(This statement is not part of the Regulations.)

Executive summary

Issue

The OPR provides a framework for a federally regulated organic regime in Canada. Since their promulgation in 2006, the Agency has reviewed the OPR and determined that certain elements required clarification and elaboration. The proposed Regulations will allow the Agency to fully implement the COR and achieve the intended and expected outcome of a federally regulated program for organic agriculture.

As there were numerous proposed amendments to the OPR, it is legal drafting convention to repeal and replace them with these proposed Regulations prior to the coming-into-force date. In order to allow sufficient time to consult with the domestic industry and Canada’s international trading partners on the proposed Regulations, it was necessary to extend the coming-into-force date of the OPR to June 30, 2009.

A number of issues were identified in the OPR, which this proposal would address: (i) the scope of application; (ii) the regulatory issues resulting from the adoption of the CGSB 310 Standard and Permitted Substances List (PSL) into the regulatory framework; (iii) the strengthening of the Agency’s and other federal government departments’ ability to negotiate import-export agreements with foreign governments; (iv) adjusting export requirements to allow flexibility in international trade; and (v) consumer confusion through the introduction of a single organic agricultural product legend (legend).

Objectives

The proposed Regulations would meet the original objectives of the OPR, including the facilitation of international market access, providing protection to consumers against deceptive and misleading labelling practices through a uniform approach to organic product certification and labelling, and supporting further development of the domestic market. The proposed Regulations would address the issues identified above and would add new provisions to preserve the organic nature and integrity of organic products.

The proposed Regulations are important from the perspective of advancing the implementation of the COR and avoiding a potential disruption in the trade of organic products both domestically and internationally.

An early principle used in establishing the COR was that it would be cost recoverable. While industry is already covering a significant component of the costs associated with organic certification, resources will be required to manage the national program, to interface with Certification Bodies (CBs) and Conformity Verification Bodies (CVBs), and to verify compliance and take enforcement actions when necessary. Fees may be applied in the future. Should the application of these fees be necessary, this would be done in strict adherence to the User Fees Act, a key principle of which is broad consultation with stakeholders and provincial/territorial partners.

Description

Scope of the proposed Regulations

In the proposed Regulations, a new section is included that would limit the scope of their application to food and drink intended for human consumption and food intended to feed livestock, including agricultural crops used for those purposes, and would also apply to the cultivation of plants.

In developing the scope of application of the proposed Regulations, the Agency considered whether a technical standard exists for a particular commodity within the CGSB 310 Standard such that criteria for its organic certification exist. In this proposal, an agricultural commodity must be able to meet the requirements for certification. While the authority of the Canada Agricultural Products Act (CAPA) is broad enough to cover a wide range of agricultural products, the proposed Regulations would narrow the scope of application to include only certain “agricultural products” which fall within the mandate of the Agency.

Neither aquaculture nor fertilizer products would be subject to the proposed Regulations. Under the authority of CAPA, aquaculture products are not considered to be agricultural products and do not have a technical standard within the CGSB 310 Standard. Although fertilizer products do fall within the mandate of the Agency, they currently do not have a technical standard within the CGSB 310 Standard.

Other commodities such as cosmetics, pet food, and natural health products would be excluded from the scope of application of the proposed Regulations. Although they are included in the CGSB 310 Standard, these products do not fall within the mandate of the Agency. Further consultations on these commodities and regulatory or legislative amendments may be required to determine their future inclusion under the proposed Regulations. It may be determined that some commodities and their organic status should be governed by another government department, agency or body.

Oversight bodies and existing certification bodies

Building on the existing organic certification system, the proposed Regulations would set out the responsibilities of the COR’s two oversight bodies: CVBs and CBs.

The proposed Regulations would replace the term “accreditation body” which appears in the OPR, with the term “conformity verification body” (CVB). This change in wording would harmonize Canadian terminology with international accreditation terminology and the standards and practices of conformity verification. This change in terminology was requested by the organizations that perform this work as they assess and recommend the accreditation of the CBs to the Agency, rather than grant the accreditation.

Incorporation by reference of Standards

These proposed Regulations would incorporate several third-party Standards by reference. This incorporation by reference would eliminate the need to reproduce the requirements of the Standards word for word within the text of the proposed Regulations and it would have the effect of incorporating their requirements into the proposed Regulations with the same force of law as the proposed Regulations.

The incorporation by reference of these Standards would be dynamic in nature, meaning that any changes made to the Standards would not necessitate an amendment to the proposed Regulations; the most current version of the Standard would be incorporated by reference at any given time. The Standards are relatively stable over time and amendments flow from a lengthy consultative process. Industry would have ample time to adjust their operations to any amendments.

(i) International Organization for Standardization Standards (ISO)

In order to enhance international credibility, the fairness and effectiveness of the COR, and to ensure uniformity and consistency of assessments performed by the various Agency-designated CVBs and accredited CBs, the proposed Regulations incorporate by reference two Standards developed by the globally recognized ISO: the ISO/IEC 17011 and the ISO/IEC Guide 65.

Referencing these Standards in the proposed Regulations would also contribute to greater consistency in the evaluations by the Agency of CVBs, in the assessment of CBs for accreditation by CVBs, and certification of operators by CBs. The incorporation of the Standards would also contribute to reducing discrepancies among the certifiers of organic standards.

These Standards would primarily be used by the Agency, CVBs and CBs. The ISO/IEC 17011 Standard and the ISO/IEC Guide 65 are both available for purchase at www.iso.org/iso/store.htm for CAN$113.00 and CAN$62.33, respectively.

(ii) Canadian General Standards Board (CGSB) Organic Standards

The proposed Regulations would maintain the incorporation by reference of the CGSB CAN/CGSB 32.310, Organic Production Systems — General Principles and Management Standards (referred to as the CGSB 310 Standard).

The CAN/CGSB 32.311, Organic Production Systems — Permitted Substances Lists (PSL Standard), is also incorporated by reference into the proposed Regulations. The PSL Standard sets out all of the substances permitted to be used in the production of an organic product.

Over the course of the last two years, the Committee for Organic Agriculture (COA), under the leadership of the CGSB, has undertaken the revision of the CGSB 310 Standard to ensure that the Standard would work in harmony with the proposed Regulations. The revisions address regulatory issues related to the amount of discretion the Standards provided to CBs and include new and innovative provisions for industry as well as allowing for new permitted substances.

The Standards CAN/CGSB 32.310 and CAN/CGSB 32.311 are both available for purchase online at www.tpsgc-pwgsc.gc.ca/cgsb/on_the_net/organic/index-e.html for CAN$93.50 and CAN$81.00 respectively.

Accreditation — Right to review

To improve clarity respecting an applicant’s right to request a review by the Agency in cases where a CVB refuses to recommend accreditation, the proposed Regulations would clearly confer a right upon an applicant to request a review of such a decision and would prescribe a limit as to the amount of time an applicant would have to make such a request. The proposed Regulations would also impose a duty on a CVB to inform applicants of their right to request a review by the Agency of the CVB’s recommendation. The proposed Regulations would impose an explicit duty on the Agency to perform such a review. The Agency would follow-up with the CVB to discuss its recommendation and the Agency’s findings.

In cases where the Agency disagrees with a CVB on its recommendation not to accredit a CB, and then proceeds to accredit a CB, the Agency would not assume the role of the CVB. The affected CB would then be responsible for seeking out another designated CVB as a service provider.

Preserving organic integrity

One of the objectives of these proposed Regulations is to ensure that the organic integrity of a product is not compromised at any stage of preparation. For example, there is a need to prevent the co-mingling of organic and non-organic agricultural products and to prevent the contact of organic products with substances prohibited by the PSL Standard.

In respect of an agricultural product, CAPA defines “preparation” as including: processing, slaughtering, storing, inspecting, grading, packing, assembling, pricing, marketing and labelling. Provisions would be included to address the certification of packaging and labelling activities, the slaughtering of organic livestock and the transportation and storage of organic livestock, and organic products. These provisions would require the preservation of the organic integrity of organic products from the reception of the ingredients through to the end consumer, ensuring they are in accordance with the CGSB 310 and PSL Standards.

The proposed Regulations would also require an organic operator applying for certification to the CB to provide information that substantiates the organic integrity of their product. The CB would then be responsible for determining whether the information provided by an applicant is sufficient to establish the product certification at each stage of its preparation.

Certification: application, procedure and renewal

Under these proposed Regulations, persons wishing to market an agricultural product as an organic product would need to follow the management system prescribed by the CGSB 310 and PSL Standards, as they relate to organic principles of production.

When certifying agricultural products as organic for the purposes of marketing, CBs would rely on the assessment of the operator’s management system and its compliance with the proposed Regulations, CGSB 310 and the PSL Standards.

The Agency wishes to highlight that under the COR, it would be the agricultural product that is certified and not the process. Although very important, the process used in growing, preparing or processing the product would not be subject to certification. Currently, in each case where a voluntary certification has been obtained, a CB has evaluated the operator’s plan and system against the requirements of the CGSB standard in order to certify the production process used in preparing the product. Under the mandatory federally regulated organic regime, it is the agricultural product that would be certified, not the production process. This approach flows from the Agency’s role in regulating the marketing of certain agricultural products as organic as well as the use of the legend in accordance with CAPA.

The proposed Regulations would require that a person who wishes to obtain certification for an agricultural product apply within 12 months of when the agricultural product is expected to be marketed as an organic product. As such, persons wishing to obtain certification should be under the oversight of a CB for a sufficient period of time prior to the granting of certification to permit proper assessment of the operator’s management system and its compliance with the proposed Regulations. The proposed Regulations would establish specified periods of time for maple products, field crops and greenhouse crops with an in-ground permanent soil system. For other commodities, the length of time required for the operator to be under the supervision of a CB would be dependent upon the length of time and the complexity involved in transitioning from conventional production to organic production. The CGSB 310 Standard provides guidance relative to transition times for commodities not identified in the proposed Regulations.

The proposed Regulations would also require that organic certification be renewed on regular basis, within 12 months from the date of granting. This renewal of certification would be required to verify that the criteria continue to be met by the holder of the certification.

Regulatory authority to suspend or cancel accreditation or certification

(i) Suspension or cancellation of accreditation

In order to provide fairness to regulated parties, the proposed Regulations would clarify the process as well as define steps and roles and responsibilities in the event of a suspension or cancellation of an accreditation. This would include prior notice to the affected party of suspension or cancellation action and notification of the right to be heard in the case of cancellation of accreditation. The period during which a suspension would remain in effect is also stipulated.

An additional non-compliance trigger for suspension of accreditation is being proposed. It would be possible for a CVB to recommend suspension of accreditation if a CB has not complied with any provision of the ISO/IEC Guide 65 Standard, the proposed Regulations or CAPA.

(ii) Certification — Responsibilities of Certification Bodies

The proposed Regulations would require CBs whose accreditation is suspended or cancelled to provide to the Agency a list of its certificate holders and a list of applications for organic certification that are pending.

The Agency would notify affected producers with certified products that the CB with whom they have a service contract for certification has had its accreditation cancelled or suspended. The affected producers or operators would then select another Agency-accredited CB as a service provider. The suspension of accreditation of the CB would not affect the status of an organic certification that was issued before the suspension of the accreditation of the CB unless it was determined that the integrity of the organic product had been compromised.

(iii) Suspension and cancellation of organic certification

These proposed Regulations would provide the authority to CBs to suspend or cancel an organic certification and would also define the circumstances under which CBs should proceed with suspension or cancellation actions. The CBs would evaluate a certificate holder’s compliance with the proposed Regulations, the product formulations to verify organic content, and the methods and manner in which the certificate holder conforms to the CGSB 310 and the PSL Standards.

The proposed Regulations would build in a number of safeguards for certification holders that would impose certain notification requirements on CBs before suspension or cancellation action could be pursued.

Organic certification

The proposed Regulations would require that the organic content of a multi-ingredient product be calculated by the method contained in the CGSB 310 Standard. Further, they would specify that only organic products could be used in determining the percentage of organic products contained in a multi-ingredient product.

Duty to inform

The proposed Regulations include a provision that would require the holder of an organic certification for an agricultural product to inform its CB of a change that affects the certification or of a complaint received by the holder about the integrity of the organic product.

International trade

Canada has an interest in both the export and import market for organic products. The existing language of the OPR could lead to the interpretation that all imported and exported organic products are required to meet the Canadian organic products standards. This requirement could impact on agreements regarding the importation and exportation of organic products between Canada and its trading partners and could be viewed as an unnecessary barrier to trade for some exporters.

As Canada does not have the capability to meet domestic demands for organic products, 70–80% of organic products are imported primarily from the United States. Canada exports organic grains and other organic products to foreign markets, such as the European Union. Accordingly, it is important that, in seeking to regulate the Canadian organic industry, the proposed Regulations provide the flexibility to facilitate international trade and to promote the development of the domestic organic products sector. The proposed Regulations include the following provisions relating to international trade:

1. Importation

The proposed Regulations would provide the Agency with the option of permitting imported products to enter Canada from countries whose requirements are deemed to be equivalent to those in the proposed Regulations. The proposed wording of this provision provides the flexibility to encompass any type of agreement respecting the import of organic products. There are three scenarios under which an organic product could be imported into Canada. Since the imported product would comply with the proposed Regulations, the product would be eligible to bear the legend.

(i) Product imported without an import-export agreement

An organic product imported into Canada from a country where there is no import-export agreement for organic products with the Agency would have to meet the requirements of the proposed Regulations, including being certified to the CGSB 310 Standard by an Agency-accredited CB.

A product originating from a country that has not entered into an import-export agreement with Canada may nevertheless be imported and marketed in Canada as organic if it is certified as organic by a CB recognized by a country with which Canada has an agreement, and is certified in accordance with that agreement.

(ii) Imported product under a full or partial import-export agreement

An import-export agreement that deems both the foreign country’s conformity assessment system, as well as its standards, as being equivalent to requirements of the proposed Regulations would be considered a full equivalency agreement. Under this scenario, an imported product could be certified through the foreign country’s conformity assessment system to the foreign standards and would be considered to meet the requirements of the proposed Regulations.

An import-export agreement that contains exceptions would partially deem the foreign country’s conformity assessment and standards as equivalent to the proposed Canadian requirements. If the foreign country’s conformity assessment system and its standards are deemed only partially equivalent, then the exceptions would be outlined in the agreement and the certification would have to meet the requirements of the agreement.

(iii) Imported product under an import-export agreement (recognition)

Where the Agency would recognize a foreign country’s conformity assessment system as equivalent to that of Canada, but would not recognize the foreign standard, an agreement would be considered to be a recognition agreement. Under this scenario, imports could be certified through the foreign country’s conformity assessment system to the Canadian requirements.

2. Exportation

Under the proposed Regulations, there would be no specific requirement that exported products meet Canadian regulatory requirements. This approach has been proposed in order to address concerns that the export measures included in the existing OPR have the potential to be detrimental to Canadian exports. The OPR requirement for exported products to meet both the proposed Regulations and the foreign country requirements, when these products are destined solely for export and will not enter the Canadian market, could be overly burdensome and could impose unnecessary costs. A key rationale for the development of the proposed Regulations was to ensure continued access to international markets for the Canadian organic industry, including those producers seeking to expand their export market. The proposed Regulations would support this objective.

(i) Canadian export-only product with no import-export agreement

A product that is to be exported to a country where there is no import-export agreement signed with the Agency could be certified to the importing country’s requirements and/or the proposed Regulations. These products would only be eligible to bear the legend if certified in accordance with the proposed Regulations.

(ii) Canadian export-only product under import-export agreement (equivalency)

In this scenario, a product that is to be exported to a country under an import-export agreement signed with the Agency could be certified to the proposed Regulations and/or the importing country’s requirements. Under an equivalency agreement, the proposed Regulations would be deemed to meet the importing country’s requirements. These products would only be eligible to bear the legend if certified to the proposed Regulations.

(iii) Canadian export-only product under an import-export agreement (recognition)

These products would have the option of certifying to the proposed Regulations and the importing country’s requirements or just the importing country’s requirements. Under a recognition agreement, products could be certified to the importing country’s requirements by an Agency-accredited CB, rather than a CB accredited by the importing country. The product would only be eligible to bear the legend if it meets the requirements of the proposed Regulations. A product that does not meet the proposed Regulations would not be considered an organic product in Canada, even if it meets the organic requirements of an importing country.

Any import-export agreements with foreign countries would only be signed after a thorough analysis of the foreign regime and only if the Agency is satisfied that the foreign regime meets the principles and objectives of the COR. The ability to enter into these agreements will provide cost advantages to consumers along with the additional choice of products available, especially in light of Canada’s high dependence on imported organic goods. Furthermore, the reciprocal nature of these agreements would benefit Canadian exporters.

Labelling provisions

Organically produced food cannot be distinguished visually from conventionally produced food and cannot necessarily be distinguished by taste; therefore, consumers rely on labels, other advertising tools for product information, and certification to ensure that the organic claims are true.

The proposed Regulations would improve consumer protection by strengthening the rules surrounding the labelling of organic products by linking the proposed Regulations and the requirements in the CGSB 310 Standard with respect to the calculation of organic content and permitted non-organic ingredients.

(i) Bilingualism

As the proposed Regulations would apply to imported products and products traded inter-provincially within Canada, it is important that organic claims be present in both official languages. In keeping with the intent of the Official Languages Act, organic claims would be required to be bilingual.

(ii) Organic legend

The Agency received feedback from the Canadian organic industry requesting that either the legend not be used on imported organic products or that a revision to the appearance of the legend be made to prevent consumer confusion as to the origin of the products bearing the legend.

The proposed Regulations would introduce a single legend that may be used voluntarily on organic products certified in accordance with these Regulations and having an organic content of 95% or higher. Imported products would be eligible to bear the legend provided they meet Canadian requirements.

The risk that some organic operators may have already prepared material bearing the “Canada Organic” legend based on the regulatory provisions published in the OPR has been examined. Following industry consultation, it was determined that there would be a minimal risk to stakeholders should the “Canada Organic” legend be changed.

(iii) Multi-ingredient product and other organic product labelling

These proposed Regulations would establish specific labelling requirements for multi-ingredient organic products and for other organic products. They would also permit the use of certain terms (e.g. organically grown) on agricultural products produced or processed in accordance with the CGSB 310 Standard.

Three types of organic claims would be permitted based on the organic content of a product:

(1) Multi-ingredient products with an organic content greater than or equal to 95% could be labelled organic or could bear the legend. These products would be certified in accordance with the proposed Regulations and would bear the name of the Agency-accredited CB that certified it as organic under the proposed Regulations.

(2) Multi-ingredient products with an organic content of greater than 70% and less than 95% could bear the claim X% organic products or X% organic ingredients. These products would be certified in accordance with the proposed Regulations and would bear the name of the Agency-accredited CB that certified it as organic under the proposed Regulations, but could not bear the legend, nor use the claim “organic.”

(3) Multi-ingredient products with an organic content of less than 70% could not be labelled organic, with the exception that any organic product contained in it could be identified as an organic product in the list of ingredients. These products could not bear the legend.

Notwithstanding the presence or lack thereof of any other organic legends, logos or statements, consumers wishing to confirm the status of the organic claim on a product they have purchased could look for the name of the Agency-accredited CB on the packaging material and visit the Agency’s Internet site (www.inspection.gc.ca), or contact the Agency, to confirm that the CB is accredited by the Agency.

(iv) Use of legend for marketing or advertising or informational purposes

Third-party use of the legend would be controlled by the Agency under the legislative authority contained in the CAPA and the Canadian Food Inspection Agency Act (CFIAA). Third parties wishing to use the legend in advertising or marketing materials or for information purposes would be able to apply to the Agency for permission to use it. The application and granting of permission for any given third-party use would be administered by the Agency. The terms and conditions of a licence agreement would outline the activities for which the legend could be used and the manner of use of the legend. The application and the procedure for application would be available on the Agency’s Internet site.

Record keeping

Any person who imports a product marketed in Canada as an organic product would have to be able to demonstrate, at all times, that the product conforms to the proposed Regulations and would have to retain the documents associated with the product. These Regulations propose that a person must be able to demonstrate, through continuous traceability, the integrity of an organic product.

Environmental impact assessment

According to the CGSB 310 Standard, organic production is based on principles which include the protection of the environment and minimization of soil degradation and erosion, maintenance of soil fertility, maintenance of biological diversity within the system, recycling of materials and resources to the greatest extent possible, attentive care that promotes the health and meets the behavioural needs of livestock, preparation of organic products, emphasizing careful processing, and handling methods in order to maintain the organic integrity and vital qualities of the products at all stages of production, and reliance on renewable resources in locally organized agricultural systems.

Based on these principles, the proposed Regulations are not expected to affect or be the cause of potential harm to the environment.

Regulatory and non-regulatory options considered

The Government of Canada is committed to implementing a mandatory regulatory framework with a third-party delivery system for Canada’s organic industry and consumers. To achieve the desired outcomes, the following options were considered.

Option 1 — Implement the OPR as promulgated in 2006

The option exists to allow the OPR to come into force on June 30, 2009. This is not recommended as certain elements of the OPR require clarification and elaboration in order to support the full implementation of a fair and effective regulatory framework upon coming into force.

Option 2 — Repeal the OPR

The option to repeal the OPR and not introduce the new Regulations was considered. This option is not recommended as it would not deliver on the Government of Canada’s commitment to introduce a mandatory regulatory framework for organic products. This option could jeopardize trade with Canada’s international trading partners. Moreover, Canada’s organic industry continues to request government oversight and a mandatory federal regime.

Option 3 — Proposed Regulations

This option is the recommended course of action as the proposed Regulations would address the identified issues, including the scope of application, the regulatory issues resulting from the adoption of the CGSB 310 Standard and the PSL into the regulatory framework, the ability for the Agency and other federal departments to negotiate import and export agreements for organic products and adjusting export requirements to allow flexibility in international trade, and reducing consumer confusion through the introduction of a single legend.

Conclusion

The recommended approach is to proceed with the proposed Regulations, in order to address all of the issues and make implementation of a federal regulatory framework for organic products feasible.

This option is consistent with the policy decisions adopted in 2006 to introduce federal Regulations for organic products with third-party delivery. These proposed Regulations would support the further development of the domestic market for organic products, would introduce a framework for the preservation of the organic nature and integrity of organic products and would regulate the marketing of organic products in interprovincial and international trade. They would also offer additional protection to consumers against deceptive and misleading labelling practices and claims regarding organic products.

Benefits and costs

The Agency conducted in 2005 a detailed cost-benefit analysis of the effects of introducing regulations. The study, Cost-Benefit Analysis of the Effects ofFederal Regulation for Organic Products, examined the economic impacts and the full range of social and economic effects of the proposed Regulations on Canadian society. The study considered the quantified impacts to growers and producers, and to the sectors that support the organic products industry (processors, wholesalers, retailers, exporters, accreditation bodies [CVBs] and certification bodies [CBs]). Qualitative impacts to consumers, the Canadian public at large, and the federal and provincial governments were also considered.

The original study has been recently updated with the inclusion of a discount rate of 8% and the use of 4% and 10% for the sensitivity analysis. Another update has been made on the time period. Whereas the original study assumed each option as “once for ever,” in the update, a time period of 50 years has been considered instead.

In the original study, the option of a status quo led to an overall loss of $490 million stated in 2005 dollars. The bulk of that negative impact falls on growers and producers (-$752 million) and on exporters (-$28 million). Although these previous results were based on a discount rate of 6.8%, the outcome at 8% would remain a net loss.

The original study also examined the option of mandatory regulation and certification, but delivered solely by the federal government. That option was found less favourable than the option of implementing the proposed Regulations due to the cost increase associated with transition to and implementation by the federal government. These costs outweigh the savings incurred due to the phasing out of third-party accreditation agencies (CVBs) and certification bodies (CBs).

The option of implementing the proposed Regulations results in a net cumulative benefit of $752 million, using a discount rate of 8%. Retailers and consumers are the largest beneficiaries with net benefits of $279 million and $211 million, respectively. However, excluding governments, all stakeholder groups benefit, as none is left worse off relative to the current situation (i.e. status quo) as evidenced by the net benefit distribution as follows:

— growers and producers, $110 million;

— processors, $11 million;

— wholesale services, $7 million;

— exporters, $8 million;

— import services, $153 million;

— retail, $279 million;

— consumers/society, $211 million;

— conformity verification bodies (accreditation agencies), less than $0.001 million;

— certification bodies, less than $0.1 million; and

— government, -$27 million.

These results are summarized in the following table that reports the discounted (at 8%) costs and benefits. All the figures are in 2005$M.

Summary Table

B. Qualitative impacts (not assessed)

— Reduction in soil erosion

— Reduction in nitrate leaching

— Reduction in greenhouse gas emission

— Maintenance and return levels of biodiversity

— Increased land area dedicated to organic farming resulting from increases in organic products consumption

Due to their relative small magnitude, data for accreditation agencies (CVB) and (CBs) are not shown in the above table. Furthermore, due to data limitations, not all benefits and costs could be quantified, as section B of the above table indicates. Similarly, implementation of Option 3 would result in increases in the personnel of the Agency, incremental and ongoing expenditures for market access activities and various expenses incurred by provincial governments with respect to their provincial accreditation bodies.

Further details for all the stakeholders and on all the options are contained in the full report which can be accessed at: www.inspection.gc.ca/english/fssa/orgbio/coana/coanae.shtml. The recommended option, federal regulation with accreditation and certification by a third party, referred to as Option 2 in the report, is equivalent to Option 3 recommended in this RIAS.

Rationale

Mandatory regulation and certification of organic products, with third-party delivery, is expected to result in an overall net benefit to Canada of $752 million. Additionally, all stakeholder groups share in the benefit, none being left in a situation worse than the current one.

The Canadian organic industry has continued to request a federal regulatory system to support the continued development of the industry. These proposed Regulations offer protection to consumers through a uniform approach to the certification and labelling of organic products. More specifically, the proposed Regulations would address the issues identified above and are important from the perspective of advancing implementation of the COR.

The provinces of Quebec and British Columbia have regulations in place governing organic production systems. Through consultation with the respective provinces, the Agency has considered British Columbia’s and Quebec’s regulatory requirements to avoid creating any technical barriers to trade stemming from differences between the provincial and federal standards.

Consultation

Industry

Since the publication of the OPR in December 2006, the Agency has been working closely with organic industry groups on the development of the proposed Regulations and to address the outstanding issues that directly impact the Agency’s ability to implement and the industry’s ability to comply with the proposed Regulations. The Agency has maintained close communication with stakeholders and industry groups by engaging in biweekly conference calls to discuss issues and the progress of the proposed Regulations in detail.

Since December 2006, the Committee on Organic Agriculture (COA) has undertaken a major revision to the CGSB 310 and PSL Standards. The COA is composed of representatives of relevant interest groups including organic producers, consumers, importers, and other users, retailers, government (federal and provincial), educational institutions, and technical, professional and research organizations (organic stakeholders). The COA and the CGSB both support the incorporation of these Standards into the proposed Regulations.

In collaboration with the Organic Federation of Canada, the Agency performed cross-country consultations with industry stakeholders on these proposed Regulations in early September 2008. Town hall meetings were held with direct interaction between Agency officials and organic industry stakeholders including representatives from provincial government, organic operators, retailers, importers, CVBs and CBs. The town hall information sessions were held in Burnaby, British Columbia; Edmonton, Alberta; Regina, Saskatchewan; Winnipeg, Manitoba; Guelph, Ontario; Québec, Quebec; and Moncton, New Brunswick.

The industry has indicated support for the proposed Regulations and is aware of their intent. However, some concerns about the following issues have been expressed.

(1) Scope

Some sectors of the industry (aquaculture, personal care products, textiles, pet food and cosmetics) and stakeholders in Quebec have expressed concern that a number of organic products which are regulated at the provincial level are not included in the scope of application of these proposed Regulations. Further consultation on these commodities will be required to determine whether they should fall under the proposed Regulations or whether their organic status should be governed by another government department, agency or body.

(2) Access to imported products

Some stakeholders have expressed concern over the introduction of provisions that would permit the Agency to enter into import-export agreements that would allow for the import of products from countries with equivalent foreign organic regulatory regimes, because these products would not be required to meet Canadian standards.

It is the Agency’s intention to facilitate the importation of agricultural products that are organic in nature while ensuring their organic integrity is in line with the intent of the general principles of organic production. A thorough analysis of the foreign regime would be conducted and the Agency would have to be satisfied that the foreign regime meets the principles and objectives of the COR before foreign agricultural products could be marketed in Canada as organic.

(3) Readiness for the coming into force date and compliance and enforcement

The state of readiness for the implementation of the proposed Regulations varies among stakeholders. Some industry stakeholders would like additional time, while others would prefer immediate implementation.

The Agency recognizes that it is important to have a smooth transition from the existing voluntary regime to the proposed mandatory regulatory framework. Therefore, agricultural products certified as organic by an accredited CB would be accepted as “organic” under these proposed Regulations at the coming-into-force date.

To support a smooth transition, the Agency has also developed a “Stream of Commerce/Enforcement and Compliance Policy” under which a temporary compliance and enforcement approach would be in place for a period of 24 months. This policy will apply to both domestic and imported products.

(4) Certification of exports

Industry has a variety of opinions on whether or not exported organic products should be subject to the proposed Regulations. Some stakeholders support the removal of the requirement for exported organic products to meet the requirements of the proposed Regulations. They believe that the export measures included in the OPR have the potential to be detrimental to Canadian exports. Requiring organic exports to meet both the Canadian requirements and those of the foreign country, when these products are destined solely for export and will not enter the Canadian market, could be overly burdensome and could impose unnecessary costs.

Other stakeholders do not support the proposed amendments and would like the existing OPR’s export provision maintained. Those supporting the inclusion of a requirement for export certification believe it to be necessary to preserve the reputation of Canadian organic products in foreign markets and fear that without it, the integrity of organic products grown in Canada could be jeopardized.

In order to address concerns of those opposed to the proposed amendment to remove the export provisions, a teleconference was held by the Agency with representatives of Agriculture and Agri-Food Canada (AAFC), Foreign Affairs and International Trade Canada (FAITC) and industry stakeholders to explain the rationale for the policy decision and answer any questions from industry participants. Over 40 stakeholders participated on the teleconference.

(5) Design of the legend

Concern was expressed about the potential for consumer confusion resulting from the three legends contained in the existing OPR.

The Agency carried out focus group testing through an online survey to solicit industry response to proposals regarding a new legend for certified organic products. Participants in the survey included members of the Organic Value Chain Roundtable (OVCR), whose membership is drawn from a wide cross-section of the Canadian organic sector including producers, processors, distributors, retailers and others. Seventy-two respondents provided comments on the design.

Support for a single revised legend has been widespread throughout industry and the OVCR has indicated that they are very supportive of changes to the design.

Interdepartmental

On August 12, 2008, Agency officials met with Canada Border Services Agency’s (CBSA) Food, Plant and Animal Unit and their Commercial Operations Section to introduce and discuss the proposed Regulations. Since there are no specific harmonized system tariff codes to distinguish them, organic products are not readily distinguishable from other imported agricultural products; as such, import declaration and/or documentation required by CBSA would continue to be required. The proposed Regulations should not result in any policy or operational changes for the CBSA.

The Agency has also consulted with officials from FAITC and AAFC in the development of the proposed Regulations. Both departments have had the opportunity to review the proposed Regulations and have provided substantive comments focusing on trade-related provisions. The Agency will continue to consult with these departments on the proposed Regulations to ensure that they respect all trade requirements and obligations.

The Government of Canada will provide official World Trade Organization (WTO) notification to Canada’s international trading partners to advise them of the proposed Regulations and to provide the opportunity to comment.

Summaries of the consultations are available on the Agency’s Internet site (www.inspection.gc.ca).

Implementation and enforcement

While the OPR provided for a two-year transition period for implementation, the proposed Regulations would require compliance with the proposed Regulations upon the coming-into-force date of June 30, 2009. As consumer protection is one of the primary objectives of the proposed Regulations, an additional transition period could significantly impact the benefits consumers would derive from the implementation of these proposed Regulations.

Some producers have requested additional time to adapt their systems to the CGSB 310 and PSL standards and the proposed mandatory framework; however, many Canadian-based operators are already being certified voluntarily to organic standards and want the proposed Regulations to be in force.

The Agency recognizes that it is important to have a smooth transition from the existing voluntary regime to the proposed mandatory regulatory framework. As such, agricultural products certified as organic by an accredited CB would be accepted as “organic” under these proposed Regulations upon the coming-into-force date. A CB accredited by a designated CVB prior to the coming into force of these proposed Regulations will be considered accredited under the proposed Regulations. This approach would allow CBs to continue providing certification services to operators without interruption upon the coming-into-force date and would avoid a surge of requests for certification on the coming-into-force date of the proposed Regulations.

The Agency has developed a “Stream of Commerce/Enforcement and Compliance Policy” where by it would implement temporary compliance and enforcement measures which would be in place for a period of 24 months. During this period, educational activities and minimum enforcement guidelines would be used, where the operator would be advised of non-compliance issues, may be requested to make corrections, and would be encouraged to develop a plan outlining how and when deviations or non-compliances would be corrected. The Agency would implement more stringent enforcement activities after this initial period.

The Agency will verify compliance and enforce these proposed Regulations in accordance with its statutory authorities, including those found in the CFIAA and CAPA. Compliance and enforcement activities would include audits of CVBs and CBs for compliance with regulatory requirements, label reviews, product verification and response to consumer complaints through on-site inspections, where required.

This approach would manage the transition by balancing the need to have controls in place to correct non-compliance and provide protection to consumers, while supporting continued trade and development of the organic industry.

Service standards

The Agency has a limited service delivery role in this program as the COR incorporates a third-party service delivery system for organic certification services.

Service standards will apply to both imported and domestic products. Service standards will be part of the import-export agreements. Service standards for the activities within the COR are outlined as follows:

(a) Agreements with CVBs

The Agency would review for adequacy the information supplied by the CVB for initial application and would acknowledge receipt within five business days after reception of the application.

The application and accompanying documents would be reviewed by the Agency for completeness within 15 business days of receipt. The Agency would assess a CVB’s system once the application is complete. The Agency would send the evaluation report to the applicant within 30 business days of completion of the assessment.

The Agency would sign the agreement within two months of the recommendation.

(b) Accreditation of CBs

A CVB would be responsible for assessing and recommending a CB for accreditation by the Agency. The length of time to complete this process and make the decision to recommend accredittation may vary depending on the completeness of the application and records, as well as the number of files the CVB is currently working on. In most cases, it would be completed within 9 to 12 months.

A CVB would be responsible for providing notification of their accreditation recommendation decision to the Agency within 30 business days of reaching that decision.

The Agency would issue an accreditation number to a CB no later than 14 business days after receiving a CVB’s recommendation for accreditation.

(c) Certification

First-time certification: Service standards will vary depending on the length of time required by the CGSB 310 Standard to transition from conventional production to organic production. Once the requirements of the CGSB 310 and PSL standards are met, the inspection and certification process would take between 12 and 16 weeks. Factors that could contribute to time delays include, but are not limited to, company location, completeness of organic production plan and the ability to demonstrate compliance at the time of inspection.

Certification renewal: Organic certification would be required to be renewed on an annual basis. For renewal, the inspection and certification process could take between 8 and 12 weeks.

(d) Appeals and complaints

The Agency’s response time for acknowledging an applicant’s request for a review of the CVB’s decision to not recommend accreditation of the applicant would be no more than 15 business days from the receipt of the request.

The Agency’s decision relative to the accreditation review would be sent to the applicant no later than 10 business days after the hearing is concluded.

The Agency’s response time for initiating follow-up to complaints regarding the organic integrity of an agricultural product would be five business days after having received the complaint.

(e) Third-party use of the legend

The Agency’s response time to an application for third-party use of the legend would be within seven business days from the receipt of application.

Performance measurement and evaluation

To measure and evaluate the effectiveness of the proposed Regulations towards attaining the objectives as stated in this Regulatory Impact Analysis Statement, the Agency would undertake to collect, analyze and evaluate performance based on the following key indicators.

(i) Objective: To protect Canadian consumers and the marketplace from unfair practices

Agricultural products marketed in Canada would be required to meet the requirements of the proposed Regulations to be marketed as organic. Regulating the use of the legend is anticipated to reduce consumer confusion with respect to the assortment of organic claims and certification marks currently existing in the marketplace. With the legend, consumers would have greater assurance that the agricultural products they are purchasing meet a defined standard, and that false and misleading claims would be deterred. This would be measured through the annual collection and analysis of the number and nature of complaints received by the Agency from consumers, organic industry stakeholders and other government departments and agencies, and through the examination of the results of surveys and other studies of consumer trends relative to the purchase and consumption of organic products in Canada, if any are conducted and information becomes available.

The effectiveness of the proposed Regulations in protecting the marketplace from unfair labelling practices could be measured through the annual collection and analysis of the number and nature of labelling or marking violations resulting from label verification activities. Additionally, the number of certifications that are renewed, suspended or cancelled would be monitored and could indicate compliance trends.

(ii) Objective: A fair and effective regulatory regime

A mandatory federal standard with effective enforcement would reduce confusion and provide quality assurance to consumers and traders, supporting the development of the domestic organic industry. A level playing field should result for all organic products marketed in Canada, as all products, including imports, would be subject to the Canadian requirements.

To determine the fairness and effectiveness of the COR, the Agency could annually compile and analyze the number and nature of complaints about unfair trade and track any market reports making note of any growth or decline in the market for organic products. Additionally, information on the increase or decrease in the size of organic operations and in the number of certified operators in Canada would be annually collected and analyzed to ascertain the potential impact of the proposed Regulations on the size and/or growth of the organic sector.

(iii) Objective: Improved international trade in organic products

Having a federal regulatory framework in place for organic products would create an environment in which Canada may negotiate import-export agreements with foreign trading partners. Canadian importers and consumers would have year-round access to certified organic products, and entry to foreign markets would be facilitated for Canadian exporters as a result of recognition of the Canadian system. Improved international market access could be annually measured through the number of agreements with foreign countries.

Effectiveness of import-export agreements will be measured through monitoring and enforcement. The progress of the proposed Regulations towards meeting these stated objectives will be reported annually in the Agency’s Departmental Performance Report.

Michel Saumur
National Manager, Canada Organic Office
Agrifood Division
Meat, Agrifood and Seafood Safety Directorate
Policy and Programs Branch
Canadian Food Inspection Agency
1400 Merivale Road, T1-4-142
Ottawa, Ontario
K1A 0Y9
Telephone: 613-773-6218
Fax: 613-773-6282
Email: OPR.RPB@inspection.gc.ca

PROPOSED REGULATORY TEXT