Thank you very much for the invitation. Three times lucky: we finally got here. We had cancellations and votes and all kinds of things going on, so it's nice to finally be here and meet with you.
I'm happy to come here to talk to you about the role of the seed industry as the foundation for agricultural innovation and competitiveness. I bring apologies from our president who is unable to come to Ottawa on this short notice. He is from Winnipeg and I don't fly him in unless it's a certainty, so you're stuck with me, but I'll do my best to make a contribution to your study.
The Canadian Seed Trade Association brings together 132 member companies. Our members are involved in all aspects of seed, from plant breeding and variety development, to production, processing, packaging, marketing, sales, and trade.
Our members range from single grower retailers to the large multinational companies, and from distributors of small packet organic herb and spice seeds to the world's giants of biotechnology. We have a very diverse membership. Our members have diverse interests and objectives. Many are competitors in the marketplace, but they come together as the Canadian Seed Trade Association in support of our mission, which is to foster seed industry, innovation, and trade.
Agriculture and Agri-Food Canada has estimated that nine out of every ten bites of food taken around the world starts with the planting of a seed. Seed is the foundation of the world's food supply and it's an important contributor to its supply of fibre, fuel, and industrial products.
Seed is the driver of the innovation that the world's farmers are going to need in order to meet the goal of feeding, fuelling, and clothing a world population that is expected to reach over nine billion people in about 35 years.
Studies have shown that over half of the yield in gain of most crops is from the genetic improvement that's delivered by seed, so farmers are looking to the seed sector, my members, to provide them with superior genetics so that they will improve productivity and protect the environment in which they operate.
Almost every week there is another announcement of a significant achievement in plant breeding and research by public and private investors and researchers. The impacts are already substantial. According to Science Daily there has been a step change in speed and cost-effectiveness. What previously took six generations to achieve can now be done in just two.
Recent achievements, ranging from the discovery of a gene that can improve photosynthesis, to genome sequencing for wheat and chickpeas, to the development of insect-tolerant wheat varieties promise future yield increases of more than 50% in the world's staple crops.
In the shorter term, advances are being made in drought and heat resistance, efficiency of water and nutrient use, disease resistance, and in the quality and health benefits of oils and meals. All of these and other advances are entering the innovation pipeline at a rapid pace and they hold great promise for farmers and consumers.
The question then is whether and how Canadian farmers will be able to access these advances. The answer is only when Canada's policy and regulatory environment facilitates investment.
Where the private sector is able to generate a return, it does invest. In 2012 CSTA's members invested over $109 million in research, plant breeding, and variety development. That's 5% of their combined sales and represents a 94% increase from the five years previous.
Most of that investment, however, has only been in three crops, canola, corn, and soybeans, where the operating environment facilitates a return on that investment in order to reinvest in the development of even better varieties.
Breeders and developers working with these crop kinds operate in a more flexible regulatory environment. For example, corn is not subject to variety registration, and canola and soybean registration has evolved to meet the needs of the marketplace.
These crops also have access to better tools to protect their inventions: new traits, attributes, and varieties. The development of hybrid corn and hybrid canola means that farmers purchase seed every crop cycle in order to continue to get the superior aspects of those hybrids. Improved performance and attributes in canola, corn, and soybeans have also been developed with the use of modern biotechnology, which allows for the use of more effective intellectual property protection tools like patents and technology use agreements.
However, private sector investment in some of Canada's other major crops, like wheat, barley, oats, flax, and pulse crops, has lagged. In 2012 only 8% of private sector investment was in cereals, 2% in barley breeding, 1% in flax breeding, and there was no significant investment in the breeding of oats or pulse crops.
To date, the Government of Canada has been the largest investor in plant breeding in these crops. But the government has been reducing and redirecting investment in plant breeding and research and is looking to the private sector to fill in, either on its own or in partnership with public institutions. The private sector is keen to increase its role, but that can only happen in a policy and regulatory environment that will foster investment.
First, our members need a continued commitment to regulatory and trade decisions that are founded in science. Science is reproducible and measurable. Regulatory processes that are based on science ensure that innovation is assessed in a consistent manner, giving confidence to consumers and to the developers of innovation. Public opinion, market acceptance, and other socio-economic factors are not consistent over time or geography, and they must not enter into regulatory and trade decisions made by governments.
Second, private sector investors need flexible, predictable, and enabling regulatory environments. The government has taken some substantial steps toward improved regulatory systems, including the removal of kernel visual distinguishability as a requirement for wheat variety registration, and the development of a framework that could, but doesn't yet, facilitate more efficient variety registration for all crops. However, there is still so much more to do. While I'm speaking of variety registration, I need to point out that the so-called three-part registration system implemented five years ago has not yet improved registration because even within the system, changes that should be simple have to be made by regulation.
We look forward to some of the provisions contained in Bill C-18, the agricultural growth act, which we hope you will soon have before you, and we hope that we will be appearing on it. Specifically, we support the ability to use foreign data for registration purposes and the ability to incorporate some documents by reference. The review of the registration system that was launched last fall is also positive for plant breeders and developers. We hope that it will give crop value chains the opportunity to design systems that will best suit their needs.
Third, in order for the private sector to invest, it needs to be able to generate a return that will cover its costs. That has not generally been the case in crops like wheat. One of our members provided us with a real-life example, FT Wonder, which was developed in Ontario. The company invested nine years and over $900,000 to develop and bring this soft red winter wheat to the market. After three years in the marketplace, the company had not even recovered half of its investment. Obviously, this is not sustainable.
Effective protection of intellectual property means that plant breeders and developers can set conditions on the use of their varieties for a specified period of time. The conditions can, and most often do, include remuneration or a royalty. For crops like cereals, pulse crops, flax, and other crops, the only real form of intellectual property protection is plant breeders' rights.
Bill C-18, as you know, strengthens plant breeders' rights, by giving breeders the ability to set conditions for a longer time and over more uses. For example, in addition to selling and advertising for sale, the breeder can set conditions on production, reproduction, conditioning, stocking for sale, and import and export of these varieties. At the same time, the bill entrenches an exception for farmers to allow them to save and store grain from protected varieties and to condition it for use as seed on their own farms.
Amended plant breeders' rights legislation will give plant breeders and developers increased confidence to invest in Canada, and it will also give international plant breeders and developers the confidence to give Canadian farmers access to superior varieties developed beyond our borders.
The last thing for today is that our members need improved access to markets. Canada is the world's fifth largest exporter of seed. Our production environment, comprehensive food safety regulations, seed quality standards, and efficient production and processing systems give us an advantage over many of our competitors. However, Canada is not able to capture some very substantial opportunities internationally because many countries impose barriers to trade that are not founded in science but are politically driven.
We appreciate that the government has adopted a very aggressive trade agenda. We encourage negotiators to remain steadfast in all negotiations in support of timely and science-based approvals and the development of trade-facilitating measures to address low-level presence of approved genetically modified events in shipments of grain and seed.
I apologize if I've gone over time, Mr. Chairman, but I will be happy to answer any questions you might have.