Agriculture Committee on May 12th, 2014

[Wilson Scott Thurlow]

The first website I look at every morning is the Chicago Board of Trade because it has prices for natural gas, prices for ethanol, prices for dry distillers grains, as well as the corn itself, and the feedstock that goes into it.

Absolutely. The assumption in your question is how price affects our ability to do research and development. When corn prices are high, times are a little bit tighter, and so it's tougher for our members to have that innovation. They hedge very appropriately. Some of them have accounts set aside for cash spotting. Some will buy corn six months to a year in advance.

The assumption is absolutely correct in that price has an incredible impact, and so I would compliment your government in ensuring there is that innovation capital there for research and development that complements the investments that business want to make.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

George, could you outline some of the innovative policies you were describing before? We do have 70% of the production that's exported to the U.S., but it isn't just getting to markets; it's some of the things you are doing in the industry.

Could you perhaps outline some of the innovation you see in your industry?

[George Gilvesy]

One of the things we do in the market that's quite unique to.... It's not unique in the marketplace, but we do it aggressively, and that's the use of in-store demos in the United States, in particular.

We have a couple of products we grow, mainly the English cucumber and the mini cucumber. These are products not well known by American consumers, for example.

One of the things we learned at the trade shows we attended throughout the United States was that produce managers offered up that these in-store demos are a tool that really does work. That gave us an opportunity to showcase our English cucumber, have American consumers taste the product, and the next thing you know they are starting to buy it.

That's one simple thing we do that's putting Ontario greenhouse vegetables in the mouths of American consumers.

[Earl Dreeshen, Conservative, Red Deer, AB]

Can you talk a little bit about the advanced traceability you described as well, and how that fits into your marketing plans?

[George Gilvesy]

One of the things most of the major retailers, or definitely the advanced ones, throughout North America are looking for is the traceability on it. We were leaders certainly in the food safety aspect of it. We were almost first out of the box in the produce sector in Canada to provide a leadership role on the food safety certification of our growers. We have had mandatory food safety in place since 2006.

We also have mandatory trace stickers that go on every piece of fruit where applicable that can trace it back definitely to the farm. Now we're looking at through the produce traceability initiative, which is a global initiative, trying to identify a single methodology in advancing that to the total sector from the farm right through to retail.

[The Chair, Conservative, Bev Shipley]

Thank you, Mr. Dreeshen.

We'll now go to Mr. Eyking, for five minutes, please.

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

Thank you, guests, for coming today and for your presentations.

My first question is for the greenhouse growers, because as a greenhouse grower, I know the challenges you face. Most of our technology came out of southern Ontario, Leamington. Of course, Leamington is a leader in North America.

Because you have so many acres in the Leamington area, my first question is on the innovation you're doing with respect to water. As you're well aware, with the water you use, especially given the buildup of salts, you have to flush out the system.

What innovations are you using to recycle the water you're using with your crops?

[Leanne Wilson]

I'll address that question.

We've been doing a lot of research for the last three to four years, I'd say, on innovation to improve our recirculation. In general, most of our growers have always recirculated. It allows them to disinfect their water, rebuild up the nutrients they need, and recirculate it back through.

As you indicated, the problem is buildups of sodiums, chlorides, and other components the plants just can't take up. What we're looking at now is a variety of different options, whether those are fluidized bed technology that can remove some of these components, or different versions of our reverse osmosis systems. We're looking at that byproduct you take up and what we can actually do with it. Are there companies that could use it to produce something else? Is it a matter of just disposing of it properly somewhere?

It's still very much in the beginning stages. Our sector has gone over to the Netherlands to try to find out what they are doing, and they are years behind it. I think they have a 2020 deadline to get rid of their issues. We're actually quite leading in this area right now, and we're making a lot of effort trying to find it, but unfortunately, at this stage there's no real solution.

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

Thank you.

You brought up the Europeans and of course, you know that the free trade agreement is coming. One of the problems the greenhouse growers have always had was the peppers coming in, and some would say dumping them in. If you've been in the Netherlands, you would know their heating costs are lower too. We have pretty harsh winters here. They're lucky to drop to 3° to 4° below zero over there, whereas here we get 25° below zero.

For us to be able to compete with the Europeans, and it'll be interesting if we can even sell over there in the future, how are you dealing with your heating costs? Is there any innovation? Are you using biodigesters or what are you doing to help deal with your heating costs? A winter like this last one especially was brutal on the greenhouse growers. What are you doing on your heating costs for innovation?

[Leanne Wilson]

The heating costs, again, are one of our major costs. The growers have looked at a variety of things. As was already mentioned, where applicable, linking up the GreenField Ethanol and other plants that are producing waste heat, is obviously ideal. Some growers are looking at biomass options. About 30 of our growers use biomass quite heavily, whether that's construction waste or wood chips and other things. In general, overall, they're trying to improve production efficiencies, such as using a double-energy curtain to de-humidify the greenhouses better. We've had a number of research projects over the years trying to reduce the amount of energy needed to produce that crop.

[George Gilvesy]

I do want to talk about that pepper situation with Holland.

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

Sorry, if you can be quick, because I need to ask one more question.

Go ahead.

[George Gilvesy]

The bottom line is we are competitive with Holland. I didn't want to leave the misconception that we aren't competitive. That's why we challenged them. They were actually dumping in here. We won the case and we got 193% duty and the Dutch did not put up any data to prove otherwise. I just wanted to clarify that.

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

Thank you very much.

My last question would be on the biofuels.

We were talking about the Netherlands. I think the average household in the Netherlands is 20% garbage disposal compared to North America and they use so much of the garbage for biofuels, especially in the municipalities. They separate it. I think you alluded to this.

What can we do in North America? It has to be municipality driven to a certain extent and there'd have to be funding and incentives for us to hit some of the targets we should be hitting. What can we be doing to help? I'm guessing it has to come from the municipalities.

[Wilson Scott Thurlow]

The municipalities are already funding garbage. They call it tipping fees. Instead of having tipping fees that go to destroying land somewhere else, we would suggest that those tipping fees be directed at investments like the one that Enerkem made in Edmonton to diversify 95% of that municipal solid waste away from landfill and into a renewable content, whether it's a chemical like methanol or whether it's a renewable fuel like cellulosic ethanol.

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

But how can we—

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Eyking.

We'll go to Mr. Payne, please, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you to the witnesses for coming.

There are some very interesting innovation activities. You just talked about the one in Edmonton. I don't know if you can expand on that a little, Scott, but I find that interesting, to produce methanol. There is a facility in my riding that actually produces methanol from natural gas. Do you have any idea how that process is working? Are they actually producing methanol, or what is it they're producing?

[Wilson Scott Thurlow]

Again, I am a lawyer by training, I'm not a chemist, so with that background....

They are producing methanol right now and they will be in a position to convert that methanol chemically into a cellulosic fuel. My understanding is they will be doing so very soon. Their official plant opening is the first week of June.

Now, whether or not they will plan to continue selling methanol or cellulosic ethanol I imagine will be driven by, as Mr. Dreeshen pointed out, price—what product to create that they can get the most for.

I think more than anything else, though, this is finally a success story in cellulosic fuel, the new processes. This is also an agricultural story. DuPont and POET in the United States are looking at agricultural residues as the feedstock for their commercial operations in Iowa. It is going to be very successful. They're both going to be commissioning to be in full commercial operation this year. This is technology that will come to Canada.

[LaVar Payne, Conservative, Medicine Hat, AB]

Is this a test pilot program?

[Wilson Scott Thurlow]

No, these are all commercial-scale facilities. The one in Edmonton is 38 million litres a year, so that's approximately 10 million gallons. That's a small ethanol plant by comparison to some of the larger plants, but it's still a significant amount when you consider how much ethanol we use in the country, which is just over 2.1 billion litres for our mandated requirement. We can scale these up in the future. Again, I think as you can appreciate, it really is just about finding the feedstock at a low cost.

[LaVar Payne, Conservative, Medicine Hat, AB]

In terms of the biofuels, a lot of people are critical because they think that the grains might be used for food rather than for fuel. Do you have any comments on that?

[Wilson Scott Thurlow]

There is no one who is happier to debate the food and fuel argument than this guy right here. It's mostly simply not based in scientific fact or in economic data. We produce more food today on less land in Canada than we ever have in our nation's history. We think that the econometrics that are associated with the food and fuel debate have not been borne out statistically with data. The fact is, when we produce ethanol, we are only extracting part of the molecule, and we're returning everything else to the food industry through dried distillers grains or through some of the other co-products that I had mentioned before.

The bottom line is that the food and fuel debate does not pan out on the economics of scale, and we are creating additional value from that corn, or from that soy, or from that canola.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you.

This question is for the Ontario Greenhouse Vegetable Growers.

You talked about traceability, and you talked about competition from high-tech greenhouses. Could you expand on what you mean in terms of the high-tech greenhouses? What are they doing that makes them so high tech and potentially more cost-effective?

[George Gilvesy]

I can maybe use the comparator to what low tech is to better describe it.

Mexico is quite well known, and Spain is well known for low tech. In their climates they don't require having the greenhouse totally enclosed, for example. Mexico is well known for shade cloth production. That's where they put poles in the ground and put a shade cloth over top. They're deeming that as greenhouse production.

What we're talking about is high-tech competition coming from fully enclosed greenhouses with computerized technology, water systems, hydroponic growing.