Canada Gazette, Part I, Volume 154, Number 10: Canadian Pork Promotion and Research Agency Proclamation

March 7, 2020

Statutory authority
Farm Products Agencies Act

Sponsoring agency
Farm Products Council of Canada

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Proclamation.)

Issues

The Canadian Pork Council’s (CPC) current system for supporting promotion and research through a patchwork of efforts at the provincial level is inefficient and ineffective at both the national and international levels. In addition, the increasing complexity of the issues impacting the sector, their interwoven nature and new marketing opportunities, as well as the escalating cost of addressing them, means that a more strategic, coordinated and national approach is required. This approach is achievable by establishing a national promotion and research agency (the Canadian Pork Promotion and Research Agency) under Part III of the Farm Products Agencies Act (FPAA).

The Canadian Pork Council (CPC) submitted a proposal to establish the Canadian Pork Promotion and Research Agency in 2015. Following the review process defined under Part III of the FPAA, the Farm Products Council of Canada (FPCC) held public consultations, received written comments, assessed the level of support of producers and importers, and evaluated the proposal. Following this extensive review process, ensuring that the proposal met all criteria needed to establish the Canadian Pork Promotion and Research Agency under the FPAA, the FPCC prepared a report on the proposal to establish a national pork promotion and research agency.

Background

Following a period of low market returns between 2007 and 2011, the Canadian hog industry underwent a significant downsizing in terms of the number of producers, the size of the total national herd and production. However, although the industry has seen a stabilization in production levels, market returns remain volatile. Nevertheless, the industry remains resilient and stabilized to a level that can support producer and domestic slaughter capacity.

Hog farming is important across the country, it is the fifth-largest agriculture sector in Canada following canola, beef cattle, wheat and dairy in terms of farm cash receipts. Farm cash receipts for hogs reached $4.1 billion in 2018, and Quebec, Ontario and Manitoba are the major hog producing provinces.

Over the last 30 years, the production of hogs has become very specialized; the number of farms producing hogs has fallen, while herd size has increased after several years of decline. However, most hog producers are small-scale, with 52% rearing fewer than 77 pigs per farm.

Pork products move along the industry’s supply chain to reach Canadian consumers from producers and processing plants to food services and retail enterprises. Canadian hogs and pork products are also exported to over 90 countries, with the United States being the major market served. In 2018, live hog and pork exports were valued at $4.3 billion, while imports were around $1.3 billion. Imported pork cuts and other products represented 10.0% of the Canadian supply in 2018. Imported pork products averaged 28.5% of pork consumption in Canada over the last five years.

The FPAA allows for the creation of the Canadian Pork Promotion and Research Agency with the authority to collect national levies on domestic and imported farm products to provide funds for its promotion and research activities. The Beef Cattle Research, Market Development and Promotion Agency is currently the only national promotion and research agency in operation. The levy is used for funding promotion and research as a means to grow markets, and improve productivity and quality in order to develop the sector. The FPAA matches the equivalent U.S. law under which a number of Canadian farm products, including hogs and pork, are levied when imported into the United States.

The creation of the Canadian Pork Promotion and Research Agency provides an effective tool to contribute to the Canadian government’s priorities, by fostering economic growth in the agri-food industries through support for agricultural science research, innovation and promotion. The Canadian Pork Promotion and Research Agency will help organize producers and industry to fund activities to equip them to face the challenges of competing in domestic and international markets.

Changes in the industry have focused provincial activities to a local or regional perspective. Currently, provincial research is focused on ways to reduce the cost of production in the local area or improve sector competitiveness. Provincial promotion activities usually consist of branding of the provincial organization and recipe information for the local area. While these activities have merit, a marketing approach with a focus on improving attitudes toward the healthfulness of pork products, through dieticians and other public opinion influencers, is better coordinated at a national level. Research to reduce cost of production would remain a priority, however additional research can be explored on various topics such as understanding consumer attitudes toward pork, differentiating the product as well as preparedness for animal health and disease challenges. These activities can be better facilitated at a national level and designed to have a broad application.

The Canadian Pork Promotion and Research Agency would also enable pork producers from all provinces to better compete in the international marketplace, where major producing countries have more resources to promote their products. The Canadian Pork Promotion and Research Agency would be better positioned to verify that the quality, taste and reliability of Canadian pork products meet consumer expectations, and determine where adjustments must take place. The pork industry sees further opportunity in Canada’s domestic market as well as in overseas markets such as Europe, following ratification of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA); Asia Pacific, through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes Japan; and China, over the next few years. However, each of these particular markets has its challenges that the industry needs to overcome to increase sales. In addition to consumer issues, the market access challenges include the responsible use of antibiotics, including reducing their use where possible; demonstrating the non-use of certain feed additives; and the elimination of certain production practices. As these major projects are costly, national pooling and leveraging of resources are essential.

Building public trust is important to the future of the Canadian pork industry. It is evolving as a major national and international concern, with increasing demands from consumers and retailers for transparency and changes to production practices in areas such as sow confinement and antibiotic use. Actions must be taken to maintain and increase the confidence and trust consumers have in the food production system. The proposed structure of the Canadian Pork Promotion and Research Agency’s board and its mandate can help the industry and its stakeholders establish a positive dialogue with consumers. Leadership at a national level from the Canadian Pork Promotion and Research Agency would eliminate the duplication of efforts, and unnecessary costs, and increase access to the best technical support. A national agency is best suited to lead these innovations in the sector and coordinate the implementation of national standards, programs, research and promotion efforts based on market signals and consumer expectations.

By encouraging producer groups to become directly involved in financing the promotion and research of their products, the Canadian Pork Promotion and Research Agency can leverage provincial and federal funding for research. To ensure that the Canadian Pork Promotion and Research Agency delivers on its promotion and research plan, the FPCC plays an oversight role in reviewing its annual business plan and budget. The Canadian Pork Promotion and Research Agency also is required to report annually to Parliament through the Minister of Agriculture and Agri-Food.

The Proclamation provides the authority for the Canadian Pork Promotion and Research Agency to establish a subsequent levy order to collect a national levy on domestic production that would be uniform, equitable and stable. In addition, an equivalent levy, if approved by the FPCC, applied to imported live hogs, pork and pork products, would contribute significantly to the proposed Canadian Pork Promotion and Research Agency’s funds and programs. Potential impacts of the proposed levy have been reviewed during the FPCC panel inquiry on the request to establish the Canadian Pork Promotion and Research Agency, and will be taken into account by the FPCC when considering its approval of the levy.

Importers and other members of the value chain would be represented on the Canadian Pork Promotion and Research Agency’s Board, together with producer representatives. This industry board would direct and oversee the allocation of more stable funding to priority promotion and research projects, as described in the Canadian Pork Promotion and Research Agency’s Promotion and Research Plan. Projects would be national in scope, with coordination among provincial boards as required.

A national effort on promotion and research would contribute to better targeted priorities, as well as improve the dissemination of positive results faster and more efficiently to members of the pork supply chain. Benefits would also be seen in the increased ability to address producer and importer views, concerns and ideas related to the sector’s promotion and research activities.

It is foreseen that the level of collaboration and cooperation among industry stakeholders (i.e. producers, processors, importers, exporters, distributors and retailers) would be significantly higher as would be the ability to more quickly identify and adopt sector innovations through enhanced provincial outreach efforts. This greater level of coordination would enable the industry to address priorities, such as African swine fever preparedness, without relying on government funds. In addition, this could mean more effective and efficient communication and responses from the industry during government consultations on programming or when dealing with challenges.

Objective

The objective of this regulatory proposal is to create the Canadian Pork Promotion and Research Agency to

Description

The Canadian Pork Promotion and Research Agency Proclamation

Regulatory development

Consultation

The FPCC established a panel of two Council members, as provided for under the FPAA, to lead the inquiry into the application by the Canadian Pork Council for the creation of the Canadian Pork Promotion and Research Agency. The panel provided an opportunity for all stakeholders to take part in its consultation to evaluate the Canadian Pork Council’s proposal and the merits of establishing the Canadian Pork Promotion and Research Agency under the FPAA. A public notice was published in the Canada Gazette on October 3, 2015, as required by the FPAA. The notice gave the purpose and scope of the hearings. The FPCC notice was also advertised in national and regional newspapers and farm journals across Canada. Public hearings were conducted to solicit input from stakeholders.

Two public hearings were held: one on January 19, 2016, in Calgary, Alberta, and one on February 16, 2016, in Montréal, Quebec. During those hearings, a majority of interveners strongly voiced their support for the establishment of the Canadian Pork Promotion and Research Agency. Among them were representatives from the Saskatchewan Pork Development Board, the Alberta Pork Producers, the Prairie Swine Health Services, the Canadian Meat Council, Canada Pork International (CPI), Swine Innovation Porc, and Les éleveurs de porc du Québec. The Canadian Meat Council (meat packers) and Canada Pork International (pork exporters), each of which has some of the major importers of pork and pork products by volume in its membership, indicated their support for the Canadian Pork Promotion and Research Agency. In Canada, pork importers are concentrated in Central Canada, with 49% of the 497 recorded importers in 2018 being based in Ontario and 20% in Quebec, with volume shares of the total pork imports of 217 million kg, of 61% and 20%, respectively. In Western Canada, 15% of the nation’s pork importers are based in British Columbia and 9% in Alberta, with volume shares of the total pork imports of 5% and 9%, respectively.

The Canadian Pork Council did demonstrate through letters of support from all provincial pork organizations representing all registered pork producers in each province, together with evidence from reports of regular meetings and motions taken at some provincial boards, that few producers were opposed to the proposal.

During the public hearing process, a few interveners voiced their concerns about the establishment of the Canadian Pork Promotion and Research Agency. No identified importers voiced their opposition to this proposal. The Retail Council of Canada (RCC) presented its objection, stating that some of its members were importers. The RCC indicated that cost implications were of concern. Retailers were concerned that the levy would be added to their costs, so could affect sales and their margins. With respect to its concern regarding importer data, the RCC was reassured by the proponent that no confidential data would be handled by the Canadian Pork Promotion and Research Agency. Another of its concerns was its doubt that the investment made would yield significant results. The proponent pointed to the positive return on investment studies done by the beef agency in Canada as well the pork and other similar agencies in the United States.

The Canadian Association of Importers and Exporters (IE Canada) reported at the hearing that it organized a teleconference on the proposed Canadian Pork Promotion and Research Agency open to its 150 members in the food sector. Of the 14 members that participated, 2 large pork importers were in favour. Retailers and small-scale importers that participated were opposed due to the pressure to deal with an additional cost because of the levy, at a time when food prices and the economy were under strain.

With respect to the impact of the proposed levy on costs and sales, the FPCC panel concluded that the effect of an import levy on Canadians would be marginal. An import levy of $0.75 per head, if approved by the FPCC, and fully passed on to consumers, would increase pork costs to the average Canadian by 6¢ per year, based on 22 kg annual per capita consumption. In response to these concerns, especially with respect to small-scale importers, the proposed Canadian Pork Promotion and Research Agency will explore the establishment of a threshold import level, below which the import levy will not be charged.

Other comments received in the form of written letters and emails were mostly from members of the public concerned for the humane treatment of animals and the environmental impacts of agriculture. These comments were not directly related to the establishment of a national pork promotion and research agency.

The Canadian Pork Council has entered into a dialogue with stakeholders of the pork value chain since the public hearings in January 2016, and believes that discussions have been productive and provided an opportunity to review the proposal to create the Canadian Pork Promotion and Research Agency, consider stakeholders’ concerns and assess how it would benefit the entire pork value chain, including importers and retailers. During these discussions, special attention was given to the need to demonstrate a return on investment to the stakeholders, the additional cost to consumers and data security concerns, as well as expanding participation on the Canadian Pork Promotion and Research Agency’s Board to other members of the pork value chain.

The Canadian Pork Council is also addressing concerns raised during the FPCC public hearing process regarding the representation from the import community on the board of the Canadian Pork Promotion and Research Agency, which was proposed as being 1 elected importer and 10 producer representatives. The Canadian Pork Council’s Board of Directors has requested that the composition of the Canadian Pork Promotion and Research Agency Board of Directors be adjusted to one producer representative from each of the nine provinces collecting the national levy (9 members), a representative from the import community (1 member) and two members-at-large, representing other sectors of the pork value chain (2 members). The Retail Council of Canada and IE Canada will be able to present nominees for consideration for the importer and member-at-large positions on the Board of Directors.

The FPCC panel, which led the inquiry into the application by the Canadian Pork Council, found that there was significant support from importers and much less demonstrated opposition. The panel was also satisfied that the level of support was sufficient to meet the requirement of the FPAA to have the majority of the aggregate of the producers and importers in support (5 898 producers and 27 importers in favour within an aggregate of 6 260).

Modern treaty obligations and Indigenous engagement and consultation

This proposal will have no disproportionate impact on Indigenous peoples.

Instrument choice

The FPCC has determined that to proclaim the Canadian Pork Promotion and Research Agency, and subsequently to establish a levy order to develop its funding, as provided under Part III of the FPAA, is the best approach as the current system to support promotion and research through a patchwork of efforts at the provincial level is inefficient and ineffective at the national and international level. The increasing complexity of the issues impacting the pork sector and the need to expand markets, as well as the escalating costs involved in research and promotion, require a more strategic, coordinated and national approach, which can be facilitated through the creation of the Canadian Pork Promotion and Research Agency.

Regulatory analysis

Benefits and costs

The activities of the Canadian Pork Promotion and Research Agency are expected to have several benefits. The Canadian Pork Promotion and Research Agency aims to carry out activities focusing on funding research and the distribution of information to producers, market actors and consumers to generate higher sales and greater productivity, enhance marketability and strengthen confidence and trust in the pork sector. It will also improve the production efficiency, economic returns and competitiveness of pork in domestic and foreign markets due to increased and better market-targeted animal science and technical research.

Furthermore, the Canadian Pork Promotion and Research Agency will support promotional campaigns and better align research projects that can improve the industry’s long-term sustainability and contribution to the growth of the Canadian economy.

The proclamation of the Canadian Pork Promotion and Research Agency creates no costs to the Government of Canada given that the Canadian Pork Promotion and Research Agency’s activities and associated costs will be covered by the subsequent levy order.

Small business lens

The establishment of the Canadian Pork Promotion and Research Agency will have implications for small producers and small importers of pork and pork products. Based on the definition of small business (fewer than 100 employees or less than $5 million in annual gross revenues) from the Policy on Limiting Regulatory Burden on Business, the vast majority of all pork producers qualify as a small business. These producers are members of the Canadian Pork Council and support the creation of the Canadian Pork Promotion and Research Agency as a means of helping them improve their productivity and returns through growing markets and developing procedures to deal with disease and quality challenges. For the small importers that are concerned about the estimated additional cost of 1¢/kg from the levy on imports affecting their business plans, in the development of the subsequent levy order, the Canadian Pork Promotion and Research Agency can consider ways to reduce this burden through establishing a minimum threshold volume or value below which the levy does not apply, or adjusting the frequency of levy payments to accommodate different situations. This will ensure that small importers do not unnecessarily bear a disproportional burden when complying with the levy order.

One-for-one rule

The one-for-one rule applies to this proposal. Although there is no increase, or decrease, in administrative burden, this Proclamation will create one new regulatory title.

Regulatory cooperation and alignment

The creation of the Canadian Pork Promotion and Research Agency allows for the alignment of provincial levies in the nine member provinces covering intraprovincial trade with the national levies on interprovincial and import trade. This will permit pooling of funds for national-level promotion and research activities and distribution of funds to provinces for their components of these national projects as well as for specific provincial-level activities. A series of Memoranda of Understanding (MOUs) with each province will be drawn up to facilitate such regulatory cooperation.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

Implementation

This Proclamation will come into force upon registration.

Within three months of the Proclamation, an interim board for the Canadian Pork Promotion and Research Agency, set up by the Canadian Pork Council, would nominate the Canadian Pork Promotion and Research Agency’s first board of directors, as per the requirements of its Proclamation order. The Canadian Pork Promotion and Research Agency would then develop its business plan and budget for its first year of activities, which would be submitted to the FPCC for review. The Canadian Pork Promotion and Research Agency would then have to file a request to the FPCC for development and approval of the levy order and subsequent collection of the levies to fund its planned activities.

The Canadian Pork Promotion and Research Agency would also prepare and sign MOUs, or other appropriate agreements, with each provincial pork board to cover the terms and obligations for levy collection and promotion and research activities. In most cases, the intra-provincial levy will continue to be collected and a portion remitted to the Canadian Pork Promotion and Research Agency for its national activities. Another MOU would be signed with Agriculture and Agri-Food Canada with regard to data collection in order to collect a levy on pork and pork product imports. Pursuant to section 27 of the FPAA, the Canadian Pork Promotion and Research Agency must conduct its operations on a self-sustaining financial basis.

In addition to hiring an auditor for a mandatory yearly financial audit, the Canadian Pork Promotion and Research Agency would present its business plan, including a budget, and report on its activities to the FPCC every year. Pursuant to paragraph 7(1)f) of the FPAA, stakeholders affected by the actions of the Canadian Pork Promotion and Research Agency may file a complaint with the FPCC.

Proposed levy

As stated in the FPAA, once proclaimed, the Canadian Pork Promotion and Research Agency would submit a request for a levy order to the FPCC for review and approval. The FPCC members, who are all appointees of the Governor in Council, would vote on the proposed levy order. A vote of approval would lead to the levy order being published in the Canada Gazette, thus rendering it effective.

Contact

Carole Gendron
Director
Regulatory and Sectoral Affairs
Farm Products Council of Canada
Central Experimental Farm, Building 59
960 Carling Avenue
Ottawa, Ontario
K1A 0C6
Telephone: 613‑759‑1562
Fax: 613‑759‑1505
Teletypewriter: 613‑759‑1737
Email: carole.gendron@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to subsection 39(1) footnote a of the Farm Products Agencies Act footnote b, proposes to direct that the Canadian Pork Promotion and Research Agency Proclamation be issued in accordance with the annexed schedule.

Interested persons may make representations concerning the proposed Proclamation within 30 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 Carole Gendron, Director, Regulatory and Sectoral Affairs, Farm Products Council of Canada, Central Experimental Farm, Building 59, 960 Carling Avenue, Ottawa, Ontario K1A 0C6 (tel.: 613‑759‑1562; fax: 613‑759‑1505; email: carole.gendron@canada.ca).

Ottawa, February 27, 2020

Julie Adair
Assistant Clerk of the Privy Council

Canadian Pork Promotion and Research Agency Proclamation

SCHEDULE

Interpretation

1 The following definitions apply in this schedule.

PART 1

Agency

2 The 12 members of the Agency are to be elected by the delegates at the Agency’s Annual General Meeting in the following manner:

3 A member holds office for a one-year term beginning on the last day of the Annual General Meeting at which the member is elected.

4 If a member resigns or dies, the body that nominated the member is to appoint a temporary substitute member to hold office until the next Annual General Meeting, and if a member is unable to act, the body is to appoint a temporary substitute member to act during the period that the member is unable to act.

5 (1) The members of the Agency are, at their first meeting and, subsequently, at the first meeting after each Annual General Meeting, to elect from among themselves a chair and a vice-chair.

(2) If the chair or vice-chair resigns their office, ceases to be members of the Agency or dies, the members of the Agency are, at their next meeting, to elect from among themselves a new chair or vice-chair, as the case may be, to hold office for the balance of the term.

6 The head office of the Agency is to be situated in the city of Ottawa, in Ontario.

PART 2

Terms of the Plan

Promotion and Research

7 The Agency is authorized to

Budget and Business Program

8 (1) The Agency must annually submit to the Council for approval a budget that sets out the costs of the proposed business and activities of the Agency for a 12-month period, a business program that sets out a detailed description of that business and those activities, and all relevant information to make the determination referred to in subsection (2).

(2) The Council must approve the budget and business program if it determines that

Levies and Charges

9 (1) For the purpose of implementation and administration of the plan, the Agency may, by order, impose levies or charges on persons engaged in

(2) An order may group persons into classes, specify the levies or charges, if any, payable by any person of each such class and provide for the manner of collection of the levies or charges.

(3) The Agency must retain moneys received from the levies or charges imposed on persons engaged in the importation of hogs and pork products into Canada in a separate account.

(4) Levies or charges imposed by orders of the Agency that are unpaid 30 days after they are due become a debt payable to the Agency.

(5) The Agency may, with the concurrence of a provincial pork association, appoint that association or any other person to collect on the Agency’s behalf the levies or charges imposed by any order.

(6) Levies or charges referred to in paragraphs (1)(a) and (b) must be fixed at levels that will produce in each year a sufficient return to the Agency to defray its estimated administrative and program costs for the current year.

Cooperation

10 The Agency must take all reasonable steps to promote a high degree of cooperation among its members, each provincial pork association and importers of hogs and pork products into Canada.

Review of the Plan

11 (1) The Agency must hold a meeting within five years after the coming into force of this Proclamation, and every five years after that, for the purpose of reviewing the terms and effectiveness of the Plan and determining whether any modifications are required to facilitate the carrying out of the Agency’s object as described in section 41 of the Act.

(2) Within three months after the date of the meeting referred to in subsection (1), the Agency must file a written report of its review and any recommendations for modifications with the Council.

Section 42 of the Act — Powers

12 Nothing in this Part affects the vesting of powers set out in section 42 of the Act in the Agency.