Regulations Amending the Health of Animals Regulations (Hatchery): SOR/2022-218

Canada Gazette, Part II, Volume 156, Number 23

Registration
SOR/2022-218 October 20, 2022

HEALTH OF ANIMALS ACT

P.C. 2022-1145 October 20, 2022

Her Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to sections 64footnote a and 64.1footnote b of the Health of Animals Act footnote c, makes the annexed Regulations Amending the Health of Animals Regulations (Hatchery).

Regulations Amending the Health of Animals Regulations (Hatchery)

Amendments

1 The Health of Animals Regulations footnote 1 are amended by adding the following after section 71:

Part VIII.1

Hatcheries and Supply Flocks

General

72 The following definitions apply in this Part.

balut
means a fertilized commercial poultry egg containing a partially developed embryo that is intended for human consumption. (balut)
commercial poultry
means poultry that are used for the production of meat, poultry products or by-products — including balut — for human consumption or for breeding to produce commercial poultry, but does not include poultry that are kept for any other reason, including poultry that are kept, bred or sold as pets or for use in shows, races, exhibitions or competitions. (volaille commerciale)
supply flock
means a primary breeding flock of commercial poultry, or a flock that is descended from a such a flock, that produces eggs or chicks that are supplied to a hatchery. (troupeau fournisseur)
Testing Standards
means the Canadian Hatchery and Supply Flock Testing Standards, prepared by the Agency and published on its website, as amended from time to time. (Normes d’épreuves)

Hatchery Licensing Requirements

72.1 This Part applies to a hatchery that

72.2 No person shall operate a hatchery except in accordance with a licence that is issued by the Minister under section 160.

72.3 (1) A licence expires two years after the date of issuance or renewal that is specified in it, unless the licence is revoked before that date.

(2) A licence is revoked if the licence holder ceases operation of the hatchery for 12 consecutive months or surrenders the licence.

72.4 (1) A hatchery operator shall prepare, keep and maintain a written preventive control plan as a condition of their licence.

(2) The hatchery operator shall implement their preventive control plan.

(3) The preventive control plan shall include a description of the measures that have been or are to be implemented by the hatchery operator in order to mitigate the risk of introduction and spread of the biological hazards set out in Part I of the Testing Standards and to control and eliminate those hazards, in relation to the following elements:

72.5 (1) A hatchery operator shall meet the requirements set out under the following headings of the Code of Practice for the Care and Handling of Hatching Eggs, Breeders, Chickens and Turkeys, published by the National Farm Animal Care Council, as amended from time to time, that are applicable to the species of poultry they are incubating:

(2) The hatchery operator shall include in their preventive control plan a description of the measures that they have implemented or will implement to meet the requirements referred to in subsection (1).

Testing Requirements

72.6 (1) A hatchery operator shall conduct sampling and testing in accordance with Part I of the Testing Standards to monitor the sanitation of the hatchery during periods of operation and for the presence of diseases.

(2) The hatchery operator shall keep a record of the results of sampling and testing conducted in the hatchery.

Supply Flocks

72.7 A hatchery operator shall obtain all eggs from a supply flock operator that

Animal and Product Identification

72.8 (1) A hatchery operator shall ensure that

(2) Subsection (1) does not apply if the box or other package is accompanied by an invoice or other document that specifies the information required by paragraph (1)(a) or (b).

Records

72.9 A hatchery operator shall keep and maintain records that include the following information:

2 Sections 79 to 79.2 of the Regulations and the heading before them are repealed.

3 Schedule VI to the Regulations is repealed.

Repeal

4 The Hatchery Regulations footnote 2 are repealed.

Transitional Provision

5 For the one-year period that begins on the day on which these Regulations come into force, any person may, instead of complying with Part VIII.1 of the Health of Animals Regulations, comply with sections 79 to 79.2 of the Health of Animals Regulations and the Hatchery Regulations as they read immediately before that day.

Coming into Force

6 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The regulatory regime governing hatchery and supply flock operators is outdated and has not kept up with evolutionary industry approaches, latest public health risks such as new types of Salmonella, and the regulatory changes of Canada’s key trading partners. Additionally, regulations overseeing hatcheries are organized through three separate regulations and do not cover species consistently.

The existing regulations prescribe testing for Salmonella diseases that do not cause illness in humans and have not been diagnosed in Canadian commercial poultry operations for over 30 years. At the same time, these regulations leave out zoonotic and emerging disease threats (e.g. Salmonella Enteritidis) that cause human illness and are already regulated by other trading partners. As a result, industry is required to carry out an unnecessary level of sampling and testing for diseases that are no longer relevant, while at the same time is following industry-led guidelines for sampling and testing of important zoonotic and emerging threats. Lastly, there are three separate regulations that address requirements for hatchery and supply flock operators resulting in some inconsistencies and potential confusion for industry.

Regulatory amendments are therefore needed to have a more outcome-based regulatory framework that will keep pace with advances in disease concerns, science, and technology. These amendments will provide hatcheries with the flexibility to use new technologies to meet regulatory requirements and to consolidate existing regulations into a single part under the Health of Animals Regulations (HAR).

Description: The regulations will be amended to

  • put all of the animal health requirements pertaining to hatcheries and supply flocks into the HAR to be applied consistently across the breeding and hatching sectors of the poultry industry in Canada;
  • incorporate by reference two documents: one that sets disease and monitoring standards for hatcheries and supply flocks, and one that sets the requirements for the care and handling of poultry, both of which can be updated as required to reflect modern science and technology; and
  • adopt a modernized approach to inspection through the requirement of a preventive control plan (PCP) to verify that industry is identifying and controlling risks and achieving required regulatory outcomes.

Rationale: The poultry hatchery is a critical point of potential disease dissemination (e.g. Salmonella) that can pose a risk to human health and animal health. Regulations that require the development and implementation of sampling and testing for certain diseases are necessary to minimize these risks to the extent possible. Unlike its main trading partners, Canada only has testing requirements in place for limited types of Salmonella. Testing for non-regulated diseases, like Salmonella Enteritidis, has been industry-led and not uniform across all provinces. The amendments will incorporate by reference a document that covers all strains of Salmonella including the ones that can cause illness to humans, with the objective that monitoring, sampling and testing requirements reflect the prevailing public health risks for Salmonella strains of concern in hatchery operations. Additionally, the current regulations are prescriptive in nature, thus hindering industry from adopting new innovations and technologies. Modernizing the regulations will recognize advances in production practices and disease monitoring, and will build in flexibility for industry to adopt new innovations. The amendments will adopt a modernized approach to inspection through the requirement of PCPs to verify that industry is controlling their identified risks and achieving the required regulatory outcomes.

The monetized costs are estimated at a present value of $10.6 million over 10 years. The main drivers for the estimated monetized costs incurred by industry are the development, implementation, and maintenance of PCPs. The monetized benefits are estimated at a present value of $1.1 million over 10 years and are driven by the reduced number of testing samples required for some of the supply flock farms. Overall, a monetized net cost (i.e. costs minus benefits) of $9.5 million (present value) over 10 years is estimated. Flexibilities, such as a one-year transition period, automatic transition from permit to licensing and removing the first licence fee after registration, have been included to assist industry with economic recovery as a result of the COVID-19 pandemic. Costs to the Canadian Food Inspection Agency (CFIA) include licence processing and compliance verification of PCPs. A resource analysis indicates these costs can be covered by existing resources since, for example, CFIA will also no longer perform certain prescriptive activities that were necessary with the old requirements.

Issues

The following issues exist with the current regulations for hatchery.

(1) The current regulations are outdated and contain rigid requirements

The regulations have not kept pace with industry practices, including technological changes and scientific developments, nor do they reflect modern methods for disease control. Regulations with outdated requirements that are too rigid hinder industry from adopting new innovations and technologies. In addition, Canada’s trading partners have updated and implemented programs to keep up with the pace of scientific innovations, as well as with new and emerging strains of Salmonella. However, Canada cannot do the same until its regulations governing hatcheries are updated.

(2) The diseases addressed by the current regulations are limited

The CFIA does not have the authority under the current regulations to develop policy or programs for pathogens like Salmonella Enteritidis. Without requirements for proper control and monitoring mechanisms, there is a risk that such emerging pathogens could contaminate supply flocks, their eggs and then chicks and eggs that would eventually enter into the food chain and could result in public health concerns.

(3) The current regulations do not provide for national consistency

The application of the regulations is inconsistent between provinces and this results in a lack of standardized program nationally. For example, section 79 of the HAR provides that for a flock to be an approved hatchery supply flock, it must be designated as one in accordance with any regulations in force in the province in which the flock is located. Some provincial regulations are more stringent than the federal regulations, while other provinces have less stringent requirements. National consistency in hatchery requirements will promote uniform monitoring and surveillance of diseases of concern (such as Salmonella Enteritidis).

(4) The regulations overseeing hatcheries are organized through three separate regulations and do not cover species consistently

Consolidating all of the federal animal health requirements pertaining to hatcheries and supply flocks into one part of the HAR will provide greater clarity for industry, and will allow hatching sectors of the poultry industry in Canada to apply them consistently.

Background

Hatcheries and industry structure

A hatchery is a place where hatching eggs are incubated and birds are hatched for an intended purpose (e.g. further breeding, to produce table eggs or meat) at another location. Hatching eggs are fertilized poultry eggs that come from breeder birds (also known as supply flocks) for incubation and hatching. These supply flocks are made up of one or more generations (e.g. grandparents, great-grandparents, etc.) of flocks maintained for establishing, continuing, or improving parent lines — the last of which act as the parent breeding flock that produces birds for the food supply (e.g. table eggs and broiler chickens). Commercial poultry production therefore reflects a pyramid, with a few breeding birds at the top, followed by hatcheries supplying chicks (supply flock operators), who then sell them to a large number of producers for meat and table eggs, to then be sold to consumers.

Hatcheries and disease dissemination

Given its place between supply flock operators and processors, the hatchery is a critical point of potential dissemination of diseases (e.g. Salmonella, avian influenza) that are a risk to human health and animal health. In Canada, human health incidences of Salmonella illnesses have steadily increased since 2008. A 2015 study estimates that on a per year basis, Salmonella infections are the cause of 87 500 illnesses, 1 000 hospitalizations, and 17 deaths.footnote 3 Another study estimates the direct annual medical costs of Salmonella infections to be CAN$17 million.footnote 4 Salmonella Enteritidis causes the majority of these Salmonella illnesses in humans; however, it is often undetected in birds and the number of overall infections attributed to hatcheries is not known.

Salmonella Enteritidis can be transmitted vertically, from the hen to chicks through the egg, which means that if present and undetected, it can be transmitted from the breeding flock supplying the grandparent chicken, down to the processed birds, retail level and the consumer (through improper handling or cooking). Salmonella Enteritidis can also be transmitted horizontally from one bird to another through contact with feces, dead carcasses, barn dust, rodents and other pests, as well as through feed contaminated with Salmonella.

It is generally agreed in veterinary communities around the world that the most effective way to limit the transmission of Salmonella diseases like Salmonella Enteritidis is to address risks from the top of the pyramid — breeder birds to hatcheries. Proper surveillance, sampling, and testing are required to mitigate risks throughout the production chain.

Legislative and regulatory context

The federally regulated poultry breeding and hatching production environment begins with supply flocks and ends with day-old chicks. The Health of Animals Act (HAA) governs the regulatory requirements on hatcheries for disease control and production processes. Regulatory requirements are organized through three separate regulations: the Hatchery Regulations, the Hatchery Exclusion Regulations, and sections 79 to 79.2 and Schedule VI of the HAR.

The Hatchery Regulations regulate hatcheries that receive fertile eggs for incubation and produce chicks that enter the food chain or produce products that enter the food chain. The Hatchery Exclusion Regulations exclude certain buildings and premises from the definition of “hatchery” by the number of eggs and type of bird handled. Any buildings or premises that have an incubator capacity of fewer than 1 000 eggs and are not used to store for incubation chicken, turkey, duck, goose, or game bird eggs are excluded from the definition of hatchery.

Sections 79 to 79.2 of the HAR apply to approved hatchery supply flocks, which are limited to chickens and turkeys, and outline their required testing to check for freedom from Salmonella Pullorum and Salmonella Gallinarum. Under the HAR, tests for these diseases must be performed and results immediately reported to CFIA.

None of the above-mentioned regulations contain requirements for balut, which is a fertilized commercial poultry egg containing a partially developed embryo that is intended for human consumption. Therefore, a definition of “balut” in the HAR will provide for more clarity.

International context

Canada is a member of the World Organisation for Animal Health (OIE), an intergovernmental organization responsible for improving animal health worldwide. The OIE sets standards for animal disease prevention and control that members adhere to, in order to facilitate trade. Of particular importance for hatcheries is the OIE Terrestrial Animal Health Code, which contains recommendations for the prevention of dissemination of infectious agents and advocates for a “written biosecurity plan” (e.g. PCP), cleaning and disinfection, and surveillance to detect infectious agents, such as Salmonella Enteritidis. This code is a result of consensus among veterinary authorities of OIE members.

International approaches to disease management for hatcheries and supply flocks are changing. Canada’s main trading partners (i.e. the United States [U.S.] and the European Union [EU]) have recently taken steps to bolster their regulatory regime and programming to enhance Salmonella surveillance. The EU adopted regulations in 2006 that applied to all segments of poultry production, with a strong focus at the top of the pyramid. The U.S. modernized their poultry slaughter inspection standards in 2014 by establishing higher standards for Salmonella.

Objective

The objectives of the regulatory amendments are the following:

Description

Consolidation of the federal animal health requirements

The amendments will modernize requirements relating to hatcheries that exist under three separate sets of regulations (i.e. the Hatchery Regulations, the Hatchery Exclusion Regulations, sections 79 to 79.2 and Schedule VI of the HAR). These regulations will be repealed or amended and will be consolidated into a new part (Part VIII.1) of the HAR. The repeal of the Hatchery Exclusion Regulations, which are ministerial regulations, will occur separately, after the 12-month transitional period provided to hatchery operators at the coming into force of the amendments to the HAR.

A definition of “balut” has been added to the HAR to provide for more clarity because it is a very specific type of egg. The word “balut” is also included in the definition of commercial poultry because this product is consumed as a partially developed embryo and can thus pose health and safety risks that need to be mitigated. Therefore, when the regulations apply to eggs or commercial poultry, they also apply to balut.

Incorporation by reference

The amendments will include the application of ambulatory incorporation by reference of two documents. Incorporation by reference is a drafting technique that may be used to bring the content of an incorporated document into a regulation. Documents incorporated by reference have the same force as the regulation into which they are incorporated. An ambulatory reference refers to the incorporation of a document in such a way as to include any future changes to that document without a need to remake the regulations. The relevant authorities that allow for the use of incorporation by reference are found in section 64.1 of the HAA.

The amendments to the HAR will incorporate by reference two documents, enabling for regular updates to be made to reflect modern science and technology: (1) the Code of Practice for the Care and Handling of Hatching Eggs, Breeders, Chickens and Turkeys (the Code), written and published by the National Farm Animal Care Council; and (2) the Canadian Hatchery and Supply Flock Testing Standards (the Testing Standard), written and published by CFIA.

Modernized approach: Preventive control plans

The amendments will also provide hatcheries with the flexibility to use new technologies to meet regulatory requirements. For example, the HAR will not prescribe the procedures for maintenance, cleaning, and disinfection of equipment, facilities, and materials. Instead, the HAR will support an outcome-based approach by requiring that measures taken to mitigate risks be documented, implemented, and reviewed. Hatchery operators will be required to develop and implement a PCP, and CFIA inspectors will use this information to verify that the implemented approaches are effective. This approach will allow industry to continue to meet regulatory requirements while being agile to incorporate changing science and technology.

The requirement to prepare, implement, and maintain a written PCP will require hatchery operators with a minimum setting capacity of 1 000 eggs (i.e. commercial operators) to identify the specific risks in their operations and describe in writing the actions they have in place to mitigate these risks. Hatchery operators will be required to ensure that their supply flock operators also have a written PCP to address the risk in their operation. Many establishments, including 34% of the hatcheries and 84% of the supply flocks, already have quality control programs that contain many components of the required PCPs. These establishments may only need to modify their current plans to be 100% compliant.

Other jurisdictions and standard-setting bodies strongly recommend written PCPs, referring to them more generally as “biosecurity plans” or “quality control plans.” For example, the National Avian Biosecurity Standard, a program developed by the joint government/industry committee, known as the “Avian Biosecurity Advisory Committee,” advocates for a “written on-farm biosecurity plan regardless of the size or type of facility.” In the province of Ontario, the Ministry of Agriculture, Food and Rural Affairs’ “Biosecurity Fundamentals for Visitors to Livestock Facilities” states that “each farm needs to develop a specific, documented biosecurity plan.” The OIE’s Terrestrial Animal Health Code, referenced earlier, also recommends a “written biosecurity plan.” Canada’s two biggest poultry trading partners (i.e. the U.S. and the EU) require that every poultry farm (e.g. breeders, hatcheries, egg layers, and meat-producing farms) have a written biosecurity plan.

The PCP requirement is new for some operators that do not have a PCP yet in place, including 66% of the hatcheries and 16% of the supply flocks. The PCP will impose a cost for those operators. However, this requirement aims to provide flexibility to industry by allowing hatchery operators to identify risks that are unique to their operation and describing how those risks will be mitigated, in contrast to the current state where requirements are rigid, prescriptive, and not responsive to current and individual operating conditions.

To help hatcheries and supply flock operators create the requisite PCP, CFIA has developed PCP templates for hatcheries and supply flocks and made them available on its website. Additionally, poultry industry associations also have on-farm food safety programs that could be used as references for developing a PCP.

In further detail, the regulatory amendments will require the hatchery operators to comply with the following.

Regulatory development

Consultation

Pre-regulatory consultations

Hatchery operators and supply flock operators are a small group within the poultry industry. There are five major organizations at the national level that are involved in the poultry production environment: the Canadian Hatchery Federation (under the umbrella of the Canadian Poultry and Egg Processors Council) [CPEPC-CHF], the Canadian Hatching Egg Producers (CHEP), the Chicken Farmers of Canada (CFC), the Turkey Farmers of Canada (TFC), and the Egg Farmers of Canada (EFC).

There are 94 regulated hatcheries (as of June 2021):

Between April 2013 and the March 2020 prepublication, CFIA had extensive engagement with its stakeholders on the proposed amendments and on regulatory actions to address gaps in poultry and egg sectors that impact the control of foodborne Salmonella Enteritidis in Canada.

More specifically, since fall 2017, CFIA met with the members of the CHF, breeder farm owners and operators of broiler breeders, turkey breeders and layer breeders on four occasions. These meetings consisted of discussions on CFIA’s stated commitment to prepublish amendments to the HAR, and to repeal the Hatchery Regulations and the Hatchery Exclusion Regulations and the path forward, as well as changes in industry structure and innovation to further inform the amendments.

Industry has repeatedly expressed their support to amend the federal regulations that govern hatcheries. Overall, the response provided by stakeholders has been positive. Industry, in particular, indicated that the proposed amendments are overdue and the consolidation of the three regulations was appropriate.

Pre-regulatory consultation — Independent operators

Independent operators that own or manage hatcheries as well as supply flocks, such as waterfowl and gamebirds represent almost half (42) of the 94 regulated hatcheries. These independent operators are not members of the CHF nor represented by any industry association. They are outside of the supply-managed system.

Prior to prepublication of the regulatory amendments, these independent hatchery operators expressed concerns regarding the costs or burden associated with developing their own PCP, a requirement that did not previously exist for them. All hatchery operators, including the small ones, will now require supply flock providers to have their own PCP in place to ensure the safety of their products. This constitutes the new principal burden for these smaller operators.

Canada Gazette, Part I, consultations

The proposed amendments were prepublished in the Canada Gazette, Part I (CG I), on March 14, 2020, for public comments of 60 days, ending on May 12, 2020. However, the global COVID-19 pandemic coincided with this prepublication and prompted the regulated industry to request an extension of the public comment period, as they had other operational priorities, and they wanted to better grasp the economic uncertainty caused by the global pandemic. As a result, the public comment period was extended by four months, until September 30, 2020, to accommodate these extraordinary circumstances.

During the prepublication of the Regulations Amending the Health of Animals Regulations (Hatchery) in the CG I, CFIA received 72 submissions outlining questions and proposed adjustments to the regulatory text. The responses were submitted through various means of communication, including email, telephone, direct messages through social media, and webinars. These submissions originated from

Throughout the comment period, CFIA noted a broad support from stakeholders on the underlying principles of the regulatory changes, namely

Engagement with all operators

To help operators understand the content and impacts of the regulatory changes, CFIA has

Operators can reach out to either their private poultry veterinarian or their local CFIA inspector for assistance in understanding the concept or the expected content of a PCP.

What we heard

Despite the largely positive reception to the regulatory proposal, stakeholders did voice concerns regarding a few of the proposed items, both before and after prepublication in the Canada Gazette, Part I. CFIA has issued a response to each of these concerns in a “What we heard” report — published on its website. These concerns and the CFIA responses are summarized below.

1. Incorporation by reference

During the CG I consultation period, concerns were raised over the choices of documents to be incorporated by reference rather than the use of incorporation by reference.

As noted, the NFACC Code of Practice for the Care and Handling of Hatching Eggs, Breeders, Chickens, and Turkeys is one of the two documents that will be incorporated by reference into the HAR. This choice of document did not get unanimity among stakeholders, as the Code is written specifically for chickens and turkeys only, and it was not clear how this Code could be applied to other poultry species. However, it is important to note that two other documents were also proposed but did not receive stakeholders’ support.

The first one was the OIE chapter “Biosecurity Procedures in Poultry Production.” Although Canada is a member of the OIE and is consulted during all chapter revisions, there would be no assurance that the comments and suggestions of Canada would be included in the OIE document, as all member countries are also given the opportunity to comment. Concerns were also raised on the document containing provisions as “recommendations” rather than “requirements,” which would make them unenforceable.

The second one was the CFIA’s National Avian On-Farm Biosecurity Standard, which was considered and recommended since this document is written by CFIA in collaboration with industry, but was once again criticized and rejected.

CFIA response

CFIA obtained official permission from the National Farm Animal Care Council to incorporate by reference parts of the requirements in the Code into the regulations. The chapters are written in a universal manner, whereby best management practices can be made applicable to every poultry operation regardless of species.

The second document that will also be incorporated by reference is the Testing Standard. This document presents the classification and testing requirements for hatcheries and supply flocks, explains the testing standards in greater detail and provides further guidelines for disease monitoring, sampling, and response to positive disease isolations.

2. Preventive control plans

Hatchery and supply flock operators expressed concern about the development, implementation and maintenance of a PCP. They were also seeking assurances that their respective quality control program and on-farm food safety programs would be recognized by CFIA as sufficient to meet this new requirement.

CFIA response

Following industry’s response, CFIA communicated to hatcheries that establishments that are recognized through the Food Safety Enhancement Program (FSEP) would satisfy most parts of the requirement for a PCP. Regulated parties would still be required to review their program to make sure that all the required PCP elements are addressed.

To help hatcheries and supply flock operators create the requisite PCP, CFIA has developed PCP templates for hatcheries and supply flocks and made them available on its website. Additionally, poultry industry associations also have on-farm food safety programs that could be used as references for developing a PCP.

3. Independent operators

Independent hatcheries (i.e. those that are not part of the supply-managed industry) commented that the provisions, such as developing and maintaining a PCP, would be onerous for them to comply with. They also commented that the required minimum setting capacity of 1 000 eggs is too low and suggested that the dimensions or size of the incubator should be used instead.footnote 5

CFIA response

The existing threshold was based on the smallest size of commercial incubators available in the market. Despite provincial health partners concern with human health hazards that can result from operators current minimum size and the international reputation for these small operations to spread avian diseases of international concern (e.g. avian influenza, Newcastle disease, Salmonella), the hatchery operators with a setting capacity of under 1 000 eggs will continue to be exempt from all federal requirements for hatcheries. This is a result of CFIA’s intent to maintain the requirement to mandate licensing and written PCP only for hatcheries that have a minimum setting capacity of 1 000 eggs.

To assist operators in identifying the risks to their operation and developing their plans, CFIA has developed and published a PCP template for hatchery and supply flock operators. To assist industry, there will be a 12-month transitional period that will begin on the day on which the Regulations Amending the Health of Animals Regulations (Hatchery) come into force. During this period, hatchery operators will have the opportunity to review and understand the updated requirements and apply guidance materials made available to them by CFIA.

4. Supply flock health status at import

Comments and questions were received about how the hatchery and supply flock farm operators were to ensure the health status of the source of hatching eggs or day-old chicks if they were imported and the need for CFIA to update its Import Reference Document (IRD), which lists conditions for the importation of hatching eggs / day-old chicks from the U.S.

CFIA response

Imported day old supply flocks and eggs from the U.S. are certified Salmonella Enteritidis-free and adhering to the biosecurity standards through the National Poultry Improvement Plan (NPIP) of the U.S. Department of Agriculture (USDA). Although this is currently implemented through bilateral agreements, there may come a time when some importations may not meet the Canadian domestic regulations.

The CFIA will update the import condition for hatching eggs and day-old chicks from countries other than the U.S.

For imports from the U.S., imported eggs and day-old chicks from the U.S. are certified to be from supply flocks that are part of the U.S. Department of Agriculture’s National Poultry Improvement Plan. Under this plan, the flocks are certified as Salmonella Enteritidis-free and are required to adhere to specific biosecurity standards, among other things.

For hatching eggs and day-old chicks from the U.S., CFIA is considering updating the IRD to ensure that the supply flocks of their U.S.-imported chicks/eggs are subject to the new Testing Standard as it is for the Canadian-based supply flocks. The IRD would be updated through a separate regulatory process as it touches a wide scope of imports, beyond poultry.

5. Regulations covering a broad range of species

The amendments incorporate by reference the NFACC Code of Practice for the Care and Handling of Hatching Eggs, Breeders, Chickens, and Turkeys into the HAR. The HAR cover hatcheries of all species of birds hatched for human consumption like chickens, turkeys, waterfowl, and game birds. The comments stated that, while incorporation of the Code into the HAR was supported in general, some groups did not think that it was appropriate for the Code to be applied to species other than chickens and turkeys, which were the target commodities in the Code and whose industry groups participated in its development. The organization that oversees the development of the code — the NFACC — shared this concern, although their position towards incorporating this document in the HAR was neutral. One province also stated concerns with the regulations referencing welfare standards on farms, since these were already enforced through provincial regulations.

CFIA response

The CFIA is aware that the Code was developed primarily for hatcheries of chickens and turkeys. It reviewed all the requirements in the Code and confirmed that the outcome of the ones to be referenced in the HAR is applicable regardless of the type of poultry. The wording of the amendments to the HAR also added the phrase “that are applicable to the species of poultry they are incubating,” such that the operator does not need to follow any requirements of the Code that do not apply to their specific poultry product.

6. Salmonella testing

Several comments pertained to Salmonella Enteritidis, including why other Salmonella serotypes (for example Salmonella Typhimurium) that can also cause human illness were not included in the CFIA’s Testing Standard. Concern was also expressed over any restrictions that would come into play with the hatchery operator possibly continuing to source eggs from a known Salmonella Enteritidis-positive supply flock.

CFIA response

On the Salmonella serotypes that can cause human illness, Salmonella Enteritidis was the only one covered in the Testing Standard. This decision was made, as Salmonella Enteritidis remains to be the number one serotype that has been identified in most cases of human salmonellosis. The use of the incorporation by reference drafting technique for the Testing Standard enables CFIA to revise these testing standards to reflect new serotypes of concern, as needed.

7. Broiler barns

Multiple comments were received about a new technology that enables broiler barns to receive partially incubated eggs from hatcheries and complete the hatching in the broiler barn. Respondents were unanimous in their request to redefine the requirements required of a hatchery operator in the proposed amendments, so that broiler barns using this technology would not be regulated as hatcheries.

CFIA response

The provision on hatchery licensing requirements in the amendments to the HAR was modified to address the above concern. An establishment that receives and incubates eggs from a supply flock must obtain a licence to operate a hatchery. On the other hand, a broiler barn using this in-barn hatching technology will not be required to obtain a licence, as it will be receiving eggs from a hatchery, not directly from a supply flock.

Other changes following prepublication in the Canada Gazette, Part I

After careful consideration of the feedback received during the public comment period, CFIA introduced some minor revisions to the initial regulatory text that was pre-published in the CG I. More specifically:

Stakeholder engagement since Canada Gazette, Part I, consultations

As a result of the extension provided for the CG I comment period, CFIA was well positioned to react to major industry needs or concerns, and to reflect those in the regulatory text, if necessary. Presentations and meetings were held with many different stakeholder groups, and CFIA addressed the issues raised after publication in the CG I. CFIA continued to remain in touch with industry associations to be attuned to major COVID-related shifts, ensuring that it remains alert to major changes in the sector.

The CFIA also took advantage of the regular meetings of the CHF, breeder farm owners and operators of broiler breeders, turkey breeders and layer breeders in February, June and October 2021 to present the results of the CG I consultation and the path forward to the final publication. CFIA also published a “What we heard” report, summarizing the feedback received from stakeholders.

In addition, CFIA met with members of the CHEP in November 2021 to provide them with similar information. CFIA and CHEP again met in December 2021 to provide further clarification on compliance with requirements associated with ammonia levels in barns.

In November 2021, CFIA sent a letter to all hatcheries and supply flocks regulated by the CFIA. Recognizing the ongoing pandemic situation, the letter sought feedback from stakeholders, asking if they were still supportive of the regulatory amendments and if they had any additional concerns. CFIA received responses from all-supply managed organizations who expressed continued support for the publication of the updated regulations.

In December 2021, recognizing the importance of seeking feedback from independent operators, a survey was sent to independent operators to seek additional feedback on the proposed regulations. Because their participation in previous phases of consultation had been relatively low compared to operators represented by industry associations, a survey was used to solicit their feedback. Survey results showed that independent operators generally support the proposed regulatory amendments, but also indicated that they have concerns with the cost and resources needed for the development and implementation of the PCPs. As previously mentioned, CFIA has developed and published PCP templates to help operators create the requisite PCP and guidance documents to help understand the requirements. The 12-month transitional period will provide time for independent operators to review the regulatory requirements and the guidance to help them in meeting the new requirements. Additionally, CFIA inspectors will be able to provide support to operators for the development and implementation of their PCP.

Modern treaty obligations and Indigenous engagement and consultation

No impacts on Indigenous peoples have been identified, in particular in relation to the government’s obligations to rights protected by section 35 of the Constitution Act, 1982, modern treaties and international human rights obligations.

Instrument choice

This section briefly describes the range of regulatory and non-regulatory options considered and explains why the approach was chosen as the instrument to address the issues.

1. Repeal all federal regulations

This option would repeal all the federal regulations relating to hatcheries, leaving the provinces to regulate hatcheries within their jurisdiction and industry to set and maintain their own standards. Since some provinces have stronger regulations (e.g. for sampling and testing of Salmonella Enteritidis in Ontario) than the current federal regulations, impacts for products moving within provincial borders would be minor. Hatcheries in provinces without provincial hatchery regulations would therefore go unregulated. These provinces would either have to make or modify any poultry regulations to make up for the repeal of the federal requirements. Industry groups that have insurance programs would follow the standards set by their insurance system, but this is not true for all commodity groups and not true for all provinces.

This is not proposed as an option. It could expose animals and Canadians to a potential increase in risk of infection of current and emerging forms of Salmonella. There is also the potential for a loss of integrity in terms of trade and Canada’s standing with trading partners. For example, there would no longer be requirements to demonstrate the birds as being part of a Salmonella Pullorum and Salmonella Gallinarum eradication program. This is a requirement of multiple export certificates, as these diseases should be controlled and tracked under OIE Standards.

2. Make amendments to the current regulatory framework

The option to make amendments to the current regulatory framework was chosen, as it is the most effective way to simultaneously keep pace with industry advances in technology and science, consolidate existing regulations into one location in the HAR, and harmonize requirements to enable national consistency.

This option will allow the HAR to be more outcome-based, and also to be more responsive to new and emerging diseases through incorporation by reference of key documents. While this option has elements which will impose costs (e.g. development of a PCP), this option is preferred as it will allow the regulations to keep pace with innovations in science and technology and address diseases of concern at any time. Amendments to an outdated regulatory framework will provide better understanding of provisions, concentrate on diseases that are emerging or re-emerging, and direct resources of both the regulator and the regulated parties to policies and programs that would address poultry and human health together. As a result, the general public will benefit from enhanced protection of risks from poultry production, and animal health will similarly be enhanced.

The poultry industry is a proactive industry and is always seeking ways to improve and has initiated some industry-led programs to meet current challenges. These are all on a voluntary basis and, at times, are not consistent across poultry commodities. By bringing these amendments forward, policies and programs will be developed and applied to the entire country to consistently cover all the identified poultry operations and align with regulations of key trading partners.

Regulatory analysis

Benefits and costs

This section assesses the incremental impacts (i.e. benefits and costs) resulting from the difference between the baseline and regulatory scenarios. The complete descriptions of the baseline and regulatory scenarios and the methodology used to assess the incremental impacts (including detailed assumptions) are fully documented in a report, which is available from CFIA by request.

As it relates to the cost-benefit analysis (CBA) completed for the CG I, the following changes were made for final publication:

The overall general impact in the CBA is a slight increase in industry benefits for the three in-barn hatcheries added, and a minor reduction in overall industry costs as a result of removing one hatchery from the overall total number of hatcheries that supply the food chain.

Affected stakeholders

It is anticipated that the following stakeholders will be affected:

Baseline versus regulatory scenario

The key elements of the baseline and regulatory scenarios are described below.

Shifting from a permit regime to a licensing regime

Under the current Hatchery Regulations, any person operating a hatchery in Canada is required to have a permit. The permit has no expiry date and there is currently no renewal process after an initial permit is granted.

The amendments will shift registration with CFIA from this permit framework towards a licensing regime. Existing hatcheries with a permit that also supply the food chain will automatically be granted an initial licence once the amendments come into force. There will be no fee associated with this initial licence granted after the transition period ends. After this, all licence holders will need to apply for renewal every two years and be subject to a fee with each renewal.

The shift from permit to licensing does not change much for hatcheries as long as they are compliant. While the frequency of non-compliance is rare, operators will need to resolve any non-compliance before their licence is renewed. Operationally, this shift will mean checking a box to indicate a change to licensing regime, which currently exists but indicates “permit.” Digitization, already in place since 2017 for hatcheries, is expected to facilitate this shift, as notices will be sent through the Digital Service Delivery Platform (DSDP) with CFIA oversight.

Table 1: Licensing requirements
Stakeholder Baseline scenario Regulatory scenario
Hatcheries (that supply the food chain)
  • Required to operate with a permit
  • No renewal fees and renewal process once the initial permit is granted
  • Required to operate with a licence
  • Renewal fees and renewal process will be required every two years, beginning two years after the transition period ends
New preventive controls and preventive control plan requirements

Preventive controls and PCPs are not required by the current regulations although many existing industry programs are similar to PCPs. In addition, for supply flock farms, CFIA provides a voluntary Food Safety Recognition Program (FSRP) to recognize on-farm food safety programs that have been developed by the poultry organizations in line with a systematic and preventive approach to food safety.

The requirements for preventive controls and PCPs will be broader and more comprehensive than any of the existing programs and will be mandatory for all hatcheries and supply flock farms.

Hatcheries and supply flock farms that do not currently have any type of PCPs will incur costs to develop a written plan for the first time. Others with a plan (e.g. any quality control program, or programming formerly known as Food Safety Enhancement Program) might need to modify their existing plans to be 100% compliant with the regulatory proposals. The required time to modify these plans may be minimal if these plans are based on HACCP principles.

Table 2: Preventive controls and preventive control plan requirements
Stakeholders Baseline scenario Regulatory scenario
Hatcheries
  • Voluntary enrollment in food safety programs (e.g. FSEP)
  • Mandatory use of preventive controls and preventive control plans
Supply flock farms
  • Limited to members of the national poultry organizations that have on-farm food safety programs
  • Mandatory use of preventive controls and preventive control plans
New testing requirements for Salmonella Pullorum, Gallinarum and Enteritidis

Under the current HAR, hatcheries are required to submit samples for testing Salmonella Pullorum and Salmonella Gallinarum and to keep all testing records.

Similarly, primary breeding supply flock farms are required to conduct Salmonella Pullorum and Salmonella Gallinarum testing on their flocks and keep records of these tests under the current HAR. Any supply flock farms who are engaged in international trading activities also participate in other disease monitoring programs, as required by their trading partners. There are also some voluntary provincial programs such as the Ontario Hatchery and Supply Flock Policy that provide disease monitoring schedules. Lastly, some supply flock farms have purchased private insurance, as these insurance policies provide financial compensation for lost revenue due to disease incursions such as Salmonella Enteritidis.

The requirements of the Testing Standard for hatcheries and supply flock farms will be incorporated by reference in the HAR. The Testing Standard includes newly modified Salmonella Pullorum, Salmonella Gallinarum and new Salmonella Enteritidis testing and testing record-keeping requirements to align with the risks to human health. For instance, Salmonella Gallinarum and Salmonella Pullorum do not pose the same health risks today when compared to when the HAR were first created. Further, with their eradication, the regulations will require fewer testing samples. The resulting cost savings have been accounted for in the CBA.

Table 3: Testing requirements
Stakeholders Baseline scenario Regulatory scenario
Hatcheries
  • Voluntary Salmonella Enteritidis testing record keeping of the supply flock farms
  • Mandatory Salmonella Enteritidis testing record keeping of the supply flock farms
Supply flock farms
  • Voluntary Salmonella Enteritidis testing and testing record-keeping requirements
  • Mandatory Salmonella Pullorum and Salmonella Gallinarum monitoring and testing
  • Mandatory Salmonella Enteritidis testing and testing record-keeping requirements
  • Mandatory Salmonella Pullorum and Salmonella Gallinarum monitoring and testing, but with less testing samples required
Description of benefits and costs

This section provides a list and brief description of the incremental benefits and costs. The listing is divided into categories based on benefits/costs by stakeholder group that were monetized and those that were assessed qualitatively.

Monetized benefits for industry

a. Reduced Salmonella Pullorum and Salmonella Gallinarum testing for supply flock farms

The requirement for the number of screening samples (e.g. blood samples) for Salmonella Pullorum and Salmonella Gallinarum at supply flock farms will be reduced, thus resulting in cost savings on an ongoing basis.

b. Reduced testing and record keeping for three hatcheries that do not supply the food chain and three in-barn hatcheries

Six hatcheries will not be captured under the amended regulations and, therefore, will no longer have to perform activities that are currently required by the Hatchery Regulations, which includes fluff or egg testing for Salmonella and record keeping. These hatcheries will also receive administrative relief on an ongoing basis associated with reduced record keeping.

c. Avoided inspection fees for three hatcheries that do not supply the food chain and three in-barn hatcheries

Six hatcheries will not be captured under the amended regulations and, therefore, will no longer have to pay inspection fees to CFIA.

d. Reduction in administrative burden associated with accompanying an inspector for three hatcheries that do not supply the food chain and three in-barn hatcheries

Six hatcheries will not be captured under the amended regulations and, therefore, will no longer have to be inspected by CFIA. This means that they will no longer accompany an inspector during inspections.

Monetized benefits for CFIA

a. Resources savings for inspection

There will be savings for CFIA since it will no longer have to provide inspection services to the three hatcheries that do not supply the food chain as well as the three in-barn hatcheries that will be excluded from licensing requirements and will not be regulated as hatcheries. CFIA’s resource savings were calculated using inspector’s time saved from not having to inspect these six hatcheries.

Qualitative benefits for Canadians

a. Minimized disease risks in poultry health and food safety

Hatcheries are a critical point of potential disease dissemination (e.g. Salmonella) in the poultry production pyramid. There is the possibility that diseases (e.g. Salmonella Enteritidis), that are known to be vertically transmitted from hen to offspring, be transferred from the supply flock farms down to the offspring via the hatcheries. These diseases can pose a risk to poultry health and food safety. In Canada, human health incidences of Salmonella illnesses caused mostly by Salmonella Enteritidis have steadily increased since 2008.

The regulatory requirements will implement and monitor controls at the top of the pyramid — parent and grandparent supply flocks — then hatcheries, which is generally agreed in veterinary communities around the world as the most effective way to limit the transmission of Salmonella diseases like Salmonella Enteritidis. In turn, it will minimize Salmonella Enteritidis infection risks in poultry, poultry products and to humans consuming poultry products.

The analysis was unable to monetize the benefits of reduced Salmonella Enteritidis infection risks in poultry or in human illnesses as a result of exposure to poultry or poultry products. There is no national database to track poultry illness caused by Salmonella Enteritidis infection, as the infection does not typically show symptoms in poultry. Thus, it is hard to diagnose. In addition, even though poultry and poultry products have been identified as the primary sources of Salmonella Enteritidis, there are data gaps in tracking sources of human illnesses back to the contaminated poultry or poultry products. Data gaps limited the ability to assess the baseline risk and to quantify any potential change in risk.

b. Increased consumer confidence

With up-to-date standards and regulations regarding PCPs, Canadian consumers will have increased confidence in food safety.

Qualitative benefits for industry

a. Improved clarity and consistency for commercial poultry

By introducing a definition of a “commercial poultry,” the regulatory amendments will introduce a clear and consistent definition across the country.

b. Improved alignment with international standards

The amendments will better align Canadian standards with those of its major international trading partners, which include the U.S. and the EU. As a result, this will lead to greater market access for Canadian poultry products.

c. Improved alignment of regulations across provinces

The amendments will result in alignment amongst provincial requirements in testing, biosecurity and animal welfare for all hatcheries and supply flock farms.

Qualitative benefits for CFIA

a. Enhanced enforcement tool for CFIA through licensing

The amendments will provide better defined procedures for dealing with suspensions and cancellations of licences for hatcheries.

b. Consistency with other regulatory approaches

This approach promotes a more consistent method of using and applying outcome-based regulatory instruments, such as preventive controls and PCPs, among a mix of other regulatory instruments used by CFIA [e.g. Safe Food for Canadians Regulations (SFCR)].

Monetized costs for industry

a. Increase in administrative burden associated with reviewing information for hatcheries and supply flock farms

Hatcheries and supply flock farms will need to spend time reviewing materials associated with the regulatory changes to familiarize themselves with the new requirements (e.g. record keeping).

b. PCP development for hatcheries and supply flock farms

Hatcheries and supply flock farms without a quality controlfootnote 7 plan in place will need to spend time developing a written PCP. Those with a different type of plan already in place will need to spend time reviewing and possibly modifying it to be compliant with the regulatory proposal. Table 4 shows that an estimated 34% of hatcheries (i.e. that supply the food chain) and 84% of supply flock farms are estimated to currently have a quality control program in place.

Table 4: Number of establishments with and without a quality control programfootnote 8
Affected Stakeholders With quality control program Without quality control program Total
Hatcheries that supply the food chain 30table 4 note * 58 88
% share 34.1 65.9 100
Testing hatcheries that do not supply the food chain 3 0 3
% share 100 0 100
In-barn hatcheries that supply the food chaintable 4 note ** 3 0 3
% share 100 0 100
Supply flock farms 514table 4 note *** 95 table 4 note **** 609
% share 84.4 15.6 100
Table 4 Notes

Sources: CFIA subject matter experts, CFIA Quality Control Program database, and private insurance companies’ membership information.

Table 4 Note footnote *

CFIA FSEP database shows that there are 13 CFIA FSEP-recognized hatcheries. In addition, CFIA Hatchery program subject matter experts estimated that 17 hatcheries have company-initiated quality control program.

Return to table 4 note * referrer

Table 4 Note **

The 3 in-barn hatcheries will not be captured under the amended regulations. They, however, supply the food chain and are subjected to their poultry organizations on-farm food safety programs.

Return to table 4 note ** referrer

Table 4 Note ***

Members of industry associations (i.e. Canadian Hatching Egg Producers, Canadian Poultry and Egg Processors Council and Turkey Farmers of Canada) are assumed to have on-farm food safety assurance programs, which are an industry-led quality control program.

Return to table 4 note *** referrer

Table 4 Note ****

Farms producing gamebirds and waterfowls are not supply-managed and also do not belong to any of the associations. Thus, CFIA program subject matter experts assumed that these farms may not currently have any quality control program.

Return to table 4 note **** referrer

c. Preventive controls implementation for hatcheries and supply flock farms

Once a written PCP has been developed, it will need to be implemented. Implementation will include training employees, PCP record keeping (i.e. administrative costs) and performing activities related to biosecurity and animal welfare.

d. PCP maintenance for hatcheries and supply flock farms

Costs will be incurred with the annual review of the PCPs.

e. Testing for hatcheries and supply flock farms

This will include Salmonella Enteritidis testing costs and employee time for keeping all testing records (i.e. administrative costs).

f. Increase in administrative burden associated with licence renewal applications for hatcheries

The 88 hatcheries that supply the food chain will be automatically granted with their initial licence as the amendment will trigger a shift from the current permit framework to a licensing regime. Therefore, there will be no administrative costs associated with their initial licence. There will be costs associated with renewing the licence every two years. The administrative costs will be the time required to prepare and resubmit the necessary documentation to CFIA, if any, depending on inspection results.

g. Renewal licence fees for hatcheries

Hatcheries will need to pay a renewal licencing fee every two years to CFIA. The fee per licence renewal is assumed to be $320 for the purposes of the cost-benefit analysis only.footnote 9 This fee will begin to be charged two years after the transition period ends. The actual licensing fee will be determined separately following stakeholder consultation.

Monetized costs for CFIA

a. Processing licence renewal applications

There will be processing costs for CFIA to process the 88 licence renewal applications every two years. This was calculated using CFIA’s processing costs minus licence fees.

b. Other costs to government and resource analysis

The amendments will replace the current hatchery program with new requirements. The updated requirements will require the same number of inspectors that are currently assigned to the hatchery program but will be focussing on slightly different tasks like PCP compliance. As such, no additional resources will be required to deliver the redesigned program. It is anticipated that program delivery will at least be maintained with these new requirements.

Methodology

This section briefly describes the model parameters and key assumptions, key data sources and industry survey used to estimate the monetized benefits and costs.

Model parameters and key assumptions

The key parameters and key assumptions include the following:

Key data sources

Various data sources were utilized including

Industry survey conducted by CFIA

Despite the publicly available information, further data and information was required to perform the analysis. As such, CFIA conducted an industry-wide survey in August 2017 to gauge the impact of the proposed regulatory changes on Canadian hatcheries and supply flock farms. The survey was distributed to the following associations, who sent the survey to their members:

The survey was also sent by email and direct mail to hatcheries and supply flock farms that were not members of the above associations.

In total, there were 54 survey responses received.

Monetized benefits and costs

The approaches used to monetize the most significant impacts are discussed below. Refer to the “One-for-one rule” section for details on the monetized administrative costs and benefits.

Monetized benefits for industry

a. Reduced Salmonella Pullorum and Salmonella Gallinarum testing for supply flock farms

There are approximately 99 675 samples tested for Salmonella Pullorum and Salmonella Gallinarum at supply flock farms every year. Under the regulatory amendments, there will be a reduction in the number of samples required. As a result, it is anticipated that supply flock farms will incur less testing costs and spend less time to collect samples. According to CFIA subject matter experts, there will be a reduction of approximately 61 560 samples required per year.

According to CFIA subject matter experts, lab costs are calculated based on a cost of $0.30 to test each sample.

Labour savings are associated with employees’ time to not having to collect larger number of samples on an annual basis. It was assumed that one employee will spend close to five minutes to collect each sample.

Monetized costs for industry

a. Preventive controls implementation for hatcheries and supply flock farms

All 88 registered hatcheries are currently implementing biosecurity and animal welfare as required by the existing Hatchery Regulations. Therefore, no additional time will be needed to implement these activities. However, survey results indicated that all registered hatcheries will still require additional time to train their employees and to keep additional preventive control-related records.

The 514 supply flock farms with quality control programs are already implementing some of the new activities. However, they will require some additional time to be fully compliant with the new requirements (e.g. training, biosecurity, animal welfare and record keeping). The 95 supply flock farms without quality control programs are not currently performing any of the new activities.

Those without quality control programs may not know the time needed to implement the preventive controls. As a result, the additional time was assumed equal to the time reported by survey respondents to implement their current food safety program.

Table 5 presents the survey results used for estimating preventive controls implementation costs.

Table 5: Survey results on preventive controls implementation
Affected stakeholders Current training hr/yr Additional training
hr/yr		 Current activities performed
hr/yr		 Additional activities performed
hr/yr		 Current preventive controls record keeping
hr/yrtable 5 note *		 Additional preventive controls
record keeping hr/yr
Hatcheries 12.7 2.7 1,167.8 N/Atable 5 note ** N/A 128
Supply flock farms 11.2 5.1 1,127.6 73.7 N/A 20.1

Table 5 Notes

N/A = Not applicable

Table 5 Note footnote *

According to CFIA subject matter experts, every establishment is currently keeping some PCP records; therefore, only additional time is required to meet the new requirements.

Return to table 5 note * referrer

Table 5 Note **

No additional time needed to perform biosecurity and animal welfare for all registered hatcheries because the new requirements (i.e. biosecurity and animal welfare) are very similar to the current Hatchery Regulation.

Return to table 5 note ** referrer

The number of affected hatcheries and supply flock farms, by activity, was determined by using the voluntary ratesfootnote 12 that are presented in Table 6.

Table 6: Survey results on preventive controls implementation at hatcheries and supply flock farms [voluntary rates (%)]
Affected stakeholders Training Performing preventive controls PCP record keeping
Hatcheries (88) 0 100 0
Supply flock farms with a quality control program (514) 48 24 21.5
Supply flock farms without a food safety–oriented program (95) 0 0 0
Estimated results

Table 7: Cost-benefit statement (in Canadian dollars [Can$], 2017 prices)

Monetized costs
Impacted stakeholder Description of cost Year 2 Year 5 Year 10 Total (PV) Annualized value
Costs — Hatcheries Administrative burden — Review information 6,586 0 0 5,753 819
Preventive control and PCP 395,891 324,698 324,698 2,039,272 290,346
Renewal licence fees* 0 0 28,160 70,952 10,102
Administrative burden — Renewing licensing 0 0 3,271 8,243 1,174
Testing 24,797 24,797 24,797 150,988 21,497
Total hatcheries costs 427,274 349,495 380,926 2,275,208 323,938
Costs — Supply flock farms Administrative burden — Review Information 45,581 0 0 39,812 5,668
Preventive control and PCP 1,293,694 1,098,490 1,098,490 6,859,208 976,597
Testing 139,616 139,616 139,616 850,121 121,038
Total supply flock farms costs 1,478,891 1,238,106 1,238,106 7,749,141 1,103,303
Total industry costs 1,906,165 1,587,601 1,619,032 10,024,349 1,427, 241
Costs — Government (CFIA) Processing licence renewal applications** (i.e. net of fees received) 0 0 211,200 532,139 75,765
Total costs (industry and CFIA) 1,906,165 1,587,601 1,830,232 10,556,488 1,503,006
Monetized benefits
Impacted stakeholder Description of benefit Year 2 Year 5 Year 10 Total (PV) Annualized value
Hatcheries Testing 7,190 7,190 7,190 43,782 6,234
Inspection fees 3,840 3,840 3,840 23,382 3,329
Reduction in administrative burden to accompany inspectors 3,866 3,866 3,866 23,541 3,352
Total hatcheries benefits 14,896 14,896 14,896 90,705 12,915
Supply flock farms Testing 124,005 124,005 124,005 755,068 107,505
All industry stakeholders Net total benefits 138,901 138,901 138,901 845,773 120,420
Benefit — Government Resource savings on inspection (i.e. net of fees received) 34,560 34,560 34,560 210,436 29,961
Total benefits (industry & CFIA) 173,461 173,461 173,461 1,056,209 150,381
Summary of monetized costs and benefits
Impacts Year 2 Year 5 Year 10 Total (PV) Annualized value
Total costs 1,906,165 1,587,601 1,830,232 10,556,488 1,503,006
Total benefits 173,461 173,461 173,461 1,056,209 150,381
NET IMPACT 1,732,704 1,414,140 1,656,871 9,500,279 1,352,625
Qualitative impacts

Positive impacts:

Note: Year 1 will have no costs to industry or Government due to the coming into force provisions (figures may not add up to totals due to rounding).

The following table shows all monetized costs and benefits by category.

Table 8: Monetized costs and benefits by impact (Can$, 2017 prices)
Monetized impact by category Total present value* Annualized value*
Administrative burden — Review information costs 45,565 6,487
Preventive control and PCP costs 8,898,480 1,266,943
Renewal licence fees** 70,952 10,102
Administrative burden — Renewing licensing costs 8,243 1,174
Testing costs 1,001,109 142,535
CFIA processing licence renewal applications***
(i.e. net of fees received)		 532,139 75,765
Total costs 10,556,488 1,503,006
Testing benefits 798,850 113,739
Inspection fees saved 23,382 3,329
Reduction in administrative burden to accompany inspectors 23,541 3,352
CFIA resource savings on inspection (i.e. net of fees received) 210,436 29,961
Total benefits 1,056,209 150,381
Net cost (i.e. costs minus benefits) 9,500,279 1,352,625

Note 1: The analysis covered the period 2022–2031.

Note 2: *Values were calculated using 2022 as a present value base year and 7% discount rate.
Sensitivity analysis

A sensitivity analysis was conducted to account for uncertainty in estimates that are inherent in predicting the future. The first approach used for the sensitivity analysis was to vary the discount rate. The mid-range estimate of 7% used in the analysis was varied to 3% and 10%. The second approach used was to vary the preventive controls implementation (i.e. biosecurity and animal welfare) costs for 95 waterfowl and game bird supply flock farms. This is done because the survey results did not reveal any information about the costs of preventive control implementation for these farms. As well, preventive controls implementation is the largest component of the estimated costs.

The analysis assumed that both waterfowl and game bird farms will experience 70% less preventive control implementation costs than other types of farms. This is primarily due to the fact that the average number of birds per flock at waterfowl and game bird farms is significantly lower than that of other farms. For example, a broiler breeder flock is three times larger than a waterfowl and game bird flock. This implies that there is less work for an employee to perform biosecurity (i.e. dead bird collection) and animal welfare at a waterfowl or game bird supply flock farm compared to other types of farms.

The sensitivity analysis then used the following rates:

Table 9 presents a summary table for the estimated results of the sensitivity analysis. The range of the annualized costs is between $1.3 million and $1.8 million. As a reference, the CBA results were generated using the medium rate of 70% and a present value discount rate of 7%.

Table 9: Sensitivity analysis results (Can$, 2017 prices)
Discount rate Annualized benefitstable 9 note * Annualized coststable 9 note * Net cost
(annualized costs minus annualized benefits)
Medium (waterfowl and game bird supply flock farms carry 70% less costs than other supply flock farms)
Medium (7%)[i.e. CBA results] 150,380 1,503,006 1,352,626
Low (3%) 153,719 1,534,820 1,381,101
High (10%) 147,798 1,478,467 1,330,669
Low (waterfowl and game bird supply flock farms carry 50% less costs than other supply flock farms)
Medium (7%) 150,380 1,715,483 1,565,103
Low (3%) 153,719 1,752,038 1,598,319
High (10%) 147,798 1,687,278 1,539,480
High (waterfowl and game bird supply flock farms carry 90% less costs than other supply flock farms)
Medium (7%) 150,380 1,301,668 1,151,288
Low (3%) 153,719 1,329,036 1,175,317
High (10%) 147,798 1,280,570 1,132,772

Table 9 Notes

Table 9 Note footnote *

Values were calculated using 2022 as the present value base year.

Return to table 9 note * referrer

Small business lens

The small business lens applies because there will be impacts on small businesses. The breakdown of industries as defined by the North American Industry Classification System (NAICS) is not well aligned to the activities of hatcheries and supply flock farms. Therefore, the distribution of businesses by their sizes based on this classification system could not be used. This led to the assumption that the share of small businesses in Canada (i.e. 98%) will be representative of the share of small businesses in hatcheries and supply flock farms.

The CFIA is sensitive to the needs of small businesses and is aware of the importance of finding the right balance between maximizing poultry health and food safety while minimizing costs to businesses. Therefore, CFIA included some flexibility in its regulatory proposal for small businesses, which will be expected to reduce costs. The following flexibilities are included in the amended regulations for all businesses regardless of their size:

The small business lens classifies impacts into two categories:

  1. Administrative impacts
  2. Compliance impacts

All impacts will occur between years 1 (i.e. 2022) and 10 (i.e. 2031).

Table 10 provides a list of all the administrative and compliance impacts that will be incurred by small businesses. The estimated total present value of costs over 10 years will be $9.7 million. This will equate to an annualized net cost per affected small business of $3,899.

Table 10: Small business lens summary (Can$, 2017 prices)

** One business enterprise represents (owns) 1.2 hatchery locations and 2.1 supply flock farm locations respectively.

Compliance costs
Activity Annualized value Present value
Preventive control plan development $51,287 $360,216
Preventive controls implementation $794,619 $5,581,075
Preventive control plan maintenance $159,110 $1,117,525
Licence fees $9,900 $69,533
Testing $109,685 $770,383
Total compliance costs $1,124,602 $7,898,731
Administrative costs
Activity Annualized value Present value
Review time for information $6,316 $44,358
Administrative burden associated with licence renewal applications $1,158 $8,130
Preventive controls implementation — Record keeping $221,623 $1,556,586
Testing — Record keeping $30,429 $213,723
Total administrative costs $259,525 $1,822,797
Total compliance and administrative costs
Totals Annualized value Present value
Total cost (all impacted small businesses) $1,384,127 $9,721,528
Cost per impacted small business $3,899 $27,385

One-for-one rule

The one-for-one rule applies since there is an incremental increase in administrative burden on businesses, and the proposal is considered burden “in” under the rule.

The one-for-one rule will apply, as the regulatory amendments repeal the existing Hatchery Regulations, which results in one title out. To note, the repeal of the Hatchery Exclusion Regulations is a ministerial regulation, whose repeal will occur separately, after the 12-month transitional period after the requirements for hatchery operators in the HAR come into force.

Similarly, the repeal of the Hatchery Exclusion Regulations has not been included in the monetization of administrative impacts for final publication. It should be noted that the calculations at prepublication had incorrectly included this relief for the three vaccine producing hatcheries who will be excluded from the new requirements as a result of this repeal and clarification around licencing requirements. This administrative relief and the title out will be counted when the ministerial repeal of the Hatchery Exclusion Regulations takes place.

Administrative costs are primarily associated with record-keeping requirements. The net annualized administrative cost (i.e. costs minus benefits) is estimated at $130,440, or an annualized net administrative cost per impacted business of $359. Table 11 summarizes all administrative cost impacts, and Table 12 presents the one-for-one rule results.

Table 11: List of all administrative cost impacts
Impact category Why is it administrative impact? Administrative burden imposed or avoided
Review new requirements The need to be familiarized with the new requirements (e.g. documents needed to submit the applications) Burden imposed
Preventive controls — Implementation (i.e. record keeping) Collecting and retaining data (e.g. businesses will need to keep records related to the implementation of preventative controls.) Burden imposed
Salmonella Enteritidis record keeping Collecting and retaining data (e.g. businesses will need to keep records of Salmonella Enteritidis testing) Burden imposed
Licensing applications Time spent to prepare and submit applications Burden imposed
Table 322: One-for-one rule results (Can$, 2012 prices)
Annualized administrative coststable 32 note * $130,440
Annualized administrative costs per businesstable 32 note ** $359

Table 32 Notes

Table 32 Note *

Values were calculated using 2012 as the base year and a 7% discount rate.

Return to table 32 note * referrer

Table 32 Note **

It is estimated that there are 1.2 hatcheries per business and 2.1 supply flock farms per business.

Return to table 32 note ** referrer

These estimated costs were based on information gathered from industry surveys, reasonable assumptions and consultation with affected stakeholders and CFIA subject matter experts. Below are the assumptions used to estimate the administrative impacts.

Regulatory cooperation and alignment

Provinces and territories

The regulations between provinces and territories vary and are applied inconsistently. There are provinces without regulations for hatcheries (e.g. Newfoundland and Labrador, Prince Edward Island, the territories). There are also provinces (e.g. Ontario, Manitoba) where registration for hatcheries and testing for Salmonella Enteritidis go beyond the federal Hatchery Regulations. Since the existing federal regulations do not have any provisions to test for Salmonella Enteritidis, for example, such specific provincial regulations result in national inconsistency.

The provinces and territories support the update and consolidation of the federal regulatory regime.

United States

The U.S. is Canada’s main trading partner when it comes to hatchery eggs and chicks. Regulatory requirements for hatcheries and supply flocks under these amendments will be aligned to the extent possible, which should maintain and potentially broaden market access.

The Animal and Plant Health Inspection Services (the CFIA counterpart in the U.S.) of the U.S. Department of Agriculture has a National Poultry Improvement Plan (the Plan) that provides a cooperative industry and state federal program through which new diagnostic technology can be effectively applied to the improvement of poultry products. The Plan has program standards for supply flocks, hatcheries and commercial meat products, with a predominant focus on supply flocks. The Plan provides various levels of disease-related certification, such as United States Pullorum-Typhoid State Clean, United States Sanitation Monitored, and United States Salmonella Enteritidis Clean. In 2017, requirements were added for biosecurity and compartmentalization (i.e. to define and manage animal subpopulations of distinct health status and meet the need to have a common biosecurity program and enable movement of products without interruption during disease incursion).

Under the regulatory amendments, alignment with the U.S. requirements for hatcheries and supply flocks will be improved. For example, the U.S. has had programs and testing for Salmonella Enteritidis in place for many years and Canada lags behind. The regulatory amendments will provide a standardized program that requires disease classification, monitoring and testing, as set out in the Testing Standard, similar to the U.S. Plan.

The CFIA has been consulting with the U.S. on the proposed modernization of the three hatchery regulations since 2010. During this time, the CFIA and the NPIP, under the U.S. Department of Agriculture Animal and Plant Health Inspection Services, have held ongoing discussions through biennial conference meetings and regular forms of communication (e.g. email). In May 2017, as part of its general consultation, CFIA requested a formal comment regarding Canada’s proposed regulatory framework. The response received was positive, in particular that the proposed requirements for Salmonella Enteritidis, Salmonella Pullorum and Salmonella Gallinarum were well aligned with the National Poultry Improvement Plan.

Some differences will still remain between the two trading partners. For example, unlike the U.S., the amendments will not cover other minor species (e.g. emus, rheas, ostriches, birds for release), birds for direct meat production (e.g. broilers and turkeys), table egg layers, and slaughter plants. In Canada, these sectors are covered under the other existing provisions of the HAR and the SFCR.

In the U.S., certificates or permits are issued for supply flocks and hatcheries at the state level once they meet classification standards of the National Poultry Improvement Plan, and these are used mostly for export purposes. As per Canadian regulations, hatchery operators will require a licence to operate, and they will now have the added responsibility of ensuring that their supply flock operators meet certain standards to be able to qualify as their supplier of fertile eggs (e.g. adhere to the Testing Standard, maintain a PCP). The U.S. views Canada’s national hatchery licensing regime and strengthened supply flock programs as strong and positive steps.

Other trading partners

In 2006, the European Commission adopted two new regulations to reduce and control the prevalence of Salmonella in poultry and eggs across the EU. These regulations require member states to actively work to reduce the presence of Salmonella in poultry and eggs at all levels of production, by setting up national control programs that are unique to each member state.

Many countries in the EU already have zoonotic Salmonella programs that aim to reduce and/or control the prevalence of salmonellosis from supply flocks, hatcheries and live bird production. For example, Denmark has been able to eliminate Salmonella Enteritidis in poultry with strict monitoring, testing, and depopulation of infected flocks in all areas of production. In the United Kingdom, there are now four National Control Programmes to target and reduce Salmonella; each targeted at broilers, layers, supply flocks and turkeys.

Canadian exporters must abide by the EU regulations to enable their products to enter countries like Denmark. The regulatory amendments improve alignment with the EU through enhanced surveillance and monitoring of Salmonella Enteritidis, and the use of incorporation by reference allows for surveillance requirements to be updated as the need arises. However, some differences remain, as the EU regulations are generally more stringent (i.e. requirement of Salmonella vaccinations and depopulating Salmonella Enteritidis positive flocks).

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

The gender-based analysis plus (GBA+) considered the impacts of the regulatory amendments on all stakeholders. The amendments remove the prescriptive nature of the regulations, and afford flexibility by introducing PCPs, for example.

Accordingly, the regulatory amendments meet the needs of Canadians in general. In particular, a food regional/ethnic delicacy known as “balut” (i.e. incubated fertilized egg for direct consumption) will now be better regulated with the new requirements. Some specific ethnic minorities and others who choose to consume balut can do so knowing that their food is safe. Furthermore, this particular change may positively impact the needs of older consumers who experience or share cultural traditions with their families.

Finally, as the new requirements cover the period beginning at the breeding stage and ending when the eggs have hatched for up to 72 hours (where they are sent to be raised for slaughter), the Canadian consumer (including parents or guardians purchasing poultry for dependents) will have greater confidence in poultry products given that animal health has been strengthened at the top of the supply chain.

There is a notable data gap on businesses owned by women, indigenous, and other ethnic minorities. According to the information available, CFIA is not aware of any disproportionate negative impact on members from these groups or their intersection. Overall, the amendments will benefit all Canadians, as they expect the poultry meat and eggs they consume to be safe and of good quality.

Rationale

Regulatory requirements in Canada for hatchery and supply flock operators provide a set of rules to adhere to in the sampling, testing, and caring of supply flocks, eggs and chicks. While industry plays an active role to prevent and mitigate risks to the poultry supply, the CFIA supports this awareness through clear regulations and compliance promotion tools and services.

Industry is proactive and continues to move forward in their efforts to improve animal husbandry, especially with respect to biosecurity. However, Canadian regulatory programs must continue to adapt and improve as supply chains between breeders and hatcheries become more integrated and threats of diseases continue to evolve. Hatcheries and supply flocks are the first critical points of potential disease spread downstream in the poultry production system. There are 88 regulated hatcheries (as of June 2021) supplying thousands of poultry farms domestically and outside of Canada. The typical farm producing poultry or products for food receives thousands of chicks per placement from a hatchery, where they are to be raised until ready for the meat or produce table eggs. Given the variety of potential sources for contamination and the ability of disease-causing organisms to multiply quickly, known and emerging diseases will always present risks.

Efforts by the industry and the provincial and municipal governments should be continued with complementary federal regulations, policies and programs. With evolving challenges, like the emergence of zoonotic Salmonella, revised complementary federal regulations and improved farming practices would be the best approach to take. The regulations need to be amended to keep up with the changing production environment and to manage risks at the top of the food supply. The main objective of the regulatory amendments is a healthier poultry supply chain from the top of the pyramid. This will mirror the approaches of other trading partners and follow the recommendations of international standard setting bodies. The amendments will streamline requirements for hatchery operators and provide better means for the CFIA inspectors to verify that a hatchery is mitigating risks in accordance with their own identified risks. It will also potentially lead to an overall health and safety benefit for Canadians and poultry.

In general, industry has been supportive of this regulatory change. Some businesses, in particular those that are not members of industry associations, have concerns related to increased cost (e.g. development, implementation, and maintenance of a PCP). To assist these operators with mitigating the costs of new requirements and to promote the updated requirements among small businesses, the CFIA has put in place guidance materials, such as PCP templates, to enhance the uptake of the updated requirements. The CFIA also has prepared plain language guidance documents and a 12-month transitional period from the date on which the Regulations Amending the Health of Animals Regulations (Hatchery) are registered to give industry flexibility to transition to the updated requirements.

Canada’s main trading partners for poultry products have modernized their poultry requirements. This regulatory change aims to reduce regulatory differences with international partners, particularly the U.S. There will be improved regulatory alignment between the two trading partners in the areas of disease monitoring, disease testing, and premises and operational requirements (e.g. PCP) — particularly for provisions related to Salmonella Enteritidis.

Implementation, compliance and enforcement, and service standards

The Regulations Amending the Health of Animals Regulations (Hatchery) will come into force on the day on which they are registered, immediately after their publication in the Canada Gazette, Part II.

Upon coming into force of the regulations, the stand-alone Hatchery Regulations, sections 79 to 79.2 of the HAR and Schedule VI of the HAR will be repealed. The regulations prescribe a 12-month transition period upon its coming into force, and any person may comply either with the new or previous regulations during that time. Note that the repeal of the Hatchery Exclusion Regulations is a ministerial regulation and that repeal will occur separately, after the 12-month transitional period after the new requirements for hatchery operators in the HAR come into force. Since the repeal of the Hatchery Exclusion Regulations will only occur after the 12-month transition period, it has not been published as part of this regulatory package.

Following final publication, companion amendments to the Agriculture and Agri-Food Administrative Monetary Penalties Regulations will be made. The amendments to the Agriculture and Agri-Food Administrative Monetary Penalties Regulations will be made 12 months after the Regulations Amending the Health of Animals Regulations (Hatchery) are made, aligning them with the repeal of the Hatchery Exclusion Regulations. The regulations made under the Agriculture and Agri-Food Administrative Monetary Penalties Act will be amended so that non-compliance with the provisions of the HAR will be subject to the administrative monetary penalties regime, under the Agriculture and Agri-Food Administrative Monetary Penalties Regulations. Once this is done, violations of these HAR provisions could result in a notice of violation with warning or with penalty or even a revocation of licence to operate based on the gravity of the non-compliance.

In terms of implementation, the updated requirements will require the same number of inspectors that are currently assigned to the hatchery program. These inspectors will be performing different tasks than under the current program. Rather than inspecting hatcheries against prescriptive regulatory requirements, they will be inspecting them against the hatchery’s PCP. Testing requirements will be monitored through a CFIA approved network of private labs. An analysis has indicated that no additional resources will be required to deliver the redesigned program. It is anticipated that delivery levels under the previous requirements will be maintained if not strengthened, through more efficient inspections, with these new requirements.

The CFIA will continue its monitoring activities and will enforce hatchery requirements through compliance verification and review of the developed, implemented, and maintained PCP (a condition of licence issuance and maintenance). The PCP will detail measures that will be implemented and maintained by the hatchery operator to maintain a licence to operate. CFIA will continue to maintain open and transparent communication with stakeholders to facilitate the transition and implementation period via the CFIA website and Ask CFIA (i.e. a web portal to ask CFIA questions).

Contact

Penny Greenwood
National Manager
Animal Health Directorate
Policy and Programs Branch
Email: AnimalHealth.Regs@inspection.gc.ca