CFIA User Fee Proposal: Destination Inspection Service
Summary of Respondent Comments and CFIA Responses (Phase III)
What We Heard

Key Respondent Messages

• There was overall support for the DIS service, including recognition of the importance of DIS' role in the industry-government initiative to support fair fresh produce trade in North America.
• Three respondents (23%) fully supported proposed user fee increases and two respondents (15%) did not support proposed user fee increases. The remaining eight respondents (62%) supported full cost recovery of the service but expressed concern with the business model on which proposed fees were based.
• More than half of the respondents suggested that fee increases, as proposed, would result in a further drop in demand for DIS services and place Canadian businesses in jeopardy in the North American produce sector.
• The Agency did not propose any changes to service standards at this time. Respondents continue to be supportive of the current service standards, and provided positive comments regarding improvements to service, transparency and accountability of those standards.

The comments received on the proposal pertained to the proposed user fees; particularly with regard to the increase in the hourly rate and the relevance of the current business model on which the full costs were based. The CFIA responses to comments received are set out below.

Amount of fee increase

Comment: Application of the proposed increase in hourly rate and the call-out fee per inspection amounts to a minimum charge of $240 per inspection; fee considered too high/ unrealistic especially for smaller loads or low-valued shipments; expected to further decrease demand of CFIA service/may artificially inflate market value of services.

Response: The proposed hourly rate and call-out fees were based on the total costs to the CFIA of delivering the DIS program in 2011-12. The costing methodology was consistent with the approach that was adopted for the DIS in close consultation with industry.

The CFIA acknowledges industry concerns related to affordability and inspection demand observed in 2012-13 suggests that the original business and costing models are no longer appropriate for DIS. The CFIA has re-examined its business model in response to comments received and an adjusted business model has been adopted. The adjusted business model (explained below) results in a decreased hourly rate and elimination of the separate call-out fee.

DIS business model

Comment: Concerns were raised around the function of the current business model, in that it was outdated and inflexible to market fluctuations; stakeholders questioned the feasibility of dedicated DIS inspectors.

Response: Further to the review and analysis of past DIS inspection and financial information, the Agency has re-examined its business model for DIS and has made some adjustments. The following highlights the changes of moving from the current dedicated DIS model to a prioritized DIS model.

Current Dedicated DIS Model

Since 2007, DIS inspectors have been exclusively dedicated to the service – i.e. they do not perform any other CFIA program delivery activities. Dedicating inspectors served to ensure that, irrespective of other CFIA priorities, DIS service standards for response time would be consistent. The costing methodology for the fully dedicated model relies exclusively on historical data, and therefore is inherently inflexible to fluctuations in inspection demand. The decline in inspection demand observed in 2012-13 poses a challenge for the current model. Further, industry feedback suggests that the fully dedicated model is too costly for end-users of the service.

Adopting a Prioritized DIS Model

The dedicated model was adopted to ensure that service standards would be met, regardless of changes to Agency priorities. When demand was constant, the model was simple to administer and easy to maintain. Given the decline in demand for DIS, and the relative maturity of the program, a new model has been adopted which will see DIS inspectors shift from being dedicated exclusively to service delivery, to being prioritized to DIS activities. Based on specific criteria, DIS inspectors will be assigned tasks in support of other CFIA programs, but this work will be carried out after DIS inspections have been completed.

The prioritized model increases the affordability of DIS. Whereas the dedicated model's fees sought to offset the entire annual cost of the DIS program, the prioritized model will introduce a fee that recovers the cost of a unit of time of a DIS inspector. Any unused inspection capacity within the DIS will be reassigned to other program delivery activities, with costs supported by CFIA budgets. This approach increases the fairness of DIS fees by ensuring that end-users are only billed for the services that they access.

Service standards will not be affected. To maintain DIS service standards, inspectors will only be assigned other duties when there are no outstanding DIS inspection requests. Further, the other activities that DIS inspectors will take on will not be time-sensitive and will not be directly related to food safety. This will ensure that the priority of DIS is maintained and that end-users of the DIS will see no change to the service standards for DIS (80% of all inspection requests responded to within 8 business hours; 100% within 24 hours).

The DIS management cadre will broaden the scope of work effort to other CFIA organizational priorities to a degree that does not impact on DIS service recipients and yet has an overall benefit on the Agency and its annual priorities. Efficient utilization of DIS staff and management during times of low or no demand reduces the overall costs in the calculation of the DIS inspector hourly rate, as illustrated in the revised costing tables below.

Table 3: DIS inspector cost break-down

Table 4: DIS and NHQ support cost break-down

Table 5: Summary of current, proposed and revised DIS user fees

Service Standards

Current service standards (80% of all inspections requests responded to within 8 business hours; 100% within 24 hours) were developed in past consultation with stakeholders. No changes to service standards were proposed in the phase 3 consultation. Comments received indicate continued support for DIS service standards and praised the service improvements over the last couple of years. In addition, stakeholders commended the Agency on its transparency and accountability of the current DIS service standards.

As noted above, the adoption of a prioritized DIS model will not affect service delivery or service standards.

Final DIS User Fees

As a result of respondent comments, the CFIA will seek to have user fees for the DIS program revised in the CFIA Fees Notice as follows:

These fees would remain in place until the next revision is completed. The Agency has committed in its Cost Recovery Policy and Framework to undertake a review of service standards and user fees every five years.