Produce sector warns of risks in ending federal inspection service

A federal service that helps keep fresh produce trade in check is on the chopping block. 

The Canadian Food Inspection Agency (CFIA) plans to discontinue its Destination Inspection Service (DIS), a fee-for-service program that offers impartial, government-backed reports on whether fresh fruits and vegetables are damaged or defective upon receipt. 

DIS helps buyers and sellers resolve disputes, uphold quality and grade standards, and maintain trust across domestic and international supply chains, notes the Canadian Produce Marketing Association (CPMA). The association warns that eliminating DIS will undermine these functions and weaken Canada’s overall market access for fresh produce—setting the industry back 25 years. 

“Before 2000, Canada was a dumping ground,” says Ron Lemaire, president of the CPMA. He explains that many exporters didn’t trust shipping to the country because of poor business practices taking place; for instance, importers saying the product arrived in bad condition and refusing to pay full price. 

“There was no system in place to validate that,” Lemaire says. “And so, shippers would add 15% to 20% more to the base cost of goods. They would not ship their premium products because [of lack of] trust in the market.” 

Impacts along the chain 

DIS launched in 2006, following the 2000 establishment of the The Fruit and Vegetable Dispute Resolution Corporation (DRC), a non-profit group that resolves commercial disputes in the agricultural sector. “DIS was one of the three legs of the stool that are foundational to fair and ethical trading in Canada around fresh fruit and vegetables,” says Lemaire.  

For buyers using DIS in the event of a dispute, CFIA will inspect fruits and vegetables for condition defects; grade or permanent defects; weight, size or count verification; condition defects on fresh-cut and bagged salad; or destruction/dump certifications (witnessing of product disposal). They then provide an impartial inspection report for the resolution of disputes. 

If the service is eliminated, CPMA believes disputes will be harder to resolve, evidence will be contested, claims will take longer and cost more to settle, and exporters will face greater financial and contractual uncertainty. 

Lemaire warns that Canadian consumers will ultimately feel these effects. “They’ll see costs increase because shippers will adjust prices to deal with a system that doesn’t have a backed federal inspection—and that could be up to 15% right away.” In addition, he says shippers may send inferior-quality product, which will reduce shelf life and increase food waste. 

The problem with going private 

While the timeline for ending the program hasn’t been determined, CFIA confirmed the decision is a cost-costing measure. “Like other federal departments, the CFIA has identified savings as part of the Government of Canada’s Comprehensive Expenditure Review,” a CFIA spokesperson said in an email to Canadian Grocer. “This includes discontinuing Destination Inspection Service.” 

The alternative to DIS is using private inspectors, with the CFIA noting in an emailed statement to Canadian Grocer the agency is not the only provider of destination inspection services. “Numerous third‑party companies across Canada offer similar services, often with greater flexibility and extended service hours,” the CFIA spokesperson said. 

For those in the produce industry, though, CFIA inspections lend more credibility. 

North American Produce is an importer/wholesaler that uses CFIA’s destination inspections service several times a week. “DIS is a mechanism that helps us to maintain relationships with our grower partners,” says Steven Moffat, VP finance at North American Produce and treasurer of the Ontario Produce Marketing Association (OPMA). 

“We build these relationships over years based on trust, but sometimes, there are situations where product arrives and it’s out of grade and they don’t want to just take your word for it," he says. "At the same time, insurance companies require us to have an independent, third-party inspection. And there’s none more relevant than CFIA. Being a government body seems to have added weight.” 

While North American Produce has used other third-party inspection services, Moffat says, “our growers in the international community demand that we have a CFIA inspection.” 

Undermining confidence in Canada 

CPMA notes that private inspections are often contested by shippers who claim the inspector is ‘biased’ toward the buyer who hired them—increasing conflict and reducing confidence in Canadian transactions. 

“Right now, you have trust that you’re going to put product on the water and/or on a plane and ship it to Canada … and get paid the right price for the product when it arrives,” says Lemaire. “If that’s not in place, market access and trade relationships change.” 

Eliminating DIS could also worsen Canada’s ability to regain access to the Perishable Agricultural Commodities Act (PACA), a U.S. law that resolves disputes and provides financial protection to produce sellers. Canada lost access to PACA in 2014 because of its lack of a comparable system. 

“U.S. shippers to Canada need [DIS], and we need it if we ever want to gain privileged access to the U.S. dispute model again, which we had until 2014 and we lost because we didn’t have all the similar tools,” says Lemaire. “Now we definitely don’t have similar tools.”

In addition, CPMA says the elimination of the program signals to international partners that Canada is less rigorous in its quality controls. In turn, confidence in Canada’s produce supply and willingness to buy from Canadian sources could decline. 

The CPMA has reached out and spoken to government officials about the importance of keeping DIS. “The hope is that the government can work with us to come up with a solution,” says Lemaire. 

“Unfortunately, the decision was made with a gap in knowledge as to the importance of this program," he says. "We’re hoping that the Prime Minister’s office and the Minister of Finance … will see that this is a net positive for our trade relationship, not a program that needs to be cut.”