Agriculture Committee on Oct. 5th, 2010

[Some hon. members]

Agreed.

[The Chair, Conservative, Larry Miller]

Okay, five it is.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, and thank you all for very well researched and thought out presentations. To be honest, on this bill, I don't think we've had four witnesses, two on each side, who have showed the dilemma this committee has, if we're really listening to what people are saying. I think, Mr. Phillips, you said this is an important debate, and indeed it is.

I recognize there are serious concerns, and, Mr. Gregory and Mr. Holmes, you outlined them, especially as they relate to the alfalfa industry. Where I come from, Prince Edward Island, our Japanese market is non-GMO. If the Japanese were to find that there was GMO crop growing too close to those products going to Japan, we would be out of the market. It's huge to us.

So there's no question in my mind that we have to find some way of balancing both sides off. But is this the bill to do it? The bill clearly says that an analysis of potential harm to export markets be conducted before the sale of any new genetically engineered seed.

I don't knuckle to the threats of the breeding companies. In my mind, those are just threats. We've seen their threats before and they've still invested in this country. But in the real world, does this bill do what we have to do? I question whether it does. I think we have to look at this debate and find a different solution.

My question to you all, really, is can you explain to me how we do that analysis of potential harm, and what would be the impact on the industries you represent? The question is to all four. I know Dr. Keller said that bioscience is critical to the future and we have to ensure that decisions are not made on a non-scientific basis. So my question is really to all four of you. How do we balance that out, and what are the risks specifically in this bill?

Peter, would you like to start first?

[Dr. Peter W.B. Phillips]

Sure.

I'll answer your last question first. Is there a method that could actually deliver the intent of the bill? I'm an economist. Whoever pays me can get advice out of me, and sometimes that means that you will get multiple bits of advice on what the market effect will be. There's no definitive right answer that will come out of the analysis. It will simply give you more information. It's not going to be that it will be perfect or it won't be perfect. You will get a grey zone, which means you're back to judgment again. It doesn't give you a conclusive answer.

I think one of the points that has come out implicitly in what we've all talked about is that there's a diversity of interests around the agrifood industry. There are some industries that can't tolerate much at all and there are some that can tolerate high degrees of commingling. It all depends on the market, the purpose of the technology, and the end products. So one size is very unlikely to fit all.

In those circumstances, where one size doesn't fit all but you do need something that is essentially quality assured, the usual model is to move towards standards, try to find some way—much as the organic industry has done through their organic standard—of certifying the quality and structure within the system, within the tolerances that are allowable in the area.

We've gone through multiple iterations of this debate in Canada. Over the last 10 or 15 years, we've had federal initiatives like RIONAP, the responsible introduction of new agricultural products, but essentially everybody's talking about how we create a quality assured supply chain.

There is a lot of literature; there are many methods. The government is a critical part of doing that, but it's not something that's top down. It has to be both ways, because each industry and each application of the technology will be somewhat different and will have different interests. A simple 42-word assertion--“Let's just make sure the market is comfortable”--doesn't work that well.

[The Chair, Conservative, Larry Miller]

You have a few seconds, if somebody else wants to comment, Wayne, but you're basically out of time.

Okay. We'll move on to Mr. Keller.

[Dr. Wilfred Keller]

Thank you.

Speaking from the science end of this--and you have a host of reasons why science is important--if all of this is to move our economy forward, we do need to build our economic plan on a strong science system. So as a researcher, and speaking for the research community and our organization, I see the requirement to have scientific principles that are quantitative embedded in our regulatory framework.

Mr. Gregory and I were talking a little bit about this before this session, and there may be the need for other types of discussions, so there will be a twofold approach. The canola example may be a good one. The Canola Council, representing the interests of the producers, the exporters, the processors, and the seed companies, was able to negotiate an agreement vis-à-vis canola seed exports, which countries will take them and under what conditions, and which traits are acceptable.

I think we need to have that level. I would be very concerned that we might dampen the scientific principles that are embedded in our regulatory framework.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, you have five minutes.

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

Thank you, Mr. Chair.

Thank you for your testimonies.

Mr. Keller, in your brief you say that Bill C-474 is based more on emotion than on science. The GMO industry has echoed that criticism several times. I am having a hard time understanding what you're talking about. I think that your claim is somewhat condescending and even insulting to those who introduced the bill, especially since Canada is not the only country where this is done. We all know that, and Argentina was given as one example. I'd like to know what emotions have to do with an analysis of the implications of changes in the markets. I'm having trouble understanding your reasoning, especially since you do not explain yourself, you just say that emotions are involved. It's as if, all of a sudden, someone announced in the midst of an emotional outburst that they would conduct an analysis of the implications of changes in the markets before selling genetically modified organisms. I feel that this accusation is a bit gratuitous.

I would still like to talk about the issues you raise, which are perhaps a little more concrete than mere emotions. You say that the bill could impede the research and commercialization processes. You might be right when it comes to commercialization. I would like to remind you that, six years ago, Argentina formulated such a policy as part of its regulatory framework on GMO exportation.

Can you provide some concrete examples showing that this was detrimental to product commercialization in Argentina? For instance, did the World Trade Organization come under attack or issue any rulings that caused problems for Argentina? That is my first question.

[Dr. Wilfred Keller]

My comments were intended to refer specifically to the use of what I would call “non-science-based issues”, such as market assessment in our regulatory framework. My intent is certainly not to dwell on the issue of emotion, and I apologize if that's taken incorrectly.

I think our emphasis must be on the scientific basis. Indeed, with regard to your comment about Argentina, Argentina is a country that produces genetically modified soybeans in fairly large amounts. Just recently, I was given to understand through documentation that Argentina is indeed developing guidelines very similar to those of North America around recognizing the need to protect the technology and to use that technology to support its producers in a fair and equal way, since the producers in Brazil are now using this technology.

I point again to the area of canola development. I think there was a very important and good dialogue about how new technology would be used in the canola industry, and I think it formed an example of how we can use the science-based regulatory framework and still make progress in dealing with trade and marketing issues.

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

Your answer leads me to believe that you have no idea whether Argentina suffered economic consequences because of its decision. I mentioned the example of the World Trade Organization, where there could have been repercussions, of course, if other countries had complained.

Speaking of Argentina—since you say that the research process could be impeded—have research investments in that South American country declined significantly? Could you provide us with tables, with examples showing that research is no longer being conducted or that the amount being done has decreased in Argentina since it decided to make market impact assessments a regulatory requirement?

[Dr. Wilfred Keller]

I'm not totally familiar with all the issues regarding Argentina; I do know they do have research capabilities to develop new crops. Of course, these are well-established technologies that have been developed in other centres before Argentina adopted them for its own germplasm.

The point I would like to make about examples is that I'm particularly interested, as I said in my comments, about the public-private partnerships and innovation going forward. I'm not as familiar with how that works in Argentina, but certainly in Canada this is very critical that university and government laboratories do work extensively with small companies.

We have four small companies in Saskatoon that are involved in developing oilseeds for environmentally friendly non-food uses. In my discussions and interviewing with all of these companies, their investors, their source of funding, which is then used for collaborative research in the government labs, is significantly affected by the environment, and that includes the regulatory environment. In their words, anything that destabilizes that environment changes that investment, and as Professor Phillips says, it will impact the public labs as well.

My main concern is about our innovative capability in Canada. We do not want to see that dampened through the use of non-science principles in our regulatory framework.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Phillips, just briefly.

[Dr. Peter W.B. Phillips]

I have two very quick points.

Argentina has suffered an investment chill in the last 10 or 15 years, not because of the regulatory changes but because it got into a dispute over ownership of the intellectual property. The new rules may or may not improve the transfer of technology.

But more broadly, people have been asking if there is truly a chill in investment as markets get somewhat restricted through regulatory systems, and I think there's compelling evidence that it does.

Fifteen years ago, the industry--every one of the major actors, and there were six or seven of them at that point--said they were working in 12 or 14 different trade categories in up to 20 different species. There are now three main actors, partly because of the consolidation driven by the costs of regulatory compliance, and they say they're working in four crop lines, maybe only three crop lines, and in two or three trades. They only will do anything if they can make money in one market: the United States. Anything else is gravy. That means that anything that isn't attached to the U.S. production system is at risk of never getting that form of capital.

That's what we've seen as the regulatory system has tightened up and slowed down the commercialization of technology. It's not the cost; it's the time.

[The Chair, Conservative, Larry Miller]

Thank you. Your time is up.

Before we move on, the technicians are having trouble with the microphones. When they turn them on it's taking a few seconds before the red light comes on, so if you would watch that a bit.... And please don't touch the microphones, as it actually makes it worse; the technicians will turn them on.

I apologize for that.

Alex, you have five minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thanks to all of you for your time.

Mr. Keller, we talk about science-based.... We've heard over and over again that it's so important, and a market-based analysis is not science-based. Yet it's my understanding that right now the industry is looking at the whole area of low-level presence thresholds. There are discussions going on, and they're actually looking at this from the market access, economic impact argument.

On the one hand, we're told that if we look at the impact of what this bill is saying, it's not science-based. On the other hand, the industry, government, and a number of ADMs are looking at it cross-departmentally, and we need to look at market access, economic impact, to see if we can get this low-level presence. It seems there's almost a double standard here. Now we're using economics, but on the other hand, we're being told we can't use it.

On my second question--and maybe, Mr. Phillips, you can answer it--would it be reasonable for us to ask the industry that develops this technology that if there is a hit to farmers as a result of contamination, for example, in the alfalfa industry, to bear full liability for market recall, and not the farmer or the taxpayer?

My third question, Mr. Gregory, concerns alfalfa. Does anyone really want it? I have not heard of anybody on the ground who wants alfalfa from conventional or organic farmers. I was in an alfalfa field this summer, and in talking to a farmer, it didn't seem that anybody wanted it. So why would we be doing this?

Mr. Keller, please.

[Dr. Wilfred Keller]

Thank you.

I would recommend that the science principles be the key and only principles in the regulatory framework to allow for the innovation. Post-innovation there are many other issues, and they can be trade or market, as I mentioned before. Adventitious presence can be dealt with at that level, post-regulatory, in establishing whatever happens with a different crop with evolving markets. Markets are not static; they come and go. There are new ones and there are emerging markets based on innovation. You would need to use strong science principles to work on adventitious presence. It would require very good, effective, and reliable DNA and biomarker testing, for example.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you.

Mr. Phillips.

[Dr. Peter W.B. Phillips]

Let me offer a really quick point about the first one. It's not what happens but who does it. If the state begins to do certain activities, you will create some precedents that you may not want to see adopted more widely. We are heavy traders of commodities around the world, and right now we determine our own market interests. But the moment you ask what other markets would like us to do, you're in real trouble. Do we want our forestry policy to be determined by European forest practices? Do we want our fisheries policies determined by European fishery practices? That's the issue. If the market does it, that's one thing. If the state does it, that's another.

On your question about liability, yes, there is a liability redress regime that's implicit and quite explicit in the market structures in North America and around the world. When there are damages that are measurable and identifiable, there are legal processes for dealing with them. The markets and the law courts are actually getting along and doing that.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

So then why did the flax farmers take a hit to their pocketbooks?

[Dr. Peter W.B. Phillips]

Part of it is that sometimes the hit is small enough that it's difficult to quantify and to actually show a cause and effect, which the law courts require. That happens in many markets, where there are effects of new technology or other market participants doing things that affect one firm's profit. You have to show cause in a legal setting. In most cases we don't compensate people for innovations that destroy other people's value.

The example I use in my classes is that when DVDs came out, we didn't have a recovery program for the VHS rental business. I'm not trying to be trite; I'm just saying that this is a principle we have. If there are direct and measurable costs of improper practices, they're actionable. Market responses beyond pure liability redress are ones that we haven't been able to figure out in any market circumstances.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

So if Monsanto introduces GE alfalfa and someone's farm becomes affected, are you saying we shouldn't be hitting them for compensation right away?

[Dr. Peter W.B. Phillips]

As you're probably aware, the provinces and the federal government have laws that deal with intermingling between the production of two systems. I'm not a lawyer, but there are strong precedents in legal practice as to how those things work. I would advise, if you want to get into that discussion, which is a bit beyond where we are today, that you bring in an agricultural lawyer to explain how it works. It is there. It does function. It doesn't function for everyone. But it's up to the individual producer, or producers, if they can justify themselves as a class, to take that forward and to use the legal system we have in Canada.

[The Chair, Conservative, Larry Miller]

Thank you, Alex. Your time has expired.

Mr. Lemieux, you have five minutes.

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

Thank you, Chair, and thank you for your presentations today. I think they've been good. They've been balanced. We have opposing opinions, which is good too.

For my part, I have a real concern about the bill Mr. Atamanenko has put forward in the House. I see science-based decisions as being somewhat objective in nature and economic analyses as being somewhat subjective in nature. This is where the difficulty lies. When you look at a market for a new product, it's very hard to evaluate an unrealized market. If you have a product that's not being sold into a market, how can you possibly project accurately, objectively, what that market would be? You could, with a little more objectivity, perhaps, evaluate what the negative impact might be based on markets you already have and could lose. That's a very biased system. If you're going to look at the negative implications objectively and at the positive market implications subjectively, it's already an unlevel playing field. I have a real issue with that.

I also think there is a feedback system. Farmers and farm groups have a role in the system that exists right now. Research and development cost money and take time and effort. Farmers and farm groups know where they can sell their products and whether they want to carry those products. It would be highly disadvantageous for a company to develop a product that nobody is going to buy. They might have the absolute best seed possible that offers the highest yield and the lowest loss possible. But if no one buys that product to grow it, there's no sense in developing it and bringing it through to marketability status. I actually think that farmers and farm groups have input into the system right now, and it is an economic input. They are able to know whether something benefits them or does not benefit them.

One of my concerns is that I think this very debate we're having today has had an impact on the market. Oftentimes, as legislators, we think that once a bill has been passed it will have an impact, but that while we're in the midst of debating it, surely there's no impact. My feeling is that, no, there is a very real impact just from being on the table. What I mean is that it sows uncertainty about the research and development part of agriculture.

I want to ask Mr. Keller if he might be able to comment on that. You're representing interests, and you also have connections with other arms of research and development as they impact technology. Could you give us your opinion as to whether this bill, even though it has not passed yet, is having a positive impact, a negative impact, or zero impact on research and development? What would be your read on that?

[Dr. Wilfred Keller]

I would be able to comment quickly on the small and medium enterprises we're trying to develop in Canada. The CEOs and presidents of those companies I've talked to about this have expressed concern that this debate is happening, because it really reflects on investments made in these emerging enterprises that could be the basis of new, innovative products. This also boomerangs directly into the public laboratories, where these public-private partnerships and the funding that is made available to the whole public enterprise also have an impact. Yes, at the level of managers in public labs and executives in small and medium enterprises, I see some concern right now.