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Unilever Canada Repeal of Ontario’s Edible Oils Products Act Presented
to: Prepared by Sean McPhee & Associates Inc. November 20, 2001 ***************************************************** Unilever Canada Unilever Canada, a subsidiary of Unilever PLC, is a diversified consumer products company headquartered in Toronto. Unilever’s interests in Canada include Unilever Canada – Foods and Home & Personal Care, Good Humor-Breyers, Unilever Bestfoods Foodservice Canada, Loders Croklaan, DiverseyLever Canada, Unilever Cosmetics International (Canada) and Bertolli Canada. In 2000, Unilever Canada had annual sales of $1.4 billion and employed 3,300 people across Canada. In Ontario, Unilever Canada has facilities in Oakville (Unilever Cosmetics International, DiverseyLever Canada, Good Humor-Breyers), London (DiverseyLever Canada), Simcoe (Good Humor-Breyers), Woodbridge (Good Humor-Breyers), Rexdale (Loders Croklaan, Foods, Foodservice) Toronto (Head Office, Foods, Home and Personal Care), Richmond Hill (Sales), Brampton (Foods), Peterborough (Foods), and Belleville (Foodservice). In Canada, Unilever is best known by brands such as Lipton, Red Rose Tea, Slim·Fast, Ragu, Knorr, Hellman’s, Skippy, Breyer’s, Popsicle, Bertolli Olive Oil, Sunlight Laundry Detergent, Sunlight Dish Liquid, Vaseline, Q-Tips, Dove, Thermasilk, Salon Selectives and Degree. Leading margarine brands manufactured in Rexdale, Ontario and sold by Unilever in Canada include: ·
becel® ·
Imperial® ·
Blue
Bonnet® ·
Fleischmann's® ·
I
Can't Believe It's Not Butter® Unilever Canada Position on Bill 87 Unilever Canada supports Bill 87 -- "An Act to regulate food quality and safety and to make complimentary amendments and repeals to other Acts". In particular, we applaud the Ontario government for its initiative in repealing the Edible Oils Product Act, an Act which is discriminatory and protectionist and stands in the way of consumer choice. The Market OpportunityOntario’s Edible Oil Products Act makes it illegal to manufacture or sell in Ontario any product that combines a non-dairy oil or fat with a dairy product; and is an imitation of, or resembles, a dairy product. Ontario is one of the few jurisdictions in the world to prohibit the manufacture and sale of these products. Unilever applauds the government’s initiative to repeal the Act through passage of Bill 87. The legislation to repeal the Edible Oils Product Act enshrines the principles of consumer choice and the elimination of discriminatory and protectionist regulation. Consumers in Ontario and Canada have expressed interest in alternatives to dairy products for cultural, medical, religious, and health reasons. For example, lactose intolerance, a condition that affects 21 per cent of Canadians, prevents those affected from enjoying regular dairy products. These products also represent new marketing
opportunities for Ontario’s soybean and canola growers as many of them are
made with soybean or canola oil. Opportunities
exist for both dairy and edible oil producers to enhance their products with
ingredients from each other that will ultimately
increase consumption of both dairy and edible oil products.
The addition of dairy ingredients to edible oil based products will
enhance the functional and sensory properties of the conventional edible oil
products such as margarine, coffee creamers and whip toppings, thus improving
the product's appeal to the consumer. Soon, as part of Health Canada’s reform on nutrition labeling, it will be mandatory for food manufacturers and producers to label their products for saturated fat and trans-fatty acids. Opening up the market for blends will lead to products that “borrow” the best qualities from dairy and edible oil products. For example, by adding butter to an edible oil, the resulting blend will be harder in texture – valued by bakers – and will not have the trans-fatty acids that occur through hydrogenation, one process currently used to harden some margarines. In addition, the blended product will be lower in saturated fat, thus lower in dietary cholesterol (because the fat is not 100 per cent sourced from dairy) but will retain a butter taste valued by some consumers. The ObligationAs
noted by the Federal/Provincial/Territorial Agri-Food Inspection Committee (FPTAFIC), measures
with respect to butter/margarine blends, and dairy product analogs,
fall within the scope of Canada’s Agreement on Internal Trade (AIT).
Chapter Nine of the AIT includes a general undertaking to work towards
common national standards for all agricultural and food products as a means of
reducing interprovincial trade barriers. With
no national standard for dairy product analogs currently in place, those
jurisdictions that regulate the commerce of dairy product analogs are open to
challenge under the equal treatment provisions of the AIT.
A large number of food products sold in Canada are not regulated by
national composition standards. Specifically, Article 902.3 of the AIT included edible oil products and imitation dairy products in the scope and coverage of the Agreement effective September 1, 1997. As such, the Edible Oils Products Act, which restricts the movement of edible oil products into Ontario, creates an obstacle to internal trade and therefore violates the Agreement on Internal Trade to which the Province of Ontario is a signatory. Therefore, the Act should be repealed and its provisions should not be included in the proposed Food Safety and Quality Act or its regulations. In addition, restrictions on blends and imitation dairy products are listed as a trade barrier by Canada’s largest trading partner -- the United States. According to the U.S. Trade Representative, “…provincial marketing restrictions on butter/margarine blends or imitation dairy products have served as a limitation and in certain cases prohibition to the sales of these products into many provinces.” As the WTO/NAFTA negotiations and discussions continue to criticize Canada's marketing boards, and the associated non-tariff trade barriers, it is difficult to see Ontario supporting an antiquated law (seen virtually in no other place in the world) that also promotes trade barriers between the provinces of Canada. This comes at a time when Canada needs every measure of manufacturing and R&D efficiency to compete in the world markets. Last year, the FPTAFIC recommended that “provinces should deregulate products that imitate or resemble dairy products, whether or not they contain dairy ingredients, and defer to existing federal regulatory processes that address the consumer information and fraud issues.” The Province of Ontario consulted with stakeholders on this recommendation, and the Ontario Soybean Growers, as well as the Edible Oil Foods Association of Canada, responded favourably. In light of this recommendation, and the favourable responses received, Ontario should proceed to repeal the Edible Oil Products Act and allow the sale of dairy analogs in this province. Specifically, the FPTAFIC recommended that:
The Direct Benefits Current SituationThe edible oils-based dairy substitutes sector makes a significant contribution to the Canadian economy, accounting for $570,000,000 in total sales (source: AC Nielsen 2000) and employing approximately 11,000 people. The margarine industry accounts for just over half of the total edible oils-based dairy substitutes market with total sales of $308,000,000 (source: AC Nielsen 2000) and employing approximately 6,000 people. The majority of all economic activity related to the margarine industry in Canada occurs in the Province of Ontario. The majority of soybeans used in margarine for the Canadian market are grown in Ontario. More than 70 per cent of all soybeans grown in Canada for all uses are crushed in Ontario. More than 90 per cent of all members of the Edible Oils Food Association of Canada have their processing facilities in Ontario. More than 85 per cent of branded margarine produced for the Canadian market is manufactured in Ontario. Opening the Market for BlendsThe repeal of the Edible Oils Products Act will stimulate the creation of a new market for edible oil/dairy blended products in Ontario enabling consumers to choose from a greater array of new products in addition to existing dairy products and edible oil products. Based on the market share in other
jurisdictions – blends have three per cent of the global dairy and edible oil
market -- the immediate market potential for blends in Canada, in terms of
direct sales, is $226,000,000 including both retail and foodservice sales with
corresponding direct employment of 2,260 new jobs, the majority of which will be
created in Ontario. In Ontario,
alone, total direct sales potential for the blends market is $66,000,000. (see
Appendix II) In addition to the creation of a third
market for edible oil/dairy blends, repeal of the Act will create a market for
dairy ingredients demanded by edible oil food producers who are developing
blended products. It should be noted that these market share
projections do not assume innovation in the category.
With innovation and consumer education, it is estimated that the market
for blends in Ontario and Canada could grow to five to ten per cent, and would
more than offset the ministry’s estimate of an initial three to four per cent
loss of market share for dairy products to the benefit of both dairy producers
and edible oil producers. The Indirect BenefitsOpening the market for blends will increase demand for both soybean and canola crops. The majority of the canola seed grown in Ontario is crushed and processed for edible oil food products in Ontario. Soybeans are the largest acreage cash crop in Ontario having doubled in production through the 1990s due to the development of soybean varieties adapted to Ontario's climate. In 2000, over 85,000,000 bushels of soybeans were harvested from 2,235,000 acres, with a cash value of over $600,000,000, representing over 80 per cent of Canada's soybean production. Approximately 65-70 per cent of Ontario's soybean production is destined for the production of vegetable oil and meal (crush market). The potential increase in demand for soybeans – the majority of which are grown and processed in Ontario -- as a result of opening up the Ontario market for blends through the repeal of the Edible Oils Products Act, is 91,000 tonnes or a 5.2 per cent increase. An attendant benefit to the Ontario economy would occur as a result of increased domestic consumption of identity preservation of specialty food-grade soybean varieties, over 95 per cent of which are currently exported. As
a result of opening up the market for dairy and edible oil product blends
Ontario companies will be able to increase investment into research and
development as a far larger potential market will provide the economic
justification for the investment. In addition, Ontario companies who develop
unique dairy and edible oil blended products for the Canadian market will now
benefit from national economies of scale that will provide a basis to seize
export opportunities in other markets such as the U.S. Other
indirect economic benefits include investment in new technologies by Ontario
companies to produce innovative blend products with attendant multiplier effects
in related industries such as equipment suppliers, packaging, marketing, etc.
– all of which will have a positive economic and employment impact on the
province. New ProductsOntario
consumers deserve the same food choice as the majority of North Americans to
match their personal dietary requirements. Consumer choice provides Ontario
companies the flexibility to develop products to increase overall demand for a
much larger North American market, which benefits Ontario. The combination of various fat sources
(dairy & edible oils) will provide the opportunity to develop new products
with unique properties resulting in new consumption opportunities for both dairy
and edible oil products. The
blending of edible oil ingredients in dairy products will improve the
nutritional aspects of the product to meet a specific need.
For example, butter blended with edible oil could still deliver desired
taste and textural qualities (desired by industrial bakers) with the enhanced
nutritional properties (less saturated fat) that the consumer is demanding.
In other jurisdictions, Unilever
markets Brummel and Brown, a margarine/yogurt blend, which is a spread low in
saturated fat offering a unique taste experience. Opportunities for the Dairy IndustryBoth the edible oil industry and the dairy industry stand to benefit from the removal of restrictions on blends. Specifically, the dairy industry stands to:
Health
Benefits
Numerous
studies have demonstrated the health benefits of lowering the level of saturated
fat, derived from animal sources, in the diet and substituting plant based
unsaturated fats. The repeal of the
Edible Oils Products Act will enable manufacturers to produce a blended spread
product that is lower in saturated fat, thus lower in dietary cholesterol,
because the fat is not 100 per cent sourced from dairy while retaining a butter
taste valued by some consumers. More
than 40 per cent of Canadians are believed to have elevated cholesterol levels.
Almost one half of Canadian adults on a diet do so because of concerns
about elevated cholesterol (see Appendix III).
On a
population basis, lower levels of saturated fat in the diet have been
conclusively linked to lower levels of cardiovascular disease (CVD). A study, using World Health Organization data, on the
incidence of death from CVD among men, aged 35-74, found the lowest rate of
death in southern Europe where relatively high levels of vegetable oils as
opposed to animal fats are consumed. Conversely,
the highest rates of death from CVD occur in Eastern Europe where consumption
patterns are the opposite of southern Europe.
(see Appendix IV) In
another study, changes in diet and the impact on the incident of coronary heart
disease in Finland were tracked between 1972 and 1992.
In 1972, 90 per cent of those studied used butter on bread; in 1992, 20
per cent used butter. The
corresponding rate of death from coronary heart disease in 1972 was 671 per
100,000; in 1992, the rate of death from coronary heart disease had declined to
324 per 100,000. (see
Appendix V) The
benefits to individuals of reducing saturated fat in their diets are obvious in
terms of personal health. In
addition, Canadian society as a whole stands to benefit in terms of reduced
health care costs and strain on the health care system due to reduced incidence
of heart disease. Impact of Repeal of Oleomargarine ActIn December 1994, the Government of Ontario announced its intention to repeal the Oleomargarine Act which, among other matters, required margarine to be a different colour than butter (either white or orange). What was the immediate impact of the repeal of the margarine colour restriction on butter sales? In 1995, butter sales remained unchanged from 1994 at about 42 million pounds (Source: AC Nielsen). Conversely, butter sales in the province of Quebec, where margarine must be coloured white, declined by about six percent in 1995 over 1994 (Source: AC Nielsen). On a per capita basis, consumption of butter and margarine has declined slightly in the 1990s in Canada. In 1991, per capita butter consumption was 2.99 kg; in 1999, it was 2.82 kg. In 1991, per capita margarine consumption was 5.55 L; in 1999, it was 5.27 L. (Source: Statistics Canada). Names and NomenclatureCurrent federal and provincial legislation provides the framework to ensure that consumers will be able to tell the difference between a dairy product, an edible oil product and a blended dairy/edible oil product. The labeling and advertising of blended products are regulated in the same manner as other unstandardized food products. Section 5 (1) of the Food and Drugs Act prohibits selling or advertising any food in a manner that is false, misleading or deceptive. Other federal and provincial laws, including the federal Competition Act and Consumer Packaging and Labeling Act and certain provincial business practice and consumer protection laws, prohibit misleading or deceptive advertising and labeling and would prohibit, for example, the labeling or advertising of edible oil products in a way which would suggest to consumers that the products are in fact dairy products. The
Canadian Food Inspection Agency’s Guide to Food Labeling and Advertising (G.F.L.A.)
addresses standardized and unstandardized food products.
The guide states that the common name of a standardized food should not
be applied to any other food, unless it meets the provisions set for that
particular food. However, a
modified common name can be used to describe a food that does not meet the
standard, if certain other conditions are met.
In addition, the G.F.L.A. provides guidelines for the nomenclature and
labeling of food products. Additional principles to ensure clear communication with consumers are as follows:
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