Agriculture Committee on Feb. 7th, 2011

[The Chair, Conservative, Larry Miller]

I call the meeting to order.

I'd like to thank all of our witnesses for being here this morning.

I understand that Mr. Cross has to leave early, so we're going to adjust the agenda a little bit and have Mr. Cross present first. Then he can leave as he wishes.

Thanks for having us here in Saskatchewan on the first leg of our cross-country tour on our study of the biotechnology industry.

With no further ado, we are going to move to Mr. Cross.

Please try to stay under 10 minutes, sir. Thank you.

[John Cross, As an Individual]

Thank you.

Welcome to you and your committee members. I'm sure your briefing notes have well described the powerhouse of bioscience capabilities that we have in our wonderful town, and I'm sure you'll learn more while you're here.

I must say that the last time I was called a witness was a rather different situation, which I prefer not to remember--

[Voices]

Oh, oh!

[John Cross]

--but let me just tell you a little bit about me.

It has been my belief for many years that farming is the most noble profession practised by mankind since the beginning of time. I've been fortunate to spend my career in the food and agriculture sector. My passion is doing things that will enable farmers to be more productive and more profitable. I'm really delighted with the results so far, but I haven't finished yet.

Here's a little story about me. In 1980, two colleagues and I founded a company called Philom Bios, the purpose of which was to use natural soil-derived microbes to enhance crop productivity. We registered Canada's first biological herbicide. We commercialized the world's first phosphate inoculant, which increased phosphate uptake in plants and increased yield and crop quality. We also developed and marketed the world's first combination phosphate and nitrogen inoculant for pulse crops. The company was acquired by Novozymes three years ago, which continues now with the marketing--essentially globally--of these products and the improvement derivatives of them.

The point of all this is that the essence of our success was very simple. We had very powerful collaborative research and development arrangements with the National Research Council laboratories in Ottawa, Saskatoon, and P.E.I., and most especially with the research branch of Agriculture Canada. The bioherbicide was developed in collaboration with Dr. Mortensen and the research station in Regina, a research station that, shamefully, was closed some years ago. The phosphate inoculant was developed in collaboration with the Agriculture Canada research station in Lethbridge with Dr. Gusse, and the combination phosphate and nitrogen inoculant with the research station at Beaverlodge with Dr. Wendell Rice and his colleagues.

These were dynamic times, gentlemen, when the research branch was a leading linkage between science and the farmer. I've learned from contacts I have in the research branch that this has changed drastically in recent years. There is a great deal of frustration among scientists with changing business models and the continuing reduction in funding. The connection between the research branch and the farmer also has been eroded almost to the point of non-existence.

Some of you will remember the great delight of the annual field days that every research station had, and the interaction of farmers and researchers. Those days are gone. In your deliberations, Mr. Chairman, I would encourage you and your colleagues to give serious thought to restoring the research branch to its former glory. This is the 125th year of the foundation of the research branch, a wonderful time to rejuvenate this great Canadian organization.

That's the only negative thing I have to say, Mr. Chairman. I have some positive comments for your and your colleagues.

I think we're doing great things. An example is Genome Canada and its constituent provincial organizations, which are doing world-class leading-edge research in the field of genomics. It is powerful stuff.

One of the organizations you may know, NAFGEN, Natural Fibres for the Green Economy Network, is a network of collaborators from across the country. There are 54 researchers from 22 organizations developing, from a feedstock of flax and hemp--Canadian natural fibres--materials for the bioeconomy: energy, chemicals, and bioproducts. It is powerful stuff. It is a wonderful model for multiplying and synergizing individual researchers in one whole.

The wrap-up presentation for NAFGEN is next Monday here in Saskatoon. Unfortunately, the funding expires at the end of March, but there is a wealth of research-generated knowledge that is now poised for the next phase of development, closer and closer to the commercial world. You may give some thought to the funding and how we fund these multiple-participant research organizations.

We're doing very well on the value-added side. Some of you will remember your former colleague in the House of Commons, the Honourable Otto Lang. In the early 1970s, he was the spearhead behind the assessment that we were hewers of wood and drawers of water, and when were we going to start processing our agricultural commodities into more value-added food and feed products? He was the originator behind the POS Pilot Plant Corporation, now called POS Bio-Sciences, which today is a world leader in providing scale-up services for companies that want to take value-added processing of commodities from the top of the laboratory bench through the pilot plant scale to a commercial level. It is a wonderful example of foresight that came from the federal government at the time. It has paid dividends over 30 years and is doing so at a greater and greater rate.

Today we have two commercial operations using university-based research in this town. They're extracting protein from canola meal. One is concentrating on the human food market, the other on the animal feed market. It is powerful stuff.

I'm involved with a little company that has developed the world's first truly natural biopesticide for soil-borne pathogens. In fact, the reason I have to leave, Mr. Chairman, is that we are in the midst of fundraising between $3 million and $5 million. I have another presentation to make. If any members of this committee would like to have subscription agreements, I can supply them at their request.

There's something happening here that I must tell you and your colleagues about, Mr. Chairman. We've done presentations on this venture across the country from coast to coast. Most investors will understand oil and gas; very few understand the agricultural world, but there is a change occurring. There is an awareness of the potential economic as well as social benefits that are now coming up through the agricultural world. That bodes well for what we're doing here generally as a community in the biosciences, and for the future prospect of gaining capital to take these developments to the commercial sphere. That is a situation I have not ever seen before in my career in Canada. It is a very encouraging development.

We are blessed in this country with excellent research supports. The sustainable development technology program is excellent. There is IRAP, which we all know, and the Canadian agricultural adaptation program, and, of course, in town there is Ag-West Bio, which is a very powerful commercial supporter.

What can I offer you for opportunities to enhance our agriculture and agrifood innovation? Please give some real thought to the research branch. I urge you to do that.

The regulatory process is getting better. It used to rot my socks when farmers in North Dakota could get our new products three years before my Saskatchewan farmer customers could. It's getting better, but this lunacy of demanding efficacy data has to stop. Everybody loses, including society.

I encourage you to continue aggressive funding for strategic research consortia such as NAFGEN, and please think about the investment tax credit and the R and D tax credit, which is now 35%. This is great. Those two become exporters, but why does that not apply to field trials done outside Canada's borders? It's crazy.

Also, if we want to build our academic powers, let's increase 35% to, say, 55% for those companies that invest in collaborations with academic researchers, because that ties in with the elephant in the room, which is that we have a dire shortage of scientists looming in our country. We know we have a science-poor culture, and there's a history for that. If you had half an hour, I'd tell you why, but it's a fact.

Where are our agronomists is coming from? I'd urge you to think about that too. The largest landowners in this province are the aboriginal bands. How are we training aboriginal agronomists? Mr. Chairman, I urge you and your committee to think about how we address this void of scientific staff in the agricultural world.

These are my points. I appreciate the time, and I hope my points will be useful to you.

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Cross.

We'll now move to Ms. Mary Buhr, the dean of the College of Agriculture and Bioresources.

Go ahead, Mr. Lemieux.

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

I just wanted to ask, Mr. Chair, if Mr. Cross was staying or leaving.

[John Cross]

I'm staying until about nine o'clock.

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

I do have a question I'd like to ask, based on the testimony we just heard. I don't know whether we want to do it now or wait until later.

[The Chair, Conservative, Larry Miller]

Ask him now. I'll take it out of your first round of questioning.

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

I was very impressed with your grasp of funding and research and development, and obviously you've got a lot of experience with the research and development arm and what it can do for agriculture.

There's a debate that's going to be taking place in the House tomorrow on Bill C-474, a private member's bill put forward by Alex Atamanenko about GMOs in particular, not biotechnology. It talks about moving away from sound science in terms of whether GMOs should be acceptable, including having a fiscal way of evaluating the impact of a GMO product before it might be approved.

In Ottawa we heard much testimony about how this bill is sowing uncertainty in the research and development field and that investors are actually pulling back, or at least going on hold, in terms of continuing with financial commitments to research and development.

I'm sure that over these past nine months you've been giving a number of presentations, and I wanted to get your opinion. When you were talking to potential investors and looking for financing, did you find that Bill C-474 had an impact? Was it positive, negative, or neutral? Could you fill is in on that?

[John Cross]

That's a good question.

Bear in mind that we're talking about people whose lives are quite different from ours, but they are different in the sense that they have money. Some of them have a lot of money, unlike us.

It didn't come at once, but.... A parallel tangent to your question is that the one thing investors hate most of all is uncertainty. If you think about this bill, it casts a pall of uncertainty; the regulatory uncertainty about our future really is very distressing. I would suggest to you respectfully that little truly analytical support has gone into this private member's bill. It could be a disaster.

Don't forget, gentlemen, we are operating on the world stage here. This is not just about Saskatchewan. It's not just about Canada. We are on the world stage. If we want to retain and enhance our global capacity and recognition.... It's similar to when the Foreign Investment Review Agency came in about 1981. What happened to the perception of us outside our borders? Don't touch Canada. I was there and I remember that. It shut us down economically for four or five or six years.

This private member's bill has the same potential in the scientific arena. That's my view, sir.

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

Thank you.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Ms. Mary Buhr, dean of the College of Agriculture and Bioresources. Please try to take 10 minutes or less.

[Dr. Mary Buhr, Dean, College of Agriculture and Bioresources, University of Saskatchewan]

Thank you.

Biotechnology is one of the tools that we use in agriculture and bioresources to address the really critical issues that are in front of us right now. It takes 10 years to develop a new plant variety, 10 years from the moment you conceive of the idea of what's needed until you can actually release that variety.

When we're looking at the world, we see that the global population will have increased by 50% by 2050. We'll have over 9 billion people by 2050, and we have no idea what's happening with climate. However, all of the climates we have right now that we can provide agricultural product for exist somewhere in the world, so it almost doesn't matter what climate we get.

Saskatchewan has over 43% of the arable land in this country. This province is critically important to the future of agriculture and bioresources. We use biotechnology, and we clearly understand that it's far more than just GMOs.

What the politicians and the policy-makers really need to do is assess the balance of good and risk in all of the technologies that are being used and all of the products that are coming out, in order to address the critical needs of our population in our country as well as the global population--and not just for food, but for the bioproducts of fibre, for fuel, for clean air, and for carbon capture. All of those pieces are part of biotechnology and are influenced by it.

What is the role of the university in the agricultural biotech sector? First of all, we're actually assumed to be an honest broker of solid information that can inform the public. We also provide research for the public good. It is not commercial research, but public good research, meaning that when we release a plant variety, having gone through all of the appropriate effort, farmers can use that seed, grow a crop, harvest a crop, and then take the seed from that crop, save some of it, and use it the next year. Corporations, because they make their money selling seed, have to sell seed that essentially cannot be harvested and renewed, because they'll lose their profits.

Canola is a hybrid crop. The corporations have the two parent varieties. They produce a hybrid seed. That's the seed that's released to producers. Producers will plant that and harvest the crop. The crop has all the excellent traits, but farmers can't keep any seed from it because it won't breed true the next year. Other crops may be bred deliberately by commercial operations to be sterile if replanted. When a university breeds plants and releases them, it's public good research. That's the definition of public good research. All of the investment comes in up front, and we're not charging for it at the far end, so again, it's the choice that has to be made.

We can undertake long-term, risky, and speculative research like the kind that led to the development of canola and pulses. Corporations have to generate income for their shareholders, so they cannot undertake the kind of risky research that we can, yet without the research that led to the development of canola, we wouldn't have it as a crop these days.

We also innovate and generate new knowledge, including those “eureka” things, the ones that you just stumble across. Those are the things we are best known for.

The critical thing we do that nobody else does is train future minds. We train the biotechnologists. We provide the learning skills--we teach how to learn--and we provide the link between disciplines and between ethics, science, and culture. Community colleges give you discrete skills; we give you learning and the ability to figure out how to learn. We stimulate that when we do it the best way we can.

In medical innovation within our university, agriculture and bioresources is working with the nutrition department and pharmacy and industry. We are literally building a research chair together to look at the human good that will come out of biofortified pulse crops to provide unlimited metals for public good. Again, these are the kinds of things we can do that nobody else can.

When we look at biotech, we can see that in this province we work in an incredibly effective research cluster. It is amazing. I came from Guelph--I was 20-some years at Guelph--and the effectiveness of the cluster here is absolutely astounding.

It took me months to figure out who worked for whom, because we move back and forth so readily that it was really confusing. It's a feature of this unique cluster that we work so well together, including Agriculture Canada, the NRC, VIDO-InterVac, the Saskatchewan Research Council, Alberta Gentech, and the B.C. dairy industry. It's all of those pieces, and we do all of that together.

We do plant breeding and selection, and yes, we've done GMOs, but we do it far better than that. We take apart the genome and the genetics, we understand what the genes can do, and then we select plants that have those genes naturally and enhance the operation of those plants.

We do animal and human health, including the development of drugs and vaccines, enzymes, probiotics, omega-3 eggs, and omega-3 enriched milk. That's because we can link to the product the foods that the animals take in and the health benefits that come to the people who eat that product. Those are the things we can provide when we export internationally as well.

We are also very involved in technology development. We take the plants that have the genetic traits and feed them to the animals that we know have the genetic traits to allow them to get the most good out of them. We then take those products and develop the actual oil extraction and protein extraction in all of those different ways to enable us to produce the product, which we can then sell abroad, or we can actually sell the technology as well as use it to develop our own products here for Canadian use or Canadian benefit.

These improved or novel crops and the high-value animal protein are the things that the rest of the world needs and wants. Our emerging partners, such as China, India, and Kazakhstan--you name these countries--are coming to us because of what we can do in biotechnology and in terms of the links to the technology of how to do it.

How do we maintain our soils? What are the microbes that will take that soil from tar sand and enable that soil to grow plants? For stressed soils in the north, or non-soils in the north, what are the values in the rocks that are there that enable us to produce a crop or grow the animals or...? I keep on telling my plant breeders that we need to look at how to grow wild rice in Saskatchewan these days, but we also need to work with our indigenous peoples so that they can use their lands in ways that they understand and know.

We learn from them, and then we work together to help them with different animal products, such as caribou, bison, and ground animals, and plants such as cranberries. What are their lands becoming? These are the things that we can use our biotechnology to develop. We use tissue culture for horticulture crops and, again, we can use that as well.

There are difficulties that we have specifically at the university level. First of all, there is the misunderstanding of the public of what biotechnologies are and what we do. We also have the whole problem of non-tariff trade barriers; flax is certainly one of those. My math says that .00 is zero, but the argument is not about science internationally; the argument is about barriers.

We also have a need for expensive infrastructure to maintain our animals in ways that abide by the Canadian Council on Animal Care. They're hugely expensive. We need them to train our veterinarians, to develop our vaccines, to train our students, and to enable us to do that holistic approach to agriculture from the soil right through to the end product. Anything we can do to help you get the message across and to help us to get the students in the door and as excited as we are about agriculture and biotechnologies, we would really appreciate.

Thanks for your time.

[The Chair, Conservative, Larry Miller]

Thanks very much, Ms. Buhr.

Now we'll go to Ms. Jill Hobbs, professor of bioresource policy, business, and economics.

You have 10 minutes or less, Jill. It's good to see you again.

[Dr. Jill Hobbs, Professor and Department Head, Department of Bioresource Policy, Business and Economics, University of Saskatchewan]

It's good to see you too.

Thanks for the invitation to speak to the committee this morning on the topic of the biotechnology industry.

Allow me to preface my remarks very briefly with my background and expertise. I'm an agricultural economist in the department of bioresource policy, business, and economics at the University of Saskatchewan. I teach and conduct scholarly research on food markets, consumer preferences for food traits, and the structure of agrifood supply chains. My past research has examined various aspects of the biotech sector from a social science perspective, including, for example, food labelling, consumers' response to biotechnology, and the international trade rules concerning products of biotech. I welcome the opportunity to share some thoughts on the biotech industry and its implications for public policy in Canada.

I'd like to cover three main points today. First, at a macro level, I'll comment on trends in global food markets and the role of biotechnology in that regard. Second, I'll offer some observations about the economic impacts of public sector investment in agricultural research. Finally, I'll address the challenges created by different rules for the labelling and segregation of agricultural products produced with biotechnology.

I'll take the macro-level trends in global food markets as a starting point. Recently we've seen the consequences of imbalances between supply and demand on world food markets in the form of significant price volatility and major spikes in the prices of key commodities--wheat, canola, soybeans, corn, and so on. Price instability, I think, in world agricultural commodity markets looks set to continue. Last year, world food prices were close to a record high.

For consumers, instability in world food markets creates economic hardship and is often the source of political unrest in low-income countries, as we've seen recently. For agricultural producers, instability in agricultural commodity prices creates uncertainty, and it exposes them to higher levels of price risk for outputs and often for inputs as well.

On the demand side, the major driver of world food demand is going to come from population growth and increasing incomes in developing countries. For example, it's estimated that world food demand could double in the first half of the 21st century as low-income consumers in developing countries escape from poverty. As the populations in those countries become increasingly urbanized, where is all that food going to come from?

If we turn to the supply side, the major drivers of world food supply are land and climate constraints and technological change. It's estimated that there is, at most, 12% more arable land available worldwide that isn't currently forested or subject to soil degradation and erosion. Climate constraints in many parts of the world preclude bringing more land into viable agricultural production, and climate change is expected to increase the frequency of extreme weather events. Increased food production, therefore, must come from improvements in agricultural productivity in the form of improved yield and through increasing the genetic potential of crops and animals.

Technological change, then, is the third key driver of world food supply. Technological change is the reason that Malthus, writing 200 years ago, was wrong when he said that population growth would outstrip food production. Technological change has been at the centre of agricultural productivity growth over the last 150 years.

Most of the productivity enhancement potential of the pre-biotech era, the so-called green revolution, has already been achieved. I'd say it's widely recognized that biotechnology offers considerable potential for yield increases, increased tolerance to drought and heat, enhanced nutritional content in grains, and improved resistance to disease and pests.

What are the implications, then, of this big global picture for the Canadian agricultural food sector? Well, of course Canada is a net exporter of many agricultural commodities. For Canada to remain competitive, continued improvements in agricultural productivity and the development of crops and livestock with innovative new traits--enhanced nutritional qualities, functional traits, and so on--will be necessary.

This requires ongoing investments in both the public and the private sectors in agricultural R and D. Economic evidence for high rates of return to society from investments in agricultural research is really quite compelling. Accurately measuring the cost-benefit ratio of agricultural research is complicated by the fact that there are very long time lags between knowledge creation and the eventual commercialization and adoption of technology, together with substantial spillover effects. In other words, investments in one province or in one country often spill over into benefiting other regions.

Nevertheless, the returns to society from expenditures on ag research are estimated to be substantial. Recent estimates, for example, for returns on public sector agricultural research expenditures in the United States put this at around 19% to 23% return per year, on average, over a substantial period.

Despite those well-documented high rates of return, however, public sector expenditures on agricultural research have declined in Canada and elsewhere. Alongside that decline in public sector investment in agricultural research has been a pervasive slowdown in agricultural productivity growth rates since the 1990s.

In this regard, the recent decision by the Natural Sciences and Engineering Research Council of Canada, or NSERC, to drop food and agriculture from its list of targeted areas for research funding is, I find, particularly troubling. Given the imbalances in supply and demand in world agricultural markets that I outlined earlier, continued investment in technology in both the public and private sectors is going to be necessary to deliver those needed agricultural productivity enhancements, and increasingly, as we already heard, public-private research partnerships and clusters of research expertise are necessary to deliver the advances in knowledge—new crop varieties, animal vaccines, functional food products with health benefits, and so on—that characterize a competitive agricultural sector in Canada.

So an examination of the state of public sector funding of agricultural research in Canada, including ag biotech, and the interplay between industry-funded, producer-group-funded, and publicly funded research is timely. It's one of the topics being examined by researchers in the Canadian Agricultural Innovation and Regulation Network, or CAIRN. The work of that research network may be of interest to members of this committee as they consider this topic.

The second public policy issue I'd like to briefly highlight pertains to rules concerning the labelling and segregation of products derived from biotechnology and the implications these have for international market access. Differences in the way different countries treat agricultural products produced through biotechnology can significantly increase costs for exporters. They can also limit or restrict access to some international markets. This, I think, has been a challenge for Canadian exporters of some agricultural products when accessing the European market, given rules over mandatory labelling of food containing GMOs and zero-tolerance requirements for commodity shipments into Europe.

Differences in international rules for market access create uncertainty and impose supply chain segregation costs on the industry. Uncertainty and higher costs deter investment, so a policy priority, I would argue, would be to push for an international agreement on harmonization of labelling and market access rules. This could be done multilaterally through the WTO as well as bilaterally through the proposed Canada-EU free trade agreement.

In closing, I'll reiterate the three main points: I think biotechnology has a key role to play in contributing to the agricultural productivity growth necessary to meet world food demand; renewed public sector investment in agricultural research is an important piece of the Canadian competitiveness puzzle; and proactive protection of international market access for products derived from biotechnology is also an important piece of that Canadian competitiveness puzzle.

Thanks for your attention. Copies of my speaking notes have some references to that sort of material, if you'd like to follow up.

[The Chair, Conservative, Larry Miller]

Thanks very much, Ms. Hobbs.

We'll now move to Professor Kerr, from the department of bioresource policy, business, and economics.

Mr. Kerr, please go ahead. Please keep your presentation under 10 minutes.

[Professor William A. Kerr, Professor, Department of Bioresource Policy, Business and Economics, University of Saskatchewan]

Thank you for inviting me to present to the committee on the topic of the biotechnology industry.

I should preface my remarks by outlining my background and expertise. I'm an agricultural economist in the department of bioresource policy, business, and economics in the faculty of agriculture and bioresources at the University of Saskatchewan.

My research area is international trade policy, and biotechnology is perhaps the most contentious issue in international trade at this time. It has been the focal point of my research for more than two decades. I published my first paper on biotechnology in 1989. I have co-authored a number of books on biotechnology, including The Economics of Biotechnology, International Environmental Liability and Barriers to Trade, and Regulating the Liabilities of Agricultural Biotechnology. I have over 300 academic publications, many of them dealing with biotechnology.

I sit on the editorial boards of a number of academic journals, including Journal of Environmental Management, AgBioForum, and the Journal of International Food and Agribusiness Marketing. I'm a founding editor of an international trade policy journal. I'm a fellow of the Canadian Agricultural Economics Society.

International trade issues pertaining to biotechnology relate primarily to the compatibility or incompatibility of domestic regulatory regimes in different countries. Thus, while I have an international orientation, I have had to learn a great deal about domestic regulatory regimes for biotechnology.

On the future of the global agrifood industry, there are two striking challenges, and biotechnology can play a major role in meeting those challenges.

The first challenge is that we are going to have to produce a lot more food globally. Between 2010 and 2050, as previously stated, the world population is expected to grow from almost 7 billion to 9.5 billion people. There will be 2.5 billion more mouths to feed, a 38% increase. To feed those extra billions, we need a rapid rate of technological improvement, and agricultural biotechnology is the best hope to be able to meet that challenge.

The second major challenge is that the climate is changing. The crops we have bred to date will not be as productive under the new climatic regime. We'll have to breed new crops, and we'll likely need to breed them quickly. Biotechnology is the key to doing that.

International trade in agricultural products is also going to increase dramatically if these challenges are going to be met. The goal of agricultural self-sufficiency is a pipe dream. The areas of the world that will have both the most rapid increases in population and the largest increases in income already suffer from stressed ecosystems and water shortages, which will only become more acute because of climate change. If that is true, where will the extra food come from?

It can only come from areas of the world where agricultural land can increase in productivity and where population is relatively stable. Canada, and particularly the Canadian prairies, is one of the few areas of the globe that has that potential. However, it can only contribute to meeting these challenges and have farmers reap the benefits that come with higher prices and yields if farmers have the appropriate technology. Again, biotechnology is likely the key.

Those who object to biotechnology often make reference to its being a risky technology. What are the risks? The risks that are often suggested are largely speculative. In other words, they're hard to test. What does the evidence actually suggest? It is often forgotten that in Canada, the United States, and a number of other countries, there has been a large-scale population-sized trial going on for approximately 20 years. We've all been eating GM foods, and GM crops are in use over a wide range of ecosystems. After all this time, there's no evidence of risk to human health or of measurable risk to the environment.

Those who oppose biotechnology are quick to point out, however, that no evidence of risk is not the same thing as no risk. Of course one needs to be vigilant and vigorous when licensing new genetically modified products and in monitoring human health and the environment after they are released. The evidence does, however, suggest that the current regulatory system is working and that biotechnological advances should not be hindered.

Those who oppose biotechnology would like to have a regulatory regime based on the strict version of the precautionary principle, whereby no risk is allowed. I ask myself what would have happened if that principle had been applied to past transformative technologies. If this were 1910 and the new technology were the automobile, I suspect it would have been banned. After all, in 1910 we knew that cars killed people. Certainly no one in 1910 could have foreseen all of the changes the automobile would bring to society--both beneficial changes, such as the ability to travel long distances, and negative changes, such as pollution and gridlock. Still, I don't think you'd find many people today who would like to have seen the automobile banned in 1910.

New technologies will have a negative effect on the well-being of some members of society. Automobiles ruined the horse, buggy, harness, and animal feed industries. It it the nature of progress. The economist Joseph Schumpeter called it “creative destruction”. Denying a technology on the basis that it will have negative economic impacts on some is to deny progress and to deny increases in societal well-being. This is very different from denying technology on the grounds of risk to human health or the environment.

There are issues of industry concentration and sharing in intellectual property in biotechnology that others are probably better qualified to speak to, but I will make one observation. At some point a decision was made that most of the research on biotechnology should be done in the private sector. To my mind, the best way to reduce the anti-competitive influences that the private sector might have on agriculture is to rebalance the research effort so that the public sector has a greater role, particularly at the universities, and as I said before, in Agriculture and Agri-Food Canada.

Studies consistently show that public sector research in agriculture is chronically underfunded. The scientists in the College of Agriculture and Bioresources at the University of Saskatchewan, for example, have made huge contributions to the welfare of prairie farmers and Canadian society. They continue to contribute, but they could do a lot more.

If the public sector creates more biotechnology products, it will lessen the influence the private sector can have. The public-private contribution to biotechnology research needs to be rethought if the current challenges of increasing food production and adaptation to climate change are to be met. If Canada is not part of meeting the challenges, other countries will reap the benefits--for example, China is investing heavily in the development of biotechnology, all of it being done by government.

Finally, international market access for genetically modified products remains an issue. A major impediment to market access is the European Union. However, the European Union is showing signs of weakening in its position, particularly over animal feeds and biofuel crops. They have had to loosen up their imports of genetically modified products. The EU is finally approving new varieties, but there is a major split among EU member states. Canada needs to continue to actively push for science-based rules for trade in the products of biotechnology.

The challenges of global population growth and climate change are real. In part, success in meeting these challenges lies in biotechnology. To benefit from the effort required to meet these challenges, Canadian farmers need to improve their technological efficiencies.

Thank you.

[The Vice-Chair, Bloc, André Bellavance]

Thank you, Mr. Kerr.

A bell is chiming. If you will permit me, before going to Mr. Potter, we will maybe wait for the bell to stop. We will pause for a few moments.

[The Chair, Conservative, Larry Miller]

The bell has stopped.

Mr. Kerr, were you finished?

[Prof. William Kerr]

Yes.

[The Chair, Conservative, Larry Miller]

Okay. Thank you.

Thanks, André, for taking over for a minute.

We'll move to Mr. Potter, director of the Vaccine and Infectious Disease Organization for the International Vaccine Centre. Please try to keep your presentation to 10 minutes or less.

[Dr. Andrew Potter, Director, Vaccine and Infectious Disease Organization-International Vaccine Centre, University of Saskatchewan]

Thank you very much for the opportunity to speak to you today.

I apologize for not getting any written material out. I just got off a plane from India and I'm really not sure what time zone I'm in, so essentially I'd just like to share a few thoughts with you.

First of all, I'll share a little bit about the organization. I know that you're coming over to our place this afternoon to have a look. We were founded in 1975 as a research institute, so we're not a commercial entity. We were founded as a partnership of the four western provinces. Alberta provided the actual buildings, Saskatchewan the land, and all of the provinces a little bit of operating funding. That's opposite to today: trying to get two provinces today to agree on anything is nigh on impossible. You talk about innovation; if you go back to 1975, I think you'll see some really innovative ways of doing things.

To make a long story short, the organization focuses on the livestock sector, specifically on infectious disease, and that's what I'm going to talk about. Anything I say won't go beyond that particular topic.

We've been relatively successful in terms of product development and the number of vaccines on the Canadian market coming out of our organization, virtually all of which were world firsts. These are not me-too products. These are high-risk types of things that can be picked up by Canadian industry. We've spun off four different companies, the latest of which is one of the new centres of excellence in commercialization and research focused on vaccines.

Finally, as was brought up earlier, very clearly our biggest product as part of a public sector institution is information. There's extension work. There are technical groups that serve the livestock industry, the swine and beef sectors specifically, and we are expanding that aspect. It has been a very successful organization over the last 35 years.

I'll switch to infectious disease for a second. Infectious diseases are still important. I think we lose track of that. If you look at the biggest threat to the livestock industry in this country, you'll see that it is in fact infectious disease. Look at that single case of BSE in 2003. We all know what happened with that. It's only now that we're actually starting to get back to the 2002 levels, eight years later. That's what it took to recover. Although the published figure says it cost $6.5 billion, it's probably more likely around $50 billion. It was an incredible risk to the industry.

We see it in the poultry industry. I don't know how many times avian flu has caused the mass killing of birds in the Fraser Valley and elsewhere across the country.

We saw it with swine flu a year and a half ago, and we all know what happened in the human sector: the story that hasn't been told is what it did to the swine industry and what it did to food processors like Maple Leaf Foods. Export markets disappeared.

We're facing a trade issue today. It's not necessarily the day-to-day disease losses, although they are important; the trade markets are the issue. How do we get around that problem from a research perspective? It's difficult.

We need to be proactive in our approaches. As a country, we tend to be reactive. We wait until something happens and then we see what we can do about it. That's not good enough in the industry if we want to be competitive.

You hear a lot about innovation. Innovation is a word that I'm pretty much convinced nobody understands--or maybe I don't understand it, and everyone else does.

Innovation is not the same as excellence. All of the programs we have set up deal with excellence, as they should, but if we want to encourage innovation, we must realize that innovation is transformative in nature. This means new markets and new ways of doing things, rather than the same old same-old. We should reward excellence, but if we want to encourage true innovation in this country, we have to do it a little bit differently, such as the way Bill Gates did it when he set up his funding program in vaccines six years ago. He funded things that were crazy, but that's what you have to do. You can't go through the regular systems.

What else do we need? We need infrastructure in this country. I think we're doing a passable job at it. I know that within the next week and a half we are completing construction of a $140 million infectious disease facility on campus at the University of Saskatchewan. The problem we face is that we have this wonderful piece of infrastructure there--it's the best in the world--but how do we operate it? We fall down when it comes to the operation of these facilities. We have to do it through partnerships. It's the only way it's going to happen.

We have a number of funding programs that I think are very good. The problem we face as researchers and research organizations is the way they're administered. If you want to talk about innovation, take the AgriFlexibility program. It's a great program in the sense that the public is involved and the private sector is involved, but you can't wait over a year to get a decision on something. It can't happen. This is a problem with the bureaucracy. I could go through a number of those programs, not only within Agriculture Canada, but in Industry Canada, Foreign Affairs, and a variety of others. We need to be nimble. If we're not nimble, innovation is not going to happen, and at the end of the day industry will suffer.

We need to really work on the partnerships. Mr. Cross talked about the value of federal research organizations, and I concur 100% with what he said. The National Research Council in the vaccine field is a jewel, a real jewel. This is an organization that has a culture of research. They understand it. The problem begins when the private sector organizations try to interact with a federal agency, and I'll speak here about one of our companies, PREVENT. When it tries to interact with a federal agency, we're still in this 1970's mindset that the crown owns everything. It doesn't work that way. We need to form true partnerships in order to move this forward.

The last thing I'd like to say is this: over the last five years or so, in the infectious disease field in the biotechnology sector we've seen incredible consolidation occurring, and there really aren't any Canadian companies active in the sector. They're all multinationals. A lot of people look at that as being a threat, an issue. I look at it as an opportunity. We need to get biotechnology moving again in the animal infectious disease sector. I think there are some real opportunities that need investment. Again, it doesn't need handouts; it needs an investment.

A study done for the Government of Saskatchewan about 10 years ago suggests that an investment in the infectious disease field for the livestock sector gives a return on investment of about twentyfold. In this case it was a $60 million investment; it returned about $1.2 billion over a 10-year window in the province of Saskatchewan. If my pension fund had done that well, I would not be speaking to you today. It's an incredible return on investment. It doesn't matter what type it is or what your target is; the smallpox vaccine for humans returned $27 for every patient who was immunized.

These are incredibly powerful technologies, but we have to harness them and we have to get manufacturing back into Canada. If we continue to develop the intellectual property.... We're masters of that in this country: in the vaccine field, we outdo any other country per capita, but it all gets exported either to the U.S. or to Europe, and we buy the products back. It can't continue to happen that way.

With that, I'll end.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Potter.

We'll now move to Mr. Bert Vandenberg, professor at the university. Please take 10 minutes or less, sir.

[Professor Bert Vandenberg, Professor, University of Saskatchewan]

Thanks for the invitation.

I'll tell you just a little bit about me. I work with pulse crops. I grew up in Ontario. I've been living with plants since I was born. My dad was a Dutch immigrant with a greenhouse business, so I've been working since I was two. That's the way it is in Dutch families.

When I came to Saskatoon, we started from scratch. I don't have much to say about the federal research system, because I haven't been involved in it. My career has been in partnership with the provincial government, with farmers, and basically with those of us at the university. We started in a very small way. We had maybe 30,000 acres, and we're at about seven million now. I can honestly say that what Albert Einstein said was correct in our case. He said that if you know what you're doing, it isn't research. We started off not knowing anything, and that's real research.

I'm going to go through my list of 10 comments. They all start with the letter “b”.

The first one is biology. One of the fundamental things that made us successful was that right from the beginning we understood that without knowing the biology of what we were working with, we couldn't understand the economy. In our case, with pulse crops one of the fundamental things was that seed cost was very high for a crop that's more risky to grow. We changed the economic model. Instead of trying to produce seed companies that would charge royalties and pass those on to farmers, we said, “Let's do it the other way. Let's have a check-off at the end, so that farmers finance the research.” It's only a four-month delay, but it's the same price, and at least then the farmer didn't have to take the risk of putting seed in the ground that didn't grow. That became fundamental to us--gaining the confidence of farmers.

The pulse thing is pretty interesting, because Canada really was one of the last places on earth to discover that you actually need legumes in your agricultural system. We were under ice 10,000 years ago, so maybe that has something to do with it, but we didn't understand that. Almost everywhere else in the world, they do that.

Understanding biology is fundamental. It's a tough challenge. My estimate is that only 20% of high school students ever take a course in biology, and forget reading labels. Most people don't understand what the labels on our food say. I think 20% understand labels. It might be related to that high school thing.

Second is biotechnology. I've heard this term misused throughout my whole career. I know there's a narrow definition that may be your focus here--transgenics--but those who are in the business of plant science think of it as an ever-expanding toolbox, and even what we call transgenics may be superseded by genomics. That's our hope in the small-crop world, because we can't afford transgenics anyway. We never bothered with them, because we couldn't afford them. Maybe with genomic information we will actually be able to do it better, more cheaply, and more precisely. That's what we're counting on.

That toolbox is full of new things and old things. We still use some old technologies that are, as I call them, biological technologies. We're still using something as old as grafting. Why not? They're good technologies, and we shouldn't restrict what we're trying to do. Let's keep in mind that maybe even the transgenic approach is not going to last. We don't know.

The third point is biodiversity. In biological terms, this means retaining as much as we can of the vestiges of our ecosystem. Let's keep it diverse. That's actually the most productive system. The more we can introduce that into the system, the better off we will be. In economic terms, we would call it diversification of your portfolio.

I'm trying to forge this link between biology and the economy in your minds, so that you can have some discussion about it. Everybody puts “bio” in front of everything these days. You can find shoes with “bio” at the beginning. I know you can find yogourt. To an extent, we've lost our whole word there.

However, I would say that biodiversification is what's happening in a place like Saskatchewan. It's harmonization of biodiversity and economics. We're trying to produce more types of lentils, not fewer. We use the car model as our example. There are many more kinds of cars today than there were when I was a kid.

Today there are four million acres of summerfallow. In 1970 there were 24 million, and there are only 44 million acres of cropland, so it's pretty incredible. Since then, we've had an additional 20 million acres of crops. Those 20 million acres in 1970 were mostly cereals.

In those days we had almost three million acres of canola. Since then canola has increased by about 4.5 million acres. Pulse has increased from zero to seven million acres. This is without the addition of transgenic technology; what we really did was harness the economy to the diversity out there and to farmers' needs.

This is happening across the country. In 1970 there were 300,000 acres of soybeans, no lentils, and no peas. Now we have about 7.5 million acres of each of those three. It's a pretty good story in Canada.

That's my “bullish” trend. That's the fifth “b”.

The sixth one is the breadbasket. I grew up with the concept that Canada was the breadbasket of the world--it was the sort of thing you saw in magazines--but in fact we produce between 3% and 5% of the world's wheat and barley and less than 2% of the corn and soybeans, and in all cases we produce less of the global share than we did in 1970.

Are we falling behind, or what are we doing? It's hard to say, but we do produce 30% of the world's peas and 45% of the world's lentils. They're not huge crops on a global scale, but they are growing in consumption faster than human population growth, so the consumers are telling us something: that we shouldn't be afraid of changing our crop base, and that they like what we produce. We're obviously the world's largest producer and exporter.

The seventh point under the “b” is bigger genetic gains. This is the real goal of genetic improvement of grain crops. We need higher yield and we need to accumulate the genes that give us the combinations that make us more productive. Without genetic gain occurring at rates above human population growth, food costs are going to rise. We're witnessing this scenario on a global scale, and I would make the argument that in the case of ethanol, biofuel policies may be adding fuel to that fire. I'm sorry for the bad joke.

Our customers are countries with large, growing populations. In most of our customer base, 60% of the population is under 30 years of age, so the impact is going to continue. They're going to live longer and they're going to eat longer, and the rate is accelerating.

The eighth point is on biofortification and beyond. This is the genetic improvement component, with the goal of improving the nutritional quality of our basic foods. We're trying to do this at an international level. It is conceptually simple, but it's going to require a big change in the way we do plant breeding. We're going to need new biological technologies, and I don't think we're going to be able to take the simple solution of transgenics. Moving one gene in and changing things is not going to work. This is a more complex issue, yet we're probably on the cusp of being able to do that. We think this is really going to help the small crops, and that's going to allow us to harness biodiversity, so that's a focal area where there could be some investment. That's going to improve nutrition, yield, nitrogen fixation, and all the things that go back to that basic principle of understanding the link between biology and economy. Let's be focused here on the long run.

The ninth point is on bits and bites of nutrition.

Human health is obviously linked to nutritional status. This goes into our biofortification discussion. We see two billion people on this planet who don't have enough iron in their diets and who have an inadequate supply of nutritious basic foods. Where we do have enough food, we're also malnourished because we don't know how to eat anymore.

The people who are involved in agriculture need to get their heads around the fact that we need to educate people. We need to educate kids, because right now the kids in school have parents who do not know anything about nutrition, don't know anything about agriculture, and don't know anything about food. Food is what you buy at a store or at a restaurant.

We're starting to see big changes in our health care costs. They're going to accelerate due to poor nutrition. Maybe the Department of Agriculture could take a lead in focusing on educating people about their food. You might find that it relates back to the whole business of biology and economy. If you don't understand what's keeping you alive, you're not going to understand the economics around it. Health care is definitely related to what we're going to see in the future.

My last point deals with barriers to innovation. I would say that fully understanding what I said about biology will provide excellent guidance on this front. We have a lot of regulatory scenarios that really are barriers to genetic gain. They are positions that people have taken through the regulatory system and they have influence. We have rules regarding barriers to innovation that are 20 years old, and they need to be revisited.

I'm specifically referring to the issue of plants with novel traits. We regulate all innovation in Canada as though they were GMOs. How stupid is that? That's like tying your shoelaces together and saying you're going to go on a run. It doesn't make sense.

Many of the technologies that non-GMO people are using are age-old technologies that were used by agriculture 6,000 years ago. We can use information, we can use knowledge, and we can train people to use simple DNA analysis to make the gains. Why don't we focus there? Then we could skirt this whole issue.

As I said, I think possibly transgenics will be an ephemeral technology in the world of plants. In the world of pulses, we deliberately did not use transgenics, because it was already causing a lot of ripples in the marketplace, particularly in our customer base. We ship wheat to only 25 countries, but we ship pulses to 140. How are we going to figure that one out? It's very complex if you do it, so our choice was to remain uninvolved in it.

Those are my comments.