Agriculture Committee on Oct. 27th, 2011

[Frank Valeriote, Liberal, Guelph, ON]

I myself come from an entrepreneurial background. I probably speak for a lot of people, and maybe some around this table, that, if given the opportunity to invest in small companies...because people are perhaps tired of mutual funds and other things, particularly in today's market.

I see, being in Guelph, that if an opportunity came along, if Bioenterprise said, “Here, we're putting a fund together, and people can invest in this thing and have a flow-through share and get some immediate benefit”, people would then take that chance in this industry. I was reading in The Economist that this is a trait we've inherited from the British, apparently, unlike the Americans.

Do you see that? Do you see an opportunity for private investment? We really have to incentivize private investment and not always rely on the government to come up with incentives.

[Dr. Murray McLaughlin]

I agree, and I think the private investment will be there. If you look at somebody like BioAmber, their facility is $80 million to $90 million. The rest of that funding will come from them. The money they have from the government is loans. It's not grant money.

The problem is that most of these start-up companies, when you look at their bond ratings, are rated triple-B or less. Well, banks will only touch you if you're double-B or higher. That's why there needs to be some methodology to help them get through that first construction. Once they have that, then the banks will probably be there, because that will probably move them to a double-B and then they'll get the funding; it's just getting that first facility.

[Frank Valeriote, Liberal, Guelph, ON]

Right.

Do I have more time, Mr. Chair?

[The Chair, Conservative, Larry Miller]

You do not. Sorry.

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

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

Thanks.

Well, after the markets today, Mr. Valeriote wishes he had more money in the markets: they were up almost 300 points today.

My first question is for Ms. Fowlie. One of the counties I represent is Huron County. At one time, not too far from where I live, there were apple orchards lined up on each side of the county road. It was called “orchard line”.

I'm wondering, in areas where horticultural growers are facing pressure--they're facing pressure on the price of land and the alternative crops to grow there, which are much more straightforward to harvest and plant--how is your group continuing to push the envelope from innovation to kind of hedge off those pressures? Or is what I've described just something I've seen in my own area? It seems to me that this is something a horticultural grower has to see.

What are your thoughts on that?

[Anne Fowlie]

Thank you very much.

Certainly it is something that's a huge concern, I think particularly to our sector, but it's not unique to horticulture. In some respects it's evolution, but how do we fend that off? Regardless of whatever happens in evolution, everybody is still going to have to eat. Once some of that land is gone into other things, it's not ever going to be brought back into agriculture production.

I think it's a number of things. Part of it is coming through diversification that we're seeing in what some producers are doing in terms of looking at other things: mixing up crops, other enterprises, looking at innovation, the different ways of producing crops. In 2008, 45% of processed foods launched contained health and nutrition messaging. It was 31% in 2002, so in 2011 going into 2012, I would expect that it's increased again.

What are the opportunities for horticulture in particular in the area of health? I think we have some opportunities, whether it's through processed items or medicinals, or just in fresh consumption that perhaps some other sectors don't have. Technology to help ease how the crops are produced...I don't want to say it's burdensome. It can be complicated. As I mentioned earlier, the very high cost of production...that definitely is unique to horticulture. How do we make for a better lifestyle and a better level of profitability on a consistent basis? Some of those things....

We've lost so much of our processing capacity in this country. That's not insignificant and that's not been something very positive for the industry. There's a whole host of reasons as to why that has happened, and that's a whole debate for another time and place.

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

Right.

I'm going to ask Mr. McLaughlin a question. If I have a chance, I'd like to ask you another one.

Mr. McLaughlin, you mentioned in one of your statements about the move away from planting food crops for biomass or biodiesel. I'm just wondering, because obviously there are still a lot of food crops that go into both, is that a philosophical issue that should be looked at within Growing Forward 2, with science and innovation supporting projects that look at using food crops for biodiesel or biomass? Or should we be looking at alternative crops like you mentioned, and switchgrass is a great example, to do that? And also philosophically about the amount of acreage allocated to biomass and biofuel....

[Dr. Murray McLaughlin]

Yes, if I look at the biomass, there are two things. One is utilizing biomass from existing crops. In corn, you can start switching to the stover rather than the grain for producing biofuels. There's still some research that's going on there, but eventually we will see that shift to using that component of the crop that isn't used today. It's the same with wheat straw or other straws that are out there. They could be utilized as cellulosic material for producing biochemicals or biofuels rather than using the grains. It's probably another three to five years, but we're gradually going to see that shift into more and more of those cellulosic materials being used for producing these products.

The main reason is to move away from food crops. It's not philosophical any more. It's there, it's going to happen. There's a lot of research going on around the world. The U.S. is really pushing hard in this sector as well right now. Again, we have to watch what's being developed, not just in Canada but elsewhere, that we can draw back in here to help us create those commercialization opportunities.

I'd make one quick comment on the horticultural side as well. I have a farm and I grow a few blueberries. Another factor to keep in mind is when you put in a high-bush blueberry crop, it takes five years to get the maximum production. There's a long time period when the farmer's got to put in a lot of money and a lot of capital before he starts seeing maximum return on his effort. Maybe there needs to be a way to think about how you help these kinds of crops on the front end that take some time. Just a side thought.

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

Within the field you have been in, obviously there have been a lot of dynamic things that have been created through your years of work, with intellectual property and the things that come along with it. What has your experience been with those, and also with defending those in the United States?

[Dr. Murray McLaughlin]

Patents and trademarks are critical. Obviously any companies that are going to go commercial on our side have those and look after them. Defending them in the U.S. is not a problem. Most of them file in the U.S. first anyway, simply because the process is quicker if you get your filing done there and then file in Canada and wherever else in the world you want protection. Usually the U.S. is the first place they will file, though.

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

Crops that were more prevalent maybe 50 or 60 years ago--and sugar beets would be a good example.... I recently heard that in Ontario now they are looking at planting thousands of acres of sugar beets down there in some of the more marginal tobacco lands. I don't know if that's something you've heard about or not.

With regard to that, I'm just wondering, since producers may be looking at alternative crops that were used years ago, how that knowledge is transferred and where that research starts again on the potential for those crops.

[Dr. Murray McLaughlin]

The knowledge will be there in some cases. I happen to live down near Tillsonburg, so I live in that part of the country, but probably more sweet potatoes are grown. There are a fair number of sugar beets grown in Lambton County. They're shipped across the border right now for producing sugar at the refinery in Michigan. Unfortunately, we lost all our refineries for sugar beets a number of years ago, but there may be some opportunities for sugar beets on the bio-industrial side, because once you take the sugar out of the beets, there is still a chunk of biomass left. Nobody has really looked that much at that from a Canadian perspective yet.

I don't know how well they would do down in that sandy soil in our part of Ontario. It probably depends on the year. That's not an area that sugar beets were grown in before. They were always grown in the loam and heavy clay soils, down near Chatham and up in Lambton County.

[The Chair, Conservative, Larry Miller]

Thank you very much.

We'll now move to Mr. Atamanenko for the last question.

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

Thanks to both of you for being here.

Ms. Fowlie, you mentioned that $3 out of every $4 spent on produce by consumers in Canada is spent on imported produce. What would you think would be a realistic ratio for us, and what is the main way we could achieve that?

[Anne Fowlie]

Even if we set a target of 50-50, that would be a significant boost.

Some of it is going to come from changing varieties, to keep up with varieties of crops we can grow that other countries are growing. It's about taste. It has to be the right price. It has to be there every day. It has to be perfect, and a whole host of other things, so some of it is going to have to be variety development.

We mentioned blueberries and the length of time to come to market. Our blueberry industry has grown tremendously. We export a lot of them. But if we look at something like strawberries, we're used to Canadian-grown strawberries. You get them early in the summer. You have them for Canada Day weekend and a little bit longer. There is a lot of work being done looking at different varieties that will keep Canadian strawberries in the market longer.

I am thinking of the Demers company. Indeed, some of the strawberries it produces mature later.

We have Canadian strawberries available in our market well into September and into parts of October, but you're looking at an investment of $50,000 an acre to do that before you put a plant in the field.

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

I've asked this question before at this meeting. I was at a Federation of Agriculture banquet last year, and I sat beside one of your directors. I forget his name, but he's a gentleman who is a big broccoli producer in Ontario.

[Anne Fowlie]

Was it Ken Forth?

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

It probably was. He mentioned that he makes money when there is something wrong with the crops in the United States, when there is a drought. I got the impression he was the biggest broccoli producer in Canada, and yet he's fighting to survive. Obviously if he's a big producer, he probably has access to technology, so what do we do? The question I am leading to obviously is about the open border for produce. Is there something we can do to maintain our status as a trading nation?

I've talked with the B.C. Fruit Growers' Association about the problem apple growers have in Canada with subsidized applies being dumped in our country. Should we be pushing for some kind of a floor price? Have you folks talked about that at the national level? Obviously we can innovate and innovate, but ultimately if somebody's going to dump some produce here at less than your cost of production, it's hard to survive. So either we just forget about trying to grow and forget about trying to get that 50% ratio, or we try to do something.

I'm wondering if you've thought about that and whether you have any suggestions in that area.

[Anne Fowlie]

We've talked about a number of things. Certainly within horticulture there are not the marketing regimes, as I would call them, that there are in some other sectors. Part of what we face is a gross lack of market intelligence sometimes, market data, even in some instances not really knowing what the true market value is of crop—all it takes is one producer, who doesn't know, to undersell. That can bring prices down. There are some things that can be done there.

We're looking also at what we can do around a promotion and research agency. Again it will take some work by some of the larger commodities first, to lead the way. That won't necessarily help with the border, but it will help reinvest money into the industry for research and innovation.

I think more and more—particularly because the Canadian and U.S. markets are so seamless, so integrated—we're seeing some of the larger commodities really working more closely together nationally and across border to look at how they can change that or change the shift a little to look at supply and demand to maybe help with that.

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

I was told once in a conversation with some fruit growers that often what the Americans will do in their peak apple season is load their semis down there with apples, and the driver doesn't even know where he's going until he gets that direction to go to some supermarket or some store in Canada and dump that produce at that price.

In innovation we're doing the very best we can. Of course we need more money from government and research, and we need everybody to chip in, but the bottom line is that if we don't do something to somehow protect you folks so that the farmers in my area don't have to.... We visited them. We visited orchardists last year, and they're hurting. A lot of them are either ploughing their land up if they can't put in the small trees, and they're trying to go into grapes, or they're trying to sell their land. Often they can't sell, because it's an agricultural land reserve. As a food-producing nation, it doesn't do a lot for our own ability to control our food supply and our food sovereignty. And I'm just—

[Anne Fowlie]

There's no question there's some work that needs to be done in the area of market intelligence and dynamics and having perhaps a better decorum in the market, if you will, and ensuring that a greater return of that food dollar does go back to the farm gate.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Mr. Payne, there is time for one quick question. We have some minor housekeeping.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

I just have a comment. We grow both sugar beets and potatoes in our riding. I was interested in the research that's going on in terms of the potato wireworm. I'm not aware of that issue or problem in our riding which is southeast Alberta, the Taber-Lethbridge area.

[Anne Fowlie]

You folks are fortunate there. It has been more of a problem in British Columbia and in areas of the east, and hopefully it won't become a problem for you.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you.