Conflicting Guidance: Importing Finished Products Containing Milk Ingredients
With Canada’s strong regulatory and supply management regimes, foreign and domestic businesses know all too well the struggle of importing milk, butter, cheese, and other dairy products into Canada. Quotas, duties, and licences aside, dairy importers face stringent animal health restrictions when arriving at the Canadian border. As of November 2019, the Canadian Food Inspection Agency (CFIA) has expanded the scope of these requirements to also apply to processed foods containing milk-based ingredients. In this article, we explore these new requirements and comment on their implications to the industry.
Animal Health Requirements for Milk and Milk Products
The Health of Animals Regulations set out the import requirements for milk and milk products, including skim milk, cream, butter, buttermilk, and ghee. Unless originating from the United States, section 34(1) of the Regulations restricts the importation of milk and milk products to only those countries that are designated as “free of foot-and-mouth disease.” Foot-and-mouth disease is a highly contagious viral disease affecting cattle, swine, and other cloven-hoofed animals, and which can be transmitted through milk and milk products. Depending on the country of origin, certain requirements must be met to mitigate and assure against the risk of foot-and-mouth disease transmission. This generally requires importers to obtain a zoosanitary export certificate that describes the product and the origin of the animals from which it is derived. Meeting CFIA’s documentary requirements under these regulations can be very challenging, particularly when exporting from a country that is not familiar with Canada’s requirements.
It's clear that these animal health requirements apply to importers of milk, cream, butter, and other milk-based products. But how do these requirements translate to finished products which contain dairy ingredients? Do the same foot-and-mouth disease restrictions that apply to butter also apply to cookies that contain butter?
CFIA Guidelines for Milk Ingredients
Over the past year, the Terrestrial Animal Products and By-products Import Policy framework (the “Framework”) has received a significant overhaul. In November of 2019, the Framework was amended to include a new section on products of animal origin containing multiple ingredients (“Section 9”).This CFIA policy document outlines the import conditions for products containing animal-origin ingredients, including foods that contain milk or egg ingredients. Section 9 requires importers to follow the same procedures as if the animal-origin ingredients were imported as standalone products, regardless of the amount of the ingredient in the final product. Previously, import conditions for these types of products were determined based on ingredient percentages. Section 9 does-away with percentages, and instead focuses on disease risk.
This means that importers must meet the same requirements whether they are importing straight butter, or a finished product containing 0.5% butter, for example. If the butter is prohibited from entering Canada, then the whole product is prohibited from entering Canada; likewise, if the butter requires a zoosanitary certificate, then the entire product requires a zoosanitary certificate.
Section 9 has implications for a manufacturer's ability to source ingredients for their finished good. Because zoosanitary certificates concern the country of origin of the animals (and not, say, the country where the dairy product was processed or transformed), this policy effectively prevents manufacturers from sourcing milk-based ingredients from countries that are not designated as free of foot-and-mouth disease by Canada. If Canada prohibits milk imports from Country A, then a finished good manufactured in Country B will be prohibited if it contains butter from Country A as an ingredient.
However, it is not clear whether Section 9 has the final say on the matter. A deeper dive into CFIA's guidance documents reveals contradictory statements concerning milk-based ingredients. In the Milk and Regulated Milk Products - Import Procedures policy document (webpage last modified in June 2018), the CFIA states that there are no animal health restrictions for milk and milk products when used as ingredients in a food product from any country, for any end use (except livestock feed). "Ingredient" is defined as "an individual unit of a food product which is combined with one or other individual units to form the integrated food product," excluding milk proteins, milk sugars, milk enzymes, vitamins, minerals, or flavourings. Under this policy, a finished product containing, for example, butter ingredients originating from any country—even those that are not considered free of foot-and-mouth disease—need not meet the requirements under the Health of Animals Regulations, including the need for a zoosanitary certificate.
Conclusion
Where does this conflicting guidance leave us? While Section 9 is more recent and more prescriptive regarding animal-origin ingredients generally, the Milk Import Procedures policy expressly addresses the matter of milk-ingredients in finished products. Canada’s regulators provide a significant amount of guidance relating to trade, often in marked contrast to our trading partners. While Canada’s regulatory guidance can make the trading process more streamlined for businesses, it also means that sometimes, despite best efforts, there can be inconsistencies in guidance to industry as our regulators try to keep up with changing laws and trade agreements. Food regulation is changing quickly for everyone, not just the private sector.
So, in this instance, we’re left to wonder: is this an oversight on the part of CFIA? Or is Section 9 not intended to apply to finished products with milk-based ingredients? With the exception of finished products originating wholly from the United States (which, as mentioned above, are exempt from s. 34(1) of the Health of Animals Regulations), the animal health requirements of foods containing milk ingredients are unclear.
This places importers in a challenging position. Canadian regulators generally take the stance that it is the importer’s responsibility to ensure compliance with Canadian food laws. But when public-facing guidance from the regulator offers two competing views on the interpretation of food law, importers must use their best business judgement to decide an appropriate course of action. As with all business decisions in the food sector, prospective importers of these products must balance the costs of regulatory compliance with the risks of food safety, quality, profitability, and brand goodwill. On this issue, for now, an importer must also seek to balance competing guidance.
If you or your business require tailored advice on this matter, please do not hesitate to contact us at info@gsjameson.com. This article does not constitute legal advice.