Agriculture Committee on Oct. 5th, 2010

[Paul Gregory]

As an alfalfa seed marketer, and working with Forage Genetics, we do multiplication with FG on their conventional side. You asked why they would put a product, in this case GM alfalfa, into a market where there is none. Well, I've been marketing seed for 25 years, and I've had one fellow in Montana ask for it because he has a cheatgrass problem--this is Roundup Ready alfalfa--and I had a dairy farmer down by St. Eustache. Other than that, the farmers do not want it. The usage for Roundup Ready alfalfa is tiny.

We keep hearing from Forage Genetics that they have customers lined up. Well, I haven't seen any, and the brokers and the seed companies I trade with daily don't know where the demand is going to come from, because the reality is that most alfalfa stands in Canada are mixed stands. They use alfalfa-brome or alfalfa-timothy, and that increases the tonnage, it increases the dry-down time. The agronomics are not there for alfalfa. Your Monsanto and Forage Genetics have this great new technology. I don't see any economics of it other than ruining our international market.

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

Just let me ask a question. Do you have any key suggestions on what an economic analysis would look like? If this bill were to pass, the question then becomes this: what economic analysis? What's the model that will be used? Can the model be used across all product commodities or not? It starts to get very complicated very quickly.

Do you have any quick suggestions on that?

[Paul Gregory]

You're right. As Peter suggested, this is a tough question, and for myself, personally, I would like to see some academia on a board. Pure science is good. I don't want to see every grass hugger out there, but I would like to see academia being present, because I'm afraid of the future.

On the technology, we don't know what's coming around the corner, and if it's just pure science, we're not going to be able to keep up. I think the politicians and the academics and the traders have that responsibility to take a second look at this new technology, because it's on us right now.

[The Chair, Conservative, Larry Miller]

Time has expired.

Mr. Valeriote, five minutes.

[Frank Valeriote, Liberal, Guelph, ON]

I too want to thank all of you for coming up today. I appreciate it. Never have I been party to such a balanced conversation about an issue with the four witnesses who are present.

I take issue, modestly, with the idea that we shouldn't have conversations around this table because people out there get nervous. All of us have children and want to avoid certain conversations with them at times, but you still have to have the chat.

The purpose of this really is to demystify the industry. I'll tell you, I'm a new member to the agriculture committee--in the last two years. I'm a new MP. I've never had a chat about GMOs, and I've learned a lot because of Alex's bill. I appreciate the fact that he has brought it forward, at least so we can demystify what's going on here.

Paul, you made a comment. You said that the argument that it will drive up research costs is groundless because of recent developments. I am concerned about that, because frankly--well, I won't mention the names--I don't want the bigger ones to be taking over either. I want the smaller ones to be able to be innovative and get involved in this and compete.

Can you tell us in thirty seconds why it's groundless? Then I'd like Mr. Keller or Mr. Phillips to respond, because that's a new development for me.

[Paul Gregory]

With the new zinc finger technology, the DNA recombinant technology, the new technologies going forward, you could do this in a small laboratory. You don't need a large university facility. I just know that because of the economics you're not going to need hundreds of people working on a project. So by taking the costs and the time down, it will be available to everyone. This is why it's groundless--because anyone can get into the game now.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Phillips, Mr. Keller, I'd like to hear from both of you.

Go ahead, Mr. Phillips.

[Dr. Peter W.B. Phillips]

Let me make a quick observation. Yes, the technology is getting cheaper in one way, but while the technology is getting cheaper, the networks that you need to actually put it into commercially viable platforms are getting more expensive. It's more industrially controlled, and the major cost in most developments is not the R and D cost anyway. If you really want to look at it, it's 10¢ for R and D and 90¢ for commercialization. So the costs could go almost to zero on the R and D side and you're still going to have the bulk of the costs. That's why you're seeing a scaling up and a consolidation within the global biotech business. We've gone to three companies having 97% market share because the regulatory system makes it so that only three companies can make any money in the business. And it's not just our regulatory system; it's the global system.

[Dr. Wilfred Keller]

I would agree with that comment.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Phillips, you made a rather compelling argument as to why government should not be involved, because it sets precedents and may impact other industries. We also spoke of a low-level presence policy that might be the way to manage this issue. If government is not going to get involved in this issue, if it chooses not to, and we rely on the industry to establish some levels and policies that are effective to protect those other interests, can you tell me to what degree has the industry--not government but the industry--engaged the EU, Japan, and other countries with respect to the establishment of a low-level presence policy and agreement that might work?

[Dr. Peter W.B. Phillips]

There's a three-level discussion going on here. There are state-to-state discussions, there are industry discussions, and then there's the interface between the two. Generally, firms only do the interface discussion when there's a specific product they need to get through some system. Their job isn't to make the regulations; their job is to comply with the regulations.

I think what you're seeing is that within a lot of these industrial supply chains, they are global. The quality of the products are defined globally, the technologies are owned globally, and the firms that are doing all the things between basic ideas and your dinner table are global enterprises. So they're developing their own standards, which in some cases far exceed the standards of any national government they're trading within.

Sometimes you're seeing a supply push standard where a commodity group or a firm that owns the technology will say, “We're going to 99.9% purity standards and that's it”, even though they may only be required to go to 95% by the regulatory regimes.

A lot of our seeds business is up there; it far exceeds the minimum standards. Similarly, downstream you're getting the food processors saying “zero tolerance” or “tolerance in these types of ways”. For example, they'll tolerate GM traits in industrial food ingredients, which don't make up a significant percentage of the food product and hence don't have to be labelled in most jurisdictions.

It's not like it's all or nothing. It's whatever is appropriate to the system, which is really just another illustration of the complexity of this world. It's not about commodities any more. It's not about a single product moving between two countries where there's no specific interest in the supply chain. That's why there aren't single rules that say we should just assess the market opportunity, because it isn't a single market. Most of these are going to be highly differentiated, so it's very difficult to know whether there's money in it or not.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Hoback, five minutes.

Okay, Mr. Gregory, briefly.

[Paul Gregory]

Thank you.

That's a good question. Recently, members of the EU as a trading group have adopted GM policies, but they left it up to the individual countries to decide which GM traits they wanted in their system or not. When it got down to it, Germany, France, and Britain politically found that it was unfeasible. They don't want farmers rioting in the streets. So for the trading groups, yes, GM sounds great--it's safe, it's science-based--but when it got down to the individual politics, they wouldn't touch it with a ten-foot pole.

Thank you.

[Randy Hoback, Conservative, Prince Albert, SK]

First of all, I want to welcome all you guys at the committee today. I think it's great. This is an excellent debate. It's unfortunate that this debate is taking place in the context of this bill, because I think this piece of legislation is a bad piece of legislation.

I know Alex's intent--he's trying to address a serious issue here--but I think this is not the right way of doing this. In fact, I think we should go forward on this. That's why I've talked to some of my committee members. Mr. Valeriote and I have co-sponsored a motion here in committee to have the committee study this in more detail, so that we can actually air this out without the context of the legislation, and look at the regulatory framework so that we can see growth in the industry but also take into consideration protection and concerns that are outside the industry. I think that's a very important piece of work, and I look forward to the committee co-operating and working together on this.

As I said about Mr. Atamanenko, we have a lot of respect for the gentleman, but this piece of legislation would put us back in the 1930s, and that's the unfortunate part about it.

When I look at this legislation, if it had been in place when Ford was developing the car, all the guys who were...[Technical difficulty--Editor].

[An hon. member]

Say it again, Randy.

[Randy Hoback, Conservative, Prince Albert, SK]

I guess my joke got lost. We'll see if it's funny the second time.

If Henry Ford was building cars and had to go through this legislation, the guys running the buggies would have been protesting, up in arms, and we wouldn't have cars this day, because politicians would have made that decision based on the existing voter base. That's the problem with bringing politicians into a context of something that should be science-based.

That doesn't mean we don't need to have the debate; we do need to have the debate. We need to figure out how to move forward on this, but this legislation isn't the proper way to do that.

I'm also very concerned that we're actually still debating this legislation, because it is having an impact on investment in future technologies to the tune of hundreds of millions of dollars.

I was at the University of Saskatchewan this summer, and even the thought of them having to go through the process, whereas they can go to another country and make these innovations without going through this process, would move that capital somewhere else, without a doubt. Our resources, our clusters, our farmers would be disadvantaged in other markets and other areas of the world because those clusters moved somewhere else.

So we need to debate this, we need to come forward on this, and, as you said, that's why I'm looking forward to the standing committee travelling to Guelph, going to the University of Saskatchewan, other clusters, and actually looking at this in a serious manner, and I hope we can do that this fall.

Having said that, I'm going to take advantage of talking about low-level presence, because that's one thing I think we can all agree on. There's got to be some standardization on low-level presence. Where are we on low-level presence? Do you feel we've done enough in all the industries, organics, right through the chain, to say this is where we have to go? Are we in agreement on that?

Mr. Holmes, would you agree with that?

[Matthew Holmes]

We don't have a zero threshold policy. We don't advocate for a zero threshold policy for low-level presence. We also don't--

[Randy Hoback, Conservative, Prince Albert, SK]

But I guess this is where I have a problem. We're looking at things based on what's safe to eat. You're looking at things and saying, “This is what my market wants.” Those are two different things. I'm a person sitting here in Ottawa and I'm legislating. You're saying, “Okay, I've got a very niche market, and this is what my market wants regulated.” Well, what do we do about everybody else? That's where the low-level presence has to come into play.

[Matthew Holmes]

And we're not arguing against low-level presence necessarily. We're saying there is an obligation before you take that step to put in place certain checks and balances. Low-level presence is itself a market access economic argument—

[Randy Hoback, Conservative, Prince Albert, SK]

Exactly right.

[Matthew Holmes]

—and as Peter Phillips said, 90% of the cost is commercialization. Anybody who's worth their mustard knows they're going to do full economic modelling and full measures in place before they invest that sort of money. It's quite reasonable to ask and consider certain metrics on what sort of markets we're selling to, what those markets currently want, and what is currently in those before we perhaps undermine existing markets.

[Randy Hoback, Conservative, Prince Albert, SK]

In the existing structure, I look at the pulse industry in Saskatchewan; it's growing, it's innovating. As far as cash receipts at the farm gate, it's huge. In fact, if you look at the farm gate now in Saskatchewan, if we can grow canola and we can grow pulse, we'll throw in wheat, because we don't make any money in wheat. We've got to deal with the Wheat Board, so we don't want to talk to that one, but we have to grow it for rotation, so we'll throw it in there. But the reality is that the paycheques are coming from crops that are being innovative--canola, pulses. And even the forages, I would say, in my area are also having that impact too. So in that scenario we're seeing great innovation in the pulse industry. They've basically touched the market. The market has told them what they wanted and they've reacted accordingly.

Now, they could go to GMOs. There's nothing really saying they can't do it, but for some reason the industry as a whole has said, “No, we're not doing that at this point in time.” I guess I'm saying here's a system that for some reason has been able to work, and you're saying now we need to have legislation to make it work. I disagree.

[Paul Gregory]

I have a question for you: what mechanism can we have to keep Roundup Ready alfalfa out of Canada? I don't see the economics. I don't see the agronomic usage. We need something other than science.

[Randy Hoback, Conservative, Prince Albert, SK]

My question back to you is, who's bringing it into Canada?

[Paul Gregory]

It's Forage Genetics. They're an independent company, but they rely on Monsanto genetics.