Re: BTA Pre Notification Kinnikinnick Foods Inc. has been working with the FDA since early 2003 to respond to the issues surrounding the BTA. We have undertaken the following: 1. discussions with Charles Breen of the FDA, Seattle office 2. Comments on the FDA website 3. Discussions with Air Courier companies (UPS and DHL) in their representations to the FDA and US Customs 4. Representations by the Alberta and Canadian Governments on the website and subsequent talks 5. Discussion with Consul General of the USA for Alberta The Issue: 1. Kinnikinnick provides basic food (bread, buns, cookies etc.) for people with health problems - specifically gluten free foods for people with Celiac Disease, wheat allergies and gluten free/dairy free foods for children with Autistic Spectrum Disorders. 2. Our US customer list is approximately 10,000 households 3. For many of these households there are no readily available substitute foods. 4. We deliver these perishable products overnight to any location in North America direct to our customers homes at a delivery cost of $10 per order. 5. We make high quality foods available to our customers throughout North America at reasonable costs. Implications of the BTA for Kinnikinnick Foods Inc. 1. We operate one of the largest home delivery air courier system in North America and ship assortments of the same products every week to hundreds of US customers. 2. Since every customer and every product require a PN number, we will be submitting to the FDA every Monday, Tuesday, Wednesday and Thursday approximately (500 orders times 8 items) = 4,000 Pre Notifications every day that we ship or around 10,000 Pre Notifications per week. 3. We understand that the FDA expects around 30,000 PN in total every week. 4. We have been unable to confirm the electronic data system that will be used. We can transmit the data daily but will we be able to get 4,000 PN daily that we can attach to invoices in order to cross the border? If the FDA system is web based, and we have to directly fill in the forms to get the PN, we believe that our inputs could cause DNS problems for your complete system. Similarly, if the system is email based, 4,000 PN emails could compromise system operatio n. Attaching the PN numbers to individual customer invoices is possible from our end, but it also means that US Customs will have a large amount of paperwork to contend with for very small value items, most of which (99%) are NAFTA certified and non dutiable. 5. We are concerned that the sheer volume of data to be transmitted, handled, responded to and applied will create a huge amount of work for a very tiny percentage of food imports for items that are covered by one of the most secure delivery systems in effect. Conclusion: 1. From our discussions with FDA personnel, it appears that the system we use for food exports to the USA provides a unique situation that may not have been considered in the development of the regulations. We are concerned as of December 13, that our customers will be unable to obtain these specialty foods. For many of them, if Kinnikinnick products are not available they will lose an important part of their diet (carbohydrates). Solution: 1. In the interest of protecting the food supply from possible terrorist action, the current importing system that we use provides the most secure of any alternatives. Since we deliver directly from our plant to our customers there is a direct tracking of all our products. For example, UPS provides a tracking system that shows the location of any order in the system. If the FDA, were to become concerned about terrorist intervention with our food, within a matter of minutes or hours we could contact any customers in receipt of any order by phone and/or email for whatever reason. Compared this to standard warehouse distribution to retail stores and then sales to consumers from those stores, the only method of recall in this case is newspapers, radio and TV. In our case we know exactly who has taken delivery of our products. It is fair to say that no other form of distribution to the consumer can come close to the security that we can provide with the air courier system that we currently use. Not only that, but the air transportation system provides one of the most secure modes of distribution with minimal opportunities for outside intervention. And finally, the number of households that we supply on a weekly basis is very small and would not seem a particularly high profile venue for any terrorist group. 2. Working with the Air Courier companies (UPS and DHL), we could provide to the FDA a summary of all the products that we ship on a given day. There might then be (say) 40 separate items that require a PN rather than 4,000. Ideally, if items under this Section which are moved by air (i.e. "tracked and traced") could continue to enter under the existing system, we could advise the FDA and US Customs in a form that would meet the security concerns but not overwhelm the system with huge quantities of data. Essentially less than 1% of these items would have any duty payable and we could discontinue those items (which come under the "sugar quota") to make all entries duty free. 3. Another alternative could be to set up an agent to take delivery of the shipment in Louisville (UPS) or Cincinnati (DHL) as one customer with multiple items. This would be similar to a consolidated shipment. One problem that might then occur is that the total value of the shipment would now be outside of Section 321 of US Customs which allows for the importation of "low value entries (<$200 value). We are shipping perishable products and the preparation of a Customs Document generally means an additional day delay in the shipping schedule. Associated Issue. With the Christmas season approaching, we need to advise our US customers on what will happen as of December 13. We have not wanted to post anything on our website but the week of December 7 may be the last week that we can guarantee that they will be able to get food in the current fashion. We would appreciate any insights you could provide as to what would be appropriate to put on our website or how the above can be resolved. We remain committed to serving our customers and finding a way to do this within the context of changing international conditions. Thank you Jerry Bigam, CEO Jerry Bigam CEO, Kinnikinnick Foods Inc. 10940 120 Street Edmonton, AB T5H 3P7 Phone: (780) 424-2900 ext. 223 Fax: (780) 421-0456 jerry@kinnikinnick.com www.kinnikinnick.com