Agriculture Committee on Oct. 27th, 2009

[Brenda Simmons]

In our province, our potato board licenses people to sell Prince Edward Island potatoes. We license one group that's a dealer, which can sell to Canada, the U.S., and Puerto Rico. The others are exporters; they go offshore. That's only on the fresh product, on seed potatoes or fresh potatoes such as you would buy in the grocery store. Those people sell to brokers sometimes, or they sell direct to a retailer. More and more, the retailers want to go direct.

On the processed side, it's the same thing. Cavendish Farms and McCain go directly to McDonald's or Wendy's or KFC; they sell directly. But they also sell to retailers and sell offshore through brokers as well, in some cases.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Lemieux, you may have a last round.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Chair.

I want to ask Mr. Smardon a couple of questions.

First of all, I liked your presentation because it focuses on a key step whereby you move research that we develop in labs to the market. It's unfortunately a high-risk endeavour. In fact, this is where venture capitalism comes in—people who are willing to take a lot of risk, because for every 100 products that look really good, a small number actually become successfully marketed to consumers or to industries and eventually to consumers.

Could you comment, first of all, on this risk? I'll call it a high level of risk.

The second thing is, could you comment on whether you think the government should be involved during this transition stage, if the risk is so high?

Perhaps the third question I'll ask is, what would you propose as risk mitigation strategies, in other words things that would actually lower the risk? Is it possible to lower the risk?

[Dave Smardon]

Mr. Chairman, there's no question, these types of ventures are extremely risky.

If you read the Globe and Mail and other papers, they will tell you that the venture capital business model is broken. What you're seeing now is a movement toward more of what they call hands-on investing, where the investors are very active in the businesses. This is almost like an incubation model. So one of the ways we see, not only in a proposal but what's happening in the marketplace today, is to have a very hands-on model. You can't have a fund without having mentors and coaches. So anything you would consider investing in, you must be able to take these people and put them into the business to help move it along.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Do you think the government is well set up to do that?

[Dave Smardon]

No, I do not.

So that's one aspect of mitigating the risk. Another way to mitigate the risk, where government can play a catalytic role, is to provide some form of grants or loans--the preference would be loans--to early-stage ventures. These are repayable loans, so we'd not be giving money away to early-stage companies. We'd simply be backfilling some of the moneys that would be brought to bear by the private sector. The loans would not be available without private sector money. You'd have to have a matching program. The private sector must be engaged in bringing this money to the table.

The intent here is not to have government giving handouts to business. The intent is to be a catalyst to kickstart the private sector into putting money into this sector.

I think I've answered your questions. I'm not sure if I've missed one.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Perhaps one other question would be.... You gave some good examples of where agri-products are involved in a final product that we might not normally assume, like in foam seats, etc. If the government were involved in this key step of moving something from the research lab to the market, how would one differentiate between all the different types of products and what actually has agri-content and what has less agri-content? Where would we start drawing lines to say something is worthy of effort because of its agricultural content, but another thing has less and something else has none? What's the model for that?

[Dave Smardon]

You bring up a very good point. There is no hard and fast criteria at this point in time that says if it's 10% agricultural oils, it doesn't fit; if it's 11%, it does. I think what we have to do is look at each individual opportunity to see what is the benefit and the impact to the Canadian agricultural community and to Canadian business, and if there's actually an opportunity to help build and maintain a leadership role in a particular facet of agriculture.

If your customer base is the auto industry, 10% agricultural oils may be sufficient. But 10% may not be sufficient at all if you're producing carpets or something. It depends.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Larry Miller]

Thank you.

Before I thank the witnesses, I'd like to follow up, Ms. Simmons, on a comment you made in your presentation. You had concerns about “buy local”. I guess, frankly, as a farmer and as a member of the committee, it kind of surprised me, because it goes against basically everything, pretty well, that this committee has heard from every commodity group, particularly two and a half years ago when the committee travelled across the country to every province, hearing input from producer groups. We heard in every province from I believe every commodity group promoting “buy local”.

I think “buy local”, if you want to take it farther, is “buy Canadian“. So I'm kind of surprised, and I don't know whether you want to comment on that or clarify it.

[Brenda Simmons]

Sure. Thank you.

We like “buy Canadian”; that works for us. As somebody said before, we have 140,000 people and 85,000 acres of potatoes. We can't eat them all, so we need markets out of our province.

We've really found, to be quite honest, that when we meet with our friends in Quebec, they've done a tremendous job in dealing with their retailers and having their support in selling Quebec potatoes. Our market share in Quebec has really dropped drastically, and they've done a very good job on quality and everything else.

When we go to Ontario, too, we're running into “Foodland Ontario”, for example. I don't pretend to be an expert on “Foodland Ontario”, but we're being told they don't want to list us in the stores because of promotions in certain periods of “Foodland Ontario”. So we're bumping into that, and it's really affecting our ability to get in the market earlier. We used to be in Toronto, definitely by late September and so on. Now we're not there until some time in November, and it's getting moved back all the time.

As I say, we like “buy Canadian”. We do buy products from the rest of Canada for other needs in agriculture and in manufactured goods--cars, all that type of stuff; we simply find that it's a bit of a trade impediment for us with a lot of retailers.

[The Chair, Conservative, Larry Miller]

Thank you.

Thank you for coming today, Ms. Simmons, Mr. Norton, and Mr. Smardon. We appreciate it.

We now have some committee business we have to attend to.

Members, we have a number of different items. The first one should be very quick. It's a housekeeping issue to do with our budget. I believe everybody has it in front of them. It's for a total of $16,250. As you can see, this is to deal with witnesses who came here from Regina, Saskatoon, Winnipeg, Toronto, and Moncton, plus a videoconference we held. Again, this is for the report under fusarium.

Is there any question or discussion about this? If not, I'd entertain a motion to approve it, if so moved.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I so move.

[The Chair, Conservative, Larry Miller]

Is there discussion on the motion?

[Wayne Easter, Liberal, Malpeque, PE]

I think there's part of the cost missing there.

[The Chair, Conservative, Larry Miller]

Is part of it missing, Wayne?

[Wayne Easter, Liberal, Malpeque, PE]

No. I think on the videoconference, one of the witnesses had to come from Moncton. Are her costs in there, bridge fares and so on?

[The Chair, Conservative, Larry Miller]

Above that, Wayne, it's got in there, “Witnesses, Moncton”.

[Wayne Easter, Liberal, Malpeque, PE]

Oh, okay. I didn't see that. She drove over, I think.

[The Chair, Conservative, Larry Miller]

Isabelle was explaining that the amount that's in there, which I thought was very excessive for travelling to the videoconference, was the amount that it would have probably cost to bring her to Ottawa. Of course, it won't be that much, but the budget is made out, and if it comes in lower, all the better.

Is everybody clear on that?

(Motion agreed to)

The motion is carried unanimously.

We'll move to our steering committee report. Before we open up discussion on it, I will point out that we've tentatively set aside, as discussed at that steering committee, to deal with the competitiveness report starting on November 19. There's one day put aside there. From discussions I've had here with Frédéric, I think it's going to be a fairly lengthy report. We may get it done in one day, but that does not always happen. It would be very important to follow up on.... I see members smiling.

I would suggest, and I consulted here with Isabelle, that if we leave the 24th open right now, if we finish on the 19th we could bring in government officials. We've had some correspondence from the Canadian Meat Council, the cattlemen, the Canadian Federation of Agriculture, and I believe a group from Quebec as well, that would like us to bring in government officials on the SRMs, which would be the second meeting. If you could keep that in mind when we're discussing the report, it would be nice to have this report wound up, sent to the House, and then move onto something else.

What I see is that we seem to be trying to do a bunch of things at one time. Sometimes it's hard to do them all right. I would prefer, if you agree with me, that we wind this thing up and get it out. Basically, that would mean the 24th at the latest, if not earlier, that the report would be available to be presented in the House.

I'll leave it at that.

André.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

I have an observation to make, Mr. Chair. If we must meet on November 24, we will have to delay the rest of our work. In other words, if we meet on November 24 to study the report, the following meeting will be spent on program review, and so forth. All of the upcoming work will be delayed.

[The Chair, Conservative, Larry Miller]

You'll remember, André, the discussion we had at the steering committee. You will see on the tentative calendar that there are three meetings at the end that were left open. Do you remember the discussion on that? We thought once we got to a point we could bump them up. Remember, we had that discussion about not wanting to book them right through to the end and then find that we had to change them at the last minute.

Will that cover what you're referring to? Okay.

Mr. Eyking, Mr. Valeriote, and then Mr. Lemieux.

Mr. Eyking, go ahead.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Are you saying that you want November 19 and 24 for the report?

[The Chair, Conservative, Larry Miller]

Yes, and if we can finish the report on November 19, Mr. Eyking, which would be nice—

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Okay. What do we have on November 17?