Agriculture Committee on June 18th, 2018

[Lloyd Longfield, Liberal, Guelph, ON]

Please go ahead.

[Damir Wallener]

We have a close working relationship with Cargill. It has some interesting facilities in the U.S. As an example, it recently brought in a very bleeding-edge technology on a pilot basis to one of its plants in the Midwest. That pilot is going to be exclusive to Cargill because Cargill has the ability to make it exclusive, which means that Maple Leaf doesn't have it.

[Lloyd Longfield, Liberal, Guelph, ON]

I'm sorry. With only a few seconds left, I have to interrupt with a quick question. Do you own the IP?

[Damir Wallener]

Yes, we do.

[Lloyd Longfield, Liberal, Guelph, ON]

That's been your protection so far...?

[Damir Wallener]

Yes. In fact, I was just editing our latest batch of patents: 46 pages and nine individual sets of claims.

[Lloyd Longfield, Liberal, Guelph, ON]

That's great, and we have new IP policy to try to help with that.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Wallener and Mr. Longfield.

Mr. MacGregor, you have six minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair, and thank you to all of the witnesses.

I want to start with a comment for Mr. Wallener, who comes from the Cowichan Valley and whose success story many of us have been watching very closely. It's putting the little Cowichan Valley on the map. I remember that when we were in Guelph talking to Bioenterprise, I started with a description of your company, and they said, “Yes, that's one of our clients.”

I think this idea came to me when considering you as a witness. We hear a lot about these organizations that do take government and private sector funding, but we hadn't heard from the companies that are actually taking this journey, as you are. You quite rightly pointed out that it's really in the incubation and validation stage that we're starting to lose companies. I wonder if you could expand a little more on that.

We have heard a lot from Bioenterprise. Given the way that organizations like Bioenterprise are currently working, we ultimately want to make a very clear recommendation to the government, so in the context of how it's already operating, can you expand a bit on what more we should be doing specifically?

[Damir Wallener]

I would be delighted to.

We first met with Bioenterprise in about March. You can see in our timeline that we were already essentially funded at that point. The interesting thing with Bioenterprise is that we came to that meeting with a deeper and broader network in ag-tech and food-tech and the investment community than they had. This is not to say that they're not good or anything like that. I mean, they have constraints that they must work within.

We commonly in Canada refer to organizations such as Bioenterprise as “accelerators”. This is a non-standard use of the term. An accelerator provides funding, and Bioenterprise does not. Also, Wavefront—recently departed—does not. Essentially, in terms of our entire federally supported accelerator network scheme, they're not actually accelerators.

When we are approached by an accelerator in the U.S., they not only introduce us to their network, but they give us money. As soon as you give somebody money, it creates a subtle or not-so-subtle obligation and pressure. As well, money leads to more money. We have offers on the table for matching funds from organizations in the States that are like Bioenterprise—basically, organizations supported by local and regional governments that will match dollar for dollar everything we raise in the private sector.

Now, we have not taken those, because I'm really good at bluffing and getting them to give us what we want without giving them what they want, but the reality is that there are Canadians all over the U.S. We are everywhere, especially in technology, and in anything to do with agriculture as well. That happens because there isn't enough to hold companies here long enough to set that taproot. All our customers are going to be in the U.S. in the first wave, but we can stay here because, number one, we have the money, and, number two, we were able to get our core team built in Vancouver Island to a kind of critical mass that it now becomes difficult to move. The support and all the other stuff can happen and will inevitably happen, some of it in the U.S., but that core team is now rooted.

The problem is that if you can't get that root tapped, they're going to go. It's like when you send a kid away to college. If you're from a small town, unless you have that taproot, that kid is probably not coming back until they're 40 and they have their own kids, right? You want to get them at that growth stage, because that's where the big bang for the buck is.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Given where you are right now and the promise that the future potentially holds, I think we all salute your patriotism and the fact that your group really wants to stay in Canada. But if we have government policies playing the cards right and you have stakeholders there, what does the ideal Canadian future look like for EIO and other companies in your situation as we try to achieve that $75-billion goal? You've already stated in your opening remarks that mastitis is a $14-billion-a-year problem for the worldwide dairy industry.

[Damir Wallener]

Yes. Are you more asking about what sort of policy adjustments are needed?

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Or just what does it look like for your company in Canada? How will the exports of your technology help us achieve this kind of goal?

[Damir Wallener]

We are looking at somewhere between $300 million to $400 million of revenue down the road if everything executes correctly. The challenge will be that we have already received one acquisition offer, which we've declined. At some point an offer is going to come in that's difficult to decline.

In my mind, there's no question that five to 10 years from now what we are doing in terms of diagnostics is going to be standard practice. As long as we keep moving, stay first, and stay agile, then we will own that space, and that is literally hundreds and hundreds of millions of dollars in potential revenue.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

That's great. Thank you.

Mr. Mercer and Mr. Metzler, you've talked about the tug-of-war between the regulatory environment and the push for innovation. I assume these are both happening within Health Canada.

[Glen Metzler]

Yes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Yes, and that's the unfortunate thing. That's a department where the right hand and the left hand don't seem to be talking to each other too much.

[Glen Metzler]

No. I guess the thing is, though, that when you have a contract with the agriculture side and the funding comes from the agriculture side, but the ultimate decision comes from the health side, you're in a position where your hands are tied. We can't move forward without something breaking.

[The Chair, Liberal, Pat Finnigan]

Thank you.

[Glen Metzler]

So if we're not going to get the opportunity to move forward in Canada, then what other options do we have but to leave?

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Metzler.

Thank you, Mr. MacGregor.

Mr. Breton, you have six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you very much, Mr. Chair.

I want to thank the witnesses for being here today.

I have a more general question.

The Canadian Agricultural Partnership has a $690-million budget to support growth in innovation and the environment in the agriculture and agri-food sector.

I would like your opinion on something I consider quite important: cooperation between industry, government, and academia.

All aspects of research and development lead to innovation and can increase exports. We are here in part to work with industry to increase our exports to reach $75 billion by 2025.

Tell me about that cooperation, which could be promising. We want to hear from experts like you as part of our study.

Perhaps you can answer one at a time.

Let's begin with you, Mr. Wallener.

[Damir Wallener]

Literally today, the main part of my team is at the UBC research barn in Agassiz, in the Fraser Valley, starting a long-term collaboration with the University of British Columbia's dairy department. This is our first, and at the same time we are submitting a proposal to the investment agriculture foundation related to follow-on work from this as well.

In general I can't say that I have significant complaints about the programs. Everything seems to be going well.

The one place where we do get caught a little bit is that we are essentially exporting a technology as opposed to a product, and so when we submit our proposals and they call for travel, our travel is generally outside the country but only travel inside the country is supportable under the programs. This is not a complaint; it's just an observation. We can work around this easily enough.

Yes, in general we value our university, our academic collaborators. They provide tremendous value. Our experience has actually been very, very positive under the programs you've mentioned.

[Pierre Breton, Liberal, Shefford, QC]

Mr. McAlpine, do you wish to respond?

[Rory McAlpine]

Yes, that is a good question.

Cooperation between industry and academia, among others, is absolutely essential.

I can tell you my opinion on cooperation within the industry itself. Competition is fierce in the food processing sector. The potential profit is minimal in this sector, so the trend is to compete fiercely with other companies. We do not have a spirit or culture of cooperation on highly competitive issues such as food safety, the environment, and sustainable development. These issues create a great deal of pressure. We need to work together to find solutions, but we do not have that spirit of cooperation.

That is why it is difficult for the government to work with us. We are not comfortable collaborating with and receiving investment from the government. The government wants us to share our results. We have to make a greater effort in that regard.