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Update on Canadian Government Harmonization

The Canadian Milling Industry &
The Canadian National Millers Association

Background
Canada’s 55 mills are located in 8 of the 13 provinces. They grind more than 3.5 million metric tons of wheat and oats annually. By comparison, U.S. mills grind 19.23 million metric tons of wheat annually.

Total milling capacity is shared about equally between eastern and western Canada. The majority of wheat milling capacity is in the east in close proximity to larger urban centers. The majority of oat milling capacity is situated in the Prairie Provinces. 20 percent of Canada’s mills are less than 15 years old.

Food Safety Agencies
In the US, the Food and Drug Administration is responsible for both food health policy as well as industry compliance and enforcement. Canada has a bifurcated system whereby health policy is set by Health Canada headed by the Minister of Health. Field compliance and enforcement is the responsibility of the Canadian Food Inspection Agency, headed by a president who reports to the Minister of Agriculture and Agri-Food.

Food Safety Statutes
There is a fundamental lack of regulatory harmonization caused by differences in U.S. and Canadian law. The Canada Food & Drugs Act says: “No person shall sell an article of food that has in or on it any poisonous or harmful substance.” On its face, this standard appears to be inflexible, and to not allow for consideration of health effects.

In contrast, the U.S. Food, Drug and Cosmetic Act says: “A food shall be deemed adulterated if it bears or contains any poisonous or deleterious substance which may render it injurious to health; but in case the substance is not an added substance such food shall not be considered adulterated… if the quantity of such substance does not ordinarily render it injurious to health.” This language sets out one standard for poisonous or deleterious substances that are inherent constituents of food, and another more stringent standard for poisonous or deleterious substances that are added to food. Note that both standards allow for consideration of health effects in determining whether a food is adulterated.

US and Canada Mycotoxin Standards
Canada’s maximum DON level is 2 ppm in uncleaned soft wheat for human consumption, and 1 ppm in uncleaned soft wheat for use in baby foods. The US Food and Drug Administration guideline for DON is 1 ppm.

The FDA has not proposed limits for Ochratoxin A (OTA).

CFIA has proposed these OTA maximum limits: raw grains 5 ppb, flour 3 ppb, bran 7 ppb, breakfast cereals 3 ppb, and baby cereals 0.5 ppb. Even though these OTA levels are merely proposed, in 2010 the Canada Food Inspection Agency (CFIA) stepped up sampling of raw grain and milled grain products. CFIA has been aggressive in asserting compliance and enforcement based on its interpretation of Canadian law.

About the Canadian National Millers Association (CNMA)
The CNMA is a national, not-for-profit industry association representing companies that are processors of wheat and oats and producers of milled grain products. The CNMA was founded over eighty-five years ago to engage in regulatory issues and public policy in the areas of food regulation, nutrition and health, food safety, transportation, international trade, occupational safety and health and environmental protection. The CNMA also provides international trade development support to its members. An executive who also manages another association heads CNMA. CNMA offers both voting and non-voting member categories and a capacity-based membership fee structure

The CNMA website lists the following key issues:

  • Wheat quality
  • Health claims in labeling and advertising
  • Fortification
  • Government-mandated grain marketing through the Canadian Wheat Board
  • Fumigants
  • Occupational exposure to flour dust
  • Food safety
  • Allergens
  • Food additives

CNMA member companies and daily flour milling capacity (cwt) as reported in 2011 Grain and Milling Annual, Sosland Publishing Co.:

ADM Milling
83,400
P & H Milling Group
58,400
Horizon Milling GP
38,000
Viterra Inc.
15,500
Rogers Foods Ltd.
11,375
Kraft Canada, Inc.
8,500
Howson & Howson Ltd.
7,500
Prairie Flour Mills Ltd.
4,000
Brant Flour Mills, Ltd.
700
Grain Millers, Inc.
Pepsi/Quaker
Nutrasun Foods Inc.
Primo Foods Inc.
Total
227,375
cwt
NAMA member companies are in bold

Additional information on Canada’s Mills from Canadian Government Sources

 

Province or Territory

Employment Size Category

(Number of employees)

Micro
Small
Medium
Large
1-4
5-99
100-499
500+
Alberta
3
4
0
0
British Columbia
3
6
1
0
Manitoba
0
6
0
0
New Brunswick
0
1
0
0
Newfoundland and Labrador
0
0
0
0
Northwest Territories
0
0
0
0
Nova Scotia
1
1
0
0
Nunavut
0
0
0
0
Ontario
0
15
0
0
Prince Edward Island
0
0
0
0
Quebec
13
11
1
0
Saskatchewan
0
4
1
0
Yukon Territory
0
0
0
0
CANADA
20
48
3
0
Percent Distribution
28.2%
67.6%
4.2%
0.0%
Source: Statistics Canada, Canadian Business Patterns Database; December 2010.

In 2010, the breakdown of employer establishments in the Flour Milling national industry was as follows: 28.2% of them were considered micro, employing less than five employees. Small establishments accounted for 67.6% and medium-sized establishments accounted for an additional 4.2% of the total number of establishments. Large employers, those with more than five hundred persons on payroll, accounted for 0.0% of the total establishments in the Flour Milling national industry. (Source: Industry Canada)
According to Statistics Canada, flour milling increased from $1.1 billion in 2000 to $1.4 billion in 2009, or at an average compound annual rate of 3.2% per year. Between 2008 and 2009, manufacturing revenues decreased by 2.6%. In comparison, manufacturing revenues for the Manufacturing national industry decreased by 1.3% on average between 2000 and 2009, and decreased by 16.3% in the most recent year.

Manufacturing value-added for the national industry decreased from $328.6 million in 2000 to $297.0 million in 2009, or at an average annual rate of 1.0%. Between 2008 and 2009, value-added increased by 6.8%. Manufacturing value-added for the Manufacturing sector demonstrated average annual decline of 2.4% between 2000 and 2009, and decreased by 10.9% between 2008 and 2009.

Canadian mill economics
Revenues

Total revenues include revenues from the sale of goods and services, interest, dividends, commissions, rent and other sources of revenues. They exclude capital gains or losses, extraordinary gains or losses and equity in net income of related parties.

The average total annual revenues for small and medium-sized businesses in the Flour Milling national industry were $981.8 thousand in 2008.

For profitable firms, average revenues were $944.9 thousand and for non-profitable firms, average revenues were $1.0 million.

Profitable vs. Non-profitable businesses: 2008
Industry Average Profitable Non-profitable Total

Percent of businesses
62.7%
37.3%
100.0%
Total Revenues ($ thousands)
944.9
1043.9
981.8
Total Expenses ($ thousands)
862.3
1107.3
953.6
Net Profit/Loss ($ thousands)
82.6
-63.4
28.2
Source: Statistics Canada, special tabulation, unpublished data, Small Business Profiles.

Expenses
Average total expenses for small and medium-sized businesses in the Flour Milling national industry were $953.6 thousand in 2008. For profitable firms, average total expenses were $862.3 thousand and for non-profitable firms, average total expenses were $1.1 million.
Expenses can be divided into two main types: cost of sales (or direct expenses) and operating expenses (or indirect expenses).

Breakdown of Total Expenses: 2008 Percentage of Total Revenues Flour
Cost of sales refers to costs related to the principal activity of the business. Examples of these direct expenses include the materials used to manufacture a product or deliver a service and the labor costs associated with the production of the product or delivery of a service. The average value of cost of sales items for the Flour Milling national industry is outlined in the table below. The cost of sales itself is calculated by adding wages and benefits, purchases, materials and sub-contracts, and opening inventory and then subtracting closing inventory.


Cost of Sales: 2008

Expense Item


Value in $ thousands


% of Total Revenues
Wages and benefits
40.6
4.1
Purchases, materials and sub-contracts
583.4
59.4
Opening inventory
97.6
9.9
Closing inventory
111.4
11.3
Cost of sales (direct expenses)
610.2
62.2
Source: Statistics Canada, special tabulation, unpublished data, Small Business Profiles.

The average value of operating expense items for the Flour Milling national industry is outlined in the table below.

Operating Expenses: 2008

Expense Item


Value in $ thousands

% Of Total Revenues
Labour and commissions
116.1
11.8
Amortization and depletion
27.1
2.8
Repairs and maintenance
13.3
1.4
Utilities and telephone/telecommunication
16.9
1.7
Rent
11.1
1.1
Interest and bank charges
10.0
1.0
Professional and business fees
21.1
2.1
Advertising and promotion
11.1
1.1
Delivery, shipping and warehouse expenses
6.3
0.6
Insurance
10.4
1.1
Other expenses
100.1
10.2
Operating Expenses (indirect expenses)
343.4
35.0

Type of Output


Value in

$ Thousands

CAGR**

2000-2009

% Change

2008-2009

2000
2009
Manufacturing Revenues
per Employee

453.9

850.3

6.5%

-8.4%

Manufacturing Revenues
Per Production Worker

525.6

1080.6

7.5%

-10.8%

Manufacturing Value-Added
Per Employee

141.9

175.8

1.0%

0.5%

Manufacturing Value-Added
Per Production Worker

164.3

223.5

0.0%

-2.2%

*Prior to 2004, data covers incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000.

**Compound Annual Growth Rate.

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 2000 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2009.

Employment by Type of Employee
The total number of employees in the Flour Milling national industry decreased from 2,316 workers in 2000 to 1,689 workers in 2009, an average annual decrease of 3.1% over this time span. There was an increase of 6.4% in employment between 2008 and 2009.

By comparison, total employment in the Manufacturing sector showed a decrease of 2.8% per year over the 2000-2009 period and a decrease of 9.7% between 2008 and 2009.

Breaking employment into its two principal components, the number of production employees in the Flour Milling national industry fell from 2,000 workers in 2000 to 1,329 in 2009, a decrease of 4.0% per year on average. There was an increase of 9.2% in the last year.

The number of administrative employees in the Flour Milling national industry increased from 316 workers in 2000 to 360 in 2009, an average increase of 1.3% per year. There was a decrease of 3.0% over the course of most recent year.

Last updated November 2011

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