Foreign Affairs Committee on May 7th, 2012

[Khalil Shariff]

Mr. Chairman, thank you.

There is a now burgeoning series of innovations in effectively aggregating a series of small-scale farmers in order for them to be able to upgrade the quality of their surplus produce. Most of these farmers will be, in the first instance, simply producing enough to feed their own families. The issue is that once they get past that threshold, what do they do with the surplus? Is there a way for them to extract maximum value from the surplus production? The project I mentioned, Frigoken, does this in green beans.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

It's called Frigoken?

[Khalil Shariff]

Yes, Frigoken. It is the largest processed beans manufacturer from Kenya into Europe. The key has frankly been to aggregate tens of thousands of small-scale farmers and invest in their capabilities.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Do they have a marketing system there?

[Khalil Shariff]

That's exactly it.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

They have a pricing system there to help them with price stability, like a marketing board? Would they have storage facilities made?

[Khalil Shariff]

It's not quite a marketing board. What it is, effectively, is a company saying to the farmers, “We're going to give you some microloans in order for you to upgrade the capacity you have to improve the quality of production. If you don't have high-quality production, you can't export to Europe. We're going to invest in your capacity to have high-quality output. We're going to help with the transport of your goods to market. We're going to give you a price guarantee with some upside if the prices are better, but we're always going to give you a floor”—

[Mark Eyking, Liberal, Sydney—Victoria, NS]

A base, yes.

[Khalil Shariff]

—“and this way, you can plan for your future.”

Then what Frigoken does is it invests in a processing plant centrally. It gathers all the produce, brings it centrally, and then processes it in a way that is in accordance with what their marketing specialists are telling them will sell in Europe. This way, the farmers get the benefit of being able to get European prices for their goods, which otherwise they would not be able to do.

There are many other experiments. Honey is another area where this has been done very well in east Africa.

This is the idea. Aggregating thousands of small-scale farmers to enable them to produce high-quality surplus, and then providing them with the support in marketing and transport in order to export their goods.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you very much.

I guess that's time? Thank you, Chair.

[The Chair, Conservative, Dean Allison]

Thank you.

We're now going to start our second round. I think we have time for a full round.

Let's start with Mr. Williamson for five minutes, please.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Chair.

Mr. Shariff, I would like a quick clarification. There was a point that Mr. Brown made, that your holding company does partner with government and receives funding. I see from the notes here, in fact, that you have worked with government and used tax dollars in your portfolio.

[Khalil Shariff]

I would just make the distinction, Mr. Chairman, that the Aga Khan Fund for Economic Development, which owns these companies, takes very little grant money from governments. We have very significant not-for-profit activities in health, education, rural development, and microfinance, etc., where we've worked with CIDA and many other donors for many, many years.

The one area where the Aga Khan Fund for Economic Development—the private sector arm—does take public money, is...there are many western donors that have private sector agencies that provide concessional debt or favourable equity in order to spur that kind of work.

The Aga Khan Fund for Economic Development does work with governments. Canada does not have that kind of vehicle, but the governments who do often work with—

[John Williamson, Conservative, New Brunswick Southwest, NB]

Presumably, that's being done because you have certain expertise on the ground that governments lack. They don't have the infrastructure and it's more efficient. It's better value for taxpayers to work through your—

[Khalil Shariff]

I think there are certain goals they are seeking to achieve and they can achieve them through these companies.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Professor Brown, we're going to find some agreement here. First of all, I was pleased with your statement that more money doesn't necessarily mean better results on the ground. I, too, get a little concerned when governments accept money from government.

I have a question for you. In the international sense, you said, and would you agree that even domestically here, it's not good policy for governments to be handing out tax dollars to business?

[Dr. Stephen Brown]

I think under exceptional circumstances it is good policy for ensuring things like access. For instance, to subsidize access to broadcasting or the Internet in the north or for postal services and things like that, I think government involvement would—

[John Williamson, Conservative, New Brunswick Southwest, NB]

What about an auto bailout?

[Dr. Stephen Brown]

I could only answer that on a case-by-case basis, but—

[John Williamson, Conservative, New Brunswick Southwest, NB]

Well, we had a big one in this country. Like the one with GM—what's your opinion of that?

[Dr. Stephen Brown]

Yes. I'm in favour of assistance.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Okay. Good.

Look, it sounds as if you're arguing more with a kind of process. At the end of the day, I don't believe in corporate welfare. I don't like government spending tax dollars on any corporate entity. I think businesses should go raise their money and do what they have to do in the marketplace.

But in this case, are you not concerned with...? You just don't like the fact that it's a business entity that might be delivering these programs, as opposed to an NGO or another entity not linked in with a business. Is that correct, as a starting point?

[Dr. Stephen Brown]

My main concern is that public funds are needlessly going to activities that could be financed otherwise, and that those funds would be better spent elsewhere. I'm not saying that the activities are necessarily bad, but this is not the best mechanism or necessarily the best place to spend limited public funds.

[John Williamson, Conservative, New Brunswick Southwest, NB]

That's a good point. You talk about building schools and doing things overseas, but I would argue that there are an awful lot of Canadian taxpayers who think that in fact money should be—and is—better spent in Canada, actually. I would put to you that if in fact we're going to have aid money budgets—and I think we should—we have a duty as legislators to ensure those dollars are actually receiving results.

If it is actually shown—I believe it is, and I believe Mr. Shariff's portfolio and his statements today highlight this—that in many cases private businesses not only are going to have the expertise but are going to be able to deliver results at a lower cost to taxpayers.... But you dispute that and you oppose that, just because you don't like money going through businesses.

[Dr. Stephen Brown]

No, I think that's inaccurate. What you're doing is what I mentioned earlier: conflating different kinds of businesses.

I'm especially in favour of things like microfinance and supporting start-ups of companies in developing countries. I'm less in support of public funds going to large, highly profitable Canadian multinationals—