Food processors anxious to start ingredient tariff consultations

Finance Department has yet to provide manufacturers with meaningful information on talks

Food processors are full of questions as they await promised consultations regarding eliminating tariffs on food-manufacturing ingredients.

Finance Canada is set to lead the talks promised in last month’s federal budget.

The budget proposed removing tariffs on ingredients, except dairy and poultry, to make food processing in Canada more competitive internationally, the government said in the budget, noting the move will support investment and jobs in the sector.

“There are more than 6,000 food-manufacturing facilities in the country and they have particular concerns,” Carla Ventin, Food & Consumer Products of Canada’s vice-president of federal government affairs, said in an interview. “They want to have time to be able to make a careful analysis of the department’s proposal.”

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Chris Kyte, president of Food Processors of Canada, said his organization, which represents small- and medium-size processors, has heard nothing from the department since the March 22 budget release. It’s not clear whether this initiative will apply just to ingredients not produced in Canada.

So far, Finance is being mum on its plan. A department spokesperson said the consultations will be launched “in the near term” and a detailed list of products of proposed products will be published in the government publication Canada Gazette then. Proposed tariff elimination will apply to the Most-Favoured-Nation (MFN) rates of customs duty of identified goods, covering imports from all countries, she said.

Usually the government posts specific regulatory changes in Part 1 of the Canada Gazette with either 60 or 90 days allocated to consultation. Then it takes the information received during the consultation and creates a final policy, which is made public later in Part 2 of the Canada Gazette.

As part of its sweeping overhaul of food safety regulations, the Canadian Food Inspection Agency entered consultations in advance of posting proposed changes in the Gazette. The entire food chain has been involved in that exercise.

The budget said food processing is “Canada’s largest manufacturing employer and an important contributor to Canada’s economy.”

That recognition is likely the results of the industry explaining its activities and operations to federal officials during meetings of Agriculture Canada’s food-processing roundtable, Ventin added.

“The government has already cut tariffs for equipment and manufacturing equipment; now we need the same for ingredients,” Ventin said.

Processors have identified access to competitively priced inputs as a key barrier to growth, she noted. Currently 57 per cent of agricultural goods are still subject to tariffs at an average rate of approximately five per cent.

“Since very tight margins exist in food manufacturing, certain tariff reductions could allow Canadian food and beverage manufacturers to lower their non-recoverable production costs, increase the competitiveness of their operations and enhance their ability to compete in domestic and foreign markets,” Ventin said.

The food-processing sector employs 300,000 Canadians and generates nearly $29 billion annually to Canada’s GDP — more than the automotive and aerospace sectors combined, FCPC says.

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