Agriculture Committee on Dec. 10th, 2007

[The Chair, Conservative, James Bezan]

I call this meeting to order.

We will continue with our study on Growing Forward, and hopefully get this wrapped up by the end of the week.

I welcome to the table today Jeff Reid, vice-president of the Canadian Seed Trade Association; from BIOTECanada, we have Phil Schwab; from Performance Plants, we have David Dennis, president and CEO; and from Pulse Canada, we have Gordon Bacon and Todd Stewart.

I welcome all of you.

If you could keep your opening comments to 10 minutes or less, it would be greatly appreciated.

With that, we'll kick it off with you, Mr. Reid.

[Jeff Reid, First Vice-President, Canadian Seed Trade Association]

Thank you very much.

Thanks again for the opportunity to present before you today on behalf of the Canadian Seed Trade Association. I'll start off with a few words about who we are.

The Canadian Seed Trade Association represents over 130 member companies engaged in all aspects of seed research, production, and marketing, both domestically and internationally. The membership ranges from those who market garden seed and herbs to large western grain handlers and from small family-run businesses to large multinational corporations.

CSTA members work with seeds from 50 principal crops, including grains, oilseeds, special crops, forages, turf grasses, flowers, vegetables, and fruits. The mission statement of the Canadian Seed Trade Association is as follows:

The Canadian Seed Trade Association is committed to fostering an environment conducive to researching, developing, distributing, and trading seed and associated technologies with the goal of bettering the choices and successes of our members and their customers.

Given our mission, we welcome very much the Grow Canada initiative, Growing Forward. We very much appreciate that mission statement, which reads:

A profitable and innovative agriculture, agri-food and agri-based products industry that seizes opportunities in responding to market demands and contributes to the health and well-being of Canadians.

This element of innovation is central to CSTA's efforts, given that innovation in agriculture starts with seed.

What I'd like to do today is not to present from our submission before you but to speak with some personal insights and observations from my own involvement in the industry as first vice-president of the Canadian Seed Trade Association and also as general manager of SeCan, which is based here in Ottawa. We distribute about 370 different varieties of seed throughout the agricultural community across Canada. Those are developed by both private and public plant breeders.

Why is the Canadian Seed Trade Association concerned with innovation and competitiveness?

First of all, I'd like to say again that we're very happy to see that this is a big part of Growing Forward. I'd like to start off by saying that obviously the Canadian Seed Trade companies supply seed to farmers. When farmers don't make money, they spend less on seed, or in many cases they don't buy seed at all. When seed companies have bad years, they don't rely on safety nets. In many cases, they end up going broke, as a lot of seed companies have over the last decade. There's been a tremendous rationalization within the seed industry across Canada.

Those companies that are left in the seed industry today are very much focused on innovation; they're innovation-based. That's really based on the fact that they're still existing in the marketplace today. They depend on that ability to innovate to ensure their livelihood.

Canadian seed companies actually invest about 26% of their operating budgets into research. Despite that, we see that four out of five of the major crops in Canada are becoming uncompetitive, and farmers are choosing other options. For example, we see that wheat acreage and productivity continue to decline in Canada relative to other options. We see that in many cases the U.S. has a competitive advantage in other crops due to their climate. We believe that in Canada we should have a competitive advantage in cereals. But again and again we see that farmers are choosing other options in which there's more investment in terms of private research.

In summary, the majority of acres in Canada have virtually no private investment, which is illustrated on page 2 of the submission you have before you. We feel those sectors of the Canadian seed industry are beginning to decline in competitiveness due to a lack of synergies being created between public and private investment.

Where should innovation come from?

The CSTA feels that this should be a balance of both public and private money. If we look at the canola example, we see that public money was invested up front to get the industry going, but then private dollars have come in, and we have a healthy and growing industry in canola due to things like hybridization and the ability to perform genetic transformation. There's been a large investment of private sector money in canola.

In that crop Canada has become a world leader, and that acreage continues to increase because clearly, farmers can make money growing canola. This has been achieved in a few crops--canola, corn, and soybeans. Again, when we look at four of the five largest acreage crops in Canada, we see that there's very little investment there.

Illustrating that lack of private investment, on page 2 of our submission you can see when we refer to cereals that less than 6% of the private investment is going into cereals. That's projected over the next five years, based on a survey of CSTA member companies, to decline to less than 3%.

Why is there a lack of investment from the private sector? I would like to illustrate with a couple of examples of my own. Last year, in 2006, we launched in western Canada a unique durum wheat variety called Strongfield, and we had a very successful launch. It was based on strong agronomics and some unique milling and processing qualities, but we found that while there was a large uptake of the product early on, it was very rapidly commoditized, and in just the second year of sales we found that sales were only 40% of what they had been in the first year's introduction. So while the acreage of that crop continues to climb substantially—that variety is now the number one selling durum wheat variety in western Canada—by the second year we already have seen seed sales diminish very significantly. Obviously, there is very little opportunity for the private sector to benefit from seed sales by introducing a new variety.

We see that it's not just our ability to sell the certified seed, but we can't protect the variety name downstream in order to make sure that farmers enjoy the value-added benefits of processing. We don't have the ability, either, to patent those products in Canada and thus to manage the longevity of that intellectual property. We feel we should have many of the same tools available in agriculture that we have in other sectors of the economy to make a true value chain.

As another example, we introduced another hard red spring wheat variety in 2006, and it was the same story: by 2007, rapidly declining seed sales to less than 40% of the launch year. So there's very little incentive for a seed company to bring on new technology.

This is particularly of concern to us now, as we are introducing midge-tolerant wheat varieties in western Canada, which should have a tremendous benefit to farmers. But without any control over the use of that seed or that technology once it gets out into the marketplace, there's a real concern that farm-safe seed will be used for many generations, and thus the refuge that's in that varietal blend will be diminished and that trait will thus be lost to Canadian farmers. It's very difficult not only to justify bringing on new innovation but also to manage it once it's out in the market.

Where there has been substantial investment from the private sector, in crops such as corn, canola, and wheat in eastern Canada, we've seen that yields have been up substantially. In 15 years we've seen a 59% increase in corn yields, a 27% increase in canola yields, and a 62% increase in wheat yields in eastern Canada. This is due to two things: a lot more private investment, and also getting rid of “kernel visual distinguishability”, which we're very happy to see we're moving ahead on in western Canada.

I reported just over a year ago to the standing committee that we hadn't received any new varieties of winter wheat in western Canada in five years—we'll now make that six years—based on kernel visual distinguishability. We feel strongly that the sooner we can get away from that KVD constraint, the better for Canadian agriculture.

In current opportunities going forward, Grow Canada has estimated that the bio-economy in plant-based agriculture could be worth $500 billion within the next decade. That's a real opportunity that I think we need to consider in the Growing Forward initiative.

In the case of ethanol, we're seeing in western Canada the oncoming of high-yielding, low-protein, high-starch, and, in many cases, non-distinguishable varieties that are going to be very beneficial for western farmers.

Higher-yielding feed-type wheats are really needed in western Canada; we have a feed industry in western Canada that's begging for new innovation in that regard.

As proposed solutions from CSTA, first of all is regulatory reform. We need amendments to variety registration, which would allow us in many cases to open up variety registration on the major cereal crops, to be more flexible.

We have noticed that there has been really no change in the registration system for most of those crops, despite the fact that we've been talking about variety registration for the last 20 years.

On export facilitation, we need to accredit companies that can do their own export sampling and testing. We had a pilot program in place five years ago that was very successful, but which hasn't been followed up on. Now it's taking companies up to eight weeks to get approval for shipping containers for export. This is something on which we really need immediate action.

To encourage more certified seed use, we have a number of proposals in place, including: a tax incentive that would allow producers to claim 155% of the cost of their seed against their income; crop insurance amendments to allow for either a discount in premium or enhanced coverage on the basis of certified seed use; and of course enhancements to intellectual property, covering both making plant variety patents available in Canada as well as becoming UPOV 91-compliant and recognizing the legitimate interests of breeders.

In conclusion, we feel there are real consequences to not taking proactive steps to encourage innovation, and there are exceptional opportunities right now to invest in industrial fuels, food, and feed. We need a more flexible and nimble regulatory system and greater incentive for innovation through a stronger system of intellectual property protection. Incentives for certified seed are required that share the cost of innovation across society as well as among all farmers. Again, we appreciate the fact that innovation is central to this Growing Forward proposal.

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Reid.

Mr. Schwab, please.

[Dr. Phil Schwab, Vice-President of Industry Relations, BIOTECanada]

Thank you very much, Mr. Chairman.

It's also my pleasure to be here today to address the standing committee on the Growing Forward plan for agriculture in Canada, and specifically to address the chapter on innovation and science.

I'm joined today by Dr. David Dennis, who is the CEO and president of Performance Plants. He will be completing my remarks.

BIOTECanada is the national association representing over 200 companies working in the broad spectrum of biotechnology across the agricultural, health, and industrial sectors. We are also proud to say that we are the most innovative industry in Canada. According to Statistics Canada, in 2005 biotechnology R and D accounted for 12% of Canada's total business-related R and D. That was the highest single sector in the country.

We have been pleased as an organization and as a community of companies to be engaged with Agriculture and Agri-Food Canada throughout the past year as they have consulted on the Growing Forward initiative. Our members believe that Growing Forward does provide a strong opportunity to move the Canadian agricultural sector to new heights of productivity and profitability.

The members of the committee are well aware that Canada is a global leader in the adoption of agricultural biotechnology. Agricultural biotechnology has led to reduced herbicide and insecticide use in our agricultural environments and has led to an increase in environmentally friendly activities, like no till. Our farmers are becoming aware of the growing advances for biofuels and industrial uses for our crops.

We're here to tell you today that this is just the beginning of what biotechnology is going to bring to Canadian agriculture, that great things are happening, and that biotechnology will allow Canadian farmers to adapt to new global markets, changes in our climate, and changes in consumer demands. This innovation is happening from coast to coast, in all provinces, and it's happening in small, medium, and multinational companies.

A key message that we'd like to leave with you today is that the government does have a role in continuing to help our companies and our farmers innovate and compete globally in order to add high-value jobs to our rural communities and strengthen investment in our small towns and villages. The strong support for innovation found in Growing Forward, if fully realized, will allow Canada to continue to be a global leader.

We have distributed to you a slide deck that contains some great examples of innovation happening across the country. I'd just like to briefly mention a couple of those. Our first example comes from Summerland, British Columbia, where Okanagan Specialty Fruits is working in partnership with Agriculture Canada scientists to develop varieties of apples and pears that do not brown when you slice them. If you think of your kids' lunch boxes, this would be a great thing: you can provide them with sliced apples so that they actually eat the apples instead of throwing them in the trash can or trading them with their friends for candy bars. Providing an opportunity for a more convenient healthy snack is going to align with a lot of our societal goals for healthy living and fighting obesity. We're really pleased that Okanagan Specialty Fruits is doing something about this type of issue.

Secondly, I'd like to move to Bellevue, Ontario, where Bioniche Life Sciences is currently commercializing a vaccine against E. coli 0157H7. This bacterium, we know, is a devastating health crisis in the meat industry and for consumers. Bioniche has currently received preliminary approval from the Canadian Food Inspection Agency to market this stunning advance in animal health.

Multinational companies have been investing in technology to develop canola and soybean varieties that contain healthier oils that can help our restaurants and food manufacturers replace trans fats with healthier oils and help all of us be more heart healthy. It's from that investment in that research and the ability to commercialize and market those new varieties of soybean and canola that we will all benefit, not to mention the farmers who get a premium for growing those varieties.

Those are a few examples of what we can accomplish, but there are a couple more that are also quite interesting. Many people know about SemBioSys of Calgary, which is currently commercializing university research that will allow them to grow a small acreage of crops that can supply a significant portion of the global need for insulin. This is a tremendous opportunity for a new use for the adoption of Canadian technology for a serious health crisis.

Stirling Products of Prince Edward Island is developing technology that came out of the University of Prince Edward Island to develop a new type of growth-promoting product that uses yeast extracts to replace the need for hormones and antibiotics in animal feed.

Finally, companies like DuPont and Pioneer Hi-Bred are working to bring what we know in Canada as the bio-refinery concept to fruition by taking corn and turning it into carpeting, clothing, and even a de-icing solution.

These are just some of the advances in technology we see moving forward. What are we asking the government to do in promoting this new technology? First, we need a regulatory system that is grounded in science, predictable, and can adapt to new technological advances. We're pleased to see that Growing Forward contains a strong message about the need to modernize our regulatory system.

The industry is doing its part too. Our member companies have agreed, through our product launch stewardship policy, that we will not commercialize a new product in Canada before receiving regulatory approval in our major trading partners.

A regulatory system also needs to have sufficient resources so that applications and submissions can be processed in a timely manner.

Finally, I'll echo the comments of my colleague Jeff Reid: Canada needs to maintain a strong and predictable intellectual property regime for agricultural products.

In conclusion, Growing Forward represents a strong, positive message for innovation and science in Canada, and we believe that the innovations under development in our biotechnology companies can add a great deal of profitability and productivity to Canadian farms.

I'd now like to turn it over to my colleague Dave Dennis, who will tell you about a specific example of Canadian technology that's being used globally to advance agriculture.

[Dr. David Dennis, President and Chief Executive Officer, Performance Plants]

Thank you very much for letting me make this presentation to you today.

My own background is that I was a professor at Queen's University for 28 years before we founded a company in 1996.

Just about two weeks ago, Sir David King, the chief science advisor to the U.K., said that the U.K. must embrace GM crops because it's crucial for the revolution we need to feed nine billion people in the world before 2050.

Performance Plants is a Canadian plant biotechnology company. We have an 11-year history. We have labs in Saskatoon and Kingston. We completed the biggest private equity financing in 2006 in ag-biotech, and we've got licence agreements with the major multinationals. We just moved into a new facility a few months ago in Kingston; it is state of the art and gives us a tremendously enlarged capacity.

We target two markets: food, which means we've got to get more seeds per acre to give us more oil, protein, and starches; and biofuels, which means more energy per acre for things like ethanol and biodiesel. We have 47 patents issued and pending around the world.

The drivers for new crop traits are that there's no new arable land available in the world. We're using all the land available. Global warming is going to cause drought and heat, which is again going to reduce yields and give us great problems. We've got depletion of fresh water supplies, which is probably going to be an even bigger problem than global warming and climate change. We've got to increase yields per acre, or else we're going to have major problems.

The drivers for biofuels are reducing Canada's carbon dioxide emissions and finding alternatives to fossil fuels. The timelines for doing this are very short. We've got to move on this very quickly.

In terms of new crops for biofuels, we must increase the mass of the entire plant for biofuels, whether you're making ethanol, biodiesel, biogas, incineration products, or bioproducts. We've got to increase the amount we can produce per acre by large amounts.

The crops we're going to be growing are in fact new types of crops--sweet sorghum, hemp, poplar, miscanthus, switchgrass, and a variety of other novel crops--which will give us high biomass per acre.

In our own technologies we have developed drought-resistant plants, which we call YPT technology--the yield protection technology. On the next slide you'll see the impact of drought flowering on corn development. A normal corncob is somewhere between 450 and 500 kernels, and if you have drought, flowering can get down to something like 15 kernels. It's a massive problem.

We have made this little plant called arabidopsis drought resistant. These are plants that have not been given any water for eight days. You'll see the plant on the left, the parent plant, is dead, but the other plants will in fact survive and produce a crop.

Unfortunately, you can't see my movies, but if anybody wants to see the movies afterwards, I've got them on my computer with me, and we'll send a disk for anyone who wants to see them.

We've done this with canola. We've had field trials now with canola for four years. If you look at the next slide, the amount of oil we're producing, the light blue shows the control plants, and the dark blue is the impact of our technology on improving yields of canola plants under different conditions. In 2003 there was no drought, and you can see we don't get a loss in yield; there is a slight increase.

We're producing a whole series of other crops; BET is increased biomass. We can increase the biomass of a plant by six to ten times, so this is going to be useful for biofuel crops. We're making crops that can break down more rapidly. This is a big problem when making ethanol from plants as a whole, rather than just from starch, and we've got some now that will break down incredibly rapidly.

We've got the WET technique, which allows plants to use water more efficiently, and we have a HEAT technique that prevents damage to plants during heat. In canola, a 29-degree temperature will in fact reduce the yield dramatically; just this morning I got some data suggesting that with our technology we can increase the yield under heat conditions by something like 40% to 50%.

The next photograph shows you the impact of our BET gene. You get a huge increase in the stem size and, again, a great increase in the biomass. This is a wonderful movie, but unfortunately you can't see it. If anybody wants to see it afterwards, I can certainly show it to you.

We're taking our technologies to Africa. We've been working with a person called Florence Wambugu, one of the most marvellous people I've ever met. She now is the president of the Africa Harvest Biotech Foundation International in Kenya. We've got the alliance in place and we're now looking for funding from foundations to support this and to develop new crops. The first one will be for drought. Drought is a huge problem in Africa, as you know. As Florence says, Africa cannot afford to be excluded from the biotech revolution, so we're developing this. We hope that in the next very short while we will in fact be developing things like white corn for African countries.

That is my presentation.

Thank you very much.

[The Chair, Conservative, James Bezan]

Thank you, Mr. Dennis.

Mr. Bacon, you're on.

[Gordon Bacon, Chief Executive Officer, Pulse Canada]

Good afternoon, everyone. I thank you for the opportunity to appear before the standing committee.

Todd Stewart, who is the board member from Manitoba on the Pulse Canada board, as well as the six other board members of Pulse Canada, representing grower groups and processors from across Canada, appreciate the opportunity to talk to you today to give some of our views about government policy framework that will guide programming in this sector for the next five years.

I'd like to start by saying Pulse Canada was very pleased to hear that ministers have agreed to seek the authority needed to continue the existing non-business risk management programming for up to one year. There are two important messages we would like to leave with you regarding the extension of these programs.

The first message is that timelines are already very tight. Once the authority for continuation is in place, organizations like Pulse Canada have to work with the department to work on applications, approvals, and getting agreements signed. This has been a very lengthy process under the ag policy framework. All of these elements need to be done on or before April 1, as some small organizations or those with large programs under the policy framework rely on advance payments and timely payments on claims. Timely cashflow under these programs is important for obvious things such as salary and administration, but it's also important to allow sufficient time to ensure work isn't rushed at the end of the extension because of delays at the start of the program.

The second message we want to leave with you is this. By extending the non-business risk management programs, the federal, provincial, and territorial governments are ensuring that we continue with these strong government-industry partnerships. I want to highlight several of these partnerships and in doing so signal the programs the pulse industry feels are important to continue in going forward.

The Canadian agriculture and food international program, CAFI, is a very good example of a government-industry partnership. CAFI has helped the pulse industry to address market access barriers, enter new markets, and promote the Canadian pulse industry during a time of rapid expansion. The government will match up to 50% of qualifying claims. This has allowed the money that is invested by grower groups in the trade to go a lot further on some of the high-risk but high-reward activities.

The advance in the Canadian Agriculture and Agri-Food program has played an important role in funding industry-led initiatives. By focusing on building capacity within the industry, positioning the industry to capture market opportunities, and working to strengthen the ag sector, this program has been of enormous help to the pulse sector.

While farmers may be the first to see the benefit that has come from funding for reduced-risk and minor-use registration programs for crop protection products, there have been benefits for all Canadians as new low-risk crop protection products come to market and as farmers are helped with pest risk management practices that lead to improvements in sustainable production. Funding for these programs needs to be increased.

As an example from the pulse sector, funding for the development of a grasshopper identification booklet for farmers helped them identify which species of grasshoppers were not likely to cause major damage to their crops. By adopting a practice of spraying only when needed, they were able to ensure more sustainable production.

Another example I'd like to cite is the funding under this program that has allowed the use of some new technology on genetic resistance for a bean disease, which eliminates seed treatment, again providing benefits to the environment and all Canadians.

First of all, with limited time, I want to focus on the science and innovation program that was introduced under the agricultural policy framework. This program is having an enormous influence on the direction of the pulse industry and is a great example of an industry-government partnership that has it right. This program needs to be maintained in its present form, because it's working, and I want to tell you why this program is working so well.

Research is the key to innovation. To make money in agriculture, the research results have to be commercialized. Since 1885, Agriculture Canada has focused on production research, because more tons mean more money, and we have a rich history of innovation on the production side in our industry.

However, the science and innovation program has focused not on the tons of production but on where those tons might be sold for more money. This program is helping the pulse industry to focus on innovation at the market side and to think beyond a commodity focus.

Let me give you an example: pulses can be sold into the food market, the feed market for animals, or into the bio-product market.

The food market for pulses is strong in countries like India, but North Americans eat very few pulses. With funding from the science and innovation program, the pulse industry sat down with the food industry, medical researchers, and health professionals and asked what should be done to use the attributes of pulses--high protein, low fat, low glycemic index, high fibre--to address such health issues as obesity, cardiovascular disease, diabetes, and more.

The approach of agriculture sitting down with other players in the chain seems very straightforward and logical. However, the reality is that agriculture has looked primarily at increasing production for traditional markets.

We have been to India because they already buy pulses, but in the pulse industry we maybe haven't looked as closely as we should have at areas where we could create new demand.

The science and innovation program has invested in linking agriculture and health issues and has invested in linking agriculture and environment issues. These are very good examples of high-risk, high-reward program investments and very good examples of linking research with business innovation.

Today the pulse industry is working with medical researchers and, importantly, has a list of research priorities that have been jointly developed by the pulse industry, the food industry, and the medical community. This list of research priorities is a blueprint for all kinds of funders. And because the people who put food on grocery shelves--the food and ingredient companies--have been part of putting our research priorities together, we are fairly confident that research will lead to innovation and that this innovation will be commercialized.

It's also important to note that this program has attracted interest from non-agricultural research funding groups, specifically from the health and medical community. This is the kind of agricultural partnership we need. I think it's one that the industry can best deliver by bringing together not just departments of agriculture from across Canada, but health interests, academia from around the world, and the people who will be instrumental in commercializing research results--namely, the food and ingredient companies.

In closing, we want to stress the value of continuity in programs under Growing Forward. Market demand has to drive research, and we need a strong industry link at every step. The industry has to be able to raise its game in order to play its new role in the area of health and environment. We have to promote the new role for agriculture and enter these markets where we're well suited to play a bigger role.

The continuity must exist from research ideas through to grocery shelves, and finally to the dinner table or the pickup window at a fast-food restaurant, and then back to the research community. Growing Forward will be a success if it continues to enable industry. Government is needed as a partner, but there are some strong arguments to suggest that industry needs to provide the direction.

I expect that this committee will hear a lot more about pulses under Growing Forward. We're off to a great start in having pulses play a much bigger role in addressing health issues of importance to all Canadians. But perhaps more importantly, pulses will play a huge role in agriculture's role in sustainability and the environment. Pulses fix nitrogen, and in doing so save huge amounts of natural gas, resulting from the reduction and elimination of the need for commercial fertilizer produced from natural gas.

So let's take this great story we have on the environment and tell the world. Let's do our homework on health issues.

If Growing Forward is a success, Mr. Chairman, you're going to have to change the name of this committee to the Standing Committee on Agriculture, Health and the Environment, because agriculture is about healthy people and a healthy planet.

Thank you.

[The Chair, Conservative, James Bezan]

I hope you're not making that a motion, Mr. Bacon.

To committee members, I will tell you about the order of business today. We're going to go through our witnesses. We'll do at least two rounds, and then we'll move in camera to deal with the report on the beef and pork sector crisis.

I am prepared to extend the meeting today. We have votes at 6:30, for which the bells will start ringing. We can take right up to that time to deal with the report and the motions after.

With that, we'll kick off the first seven-minute round.

Over to you, Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you, folks, for your presentation. There seems to be a lot of optimism on the part of all of you, and that's good to see. But to be honest about it, where there's less optimism is at the primary producers' gate. We're constantly hearing, increasingly so, and especially in the beef and hog sector these days, that we've have had in Canada our five worst years on farm income while the Americans have had their five best years. I think we want to do everything we can do to ensure that there is investment in your industry, that government is there, that the farm community is there, and that the regulatory regime is right.

The great concern in the farm community, at the farm level, is that everybody else in the farm food chain seems to be making a profit. It's a little different right now in grains and oilseeds, but primary producers, to a great extent, haven't been. When you talk to primary producers, at the production level, there is concern about some of the companies that you folks associate with as well.

It's not on the technological side, actually, but do you see from your perspective anything that can be done to ensure that there's a better sharing of profits at the farm level, of those total profits throughout the system, so that the primary producers get their share?

I do have some questions on inspection fees and the regulatory regime, but if you can think about that one.... Does anybody have any answers? That's the big concern. As somebody said in the beginning—I believe you, Jeff—if you don't have primary producers, then you folks are impacted too. And we do know that research companies tend to target the American midwest. That's where the biggest market is, and we're often considered niche markets in terms of the larger companies. Have you any thoughts on that?

[The Chair, Conservative, James Bezan]

Mr. Bacon or Mr. Reid?

[Jeff Reid]

Sure, I'd be happy to take the first crack at that.

Absolutely, we're concerned that our primary producers, first and foremost, need to make money in order for anyone else in the value chain to make money. You alluded to the U.S. Certainly we don't believe that the Canadian government, in the long term, can afford the kinds of ad hoc programs or funding and the stabilization in the same manner that the U.S. can on a per capita basis. That's why I think we need to look to more long-term systemic solutions in terms of innovation, and look to things like intellectual property, which is going to encourage investment over the long run and is going to keep our sector competitive, and competitive not just on the basis of handouts but on the basis of innovation going forward to drive profit at the farm gate level.

Certainly, I would say that the primary producers, particularly in western Canada, have struggled for quite a number of years. I think if you look at the areas where they're struggling, that goes back very much to those crops where there has been very little private sector investment. So while you say there are few dollars flowing back to primary producers in those areas, there have been few to no dollars, in some cases, flowing back to the private sector seed industry in those same crops.

So we very much echo those exact same concerns that producers do about profitability, because the numbers speak for themselves in terms of our submission that the seed industry just hasn't been able to afford to invest in those crops. We're on exactly the same page there.

[Wayne Easter, Liberal, Malpeque, PE]

On the regulatory regime—and it certainly affects you folks and producers as well—I'll give you an example from the hog industry that I heard yesterday. It absolutely amazes me that in Canada, producers, for whatever reason, are not allowed to use a certain product and sell their finished product to consumers, and yet we'll import food that was produced with that product from elsewhere.

A hog producer whom I was talking to yesterday, who was an 800-sow producer, went broke three weeks ago. There's one product—which they can use in the United States and we can't use in Canada--that if he'd had it for five years would have saved him $4 to $5 a hog. That's $560,000 in his operation over that five-year period. Now, $4 to $5 a hog doesn't sound like a lot. To him, $560,000 might have been enough to keep him in business.

Do you see any areas in your industries where our regulatory regime, the higher costs of inspection fees, and so on, which really should be, in my view, not a fee on farmers but should be provided by government because it's a safety factor...? Can you list any of the regulatory problems that you see in your industries that are a burden to you and our producers and not to the U.S.?

[The Chair, Conservative, James Bezan]

Mr. Bacon wanted to get in on that last question, and I'll let you kick that off.

[Wayne Easter, Liberal, Malpeque, PE]

Oh, sorry, Gordon. I didn't see you.

[Gordon Bacon]

I would echo Jeff's comments about how innovation is going to be one of the ways that Canadian farmers can separate themselves from the pack. If I were to speak specifically about the pulse industry, five of the seven board members on the Pulse Canada board are farmers, and it's a question I receive all the time. The approach we're trying to take is to show where we are apart from the rest of the suppliers in the world on the health and wellness side as well as on the environmental side. We compete on a global basis, and if we are still competing on a commodity basis, we are going to be challenged because we aren't always going to be the most efficient or the lowest-cost producer. We need investment in science so that we can have innovation to separate ourselves from the pack.

To make one quick comment on your second question, Mr. Easter, I just want to cite an example that's somewhat similar and that shows why Pulse Canada has been a strong supporter of NAFTA harmonization of crop protection product registration. There have been examples in our industry in which U.S. pulse growers have had access to crop protection products that weren't available in Canada. We are a smaller market, and that's why we feel it's important. We are very supportive of what PMRA has done recently to harmonize and look at encouraging companies to register products simultaneously. Also, I'm encouraged to see that PMRA has even started sharing some of the evaluation of products with Australia. This is a way that we can ensure we are getting these reduced-risk products on the market quickly. Again, all the products that are coming out now are far safer than older products. The harmonization of regulations is an important part of competitiveness.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired.

Monsieur Bellevance, pour sept minutes.

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

The importance of research and innovation was highlighted in the report tabled by the Standing Committee on Agriculture and Agri-Food last June. I am pleased to hear that we were obviously not alone in thinking that.

Mr. Bacon, you have expressed a certain degree of optimism, as Mr. Easter mentioned. You said that the agricultural policy framework, Growing Forward, was going to be successful. Then a little later, you added, “If Growing Forward is a success”. That is a little less certain.

What makes you think that the agricultural policy framework will be a success?

We have heard a lot of people talk about this because we spend a lot of time on the ground. You must meet with a lot of producers too. They, however, are somewhat less optimistic. For example, consider what is about to replace the Canadian agricultural income stabilization program for cattle and dairy farm operations that produce feed crops. AgriStability will replace CAIS, but that will not change a thing. Under the new program, these people will not have access to AgriStability to compensate them for their losses, which CAIS currently does.

What we are hearing does not sound very optimistic. What makes you think that this will be a success? Were you referring specifically to research and innovation? If not, were you talking about the system as a whole, including business risk management?

[The Chair, Conservative, James Bezan]

Who would like to go first?

Mr. Bacon.

[Gordon Bacon]

Pulse Canada has not focused on the Growing Forward component of the business risk management side of things. Our board had decided that this was an area that other farm organizations were covering off and our limited resources wouldn't be focusing on that area. So I'm afraid I don't have a connection to talk about our research and innovation investment and how it links to business risk management, because our organization hasn't focused on that side of the Growing Forward program.

[The Chair, Conservative, James Bezan]

Mr. Dennis.

[Dr. David Dennis]

There is a real problem of risk in what we do. A major problem we have in Canada is taking really great research from the universities and government labs and actually commercializing it. The amount of funding available for that in terms of investment funding is very limited in Canada. Actually, commercializing new ideas and new innovations in Canada has problems. It would be much easier for a company like Performance Plants to move down to somewhere like St. Louis and get funding there for these things.

Something that Canada has to look at carefully in all fields, not just for this area, is how we take really great research that is done in universities and in government labs and get it through to produce a commercial product in Canada, rather than allowing it to be commercialized in other countries and then come back to Canada. We certainly need an investment climate that is more conducive to that, especially for companies like ours, which are in the phase of actually expanding to form a bigger company. There's often start-up money to get a company going, but to keep it going to bring new innovative ideas into all areas of research in Canada can be quite a problem in Canada.

[The Chair, Conservative, James Bezan]

Mr. Schwab.

[Dr. Phil Schwab]

Mr. Chairman and Mr. Bellavance, I might add that a lot of what biotechnology companies are investing in, in terms of technology, is also risk management for agricultural producers. Dr. Dennis' company is working on managing the risk of drought, so that even in a dry year, farmers can still maintain the yield they would normally expect from their crops. Other companies are working on new technologies that will ease their market risk, so that you can market a specialty crop with a low saturated fat oil at a higher price.

So some of the very specialized technology and trade development efforts that are going on will hopefully help to ease some of the risk farmers face each and every year.

[The Chair, Conservative, James Bezan]

Mr. Reid.

[Jeff Reid]

Further to that, from the seed industry perspective, there are a couple of things going on. First of all, just the whole concept of certified seed is a management of risk, in terms of quality assurance, germination, purity analysis, and so on. So those inherent components of certified seed are in themselves a form of risk management.

Again, going back to the traits and characteristics being developed in new products, be it through patented genetic modification or traditional breeding, these are also things that help to manage risk. So we think there should be incentives in place through, for example, enhanced coverage or reduced premiums for production insurance for the use of improved products and certified seed.