Agriculture Committee on Oct. 27th, 2011

[Dr. Peter W.B. Phillips]

Yes, definitely.

My colleagues and I did a major study of the introduction and adaptation and use of canola. We have currently three main herbicide-tolerant platforms: two that are transgenic; one that is mutagenic. If you take the three of them together, because they're all complementary and competing technologies, that set of technologies has generated—I'm having to grab the numbers out of the air at this point, and I can send you the studies that we've published—I think it was in the range of $1.5 billion of producer profit over a 10-year period, at the operational level. These aren't doubling your revenue base, but they're adding 7% to 10% to your margins. It generated significant research that created jobs in the industry. It created value that remained within the Canadian supply chain as these products moved to markets. We went from a production base that was constrained by a technology of 7 million to 9 million acres to now what is in the range of 14 million to 18 million acres. So the actual acreage grew because the technology had reduced the impediments.

That technology alone generated significant value to consumers, both domestically and, more importantly, internationally, as prices were pulled down from what they would have otherwise been. Over and above that, because the technologies brought into use new chemicals that had lower EIQs, or environmental impact quotients, they lasted for less time in the environment, and when they were in the environment they had less chance of emerging into the aquatic and bird populations. The environmental footprint of the larger area is lower than the smaller area we used to produce.

So there's an example of where a Canadian-led technology, developed using Canadian leadership from Agriculture Canada and NRC and Canadian funds from various programs, has demonstrably changed valued addition throughout the world, and it has sustained and converted canola into a different kind of crop. It used to be something you added in after you decided how much wheat you were going to plant and how many other crops you were going to plant. Now it's at the core of the rotation. Now what we need to do is convert that model into wheat. We used to be king in wheat. We still are a significant player in the global wheat market, but now wheat is the third crop farmers usually add to their rotation as they're thinking about what to plant every year. They first do canola to make the money, they do pulses to both make money and add nitrogen to the soil, and then they fit wheat in and around their other crops. That's a real challenge for the Canadian economy and the Canadian agrifood system because that's the market we should be in as well.

[The Chair, Conservative, Larry Miller]

Thank you.

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

[Frank Valeriote, Liberal, Guelph, ON]

Thank you to both gentlemen for being here with us today. My first question is to Dr. Fraser.

Dr. Fraser, the committee has heard many times about not enough funding to eliminate what's referred to as the “valley of death” of research--I know you've heard of that--that area between the concept, or the innovation and idea, and the actual product being produced and applied and used.

There is a program called developing innovative agriproducts, which is a component of Growing Forward. This really applies to all four of the strategies of which you speak, as far as I am concerned. My question is, are you familiar with that initiative? Do you think it's enough? And what other types of mechanisms or programs should be introduced to eliminate the “valley of death”?

I've talked to a lot of people over the summer while in Guelph--to Dave Smardon and others--and they talk about flow-through shares and other tax credits to incentivize the turning of ideas into products. Can you talk about those things?

[Dr. Evan Fraser]

Thank you very much for that.

From my perspective, some of the most important things come from adding value to ecosystem services and to public goods. So I think there's an enormous amount of important fundamental research...and then turning that fundamental research into applications that look specifically at the value of the ecosystem services that farmland produces for us, creating incentives to promote those, and then letting ingenuity and innovation fill that gap to try to create agricultural systems that reward ecosystem services.

Things like carbon credits, I think, are an extremely important part of a way of promoting land management practices that don't result in high levels of carbon dioxide coming off. Similarly, putting values on clean water will be a significant way of incentivizing technologies that reduce the nutrient runoffs.

I'm working with some people in Quebec right now on developing policy tools to look at why farmers would or would not put in drainage tiles and other sorts of technologies like that, which would reduce runoff from fields.

Very quickly, I think the core thing is to look at the values we want out of our agricultural system and engage in research that looks at ways of valuing those things, not only the strict profit margins but also the ecosystem services, and the whole issue of resilience and redundancy within the food system.

We have adopted, over the last 50 years, this very efficient system that seems to have very little resilience within it. I think we need ways of identifying the value of resilience and then promoting that through policy initiatives. It's those sorts of instruments that I would aim for.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you, Dr. Fraser.

Dr. Phillips, it would be a shame not to ask you this question, given the conference you're at. Some people think I'm full of beans when I talk about coexistence between GM and non-GM. We simply haven't determined whether they're GM beans or non-GM beans. But my question to you is this: is there a possibility of coexistence? We need to be satisfied and know that buffer zones or low-level presence in any number of initiatives, if applied, will allow the coexistence of GM, non-GM, and organic. Can you shed some light on that?

[Dr. Peter W.B. Phillips]

The short answer is yes.

It's happening now in many markets. Is it universal, and is every product uniquely differentiated for end consumers? No, because there's not enough value in some of those markets to justify the full differentiation.

For virtually every product line where there are GM crops, there are alternate, competing, differentiated attributes. They may be functional attributes that are either GM or non-GM. They may be organic. They may be using a whole variety of other provenance-based elements. Some of it's simply just branded products that somebody thinks have a slightly higher quality control around them.

Yes, we can do it. The challenge, though, is that we have quite diffuse and conflicting international standards, and as long as the governments of the day around the world all want to occupy the centre space and define what are the thresholds for entering or not entering a market, the industry can't step in and do that.

In a few cases, government has done it—drawn the lines—and the markets are being satisfied. In a few places where the government has said, “We're not sure where the line is, but we reserve the right to define the line”, markets have a difficulty stepping in because they'll almost universally be in the wrong space to satisfy regulators down the road. Where the state has said, “We're not going to draw the boundary, that's your job because it's a relationship between the buyer and the seller”--this is not about safety, this is not a safety issue, this is about quality attributes and what people want and are willing to pay for and it's possible to supply--in those cases there have been very effective supply chains that develop that benefit the producers and consumers, both within the supply chain and the other elements in the food chain.

The short answer is yes, it can be done. It's being done pretty much around the world, not just in developed countries, where there are high incomes, but in developing countries as well.

The challenge is that we're spending way more than we should to differentiate those product categories, because we're reinventing the wheel in every market.

If I take you back 50 years, we spent an inordinate amount of our energy as governments trying to harmonize, so that whoever brought a product to market quality assured that product. Now we've renationalized, so we have upwards of 70 or 80 countries who say, “That might be okay, we might accept that it's safe, but we're not quite sure whether it fits with the consumer and producer demands in our market.” The difficulty is that we don't know what those consumer and producer demands are. It's just another group of people making choices. What we've found is that where these supply chains work, it's because buyers and sellers sit down and say, “This is what we want, this is what we'll pay for; this is what the cost will be, and there's value there.”

The numbers coming out of our conference are that about half of the value that could be generated by GM crops has been truncated in the marketplace. We're talking about $5 billion to $10 billion worth of wealth.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Storseth, you have five minutes.

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

Thank you very much, Mr. Chairman.

Mr. Phillips, I'd just like to follow up on the end of your answer to the parliamentary secretary in regard to the question he asked you on science and innovation.

You mention that the lack of wheat acres planted is a major challenge to the Canadian economy. Obviously one of those reasons for it is profit. Canola has been far more profitable out west over a number of years.

Can you tell us what some of the other challenges have been and why this has become a third rotation in the crop?

[Dr. Peter W.B. Phillips]

Profit is the bottom line, but what is the source of the differential profit?

The source of the differential profit is that the value added per acre has not kept up in the wheat area with the other competing crops, with pulses and with canolas.

There's a challenge there. That challenge is partly uniquely around what has been done around wheat. This is not just a Canadian problem, this is a global problem, because wheat is a very important part of our nutrition requirements. It meets a large part of our nutrition requirements in the world. It's not just wheat yields that are weak in Canada; they're weak everywhere. There probably needs to be some global effort, and this is where I think Canada, because we are a significant player in this market, probably could and should take some lead in trying to crack some of those upstream problems about how do you make the seed work most efficiently for producing the quantities and qualities that the market needs.

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

Do you mean science and research into the seed quality and capacity itself?

[Dr. Peter W.B. Phillips]

You need science and research into the seed itself and science into the adaptation to and adoption in different production systems and ecosystems.

One of the big constraints in many of these product areas is the related science activities, what the statisticians you probably heard from call RSA, which is a major area of investment by the federal government. It's around regulatory science. It's around understanding how one determines what fits or doesn't fit into the market system. That part has been lagging, and that's one reason the diffusion of these new technologies is lagging. We just haven't spent enough time and energy optimizing the use of the existing technologies.

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

Thank you.

One of the other questions that's come up throughout, and I've actually heard it from a lot of researchers in and around the University of Alberta as well, is about the paperwork for different grant applications and how onerous it can be. They actually have different levels of grants they've told me about. These ones are kind of like high-target funding areas, because there's more probability of being accepted.

Can you talk to this and propose any solutions you might see?

[Dr. Peter W.B. Phillips]

I think there are two elements.

One is that the shortening of the life cycle of grants has increased the cost. It generally takes upwards of a year to put together the proposal and get it through the international peer review. In some cases, the grants have shrunk in size and have been shortened in duration. You spend a year to get two years' worth of money, then you have a six-month window to report on the money, and during the project you have to report, in many of those granting programs, quarterly.

It's at the point where if you're getting funding from Genome Canada, for example, which is a major funder through the ABC competition, they have actually made it mandatory that you have a full-time, permanent manager for the project.

Now, the tri-council grants and the Ag Canada contracts and grants don't have that, but they still have the same level of requirements. It has gotten to the point that if a scholar like me, who is on five or seven grants, didn't have somebody like that, all I would do is fill in paperwork. I wouldn't do the scholarly work I'm hired to do.

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

Absolutely.

I have a last question for both of you gentlemen.

I've heard a lot about technology transfer and commercialization and how it must be included in any research project or strategy, because it's one of the weakest links in the innovation project. What do you think the federal government can do better to connect both ends of the value chain to increase the number of research projects that are successfully commercialized?

Mr. Phillips, would you mind starting? Mr. Fraser, you can finish, and then I'm sure the chair will count my time.

[Dr. Peter W.B. Phillips]

I'll be really quick.

The “valley of death” is not unique in the agrifood world. It's not unique in Canada. It's a universal problem of taking technology into application and use. The agrifood system actually has some very good models that work. The commodity groups, such as the Canola Council of Canada, the Canadian Canola Growers Association, and the pulse growers are very effective as research targeting partners but also as a demand pull into the marketplace. I think there are some really good models there.

I think where we lag, in many cases, is where we try to create a technology that doesn't have a natural adapter and adopter. We try to find one after the fact. I think there's a little bit more partnering that might go on upstream that would lead to a downstream pull of the technology into the market rather than it needing a push.

[Dr. Evan Fraser]

I'll chip in here, if that's okay, and reflect on my experience of working for much of the last 10 years in the U.K., where there were a number of interdisciplinary programs designed to link industry and academics and a range of stakeholders on agricultural themes. There was the rural economy and land-use program and the ecosystem service and poverty alleviation program, just to name two that represented major cross-departmental initiatives that I think resulted in some significant translation of research ideas into on-the-ground, land-use change programs or new technologies. They were indeed taken up by farmers, because the initial partners in these programs included not only academics and researchers but industry groups and farm groups. So I think there are some good models from the U.K. that do exactly that.

[The Chair, Conservative, Larry Miller]

Thank you very much.

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

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

Thank you very much.

Thanks to both of you for being here.

I'll try to split my time between both of you. I hope we can get in a couple of questions.

Dr. Fraser, first to you, I have a document in front of me put out by Oxfam called Growing a Better Future, which you may be familiar with. They talk about access to technology. I'll read a paragraph and I'd like to get your comments on it. They talk about the major companies, in this case, Dupont, Monsanto, Syngenta, and Limagrain. It says:

The research agenda of these companies focuses on technologies geared toward their biggest customers, large industrial farms which can afford the expensive input bundles the companies sell. Such technologies rarely meet the needs of farmers in developing countries, who in any case cannot afford them. Small-scale farmers' technology needs are ignored, despite the fact that they represent the biggest opportunity to increase production and combat hunger. The market is failing, and--with a couple of notable exceptions such as China and Brazil--governments are failing to correct it.

We're talking about science innovation and the fact that we're getting technology to produce more food, and yet we're seeing that maybe it's not getting to the farmers who may need it the most in developing countries.

I'd like you to comment on that.

[Dr. Evan Fraser]

It's a wonderful question. Thank you for that.

The green revolution technologies, which are ubiquitous and miraculous in the west, were developed with a number of assumptions that were perfectly legitimate. The scientists who developed the hybridized seeds, etc., assumed that farms were large and relatively fertile, that markets functioned, the politics were stable, and that rural populations were relatively sparse. In other words, they assumed the conditions of North America and to a large extent parts of Europe. In those conditions these technologies and these companies' technologies work exceedingly well.

The problem is that those conditions don't exist in major parts of the world. In those parts of the world there's an enormous yield gap between what could be achieved theoretically and what is currently being achieved. The subtle point is that if we are going to develop new technologies to close this yield gap, to boost yields in sub-Saharan Africa, we have to engage in new kinds of partnerships between agricultural experts where the expertise largely resides in the west and the farmers who are going to use those technologies in sub-Saharan Africa and southern Asia.

It requires not just a new approach to developing science but a new approach to how we fund science and how we develop partnerships. In my opinion, it comes back to my point about the desire to link the development agencies and the agricultural agencies to fund and establish some of these initiatives. The Oxfam point needs to be well taken, and it requires us to rethink how we do science.

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

Thank you, Dr. Fraser.

Dr. Phillips, you're now at a conference on coexistence. I just received a document from Dr. Clark, formerly of Guelph University, who shared a document on weed resistance put out by GM Freeze. Apparently it's now a serious problem for farmers growing glyphosate-tolerant Roundup Ready crops. The document targets cotton, soya, and corn. Obviously you've done a lot of work to develop canola. They're saying here that weed resistance to glyphosate is also a problem for the environment because the current solution is to use more and sometimes stronger applications, for example, a mixture of glyphosate and 2,4D and others.

Have you seen the problem in the canola industry, and if this is the case, what solutions are being offered? Obviously using more herbicides probably isn't the answer. Are any other innovative solutions being offered to combat this threat?

[Dr. Peter W.B. Phillips]

Yes, I, too, have seen the reports, particularly from the United States and some of the Latin American countries, about herbicide resistance in weeds. As we all know, that's not a new problem; it's just compounded by the much larger acres that are going to a single chemical platform.

The good news on the canola side is that we actually have three competing platforms. Producers who discover that they have some weeds that appear to have adopted some tolerance to one of the chemicals, be it Roundup, Liberty, or IMI, can simply, if it's an economic problem—because sometimes it just looks bad, it doesn't actually change the economics of the crop—rotate their chemicals through and kill off whatever has the resistance. So at this point we're in pretty good shape.

The lesson from that is we don't want mono-technologies adopted in any ecosystem. You want competing models. One of the lessons from canola versus those other crops you talked about is that we were able to sustain competition throughout the supply chain, from research right down to adaptation and use.

Federal labs were critical in that. They were the ones making sure that all the companies were competing on a generally competitive basis, as they were doing the research, by doing some of the foundational research that brought them into the crop and made sure that, at the end of the day, we had three technologies that complemented each other rather than caused further harm.

I think that's a really good lesson for the whole industry. We don't want to erect enough barriers to create de facto monopolies here. We do want competition, because competition creates variety and it pushes down prices. I think that's an important lesson from the canola story.

[The Chair, Conservative, Larry Miller]

Sorry, Alex, you're over time.

Now I'll move to Mr. Payne, and you're the last questioner in this round.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chair.

My questions will be through you to the witnesses.

Thank you both very much for being on screen today. I understand, obviously, that you can't be here, so it's good to actually get faces to your names.

Dr. Phillips, I was listening to your opening comments, and there were a couple of things that certainly interested me. In particular, you talked about investments and not investing enough in agriculture, the federal research, and particularly you mentioned they are not working together.

I had this picture in my head of something bureaucratic, and I'm wondering if you could flesh out your thoughts around that, and what needs to be done to move those research dollars and people together to make sure we get the right groups working together to get the innovation we need, and to ensure that we can continue to feed the world.

[Dr. Peter W.B. Phillips]

Let me give a couple of quick examples of that. I think you currently have more than a dozen, but less than two dozen, federal labs through the National Research Council, and you have a similar number of labs through Agriculture Canada, many of which focus very explicitly on certain crops.

The industry and the scientists themselves tell me sometimes it's easier to do partnerships with a private sector company than it is with a lab in the same organization across the street. It's partly the structures of how research outcomes are managed and designed. That's one example.

A second example is that federal programs are increasingly getting more defined about what they'd like to support, particularly the programs under the umbrella of Industry Canada. One of the difficulties there is that they are increasingly carving out the potentially high-return research areas in the agrifood world. So you've got the potential to do it, but you haven't got an ability to put it together.

A third example is that Industry Canada says that even if we do invest in the agrifood world, in many cases Agriculture Canada and NRC are not eligible partners in research grants in the research programs. They can sometimes do parallel things, but you have to sort of do workarounds. So you get into the circumstance where we haven't got enough research. We have really important research being funded by multiple agencies that all come under the umbrella of the Queen of Canada under the federal government, and they can't do anything more than sort of talk across a fence.

Now, somehow getting their parts working together seems to me to be an area that's within the power and the purview of the federal system. If I look back in the past, the successes that the Canadian research community had were when Agriculture Canada, NRC, and other federal institutions worked well together.

We really do work well now in the Canadian context when there's a strong commodity group that can pull people together. So the leadership has left the federal system. It's now residing at the producer level, which isn't bad, but it may be less than fully useful. For example, the pulse growers in Saskatchewan, through the Crop Development Centre and in their partnerships, have been very effective at bringing new varieties to the market. But they've done it almost in spite of the federal funding and management and infrastructure programming.

[LaVar Payne, Conservative, Medicine Hat, AB]

I understood you to say that we are not being creative in the clusters. From that standpoint, what is there that you see could help us ensure we get that creative talent moving and get that into partnerships in the marketplace?