8.7  Food Safety Balance Sheet Effects of Foreign Currency 8.6  Non-Seafood Commodities 48 HIGH LINER FOODS INCORPORATED The Company has a Quality Steering Council comprised of all  senior quality personnel in the Company. Their mission is to  ensure that High Liner Foods has the best policies, consistently  applied throughout the Company as well as implementing audit  processes and ensuring quality personnel are adequately trained.  Quality and food safety, including the implementation and  maintenance of state-of-the-art product specification and  traceability systems, were strategic goals of the Company in 2010  and progress was made on these initiatives in 2012 and 2013. We employ several experts in this area, including food scientists,  quality technicians, raw material inspectors, and labeling and  nutritional consultants. We also have a supplier code of conduct  and retain independent auditors to monitor compliance. Other commodities, whose fluctuating market prices may affect  our financial results, are flour, corn, paper products, and frying  oils. The Company’s  Price Risk Management Policy  dictates that we  use fixed pricing with suppliers whenever possible but allows the  use of hedging with costless tunnels or swaps if deemed prudent.  During 2012 and 2013, we have been able to deal with this risk to  management’s satisfaction using contracts with our suppliers.  World commodity prices for flour (wheat and corn) and oils (corn,  soy and canola), important ingredients in the manufacture of many  of the Company’s products, decreased in 2013 and are trending  stable for 2014. Currently, we are still working with fixed price  contracts with our suppliers and have most of 2014’s commodities  under contract.  All our plants in the U.S. and Canada are certified to Global Food  Safety Initiative (“GFSI”) standards, and we are recommending our  global suppliers work to achieve this standard too. Lunenburg,  Portmouth and New Bedford have Safe Quality Foods (“SQF”)  certifications and the Newport News is certified to British Retail  Consortium (“BRC”) standards. Plants outside of North America must also pass HACCP audits to be  able to export products to the U.S. All of the Company’s non-North  American suppliers operate HACCP approved plants. The CFIA must  inspect food that is procured outside of Canada. The Food and Drug  Administration (“FDA”) inspects food that enters the U.S. In addition,  all purchases are subject to quality inspection by the Company’s  own quality inspectors. We have strict specifications for suppliers of  both raw material and finished goods to ensure that procured goods  are of the same quality as products made in our own plants, as  indicated in our “ Supplier Standards and Audit Manual ”. Our operating costs are affected by changes in crude oil prices,  which particularly influence the costs of our incoming and  outgoing freight. When we experience higher crude oil prices,  freight costs increase as our freight suppliers add fuel surcharges  and our suppliers charge us more for ocean freight. To minimize  our risk, and in accordance with the  Price Risk Management Policy ,  we can enter into costless collar hedges but did not do so in the last  five years. We do not plan to hedge fuel surcharges in 2014. Board oversight accountability: Audit Committee Senior management accountability: Mario Marino, President and  COO, Canadian Operations; Keith Decker, (Interim) President and  COO, High Liner Foods (USA); Derivatives – Kelly Nelson, Executive  Vice President & Chief Financial Officer; Rick Barnhardt, Vice  President U.S. Supply Chain As we have operations in Canada, and some monetary assets and  liabilities in the U.S. that are denominated in CAD, assets and  liabilities of the consolidated company change as exchange rates  fluctuate. At December 28, 2013, the Canadian dollar weakened by  approximately 7.0% from its value at December 29, 2012. As such,  the weakened Canadian dollar has decreased the carrying value of items such as accounts receivable, inventory, fixed assets, and  accounts payable of the Canadian operations in our U.S. dollar  balance sheet. The net offset of those changes flow through Other  Comprehensive Income in shareholders’ equity on the balance  sheet. Changes in monetary assets and liabilities in the U.S. that  are denominated in CAD flow through the income statement,  unless they are hedged.  Details on the hedges in place on December 28, 2013 are included  in  note 22  to the Consolidated Financial Statements. fish fillets, that are not hedged under this program as the price in  the marketplace moves up or down with changes in the Canadian  dollar cost of the product. Approximately US$85 million of the U.S.  dollar purchases of the Canadian company are part of the hedging  program and are usually hedged between 45-55% of the next  twelve months of forecasted purchases. Senior management accountability: Mario Marino, President and  COO Canadian Operations; Keith Decker, (Interim) President and  COO High Liner Foods (USA) Board oversight accountability: Board of Directors At High Liner Foods, food safety is our top priority. Our brand  equity and reputation are inextricably linked to the quality and  safety of our food products. We must be vigilant in ensuring our  products are safe and comply with all applicable laws and  regulations. Consumers are also increasingly better informed  about conscientious food choices. All of our processing plants have the required State or Provincial  and Federal licenses to operate. The U.S. requires its seafood  processing plants to adopt a quality management system based on  Hazard Analysis Critical Control Points (“HACCP”) principles. Our  plants in Portsmouth, Malden, New Bedford and Newport News are  regularly inspected and meet or exceed all HACCP requirements. In Canada, all seafood-processing plants are required to adopt a  Quality Management Plan (“QMP”) covering the regulatory and  safety aspects of food processing. High Liner Foods’ QMP has been  approved by the Canadian Food Inspection Agency (“CFIA”) and  has been in good standing since inception of this requirement.  Canada’s QMP is an accepted standard under the U.S. HACCP  system. Our Lunenburg facility falls under this regulation and  meets or exceeds the related regulations. MANAGEMENT’S DISCUSSION & ANALYSIS (CONT’D)