Agriculture Committee on Feb. 26th, 2013

[The Chair, Conservative, Merv Tweed]

Thank you, and good morning, everyone. Welcome to the Standing Committee on Agriculture and Agri-Food. This is meeting number 68.

Our orders of the day, pursuant to Standing Order 108(2), include the study of agricultural and agri-food products supply chain (grains and oilseeds).

Joining us today at our witness table are, from the Canola Council of Canada, Jim Everson, vice-president, corporate affairs; and as an individual, Mr. Stuart Smyth, research scientist, department of bioresource policy, business and economics, University of Saskatchewan. Welcome.

This is the drill. You get about seven to ten minutes, and then we ask you some questions.

Jim, do you want to start?

[Jim Everson, Vice-President, Corporate Affairs, Canola Council of Canada]

Sure. That would be fine.

Good morning, and thank you very much for inviting the Canola Council of Canada to speak today about low-level presence.

The Canola Council is a value chain organization representing the entire canola sector in Canada, which includes 43,000 canola growers, the seed development companies, the crushers that process the seed into oil and meal, and the exporters who export canola as seed for processing in the export country. The Canola Council is the medium through which the industry comes together to set objectives and implement plans for the entire sector.

I'd like to start by giving you some numbers on the industry. Canola returns the highest value to farmers of any crop in Canada. In 2011 canola returned $7.3 billion in farm cash receipts to Canadian farmers. The industry supports 228,000 jobs across the country and contributes $15.4 billion annually to the Canadian economy. The canola industry has doubled in size in the last decade, producing more jobs and economic investment every day.

I hope that paints a picture of the value the industry is providing to the Canadian economy and to rural life in Canada. But for the purposes of today's discussion, I think the most important statistic is that Canada exports over 85% of all the canola we grow, in the form of seed, oil, or meal, worth more than $9.6 billion last year. This makes our industry highly reliant on predictable market access.

Just yesterday the Canola Council released a major report outlining our market access priorities for the future, which I hope you'll take time to read. You will note that risk-based and efficient regulation of biotechnology is highlighted as a major determinant of effective access to international markets.

We thought the best contribution we could make to the study of low-level presence is to outline why it's an important issue for our industry and to explain in practical terms how LLP can benefit Canada's grains and oilseeds export sector.

Canola producers in Canada have eagerly adopted biotechnology, including genetic modification, because of its superior weed control, cost savings on crop inputs, and other benefits. Last year more than 97% of the canola grown in Canada was developed employing modern biotechnology.

Like Canada, the major markets we ship canola to have laws in place that regulate the import of biotech plant materials. These laws are there to protect human, animal, and plant health, and the environment. They require that a new biotech product be rigorously assessed for safety and approved by the regulatory authority in that market before imports are permitted. And they are strictly enforced, with zero tolerance for the presence of an unapproved GM event.

The canola industry in Canada is fully committed to meeting the requirements of importing countries and ensuring our exports comply with these regulations. The council maintains a voluntary market access policy, which dictates that new genetically modified products must be approved by regulators in those major markets before products are commercialized in Canada.

It recognizes that complete segregation of crops is extremely difficult because of commingling that occurs when grain is handled and transported. By requiring market approvals prior to commercialization, the policy ensures that no new GM seeds are even cultivated commercially until they are approved for import by our major markets.

The challenge in the future comes from the substantial increase in the development of biotechnology products, not only in the major developed nations but all over the world.

Just last week the International Service for the Acquisition of Agri-Biotech Applications, an organization that reports annually on the use of agriculture biotechnology globally, reported that a record 420 million acres were planted to biotech crops in 2012 in 28 countries. This is a 6% increase in acreage over 2011 and the 17^th year of consecutive growth in biotech crop acreage. And 20 of the 28 countries electing to seed biotech crops are developing nations. Some of these products may be commercialized before approval is granted in some of our foreign markets. In some cases, developers may not even seek approval, intending that the product only be cultivated for their domestic market.

The threat to Canada's export trade in grains and oilseeds comes from the potential of a presence, at a very low level, of these products in Canadian grain exports. The detection of unapproved biotech material in a shipment of canola, wheat, or pulse crops can result in the rejection of a vessel, with the associated economic loss and, potentially, serious implications for Canada's reputation internationally.

So how could this happen? Imagine a vessel arriving at the port of Vancouver to load up with canola and destined for one of our major canola markets. The vessel may have, on its previous voyage, carried loads of biotech rice from Asia or soybeans from South America. Traces of those crops may still be present in the vessel and those products may not be approved in the country we're exporting canola to. Those minute levels of material that are unintentionally in the shipment could lead to a rejection of the entire cargo.

A low-level presence in place in this import country would reduce this risk of trade disruption. The policy would allow for low levels of the unapproved product, knowing that the GM material has previously been safety assessed and approved using international risk assessment standards.

Another factor is increasingly acute detection methodology. Today's testing is becoming incredibly precise. In a zero tolerance system, even the smallest increment of unapproved material can disrupt trade. By example, in 2009 shipments of American soybeans destined for the EU were found to have come in contact with corn dust. This dust, probably picked up at a port or other grain-loading facility, included traces of an unapproved corn trait, and resulted in rejection of soybean cargoes. This type of situation is more likely to occur in the future, as detection and testing procedures become ever more precise.

For the export-oriented canola sector, low-level presence is one tool for managing this risk. In the view of the Canola Council, low-level presence policies would help achieve the dual objectives of maintaining rigorous health and safety standards while facilitating trade and eliminating unnecessary trade disruption.

It's also important to consider that the threat of trade disruption is not limited to crops that are produced with genetic engineering. Trade and other major Canadian crops, including wheat, durum, barley, and pulses, which are not derived from modern biotech, can also be disrupted by the unintended presence of low levels of GM material.

While we see this mostly from an export point of view, LLP is equally valuable as a tool to ensure food and feed safety and security for importing nations. Countries that are highly reliant on grains and oilseeds imports are at risk if trace levels of biotech disrupt or stop trade and therefore cut off the security of their supply.

So what exactly is LLP? It is the unintended presence, at low levels, of unauthorized GM material in imported grain, where the GM material is authorized, following a safety assessment in one or more countries but not in the country of import.

With LLP policies in place in grains and oilseeds importing countries, the regulatory authorities in those markets can rely on the fact that the biotech material has been risk assessed and declared safe, and can apply risk management thresholds, below which they can declare the presence of the product as acceptable in imports in their country.

The Canola Council supports the development of LLP policies in order to prevent trade disruption resulting from unintended presence. We welcome Canada's leadership both in developing a practical, effective, and transparent policy framework for LLP in Canada and in taking leadership internationally in calling for other countries to do the same.

Canada is not alone in this effort. Two significant international meetings have been held to discuss LLP globally. A group of 13 countries released a statement on LLP, agreeing to discuss LLP and look for ways of implementing it globally. Canada's draft policy is a potential model that others could adopt. This is a complex and challenging issue, and Canada's policy and regulatory experts are playing a responsible and helpful role in developing innovative policy.

But there is also a higher calling, from my way of thinking.

By 2050 the world's population is set to increase by 50%. We will have nine billion people to feed and the same amount or less of arable land. Biotechnology is just one way to increase our food productive capacity, and an important one. To do this, we need practical and effective policies that protect health and safety but also facilitate trade.

Your work in ensuring our policy and regulatory frameworks help Canada continue to take advantage of the latest innovations to create jobs and feed the world is greatly appreciated.

Thank you again for an opportunity to appear, and I look forward to questions.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Smyth, welcome.

[Dr. Stuart Smyth, Research Scientist, Department of Bioresource Policy, Business and Economics, University of Saskatchewan, As an Individual]

Thank you.

I hope you all have received copies of the brief I submitted two weeks ago. I'm not going to read from that. Instead, I'll give you a bit of a sense of how commodity agriculture basically works.

Most farmers, at some point, use certified seed, which is what they would buy from a certified seed grower. They plant that seed. It moves through our supply chain, and is then exported.

Now, all along the system there are thresholds. Even with certified seed, which is the purest seed that a farmer can put in the ground, there are thresholds for coexistence of other varieties. For example, if a farmer wanted to plant wheat, and let's suppose there was GM wheat on the market, the non-GM wheat would have a threshold of a quarter of a per cent for GM wheat. So even starting from day one, a non-GM wheat field could have up to a quarter of a per cent of GM wheat.

Europe has put in place a 0% threshold for GM varieties. There's no way the Canadian system, when we start with 0.25%, will ever meet a threshold of zero, based on the international standards for certified seed.

So as a farmer goes through and plants that, livestock, fowl...seeds from previous crops are in the soil bed. They will all germinate and will add to that 0.25% as it goes through, being trucked by semis, by railcar, by boat, to an export market. That 0.25% is going to increase.

Certainly in the seed trade, they know that exporting at 100% is not possible, yet it's quite easy to meet existing thresholds of 2% or 3% of commingling of other varieties. As Jim was saying, a bit of corn or soybeans in a wheat shipment would not be unexpected in bulk commodity trade.

Where we're seeing a lot of difference between the North American approach that's really focused on science-based regulation and the European approach is best understood through the approach to risk.

In Canada we have a decoupled system for most commodities between the scientific safety assessment and the variety approval. So in Canada we have the CFIA and Health Canada that do the science-based risk assessment on the dossier of information that's provided by the developer, whether it's a public or private entity. They make the safety assessment, and then the variety approval committees look at the various agronomic...in terms of disease resistance and yield. They actually are the ones that give variety approval, for canola and wheat, for example.

What we have in Canada, then, is a government component, which does the scientific safety, and then we have an industry component, which is made of breeders and stakeholders through that commodity who make the final decision on variety approval.

However, in the European system, they still have the government-based, regulatory approach to the scientific assessment, which in their case is the EFSA, the European Food Safety Authority. They make the science-based risk assessment. Yet instead of having the private sector decide which varieties will be approved, that now becomes a political decision of the European Commission. They have a committee that's set up to make the variety approval.

So they have the same decoupled process that we have, yet what we're seeing, because they've sort of politicized risk at the European level, is that decisions are simply not being made.

I've provided a list of some varieties that have been submitted for approval within the EU system and that are safe by the EFSA's assessment. By next week the variety at the top of the list will have been eight years' waiting for the commission to give a variety approval decision to that commodity.

Clearly, decoupling is an acceptable process when you have the science being done by the regulators and the commercial approval being done by the stakeholders. However, in the European system, because they've moved that decision from the stakeholders—industry, developers, and farmers—to the political level, it's not functioning the way they had hoped it would have when they set this system up nearly 10 years ago.

Probably the best example of this from a Canadian perspective, which I mention a little bit about in my brief, is the example of the detection of GM flax in 2009.

Saskatchewan grows over 60% of all the flax that's exported in Canada, so this is a story that we spent a lot of time looking at, at the University of Saskatchewan. What we found through over 10,000 tests is that the GM flax is showing up at 0.05%. So even within flax, using certified seed, which allows 0.25% of other flax varieties, this is very low.

When this was detected, to a large extent Europe broke their commitment to the World Trade Organization, and especially to the sanitary and phytosanitary agreement, because under the SPS agreement the EU would have been required to do a survey of the literature on flax to look at what degree of problem this was going to be. They were also then required to do a risk assessment, which should have been done by the EFSA. That was not done. They closed the border to Canadian flax for over two months. It cost us in the range of $12 million in lost sales, and they then forced testing on the entire Canadian industry, at a cost now approaching $20 million.

When we did this study to the end of 2011 we estimated the costs at that time to be about $30 million. Another year has passed and we've been testing all of our flaxseed again for another year, and we will for another two years, so those costs will continue to increase over the next couple of years.

These are costs that are borne by Canadian farmers. They have to test their seed prior to it being planted, and they have to test what they harvest before they sell it to an export opportunity. They're not being reimbursed for this by anybody. These are out-of-pocket costs that are being experienced by Canadian farmers because of the European approach to zero tolerance.

When Canada is faced with the opportunity to look at developing domestic LLP policy, I think the best approach is to understand that zero is not something that markets can function at. We all know that the speed limit in Canada is 100 kilometres an hour, yet I would hazard a guess that most of us have exceeded that at one point or another in our lives.

So we know that the reality of zero is not something that our export markets can function at, and that Canada has a real opportunity to be a global leader in developing a domestic LLP policy that has thresholds that can be successfully and economically met by industry so that when we import varieties from other countries and something is detected, we don't slam our borders on our trading partners, and that we have thresholds that will allow for that situation to be addressed and trade to continue to happen.

That precedent would really set Canada far ahead of our trade competitors, and would have some ability to influence developing countries that are looking at developing LLP policy as well.

Thank you for your attention.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Allen, good morning.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you to you both, gentlemen, for your comments.

Mr. Smyth, I was trying to jot it down quickly when you indicated who the stakeholders were. I wrote that the stakeholders would be the biotech firms, farmers, and processors. Where is the consumer in the stakeholder piece?

[Dr. Stuart Smyth]

That's a good question.

[Malcolm Allen, NDP, Welland, ON]

Considering the consumer is the one who ends up eating all the end product, the consumer is a big stakeholder, I would think.

[Dr. Stuart Smyth]

Largely, in the Canadian food system there is such a high level of trust in the food that's on our store shelves that direct consumer involvement in the regulatory process is something you don't see a lot of. We have a very high level of trust in the CFIA, in Health Canada, and we allow our regulatory system to operate somewhat unimpeded by having direct consumer involvement in any of our regulatory decision-making capacities.

Our system operates on a market preference. If a company wants to invest in developing a food product and it meets the safety requirements, it's put on the store shelves and then the market is allowed to decide whether or not they want to purchase that commodity. So if consumers simply say that they're not comfortable buying that product, the retailer will say to the firm marketing that food product, your product is not selling. We want to minimize the space and you're going to have to take that product. We won't carry that line anymore.

Really, consumers get to vote with their dollars as to which products they want to buy.

[Jim Everson]

Mr. Allen, could I quickly add to that?

[Malcolm Allen, NDP, Welland, ON]

Mr. Everson, I will get to you. Thank you.

But in fairness you have to tell me what it is first. If I don't know what it is, how do I choose? So if you don't tell me it's a GM product—and I've had this debate with Mr. Everson before on the Canola Council—then how do I know it is? You're assuming I have a knowledge that I may not have since you won't put it on a label. So if you don't want to label it, I agree with you. I can choose as a consumer not to buy, but I can only choose not to buy based on what I know, and if you don't inform me then I don't know. Therefore I can buy a product based on, yes, we have a very safe food system, as you pointed out. So I'm buying on a confidence level that some folks may argue is misguided because I don't actually have the full information.

That's the point, I think. When you look at your stakeholders you ought to consider the biggest stakeholder, and they ought to be involved in the process. Now, I'm not asking you to tell me yes or no. I just simply made a comment.

Jim, you wanted to add a few words to this. I'm sorry to have cut you off. I didn't mean to, but you know what time is like here.

[Jim Everson]

I was just going to add that on LLP I think with consumers the issue is if there's a trade disruption. Dr. Smyth talked about the flax going to Europe. Well, there were consumers who relied on the product that was going in there, and with that trade disruption resulting from this very trace level, low-level presence of this commodity, they were disrupted. Their product wasn't there or the price increased. There were flax crushers in Europe that faced financial ruin as a result of that change. That dribbles through to the consumer. So they're relying on a canola oil product that will be disrupted, they won't get their supplies, consumer prices will go up. So that's how I think the direct link to the LLP comes through.

[Malcolm Allen, NDP, Welland, ON]

Not to disagree with that; I think you're right. I think what Dr. Smyth pointed out was there were a certain number of stakeholders. I'm simply articulating that maybe there's a big stakeholder that's been omitted. And when we start to think about how we want to do this, is that group someone we should actually have a conversation with? I simply lay that out for those who were thinking about who we should talk to, to think about who we should talk to.

On the other side, I appreciate, Dr. Smyth, your actually going through flax because that is “the example”. But it's an example from two perspectives. You've articulated the one about 0.005, which I get. There is no such thing as zero. Absolute zero doesn't exist, actually. Mathematically you can't actually get it either. So that's the science of that piece. The issue is this. Do we, then, simply take a defeatist attitude that we should not continue to try to get that way? Or do we just throw up our hands and say, well, we can be 0.1 today, 0.25 tomorrow, 0.3 tomorrow, and 0.5 after that...2%, 6%, who cares? That's an approach, right? Or do we continue to say, well, we should try to approach zero? We all understand there are extraneous materials in all of our commodities.

[Dr. Stuart Smyth]

Yes.

[Malcolm Allen, NDP, Welland, ON]

So the issue is about this. If we quantify it, are we then saying, okay, that's good enough, but if it's on the other side of that it's not that bad either. So is it incremental, moving up, or is it a definitive line that says here it is? I accept the fact that testing five years from now might be better than it is today. It might actually tell us it's 0.125 rather than 0.101. I recognize that's a difficulty for us all, but do you see that as a potential?

[Dr. Stuart Smyth]

I think a lot of these are based on the individual contract. So if I have a commodity for sale and you want to buy it, you will specify the conditions of that contract. As an exporter, I will strive to meet the demands of my customer to the best of my ability. So that might be 1% in your case. It might be 0.5% in the next case. I think the terms of the contract dictate how rigorously we advocate for our LLP policy, for example.

[Malcolm Allen, NDP, Welland, ON]

I hear what you're saying, but the dilemma with that is that's a commercial contract between you and me.

[Dr. Stuart Smyth]

Yes.

[Malcolm Allen, NDP, Welland, ON]

The problem is Mr. Dreeshen says he wants 0.25 and he happens to be next door to me and I contaminate him because I said, I'll take 1%. So where does Mr. Dreeshen fall down in that? Where does his piece come into...I made a commercial deal with you, but I ended up impacting Mr. Dreeshen, or vice versa? Where do we see that piece? Clearly, if we simply say it's a commercial piece, then if I say, I don't care what you commingle it with, go for it, I'm okay with that. Others may not, and they may be my neighbours, or it could be at port. Now we're not talking about neighbours, we're talking about hundreds of neighbours at port. Because it's a commercial contract what have we now done to those who say, it's not what I want to do? Where's the liability and what are the repercussions? And what are the safeguards that have to be undertaken to make sure that you and I, by taking a commercial risk that's greater than what our neighbours want, are not impacted?

[Dr. Stuart Smyth]

That's a question for a commercial lawyer. I'm afraid I don't have enough law training to be—

[Malcolm Allen, NDP, Welland, ON]

I don't think there are any lawyers...well, Frank, that's a job for you, I guess.

Thank you.

[The Chair, Conservative, Merv Tweed]

I'll move to Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you.

And thank you for being here. I think this is really important subject matter, this whole discussion about low-level presence. I'd just make a couple of points.

I think what I heard Malcolm, my NDP colleague, say was that zero tolerance really is unachievable. It's not realistic. The question is: what do you do after that, once you acknowledge that fact? Certainly, in my work with the industry, there is a general acceptance that with zero tolerance the stakes are high, and no one really wins in that scenario. But then there's a variance of opinion based on what to do next.

The other point I want to bring up is that I think, when you look at a low-level presence policy, the conversation immediately goes to GM contamination. But I would say there are all sorts of other contamination, right? You were talking about wheat that could have some corn contamination. It could be non-GM corn, but it's there from a previous shipment that was held in a hold, or something along those lines. It doesn't necessarily mean GM, it can be a non-GM type of contamination as well.

The other thing I'd say too is that “contamination” is a very negative word, but if there is a contamination of something other than the core product, it has to be a product that is fit for consumption based on sound science. We're not talking about a low-level presence of highly radioactive material or lead or something like that, that you're not allowed to consume. That would ban the shipment. We're talking about the contamination of product that is fit for human consumption and is based on sound science.

I think those are two important points to make.

I want to ask a question about different sectors. I've had many meetings with the organic sector. I would have thought the organic sector would have been open to low-level presence because the stakes are high for them too. It's not GM, as I say, it could be any non-organic contamination of their organic shipment. It could come not from their fields, of course, but as you mentioned, the supply chain, meaning a truck, a railcar, a shipping hold that was not properly cleaned. But what I have found in general is that the organic sector is not open to low-level presence. They're not in favour of it.

I'm wondering if you two are able to comment on that. I know that's not necessarily your sector, but I don't know if you've encountered that in your discussions. Do you try to provide them with other information? What's your experience on that?

I'm asking both of you.

[Jim Everson]

Mr. Lemieux, first of all, in terms of your opening comments, it is true that with these tolerance levels—no matter what issue you're talking about, whether it's genetic modification or it's some kind of foreign material and other seeds and that sort of thing in the grain-handling system—zero is extremely difficult or impossible to achieve, which is why we're into this area.

The other point that I think is important is I congratulate the Government of Canada for the way they have addressed this issue by pointing the LLP initiative to defining “low-level presence” in terms of products that have been safety assessed using an international protocol by a competent authority in another country. We're not talking about products we don't know anything about, that have never been safety assessed. We're targeting only those products that have been approved by a competent authority somewhere else before they're supplied. So health and safety are very important points.

I certainly want to hear what the organic sector has to say on the issue. I don't think the LLP initiative should be as big a concern from an organic point of view. In the case of the Canadian initiative, for example, an LLP policy for Canada, we are not talking about seed imports, products that are coming into Canada that would go for cultivation, we're talking about products coming in that go for processing. They would go to food-for-feed processing or industrial purposes. They're into a commercial chain that takes them into processing, as opposed to something that's going to be open to the environment and become an issue in the Canadian environment. The risk of any concern, in terms of LLP, should be low.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Stuart, do you have any comments about that?