Agriculture Committee on April 30th, 2014

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you to the witnesses.

Ms. Fowlie, you said that we're losing that capacity. Why are we losing it? What is the structural change that's happening in Canada such that they're going somewhere else? Have you identified it?

[Anne Fowlie]

Allegedly in those particular instances, not exclusively that one, certainly the repeal on the standard containers was cited as a reason for some changes, and also the differences in how companies were looking at rationalizing their investment and whether they would continue with existing investment or in fact make new investments. So there—

[Randy Hoback, Conservative, Prince Albert, SK]

What are the factors in that decision-making process that would make them choose one area over the other? Is it lack of innovation, or is it because of taxation, or is it because of the working environment? What would be the factors?

[Anne Fowlie]

It would be taxation for some. Again, it's some of the regulations and, as I said, the repeal of standard containers. I won't go into that one, because certainly I think many of you heard a lot about that at the time—

[Randy Hoback, Conservative, Prince Albert, SK]

That's another 25-minute debate.

[Anne Fowlie]

Exactly, and we appreciate that it's being held in abeyance, so carry on.

Again, it's a combination of things that are beyond our control in terms of the Canadian dollar or other things, but a lot of it does have to do with regulatory uncertainty. I think that as far as production capacity, quality of labour, and all those types of things go, we're second to none.

[Randy Hoback, Conservative, Prince Albert, SK]

Ms. Townsend, one of the things I hear about when I go back to Saskatchewan is the actual increase in innovation and the increase in research and development in wheat, and how the handcuffs, which is the expression that's used back home, have been taken off wheat.

Can you highlight exactly some examples of what's going on in the innovation side, maybe particularly in wheat? I also give you the freedom to go into other crops, if you think there is something that gives us an even better example of what can happen when you allow innovation to happen.

[Patty Townsend]

Sure. I can give you some examples from some of our member companies. For example, Syngenta has hired a wheat breeder, and Bayer has substantially increased their production.

One of the things they said to us before some of these regulatory changes happened, which I'll get into in a second, was that it was easier for them to develop a new seed treatment or a new fungicide than it was to develop a new variety they could use that would be resistant to the pests they were trying to control.

Bayer has taken a more optimistic view. CPS, which used to be Viterra, has also started to take a more optimistic view of cereals.

There were a number of things that happened, such as changes in the marketing structures and the opening up of some of the classes of wheat for delivery, for example. Another example is the broadening of the Canadian prairie spring class for milling wheat, which was a big step.

A really, really big step that was taken was the removal of kernel visual distinguishability as a requirement for wheat variety registration. You can now bring in stuff that looks like hard red spring but has better attributes and maybe stronger straw and a higher yield, so that was a very positive thing.

Bill C-18 in itself, just that promise that finally after over 20 years we were going to bring our intellectual property protection regime in line with that of the rest of the world, created a lot of optimism. It's more optimism than anything.

I know there's a lot of work going on now around things like drought resistance. They're bringing in new variety, new germ plasm, to increase yield for the fuel industry, for the ethanol industry, so it is a very positive, bright scene out there right now, if they can get around the rail problems—but that's another story—for the cereal industry in particular in western Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

It's interesting, because I can remember being on this committee five or six years ago and Dr. Fowler, a plant breeder out of the University of Saskatchewan, coming here to tell us about how he had developed all these new varieties that were nicely grown in North Dakota and Montana because they couldn't get through the process here in Canada.

Has that improved now? Are we starting to see that ability to actually develop something here and actually market it here?

[Patty Townsend]

One of the changes that was made last February, actually, was an expansion of that new milling class that we call Canada's opportunity class. It does allow for the development of varieties that are closer to the U.S. dark northern springs, for example, or some of the harder spring wheats in Australia and around the world. That's been very positive, and we have seen a number of applications.

Some of the other things that are happening around variety registration, with the changes in voting and the reduction of the criteria that we hope will happen, are having some positive impacts and allowing a lot of breeders, public and private, to get some of their varieties into the market in Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

Are you guys doing anything in particular to encourage more students to go into that type of occupation and in that field? I think that one of issues that's been identified is that it's not as sexy as some other fields. What are you doing there?

[Patty Townsend]

We are trying very hard to do that. You're right. Plant breeding is not really a very sexy thing. Being a trait developer and working in biotechnology is for people who are inclined that way—not me. It is more attractive because it's more high tech.

Real plant breeding is difficult. We are seeing more students getting into plant breeding. There are education programs out there. Some companies are now running seed business courses. There's plant breeding 101 courses being offered and it is starting to pick up, slowly, but it is starting to pick up.

[The Chair, Conservative, Bev Shipley]

I want to thank our witnesses, Patty Townsend from the Canadian Seed Trade Association, and Anne Fowlie from the Canadian Horticultural Council. Thank you very much for coming and for your great presentations.

We'll suspend for a couple of minutes while we get the next group in.

[The Chair, Conservative, Bev Shipley]

Okay, our witnesses are ready.

From the Canadian Poultry Research Council, we have Mr. Bruce Roberts. He's the executive director. Welcome, Bruce.

Also on video conference from Winnipeg, Manitoba, where the sun has never quit shining and it has been warm all winter, we have Mr. Rex Newkirk, the vice-president of research and innovation at the Canadian International Grains Institute. Mr. Newkirk, welcome.

I will go to you, Mr. Newkirk, for seven minutes and your opening presentations.

[Dr. Rex Newkirk, Vice-President, Research and Innovation, Canadian International Grains Institute]

Thank you very much.

I wish it were sunny. It was sunny all winter, although maybe not warm as you mentioned.

Good afternoon and thank you very much for this opportunity to present our opinions regarding innovation in agriculture in Canada. I'm honoured to have this opportunity to meet with you today.

My name is Rex Newkirk, and I am vice-president of research and innovation at the Canadian International Grains Institute, an independent, not-for-profit institute that provides technical support to buyers of Canadian field crops from around the world. We've done this since 1972.

During my introductory statements, I would like to briefly introduce a few key points regarding innovation. I'd like to speak to the importance of innovation in agriculture and the role it has played in the success of the industry. I would also like to discuss the potential for innovation in the future and what needs to be done to meet this potential.

Innovation has been a key part of agriculture and will continue to be for the foreseeable future. Farmers have had to be very innovative to be productive and profitable, given the challenges of our environment and the distance to our key markets. Canadians have been at the forefront of things such as conservation and the implementation of direct seeding. Agriculture and Agri-Food Canada and university scientists have developed the principles and conducted the basic science required for this innovation. Once producers were introduced to the potential, they were often the ones who, with the assistance of Agriculture Canada and university scientists, developed the methods to adopt the technology. They started companies to produce the equipment required and have steadily made improvements and increased this productivity.

Life science companies have developed the chemistry required to use this technology, and the government, university and industry researchers have refined rotations to minimize disease and maximize profitability. Grain companies have been innovative in their approach to increase handling and transportation efficiencies resulting in one of the most efficient grain handling systems in the world.

Underpinning this market are the developments of new varieties of crops that combat disease and maximize productivity. The majority of grain varieties in the past have been developed by Agriculture and Agri-Food Canada, the Crop Development Centre, and other university and provincial breeding programs.

Going forward, as we heard from the previous speaker, many commercial entities are investing in new variety development, and they continue to develop new and improved varieties. These are just a couple of examples of the innovations we've seen in agriculture, and there have been many. The industry should be proud of its achievements with regard to production and grain handling.

Many would argue, however, that Canada is an expert at production, but that in the future we will need more innovations in food product applications to increase future markets and to promote processing of these commodities prior to export. We feel that innovations in production and grain handling efficiencies must continue, but much of the future prosperity is also reliant on innovation in food, feed, and industrial product applications.

The question becomes what must be done to ensure that research investments made result in innovations that benefit producers, customers, and Canadians. Recently, with the support of the Government of Canada and grain producers, CIGI has been doing a great deal of research on product applications leading to new innovations. Also, prior to joining CIGI, I developed a new product from canola and co-founded a technology company to take this product to market. This technology has now been bought by a multinational company and is being implemented as we speak.

Based on these experiences, we feel we can provide some insights into what we feel must be done to see successful innovations in the area of product application and processing.

First, an important and surprising observation is that food and feed companies do not usually drive the initial innovations. They are not risk-takers, but they will certainly capitalize on an opportunity once they understand it and see the value. The investments made by government and producer associations are best directed to the initial stages of development, in our opinion.

CIGI works closely with food companies to determine what the opportunities are and to identify potential product applications that would benefit these companies. Using public and producer funds, we collaborate with food centres and other researchers to start the product development. We demonstrate the new products to food companies and attempt to introduce the opportunities to them. If the company is sufficiently interested, it is asked to invest in refining the product to meet its needs and to refine the process. We work side by side with it, but under a confidentiality agreement, to move the product to market. We are currently in this process with several very large companies, and this process seems to be working well for us.

We feel the key to the success of new food product development innovations in the future encompasses these two components: initial public and producer investment, followed by commercial investment and partnerships. The key is to ensure that this transition happens at the right time, and that the right resources are in place to ensure the innovations being developed initially are commercially relevant.

One question you may be asking is what the role of government is in this innovation pathway. Certainly the investment, initial research, and product development is very important. This should be done in partnership with those with a vested interest in the success of the research. In our example this would be agricultural producers.

The research should also be driven by real needs and market opportunities. Organizations like CIGI, that have close working relationships with customers, make excellent collaborators on this research, as they bring the customers' insight to the table.

The government investment and research capacity is also very important. Without the right type of facilities and people with experience, the quality of the research will not meet the needs of the customer.

In my own example of developing a canola protein concentrate, without access to the research facilities such as Innovation Place bioprocessing in Saskatoon, as well as the food development centres, this technology would never have been proven to the point that it could be adopted by the industry, and therefore it would not have succeeded.

The investment of the governments, both federal and provincial, and the organizational capacity to develop and introduce innovations is very important in the future. I would also suggest it is very important that public investment should be sufficient to allow the development to a stage so that they can be introduced to the companies.

In the end, company investment is very important to the transition, as I discussed earlier. It is key. However, if public investment doesn't allow the product to be developed sufficiently so that these companies could then take on the next stage, the initial investment would be lost.

It is our belief that Canadian agriculture will continue to grow and be profitable, and that this growth will be based on innovation. With this approach that we've presented, we believe that we will see significant growth not only in commodity production, but also in new food and product applications as well as industrial and feed. This will result in additional ingredient processing as well.

Thank you very much for this opportunity. I welcome any questions you have regarding our proposal for the innovation pathway that we've identified.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Newkirk.

Now I'll go to Mr. Roberts from the Canadian Poultry Research Council, for five minutes, please.

[Dr. Bruce Roberts, Executive Director, Canadian Poultry Research Council]

Mr. Chair, on behalf of the Canadian Poultry Research Council and its member organizations, I would like to thank you for the opportunity to appear before the House of Commons Standing Committee on Agriculture and Agri-Food.

The Canadian Poultry Research Council, or CPRC, was established in November 2001 to provide funding and coordination for national research activities for its members. Those members include the Canadian Hatching Egg Producers, the Canadian Poultry and Egg Processors Council, Chicken Farmers of Canada, Egg Farmers of Canada, and Turkey Farmers of Canada.

Poultry production and processing must continually improve productivity and efficiency in an ongoing search for cost control measures and innovative products. That's what keeps the price down. Canadian poultry research has achieved significant success in developing new, targeted approaches. One of the best examples of Canadian research success was the development of the omega-3 egg, a functional food with significant health benefits and a commercial opportunity for egg farmers, even though the university that developed it did not see any point to it and didn't take possession of the IP, intellectual property, which we've always found quite interesting.

Research and innovation are important to competitiveness; however, the concept of competitiveness is not always fully understood. Competitive markets grow but they also maintain their existing customer base. For many industries this means constantly offering new and improved products and services, with customer focus being on a product, and less frequently on the circumstances under which it is designed or produced. It isn't quite that way with agriculture lately.

The agriculture industry faces some relatively unique issues because of its nature by working with plants and animals. Consumers question how agricultural products are produced, as well as their attributes, more than in the past. Acceptable and often recommended past practices are now being questioned or changed.

The poultry industry has reacted to changes in consumer expectations in several ways, including a shift in our research emphasis toward poultry welfare and behaviour, alternatives to antibiotics, and the environment. The emphasis on these issues is designed to both expand the Canadian poultry sector and maintain the Canadian consumer's confidence in Canadian-produced poultry and egg products.

The federal government is an important partner in the research innovation value chain; however, Agriculture and Agri-Food Canada, AAFC, no longer has dedicated poultry researchers as they do in many other agricultural sectors. Some AAFC researchers conduct poultry-related research as part of their mandate, but those resources are few and narrow in scope.

CPRC has begun early discussions with AAFC to determine if existing government researchers working in other fields or other commodities can direct some of their research efforts to the poultry industry through the collaborative research and development program under which industry shares research costs with AAFC. This would provide the opportunity to expand our access to specialized research knowledge presently within AAFC for collaborative research projects in cooperation with universities and industry. We have followed this approach in our new poultry cluster. A strong partnership among AAFC, Canadian universities, and the poultry sector will continue to benefit the Canadian economy and society in general.

I thank you again for the opportunity to provide input to this committee in its deliberations.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Roberts, for your presentation.

We'll now go to rounds for questions.

I will go to Madame Raynault, for five minutes, please.

[Francine Raynault, NDP, Joliette, QC]

Thank you, Mr. Chair.

I would also like to thank our witnesses for being here.

I am an MP from Joliette, north of Montreal. We have a lot of poultry producers in my riding, especially in Saint-Félix-de-Valois. Of course, there are hatcheries there. Poultry is raised there, and there are processing plants. The poultry industry in my riding employs a lot of people.

As an aside, I sold poultry, laying hens, to be exact. People asked me why the truck was empty in the middle of the day. It's because you don't load poultry during the day. You do it at night because poultry get a little worked up during the day. In any case, when I was doing it, we loaded the trucks at night.

I have the French version of your document. It says that Agriculture and Agri-Food Canada indicated that farmers had generated farm cash receipts of close to $3.7 billion through poultry sales. That's a lot of money. That's 7% of all receipts from the sale of agricultural products.

Let's talk about innovation. A little further on in your document, it says that no researchers are really devoting their work to the poultry industry anymore. Will the fact that fewer researchers are focusing on that industry negatively affect it?

[Dr. Bruce Roberts]

Definitely. We will fall back. We already have. From the staffing adjustments in Ag Canada we've lost six positions: three researchers and three research associates. They were all dedicated strictly to poultry, quite a few of them in the area of poultry welfare and behaviour, something that is in the forefront now, which I'm sure you all have heard. It's a critical issue we are dealing with and it's relatively new, so we have a lot of work to do in this area. That loss has certainly had a significant impact, which we're doing our best to work with the universities, Ag Canada, and the provinces to mitigate.

[Francine Raynault, NDP, Joliette, QC]

There are also commercial barriers that are negatively affecting your industry, such as spent hens from the United States, and that are moving into the Canadian market. Is this disguised dumping going to hinder the capacity for innovation in your industry?

[Dr. Bruce Roberts]

That isn't an area CPRC gets involved in, although we have worked a little bit with the Chicken Farmers of Canada on some studies for them. Anything that reduces revenue puts pressure on the system essentially, but that's about as far as I can go with it. That's not an area that we have any responsibility in.

[Francine Raynault, NDP, Joliette, QC]

Do I still have some time left, Mr. Chair?

[The Chair, Conservative, Bev Shipley]

You've got a minute and a half.

[Francine Raynault, NDP, Joliette, QC]

Perfect. Thank you.

I'm not talking about spent hens that come from the United States, but those that are in Canada. Once the hens are done laying or the roosters are done serving, does the industry get assistance to create new products or improve products that are already on the market? We know that this meat is not put in the garbage.

What does your industry do exactly to help all these poultry breeders when they come to the end of their active life in the industry?