Thank you.
Let me begin by saying that this is an important study you've started. I think it's vital that Canada look at renewing and revitalizing its national agrifood policy. In that context, I think the core message coming from all of us, in one way or another, is that innovation is a core part of this renewal, not simply a means of sustaining the existing infrastructure.
I firmly believe there's a strong case and an opportunity to renew and accelerate agrifood innovation by intelligently and aggressively developing, adapting, adopting, and using advanced technologies of all types, including biotech, to enhance our position. Two pressures are inextricably driving us towards that view.
First, agriculture in Canada has two main competitors: one is the rest of the world, which is advancing in many ways; the other is the demand for the resources from agriculture from down the street. It's the demand for skilled labour from surrounding communities and cities, it's the demand for land from cities and industries, and it's the demand for capital from other areas. If agriculture isn't able to sustain at least an average return on its investment, then those resources will walk, as they have walked in substantial ways across the world. Right now, agriculture generates only about half the value added per employed asset, so it has a major gap relative to the rest of the economy. That gap could be filled; there are producers who are more productive than the average, but the average is below.
Second, poor international trade and market policies, compounded by inadequate investment in agrifood R and D around the world, have dampened supply at the point when demand is rising, so we now have spikes in many basic commodity prices. These spikes are causing unrest in many food-insecure parts of the world. We're jeopardizing 850 million food-deficit consumers around the world. Canada has both an economic and a moral imperative to respond.
Innovation isn't just about the next variety or the next grain elevator or the next air seeder. Innovation is a continual process of change. This creates real challenges for public policy, because it means that public policy itself has to be adaptable and change. The good news is that Canada is well positioned for that. We have 100 years of successful innovation, partly driven by the industry, partly driven by government, and partly driven by non-governmental organizations and commodity and producer groups, and some of those have been quite spectacular.
You've heard about the global agrifood impact of GM technologies. In Canada alone, we have generated significant value for producers, for the industry, and for consumers around the world from the introduction of a variety of high technology products in category lines like canola and wheat. I think there's significantly more opportunity to do that as we adapt and adopt the technologies.
The opportunities are fairly large, and if you spend time with the science community, you'll see significant unrealized potential out there. We have the possibility of dealing with biotic and abiotic stresses through traditional and non-traditional breeding techniques. In addition, we have the opportunity to develop competitive and accessible elite germplasm lines. Particularly in a period of increasing privatization of the downstream varieties, those elite germplasm lines are the bedrock of a national policy in the grains and oilseeds business.
There's also significant room for quality differentiation. This industry makes most of its money from differentiated food products. It's not producing commodities anymore; it's producing high-value-added crops and oilseed. There's a lot more that could be done. That's why we need to find room to have organic, GM, and more advanced industrial agrifood products within the same legal, commercial, and regulatory systems.
Biofuel is an area people have been talking about. These biofuels have various industrial uses, including the environmental services that come from bioremediation. Ultimately many of the plants, animals, and microbes that fall under your ambit, I suspect, have the potential to become the ultimate green biofactories.
Now that's a big challenge. That's a massive change in the way agriculture is structured, but in the end it's about differentiation of products, technologies, and services, and those efforts need new regulatory and management systems. The good news is that we're extremely well endowed. There is the infrastructure at Agriculture Canada and NRC. You have some of the world's best technology in places like Saskatoon, where they have VIDO-InterVac, the vaccine and infectious disease site, along with Canadian Light Source, which I believe you've had an opportunity to investigate a bit.
Those are probably the cutting edge of the new management and regulatory systems of the 21st century. Agriculture will not be a 19th century technology if it's going to be successful; it will be a 21st century one.
Similarly, in places like Saskatoon and Guelph and elsewhere, you have some really powerful and exciting public-private partnerships that even in the absence of government decision are driving significant industrial development.
In Saskatoon, for example, the Saskatchewan Pulse Growers, working with the Crop Development Centre, have become the world centre for pulse production. That has generated a multi-billion-dollar industry in Saskatchewan and in western Canada and similarly has generated food production that's vital to the nourishment of many of those 850 million people who are in food-deficit parts of the world.
So there's a need and there's an opportunity. What are the choices that face us as a government and as a society?
I would argue that accelerating innovation in the Canadian agrifood system will require a combination of new policies, programs, and partnerships that will mobilize the capacity we have and link it to the rest of the world. The trick is to create a sense of purpose and certainty. In the absence of that, conflict and lack of focus will create uncertainty, which will not only reduce the value of public investments but will drive private investments away from the sector. We'll be in a lose-lose world.
There are three particular policy areas that I want to touch on. The first one is that the research effort needs to be improved. Canada used to be a leading agrifood research centre around the world, but if I look to Ottawa and the messages coming out of Ottawa today, they've written off agriculture as a sunset industry. The S and T policy that was announced back in 2007, which is now beginning to trickle into various policies and programs in Ottawa, is explicitly exempting or cutting out agrifood-related research and development opportunities. The centres of excellence, NSERC, and the excellence research chairs have all said, “Don't come to us”.
The second area is that the federal government often works against the natural flows of research and development. We tend to break up the agglomerations that scientists in industry want and need to bring technology to market. Federal labs in many cases have been disconnected, and when there has been success, it's been because they brought them together under one roof and in partnership with industry, such as in the Plant Biotechnology Institute in Saskatoon.
Federal funds are increasingly for the short term, one to three years. The research community and the leading research parts of the world are investing seven to fifteen years out, and we're being cut back to one- to three-year cashflows. On top of that, that one- to three-year cashflow has about a 40% to 60% overhead cost of just getting the money, administering the money, and shutting down the projects. You're getting a lot of stop-start work that doesn't really generate the long-term value that I know you're desiring.
As well, the administrative rules of just dealing with government--I mean, it's the reality of the 21st century--are costing these programs significantly. Lead scientists are spending most of their time bidding for and managing projects, not sitting in their labs and commercializing technologies.
A second area is intellectual property. A couple of weeks ago you heard one of my colleagues, Richard Gold from McGill, so I won't belabour that. Suffice it to say that the intellectual property system is a critical part of a 21st century agrifood technology. This will not work entirely by open-source innovation. There has to be some open-source and some highly proprietary assignment of technologies and products.
Third, Canada needs to complete its regulatory system. Arguably--and I fully agree with Steve--we have one of the best and most respected regulatory regimes for biotechnology and for agrifood in general around the world. We were cutting-edge. The key word is “were”: for the last ten years it's been stalled.
I sat on the Canadian biotech advisory committee, and we developed a variety of reports and recommendations in consultation with the Royal Society panel report. Nothing happened. We have whole areas of the regulatory regime that are just waiting for a decision. It's not that we can't say “yes” to Steve; we can't even say “no” or “maybe”. It's always, “Come back tomorrow, and we'll tell you if we have an answer to the question”. That drives public and private capital out of these areas.
Let me conclude. I think you have a golden opportunity here to actually craft a 21st century public policy that will not only meet our national economic interests but will serve broader moral interests around the world. The real challenge is whether the federal government will be a leader or a follower--or will it simply be pushed or have to move out of the way to let others in Canada or elsewhere take the lead in these areas?
Thank you.