CFIA User Fee Proposal: Destination Inspection Service

Summary of Respondent Comments and CFIA Responses

December 19, 2011 - February 16, 2012

Table of Contents


Introduction

The Canadian Food Inspection Agency’s (CFIA) operating environment is evolving and becoming increasingly complex. A number of factors contribute to this growing complexity, including: increasing trade volumes with goods sourced from a greater diversity of markets, changing consumer demands driven by demographic and social trends, higher international standards, and new business and production practices. These changes affect the CFIA’s ability to keep pace with rising costs, changes in technology, new programming, shifts in demand for services, and evolving government policies.

One step the CFIA is taking to respond to these changes is to set clear and transparent service standards with appropriate fees that are in line with the cost of providing these services.

Destination inspection is a quality-related inspection of fresh-produce shipments. The results of the inspections are of direct benefit to the fresh produce industry, supporting the process by which the industry settles commercial disputes, primarily between sellers and purchasers.

In response to industry needs, the CFIA implemented enhancements to the Destination Inspection Service (DIS) program including dedicated front line resources, national training, and new service standards. To support these enhancements, amendments to the Licensing and Arbitration Regulations and the Fresh Fruit and Vegetable Regulations were introduced in February 2010, including committing to moving to full cost recovery for the DIS program, phased-in over three years (50-75-100%). The current proposal relates to the second year of implementation (2012/13), and fees aimed at recovering 75 percent of program costs. Without a full cost-recovery system in place, the CFIA would not be in a position to dedicate full-time staff to destination inspection and consequently would not be able to meet industry demand. The fresh produce sector supports the new DIS model as an essential component of the dispute resolution process, and has committed its full support to the phased-in implementation of this cost-recovery strategy.

The Agency undertook a 60-day consultation on a user fee proposal to set fees at 75% of the costs for DIS. The proposal set out service standards and user fees anticipated to be fixed in the CFIA Fees Notice on April 1, 2012. The CFIA invited comments from interested parties, including issuing a World Trade Organization notification, from December 19, 2011 to February 16, 2012.

This report consolidates and summarizes the comments received during the consultation period that directly pertain to the user fee proposal and the CFIA’s response to those comments.

About the Consultation

The primary mechanism to facilitate the consultation involved posting the user fee proposal on the CFIA website, issuing a World Trade Organization notification, providing a link to the Consulting Canadians website, and outreach directly to industry stakeholders by front-line and headquarters DIS staff. Ten complete responses were received.

What We Heard

Respondent Profile

Table 1: Respondent Profile
Categories of RespondentsDistribution
Individual 70%
Firm/Business 10%
Association 10%
Government Organization 0%
Non-governmental Organization 10%
Other 0%
Total Number of Respondents 10

 

Table 2: Primary Respondent Firm/Business Focus
Firm/Business FocusDistribution
Exporter 0%
Importer 10%
Manufacturer 0%
Distributor/Broker 10%
Research 10%
Industry Association 0%
End user (for example, consumer) 60%
Other 10%
Total Number of Respondents 10

One response was received on behalf of the primary industry associations. Collectively, they represent a total membership exceeding 20,000 stakeholders which includes those who are directly impacted by this proposal, the DIS end-users. DIS end-users are beneficiaries of the service, and have a vested interest in its long-term viability.

One respondent employed staff greater than 250 (a non-governmental organization) and one employed staff less than 10 (an importer). Four responses were received from Ontario, three from Manitoba, two from British Columbia and one from Alberta.

Key Respondent Messages

The associations officially representing directly impacted industry stakeholders were fully supportive of the proposal, and suggested various adjustments to further improve its practical implementation. This response indicated overwhelming industry support for the proposal and the three-year plan moving to full cost-recovery for destination inspection.

Of those respondents who were not supportive of the overall proposal, some viewed it as a service that should be paid for through general taxation, while others were concerned about costs being passed on to consumers. Some respondents noted that the CFIA’s primary responsibility is to food safety, animal health and plant protection, rather than the resolution of commercial disputes.

The industry associations and three of the other respondents expressed support for the service standard, while the remainder of respondents were evenly divided between no support and being unsure about their position.

The industry associations and one of the respondents indicated support for the proposed user fees for the service, while the remainder were evenly divided between no support and being unsure about their position.

The comments received on the proposal pertained to the proposed user fees, particularly in regards to the characterization and application of the travel fee, the distribution of fee amounts, and the approach to overtime. Clarification was also sought with respect to the service standard. The CFIA responses to respondent comments are set out below.

User Fees

Comments on the proposed user fees related to the characterization and application of the travel fee, the distribution of the fee amounts across services (i.e. inspection vs. travel), and the approach to overtime fees.

Characterization of the travel fee

Respondents raised concerns that the term “travel fee” suggests that only the costs for mileage and gas are being recovered. The CFIA has been asked to consider re-characterizing the travel fee as a “call-out fee” to more accurately reflect the fact that this fee also captures the labour costs of the inspector who is travelling to the destination to deliver the service.

CFIA Response: The CFIA agrees with the recommendation to re-characterize the travel fee as a ‘call-out fee’ as it more accurately represents the costs associated with this activity.

Application of the travel fee

Respondents raised concerns around the application of the travel fee on a ‘per visit’ basis and have requested that the CFIA consider applying the travel fee on a ‘per inspection’ basis.

CFIA Response: The CFIA agrees with the recommendation to apply the travel fee on a per inspection basis. The DIS program conducted 14,924 inspections in FY2010-11. Distributing the travel costs of $994,860, incurred during FY2010-11, across the number of inspections, results in a travel fee of $51.73/inspection. The costing of this fee is set out in the following table:

The costing of this fee is set out in the following table:

DIS Travel CostsAmount
Labour costs for travel time $864,172
Vehicle cost $130,688
Sub-total $994,860
Number of inspections 14,924
Call-out fee per inspection $66.66
Call-out fee per inspection at 75% cost recovery $50.00
Call-out fee per inspection at 75% cost recovery adjusted for inflation (1.72% per year) $51.73

Distribution of fee amounts

CFIA has been asked to consider rounding the proposed user fees to even dollar amounts for ease of processing.

CFIA Response: In keeping with the approach to move to 75% cost recovery for the DIS program, the CFIA agrees with the recommendation to adjust the fees to round dollar amounts to simplify processing.

DIS User Fees

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

DIS User Fees
(a) for the inspection of domestic fresh produce or fresh produce entering Canada from a foreign jurisdiction $145/hr, assessed at $36.25 per 15 minutes, subject to a 1 hour minimum charge
(b) for the witnessing of the destruction or disposal of fresh produce and the issuance of a Notice of Dumping or other Disposition $145/hr, assessed at $36.25 per 15 minutes, subject to a 1 hour minimum charge
(c) call-out per inspection service visit in (a) or (b) $50.00
(d) for the cancellation of inspection services requested after an inspector has been dispatched $70.00

Approach to overtime fees

Respondents pointed out that the CFIA’s current overtime fees are out of date. The CFIA has been asked to consider reviewing and revising these fees to coincide with the introduction of the revised DIS user fees on April 1, 2013.

CFIA Response: The CFIA agrees that the current overtime fees are out of date and intends to review these fees consistent with the approach set out in the CFIA’s policy on cost recovery. The existing overtime fees set out in the CFIA Fees Notice will continue to apply until such time as these fees are reviewed and updated.

Service Standards

Some respondents expressed concern that the standard of responding to 100% of service requests within 24 working hours could be interpreted as 3 business days. Clarification of the service standard has been requested.

CFIA Response: The CFIA agrees that the proposed service standard is unclear and proposes the following: the CFIA will commit to responding to 80% of service requests within 8 working hours of receiving a request and 100% of service requests within 24 hours of receiving a request. However, should there be a request to deliver service outside of regular working hours, this request would still be subject to overtime charges.

Next Steps

Pursuant to the Canadian Food Inspection Agency Act, the new user fees will be fixed in the CFIA Fees Notice and are anticipated to come into force on April 1, 2012 and be published in the Canada Gazette within 30-days of the coming into force.

Comments that were not directly related to the user fee proposal will be passed on to program representatives to be addressed in the appropriate forum.

In fall 2012, the CFIA anticipates undertaking another consultative process to move to full cost recovery for the DIS program, anticipated for April 1, 2013.

The CFIA would like to thank everyone who contributed their time to this consultation process and shared their views.