Good afternoon, Mr. Chair and honourable members of the committee. Thank you for the opportunity to address you on the issue of marketing and trade.
My name is Rickey Yada. I'm a professor in the department of food science at the University of Guelph and the scientific director of the Advanced Foods and Materials Network, which up until last March 31 was funded through the networks of centres of excellence program. As a network, AFMNet established an infrastructure of approximately 25 universities across Canada, involving 75 researchers and over 100 highly qualified personnel and partnering with industry, government, NGOs, and 18 other global research networks. AFMNet had a mandate to produce commercially viable, socially acceptable, value-added products and processes for the benefit of Canadians in the agrifood space.
Having been with the network, I've had the unique opportunity to observe various challenges and opportunities, from researcher to consumer, in moving products and technologies forward. Core to the network was the ability to attempt to take a good idea and transform it into a product or a technology that was taken and used, i.e., innovation. The issue of trade and marketing is moot if there are no products or technologies.
In addressing the committee today, I bring forth my personal comments as well as those of parties ranging from researchers to consultants, commercialization organizations, small Canadian SMEs, a Canadian subsidiary of a multinational, a Canadian food company, and a food author.
From an AFMNet point of view, several recurrent issues have come up, which you will hear from many of the people I interviewed. Canada is blessed with very creative and innovative researchers in the agrifood area, but many academic researchers are naive about intellectual property and commercialization. We need a forum to bring producers, researchers, industry, government, funders, and consumers together to discuss needs and priorities to facilitate changing good ideas into products and technology.
There is a definite lack of funding to support proof-of-concept funding. Most food companies are reluctant to invest in research, wanting to buy a technology or a product. The regulatory approval process is often considered a big challenge in moving good ideas forward. Trade commission officers funded though Agriculture Canada and DFAIT are an excellent avenue for connecting researchers with foreign industries, identifying potential users. AFMNet had a wonderful experience with a major company in the Minneapolis area.
There is still a disconnect between industry and academic or government research labs. Industry is looking for a solution to a problem, while researchers have a solution and are looking for a question. The food processing industry in Canada is very fragmented. A major challenge for us in the agrifood industry is to make agrifood a priority area in Canada's S and T plan, since it can address all three pillars: entrepreneurial advantage, knowledge advantage, and people advantage.
Next are some comments from some of my colleagues. Rotimi Aluko is a faculty member at the University of Manitoba who has made some interesting discoveries and was funded through the network. I quote:
I think there is the need to emphasize that there is currently limited funding available for food research in Canada.
The regulatory process for novel foods needs to be revised to allow approvals based on solid scientific publications in peer-reviewed journals. It is unfortunate that sometimes grant review panels are composed of personnel that are ignorant about novel foods and their potential health benefits.... It might be necessary in funding programs that involve technology transfer or marketing of new or novel food products for the review committee to be appointed after the applications have been received to ensure that experts for food-related applications are appointed.
Commercialization grants should be available to researchers if they can find an industrial partner that is willing to translate the technology into marketable products.
One of the main impediments to technology transfer in Canada is the strict requirement for cash from industry partners. This is especially difficult and in most cases impossible for small-scale businesses that are looking for growth opportunities through adopting new technologies from university researchers. For example, part of the current Growing Forward program requires 25% cash input from industry partners. My research group developed a very good technology for converting hemp seed proteins into blood pressure-lowering protein hydrolysate, but we needed to test to the product in animal models. When I approached the hemp seed processing plants in Manitoba to sponsor our application for the Growing Forward program, none was ready to part with cash but some were willing to give in-kind donations. Canada does not have a very many strong multinational or even large companies that can put up a lot of cash for technology development and innovative research activities.
Alejandro Marangoni is a faculty member in my department who spun out a company called Coasun, which looks at trans fat substitutes. His message is that we must have market pull. He says the best way to do this is to work with small and medium-sized companies that already have some market presence, and help them develop and protect their technology.
He also indicated that we need an organization that oversees this, much like AFMNet, to bring researchers, government, and industry together. We need it more in the commercialization area.
Tim Durance is a faculty member at the University of British Columbia, but he has also spun out a company. He's the director, chairman, and co-chief executive officer of a company called EnWave. It is a Vancouver-based industrial technology company developing a new industrial standard for the dehydration of food.
In talking about this issue, Tim identified some programs that he's tapped into, such as international business development programs through foreign affairs trade commissioners. I've heard about using their trade offices from many of my colleagues.
He says Export Development Canada provides a useful service in taking some of the final risk out of large sales, for example, of equipment to foreign customers. EnWave hasn't used them, but he suspects it won't be too long before they do.
He also talked about the SR and ED credit:
This is fairly useless to a company like EnWave because, being publicly traded, we only get tax credits. Since we don't yet make a profit, we aren't paying taxes yet anyway. By the time we have taxable income, we won't really need the support, so the SR&ED support is focused on the wrong stage of company development, at least for public start-ups.
EnWave's business model depends on collecting royalties on the use of its patented IP and know-how. One constraint for us in many international jurisdictions is our understanding of local legal systems. We regularly turn down offers of business because we fear international partners may refuse to pay their royalties...
On university spin-off creation, he says, “As you can imagine, I think there is a huge amount of unrealized business potential in our universities.” Again he advocates for the need to have a forum where business, university, and government can come together.
Sylvain Charlebois is the acting dean of the College of Management and Economics at the University of Guelph. He says:
Most Canadians are not aware that our country is addicted to cartels--sort of. Our infatuation with managing the supply of commodities has made our country trade-inept. We have adopted highly protectionist policies to support our milk, poultry, eggs and turkey production and for the distribution of other commodities as well
Dave Sparling is someone you have probably had before this committee. He's a faculty member at the Richard Ivey School of Business, and along with a colleague in Saskatchewan he has produced a report. I've spoken to the clerk of this committee and I will send you this report, because I believe Dave has made some really cogent arguments.
The report is called “Market Development and Promotion by Agricultural Commodity Boards and Organizations in Canada: State of the Industry and Evidence of Best Practices”. Dave Sparling and Shelley Thompson, the co-authors, have identified a number of important points: they say that government funding is a fundamental foundation for market development, that supporting connections with customers and fully developing high-value markets is a critical aspect, and that trade missions should be continued to provide a more coordinated and supported approach to key trade shows around the world.
As well, they say enablers matter, and in this aspect they talk about continued support for key enablers, such as the Canadian International Grains Institute. They say that market intelligence should be supported, that knowledge and promotion partnerships should be expanded, and that market pull product development and broader activity focus by innovation organizations should be supported.
Another recurrent theme is to reduce overhead and uncertainty around government programs. Finally, domestic marketing should be supported, particularly for import replacement.
The next comment comes from Rory McAlpine, the vice-president of government and industry relations at Maple Leaf Foods. Rory emphasizes the need to fix the ancient, broken legislative and regulatory framework around our industry.
Citing a report of the National Millers Association entitled “An Enabling Food Legislative and Regulatory Modernization Initiative for Canada: The Way Forward to 2015”, he quotes:
While Canada has enjoyed an enviable reputation as a producer and exporter of food commodities and processed foods that are safe and of high quality, Canada is the last among its industrialized trading partners to modernize legislation and regulations that are the foundation of food safety and healthy eating.
That's another recurrent message around a regulatory process.