Thank you, Mr. Chairman. As I only have 10 minutes, I'll have to speak in English.
I will not be able to make a presentation in ten minutes in French; I'm very sorry.
I wish to thank you for the invitation to appear here today on behalf of a remarkable organization, the Farm Pure family of companies, headquartered in Regina. Farm Pure began as a pedigreed seed company and has grown into much more. The company is farmer-owned, with 196 shareholders from across western Canada. These men and women share a common dream of self-sufficient agriculture, and are motivated to achieve a vision of creating a most rewarding and sustainable value chain for their stakeholders and customers.
We represent the best seed from 30 of the world's finest breeding institutions to create wholesome and energized consumer-ready products. Linked to and owned by a select group of farmers with extraordinary skills, Farm Pure capitalizes on capturing the best nature has to offer.
Our core product is pedigreed seed. However, our business is knowledge-based value creation. It is our mandate to produce food, beverages, and intermediate products, beginning with pure grain grown in an extraordinarily friendly environment for discerning buyers. Based in western Canada, we have global interests and are active in five continents. We are open to partnerships or joint ventures where we create innovative agriculture value-chain relationships.
Earlier this year, the Conference Board of Canada issued its Canada Project, which called for the resolution of issues that have been bothering this country for some time if we are to achieve our maximum potential. The authors of that report included a chapter devoted entirely to the agrifood sector.
This chapter highlights the success of the sector in growing exports. Canada's growth in this sector outpaced growth in global food exports. We took an increasing share of global food exports from 1995 until the BSE crisis in 2004. Our trade in this sector is being driven by value-added agrifood exports, from 52% of the total in 1990 to 80% in the year 2004.
Against this background, the report notes a number of issues that, if resolved, would carry the industry to the next level of achievement—namely, market- rather than production-focused innovation; the need to strengthen value chains; regulatory regimes facing industry; and a variety of human resource issues.
My company agrees with the analysis and recommendations of this report on these broad areas of public policy affecting the future of this industry and, clearly, the work of this committee. Today Farm Pure produces a range of products aimed at enhancing the lives of millions of North Americans stricken with celiac disease. From an array of pure oat consumer-ready products, a revolutionary new grain-milling technology, and recently patented all-natural beverage manufacturing process for ingredients in beer, the focus of the company and its shareholders is totally consistent with what we have identified as the only sustainable future for agriculture—high value-added, niche-focused, and value-creation reflected.
Focusing on creating food products for celiac sufferers has brought us into yet another key area of innovation for agriculture. The numbers are staggering: perhaps 3% of the Canadian population carries this sensitivity. Of those who do, only 3% have been diagnosed. This leaves the health care system coping with the need to treat symptoms without ever getting to the root cause.
The costs are enormous. There is an urgent need to link the health care budgets in this country with agriculture research opportunities and human nutrition. It is in this direction that we are taking the company, and it is in this direction that I think the government wants to see industry move.
In the short time available to me, I would like to highlight one area that is a constraint on my company and on the whole innovation effort in the agrifood companies across Canada, consistent with agriculture policy frameworks I and II. At the very least, entrepreneurs from all sizes of companies have to be able to drive their dreams if they are to succeed. Let me highlight the area of capital formation.
As I've mentioned, at Farm Pure our core product is pedigreed seed. However, our business is knowledge value creation. Across the country today, as our export numbers demonstrate, entrepreneurs are taking a fresh look at this sector and putting their investment capital where their ideas are. On a grand scale, the current battle in the grain industry among Agricore, the Saskatchewan Wheat Pool, and Richardson is evidence of a new look being given to these industries. In this case, even major pension funds are getting involved. And that's a very good thing.
Missing from the picture, however, is a vibrant juniors market of the kind that characterizes both oil and gas and mining industries. It is here that most new ideas are brought to market to the benefit of shareholders and customers. It is from this pool of smaller players that larger companies emerge, or from which acquisition targets draw the attention of larger buyers. The impact of new initiatives in this area is quite predictable and immediately beneficial to all in the sector.
Increasingly high value-added agrifood businesses will survive and thrive only when they are combined with high-value product and with capital-intensive manufacturing to produce high-value jobs—as one person I talked to recently said, “adding value without necessarily adding people”. Put another way, the success of the industry will depend on its ability to pay high wages to highly skilled workers. The equation requires access to capital for the same reason that energy and mining industries do.
In this country we have supported primary industries, such as the resource industry, with tools to assist capital formation. The introduction of flow-through shares in 1984 for individual investors has resulted in substantial capital being raised for exploration and development. It is estimated that in 2006 alone, $1.25 billion was raised through flow-throughs. These funds ensure the evolution of technologies for finding, developing, and producing resources that are fundamental to our national income. We now have a world-class resource sector.
Many, if not all, new resource projects originate out of the junior corporate sector. Small companies are much more accustomed to innovation and the risk profile that are essential for development. However, this junior sector is not profitable from production, but has the expectation of profit from growth of the company. This means that many of the exploration and development expenses either must flow through to investors who are prepared to invest in the company, or are lost in the process.
Flow-through shares are simply a method of flowing the eligible expenditures that are attached to a common equity share. These junior companies can now expand their capital base as risk-reward metrics have been improved.
In closing, on this subject we simply have to find ways to become more efficient at raising capital if we are to strengthen our position in the global marketplace. Access to capital is the catalyst for innovation and development, a key element in the agriculture policy framework I and undoubtedly agriculture policy framework II.
Thank you very much.