Evidence of meeting #32 for Agriculture and Agri-Food in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was value.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Robert Seguin  Excutive Director, George Morris Centre
David McInnes  President and Chief Executive Officer, Canadian Agri-Food Policy Institute
Michael Burt  Director, Industrial Economic Trends, Conference Board of Canada

3:30 p.m.

Conservative

The Chair Conservative Larry Miller

We'll call our meeting to order.

I'd like to thank our witnesses today, Mr. Burt and Mr. McInnes, and also by video conference, Mr. Robert Seguin.

I hope I pronounced that right.

3:30 p.m.

Robert Seguin Excutive Director, George Morris Centre

That's fine, thank you.

3:30 p.m.

Conservative

The Chair Conservative Larry Miller

There's a hockey player by that name who plays for my favourite team.

Anyway, due to possible problems with technology, Mr. Seguin, we're going to start with you. So you have 10 minutes or less, please.

3:30 p.m.

Excutive Director, George Morris Centre

Robert Seguin

Thank you very much, Mr. Chairman and members of the committee, for a chance to present on Canada's food chain. I'll make a very quick comment on the George Morris Centre, for everyone's awareness, talk about the food chain very quickly and some of the challenges and opportunities, and the concept of the value chain as a way of trying to address this, which governments in Canada and the industry itself are starting to do. And we'll talk about some future directions.

The George Morris Centre, as some of you may recall from the presentation last fall, is a national, non-profit think tank for agrifood policy. One of the areas we do work on is the value chain, the concept of the food chain and how to make it more effective.

Canada's food chain, from the farm gate all the way to the dinner plate, as some people call it, is sophisticated, competitive, innovative, and adaptable. But it is not quite perfect. There are issues of scale, depending on where you are in the sector and inside the food chain, where you are getting the investments, who is investing, and whether they're capable of handling some new innovations. The regulation of the food chain varies, depending on where you are, what products you're in, and what history has occurred in those products, and there are issues of what the non-food sector has in terms of bringing either competition head to head or competing for that consumer dollar.

There's a good deal of evolution happening, both at the food retail and food service end, which most consumers see all the time. That's leading to changes down through the chain, back through the processing side, into the farm community, and into the input sector. The whole concept of traceability is one way of thinking about how people's attention to the food chain has changed over the years.

I should note that competition exists everywhere in the food chain to a greater or lesser extent, and in some cases it's very ruthless. In some cases it's dominated by several large players.

I have just a few quick stats, and I'm sure my colleagues will present a far greater amount of information. I should note that recently Agriculture and Agri-Food Canada released an overview for 2012 on this whole issue, and it's very good. I'll try not to replicate it, but $87 billion is an estimate of food retail sales in Canada, and the food service sales are about $48 billion to $49 billion. These are the large employers, when we add it all up, for the Canadian food system, and they have a dramatic impact across all regions of Canada.

On the other hand, for the food chain, the farm community, the food processing retailers, food service and others have very different historical developments, some smooth, some not very smooth. Many players that used to exist have ceased to exist. Consolidation has occurred across the entire food chain, as well as increasing scale for some and increasing innovation for others. There are very different attitudes up and down the chain, and some of that's been driven by some of the regulatory context in which the participants operate.

There are also differences between the chains, when I think of the food service and food retailing or the independents, and the links back in terms of how they link to the processors and the farm community. And there are also new competitors. I'm sure my colleagues will speak to this, like the issue of other stores, such as Target, coming into Canada, or to what Walmart has done to the food retailing system in terms of changes. There's the use of grocery stores and food service sales at gasoline stations. Shoppers Drug Mart is now getting into a certain amount of actual food retailing. These formats are shifting, and it shows the kind of continued evolution of the food chain and what it means up and down.

There's also been a tremendous shift in consumer demands for fresh product, for different types of packaged goods, for pricing, and goods from outside of Canada. There are also shifts in demographics, both in age and ethnicity, and a need for different approaches to meet these different types of consumers in terms of driving back some differences up and down the chain.

One thing that has changed in the last two or three decades, particularly in the public policy for agriculture and food, is the growing involvement of the entire food chain in all these discussions, whether it's on a specific issue or on the broadest context of agrifood policy. The challenge is that the capacities differ between the players. Their histories and institutional memories are not identical, and how the markets affect them are also not identical. Both work for the past efforts and where they're going in the future.

There are different ways of responding to environmental pressures, social pressures, community pressures, community issues, where a community wants to be with certain food products or what they don't want, and how you shift the roles and linkages between them. How the sector responds and how the entire food chain responds has not always been consistent. There have been some very diverse views out there in discussions between one part of the chain with the other, some of it driven by the regulatory context, which is part of the history of how these things have changed.

Over the last several years, spurred both by industry and by government, there has been a greater focus on what we call value chains, in which they try to find market opportunities at the enterprise level, not trying to solve all of it at the industry level, but building up from enterprises, special value chains within sectors and within subsectors.

There is a whole concept now of value chain management, which the Government of Canada, provincial governments, and industry groups have supported. They're trying to learn more about how this works and how other jurisdictions have worked the value chain to get greater profitability, better viability across all players, not just some players in the food chain, and how technology, different attitudes, and different awareness might affect it.

Again, there are some limits on capacity, limits on adaptability, who has the money to reinvest, and who has the time and effort to think differently about an issue in which they can all participate. Where in the past they would have been in conflict, maybe in the future there should be greater trust and responsiveness.

The George Morris Centre has a value chain management centre, and we've done this business for about four years. We've done some work with the Canadian Agri-Food Policy Institute, which David McInnes represents. A recent paper released recognized these challenges through both our workshop efforts and our analysis. Past adversarial attitudes, driven by conflicts in history about bargaining power, about attitudes, about differences in how to achieve the same goals, and a lack of trust in the sharing of information have been real challenges. However, that can be overcome, and there have been examples both in Canada and across the world where the food chain has been able to achieve better results for consumers and for themselves by better cooperation, better linkages, and better trust.

A key focus for value chains is how to improve that over time, step by step so that it can work, not only for just one small commodity but across commodities. Still, we have to realize that the sector is complex. One size won't fit all. There have to be different ways of looking at it and different measures of how you see this being successful. Then look at these results and try to find the ones that work the best, and try to keep replicating the successes and avoiding the failures.

My view, and the view of the centre, would be that there is a great opportunity here to improve the trust, the comfort, and the relationships between those up and down the chain. There is an opportunity for better information sharing, better awareness of what the consumer really wants, and a recognition of the complexity in trying to learn how to make these value chains real, not just conceptually or just by one little pilot, but how to make them real.

I will make one last plug. Mr. Chairman, early next week the Government of Ontario, aided by the Government of Canada, is sponsoring a value chain innovation forum here in Mississauga. We're part of that. It will bring in experts from across Canada, across the United Kingdom, and Australia to talk to people on how to make the system really work, how it was achieved in the past and how they can actually make it work here.

Thank you, Mr. Chairman.

3:35 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you, Mr. Seguin.

Now, from the Canadian Agri-Food Policy Institute, Mr. McInnes, for 10 minutes.

3:35 p.m.

David McInnes President and Chief Executive Officer, Canadian Agri-Food Policy Institute

Thank you, Mr. Chairman.

Good afternoon.

I represent the Canadian Agri-Food Policy Institute, an independent, non-partisan forum. Our task is to create a dialogue on pertinent issues and present alternative solutions, so that Canada's agri-food sector can reach its full potential.

Mr. Chairman, this is about creating a more prosperous agrifood sector. What are those essential conditions to create jobs and profitability across the sector? Our consultations revealed that achieving a great food future requires three things: transforming how we collaborate; linking economic success, people's health, and environmental sustainability to create opportunities; and third, integrating policies and strategies to support these shifts. These ideas are based on a piece of work we did in 2011 entitled Canada's Agri-Food Destination. In short, our work is about supporting and nurturing food systems.

The food system includes supply chains and how they work better together. Moreover, it's about how supply chains depend or are impacted upon so many others who are essential to success every day. Three levels of government, financial services, information technology providers, nutritionists, educators, ports, transport, logistics, human and animal health sectors—the list does go on. Taking a food systems approach is about how these players work better together so that we can truly be at our best to serve the consumer interest.

The diagram that we've submitted to you, which is submitted for the record, offers a perspective.

Food links government and supply chains. On the right hand side of the diagram are likely policy priorities of government. On the left are suggested agrifood priorities. I'm going to quickly walk through this for you to bring it to life.

Let's start with health. For governments across the country, the major goal is reducing health care costs. We need to increase the focus on prevention. Some 40% of health care costs are driven by chronic disease, and diet is a key driver of reducing chronic disease—90% of type II diabetes, 80% of heart diseases, could be prevented through improved diets, among other lifestyle changes.

Satisfying the growing interest in nutrition and what we eat is the opportunity for the agrifood sector. Pulse Canada, for example, wants to create a market pull for pulses, beans, and lentils as an “ingredient”. By adding pulses to pasta, for example, they can double the fibre and increase the protein by 25%, as well as lowering the carbon footprint. Working with researchers, culinary schools, and health professionals, Pulse Canada is trying to nurture the demand for healthy pulses.

Vancouver has a food systems strategy. It's linking the viability of local farmers, of which there are 2,600 in metro Vancouver, to produce healthy foods like fruits and vegetables for its residents. We need to identify how Growing Forward 2 can be linked to health strategies to build on this potential.

With regard to trade, Canada is expanding market access for exporters. Access opens the door, but fostering demand is crucial to our commodities and value-added sectors. To compete against low-cost exporting countries and premium exporters, we need foreign consumers to want to buy Canadian even more. Distinguishing Canadian food is the imperative. Price, quality, safety, supply reliability—these are very important, but consumers, retailers, and processors are increasingly looking to how food is produced, from environmental footprints to hormone-free attributes. Export success will likely depend on delivering upon such attributes. Traceability, for example, is an effective tool that can demonstrate this value proposition.

The bio-economy is surely going to be the innovation engine of the future. Creating business opportunities is a priority, and this is the platform for generating new revenues, reducing inputs, and lowering the costs for farmers. Take a Manitoba potato processor. It now diverts its potato waste to a biotechnology company, and that's used to create biodegradable plastic resins used in packaging and mouldings. That's a win-win.

In the livestock sector, bio-digesters can generate gas and electricity from manure, reducing energy costs and generating new revenues by selling the electricity to the local grid.

The University of Saskatchewan has discovered a bio-pesticide originating from mustard seed.

We need to systemically look at every food compound for its potential bio-applications. Improving the viability of producers, in part by deploying bio-solutions, may also help to render certain producer-directed risk programs less necessary, such as AgriStability.

Along with some improvements to the efficiency of such programs, the savings might be directed to help expand innovation and R and D. We see this as a proactive investment. Under the environment heading, it's important, and managing water and carbon is the priority. With climate change, this is essential to our remaining a reliable food supplier.

Research is vital in ensuring that farmers can remain adaptive. For example, they can develop ways of growing heat- and drought-resistant crops. Retailers and processors are setting water and carbon reduction targets. They are reaching to the farm level throughout their chains to help producers in this effort. Water and carbon will continue to shape environmental and competitiveness strategies for years to come.

If being competitive is the goal, then fostering an attractive business climate is the priority, and regulations are a big part of this. Regulations have a life cycle. We should be asking, for example, whether regulation X is still keeping Canada safe and competitive. Constantly harmonizing, updating, or embracing best practices is the key. Change is possible, as we all know from the major step to improve the regulatory environment between Canada and the U.S.

Commercializing publicly funded research and development relies, in part, on well-functioning public-private partnerships. Doing this can mitigate innovation risk. Let's look at a healthier mushroom, for example. A large processor in Ontario worked with a mushroom grower and a publicly funded innovation centre, Vineland Research, to create a more nutritious mushroom for use in sauces and soups. The processor benefited because it delivered a desired product to the marketplace. The grower benefited because he had a processor with an eye to the customer. The innovation centre benefited because it now had the supply chain to deliver commercialization success. Collectively, they reduced each other's innovation risk.

Can flaxseed prevent heart disease? There is a clinical trial going on right now that is trying to find out. This effort involves Agriculture and Agri-Food Canada, St. Boniface Hospital, the University of Manitoba, and Health Canada. A processing company is keeping a close eye on this.

A research priority could be to systemically examine food compounds for such new product ideas.

Food connects common linkages. Turning to tourism, Canada's “Canadian food” can help brand Canada. There is no surprise, given the season, that harvesting maple syrup in Quebec is profiled on Tourism Canada's website. Promoting regionally grown food is good for tourism, local economies, farmers, processors, and restaurants. The strategic question here is, what's holding back local food from truly defining Canada as a food destination of choice? I would think that every region across the country would have an opinion on that.

To sum up, food spans many policy domains. The players are connected. We can create economic opportunities. We can address people's health. We can improve the sustainability of Canada. We need to make it happen to maximize this. This is about creating a food systems strategy. Developing targets and metrics will help to galvanize this. The Canola Council of Canada has done so.

We're not suggesting that government dictate what supply chains do; each supply chain should create its own targets. Government can inspire change by laying out a broad set of targets. It could also do so for its own domains of activity. This is not about crafting vision statements. We need a dialogue today about what should be our country's agrifood destination. This is about where we want to end up.

We believe we have a great food future. What do we want to achieve? Is it to double the value of our exports by a certain date? Should we be supplying a certain percentage of our own food? What would it take to do so? This is the conversation that is needed so that policy and practice can be even better aligned to drive performance.

Thank you very much.

3:45 p.m.

Conservative

The Chair Conservative Larry Miller

Thanks, Mr. McInnes.

We now have Mr. Burt from the Conference Board of Canada.

3:45 p.m.

Michael Burt Director, Industrial Economic Trends, Conference Board of Canada

Thank you.

Thank you for inviting me here today. For anyone who's unaware, the Conference Board is a non-profit, non-partisan think tank based here in Ottawa. We do research in a variety of areas, including public policy, organizational performance, and economic forecasting and analysis.

We were asked here today to talk about the food value chain. When we think of the food value chain, the four main segments we think of are essentially agricultural primary producers, food manufacturers, retailers, and restaurants. But it's also important to remember that there are the connectors between those main segments. We have the transportation network. We have wholesalers. It's important to look at the whole supply chain and how that relates in terms of the success of the agrifood sector here in Canada.

Now, when we talk about the agrifood sector, one of the things we always like to point out is that it's not a monolithic thing. There are very different market conditions in different segments of the industry, such as, for example, capital intensity. Farming is a very capital-intensive business. It becomes much less capital intensive as you move down the value chain. Retailing and restaurants are much less capital intensive. So the market conditions are different in that respect. Their need for capital is different.

With regard to the degree of competition and market power, Mr. Seguin already touched on this, but probably the most concentrated part would be the retail segment, where we have three grocery stores accounting for about 70% of the retail sales in Canada, but even there, there's a large amount of competition going on. There are literally thousands and thousands of small retailers. You have competition from other major chains outside the grocery store network, things like Walmart and Target. So there's a high degree of competition in that segment.

Other segments also face different types of competition. For example, manufacturing varies very much depending on what type of product you're talking about, but there is some ability for market power there through things like branding. In the case of restaurants, again, it's a very fractured market with many players, but players have some ability to create value through things like their menu offerings, their location, and the degree of service they're offering.

Finally, farming is often thought of as a commodity-driven industry. It is, broadly speaking, but there are many niches where farmers have been able to create value by not selling a commoditized product and starting, essentially, to create some brand power and some value associated with the products they're creating.

Finally, one other big difference across the value chain is the degree of volatility in output prices and input costs for the industry. At one end we have farmers' very volatile prices, and at the other end we have retail and restaurants where prices are much less volatile. There is much less need to control the volatility the industry is experiencing at that end.

One of the things we have had to work with, a challenge we have had to address when we've been doing research on the agrifood sector, is that it is a viable sector, and in Canada it is a growing sector. It is experiencing modest growth. Contrary to perceptions, it's not a sector that is shrinking or under significant threat. That said, there are obviously individual companies in the sector that have faced their challenges, and the number of players in the industry is shrinking. So what we're seeing is fewer players that are bigger. There's a consolidation process going on.

What's driving this growth, this success of the industry? There are a number of factors. First we have our natural endowments here in Canada, our water and our land. These provide us with the resources necessary to be major players on the global stage in terms of agrifood production. Just as an example, we are among the major exporters of major foodstuffs such as wheat and canola and soybeans, and we are the largest exporters for a number of specialty products such as oats, peas, and lentils. So we are already major players on the global stage, and there is certainly the opportunity to grow our presence.

Another big factor of support for the industry—and this is one reason the industry has had slow, stable growth over time—is that we have the domestic market to support the industry. Import penetration in the industry is relatively low. Much of the industry is really reliant on the domestic market. With the exception of a couple of key segments, such as crops, seafood, and some red meats, most of the industry is very domestically oriented. So there's that slow, stable growth, where you have, say, population growth, a reasonable level of wealth, and income growth. It means that the industry has a stable base from which to operate.

But where's the growth going to be going forward? Emerging markets certainly have a growing presence. They are some of the factors behind the global rise in food prices we've seen in the last few years. In big marketplaces like China, India, and Brazil, their populations are growing, wealth is growing. They're demanding more food, better-quality food, and a greater variety of food products. Canada has the potential to meet some of those demands, but how do we fully leverage these opportunities?

As Mr. Seguin touched on, we do a lot of industry analysis, but our success is determined at the firm level. What are individual companies here in Canada doing to succeed? As part of our research on the agrifood sector, we've done a number of case studies on different success stories in the Canadian agrifood sector.

There are a variety of things, and they are often combined together. One of the things we often see is successful vertical integration with their supply chain, either upwards or downwards. So they're dealing with their suppliers and they're dealing with their customers. This may be through direct ownership, where they own additional parts of the value chain, or through partnerships, joint ventures, those sorts of things.

This allows a variety of benefits. For example, it allows diversification of products and markets. If you're making one thing for one customer through vertical integration, you can hopefully smooth out some of the fluctuations in your own business cycle. Maybe one particular portion of the agrifood supply chain is experiencing difficulties at one time, but it's very unlikely that the entire chain will be experiencing difficulties. So you can get the benefits of diversification.

Branding is an important issue. Are you making just a beef product, or are you making something that customers can know, recognize, and value? Do they understand that this is a consistent quality product that they will be able to buy on a regular basis?

There's product development. Are products being developed in isolation, or are products being driven by what is desired by consumers? What's possible at the producer end of things? Can we get together to understand the characteristics of our products and see how we can adapt them to the needs of consumer markets?

These are all ways that value-chain integration can help to improve the value we're creating with our agrifood sector here in Canada.

To sum up, agrifood has been a consistent source of modest growth for the Canadian economy over the last 20 to 30 years. Our natural endowments allow us to experience this growth—our land, our water. We need to understand and leverage those endowments to see how we can take advantage of the opportunities going forward, particularly in emerging markets. Effective management of our food value chain is one of the ways in which we can take advantage of those opportunities.

Thank you.

3:55 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

Thanks to all of you for keeping well under the time.

We'll move to rounds with Ms. Raynault. You have five minutes.

3:55 p.m.

NDP

Francine Raynault NDP Joliette, QC

Thank you, Mr. Chair.

I want to thank each and every one of you for accepting the committee's invitation.

My first question is for Mr. Seguin.

In your presentation, you talked about the increased complexity of Canadian consumers. Could you expand on that, please?

3:55 p.m.

Excutive Director, George Morris Centre

Robert Seguin

Thank you for the question.

On what Canadian consumers may want from their products, it's not just the taste but the packaging, long shelf life, the ability to have it at a price that is competitive to other importers, or in some cases to have it in the shape and form they want at any place and any time.

An example is the whole concept of fast food, where a similar product produced at any spot within Canada or the United States is identical. How to achieve that takes a great deal of complexity—consistently done and constantly done.

3:55 p.m.

NDP

Francine Raynault NDP Joliette, QC

That means the production and processing industries must adapt fairly quickly to consumer needs. Basically, they must meet consumer needs if they want to sell their products.

3:55 p.m.

Excutive Director, George Morris Centre

Robert Seguin

Yes, but the challenge on the value chain is this. Do people truly understand what consumers really want? We've done analysis where we've talked to consumers; colleagues went to talk to consumers as they entered the grocery store. They indicated what they would buy as they entered and the differences were compared when they left the store. Their actual consumer purchases can vary considerably from what they said they would do. When challenged with it, they started to see some of the inconsistency.

In turn, you'll find that what some producers or processors think the marketplace will want, based on their understanding of consumers...when you really do the full analysis, you find that consumers didn't want packaging that large, they wanted it smaller, or they wanted it fresher, or they wanted it individually wrapped.

As my two colleagues said, there's a need to constantly re-evaluate how effective we are—what information is in the marketplace, who has that information to share up and down—so that everybody can participate and be better valued. A system whereby one partner uses that information to dominate the marketplace may have been effective historically, but in a very competitive marketplace like we have in Canada, with a lot of international competition, that's not a very good long-term strategy inside Canada.

4 p.m.

NDP

Francine Raynault NDP Joliette, QC

Mr. McInnes, according to CAPI, consumer interests are key in a food system. How are consumers involved in a food system?

4 p.m.

President and Chief Executive Officer, Canadian Agri-Food Policy Institute

David McInnes

Thank you for the question.

The consumer is vital. At the end of the day, if a consumer is not buying a product, that's not good for the profitability of any player in the supply chain. I think the question for us is not to try to discover what individual consumers want. I'll leave that to retailers and restaurants and those who are monitoring the individual consumer's behaviour. What's important, though, is understanding how that information flows back and forth across each supply chain, because it's only through that sharing of information that the producer can produce what's ultimately required at the end of the day in the marketplace.

What we're seeing is an increasing use of communication. It may be growing more ethnic vegetables around Toronto to serve a growing, burgeoning ethnic population in Toronto. People are listening and trying to serve that new burgeoning demand. If the consumer interest is kept forefront at the producer level right through to the retail level, then I think maybe we can be more nimble at serving consumers' needs. I think that's good for everybody.

4 p.m.

NDP

Francine Raynault NDP Joliette, QC

I am from Quebec, and I represent Joliette. I have to say that grocery stores had to adapt to people from the outside who come to work on our farmland. Today, our stores carry certain types of food that were not on their shelves five years ago. Of course, I try those products, just as others probably try our maple syrup.

My question is for Mr. Seguin. In your presentation, you talked about the limited capacity to adapt, the regulatory context for adaptation and the conflicting historical goals. Could you elaborate on that, please?

4 p.m.

Excutive Director, George Morris Centre

Robert Seguin

Thank you for the question.

For example, if we have historically grown certain types of vegetables, with a regulated marketing system to help protect the producers in their negotiations with processors, retailers, then bringing in new crops, which they're not used to producing, and trying to think of how that's going to be managed...what are the production practices? What are the food safety practices? Are we sure those consumers will be buying it, or will they just test it out and then go back to their home products that are being imported?

David mentioned Vineland Research and Innovation Centre. It's an excellent example of trying to bring the science community, the producer, the processor, and retailers together to try to find ways of profitably producing it, marketing it, and being successful in the marketplace. But it's not always easy. It's also the case that only so many producers, so many processors, are willing to take on those risks early until their product has proven itself.

4:05 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

Mr. Zimmer, for five minutes.

March 28th, 2012 / 4:05 p.m.

Conservative

Bob Zimmer Conservative Prince George—Peace River, BC

Thanks for coming to our committee today.

I just had an overarching question about the food supply chain in terms of our responsibility as government. We have to look at it from a top-down—and “top-down” is maybe the wrong word—or maybe more of a bird's-eye view of this. I think the food supply chain works pretty well right now.

There are some smaller issues, but I guess we need to see it from a long-term perspective. From your perspective, with production processing, distribution, with all those things in mind within the food chain, what are some concerns, possibly, that you can see in the future, where if we don't address them, they could be larger issues for us?

I'll start with Mr. Seguin and then go to the rest of the panel.

4:05 p.m.

Excutive Director, George Morris Centre

Robert Seguin

Thank you for the question, Mr. Zimmer.

I think I'll posit two different questions, challenges, to the government, both the federal government and the provinces. One is a challenge of scale. To satisfy the market demands of a large retailer, a large food service—Tim Hortons, Boston Pizza, The Keg—on a cross-Canada basis, such that they have the quality needed, needs a certain amount of scale at the production end and at the processing end to manage that and meet the needs. It requires that the consumers at that retailer or food service are satisfied continually and that the quality is assured, and, if necessary, even traced back with confidence to meet the government's needs. You need that scale, that investment, and investment in technology and management. Are we sure we're doing enough to help that?

At the same time, you don't want to do it in a way that disturbs the innovation in the system, having regional entrepreneurs, local entrepreneurs, trying something in a local market, or a very niche market that they can sell on a national basis. Is the regulatory system able to adapt to handle something that was not there historically? I use the example of certain new vegetables. If the production practices are different enough, do we have the regulatory systems that are adaptive enough, and do we have the management systems that are adaptive enough?

So it's a case of local innovation, regional innovation, and the ability to have scale when you're dealing with a national, even a global, marketplace.

4:05 p.m.

Conservative

Bob Zimmer Conservative Prince George—Peace River, BC

David.

4:05 p.m.

President and Chief Executive Officer, Canadian Agri-Food Policy Institute

David McInnes

Thank you very much for the question.

I think government is trying to do quite a bit to try to facilitate change, innovation, and competitiveness. I think, though, there's always room to ask the question, are we optimizing? For example, there was an effort made to enhance or elevate the omega-3 in milk, called DHA milk. I drove on the highway the other day and actually saw a big billboard advertising that. This was an initiative by the University of Guelph, the dairy industry, the Dairy Farmers of Canada, and Neilson Dairy, to actually enhance the micro-nutrient omega-3 in milk. It received a premium for that product in the marketplace of some 8%. So innovation is driven to seek out differentiation and profitability.

However, one of the challenges in creating this novel food product is that inevitably regulatory issues can stand in the way of speeding or accelerating that approval. We need to ensure that where we foster innovation on the one hand, the regulatory speed and approval is just as tightly interwoven, so that we can attract investment here in Canada and create an innovation hub around food. That's what we're trying to achieve by linking the players and linking policy across systems, innovation in this sense and regulation on the other.

4:05 p.m.

Director, Industrial Economic Trends, Conference Board of Canada

Michael Burt

I would point out two things. One is on the international scale. Market access is a very important issue. Food is probably, more than any other industry, subject to various forms of barriers that are in place internationally. Just recently, and I'm sure you're all aware, South Korea finally allowed access to Canadian beef. How many years after BSE? Pressing forward on that market access issue in international markets is key to us being successful in international markets.

Domestically, I would agree with David in the sense that probably one of the biggest issues around the development of new and innovative products is ensuring that the regulatory system is able to quickly, whether it's feed for animals or additives for food...and a great example would be putting lentils into pasta. By moving away from the traditional food framework that we think of, food products, we should not be preventing companies from being innovative and making these experiments, making these improvements to our food, because the regulatory system is hindering them from doing so.

4:10 p.m.

Conservative

Bob Zimmer Conservative Prince George—Peace River, BC

That's good.

4:10 p.m.

Conservative

The Chair Conservative Larry Miller

Thank you very much.

Mr. Valeriote, five minutes.