Discussion paper: Identifying a new approach for developing and maintaining Canadian fresh fruit and vegetable grade standards

Introduction

The Canadian Food Inspection Agency (CFIA) is modernizing Canadian food quality standards, including grade standards for fresh fruit and vegetables (FFV). The goal of this consultation is to help the CFIA select a new approach for developing and maintaining Canadian FFV grade standards.

In order to develop options for a new model, CFIA engaged with stakeholders including industry, Agriculture and Agri-Food Canada and key international trading partners to:

• gain a better understanding of the role of FFV grades in the modern marketplace
• identify opportunities to reduce burden on industry and support competitiveness
• be informed on how different approaches for developing and maintaining FFV grades may affect stakeholders

Feedback from these initial consultations informed the development of three possible options. The CFIA consulted on these option.

From July 22, 2024 to October 20, 2024 to seek feedback from all stakeholders, including:

• academia
• consumers
• consumer associations
• federal, provincial and territorial government departments
• Indigenous Peoples
• industry
• industry associations
• international trading partners
• non-government organizations

Following the consultation period and an analysis of stakeholder comments, CFIA will publish its findings in a "What We Heard Report" and document its next steps.

What are fresh fruit and vegetable grades?

Grades and grade names for foods are regulated under the Safe Food for Canadians Act (SFCA) and the Safe Food for Canadians Regulations (SFCR), as well as under various provincial acts. Depending on the food commodity, grades are either mandatory or may be used on a voluntary or optional basis. In either case, whenever a grade name is used, the food commodity must meet the grade requirements. Currently, thirty-one (31) FFV grade standards are maintained by the CFIA.

FFV grades describe product quality requirements such as colour, size, maturity, firmness, shape, condition of the food, as well as different types of defects (for example, bruises). Grades are used to categorize produce based on quality attributes into different grade classes, such as Canada Extra Fancy for apples and Canada No. 1 for cabbages. Produce assessed as having a higher quality is sold at a higher price when traded.

Canadian FFV grades and the verification of FFV grades by the CFIA also support access to the United States (U.S.) export market. U.S. legislation requires certain imported potatoes, onions, and field tomatoes to meet the same grade, size, quality and maturity standards as U.S. domestic products. The U.S. recognizes some aspects of Canadian potato grades as equivalent, which facilitates access to the U.S. market for Canadian growers.

The Canadian Grade Compendium: Volume 2 – Fresh Fruit or Vegetables sets out grade requirements for 13 fresh fruit and 18 fresh vegetables.

The Canadian Grade Compendium: Volume 9 – Import Grade Requirements prescribes the import grade names for imported FFV if they meet the requirements in the Canadian Grade Compendium Volume 2 for a Canadian grade name.

The Grade Standard Requirements for Fresh Fruits or Vegetables Imported from the United States sets out grade requirements in respect of FFV imported from the U.S.

What is incorporation by reference?

FFV grades and grade names established for certain FFV are set out in the Canadian Grade Compendium: Volume 2 –Fresh Fruit or Vegetables, which is incorporated by reference into the SFCR and is maintained by the CFIA.

What does "incorporation by reference" (IBR) mean?

IBR is a drafting technique that introduces the content of an internal (CFIA-owned) or external (non-CFIA) owned document (such as, a policy, directive, list, or standard) into a regulation without having to reproduce the document's text in the regulation. This means that, although the FFV grades are in a separate document that is maintained by the CFIA, they have the same effect as if they appeared in the regulations. The advantage of IBR is that these documents can be updated in a more efficient manner than regulations. CFIA maintains IBR documents based on the guiding principles of accessibility, transparency, consistency, reasonableness and clarity, in accordance with CFIA's Incorporation by Reference Policy (IBR Policy).

The world in which grades operate has evolved

FFV grades have a long history of use in Canada. One of the first known existence of FFV grades was in a document dated 1938 called "Buy by Grade" which was published by the Department of Agriculture. Grades evolved to provide a common language between shippers and receivers of fresh produce. They were used by both government and extensively by industry when trading such commodities sight unseen over long distances. They have also been used by government to ensure packages bearing a grade met the requirements declared on the packages. Grades for FFV were included as the standard industry trading language under the now repealed Canada Agricultural Products Act by way of the Fresh Fruit and Vegetable Regulations and the Licensing and Arbitration Regulations. Grade standards continue to be used almost exclusively by industry to conduct trade and establish prices based on the quality of the product. Industry ensures that only quality product reaches its buyers and the end consumer.

When the SFCR came into force in 2019, the FFV regulations and grades were incorporated into a single risk-based food regulatory framework that guides CFIA oversight activities for food safety, consumer protection and supports market access and competitiveness of Canadian industry.

The SFCR sets food safety requirements that apply equally to all foods in Canada, including requirements for licensing, preventive controls and traceability to facilitate recalls. The FFV grades do not contain food safety requirements. The SFCR and Food and Drug Regulations set consumer protection requirements, including requirements for labelling and prohibitions against selling food in an unsanitary condition (for example, rotten or decomposed food). The FFV grades do not contain consumer protection requirements.

After five years working within the SFCR regulatory framework and on modernizing FFV grades within its current context as CFIA-owned IBR documents, the CFIA is reviewing the framework for FFV grades and our role in their development and maintenance. This is consistent with the CFIA's commitment to strive to ensure priorities are aligned with the Agency's mandate, resources, as well as the Government of Canada's priorities and stakeholder priorities.

As part of this review, the CFIA has assessed the Canadian FFV grades and notes that the current marketplace includes produce with and without prescribed grades. During its analysis the CFIA has further noted:

• Domestically, most FFV do not have prescribed Canadian grades and in these cases applicable foreign standards (e.g. U.S.) are often used.
• Grades do not play a role in food safety and they are unrelated to the nutritional value of FFV
• Grades are used to differentiate FFV quality parameters
• Canada's 31 FFV grades include prescriptive requirements which can hinder product innovation and advancements in technology or consumer preferences (for example, greenhouse growing conditions, sale of different coloured beets in the same bag, etc.)
• FFV grades set in the Canadian Grade Compendium: Volume 2 – Fresh Fruit or Vegetables trigger mandatory grading and labelling requirements. If these labelling requirements are not necessary for food safety or consumer protection, they can add costs to industry, and place additional burden on the CFIA for oversight.

There has been previous work to modernize FFV grades

Previous work to modernize the grades in their previous and current frameworks focused on making changes to FFV grades, one at a time. This work was slow and imposed burden on both industry and CFIA.

Additionally, the previous work was started before the CFIA fully elaborated and finalized its:

• food safety risk intelligence systems, including the Establishment-based Risk Assessment (ERA) and Importer Risk Assessment (IRA) models which help identify areas of higher risk, prioritize CFIA inspection activities and inform the allocation of inspection resources. For example, higher risk establishments will require more oversight while lower risk establishment will require less.
• intention to move away from prescriptive requirements in favour of outcome-based provisions. Outcome-based regulations offer more flexibility because they focus on achieving measurable results by specifying the desired outcome that a regulation intends to achieve. This is in contrast to prescriptive regulations that tend to describe a specific process or action that must be followed to achieve compliance. For example, an outcome-based grade standard could omit the prescriptive requirement for apples to be "hand-picked".

As we look to modernize the development and maintenance of FFV grades, it will be important to consider this analysis and to consider which regulatory framework maximizes beneficial outcomes for all stakeholders.

Proposed guiding principles for selecting a new approach to modernization

Similar to what the CFIA proposed as guiding principles for its modernization of food compositional standards, the CFIA is proposing the following guiding principles to aid in the selection of a new approach to grades modernization that creates an agile framework for the FFV grading system:

• The framework should balance the CFIA's mandate and resources for grades modernization, while still helping Canadian businesses compete in a complex international trading environment by removing barriers
• The FFV grade framework should provide for a more effective and efficient change process than previous approaches where regulations or IBR documents are owned and administered by the CFIA
• The framework should consider whether increased industry and/or third party responsibilities for FFV grades could enhance efficiency of modernization
• The FFV grade framework should be outcome-based, where possible, to create opportunities for product innovation and advancements in technology
• The framework should continue to comply with Canada's international trade obligations
• The FFV grade framework should align with CFIA's mandate, and where applicable and possible within that mandate, align with the Government of Canada's commitments to sustainability, food security, and reduction of food loss and waste

Considerations for a modernized approach to FFV grades

In developing options for a new approach to FFV grade modernization, CFIA considered grades from a number of perspectives:

What is the importance of grades to the FFV industry?

The CFIA conducted pre-consultation engagement with the Fresh Produce Alliance (FPA), an organization consisting of two national FFV industry associations, Canadian Produce Marketing Association (CPMA) and Fruit and Vegetable Growers of Canada (FVGC), and the Fruit and Vegetable Dispute Resolution Corporation (DRC). The objective of this early engagement was to better understand from industry's perspective:

• The role of FFV grades in the modern marketplace
• Potential opportunities to reduce burden on industry and support economic growth
• Ways a new approach to FFV grades could contribute to the Government of Canada's commitment to sustainability (for example, food security, reducing food waste/loss, climate change)
• How different approaches might impact stakeholders, and why

The engagement consisted of completion of a detailed questionnaire that included input on the use of FFV grades from CPMA, FVGC, individual growers, shippers, retailers and the DRC.

Through this engagement, we gathered the following key insights:

• FFV grades are essential for:
  • establishing a common trading language that sets minimum quality expectations
  • promoting the "Canada" brand
  • commanding a specific price
  • market access and facilitating trade between Canada and other countries and trade between provinces
  • setting minimum import requirements to prevent lower quality produce from undercutting prices for domestically grown FFV
  • settling trade disputes
• Modernizing FFV grades to be more agile and responsive to change will increase competitiveness of Canadian businesses
• The way grades are described in the SFCR is overly restrictive and can inhibit the grades from being able to adapt to encompass new products and varieties (e.g. convenience-sized vegetables), or advancements in production methods (e.g. greenhouse and vertical farming)
• Grade standards that are accessible and available to buyers, growers, FFV industry and general public, and are reviewed and revised on a regular basis are important. Seeking updates for FFV grades through regulatory changes and the current approach to modernization is not agile enough.
• US grade standards are referenced in business to business transactions where no Canadian grades exist
• Continued government oversight of grades is important
• Mandatory grade labelling supports Canadian businesses achieve a fair price and communicate the grade requirements met

The DRC also expressed interest in assuming responsibility for overseeing FFV grades under the current regulatory framework.

How do trading partners use FFV grades?

Between December 2023 and January 2024, the CFIA met with key trading partners to gather insights to help inform options for a new approach for the development and maintenance of FFV grades. We learned the following during our discussions:

• The U.S. government maintains many FFV grades, but they are all voluntary. If industry applies a grade, the produce must comply with the requirements of the grade. The U.S. also has marketing orders that are industry-driven programs that help fruit, vegetable, and specialty crop producers and handlers achieve marketing success through minimum quality requirements, marketing and promotion initiatives, and other authorized efforts that foster success for industry members. Import regulations further support the marketing orders by requiring imported produce to meet the same grade requirements as the domestic produce covered by marketing orders (for example, potatoes and onions).
• The European Union (EU) regulates FFV marketing standards that set minimum quality requirements for fresh produce. There are 10 grades (called Specific Marketing Standards) for certain FFV set in regulations. If there is no Specific Marketing Standard set in regulation for a particular FFV, industry must grade their FFV according to the outcome-based General Marketing Standard, or the United Nations Economic Commission for Europe (UNECE) standards. 
• The United Kingdom (UK) regulates the same FFV marketing standards as the EU.
• The Australian government does not maintain FFV grades. This responsibility was transferred to Fresh Markets Australia, a national FFV industry organisation. Regulatory requirements are in place that require horticulture produce agreements between growers and traders. The agreement must specify, among other things, the FreshSpecs^® produce specifications or other specifications that will be used to establish the quality of the produce traded. FreshSpecs^®are outcome-based grades that are seen as the industry standard for class one produce.
• In New Zealand, the government does not regulate FFV grades. Industry is responsible for setting their own grades.

This analysis shows that there is no one single, or common approach to grades oversight among Canada's main trading partners and those FFV grade frameworks are designed to fit unique national and market characteristics.

How do Codex Alimentarius standards compare?

Codex Aliminentarius is an international standard setting organization for food. Codex coordinates input from 187 Member Countries including Canada, to develop and endorse the international food standards. In most cases, Codex standards are adopted by consensus among Members and are based on the best scientific and technical knowledge. As a participating Member, Canada contributes to the development and decisions relating to food standards and is an active participant in various Codex committees, including the Codex Committee on Fresh Fruits and Vegetables (CCFFV). CCFFV is responsible for the food standards of over 40 fruits and vegetables, which are broad and outcome-based requirements. These Codex FFV standards include minimum requirements for quality as well as specific requirements for each of the following classifications – Extra Class, Class I, Class II.

Do FFV grades contribute to food loss and food waste?

The Government of Canada committed to reducing avoidable food loss along production and supply chains as well as at retail and consumer levels. It is noted that some products that do not meet grade requirements can already be beneficially repurposed as animal feed or turned over to ensure soil health. Work to find additional ways to reduce food loss and waste can benefit Canadians by saving them money, improving the efficiency and competitiveness of the food and agriculture sector, reducing greenhouse gas emissions, and will contribute to global efforts to address this issue.

As part of this commitment, Environment and Climate Change Canada (ECCC) published Taking stock: Reducing food loss and waste in Canada, a report compiled to share information on existing policies, programs and initiatives currently taking place in Canada to reduce food loss and waste. The ECCC report notes that an estimated 13% of fruits and vegetables grown in Canada go unharvested or are discarded following harvest, some of which can be used as animal feed or be turned over to improve soil health. As well, FFV loss and waste occurs during production/processing, at wholesale and retail due to the culling and rejection of produce that do not meet quality standards.

The report identified the following key action area as an opportunity to reduce food loss and waste in the fruit and vegetable sector:

• Educate and raise awareness to change attitudes of industry and consumers regarding the aesthetic appearance of fruits and vegetables.

In addition, the ECCC report cited Quebec's repeal of their Fresh Fruits and Vegetable Regulations under the Food Act of Quebec in 2016as an example of a marketing approach intended to address the underlying root causes of food loss and waste. The Quebec regulations previously prohibited the sale of produce that did not meet aesthetic standards.

Proposed options for the development and maintenance of fresh fruit and vegetable grades

Consistent with its role as a regulator, the CFIA exercised its due diligence by exploring various options for the development and maintenance of FFV grades and by putting them forward for broad consultation to enable the views of all implicated stakeholders to be considered in the selection, design and implementation of any new framework for FFV grades. With this in mind, CFIA proposes the following options:

Option 1: Retain the FFV grades in the SFCR and give ownership of the IBR document for FFV grade standards to an industry body

How would this work?

CFIA could establish a memorandum of understanding (MOU) with a third party, such as the DRC, to take accountability for the FFV grades within an external IBR document. The third party would maintain the FFV grade document and develop new grades according to the conditions set in the MOU. The grades would continue to be incorporated by reference into the SFCR and enforced by the CFIA, and the SFCR would be adjusted to reflect that a third party develops and maintains FFV grades.

The CFIA already uses versions of third party ownership for other IBR documents. CFIA has a similar arrangement with the Canadian Beef Grading Agency (CBGA). The CBGA maintains the Beef, Bison and Veal Carcass Grade Requirements (PDF), which are incorporated by reference into the SFCR.

Another example is the oversight of the organic standards. Food products represented as organic in import, export and interprovincial trade, or that bear the federal organic logo, must be certified organic according to the Canadian Organic Standards (COS). The Standards Council of Canada (SCC) and the Canadian General Standards Board (CGSB) issue these standards, which are incorporated by reference into the SFCR. This model is effective because it enables equivalency agreements between countries to facilitate trade; supports Canada's trade obligations; respects the SFCR, and it requires limited CFIA resources to update the standards.

Benefits:

• Respects the FFV industry's interest to retain a federal framework for grades that supports an industry trading language and that supports grower competitiveness and trade/export of commodities that require adherence to a foreign country's grade requirement (e.g. potatoes and onions exported to the U.S.).
• This model would be more responsive. Industry would be able to initiate grade changes when consumer preferences change or when new technologies or products are developed.
• This option would maintain minimum import requirements for all FFV that have a Canada grade established.
• Supports CFIA's efforts to prioritize resources to areas of highest risk. The third party would complete any changes to the FFV grade standards and they would not have to follow the IBR process for CFIA-owned IBR documents.

Challenges:

• CFIA would need to identify a new owner of the FFV grades and establish an MOU that sets appropriate terms for oversight (e.g., how regulations and trade agreements must be respected).
• CFIA would need to make minor changes to the SFCR to change the status of FFV grades from CFIA-owned and administered to externally administered.
• A third party owner could require resources to update the current FFV grades.

Option 2: Expand the mandate of the Fruit and Vegetable Dispute Resolution Corporation (DRC) to include the development and maintenance of most FFV grades

How would this work?

Under Section 122 of the SFCR, a person cannot trade FFV unless they are a member in good standing of the DRC. The DRC is a non-profit, member-based organization that serves the produce trade and offers its members harmonized standards, procedures and services. As part of its mandate and in collaboration with industry associations and government bodies, DRC strives to improve legislation and establish industry standards. The DRC is the single dispute resolution body for the FFV industry in Canada. They provide rules for their members to help avoid FFV trade disputes.

Using SFCR 122, CFIA could update the CFIA-DRC MOU, giving DRC responsibility for developing and maintaining 28 FFV grade standards. This would not apply to apples, onions and potatoes due to specific import regulations under the SFCR. The 28 FFV grades would be removed from the Compendium and housed in a document prepared and maintained by the DRC. The DRC-maintained grades would no longer be incorporated by reference under the SFCR and therefore would be outside the scope of the CFIA's IBR Policy. The 28 FFV grades would no longer be subject to mandatory grading and mandatory labelling of grade names under the SFCR. However, DRC could update its Good Arrival Guidelines in their By-laws and Operating Rules to include a requirement to adhere to the grades it oversees. This would preserve a Canada-wide framework for grades oversight that is integrated in CFIA regulations. To remain in good standing with the DRC, the grades would need to be applied as prescribed and those not adhering to the grades would thus be in violation of the SFCR, as they are today.

Benefits:

• Can be achieved in the very short term without a regulatory change.
• Retains a federal framework for grades that is embedded in regulations and establishes a framework that includes a more effective and efficient way to update current FFV grades and create new grades. Industry managed FFV grades would provide flexibility to quickly adjust to scientific and technological advancements (for example, new and improved growing methods).
• Retains the specific import regulatory requirements prescribed in the SFCR for apples, onions and potatoes
• Retaining grades under the DRC would support the Canadian brand for exports and an industry trading language.
• Supports CFIA to prioritize resources to areas of highest risk.
• Provides a long-term solution that reduces burden on industry and supports economic growth.

Challenges:

• CFIA would continue to be accountable to update and maintain the Compendium for apples, onions and potatoes by following the IBR Policy. From experience, this process is slow and imposes burden on industry and CFIA.
• DRC would need to invest resources to update the 28 FFV grades.

Option 3: CFIA maintains FFV grades in the SFCR and applies a risk-based approach to develop outcome-based grades

How would this work?

CFIA could retain responsibility for developing and maintaining FFV grades in the SFCR and modernize them to be more outcome-based. This option will involve assessing:

• whether it is necessary for all FFV grades to be mandatory
• implementing a general grade standard that sets minimum quality expectations for FFV not covered by an existing grade
• updating the remaining FFV grades to include outcome-based minimum quality standards
• removing mandatory labelling requirements for FFV that are graded
• updating the Compendium and SFCR requirements accordingly

Benefits:

• Simplifying FFV grades would reduce the overall impact on CFIA's resources and priorities.
• Outcome-based FFV grades will establish comparability and support regulatory cooperation with those of Canada's international trading partners and other jurisdictions that are based on similar outcomes. Outcome-based FFV grades will also align with Codex food standards.
• Implementation of a general grade standard will address industry concerns related to the quality of imported FFV and will provide a minimum standard to reference in business-to-business transactions.
• Eliminating mandatory labelling requirements for graded produce that are not required for food safety or consumer protection could reduce burden on the FFV industry for some products.

Challenges:

• This strategy will take time and will be slower than industry's expectations. It may also not deliver the anticipated outcomes.
• CFIA will need to invest significant resources to update the SFCR and to maintain the minimum level of commitment outlined above.

How to participate

Stakeholders can submit comments on the options outlined above by way of the online questionnaire that asks a series of key questions to solicit feedback. Following the consultation period from July 22, 2024 to October 20, 2024 and an analysis of stakeholder comments, CFIA will publish its findings in a "What We Heard Report' and document its next steps."

Contact us

If you have any questions about this consultation, send an email to the CFIA's Compositional Standards and Grades Section and include "FFV Grade Modernization" in the subject line.