Thank you very much.
To give you a sense of where I'm coming from, I study the issues of innovation as they relate to agrifood and trade. I've spent the better part of 13 years in a series of research chairs, research projects, funded by the granting councils and by various agencies, and I've had some experience in the area of trade litigation and regulation through CBAC and through the NAFTA chapter 13 process.
Let me start with the intent of the bill. I think it's an excellent intent. The whole purpose of the proposed Seeds Regulations Act is to actually assist and promote innovation within the seeds sector. It's there to ensure that whatever we import and whatever we produce, and whatever we then export to the world, has quality assurance around it. From an intent perspective, I think it's an excellent proposal. The problem is that the devil's in the details. With most simple answers to complex problems, you can create some adverse effects that you don't anticipate.
Let me start by talking about what innovation is about. If that's the purpose of the regulations in the act, it's perhaps a good idea to think about how it affects innovation. Innovation is fundamentally about creative destruction. It's about new ideas that enter the market and challenge existing positions, and then if they're successful, they overcome the other product and we get more value, more social good, and we enhance the quality of our lives, our environment, and our society. So those are the fundamental underpinnings of innovation.
It's really about change. It's not about protecting interests; it's about unleashing the possibilities and the challenges of existing positions.
There are two types of innovation. The simple innovations, the small ones, the iterative ones, where you're simply adding a little incremental change to a technology or product, they could live quite happily within the most strict regulatory regimes you could imagine. They could live quite comfortably within this proposal. The difficulty is that you don't get much value out of those. They're happening, they're important, but they're not going to speed the underlying success of the agrifood industry in the 21st century.
The agrifood industry in the 21st century is not competing against the United States or Europe for land, labour, and capital; it's competing against its neighbours down the road, who are doing other things that are earning higher-value products there, higher values from their land, from their labour, their capital. The reason you're seeing disinvestment in agriculture throughout much of the developed world is not because they can't compete with the third world; it's because they can't compete with their neighbour down the road who is doing things that are adding more value and generating more income.
I used to belong to an agricultural college. We used to send 75% to 80% of our students back to the farm. Now we send less than 5%, because the opportunity cost of getting a degree is too high.
These major transformative changes need flexibility and liberty to be able to find their market niche. It's very difficult in many cases to in fact know what the market niches are until they've actually been tested and adapted and adopted to the marketplace. They don't come fully packaged, not like those small incremental ones, where you know exactly who's going to use it, where they're going to use it, and how they're going to use it.
In this case, in the area of transformative change, you need to have some flexibility. We do have very strict regulatory regimes that ensure public health and safety. What we don't have at the moment are rules that lock in the market system and the market shares by various product or category. So that's what we're talking about here.
Let me give you an illustrative example of why it's important. Many of you will have heard that in the city I come from and the product line I specifically look at, we have generated a world-class product that has generated multiple times its investment: canola. Herbicide-tolerant canola was a product of not simply two multinationals working in their private labs using private capital, but it was really a team effort. It was investments by the Canadian government. It was investments by the people of Saskatchewan. It was investments by the farmers themselves in bringing new technology to the market.
Now that story has a lot to say about what might or might not happen under the provisions of this bill, so let me take you through five or six implications. In the first instance, that technology, which was in two traits initially and is now in 12 traits that have been commercialized--some of which have been withdrawn because they didn't meet market tests--generated more than $1.2 billion, which stayed in the hands of Canadian farmers. It also generated over $1.5 billion of net returns to the industry, which then got distributed either in new investment, returns to shareholders, or some of it was taxed by the Government of Canada and the Government of Saskatchewan.
In addition, what's often forgotten is that about $600 million of net value has been generated over the last 15 years for consumers. Most of those consumers are not Canadians. They're poor people who are living on low incomes in third world countries. That's where the bulk of our oilseeds are used in the food chain.
So over $3.3 billion of investment was generated by this technology. That's point one.
Point two, if you had had this rule, could you have realized that $3.3 billion? The short answer is no. AgrEvo's technology has still not been approved in Europe. So you would have foregone that under the rules that you're proposing here: a major internationally competitive and internationally attractive investment in a technology.
Third, part of the story I haven't told you yet is that when this technology came to the market, the identical question you're trying to address was raised by the industry. Pending approval in Canada and the United States, the seed growers and others in the supply chain, and farmers' groups, said, we've got a problem. Our major markets, over 50% of the market share in the previous three years, were in Europe and Japan. They had yet to approve the technology, and there was some uncertainty as to when or if they would approve it. So the industry worked together with the seed trade and with the commodity groups and with the growers' associations to ensure that the technology could be adapted and adopted in a test model, an identity-preserved production marketing system, for two years very successfully. It accelerated adoption of that technology by two years, and the net gains across the supply chain have been estimated in some of my previous work to be in excess of $100 million in net present value terms. So by allowing the industry to work with the proponents who had the most at stake, they were able to structure something that brought the technology to market and got it adapted and adopted by early users in North America.
A third point is that this structure they created was in many ways the gold standard for responsible introduction of new technologies into contested markets. Interestingly enough, the great demon of the biotech world, Monsanto, has in subsequent technologies tended to try to live up to that commitment through their Monsanto pledge around GM wheats. Other companies similarly have been working with industry and with supply chains to ensure that the technology doesn't artificially or inappropriately disrupt market shares in areas. That's not to say that there aren't some problems lingering from previous introductions before they had found this model.
A fifth point I'd like to make is that there's no technology that's universally accepted. This technology has been unambiguously rejected within the organic industry. We have actually had a tentative class action case in Canada, the Hoffman-Beaudoin case on behalf of the Organic Directorate in Saskatchewan, to attempt to either halt, withdraw, or seek compensation for the damages. While the case was never litigated on its content because it didn't get a class status, what it really amplifies is that no matter what technology you're talking about, there are going to be markets that will say, “No, thank you.” The challenge is, can you segregate between the accepting and the non-accepting markets?
Finally, let me make a point about the provenance of technologies like this. In the international global agrifood world that Canada now lives in, and will succeed or fail in, research will not come from the small, isolated public lab or the small, isolated commercial seed producer in a niche market. It's coming from networks and relationships. Those networks and relationships are increasingly being vested in research centres: the city of Guelph, the city of Saskatoon, St. Louis, Melbourne. These are places that have invested heavily in the infrastructure and the networks and the capacities to bring new technology to the market. Wilf has indicated that this could create a chill in the public investment and the private investment community, and I wouldn't discount the fact that the public sector may say, we won't invest there either if there are increasing difficulties. The challenge here is that those will be your sentinel species. If you're looking for where the effect will be, you will see it hit first in those areas.
Let me conclude my substantive arguments by saying that innovation is not about managing change; it's about creating the appropriate space for change. In that sense, I think the debate you've opened with this bill is an excellent one. The regulatory system is not complete; it does have areas that need change and improvement. There are lots of studies that I and other scholars have done. There's work done by CBAC and the Royal Society about what more could be done to improve the system so that we can bring technologies to the market that meet the needs of everyone at this table, not just the biotech seed companies, but the producers that are producing commodity bulk products and the other industries that choose not to use the technology.
Thank you.