmonized sales tax (GST/HST) account registration requirements for small suppliers under the Excise Tax Act. These businesses would still, however, require a licence for basic oversight and compliance promotion, and would be required to meet other regulatory requirements, including preventive controls. Licensing, traceability, and preventive control requirements would also be phased in so that sectors which have not previously been subject to these requirements would have more time to adapt to them. Additional time will be provided to some businesses with annual gross food sales of $30,000 or less, and no more than four employees. Plain language guidance documents, model systems, and tools would be available to help small businesses meet these requirements. Training 3. The need for a comprehensive training system to support the implementation of the proposed Regulations was the focus of a number of stakeholder comments during the 2013 and 2014 consultations. These comments, often from industry and academic stakeholders, indicated the need for the CFIA to provide inspector training that will allow inspectors to consistently enforce any new requirements and to stay abreast of new technologies used to prepare food. CFIA Response: The CFIA is developing a Learning and Training Architecture that includes improved recruitment, standardized training, supported technology information solutions and enhanced proactive science capacity. In addition, under a new private-public partnership, Safe Food Canada — The Learning Partnership, the CFIA is collaborating with key stakeholders from industry, academia, and provincial/territorial governments to explore the development of a national training and certification curriculum for food safety. This initiative has the potential to standardize professional development for regulators and all employees in the food industry. Regulatory cooperation The proposed Regulations would allow Canada to keep pace with food regulatory modernization initiatives being pursued by its trading partners, in particular with the United States, which is Canada’s largest export market for food. There is good alignment between the approaches in the proposed Regulations and in the FSMA rules. Both frameworks note the importance of broadly applied preventive approaches, and both frameworks recognize the primary role that industry plays in the preparation and import of safe food. Food businesses in both countries will be required to have a licence or registration, have good manufacturing practices, have traceability requirements, perform hazard analysis, establish preventive controls, and conduct monitoring. Both the United States and Canada will help small businesses in meeting the new food safety requirements of new regulations by providing assistance through plain language guidance documents, interactive decision tools, and phased-in application dates. The concurrent nature of work on FSMA and work on the proposed Regulations has allowed the CFIA to use this as an opportunity to align our approaches with those of the United States or to minimize differences where it was possible and appropriate to do so. Some differences exist, namely in the scope of the application of the rules. The U.S. rules apply to all food producers — including those whose product remains in the same state or is sold locally. The proposed Regulations would generally only apply to businesses that import food or prepare food for export or interprovincial trade, and would not apply to those food producers that trade solely within a province (with the exception of some provisions). The FSMA also does not apply to those products that are regulated by the U.S. Department of Agriculture (meat, poultry, and certain egg products) whereas the proposed Regulations would apply to these products that fall under the CFIA’s mandate. The proposed Regulations and the FSMA’s requirements provide generally similar exemptions. The FSMA provides exemptions for specific business types (e.g. restaurants, food retail establishments, certain farms) and exempts certain products (e.g. alcoholic beverages, certain fresh fruits and vegetables that are rarely consumed raw, and raw agricultural products). These exemptions are generally consistent with those in the proposed Regulations (e.g. alcoholic beverages, food additives, grains, oilseeds). The FSMA rules offer “modified requirements” rather than exemptions for what it describes as “qualified facilities.” Qualified facilities can either be “very small businesses” or facilities that average less than US$500,000 in annual sales and that sell over half of their production to “qualified end-users” (i.e. direct to consumers, restaurants, retail establishments) not more than 275 miles away. In place of a documented PCP, these facilities must attest to the FDA that they have identified hazards and implemented preventive controls, and continue to monitor them and retain appropriate documents. In defining “very small businesses” the FDA noted that the results of its study of the U.S. food processing sector revealed that even in the smallest category of businesses in the U.S. processed food sector (i.e. those with fewer than 20 employees), nearly all had substantial annual sales that exceed $1 million. (see footnote 13) The FDA noted that its goal in establishing this definition was to exempt only a small percentage of U.S. food from coverage of this rule in order to minimize the risk of food-borne illness. In light of this, the FDA concluded that a “very small business” definition of business with sales under $1 million was appropriate as it would exempt less than 1% of the dollar value of food produced in the United States. (see footnote 14) Thus, the modified requirements would only be available to the very smallest businesses and would account for 0.6% of annual U.S. food sales. (see footnote 15) The requirements described in the proposed Regulations would also help to sustain a major achievement under the RCC, the Food Safety Systems Recognition Arrangement. This arrangement between the U.S. Food and Drug Administration (FDA), Health Canada, and the CFIA was signed in April 2016 and it recognizes that the U.S. and Canadian food safety control systems provide a similar level of public health protection. By recognizing each other’s systems, the U.S. FDA and Canada are expressing that they have confidence that they can leverage each other’s science-based regulatory systems. For example, the agreement allows the importing country to consider the exporting country’s comparable level of oversight. The changes introduced in the proposed Regulations are important for maintaining this arrangement as they would keep the Canadian and U.S. approaches comparable. Rationale Canada has one of the best food safety systems in the world, but this system must continue to adapt and improve as the food safety environment evolves. Approximately 82 000 businesses of all sizes are deeply integrated into supply chains that prepare and import Canada’s food. In these integrated chains, smaller businesses often supply foods used as ingredients by larger businesses and problems can occur at any stage of preparation (e.g. prior to import, during preparation, during distribution). In such a system, when problems do occur they can quickly become widespread geographically and affect multiple sectors. At the same time, consumers are demanding more information in order to make informed decisions about the foods they purchase. Industry integration is observed in many countries and foreign regulators and international standard-setting bodies (i.e. Codex) are increasingly advocating the use of systems-based, preventive approaches that identify potential hazards to foods and appropriate controls in order to prevent food safety problems before they occur. They are also advocating the adoption of other practices, such as record keeping, to help recall food products from the market quickly in the event of a food safety incident. The proposed Regulations would address changes to risks and changes in business practices by establishing a modern and robust legislative framework for food that is prepared in Canada or imported into Canada. The proposed Regulations would also provide new authorities to prevent food safety incidents, respond quickly when incidents occur, and maintain market access. The proposed Regulations would also better align Canada with international approaches by increasing the consistency of the application of these principles and approaches in Canada in a way that focuses on preventing food safety incidents and recognizes the primary role that industry plays in the preparation and import of safe food. For example, Codex guidance on traceability will be applied to a broader range of food businesses. This will address the risk from situations where recall is hindered because a business is unable to provide information regarding where that food originated and where it was sent. Codex guidance suggesting the broad application of preventive approaches is reflected in the requirement for preventive controls and PCPs (subject to certain exceptions) in the proposed Regulations. These requirements would apply to certain food businesses importing food, or preparing food for export or for interprovincial trade. The choice to broadly apply these approaches also recognizes the integrated nature of Canadian food supply chains that integrate businesses conducting activities representing different levels of risk. The requirements in the proposed Regulations also reflect the lessons learned from previous food safety incidents. Other means of carrying out compliance verification and enforcement, such as increased sampling and testing, are more intrusive and costly and would reduce industry accountability. While the non-federally registered food sector and the fresh fruit and vegetable sector have not been subject to preventive control requirements in the past, many within these sectors have already adopted preventive controls and traceability measures through voluntary programs. That said, there is still a significant number that have not and the proposed Regulations would have the greatest effect on these businesses — which are often small. Small business activities are often simple and have few controls to implement. In these cases it is relatively simple for an inspector to verify that the business poses a lower food safety risk and is meeting its preventive control requirements. As a business increases in size (i.e. as revenues increase), its activities often become more complex (i.e. they conduct more sophisticated operations, increase their volume of production, increase their number of employees). This increased complexity makes it difficult to perform effective inspections without written documentation, such as a PCP. This difference in complexity and its associated risks have led the CFIA to provide an exception to the PCP requirements for certain micro-businesses with gross annual sales of $30,000 or less that sell interprovincially, import or export. This provides an exception for a number of businesses (i.e. ~9 500 out of ~82 000 total food businesses) that does not substantially weaken the effectiveness of the PCP requirement (i.e. increase food safety risks). The $30,000 threshold was also chosen since it is aligned with the GST/HST exemption limit and offers a straightforward means to identify micro-businesses. In addition, to help mitigate the costs of new requirements while continuing to support an acceptable level of system-wide food safety, the CFIA is proposing a number of measures to enhance compliance including “model systems,” plain language guidance documents, PCP templates, and staggered coming-into-force dates for certain requirements in certain sectors that would be included in the proposed Regulations. The proposed Regulations would also streamline existing regulations to reduce the potential for inadvertent differences and duplications. Modification of commodity-specific requirements for meat products that are a mix of ready-to-eat meat products and other ingredients (e.g. frozen pepperoni pizza) will reduce duplicate requirements. In this situation the meat would already have been subject to food safety requirements for ready-to-eat meat products earlier in the chain of preparation and would not be subject to a second set of regulations for ready-to-eat meat when it is incorporated into the final food product. Streamlining will also address non-food safety requirements (e.g. standards of identity) in a more consistent manner that is flexible enough to accommodate new industry practices. As other countries modernize their food safety requirements, Canada will need to demonstrate that comparable domestic requirements are in place to maintain market access. This is important given that Canada exported approximately $25.4 billion of food in 2013, a 31% increase from 2009, and exports are significant contributors to the Canadian economy and the Canadian food industry, which is valued at approximately $87.9 billion. Overall, the proposed Regulations would have several benefits. For consumers, a broader range of foods sold in Canada would be subject to requirements that focus on preventing food safety risks and enable a faster response in the event of a food safety emergency. Beyond a more effective and efficient inspection system, the proposed Regulations are expected to yield cost savings to governments and Canadians through a reduction in food-borne illnesses and costs to the health care system. In addition, implementing the proposed Regulations would be the most cost-effective approach for Government as inspectors would be designated under one act, rather than four (i.e. the CAPA, FIA, MIA and CPLA) and would be trained to a consistent inspection approach enabling deployment to the sectors of highest risk. Finally, industry would benefit from increased consumer confidence in their products, enhanced market access opportunities through regulatory alignment with major trading partners and less-costly or fewer investigations and recalls. Overall, it is estimated that industry would derive a net benefit from the new streamlined licensing system and more targeted efficient recalls. Implementation, enforcement and service standards The CFIA is proposing a phased approach for the coming into force of the proposed Regulations that reflects the different levels of industry readiness and the concerns of small businesses. Table 1 provides an overview of the phased implementation. Table 1. Overview of phased implementation timelines This table presents an overview of the phased implementation timelines. Meat, Fish, Eggs, Processed Egg, Dairy, Processed Products, Honey, Maple products Fresh Fruits and Vegetables All Other Foods (see footnote 16) All Other Foods (see footnote 16) All Other Foods (see footnote 16) Meat, Fish, Eggs, Processed Egg, Dairy, Processed Products, Honey, Maple products Fresh Fruits and Vegetables >$30K and ≥5 Employees >$30K and <5 Employees ≤$30K Licence (see footnote 19) Immediately Immediately + 2 years + 2 years + 2 years Traceability Immediately (+1 year for growers and harvesters of fresh fruits and vegetables) Immediately (+1 year for growers and harvesters of fresh fruits and vegetables) + 2 years + 2 years + 2 years Preventive controls (see footnote 20) Immediately + 1 year + 2 years + 3 years + 3 years Written PCP (see footnote 21) Immediately + 1 year + 2 years + 3 years Not required (see footnote 22) The CFIA will maintain open and transparent communication with stakeholders to facilitate the transition and implementation period for the proposed Regulations through the CFIA website. When the SFCA comes fully into force, it will repeal the CAPA, the FIA, the MIA and the food-related provisions of the CPLA. Two federal legislative regimes within the CFIA mandate would apply to food in Canada — the FDA and the SFCA. Food prepared for sale only within provinces will continue to be subject to the requirements of the FDA that generally apply to all food in Canada and to some requirements of the SFCA. Implementation of the proposed Regulations would be supported by new plain language guidance documents that facilitate the understanding of the requirements; the outcomes of a review (including consultations) on the CFIA’s service standards and user fees; continued communication and engagement with stakeholders; new compliance promotion tools to assist industry in meeting the regulatory requirements; a new Learning and Training Architecture for food inspectors; a new science-based approach to risk rating of foods; a modernized and integrated approach to inspection; modern IM/IT systems and tools; a new performance measurement framework that considers a range of systemic indicators and accountabilities; and increased emphasis on a government–industry partnership on food safety. Compliance and enforcement The CFIA uses a range of tools to verify compliance, including inspections, surveillance, sampling, and testing. When non-compliance is determined, the CFIA takes enforcement action commensurate with the seriousness of the non-compliance. Under the proposed Regulations, the Minister may suspend or cancel a licence. For example, a licence would be suspended immediately, upon notice, where there is a risk of injury to human health. This enforcement tool would be in addition to other compliance and enforcement tools and measures available to inspectors, including food product seizure and detention, an order to remove a product from Canada, and a recall order, and/or penalties such as the issuance of an administrative monetary penalty under the Agriculture and Agri-Food Administrative Monetary Penalties Act. Performance measurement and evaluation It is expected that the proposed Regulations would improve the ability of the CFIA and regulated parties to prevent and manage food safety risks, better protect consumers, and maintain and expand market access for Canada. The CFIA is developing a food program performance framework to measure how well its activities, processes, and services contribute to these outcomes. The CFIA is developing performance indicators to measure the performance of the Regulations, once they come into force. These indicators will allow the CFIA to monitor and assess whether the Regulations are achieving the goal of increasing food safety in Canada. To date, the following indicators have been proposed for this purpose: Increase in the number of CFIA-licensed food manufacturers that have a system in place to promote food safety (target: to be determined) [source: CFIA internal data]; and Increase in the number of CFIA-licensed food importers that have a system in place to promote food safety (target: to be determined) [source: CFIA internal data]. Contact Richard Arsenault Executive Director Domestic Food Safety Systems and Meat Hygiene Directorate Canadian Food Inspection Agency 1400 Merivale Road, Tower 1 Ottawa, Ontario K1A 0Y9 Telephone: 613-773-6156 Email: [email protected] Small Business Lens Checklist 1. Name of the sponsoring regulatory organization: Canadian Food Inspection Agency 2. Title of the regulatory proposal: Safe Food for Canadians Regulations 3. Is the checklist submitted with a RIAS for the Canada Gazette, Part I or Part II? ☑ Canada Gazette, Part I ☐ Canada Gazette, Part II A. Small business regulatory design This table presents the Small business regulatory design. I Communication and transparency Yes No N/A 1. Are the proposed Regulations or requirements easily understandable in everyday language? ☐ ☑ ☐ The majority of the provisions of the proposed Regulations are easily understandable in everyday language. Some sections however, are technical in nature. Plain language tools will be developed in everyday, non-technical language and will be targeted to different affected stakeholder groups to explain the regulatory requirements. For example, importers would have guidance tailored to their specific needs, as would businesses who prepare food for inter-provincial trade. The majority of the provisions of the proposed Regulations are easily understandable in everyday language. Some sections however, are technical in nature. Plain language tools will be developed in everyday, non-technical language and will be targeted to different affected stakeholder groups to explain the regulatory requirements. For example, importers would have guidance tailored to their specific needs, as would businesses who prepare food for inter-provincial trade. The majority of the provisions of the proposed Regulations are easily understandable in everyday language. Some sections however, are technical in nature. Plain language tools will be developed in everyday, non-technical language and will be targeted to different affected stakeholder groups to explain the regulatory requirements. For example, importers would have guidance tailored to their specific needs, as would businesses who prepare food for inter-provincial trade. The majority of the provisions of the proposed Regulations are easily understandable in everyday language. Some sections however, are technical in nature. Plain language tools will be developed in everyday, non-technical language and will be targeted to different affected stakeholder groups to explain the regulatory requirements. For example, importers would have guidance tailored to their specific needs, as would businesses who prepare food for inter-provincial trade. The majority of the provisions of the proposed Regulations are easily understandable in everyday language. Some sections however, are technical in nature. Plain language tools will be developed in everyday, non-technical language and will be targeted to different affected stakeholder groups to explain the regulatory requirements. For example, importers would have guidance tailored to their specific needs, as would businesses who prepare food for inter-provincial trade. 2. Is there a clear connection between the requirements and the purpose (or intent) of the proposed Regulations? ☑ ☐ ☐ 3. Will there be an implementation plan that includes communications and compliance promotion activities, that informs small business of a regulatory change and guides them on how to comply with it (e.g. information sessions, sample assessments, toolkits, websites)? ☑ ☐ ☐ 4. If new forms, reports or processes are introduced, are they consistent in appearance and format with other relevant government forms, reports or processes? ☑ ☐ ☐ II Simplification and streamlining Yes No N/A 1. Will streamlined processes be put in place (e.g. through BizPaL, Canada Border Services Agency single window) to collect information from small businesses where possible? ☑ ☐ ☐ 2. Have opportunities to align with other obligations imposed on business by federal, provincial, municipal or international or multinational regulatory bodies been assessed? ☑ ☐ ☐ 3. Has the impact of the proposed Regulations on international or interprovincial trade been assessed? ☑ ☐ ☐ 4. If the data or information, other than personal information, required to comply with the proposed Regulations is already collected by another department or jurisdiction, will this information be obtained from that department or jurisdiction instead of requesting the same information from small businesses or other stakeholders? (The collection, retention, use, disclosure and disposal of personal information are all subject to the requirements of the Privacy Act. Any questions with respect to compliance with the Privacy Act should be referred to the department’s or agency’s ATIP office or legal services unit.) ☐ ☐ ☑ The data or information, other than personal information, required to comply with the proposed Regulations is not already collected by another department or jurisdiction. The data or information, other than personal information, required to comply with the proposed Regulations is not already collected by another department or jurisdiction. The data or information, other than personal information, required to comply with the proposed Regulations is not already collected by another department or jurisdiction. The data or information, other than personal information, required to comply with the proposed Regulations is not already collected by another department or jurisdiction. The data or information, other than personal information, required to comply with the proposed Regulations is not already collected by another department or jurisdiction. 5. Will forms be pre-populated with information or data already available to the department to reduce the time and cost necessary to complete them? (Example: When a business completes an online application for a licence, upon entering an identifier or a name, the system pre-populates the application with the applicant’s personal particulars such as contact information, date, etc. when that information is already available to the department.) ☐ ☑ ☐ The type of information currently collected by the CFIA varies by food program and differs from the information that will be required under the regulatory proposal. However, the information will be pre-populated for renewal or in the case of amendment or application for other licences or permissions granted by the CFIA. The type of information currently collected by the CFIA varies by food program and differs from the information that will be required under the regulatory proposal. However, the information will be pre-populated for renewal or in the case of amendment or application for other licences or permissions granted by the CFIA. The type of information currently collected by the CFIA varies by food program and differs from the information that will be required under the regulatory proposal. However, the information will be pre-populated for renewal or in the case of amendment or application for other licences or permissions granted by the CFIA. The type of information currently collected by the CFIA varies by food program and differs from the information that will be required under the regulatory proposal. However, the information will be pre-populated for renewal or in the case of amendment or application for other licences or permissions granted by the CFIA. The type of information currently collected by the CFIA varies by food program and differs from the information that will be required under the regulatory proposal. However, the information will be pre-populated for renewal or in the case of amendment or application for other licences or permissions granted by the CFIA. 6. Will electronic reporting and data collection be used, including electronic validation and confirmation of receipt of reports where appropriate? ☑ ☐ ☐ 7. Will reporting, if required by the proposed Regulations, be aligned with generally used business processes or international standards if possible? ☑ ☐ ☐ 8. If additional forms are required, can they be streamlined with existing forms that must be completed for other government information requirements? ☐ ☐ ☑ The forms required under the proposed Regulations cannot be streamlined with existing forms required for other government information requirements, as the information required is not currently being collected. The forms required under the proposed Regulations cannot be streamlined with existing forms required for other government information requirements, as the information required is not currently being collected. The forms required under the proposed Regulations cannot be streamlined with existing forms required for other government information requirements, as the information required is not currently being collected. The forms required under the proposed Regulations cannot be streamlined with existing forms required for other government information requirements, as the information required is not currently being collected. The forms required under the proposed Regulations cannot be streamlined with existing forms required for other government information requirements, as the information required is not currently being collected. III Implementation, compliance and service standards Yes No N/A 1. Has consideration been given to small businesses in remote areas, with special consideration to those that do not have access to high-speed (broadband) Internet? ☑ ☐ ☐ 2. If regulatory authorizations (e.g. licences, permits or certifications) are introduced, will service standards addressing timeliness of decision making be developed that are inclusive of complaints about poor service? ☑ ☐ ☐ 3. Is there a clearly identified contact point or help desk for small businesses and other stakeholders? ☑ ☐ ☐ B. Regulatory flexibility analysis and reverse onus This table presents the Regulatory flexibility analysis and reverse onus. IV Regulatory flexibility analysis Yes No N/A 1. Does the RIAS identify at least one flexible option that has lower compliance or administrative costs for small businesses in the small business lens section? Examples of flexible options to minimize costs are as follows: Longer time periods to comply with the requirements, longer transition periods or temporary exemptions; Performance-based standards; Partial or complete exemptions from compliance, especially for firms that have good track records (legal advice should be sought when considering such an option); Reduced compliance costs; Reduced fees or other charges or penalties; Use of market incentives; A range of options to comply with requirements, including lower-cost options; Simplified and less frequent reporting obligations and inspections; and Licences granted on a permanent basis or renewed less frequently. ☑ ☐ ☐ 2. Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, quantified and monetized compliance and administrative costs for small businesses associated with the initial option assessed, as well as the flexible, lower-cost option? ☑ ☐ ☐ 3. Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, a consideration of the risks associated with the flexible option? (Minimizing administrative or compliance costs for small business cannot be at the expense of greater health, security or safety or create environmental risks for Canadians.) ☑ ☐ ☐ 4. Does the RIAS include a summary of feedback provided by small business during consultations? ☑ ☐ ☐ V Reverse onus Yes No N/A 1. If the recommended option is not the lower-cost option for small business in terms of administrative or compliance costs, is a reasonable justification provided in the RIAS? ☐ ☐ ☑ The recommended option is the lower-cost option. The recommended option is the lower-cost option. The recommended option is the lower-cost option. The recommended option is the lower-cost option. The recommended option is the lower-cost option. PROPOSED REGULATORY TEXT Notice is given that the Governor in Council proposes to make the annexed Safe Food for Canadians Regulations pursuant to (a) sections 51 (see footnote a) and 75 of the Safe Food for Canadians Act (see footnote b); (b) section 12 of the Canadian Dairy Commission Act (see footnote c); (c) subsection 18(1) of the Consumer Packaging and Labelling Act (see footnote d); (d) subsection 55(1) (see footnote e) of the Controlled Drugs and Substances Act (see footnote f); (e) subsection 462.3(2) (see footnote g) of the Criminal Code (see footnote h); (f) subsection 19(1) of the Customs Tariff (see footnote i); (g) subsection 5(1) (see footnote j) of the Feeds Act (see footnote k); (h) subsection 30(1) (see footnote l) of the Food and Drugs Act (see footnote m); (i) subsection 64(1) (see footnote n) of the Health of Animals Act (see footnote o); (j) subsection 4(1) (see footnote p) of the Seeds Act (see footnote q); (k) section 32 (see footnote r) of the Canada Agricultural Products Act (see footnote s); (l) sections 3 (see footnote t) and 12 of the Fish Inspection Act (see footnote u); and (m) section 20 (see footnote v) of the Meat Inspection Act (see footnote w). Interested persons may make representations concerning the proposed Regulations within 90 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Richard Arsenault, Executive Director, Domestic Food Safety Systems & Meat Hygiene Directorate, Canadian Food Inspection Agency, 1400 Merivale Road, Tower 1, Ottawa, Ontario K1A 0Y9 (tel.: 613-773-6156; email: [email protected]). Ottawa, December 15, 2016 Jurica Čapkun Assistant Clerk of the Privy Council Safe Food for Canadians Regulations PART 1 Interpretation Definitions 1 (1) The following definitions apply in these Regulations. Act means the Safe Food for Canadians Act. (Loi) brine pack or packed in brine, in respect of a processed fruit or vegetable product, means that the product is in a package in which a water and salt solution is used as the liquid packaging medium, with or without the addition of sugar. (conservé dans la saumure ou mis en conserve dans la saumure) carcass means the body of a dead animal. (carcasse) case, in respect of eggs, means a package that is intended to contain 30 dozen eggs. (caisse) catch-weight food means food that, because of its nature, cannot normally be portioned to predetermined fixed quantities and is, as a result, usually sold in containers of different quantities. (aliment à poids variable) close proximity, in respect of an item of information that is shown on a label, means immediately adjacent to the item of information and without any intervening printed, written or graphic matter. (à proximité) commercial sterility means the condition of a food that has been subjected to a thermal treatment, alone or in combination with other treatments, to render the food free from viable forms of micro-organisms, including spores, that are capable of growing in the food at temperatures at which the food is intended to be normally kept during storing, conveying and selling. (stérilité commerciale) common name, with reference to a food, means (a) the name of the food that is printed in boldface type, but not in italics, in the Standards of Identity Document or in any of sections 252 to 254; (b) the name of the food that is printed in boldface type, but not in italics, in a provision of the Food and Drug Regulations; or (c) in any other case, the name by which the food is generally known or that identifies its function. (nom usuel) Compendium means the document entitled Canadian Grade Compendium, prepared by the Agency and published on its website, as amended from time to time. (Recueil) condemn means to identify a food animal, its carcass, the parts of its carcass or its blood as inedible following a determination by an inspector to that effect. (condamner) consumer prepackaged, in respect of a food, means packaged in a container in the manner in which the food is ordinarily sold to or used or purchased by an individual — or in which the food may reasonably be expected to be obtained by an individual — without being repackaged, to be used for non-commercial purposes. (de consommation préemballé) container means an outer receptacle or covering that is used or to be used in connection with a food. It includes a wrapper and a confining band but does not include a conveyance or any container that is an integral part of a conveyance. (contenant) contaminated, in respect of a food, means that the food, among other things, (a) contains a chemical, drug, food additive, heavy metal, industrial pollutant, ingredient, microbe, pest control product, poison, toxin or other substance that is not permitted under, or that is in excess of limits or levels provided under, the Food and Drugs Act; (b) contains a micro-organism, chemical substance or extraneous material that is in excess of levels set out in the document entitled Biological, Chemical and Physical Standards for Food, prepared by the Agency and published on its website, as amended from time to time; or (c) contains anything that is inedible or has come into contact with anything that might cause the food to become inedible. (contaminé) cured, in respect of an edible meat product, means that salt and at least 100 p.p.m. of sodium nitrite, potassium nitrite, sodium nitrate or potassium nitrate, or any combination of them, has been added to the meat product. (saumuré) dairy product means milk or a food that is derived from milk, alone or combined with another food, and that contains no oil and no fat other than that of milk. (produit laitier) dress means to dress a carcass in accordance with subsection 144(1). (habiller) drug has the same meaning as in section 2 of the Food and Drugs Act. (drogue) dye mark means an ink mark that consists of the word “dyed” or “teint” or a deposit of ink that is applied to an egg’s shell by the holder of a licence to grade eggs. (marque de teinture) egg means an egg of a domestic chicken of the species Gallus domesticus or, in respect of a processed egg product, means that egg or an egg of a domestic turkey of the species Meleagris gallopavo. It does not include a balut. (œuf) egg carton means a package that is capable of being closed and that is intended to contain not more than 30 eggs in separate compartments. (boîte à œufs) eviscerate means (a) in respect of the carcass of a bird, other than an ostrich, rhea or emu, to remove the respiratory, digestive, reproductive and urinary systems, with or without the kidneys, and the other thoracic and abdominal organs; and (b) in respect of any other carcass, to remove the respiratory, digestive, reproductive and urinary systems, except the kidneys, and the other thoracic and abdominal organs. (éviscérer) Fees Notice means the document entitled Canadian Food Inspection Agency Fees Notice, published by the Agency on its website, as amended from time to time. (Avis sur les prix) fish includes shellfish, crustaceans and other marine animals, and any of their parts, products and by-products. (poisson) food has the same meaning as in section 2 of the Food and Drugs Act. (aliment) food additive has the same meaning as in subsec- tion B.01.001(1) of the Food and Drug Regulations. (additif alimentaire) food animal means a bird or mammal, other than a marine mammal, from which an edible meat product may be derived. (animal pour alimentation humaine) fresh fruit or vegetable means a fresh plant or fresh edible fungus, or part of such a plant or fungus, that is a food. It does not include a food referred to in subparagraph 9(2)(c)(i). (fruit ou légume frais) game animal means a wild animal that is a food animal — including an animal that lives in an enclosed territory under conditions of freedom similar to those of wild animals — that is hunted under a licence issued by a province. (gibier) gelling agent has the same meaning as in subsection B.01.001(1) of the Food and Drug Regulations. (agent gélatinisant) heavy pack, in respect of a processed fruit or vegetable product, means a package in which the minimum amount of water required for proper processing of the product is used as the liquid packaging medium. (conserve épaisse) hermetically sealed package means a package that is designed to be and is secure against the entry of micro-organisms, including spores. (emballage hermétiquement scellé) inedible, in respect of a food, means that the food is not fit for use as food. (non comestible) licence means a licence that is issued under paragraph 20(1)(a) or (b) of the Act. (licence) maple product means a food that is obtained exclusively by the concentration of maple sap or maple syrup. (produit de l’érable) maple sap means sap that is obtained exclusively from trees of the genus Acer. (sève d’érable) meat means the edible part of the carcass of a food animal, that is, the muscle associated with the skeleton, tongue, diaphragm, heart, gizzard or mammalian oesophagus, with or without accompanying and overlying fat, together with those parts of the bones, skin, sinews, nerves, blood vessels and other tissues that normally accompany the muscle and are not normally removed in dressing a carcass. It does not include the muscles associated with the lips, snout, ears or scalp, mechanically separated meat or meat to which an ingredient other than meat has been added. (viande) meat by-product means the edible blood of a food animal or an edible organ or tissue that is derived from the carcass of a food animal. It does not include meat or mechanically separated meat. (sous-produit de viande) meat product means the carcass of a food animal, the blood of a food animal or a product or by-product of its carcass, and any other food that contains the blood of a food animal or a product or by-product of its carcass. It does not include (a) gelatin, bone meal, collagen casing, hydrolyzed animal protein, monoglycerides, diglycerides or fatty acids; or (b) any food that contains a meat product in an insignificant quantity, having regard to the nature of the food and of the meat product. (produit de viande) mechanically separated meat means an edible meat product that is obtained by removing most of the bone and cartilage from a comminuted meat product from which the bone and cartilage was not previously removed and that does not contain more than 0.027% calcium for every 1% protein or any bones or bone fragments larger than 2 mm. (viande séparée mécaniquement) metric unit means a unit of measurement set out in Schedule I to the Weights and Measures Act. (unité métrique) organic product means a food commodity that has been certified as organic either under subsection 342(1) or as described in subparagraph 354(1)(a)(ii). (produit biologique) ornamental container means a container that, except on the bottom, does not bear any advertising material, other than a trade-mark or common name, and that, because of any design appearing on its surface or because of its shape or texture, is sold as a decorative item in addition to being sold as the container of a food. (contenant décoratif) poultry carcass means the carcass of a slaughtered turkey, duck, goose, guinea fowl or bird of the species Gallus domesticus. (carcasse de volaille) prepackaged, in respect of a food, means packaged in a container in the manner in which the food is ordinarily sold to or used or purchased by a person. (préemballé) President means the President of the Agency. (président) principal display panel means (a) in the case of a consumer prepackaged food whose container is mounted on a display card, the part of the label that is applied (i) to all or part of the principal display surface, (ii) to all or part of the surface of the display card that is displayed or visible under customary conditions of sale or use, or (iii) to all or part of both of those locations; (b) in the case of a consumer prepackaged food whose container is an ornamental container, the part of the label that is applied (i) to all or part of the bottom of the container, (ii) to all or part of the principal display surface, or (iii) to all or part of a tag that is attached to the container; (c) in the case of a consumer prepackaged food whose container is not described in paragraph (a) or (b), the part of the label that is applied to all or part of the principal display surface; (d) in the case of a prepackaged food other than a consumer prepackaged food, the part of the label (i) that is applied or attached to all or part of the surface of the container that is displayed or visible under customary conditions of sale or use, or (ii) if the container does not have such a surface, that is applied to any part of the container, except the bottom, if any; or (e) in the case of a food that is not a prepackaged food, the part of the label that is applied or attached to all or part of the surface of the food that is displayed or visible under customary conditions of sale or use. (espace principal) principal display surface, in respect of the container of a consumer prepackaged food, means (a) if the container has a surface that is displayed or visible under customary conditions of sale or use, the total area of that surface, excluding the top, if any; (b) if the container has a lid that is the part of the container that is displayed or visible under customary conditions of sale or use, the total area of the top surface of the lid; (c) if the container does not have a particular surface that is displayed or visible under customary conditions of sale or use, 40% of the total surface area of the container, excluding the top and bottom, if any, if it is possible for that 40% to be displayed or visible under customary conditions of sale or use; (d) if the container is a bag with surfaces of equal dimensions, the total area of one of the surfaces; (e) if the container is a bag with surfaces of different dimensions, the total area of one of the largest surfaces; (f) despite paragraphs (a) to (e), if the container does not have a surface that is displayed or visible under customary conditions of sale or use on which a label can be applied, the total area of one side of a tag that is attached to the container; (g) despite paragraphs (a) to (e), if the food is wine that is exposed for sale, any part of the surface of the container, excluding its top and bottom, that can be seen without having to turn the container; and (h) if the container is a wrapper or confining band that is so narrow in relation to the size of the food it contains that it cannot reasonably be considered to have any surface that is displayed or visible under customary conditions of sale or use, the total area of one side of a tag that is attached to the container. (principale surface exposée) processed egg product means any food for which a standard is set out in Volume 2 of the Standards of Identity Document. (produit d’œufs transformés) processed fruit or vegetable product means any food (a) for which a standard is set out in Volume 4 of the Standards of Identity Document; (b) for which a grade is established in Volume 3 of the Compendium; (c) that is set out in any of items 2 to 11, column 1, of Table 3 of Schedule 3 or in column 1 of Table 4, 5 or 6 of that Schedule; or (d) to which Division 3 of Part 10 applies. (produit de fruits ou de légumes transformés) ready-to-eat, in respect of a meat product, means that it has been subjected to a treatment or process that is sufficient to inactivate vegetative pathogenic micro-organisms or their toxins and control spores of food-borne pathogenic bacteria so that the meat product does not require further preparing before consumption except washing or thawing or exposing it to sufficient heat to warm it without cooking it. (prêt à manger) refrigerated, in respect of a food, means that it is exposed to a temperature of 4°C or less, without being frozen. (réfrigéré) sanitary conditions means conditions or circumstances that do not present a risk of contamination of a food. (conditions hygiéniques) shellfish means a bivalve mollusc of the class Bivalvia or a carnivorous marine mollusc of the class Gastropoda, or any product that is derived from one of those molluscs. (mollusque) solid pack, in respect of a processed fruit or vegetable product, means a package in which the fruits or vegetables have been partially or wholly precooked before processing so as to allow the fruits or vegetables to pack closely with the minimum amount of free liquid. (conserve compacte) Standards of Identity Document means the document entitled Canadian Standards of Identity, prepared by the Agency and published on its website, as amended from time to time. (Document sur les normes d’identité) tray, in respect of eggs, means a package, other than an egg carton, that is intended to contain not more than 30 eggs in separate compartments. (plateau) vacuum pack, in respect of a processed fruit or vegetable product, means in a package in which a minimum amount of liquid packaging medium is used and in which a vacuum is created mechanically. (conservé sous vide) wine means an alcoholic beverage that meets the standard set out in section B.02.100 of the Food and Drug Regulations. (vin) Foreign state (2) For the purposes of these Regulations, a reference to “foreign state” includes a reference to a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act. Terms used in documents incorporated by reference (3) For the purpose of the incorporation by reference into these Regulations of any documents prepared by the Agency, terms that are used but not defined in those documents have the same meaning as in these Regulations. Definition prepare — producing 2 (1) Subject to subsection (2), for the purpose of the definition prepare in section 2 of the Act, producing, including growing and harvesting, is a prescribed activity. Exception (2) In Parts 1 to 10, 12 and 13, the activity prescribed under subsection (1) is limited, for any food commodity other than an organic product, to the growing or harvesting of fresh fruits or vegetables. Documents — official languages 3 For greater certainty, any document that is required under these Regulations to be prepared, kept or maintained must be prepared, kept or maintained in at least one official language. Clarification — “prepackaged” 4 For greater certainty, a reference to “prepackaged” in respect of a food is, unless otherwise provided, a reference to a consumer prepackaged food and to a prepackaged food other than a consumer prepackaged food. PART 2 Trade DIVISION 1 General Subsection 10(1) of Act 5 (1) For the purpose of subsection 10(1) of the Act, the prescribed food commodity that it is prohibited to send or convey from one province to another — or to import or export — except in accordance with these Regulations is any food commodity. Subsection 10(2) of Act (2) For the purpose of subsection 10(2) of the Act, the prescribed food commodity that it is prohibited to import without a licence is a food other than a food referred to in any of paragraphs 9(2)(a) to (c). Subsection 10(3) of Act (3) For the purpose of subsection 10(3) of the Act, the prescribed food commodity that it is prohibited to send or convey from one province to another — or to import or export — unless it meets the requirements of these Regulations is any food commodity. Section 12 of Act 6 For the purpose of section 12 of the Act, the prescribed food commodity that it is prohibited to have in one’s possession for the purpose of sending or conveying from one province to another — or for the purpose of exporting — unless it meets the requirements of these Regulations is any food commodity. Subsection 13(1) of Act 7 (1) For the purpose of subsection 13(1) of the Act, the prescribed food commodity that is to be exported or to be sent or conveyed from one province to another is any food commodity and the prescribed activities that it is prohibited to conduct in respect of that food commodity, except in accordance with these Regulations, are (a) manufacturing, preparing, storing, packaging and labelling; and (b) if the food commodity is an organic product, in addition to the activities set out in paragraph (a), advertising and conveying. Subsection 13(2) of Act (2) For the purpose of subsection 13(2) of the Act, the prescribed food commodities that are to be exported or to be sent or conveyed from one province to another are a food, other than a food referred to in paragraph 9(2)(a) or (b), and a food animal and the prescribed activities that it is prohibited to conduct in respect of those food commodities without a licence are (a) in the case of a food, (i) manufacturing, processing, treating, preserving, grading, packaging and labelling, other than (A) the packaging of fresh fruits or vegetables in the field by a person who grows or harvests them if they are to be sent or conveyed from one province to another to be subsequently manufactured, processed, treated, preserved or graded by a licence holder, and (B) the packaging and labelling of a food refe