Canadian Food Inspection Agency – Quarterly Financial Report for the quarter ended December 31, 2023

ISSN: 2819-0270

On this page

• Introduction
• CFIA mandate
  • Basis of presentation
• Highlights of fiscal quarter and fiscal year-to-date
  • Significant changes in the Statement of authorities (Annex A)
  • Significant changes in the departmental budgetary expenditures by standard object (Annex B)
• Risks and uncertainties
  • Post-COVID-19 and emergencies
  • Sunsetting resources renewal
  • The Sidney Centre for Plant Health
  • Program risk
• Significant changes in relation to operations, personnel and programs
  • Regulatory framework
  • Personnel
• Annex A – Statement of authorities (unaudited)
• Annex B – Departmental budgetary expenditures by standard object (unaudited)

Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the 2023 to 2024 Main Estimates, the 2023 to 2024 Supplementary Estimates and authorities received from Treasury Board central votes. Main and Supplementary Estimates documents can be found on the Government of Canada's Planned government spending webpage.

A summary description of the program activities of the Canadian Food Inspection Agency (CFIA) can be found in the CFIA's 2023 to 2024 Departmental Plan.

This quarterly report has not been subject to an external audit or review.

CFIA mandate

The Minister of Health is responsible for the CFIA and for the overall direction of the agency. In addition, the Minister of Agriculture and Agri-Food is responsible for oversight of the agency's non-food safety agricultural activities, including economic and trade issues, as well as important animal health and plant protection work.

The CFIA is headed by a President, who has the rank and all the powers of a Deputy Head of a Department. The President is also the Chief Executive Officer. The responsibilities of these roles are outlined in the Canadian Food Inspection Agency Act 1997, c.6.

The CFIA's legislative mandate is enabled by the Canadian Food Inspection Agency Act, which also enables the agency to administer and enforce other federal statutes, regulations, and the Fees Notice. These statutes and regulations regulate the safety and quality of food sold in Canada and support a sustainable animal and plant resource base. The CFIA shares many of its core responsibilities with other federal departments and agencies, with provincial, territorial and municipal authorities, with private industry, and with other stakeholders.

The CFIA works with its partners to implement food safety measures; manage food, animal and plant risks, incidents and emergencies; and promote the development of food safety and disease control systems to maintain the safety of Canada's high-quality agriculture, agri-food, aquaculture and fishery products. The agency's activities include verifying the compliance of imported products; registering and inspecting establishments; testing food, animals, plants and their related products; and, approving the use of many agricultural inputs.

Additionally, the agency actively participates in international fora for the development of international science-based rules, standards, guidelines and policies. It also participates in the management of sanitary and phytosanitary committees, established under international agreements, and actively promotes the Canadian science-based regulatory system among foreign trading partners. The CFIA negotiates to resolve scientific and technical issues, contributing to market access for Canadian goods. It also provides scientific advice, develops new technologies, provides testing services, and conducts regulatory research.

At the CFIA, decisions are based on high-quality, timely and relevant science. Science informs policy development, and program design and delivery through foresight, advice, risk assessment, the influence of international standards, research and development, and testing.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of authorities (Annex A) includes the agency's spending authorities granted by Parliament and those used by the agency, consistent with the interim supplies granted for the 2023 to 2024 Main Estimates, the 2023 to 2024 Supplementary Estimates and authorities received from Treasury Board central votes. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before funding can be spent by the Government. Approvals are given through annual appropriation acts or legislation which provides statutory spending authority for specific purposes. The CFIA was granted its full supply for the 2023 to 2024 fiscal year in June 2023.

When Parliament is dissolved for the purpose of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The agency uses the full accrual method of accounting to prepare and present its annual financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year-to-date

In line with previously reported variances in the Departmental Results Report and Quarterly Financial Reports, the CFIA determined that variances which are greater than $5.0 million and represent more than a 10% change, in budget or expenditures from one year to the next, are deemed significant. When both of these criteria are met, further analysis is always provided. Further analysis is also provided when the dollar value is deemed significant.

Significant changes in the Statement of authorities (Annex A)

Authorities available for use

At the end of the third quarter, December 31, 2023 (Q3), the CFIA had $929.9 million of authorities available for use, as detailed in Table 1. This represents an overall increase of $38.6 million (4.3%) compared to the end of the same quarter in 2022 to 2023. Below is a breakdown of the variance.

Numbers may not add due to rounding.

Compared to the end of the same quarter in 2022 to 2023, the Vote 1 – Operating expenditures, grants, and contributions authorities available for use increased by $20.8 million (3.0%) mainly due to the receipt of funding for building a post pandemic agile workforce and to support long-term digital transformation ($18.4 million), funding for preparedness, prevention, and trade continuity in response to African swine fever ($7.0 million), funding to address the current potato wart crisis in Prince Edward Island ($4.8 million), funding for pet trade ($3.5 million), and funding for Canada's Indo-Pacific Strategy ($2.9 million). This increase in funding is partially offset by the sunsetting of COVID-19 funding (−$16.1 million).

The Vote 5 – Capital expenditures authorities increased by $13.9 million (27.6%) mainly due to the transfer of funding from Public Services and Procurement Canada (PSPC) related to the Sidney Centre for Plant Health ($10.0 million), and the re-profile of funding for the Sidney Centre for Plant Health ($5.0 million). This was offset by less capital carry-forward from the previous fiscal year.

Year-to-date expenditures 

At the end of the third quarter for the 2023 to 2024 fiscal year, the CFIA had expenditures of $716.5 million as outlined in Table 2. This represents an overall increase of $20.8 million (3.0%) compared to the end of the same quarter for the 2022 to 2023 fiscal year. Below is a breakdown of the variance.

Numbers may not add due to rounding.

Compared to the same quarter in the previous year, the 2023 to 2024 Q3 operating expenditures (Vote 1) have decreased by $8.5 million (−1.7%) mainly due to a decrease in operating costs associated with the highly pathogenic avian influenza (HPAI) outbreaks. Elevated spending of $16.6 million (91.1%) in capital expenditures (Vote 5) is mainly due to increased expenditures for the Sidney Centre for Plant Health, and the timing of payments for investment plan projects.

Compensation payments have increased by $10.3 million (14.3%) compared to the same quarter in 2022 to 2023 mainly due to higher payments made for HPAI ($15.1 million), chronic wasting disease ($0.3 million), and tuberculosis ($0.3 million). These increases are offset by decreased payments for potato wart (-$5.1 million). Since compensation payments are statutory in nature, the agency is within its authority to incur expenditures as required against the current compensation authority levels. These authorities will be adjusted at year-end to the equivalent of all expenditures related to compensation payments.

The slight increase in the spending of revenues is mainly due to the timing of payments.

Significant changes in the departmental budgetary expenditures by standard object (Annex B)

Planned expenditures (equivalent to authorities) by standard object

Compared to the same quarter in 2022 to 2023, the $38.6 million increase in authorities is mainly due to increased funding for a number of initiatives as mentioned above.

The increase in authorities more significantly affected the following standard objects:

• Personnel – $14.6 million (2.1%)
  • The increase is mainly due to the receipt of funding for building a post pandemic agile workforce, and to support long-term digital transformation
• Acquisition of machinery and equipment – $13.4 million (47.8%)
  • The increase is mainly due to the receipt of funding from PSPC for the Sidney Centre for Plant Health
• Professional and special services – $9.0 million (9.6%)
  • The increase is mainly due to the receipt of funding from Agriculture and Agri-Food Canada for initiatives under the Sustainable Canadian Agricultural Partnership

Expended during the quarter ended December 31, 2023 and year-to-date expenditures by standard object

Compared to the same quarter in 2022 to 2023, the $20.8 million increase in expenditures year-to-date is mainly caused by the following:

• $16.1 million (30.8%) increase in professional and special services mainly due to payments for the Sidney Center for Plant Health
• $10.6 million (14.7%) increase in transfer payments largely due to the timing of payments for HPAI

These increases have been partially offset by reductions in transportation and communication (-$2.9 million), and utilities, materials and supplies (-$2.5 million) due to reduced activity for HPAI and potato wart compared to Q3 of the prior year.

Risks and uncertainties

This quarterly financial report reflects the results of the current fiscal period in relation to the Main Estimates for 2023 to 2024, the 2023 to 2024 Supplementary Estimates and authorities received from Treasury Board central votes. The agency anticipates receiving further funding in the 2023 to 2024 fiscal year via Supplementary Estimates and Treasury Board Central Votes. In addition to managing the delivery of the agency's programs based on anticipated total spending authorities, the agency faces other financial and non-financial risks and uncertainties. Through science, innovation and evidence-based decision-making, the agency has a solid foundation to continue responding to challenges of the modern world, including a global food supply chain, climate change and emerging diseases.

Post-COVID-19 and emergencies

The CFIA overcame several challenges in the 2022 to 2023 fiscal year while supporting and ensuring the delivery of critical work and services during the COVID-19 pandemic, maintaining the continuity of the food supply chain affected by the war in Ukraine, and facing climate change-related emergencies. Extreme weather events such as Hurricane Fiona in the Atlantic provinces, a derecho in Québec and Ontario, floods in Manitoba, record-breaking heat and drought in the West, and wildfires across much of the country were added challenges where the agency had to quickly pivot to modify service delivery models to avoid interruptions or delays of its critical work to support the agri-food industry in Canada. The agency mobilized resources to ensure CFIA inspectors, scientists, and veterinarians were on the front-lines, while also adapting through innovation and digitization (for example, virtual inspections, developing import certification, and tracking applications).

Critical services for Canadians continue to be monitored and prioritized in order to ensure the safety of its employees and to carry on the delivery of frontline services that safeguard Canada's food system, along with the plant and animal resources on which Canadians depend.

The CFIA operates in an uncertain environment, and in addition to the day-to-day work of CFIA employees, is prepared to respond to new or emerging threats and market pressures resulting from events such as the COVID-19 pandemic, HPAI, potato wart and other high-profile issues.

Through inspections and detection efforts, the CFIA has worked with stakeholders to protect Prince Edward Island's (PEI) high-quality potatoes for Canadians and international trade by helping contain, control, and prevent the introduction and spread of potato wart. Although potato wart is not a food safety risk, this pest may result in financial losses for potato farmers, affect exports, and lead to uncertainty in the domestic market. In Budget 2022, the Government of Canada allocated $12 million in funding over 2 years, starting in the 2022 to 2023 fiscal year, to support the CFIA's continued response to potato wart in PEI. With these funds, the CFIA hired additional staff to meet the established target of collecting and analyzing over 35,000 soil samples by March 31, 2023, and more than 48,000 soil samples by July 2023. The agency successfully re-established exports of PEI potatoes to the United States on April 1, 2022, and has continued to engage with international and domestic stakeholders to seek feedback on its review of the Potato Wart Domestic Long Term Management Plan (2009). In November 2023, 3 risk management documents were circulated for stakeholder comment to inform the development of a new National Potato Wart Response Plan.

The CFIA also continues the response to cases of the HPAI in Canada. HPAI, also called "bird flu", is a viral infection that spreads easily and quickly among birds. Parts of North America, Europe, Asia and Africa are currently seeing bird flu outbreaks. Since HPAI was first detected in Canada in December 2021, 9 provinces have reported cases in domestic poultry flocks, affecting over 7.3 million birds. It directly threatens the Canadian poultry and egg industry, contributing $5.5 billion to the gross domestic product in 2021. The CFIA continues to conduct HPAI surveillance activities to monitor for the disease in domestic and wild bird populations. In the 2022 to 2023 fiscal year, the CFIA launched the HPAI in Wildlife Dashboard. This interactive tool supports the outbreak response and helps Canada uphold international obligations for notification of new findings of HPAI.

As the lead authority for safeguarding the food supply in Canada and for monitoring, controlling and eradicating animal and plant diseases, the agency must respond with prompt action above and beyond normal business activities when these temporary situations arise in order to safeguard Canadians and maintain access to export markets.

The agency has established a dedicated emergency reserve in order to manage the incremental response costs associated with emergencies. This is reviewed every year as part of the agency's planning process and is subject to ongoing monitoring. While the CFIA is confident that its emergency reserve is generally sufficient to cover the incremental costs related to emergency management on a yearly basis, it is recognized that the exceptional circumstances may drive costs above the funding set aside. The agency will continue to monitor, reallocate resources where possible and seek additional funding through engagement with central agencies.

Sunsetting resources renewal

In 2023 to 2024, funding for Daily Shift Inspection Presence (DSIP) in federally registered meat processing establishments has been renewed and received through Supplementary Estimates (A). Funding for Improving Food Safety (IFS) and Secure Market Access (SMA) has been renewed and received through Supplementary Estimates (B). Funding for protecting against bovine spongiform encephalopathy (BSE) will sunset in 2023 to 2024.

The Sidney Centre for Plant Health

As part of the Government's commitment to establishing and maintaining modern federal science infrastructure, Budget 2017 provided $80 million to upgrade the Centre for Plant Health (CPH), located near Sidney, British Columbia. An upgraded, world class plant health research facility will further enhance the safety of Canada's agriculture and agri-food sector, while facilitating the trade and economic growth that benefits all Canadians.

Laboratories Canada and the CFIA continue the advancement of the detailed design and construction of the facility, including network connectivity. The construction of the entire facility is projected to be completed by fall 2024. The agency has spent a total of $40.1 million on the Sidney Centre for Plant Health as of the end of Q3 2023 to 2024, including $12.3 million in Q3 of 2023 to 2024.

Program risk

The CFIA is responsible for identifying and managing risks to the food supply and the animal and plant resource base which contribute to and are crucial for food safety and a prosperous economy. Across the agency, integrated risk management is an integral part of policy, program design, priority setting, planning, delivery, review and reporting activities.

Integrated risk management is at the core of the CFIA's modernization initiatives. The agency operates in a dynamic and complex risk environment that continues to change rapidly. The sectors that the CFIA regulates are constantly changing their business models and technologies; industry is always developing new and innovative products, and new pathways for risk are emerging.

The CFIA will continue pursuing a One Health approach to address the complex challenges that can arise at the intersection of human, animal, plant, and environmental health, such as antimicrobial resistance (AMR), HPAI, chronic wasting disease, and other risks exacerbated by climate change. The agency will continue to seek out and share intelligence with numerous domestic and international experts to develop an integrated approach to these and other global issues and diseases. Information on key risks and response strategies are outlined in the CFIA's 2023 to 2024 Departmental Plan.

Significant changes in relation to operations, personnel and programs

Regulatory framework

The CFIA is committed to strengthening Canada's world-class food safety system. On January 15, 2019, the Safe Food for Canadians Regulations (SFCR) came into force. The SFCR improves and strengthens Canada's food safety system, enables industry to innovate, and creates greater market access opportunities for Canadian food products exported abroad.

The SFCR reduces unnecessary administrative burden on businesses by replacing 14 sets of existing regulations with one, and helps maintain and grow market access for Canada's agri-food and agricultural sector. The SFCR is the result of careful, informed policy development supported by extensive consultations with CFIA staff and Canadians across the country. The regulations make our food system even safer by focusing on prevention and allowing for faster removal of unsafe food from the marketplace.

The CFIA is conducting a multi-year structured and comprehensive review of its regulatory frameworks. Regulations that are outcome-based, transparent, and consider industry practices will provide a strong foundation for the delivery of results. The CFIA will advance a number of regulatory proposals in the 2023 to 2024 fiscal year, including priority proposals related to livestock identification and traceability, food compositional standards, cross-border transport biosecurity, and livestock feed.

Personnel

In October 2023, Debbie Beresford-Green was appointed Vice-President of Operations Branch.

Approved by:

Annex A – Statement of authorities (unaudited)

Numbers may not add due to rounding.

Annex B – Departmental budgetary expenditures by standard object (unaudited)

Numbers may not add due to rounding.