Canadian Food Safety Quality Program

November 22, 2006

Ms Joan Champagne, CMA

Canadian Food Safety Quality Program

- On-Farm

Program Coordinator

1101-75 Albert St.

Ottawa, Ontario

K1P 5E7

Dear Ms Champagne:

Re: OFFS Delivery Option Identification and Evaluation –Final Report

Scott Wolfe Management Inc. is pleased to provide the Canadian Federation of Agriculture with our Final Report of the current and projected cost of delivery of on-farm food safety programs at the national and provincial level, as well as options for delivery of on-farm food safety programs in Canada.

We have appreciated the comments and direction from the Steering Committee throughout the conduct of this project. We look forward to the continued discussions with the participating commodity organizations to discuss their individual costs and the delivery options available for the on-farm food safety programs.

Sincerely,

SCOTT WOLFE MANAGEMENT INC.

per

Robert S. Hyde, CAC, CMC

President

Final Report

OFFS Delivery Option Identification and Evaluation October, 2006

TABLE OF CONTENTS

Page

I.INTRODUCTION1

Background 1

Consulting Objectives 2

OFFS Delivery Considerations 2

II.PROFILE OF CURRENT OFFS DELIVERY 5

Overview of OFFS Delivery 5

Requirements for Successful Delivery10

III.COSTS OF ON-FARM FOOD SAFETY PROGRAM DELIVERY12

Profile of the Costs 12

Summary Observations21

IV.DELIVERY MODEL OPTIONS27

Identification and Description of Attributes27

Delivery Options27

Potential Evaluation of the Options28

APPENDICES:

A:Project Methodology

B:Participants, Contacts and References

C:Glossary of Terms

D:Official Recognition

E:Summary of Business Needs Survey

F:Further Description of Selected Model Attributes

G: Current OFFS Program Delivery Service Providers

Final Report

OFFS Delivery Option Identification and Evaluation October, 2006

I.INTRODUCTION

Provincial and national commodity organizations require a framework to make informed decisions in the planning and management of their On-Farm Food Safety(OFFS) program. This project provides commodity organizations with indicative data of current and projected delivery costs regarding the delivery of OFFS programs, and a profile of delivery options and attributes. This project identifies what is currently required to deliver OFFS programs and helps to ensure that all appropriate delivery mechanisms and their attributes are being considered as options are being evaluated going forward. The Delivery Options for On-Farm Food Safety Programs Steering Committee, a joint national/provincial steering committee of the Canadian Federation of Agriculture, engaged Scott Wolfe Management Inc. to conduct the project.

BACKGROUND

Across Canada, the delivery of on-farm food safety programs has largely been the responsibility of the provincial commodity organizations operating within the context and overseen by the respective national commodity organizations. For those provincially-developed on-farm food safety programs, the provincial commodity organization has sole responsibility for program delivery.

Each commodity group in Canada has considered, or is currently considering, alternatives for the delivery of on-farm food safety programming in Canada. Some of the basic questions include:

what is the best form of delivering OFFS programs? i.e. should each commodity organization establish in-house systems or contract 3rd party auditors?;

will the audit system required by CFIA/Provinces lend itself to meeting other national and/or commercial audit requirements?

could an already established ISO-accredited audit firm better meet the multi purpose requirements of OFFS systems?

could a national system, if implemented, run the risk of not meeting market / customer needs?

the costs of delivery are believed to be substantial; could cost benefit analysis help determine who is responsible for what level of cost?;

should the implementation of food safety be driven by the private-sector, or does the public safety aspect demand a role or public institution involvement and possible leadership?

what are the important considerations for implementing on-farm food safety in Canada?

The priorities of the range of commodity sectors vary. Some of the industry sectors, such as the feather industry, will have several process requirements like food safety, animal welfare and environmental verification met very soon. Incremental costs will be added to their cost of production calculations. Grains and oilseeds producers are likely to see the timing and evolution of needs
very differently. Bovine livestock producers are likely most concerned about ensuring any system contributes, or does not detract from, any gains in ensuring the integrity of an effective tracking and tracing system to support more rapid trade resumption.

Commodity groups in Canada are in the process of, or have completed, development of their national OFFS programs based on Hazard Analysis Critical Control Point (HACCP) principles. In addition, independent provincial programs are also being delivered. Focus is now shifting to ensure the effective delivery of these programs. Commodity groups now want to determine their organizational cost associated with introducing and delivering these programs to the producer.

CONSULTING OBJECTIVES

The overall objective of this project wasto contribute to the identification and assessment of the most effective options that will support efficient delivery of producer-led on-farm food safety initiatives. More specific objectives were:

to determine the current and projected cost of delivery of OFFS programs at the national and provincial level; and,

to identify and profile options for delivery of OFFS programs.

The Project’s methodology is described in Appendix A.

This project has been supported by national and provincial commodity organizations. Twenty-six organizations participated in the initial phase of activity – that is the identification of the current status of OFFS development and implementation, and the identification of the business needs for the results of this project. Consultations with the individual organizations also included seeking input on the delivery mechanisms and options available. A list of participating organizations is provided in Appendix B.

Twenty-one provincial and national commodity organizations have provided cost data. The support and co-operation of industry organizations is appreciated. The costs data from individual organizations has been collected in confidence. Any cost data reported in this project report is consolidated and compiled using a methodology that does not disclose any individual organization’s cost data.

Cost data collected from participating commodity groups has been sourced from books of record, individual costing reports, estimates of actual costs using appropriate allocation methods, and some estimates of projected costs from those organizations who are currently building their capabilities to deliver OFFS programming. During the data analyses activities, the cost data was normalized to the extent that extreme outlying data was identified. This process involved some re-allocation of cost data between categories of activities.

OFFS DELIVERY CONSIDERATIONS

There are considerable terms and a range of definitions important to on-farm food safety programming. A Glossary of Terms is presented in Appendix C.

The primary elements of OFFS delivery are:

Producer Awareness Sessions: presentations made at producer meetings to inform producers of OFFS programs;

Producer Training Sessions: workshops designed to provide information and promote an understanding of OFFS program requirements including audits requirements;

Auditor Training Sessions: sessions designed to provide potential OFFS program audits with a detailed understanding of program requirements, auditing principles and audit requirements including reporting;

Pre-Audit Services: a review of documentation designed to assess the readiness of the farm for a certification audit;

On-Farm Audits: designed to determine the level of conformance of a site specific on-farm food safety program as measured against the commodity-specific OFFS program requirements; and,

Certification Scheme: the national producer organizations (NPOs) provide certification to farms operating in compliance to the OFFS program requirements.

All OFFS delivery requires resources and efforts in the following management functions:

Direction and control:

• planning anddirecting the overall program;
• monitoring and reporting, being accountable to Boards, management;

Operations:

• managing the implementation of:
• producer training, awareness and support;
• auditor training and auditing, program level;
• certification, validation of producers, appeals, dispute resolution; and
• the recognition of the program;

Supporting administration:

• management of information;
• financial: i.e. budgeting, record keeping, reporting;
• legal: i.e. contract management; dispute resolution mechanisms;
• administration, i.e. scheduling, office co-ordination; and,
• communications: i.e. strategy, development and distribution of materials.

This project collects the available cost data for the activities undertaken by the delivery agent for these management functions. The project does not include the costs associated with OFFS program development, Quality Management Systems being developed and implemented by some participants, or any anticipated (and currently largely undefined) management systems requirements to sustain the implementation of OFFS programs.

A nationally recognized food safety system must be approved by a national authority, the Canadian Food Inspection Agency (CFIA) and a panel of provincial specialists (provincial recognition requirements is currently being further discussed). Programs are being reviewed and approved in two steps:

1. the appropriate on-farm HACCP-based protocol for a specific commodity; and,
2. the organizational requirements of a national commodity organization to monitor, update, manage and assure compliance through an audit or verification.

Most commodity groups are effective in developing step 1, recognizing that the Food Safety Working Committees comprised of industry, CFIA and provincial food safety specialists are the most qualified and credible in interpreting HACCP rules as they could and should apply to a farm. Step 2 is about verification requirements and the most appropriate structure to assure continued compliance. Several issues create difficulties in step 2:

there are very few clear international indicators for the frequency of the on-farm audit and/or the intensity of the audit required to provide adequate assurance to customers. This is primarily due to:

• differences by commodity, i.e. technical requirements;
• differences by customer for the same commodity, i.e. unique specifications in seeking competitive advantage;
• the need for a nationally recognized audit system or a ISO-recognized audit system that can audit appropriately to a protocol standard (as determined in part by an assessment of risk); and,
• differing opinions on the impact of branding Canada and possible diminishing the credibility of any other standard;

there are a wide variety of methods used by producer organizations to track and record expenses regarding to the delivery of on-farm food safety programs. Some commodity organizations include the costs of delivering on-farm food safety programs as part of their field services. Other organizations have the cost of delivery of their programs clearly identified. As well, some commodity groups have delivered a comprehensive program while other commodity groups will have only delivered certain elements of the program. There is also variability in who conducts the on-farm audit functions for individual programs. Some organizations are early in the development stage; their costs have been projected based upon their current understanding of how the delivery would be implemented;

audit requirements, and the resulting auditing function of on-farm food safety programs, may warrant some integration with national standards/ protocols of other programs, beyond Food Safety. These may include environment plans, animal welfare plans, worker safety plans, tracking and tracing systems;

it is anticipated that many other farm-based processes may require verification or audit in the near future, i.e. closed-loop identity preserved strategies, commercial standards/ protocols (i.e. Maple Leaf Natures Own, Cargill Prime Beef, Heinz, etc), individual / private standards for improved bio-security, animal care, or processes to establish individual brand identity that are being developed and implemented.

The following section continues with an overview of on-farm food safety delivery and the key requirements for managing successful implementation of the delivery component.

II. PROFILE OF CURRENT OFFS DELIVERY

OVERVIEW OF OFFS DELIVERY

For the purposes of this project, OFFS delivery is the implementation and maintenance of an on-farm food safety program. In this project, relevant costs include the personnel, materials and supplies, travel, and facilities involved in the following delivery activities:

Directing and Monitoring

There are two areas of resource, and related costs, involved in the planning, directing, controlling, monitoring and reporting management functions: members of the Board of Directors and the Executive Management of the commodity organizations.

Board of Directors / Committees
the accountable review by Boards of Directors, and/or Committees of the Boards

The largest potion of Board members’ involvement has been in the development of organizational policy in the design and the development of the organization’s OFFS program. This includes the development of OFFS delivery policy and procedures. Board members are also accountable to the membership for the implementation of OFFS and have an ongoing directing, monitoring, control, and reporting role. The level of involvement of Board members largely depends upon the specific commodity organization’s stage in implementation of on-farm food safety initiatives. These activities and related costs have been identified and captured in this project.

Executive Management
the directing and monitoring role of executive management overseeing the delivery of the program

The General Managers and Executive Directors of the national and provincial commodity groups have management responsibility for the day-to-day operations of the OFFS delivery. This portion of their efforts has been allocated to the OFFS delivery costing efforts; costs primarily include salaries and travel.

Operations

The primary activities involved in any implementation of OFFS programming are the training of the producers, the certification of the producers, the registration of producers, and the procedures required for potential seeking official recognition of the program from the Canadian Food Inspection Agency. Most of the activity in OFFS delivery is in training, certification, and registration areas.

Producer Training and Support
help desk
producer inquiries
training sessions: group
training sessions: one-on-one
pre-audit service, including gap analysis

Most organizations now have in-house staff involved in assisting producers understand the importance of OFFS programming, the components of their respective on-farm food safety initiatives, and the requirements for the program. One-on-one training is the most prevalent activity to accomplish this. Some organizations contract external resources to assist in the training required.

Certification of Producers
record of producers
producer manual documentation
- complete forms, checklist
- date / initial completion
- maintain records
acknowledgement of conformance

Most of the participating organizations are at this stage of implementation. The certification of producers is the largest area of activity and currently represents the highest total of costs for the participating organizations. This implementation activity is mostly accomplished in-house; most human resources are also involved in all key operating activities: training, certification, and registration.

Numerous producer groups have adopted terms that have specific applications i.e. certification versus validation versus audit. Those terms however, may have limited transferability or application with other producer groups. Establishing a vocabulary that is consistent with internationally recognized protocols (ISO) and transferable between the producer groups is paramount.

Producers currently are audited to numerous certification schemes. These schemes vary in scope and complexity; objectivity and independence. Any organization that provides to its producer group a certification or validation scheme that is self-administered by the organization by definition is not as independent or objective as a certification or validation scheme granted by a qualified 3rd party or accredited organization. An accredited organization is independent of CFIA but formally authorized by CFIA to certify or validate.

Registration
audit (on-farm) OFFS Program
for adequacy and effectiveness
validate OFFS Program (by 2nd or 3rd party)

Registration of a production unit occurs when the requirements of an on-farm food safety program are met. The audit function is the most in-depth, and costly, implementation activity. Those organizations at this more advanced stage of delivery are experiencing their most significant costs. This area of activity also has the broadest range of resources – from in-house initial audits, to contracted third party audit.

Official Recognition / Program Level Audit
technical review
review of management manual
gap analysis-management system
implementation assessment
audit of the program

Official Recognition is a multi-party examination of the technical soundness and administrative effectiveness of the on-farm food safety programs. Official Recognition is a deliberate process requiring controls (e.g. clear responsibility, allocated resources, clear and effective program design and delivery, measurement and analysis, etc…) and a mechanism for continual improvement. Costs incurred to meet the Quality Management System requirements needed for formal recognition are being captured in this project. Appendix D provides a further description of Official Recognition.

Administration / Support

OFFS delivery requires administrative support activities, including such management functions as the maintenance of a database and filing system, scheduling and co-ordination of events, communications with stakeholders, management of information, management of human resources, and possible legal activities. Most organizations do not specifically identify and track costs by each of these functional areas. This level of detail i.e. multiple management functions, was requested to assist participants in identifying and reporting appropriate costs.