Agriculture Committee on Oct. 18th, 2011

[Mark Eyking, Liberal, Sydney—Victoria, NS]

You could have a good crop and a good market out there, but if the transportation links are inadequate they will cause farmers to shift to another crop with less money.

[Gordon Bacon]

They may make that planting decision, but as the Colombian buyer pointed out, he has to consider the reliability of supply when he needs product. If your shelves are empty, you need product on a predictable basis. The key is really to identify the problems in the entire system, from the farm gate all the way through to the time the boat leaves Canadian waters. Where can we start tightening up some of the variability?

So it's not about pointing fingers at any one player or about pointing fingers at the railway alone; it's about asking ourselves, as one of the steamship lines put it, how we can squeeze the bell curve to eliminate some of the extreme variability on either end? When we can start putting more predictability into the system, we're going to start reducing some of the cost.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Given that we can produce the product and we have the market, how are our competitors dealing with the Australians and the Americans? Do they have better transportation links, and are they getting the product in there on time, with just-in-time arrival? Does that give them the upper edge? Will we have to start using U.S. transportation links to get there? Is that an option? If we fail to have our own proper transportation links here, will farmers have to start shipping through the U.S. to get it out through the airports?

[Gordon Bacon]

On the first question about our position relative to Australia or the U.S., I don't think any exporting country would say they have the perfect transportation system. But one thing I do want to point out is the proximity to market. We have some of the longest shipping distances. If someone is importing pulses into India, the number of days to get cargo from Australia to India is far shorter than from Canada to India. We want to look at the whole period, from the time an order is placed until it arrives in port. That's where some of our competitors.... If we look at peas out of the Black Sea, you have a lot shorter shipping time to India than we do. We're geographically where we are in the world, and our markets are where they are, which is one of the challenges.

The U.S. also has transportation challenges. When it makes economic sense, I think Canadian companies ship through U.S. ports. There have been discussions on this. In fact, at transportation seminars we regularly have people coming up from U.S. rail lines and ports. But they also have a very large tonnage of product that's exported out of U.S. ports.

I think our focus needs to be on how to make the Canadian system work well. We have a good system, but it's just underperforming.

[The Chair, Conservative, Larry Miller]

Thank you very much, Mr. Eyking. You're time's up.

Mr. Lobb, you have five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks, Mr. Chair.

My first question is for Mr. Bacon.

As a member from southwestern Ontario, I will point out that the white bean industry is a pretty significant component of the acreage in southwestern Ontario, with probably 60% of all the production in Canada coming from that area. With corn, soybeans, and wheat, a lot of corporate dollars are invested in research and innovation on their different strains and seeds, and so forth.

But can you tell the committee the importance of the dollars invested in science and innovation on crops such as white beans or coloured beans that the corporate world just doesn't make that investment in, and why it's important for the future of those sectors?

[Gordon Bacon]

Beans are a good example. We do have some private investment. Thompsons has a breeding program, and a number of other private companies do. But what we look for is that private-public partnership that will extract the highest value. Dr. Van Acker talked about some mapping. So I think there is a role we can look at and say, “How do we extract maximum value out of research dollars?”

Innovation is going to be the key. We have to address production problems. When we talk about efficiency, what is holding us back? I won't try to compete with the agronomist as a witness, but do we need to focus on improving nitrogen fixation in beans? Do we need to focus on better disease resistance? Then we need to look at where partnership between the private and public sectors will best make that happen.

A diversified cropping system will provide some of the stability that farmers are looking for. It's also good from a production perspective, because you're spreading risk and opportunity across a lot of crops.

[Ben Lobb, Conservative, Huron—Bruce, ON]

We talked a lot about seeds and sprays—herbicides, pesticides, and whatever else in the science goes into the perfect plant and the perfect seed. Do any of your projects that you put forward or would consider look at the machinery that puts it into the ground and harvests it from the ground? I mean, have you done projects? Do you work with corporations on the machinery side? How does that work? How do you see moving into the future?

[Gordon Bacon]

That question might be better addressed to the provincial groups, the Ontario Coloured Bean Growers Association and the Ontario Bean Producers' Marketing Board.

At Pulse Canada, we focus more on the market demand side rather than some of the production-specific areas. Frankly, I'm not able to answer that question for you.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Fair enough.

My next question is for Mr. Van Acker. I was at an announcement not too long ago with one of your colleagues, Peter Pauls. I am just wondering if you could talk about some of the relationships and the advantages to industry and also to consumers. When we look at the industry, when we're talking about partnering with universities, with Agriculture and Agri-Food Canada, and with industry, whether a commodity group or whatever, could you just explain to the committee how the Growing Forward suite of programs, through science and innovation, has helped to push the bar along with that collaborative approach?

[Dr. Rene Van Acker]

Collaboration definitely has many benefits, not the least being the efficiency of the effort. When we have collaboration, we use facilities and also experts to their utmost. And we also have a chance to bring in the very cutting edge when we do that. So any programs that facilitate that sort of collaboration end up being the best programs, in fact.

We also have a long history with that, and I think agricultural scientists have a long history of working collaboratively with industry. Part of it is that those who are involved in agriculture tend to be fairly practical and pragmatic, and want to see an end use to the work they do. So they have a lot in common with their colleagues in industry.

What's also true for us is that we focus very heavily on the training of graduate students, highly qualified personnel, most of whom end up working in the industry. And so we know these people quite well. They're colleagues of ours.

We welcome the science and innovation strategy tools that may help these sorts of collaborations. Again, I stress the success that we've had with the co-locations, for example. We're very happy also with other federal programs that may not be led by Agriculture and Agri-Food Canada but are important, such as science programs like collaborative research and development, and CRD programs through NSERC, as well as the NSERC industrial research chairs program.

I have to say we were a little disappointed recently when we found out that our application to use the Hensall District Co-Operative's contributions towards an NSERC industrial research chair for Peter Pauls was denied. We were a little surprised about that. Nonetheless, Peter is working hard at making sure we match that money through a CRD program.

Those are just a few comments, all in agreement with the things you were saying.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Atamanenko, you have five minutes.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you both for being here.

My main question is directed to you, Gordon.

Greg and I met a couple of weeks ago and he outlined some of the concerns you folks had in regard to the service review. There has been something like a seven-month delay. There were recommendations but there hasn't been any movement on them. I'm wondering if you could explain some of the concerns, because I think all of us here share them.

It's obvious that the ultimate cost for this lack of consistency in the transportation system is borne by farmers. We've had railways appearing before this committee ever since I've been here. We question them and we get answers, and yet there doesn't seem to be much change. This delay in movement concerns all commodity groups, I suspect, not just agricultural groups. There's obviously a will here. I'm sure there's a will in Parliament to fix this, in all parties.

What should be done? To be blunt, does government have to get tougher with the railways? Do we have to hold their feet to the fire and say this is not acceptable, meaning all of the things you mentioned in your talk? It seems that we keep going on and on.

Maybe I'll stop there and let you comment.

[Gordon Bacon]

I think that government should expect the whole system to work better. Government spent tens of billions of dollars in infrastructure improvement, and we should expect the entire supply chain to work better. I don't want to point fingers at the railway. We have people in our industry who order double the number of rail cars they hope to get, because they might get half of them. Now is that a railway problem or a shipper problem?

What we have to do—and we would be in agreement with the railways on this—is to look at the entire supply chain, from the time the product enters the boat back to the point where it leaves the farm, and we have to make the system function better. You referred to the rail freight service review. I think one of the most interesting things in that report was some of the innovative measurements of system performance. Those numbers are now three years old. To make informed decisions, we need to get away from story-telling. I might come in and give you a heartbreaking story about how bad service is, then someone else will come in and say how good it is. Instead of that, we need to start focusing on the measurements that are going to tell us how well the system is performing.

Vessel demurrage is a very interesting thing. You can cite a lot of good numbers about performance, but if you're incurring huge vessel demurrage costs, something in the system isn't working. An analysis of key performance indicators will tell you where you need to start putting a little bit of heat.

We were firm supporters of the announcement made by government on March 18. We feel it had all the essential elements. What we said then and what we continue to say now is that we need to get on with it. Let's start implementing the recommendations. We have met with Transport Canada. We understand that they have been working to find a facilitator. They had a couple of people they were hoping would take the job but didn't. But even without the appointment of a facilitator, we think that this committee and others, as well as relevant departments, could be looking at some key performance measurements. They could start by making sure that all committees have up-to-date information.

So expect more—but expect more of the entire system. To know exactly where the improvements need to be made, I think we need to be starting with current information. The railways rightly say that their performance has improved, but that's not the measurement that really matters. What we need to understand is that the entire system is working well together.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Have you had feedback on why there has been this delay, despite the will to move forward?

[Gordon Bacon]

If you're going to have a facilitator, you have to find a qualified person who can take the job, but I don't think that we need to wait. All things don't hinge on starting with a facilitator. There are other actions that we would all benefit from. What we need now is performance measurement, a discussion about what we need to focus on, and up-to-date information.

[The Chair, Conservative, Larry Miller]

Thank you, Alex.

We will now go to Mr. Payne for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chair.

I would like to thank the witnesses for coming today. It's important to get your perspective on Growing Forward.

I'm from the Medicine Hat riding in the southeast corner of Alberta. We have a huge agricultural area, with both dry-land farming and irrigation. Our crops include peas, lentils, beets, potatoes, canola, wheat, barley, etc. It's a very well-diversified area. There are certain issues—and you have talked about them—but I don't really want to get into the transportation side of things at this time.

My first question will be to Dr. Van Acker.

You have done some research on the coexistence of GM and GM-free crops. I'm wondering if you can explain some of the results of your studies, and how farmers on both sides of the issue can work together here in Canada.

[Dr. Rene Van Acker]

We've done a lot of work. In fact, next week I will be at a conference in Vancouver on coexistence of genetically modified and non-genetically modified crops in the agricultural supply chains. I'm currently working on a report with the USDA on this issue as well in regard to a variety of crops.

There are a number of things to note. One thing very important thing that we learned is whether or not we are talking about traits that are regulated or traits that are deregulated. If we're talking about traits that are deregulated, it is really an issue of coexistence and cooperation. With deregulation you have unconfined environmental releases. So there are no requirements per se for maintaining any sort of segregation or not.

With traits that are regulated, there is a current regulatory requirement that those traits do not appear anywhere—although there are discussions about whether there would be some international standards for low-level presence, LLP, for example. But my feeling is that there's still quite a long way to go on that. There isn't necessarily a great track record in international agreement on these issues.

On what farmers do, there are examples in the marketplace of people maintaining segregation as long as a threshold is set. That is key. If somebody sets a threshold, you have something to work towards. In an ideal situation, it's the person who wants to maintain something free of GM and there's a premium, they can roll the cost of the maintenance into the premium they have in the GM-free product. If there's no premium, there's really no point in doing it, as you're going to lose money doing it.

We have also learned that when you start getting below 1% of that threshold, things become expensive and challenging. In Ontario, for example, the non-GM soybean market is typically working somewhere between 1% and 5%, depending on who's buying. Again, the cost for that is rolled into the buyer who wants the non-GM label. These are all practical considerations. It can be a very practical thing and we have lots of experience with it.

I know that the International Seed Federation and CSGA have been looking at this situation in terms of seed purity standards. There isn't a necessity per se of maintaining a seed's purity in regard to traits that have achieved deregulation. It's not necessarily fair to seed growers or companies to be penalized for the presence of those traits, if those traits were not required to be kept segregated in the first place. That goes back to my first point on whether it's a requirement to segregate it or not.

If we go into a world where we are going to semi-deregulate some traits, we would want to think long and hard about what those traits would be, why we needed to segregate them, and what crops and systems we would work with so we would have a very realistic perspective on the costs and capabilities of that segregation. There, I think, farmers have a lot of experience and could provide excellent advice in that regard. I think the first thing they would ask is, “What's the threshold?”

I'll stop there. I'll go on and on, if you let me.

[LaVar Payne, Conservative, Medicine Hat, AB]

Is my time up?

[The Chair, Conservative, Larry Miller]

Yes.

We're going to move into our next hour, but there's one comment you made in the text of your presentation, Mr. Bacon. You said:

The industry needs investment in innovation more than it needs stabilization.

I guess you could take that a number of ways, but I'm going to presume that you don't think that governments shouldn't be worried at all about stabilization. Are you suggesting--not to put words in your mouth--that we need a little more on the innovation side? Do you want to comment on that?

[Gordon Bacon]

The point I wanted to make was that the marketplace we're serving--and I think Dr. Van Acker talked about this as well--has changed remarkably and will continue to change. We can't imagine where we'll be in 10 years. I think the mix between investments and innovation, and investments and stabilization has to be a key part of the discussion that we have in Growing Forward 2.

I won't make a judgment about what the mix should be. There are a lot of people who would say that perhaps we're spending a little more than we should on stabilization and we're under-investing in innovation. I think that's the key message I would leave. It's going to be a key part of the discussion in Growing Forward 2, when it comes down to how much money is available for programming that will fund research programs and innovation and science. With a limited amount of dollars, it's either going to come from money in stabilization, or this committee will have to be very effective in getting the government to increase the amount of money going into agriculture. Perhaps we need both.

My last comment is that agriculture is a solution provider in health care and environmental sustainability. We can be a lot of things. We probably need an integrated strategy, where we're looking at health and agriculture and the environment and agriculture and are making a bigger investment. But if we're going to have to make choices, we do have to look at what we're stabilizing to when in fact the market changes every day.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Thank you, Mr. Bacon, and Mr. Van Acker, for joining us.

We'll recess for a few minutes. I invite the next slate of witnesses to come to the table.

[The Chair, Conservative, Larry Miller]

I call the meeting back to order.

I'd like to thank Mr. Keller, Ms. Boyd, and Mr. Broderick for joining us here today.

We'll start with Mr. Keller, president and chief executive officer of Genome Prairie, for 10 minutes or less, please.

[Dr. Wilfred Keller, President and Chief Executive Officer, Genome Prairie]

Thank you very much for the opportunity to present.

Genome Prairie is an organization that's been around for about 11 years. We have responsibility for Manitoba and Saskatchewan and are one of six regional centres spread across the country. We work very closely with the national organization, Genome Canada, to support new initiatives, and to build and develop genomic sciences. We believe these are transformational in their socio-economic impact on Canadians.

We work in our region to build teams of researchers to develop important projects that have an end point in terms of generating knowledge and translating this into socio-economic benefits. A number of our projects are in the agrifood area.

To provide just a little background, the agricultural system—I will call it the agrifood system—is critically important to the Canadian economy. It employs about 2 million Canadians, equivalent to 1 in 8 jobs. This industry is worth well over $100 billion annually, and there is potential for growth as we look to bioproducts, and environmentally sustainable and renewable products, which can be used to build parts for automobiles, for example. So this is a growth industry.

Canada is the fourth largest exporter of agrifood products, so it's a big business. The federal science and technology strategy represents or speaks to four pillars. We feel that the agrifood system should be a fifth pillar and be recognized as a critical component of the Canadian economy, because there will be many significant opportunities going forward.

For example, we will have close to 1 billion affluent people in Asia. These good people are going to be a very important market for top-notch Canadian products, and we need a key business plan to meet the market demands of these affluent citizens. So the timing is excellent when we are looking at Growing Forward 2, developing a strong federal position, and building a long-term R and D and commercialization strategy in the agrifood area.

With that in mind, I would like to address the committee with five recommendations. First, we believe that the agriculture and agrifood system needs to be integrated and elevated into a revised national science and technology strategy. Growing Forward 2 will be in a position—or in our minds, could be in a position—to identify and support key national initiatives to build Canadian competitiveness so that we can be a long-term leader in the production of a range of agricultural products. These could range from dairy to livestock to an array of crops.

For example, we could envision the development of a national plant innovation centre in Saskatchewan, in Saskatoon, in particular, building on institutional capacity that's already there—for example, the Canadian Light Source—so that we would have a very advanced set of tools to evaluate plants coming out of the research lab and to be able to pick those winners that can go forward to commercialization.

With Growing Forward 2, we think there might also be a commitment to actual bricks and mortar and to develop some of these institutions that would enhance the capacity of our clusters.

Second, we believe that Growing Forward 2 should recognize the value and the opportunities around non-food industrial bioproducts, be they lubricants, automobile replacement parts, polymers and so forth, which provide a whole new set of business opportunities to our skilled producers, and develop a base for innovative new companies. For example, there is the development and use of oilseed for jet aviation fuel—currently a very hot and interesting area that Canada could play a lead role in. And with the release of the federal R and D panel report yesterday, there will be an opportunity as those recommendations are put into place for many more companies to be in that space and to start developing and utilizing agricultural products.

Third, as has been mentioned already by other speakers, there is a very rapid pace of change in agriculture. The restructuring of the Canadian Wheat Board is an example of an initiative that we believe will allow an opportunity for increased diversification and new product development. This will require intensive research and the creation of private–public partnerships. We think there are going to be opportunities, in light of the markets that I mentioned previously, for Canada to respond to global demands and to build on new developments and to build new product types, in particular. For example, the Canadian International Grains Institute, or CIGI, in Winnipeg—a very interesting place to visit—does end-product analysis. They bake virtually every type of bread available on the planet. They're capable of making every type of pasta and noodle. Think of the feedback loop they could provide if that group were enhanced.

We recommend an enhancement in the capacity of organizations like that so that they can provide end-point use that researchers can then use to address future market needs. Canada should be first through the starting gate on that.

Fourthly, we certainly see regulatory streamlining as a requirement if agricultural products are to be competitive. We certainly hope that Growing Forward 2 will be in a position to address some of the bottlenecks that we see. Plant pathologists, people who do research on plant diseases and try to develop disease-resistant crops, are really very seriously handicapped by the fact they now have to do a lot of paperwork to receive approval for testing plants. For organisms that have been found in the soil for decades, they're now forced into the situation where these organisms or microbes are cultivated at a laboratory. As soon as that happens, it's viewed as a manufacturing process and a whole bunch of paperwork has to be done--in the range of about 150 hours' work--to get approval for something that had been done for a long time without any issues. That doesn't make sense to the research community, and we would ask that Growing Forward 2 programming take a look at bottlenecks like that, and that we actually think about rescinding guidelines like that, which do not make sense in terms of commercialization.

Finally, we would suggest and argue for a third-party delivery of Growing Forward 2 programs. By third party, we mean those regional economic development agencies and other agencies like those that are working on a not-for-profit basis. They might play an excellent role in working with Agriculture Canada to deliver programs to a regional base where these agencies and organizations have a strong familiarity with the priorities, the research players, and the delivery mechanisms in the private sector. This would be a way of improving the efficiency of the system while encouraging more regional development.

Thank you.