Industry Committee on May 28th, 2008

[Raymond Simard, Liberal, Saint Boniface, MB]

Is part of your objective to try to leverage private funding?

[Perry Lidster]

Yes, it certainly will be. We're looking at developing a continuum of funding and support for technology, and that will include publicly raised money and privately raised money.

[Raymond Simard, Liberal, Saint Boniface, MB]

One of the things we discussed this morning, and it was actually very troubling, was that yesterday, in Manitoba, we were told that Canada usually raises about $4 billion in venture capital, and this year it is down to $1 billion. For me, that's obviously a bad sign.

I'd like to ask anybody on the panel where we are going with this. This is a very scary thing. What do we have to do as an industry committee? What do we recommend to the government to modify this behaviour? We've heard all kinds of things. Maybe there should be some tax cuts. Are there recommendations that anybody on the board here could make?

[Perry Lidster]

Venture capital is only one source of funds. There are many other sources of funds. In some cases, venture capital is not the appropriate vehicle for funding. It is worrisome, particularly for people who rely on venture capital. A reduction from $4 billion to $1 billion is huge. But for us, if we're taking the technology from the laboratory to a semi-commercial stage, we can find other sources of funding.

[The Chair, Conservative, James Rajotte]

Mr. Konecsni.

[Jerome Konecsni]

Further to your question, one of the things we can do to excite and encourage more private investment is to have mechanisms to take the research that is done at the universities and in the federal labs further down the value chain. A good example is crop research. I gave you the example of the plant accelerator. A lot of the gene discoveries that are made are not taken up by industry, because they're still early stage and there's still a lot of risk involved. So they're not willing to take that risk. It's too early. If we can move it further down and generate field data....

Right now, having data that is proof of the concept in a greenhouse is one thing. But that's not going to be enough to entice a company to invest millions of dollars to commercialize it. So with an investment that can be supported by the public sector, I think we can greatly accelerate the development of new crop varieties and the commercialization of our research. They will invest when they see that the opportunities are there and when the risk is at the appropriate level.

[Raymond Simard, Liberal, Saint Boniface, MB]

We've just been to the ag station--I guess that's what it's called--and it's actually an amazing place. But I'd like to ask a few questions about that. Although they're doing some absolutely phenomenal, world-class things, it seems to me that last year, or a couple of years ago, Europe was planning on boycotting anything that was genetically modified.

I wonder if I could get some feedback on that. If we're going in that direction at 100 miles an hour, and nobody is going to buy our product, why are we doing this?

[Jerome Konecsni]

I found the article I talked to you about earlier this morning, and I'll give you a copy. It provides excellent data on genetically engineered crops and the social, economic, and humanitarian benefits. In the 12 years since genetically engineered crops were introduced, the growth in acreage has been double-digit.

I'll quote from the article:

This very high adoption rate by farmers reflects the fact that biotech crops have consistently performed well and delivered significant economic, environmental, health and social benefits to both small and large farmers in developing and industrial countries.

There are now 23 countries worldwide that are growing GM crops, and 12 of them are developing countries.Ten million poor farmers have been growing GM crops in those developing countries. And they have enhanced their farm income significantly and have improved their economic condition dramatically.

[Raymond Simard, Liberal, Saint Boniface, MB]

We assume that Europe is not, for the most part.

[Jerome Konecsni]

If you look at the data in this article, it will show you that there is some GM crop, but it's very small. Canada is fourth in acreage growing GM crops. The United States is first. China and India are after Canada. Argentina and Brazil are second and third.

[Raymond Simard, Liberal, Saint Boniface, MB]

We found that leadership is extremely important, that the person who is heading an organization can be absolutely critical. What do we need to do to attract the best and brightest to lead some of these organizations?

[Jerome Konecsni]

You need to have policies that will attract the best and the brightest by compensation. A lot of organizations are restricted in their ability to attract and pay. They have an idea of whom they want, but the pay scale is restricted by public policy or whatever, and that is a big factor.

[The Chair, Conservative, James Rajotte]

Madam Brunelle.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good afternoon.

I was very impressed with the two tours we had this morning at the Synchrotron and at Agriculture and Agri-Food Canada. I was fascinated to see the huge financial outlay and the wealth of patience that are needed to do research. Believe me when I say that I admire your work greatly.

I have a question for Genome Prairie. You certainly caught my attention with one of your key observations, namely that genomics tools can be applied to address world issues such as global food and energy shortages, climate change challenges, and environmental sustainability.

If we as politicians could solve just a tiny part of those problems, it would be a considerable achievement. With all the scientists in the world who are doing research into the same issues, to what extent does Canada have the economic capacity and the scientific resources to get involved and to make its mark?

It is a considerable challenge and you may well tell me that you are excited by it. But what can we as politicians do to move research forward so that it produces results? What do we do about the impression that budgets for the area are bottomless pits and that we will never have the population base to sustain them?

[Jerome Konecsni]

The position papers were written by a team of scientists together with their partners from industry and the funding mechanisms. There is a compelling argument for why Canada has the capacity and how we can, with a reasonable investment, make a significant impact on all those issues—the energy shortage, climate change, and so on. You as politicians can support the strategic advancement. We will see at least 10 projects that will be awarded funding by Genome Canada in the next year. They will be moving some of this research forward.

What we need is a strategic and coordinated effort to develop a Canadian crop strategy to address climatic change and improvement of the food quality. Next year, there is additional funding coming through Genome Canada. This was provided by the federal government, and it was one of the most significant investments in science and technology that the government made last year. It was based on a well-stated socio-economic argument for why Canada can do this. They set targets: achieving a 25% crop yield improvement, addressing climate change and stress, making crops more robust, making crops so that we can use marginal land to produce food. These are all very real.

One of the gentlemen sitting with us today is a foremost scientist in this area. He is leading a team of 20 scientists at PBI, and they are just one component of a cluster who could lead Canadian efforts in this area.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

In your opinion, what is Canada's competitive advantage in this research? What cards can we put in the hand of a researcher such as yourself, Mr. Hodgson? Is there something that we can provide? We know that cutting edge researchers value their services in the millions of dollars, a little like star hockey players. Apparently, we have to look all over the world for people of that calibre. But maybe that is not the solution either. We also have some very fine people at home. What can we offer to researchers like that? Do we have the structure to attract them?

[Dr. Paul Hodgson]

One of the principal ways we can address that is by creating a corporate culture that's friendly to the scientists. Alberta has started doing that with the Alberta Ingenuity Fund. VIDO has done it for about 30 years with our scientists, and we've been very successful in recruiting some of the best scientists in the world. We've had scientists from about 20 different nations.

Canada has established some programs, such as the Canada research chairs, to ensure laboratory funding and the ability of those scientists to become established and remain here. Ultimately that's our competitive advantage. Canada is one of the best countries to live in. The scientists are world-class. Our former director used to always say that one of the biggest challenges is that Canada doesn't think big enough. There's no reason why we can't be the best in the world.

[The Chair, Conservative, James Rajotte]

Mr. Keller.

[Dr. Wilfred Keller, Acting Director General, Plant Biotechnology Institute, National Research Council Canada]

Thank you.

I might add that the investment in genomics initiated in Canada is very critical in developing the basis of knowledge for generating new technologies and eventually new products. A good example for us is canola. We have critical mass, and if we use these new technologies, invest in them, and develop the appropriate partnerships, we can be in a very strong and competitive position. That needs to include the federal labs, universities, and companies so there is a pipeline that takes us from knowledge through to innovative products, commercial results, and economic well-being. It requires long-term, appropriate investment and focus in key areas that are of national interest to us.

[The Chair, Conservative, James Rajotte]

Merci, Madame Brunelle.

We'll go to Mr. Carrie, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank the witnesses for being here today.

I'm extremely impressed with Saskatchewan. As a kid growing up, I always thought it was all about wheat. But I listened to the Prime Minister say that Canada should be an energy superpower. Looking at Saskatchewan, I see you have oil and uranium, and the potential for biofuels is unbelievable.

Can you explain to the committee the status of the biofuels sector here in Canada? How does it relate to the rest of the world? More importantly, if we're developing this new biofuels sector for the world, how can we as Canadians keep those jobs throughout the value-added chain right here in Canada?

For example, when we signed agreements on natural gas in the past, they weren't exactly in Canada's best interest. But in this exciting new field of ethanol and biodiesel, what's the status of the sector right now? How do we relate to the rest of the world, and how can we keep those value-added jobs here?

[Jerome Konecsni]

I think the most knowledgeable person to answer would be Ron.

[Ron Kehrig, Vice-President, Biofuels and Bioproducts, Ag-West Biotech Inc.]

First of all, I would say that Canada does have a rapidly growing biofuels industry, as do many other countries in the world. Biofuels and sustainable energy are going to play an important role worldwide. Unfortunately, there is no magic bullet to our energy needs as we move forward, but certainly conservation and other aspects are important.

With respect to biofuels, our capacity in this province is in the order of 342 million litres, counting the plants that are in construction and commissioning stages. Another 160 million-litres capacity in second-generation biofuels is in the offing, both through a thermal process with the group at Nipawin, and also in hopes that Iogen Corporation would select a site within Canada that is within our province, and that would move us forward.

We see the first-generation biofuels under the renewable fuels standard being an important first step, but clearly the move is towards biomass to energy, and second- and third-generation fuels are going to be extremely important in Canada.

We have a research cluster actively focused on biofuels development. Really, we view biofuels as being part of a biorefinery, integrated into food production and feed production. Our utilization of our land base is very important. I think we have to look at the environmental footprint of production and processing, and care for ecologically sensitive lands as we move forward.

I think Canada has a very strong record of stewardship on that front. I don't see any reason to think that our move towards the biofuel sector can't be managed and handled appropriately in that context.

[Colin Carrie, Conservative, Oshawa, ON]

Do you have specific recommendations for a strategy to keep the value-added jobs here?

I loved your comment, Mr. Hodgson, that Canada doesn't think big enough. We have this great potential. As legislators, can the federal government do anything at this early stage, or at this stage now, to keep those value-added jobs and products here?

[Ron Kehrig]

I think it's quite clear that we have the resources. It's always a challenge for Canada in any sector to move beyond being a supplier of raw resources to the world, and move into value-added. Some of the initiatives towards research and development, second- and third-generation biofuels, and certainly biorefinery research are critically important in that.

We see the Department of Energy in the United States putting a tremendous amount of funds into the development of that south of our border. I think there is a role for public sector funding increasingly towards research or second- and third-generation biofuels, particularly those that are from biomass or lignocellulosic material--really forestry--in which Canada would have a natural advantage.