Agriculture Committee on Feb. 6th, 2012

[The Chair, Conservative, Larry Miller]

Thank you very much.

Go ahead, Ms. Raynault, for five minutes.

You may want your translation, gentlemen.

[Francine Raynault, NDP, Joliette, QC]

Thank you.

Thanks to the witnesses for joining us today.

My question is for Mr. Brewin.

Earlier, we heard about strategic harmonization with American regulations. You also mentioned in your brief that, given the flexibility of programs like AgriMarketing and the Canadian Agricultural Adaptation Program, you do not know if any new programs are required.

Could you tell us more about that, please?

[Dr. Derek Brewin]

I'm not a real expert in regulating and how much it costs. I think Rickey and Manish might have better answers on how complicated the process of regulation is and whether or not the current level of funding is enough to help individual firms. I feel the terms of reference in the programs you have now are broad enough that certain firms should be able to get help. I just don't know if there's enough money.

[Dr. Rickey Yada]

I think regulation happens at many levels. From a university perspective, getting clinical trial approval through an ethics board at a university is difficult. It's compounded by the fact that in Canada we don't have harmonized ethics board approval at the universities. As a result, if you have a multiplayer project--and we have researchers at Laval, Guelph, and Toronto--each of those researchers has to get approval from a separate ethics board.

Then we work with Health Canada. The problem with Health Canada is not Health Canada, it's that our researchers are not engaging Health Canada regulators early in the system. Once they've gone through their trials, they then go to Health Canada and ask for approval. Then Health Canada has to go through a learning process.

[Francine Raynault, NDP, Joliette, QC]

Mr. Brewin, in your brief, you say the following: “The Growing Forward programs seem well suited to increasing innovation, addressing some food safety and environmental concerns and reducing farm production and income risks.”

But you say that you are concerned by “the evolving structure of our major commodity markets and the power of monitoring agencies to police unfair practices.”

What could be done in that regard?

[Dr. Derek Brewin]

Actually, I am worried about that, but I'm not sure that beyond funding the monitoring of the sector.... Agriculture Canada's been doing this with Quorum Corporation in the grain supply chain, which I fully support. I'd like better access to more data like that.

However, as for regular funding, I don't know if the supply chain needs a large funding so much as it needs more diligence on the part of, say, the Canadian Grain Commission or the Competition Bureau. That's the main solution there, I think.

[Francine Raynault, NDP, Joliette, QC]

Do I have any time left?

[The Chair, Conservative, Larry Miller]

Yes, you have about a minute and a half.

[Francine Raynault, NDP, Joliette, QC]

Mr. Raizada, earlier, I gathered that producers should process raw commodities here. Could you give us more details about that? Could you tell us what kind of assistance we could provide to producers in order that they can do the processing here and sell finished products?

[Dr. Manish N. Raizada]

What we need is more funding in this area, to begin with, and my suggestion is that producers get involved, with government help, in essentially setting up venture capital types of funds or angel investment types of funds, developing business plans, and doing all the smart things involved in starting up a new business so that we can process it locally.

I'll give you a very simple example. I take students through the U.S. Midwest to see some innovative farms. There's a farmer in the Midwest who grows corn, but he realized he could get more money for his corn by drying it and flaking it, rather like cornflakes, so he set up a little steaming system on his farm. The corn is for animal feed, and the digestibility increases if you steam it and flake it. Now he has all sorts of producers selling him his corn, and it's a central processing facility.

This is one farmer who had an idea, but it required about $2 million in capital funding to do that, and the money had to come from someone. Someone has to take that risk along the way, and even though we have small markets here, I think there is a role for government in that area.

Perhaps I could go a little bit further on this aspect. I lived in Silicon Valley in the U.S. for about seven years, so I saw a lot of venture capital funding. I saw Google being formed in front of my eyes; in fact, one of the stupidest things I've done in my life was to not respond to an email offer to work for Google for $50 an hour when it had 10 employees. I wouldn't be here in front of you today.

Where does all that money for lot of the long-term funding come from in the U.S? It comes from the U.S. military, through DARPA. I'm Canadian, but some of my microbial research when I lived in California was funded by the U.S. military. DARPA is the name of the organization. Although the U.S. might say that the government doesn't fund certain things, well, the U.S. military does. It provides huge amounts of money in long-term funding.

[The Chair, Conservative, Larry Miller]

The time has expired.

Please go ahead, Mr. Storseth, for five minutes.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much, Mr. Chair.

Thank you, everybody, for a very interesting dialogue today.

Mr. Rude, I'd like to start with you. I have a couple of questions.

I think we agree in general that free trade agreements are important to help facilitate good economic growth for our country, but you raise some interesting points, and I'd like you to expand on them a little bit. You talked about how, for example, the European trade agreement is of limited benefit. Can you explain what you mean by that? Why is it limited?

[Dr. James Rude]

Well, first of all, there is no agreement yet. It's under negotiation. I assume they're closer than we may think.

I think too many things have been taken off the table by both parties. If you look at what our bigger export interests would be, you see that our biggest export is durum wheat. Our biggest importer is Italy, but we're faced with a 500,000-tonne TRQ on durum wheat.

You can expand that to see that we've had a long history of disputes. As soon as the U.K. went into the European community, we lost access for high-quality wheat. We've been negotiating that situation for I don't know how many years--was it since 1971? I'm not certain, but it has been a considerable period of time.

If we could get real and substantial access there, possibly we could regain some of our original markets in Europe with respect to high-quality wheat. We have to also respect the fact that the Europeans produce a large amount of wheat and do so with very high yields. It's not the quality that we produce, but certainly they're a strong competitor.

In terms of pork, we think of China as a large market for pork. Europe is also a substantial market. We face some very strong competitors, the Danes and the Dutch, but if we could increase the size of the TRQ with respect to pork, we could have some potential gains there.

I think both sides are a bit reticent. The negotiating language used in dealing with these issues shows that it is not an absolute free trade agreement. The awkward name that they provide gets around the fact that they are not going to liberalize everything.

What will we get at the end of the day? I suspect that we'll get some basic structural things in place that will probably help the market. Hopefully we'll get enough incremental access in some of these sectors to make it worthwhile at the end of the day, but you have to look broadly at the economy. What are the gains in terms of services? What are the gains in terms of some of the high-tech industries? What might be the gains with respect to investment? You have to balance all of those things out at the end of the day.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I don't want to make you speculate, but if we did have a truly liberalized free trade agreement of the kind you were talking about, do you think it would be a net benefit for Canada?

[Dr. James Rude]

In the case of Europe, it probably would be.

I don't think we'd get the access that we had historically. We have to live with the fact that the Europeans are very large producers of wheat and other grains. In terms of being able to re-enter that market, they are not going to move back to being a net importer, as they were in the 1960s. They are often the second-largest exporter of wheat in the world. In terms of market share, they are the ones we compete with.

Overall, the benefits for the entire economy would be significant. Very indirect effects come through; everybody benefits as overall incomes grow, and there would be a large share of agricultural benefits.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

You commented on private standards becoming a bit of a burden. Could you elaborate on that?

[Dr. James Rude]

There are several organizations, such as EUREPG.A.P, which has become GLOBALG.A.P. Basically, they present standards set out by firms like Tesco or Carrefour as the standards that they require when they source their products.

There is nothing governments can do about them. They are private standards. They deal with day-to-day transactions. The problem is that as these standards become more evolved, if we're not careful, we can very much be left behind.

I think the Agri-Food Trade Service and the trade commissioners can play a role in monitoring what's going on and what potentially could be a problem. It's not other governments that are introducing the standards; it's private firms.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Excellent. Thank you very much for that clarification.

[The Chair, Conservative, Larry Miller]

Thank you.

We'll now move to Mr. Rousseau for five minutes.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Thanks, Mr. Chair.

I'll ask you to please keep your translation device on, because I'm French too and I'm more at ease asking these questions in French.

My question is for you all, starting with Mr. Yada.

It would seem that energy efficiency is a big problem for our producers in terms of competitiveness. It seems that it is a problem that affects us internationally and that we should find a way to help our producers. Would there be a way for us to approach this more collectively with our producers?

Would promoting energy-efficient methods, with a smaller environmental footprint, be beneficial at international level? Could we gain market share by improving our environmental footprint, thereby considerably reducing our energy costs?

What do you think, Mr. Yada?

[Dr. Rickey Yada]

Thank you, Mr. Rousseau.

Right now, along the entire value chain, energy costs are an issue. For example, the companies that I deal with are asking us to look at ways they can process foods with less energy, as are the producers looking to use less energy in producing their crops. They're also asking us to look into issues around water.

Surprisingly, a lot of countries think that water is not an issue in Canada, but it will be an issue, and it is an issue—

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Do you mean not wasting water?

[Dr. Rickey Yada]

Yes, and they are actually asking us to look at processes that use less water. Dr. Raizada can probably speak to this issue in relation to drought-tolerant crops. Food companies are now sourcing crops that are drought-tolerant, and they're having to process those commodities very differently.

[Dr. Derek Brewin]

In general, the open market finds the most efficient use of energy, and in general, that's how I feel about managing energy. If you subsidize the energy consumption of farmers, you might hurt them in trade access or something like that.

However, I would comment that low-input agronomy isn't a place where you can get a lot of industry support for your research program, so I think it is an area where you need some kind of public investment. I would put a plug in there for the Martin Entzes of the world.

[Dr. Manish N. Raizada]

Modern agriculture, particularly in grain production, is incredibly stupid when it comes to energy.

I'll tell you what our energy is currently based on. We consume oil and natural gas to produce synthetic nitrogen fertilizer to make crops. We consume those crops. Then humans produce solid waste, which is rich in nitrogen and phosphate; then we spend huge sums of money in municipal waste treatment plants to burn off that nitrogen. Ecologically speaking, it's completely stupid in terms of energetics.

We need to do two things. First, as I mentioned earlier, people who grow soybeans or know about soybeans also know that they're rich in protein. The reason they're rich in protein is that protein requires amino acids, and the building block there is fixed nitrogen. Soybeans are able to associate with the microbes that I discussed earlier and convert atmospheric nitrogen gas into ammonia fertilizer; therefore, we need to take better advantage of the microbes I discussed earlier, not only for soybeans but for cereals and other crops. There's a lot of potential in that area.

The second thing we need to do is at the waste treatment level or the toilet level. We need to recycle human waste. People laugh when I talk about this, but we could solve the nitrogen energy problem overnight by doing a better job of recycling human waste.