Agriculture Committee on Oct. 27th, 2011

[The Chair, Conservative, Larry Miller]

We'll call our meeting to order.

I'd like to welcome our witnesses here, Dr. Fraser and Dr. Phillips.

[Dr. Evan Fraser, Associate Professor, Canada Research Chair, Department of Geography, University of Guelph, As an Individual]

It's absolutely my pleasure, and thank you very much for your time.

Is this adequate as a sound check for you guys or should I keep talking?

[The Chair, Conservative, Larry Miller]

Keep talking for a second.

[Dr. Evan Fraser]

My background is in geography. I'm fairly new to Canada. Although I'm Canadian by upbringing, I have spent most of the last 10 years working in the United Kingdom, and only came to the University of Guelph about a year ago.

[The Chair, Conservative, Larry Miller]

Okay, Mr. Fraser.

Mr. Phillips, if we could ask you to do the same...?

[Dr. Peter W.B. Phillips, Professor, Johnson-Shoyama Graduate School of Public Policy, University of Saskatchewan]

It's a pleasure to be here for the third time in a year on different issues. Today I'm being beamed in from Vancouver, where I am co-chairing the GM Coexistence Conference. I'll talk about that shortly.

[The Chair, Conservative, Larry Miller]

Thank you very much to both of you for appearing before us today.

Dr. Phillips, you get to be the first presenter, for 10 minutes or less.

[Dr. Peter W.B. Phillips]

Let me make four or five key points. The first is that science, technology, and innovation is, has been, and should be a critical part of federal policy. I think over the last 20 to 30 years there's been a diminution of its role in driving policy options and policy solutions. So I applaud you for focusing in on science and innovation as a critical part of the GF 2.

Secondly, just to remind you where I come from, I'm a professor of public policy. I study innovation as it relates to the agrifood system. So much of what I'm going to talk about, I write about and publish on a regular basis. So if anything tweaks your interest, you can find background information.

The third thing is I think it's important when we talk about innovation in the agrifood system in Canada that we keep two realities in mind. The first is that while we perceive your competition to be Chinese and Brazilian and American farmers, more fundamentally, your competition in terms of accessing land, labour, and capital to keep the industry vibrant and growing in Canada is other sectors in the Canadian economy. So it's not only important to be price competitive with other exporters, it's important that the sector be able to generate enough wealth from its use of its resources to sustain that use of those resources in this sector. Right now there are major parts of the Canadian agrifood industry that don't generate enough value to sustain the ongoing use of the land, labour, and capital, especially the mobile labour and the mobile capital.

The second point is that much of what we're talking about is fenced around by distorted policies around the world. So as we think about science and innovation, we're fundamentally going to have to worry about where it fits in the context of international trade. One of the impacts of that is that pretty much universally around the world we're not investing enough in the basic and applied sciences in the agrifood world.

The simplest test of that is that the return on investment for directed agrifood investment is running around 50% to 70%. We'd all love to get 50% ROI from our investments, but much of that is dispersed among a large group of people, so to have the ability to actually extract that and pay for the investment is very difficult.

The Canadian government has accepted innovation as a critical part of the Canadian economy's future, but if there's a problem, it's that agriculture, for some reason, either by choice or by chance, seems to have been partially carved out of that vision. Many of the things that are relevant to agriculture--the programs, the services, the investment pools--are not eligible for R and D and basic science research in the agrifood area, and that's a major concern. So the Canadian government is in the right space, but the agrifood policy area in many ways has been carved out.

As you go through your review, you're probably going to get a lot of advice, free or otherwise, about where Canada should put its resources. I often suggest to anybody who thinks about innovation policy to think about four Ps.

The traditional economists will say all we need to do is get the prices right, and the government's role should be pretty minimalist--don't do any intervention, just make sure the prices are right so that you get rid of all kinds of perceived distortions in the marketplace. That is an important element to it, but that's the base. Correct prices will bring forward investment, but not necessarily investment that will keep this industry viable.

There are three other Ps that really matter. There's place. Most of the really interesting innovation that comes out of the agrifood world and virtually every other sector is in agglomerations of research communities, users, consumers. So it's the cluster model. Place is a critical part, but place isn't enough anymore.

The second part is processes, innovation systems. There are natural flows of information that are important to converting basic science into applied science, into application and use. We have some very good examples in Canada and very good networks between Canada and the world that bring much of that technology into the Canadian context and use it for industrial purposes.

The fourth P that a lot of people talk about is creativity--the creatives, the people who make it happen. So it's not just about place, it's not just about getting the macro prices right, it's not just about getting a whole bunch of institutions in place. It's about attracting and retaining and mobilizing and enabling the scientists and scholars and entrepreneurs to actually do what they do best, which is bring new things to use.

I think you're going to be posed with policies right across that piece. I think those four Ps help, in a way, to define what kinds of policy options may make some sense in the broad area of agrifood research.

In the first instance, there probably needs to be less pulling away from basic and early applied research by the federal system. There has been a pullback, and that is partly what the Jenkins report and some of the advice coming from STIC are about. Right now we are very passive in the way we assist firms and industries to invest in development and innovation. There's a lot more federal capacity--be it through the Ag Canada research centres or the National Research Council institutes--where the federal government could be a critical player.

There are three or four elements about the federal investments that I want to quickly touch on.

When we last talked I laid out some of my concerns about the changes in the way Ag Canada and some federal programming had been operating that had been sort of cutting out agriculture as a priority area. There has been an additional change to that, in that the National Research Council is now talking about substantially changing the way it operates institutes.

I can speak with a fairly high degree of confidence that many of the important innovations in the agrifood world, for which Canada was ground zero, were inextricably linked to the capacity and the mobilization of knowledge from the NRC, particularly PBI in Saskatoon, and others. If the institutes die or change into downstream, project-based ventures, I think you're going to lose some very important strategic actors in the system.

Federal research effort is pretty diffuse, not only through the undirected grants, but even at the operational level in the intramural research between departments and agencies. It doesn't get together very well. Even within the same department across different divisions or sectors, they have difficulty working together. I think that's a shame in a country this small with this need for science in its industry.

Second, we're becoming too short term. We're moving from seven- to 10-year planning horizons to one- to two-year planning horizons. Our main competitor in many of our product lines is Australia. They took the lessons we showed them in the centres of excellence program and embedded them system-wide in the agrifood system through the GRDC. I think we should be re-examining our horizons there.

Third, there's the real challenge that we tend to spread our capital too thinly. We want to do something in every community. There are natural agglomerations. They are natural places where things happen. You don't have to choose them. The industry and the commodity groups have chosen them for you, so you just need to support and assist them. The artificial pulling apart of capacity is a dangerous policy area, and there are some opportunities there.

Another area I talked about before and won't belabour is that intellectual property is a critical part of the future of agrifood: brands, patents, and plant breeders' rights. We have most of the bits there, but we could do more. The one big concern I have is that once we have things that have intellectual property value, we have great difficulty in partnerships within the public domain. I had a student look at a recent partnership in Saskatoon that comprised public institutions using public funds. They had over 150 pieces of intellectual property, but they couldn't come to an agreement to pool them and exploit them as a common resource. That's a major failing of a governing system.

The final point I want to make is about regulation and governance. If the Canadian agrifood industry is going to thrive in the 21st century, it will have to differentiate and exploit value wherever it is. That means we'll have supply chains for commodities and products that are GM or GM-free, organic, and halal. They'll have unique functional attributes, and we don't have regulatory and supply chain systems in place to currently handle them.

The conference I'm now at in Vancouver is an international conference of regulators and industrial people from pretty much across the agrifood system around the world, and we're all facing the same problem. Canada can and should be a leader in that policy debate, and I will give you a symptom of the challenge.

It was next to impossible to get some of the key informants and leaders in the Canadian regulatory system to engage in the dialogue in Vancouver. I had no problem getting the Europeans, the Brazilians, the Australians, or the Americans to turn up, but the Canadians just didn't turn up. They all got their marching orders on Monday this week. We've been planning this conference and talking to them for over a year.

So here's an opportunity right in our backyard, where we could have taken a leadership role in defining the debate about how the system will differentiate products and sustain value in all these competitive but parallel supply chains.

In conclusion, I think you have a really important topic here. Innovation is the future of agriculture. It's not about divvying up the profits and trying to maintain markets. It's about trying to make, create, and innovate within a whole variety of technology and product market categories.

I thank you for inviting me, and I'll pass it over to my colleague.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Fraser, from the University of Guelph, has 10 minutes or less, please.

[Dr. Evan Fraser]

I passed along some brief illustrations that I was going to use for my talk. Do you have access to those in front of you, or should I just go without them?

[The Chair, Conservative, Larry Miller]

Yes, I believe we do.

[Dr. Evan Fraser]

I'll direct your attention to some of those illustrations as I work along.

I have to begin with a caveat. I haven't lived in Canada for much of the last 10 years, and I'm not an expert on agricultural policy. My training is on global food security. So my hope is to give you some broad contextual issues and maybe a way of thinking about agricultural policy from a very broad and global perspective.

The second illustration I sent includes some data from the United Nations food price index. It shows why I'm concerned about global food security in the 21st century. You can see two extraordinary price spikes in 2008 and again last year .

[The Chair, Conservative, Larry Miller]

Mr. Fraser, as long as you're sticking to the topic at hand on innovation, carry on. This isn't really about agriculture policy. It is, in general terms, but the topic we're on is innovation.

[Dr. Evan Fraser]

Fair enough. Thanks for that.

The point I'd like to link to innovation, though, is that we need to develop a broad range of policy platforms in order to prepare for what many business experts and scientists are describing as an extraordinary crisis that seems to be unfolding. There are a number of places around the world that are struggling with food crises. I think Canadian agricultural policy has a strong role to play in addressing this global crisis, which cuts through our Canadian system as well.

I'd like to direct my attention to four broad areas. The first broad strategy, which gets discussed at a range of fora, including business and scientific groups at the grassroots level, is that we need to be investing in science and technology to boost productivity.

Europe has tripled productivity over the last 50 years. Other data show how productivity and investment in Africa have resulted in 1,000 kilograms of grain per hectare over the last 50 years. We see that the green revolution has worked extraordinarily well in some parts of the world but not in others.

This applies to Canada as well. When I was working in the U.K., the Department for International Development, DFID, and the DEFRA, the Department for Environment, Food and Rural Affairs, were working together to develop science and innovation platforms that drew on western academic expertise to address global food security.

If you have the opportunity to think broadly and at a global scale about the Growing Forward 2 program, I would encourage you to look for opportunities to develop new partnerships that might result in new technologies capable of being applied at the grassroots level in different parts of the world.

There's a strong argument throughout the literature that we need more research and innovation to further government regulation for environmental management. This cuts through all the debates that I've been part of. We get a strong sense of this when we start looking at things like nutrient run-offs from the livestock industry. We need a strong government mandate to develop tougher environmental regulations.

The third type of strategy related to the global food crisis is that we need to develop technologies to store food better. This is an extraordinarily important point that has social policy, engineering, and technical aspects to it. We need better technologies to store food. We also need to understand the scale at which we need to store food.

I wanted to highlight the importance of storing food in ancient societies and to link that to agricultural policy. There is the biblical story of Pharaoh's dream, where Pharaoh dreams of seven good years followed by seven bad years. The public policy advice Pharaoh adopted was to develop infrastructure and store food. We don't do that anywhere near enough. I think the world has forgotten this lesson—it's embarked on a just-in-time food system. For six years we've eaten at a global scale more than we have produced. This is a mistake.

The latest United Nations report on the global food crisis says that the world does not have enough food in its reserves to survive a bad harvest without markets dissolving into significant turmoil and volatility.

The fourth and final solution that is debated about the global food crisis and the sort of science and technology public policy we ought to be embarked on in order to prepare proactively for what some people are calling “a looming crisis” is that we need to do a better job of creating alternative food systems that sit alongside the mainstream or global food system. This is sometimes called the local food movement.

To me, there are two very important reasons the local food movement is going to be critical in the next generation. First of all, it increases the level of literacy among people to food issues. Second, the local food movement, local food systems, provide an insurance policy or a plan B, a buffer that separates the urban consumer from the vagaries of the international market. If the predictions are correct and over the next generation we see radically increasing prices in food, radically more volatile food prices, if these start having the expected political ramifications, we will be glad to have maintained these alternative food systems.

On my last slide I've tried to lay out the four broad policy arenas that are talked about with some degree of seriousness—a strong degree of seriousness—by activists, business leaders, and academics, as a way of proactively preparing ourselves for what some people call the perfect storm of problems that will come in the next generation.

I would like to leave you with one message. If you have the opportunity in deliberating on the Growing Forward 2 program to think globally and holistically, we need strategic investments across these four sectors.

We need strategic investments in science and technology, but emphasizing links between scientists and farmers from around the world. That requires some creative problem solving on the part of different institutions.

We need the managerial and bureaucratic solutions. We need the alternative solutions. And we need to understand how much, and where, food can be stored efficiently.

We need essentially a portfolio of strategies in order to protect ourselves and protect our food system.

In my last few breaths here I would like to say one thing, and that is I think Canada's role in the international food system will grow over the next generation. Our role as a food producer and a food exporter—our resource base—means that as the international food system comes in for what most expect will be some fairly turbulent times, Canada's role will grow. I think this represents a core opportunity for the Canadian agrifood business, as well as a challenge to our international development and humanitarian responsibilities. These things should, and can, be brought together through strategic investments in the four areas I have laid out.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Okay, thank you very much.

We'll now open questioning to Mr. Rousseau.

As a reminder to the committee, there's a list of witnesses that have been placed before you by the clerk. Perhaps in the course of the meeting you might get a chance to look at that and at the very end of the meeting we'll get a bit of direction as to how long we will take on the study of innovation.

We'll come back to that.

Mr. Rousseau.

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

Thank you, Mr. Chairman.

I also thank both of you for your fascinating and enthusiastic testimony.

My question is for Mr. Fraser and Mr. Phillips.

First, Mr. Phillips, do you think that research in Canada should increasingly have as its objective ensuring the food sovereignty of all Canadians? What type of research would this be?

[Dr. Peter W.B. Phillips]

You need a portfolio of research in the context of the agrifood system. I'm always nervous about a grow local food sovereignty model, in that we are a very large producer on per capita terms of many foodstuffs, which we could never consume locally. So we need to be able to access the things we can't produce effectively and efficiently in Canada—bananas, a lot of the tropical fruits and vegetables, and many of the foodstuffs that just don't fit within either our industrial system or agro-environmental system. But we also need to maintain the competitiveness and the capacity to sustainably produce large volumes of competitively priced grains, oilseeds, red meats, and a variety of other less traditional but very important high-value-added activities.

Environmental policy is an inextricable part of that. It sometimes is explicitly environmental, and sometimes it's simply embedded and embodied in the research around the seed or the animal itself. Reducing waste in the food system, which my colleague had mentioned.... We've got the deputy director general of the FAO who just gave a speech a few minutes ago, and she pointed out that 30% of the world's food that is produced is never consumed by anything that adds value, an animal or a human being. It's wasted. And that's not just in developing countries; that's in many developed nations. Canada is actually on the better end of that spectrum.

So if we could reduce food loses, that has strong environmental effects. There are some areas where sometimes the food losses might be more mechanical than biological—the cold chains and other mechanisms. Sometimes it's dealing with the food in the field. Sometimes it's dealing with the seed in the input side that may reduce the susceptibility of the plants or the animals to disease and wastage in the food chain.

I think the environment is a critical part, but my strong view.... And this is partly a western Canadian view, and I respect that—in western Canada in particular the agrifood system is almost universally export focused; the volumes that are produced are inappropriate to the domestic demands of a population of about 33 million people. My strong view is that the export focus part of the agrifood economy does need to be environmentally sound, but it also needs to be moving towards being competitive with the leading edge of the global agrifood system.

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

Mr. Fraser, I would like to know your opinion on the same topic, please.

[Dr. Evan Fraser]

I'll come back to my point that I think confirms what we just heard. I think obviously the Canadian agricultural system is geared towards export. I think it will increasingly orient itself towards that, and I think that's appropriate. Simultaneously, I think we need to be maintaining local supply chains, local food sovereignty, as an insurance policy, as I said, or as a plan B that acts as a buffer between the vagaries of the international market and the individual consumer. I think this is that portfolio approach. The sensible portfolio manager will try to create a high-returns/low-risk portfolio that will have adequate cash reserves to maintain a client through tough economic times. I think our food system has to be seen in a similar way. We need the high productivity systems. We need to have tough environmental legislation to protect them. We need to maintain food sovereignty at a local level, which is a lower productivity system but reduces risk, and we need better food storage to act as our bag of bullion that we hide under the floor boards to keep us when things go really badly.

[The Chair, Conservative, Larry Miller]

Thank you very much.

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

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

Thank you very much, Mr. Chair.

I would like to thank our witnesses for being here.

Perhaps I'll start with Dr. Fraser. You spoke about concerns with respect to food storage and food security. I'd like to know where you would see science and innovation fitting in here. I was looking through your slides and I noticed there was a photo of a storage bag that was more impervious to rodents and it protected the seed from rot. That's probably a small science and innovation type of project, but I'm wondering how you see science and innovation contributing to what it is you think the government should be addressing.

[Dr. Evan Fraser]

Thank you for that question, and thank you for drawing attention to that example.

That is, as you said, a small-scale example of a piece of technology that was developed in partnership between western academics and small-scale farmers in India. It was designed to overcome a local constraint in a cost-effective, appropriate way, and it's had a big impact on the lives of the people who have adopted that technology in Asia. It has generated a productive agribusiness, I believe, in North America.

There are so many questions that we don't have answers to, about where we should store food, how much food we should store, and what are the most appropriate methods to store it. So there are questions of how much food should we store.

We don't want to over-insure ourselves. We also don't want to under-insure ourselves. So there are a tremendous number of scientific questions that have to be answered in that regard.

In terms of how to store food, we have 20 years of experience with the United Nations strategy grain reserve policy, which paid African governments large amounts of money to establish huge grain silos, often outside of capital cities. That policy, by and large, failed.

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

Could I just interrupt for a moment? When you're talking about those kinds of policies, do you see those as being agricultural focused policies, like something we would include under Growing Forward 2? Or do you see those as larger government policies, for example, storing food, infrastructure that's related to storing of food, etc.?

[Dr. Evan Fraser]

The short answer, I'm afraid, is both. The agricultural side of it is this. What are the engineering facilities? What are the technologies that are required to store that kind of food? Should that food be stored close to farmers or should it be stored close to consumers? But then answering those questions I think requires a greater degree of cross-departmental collaboration among different agencies of government.

I alluded to that earlier by saying that in my experience in the U.K., there is significant collaboration between the equivalent of Agriculture and Agri-Food Canada and the equivalent of CIDA, so it's DEFRA and DFID, working together on addressing both the technical agronomic aspects of these questions as well as the larger-scale governance issues of these questions.

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

Okay, thanks.

I only have a few moments left. I'll ask Dr. Phillips a question.

I understand you have an expertise in biotechnology. This committee did a study on biotechnology just before the last election. I'm wondering if you can give us some concrete examples of where science and innovation, with respect to biotechnology, has quantifiably helped farmers, food production, lowering input costs, those types of things.