Industry Committee on Oct. 5th, 2016

[Carla Ventin]

I've relied on the statistics that I read from both CAPI and Agriculture and Agri-Food Canada, so I don't have the most current against the last year or two—

[Chandra Arya, Liberal, Nepean, ON]

Okay, that's fine.

Ms. Ventin, I believe in the submission to the Standing Committee on Finance you called for more federal investment in food manufacturing to stimulate innovation. Earlier we heard from Ms. Andrea Johnston that there is no collaboration between the researchers and the industry. We have increased funding for research, especially emphasizing basic research. If there's no collaboration between the researchers and the industry, why should we pump in more money?

[Carla Ventin]

If you look at the overall scale of things in Canada, there is not a lot of collaboration in those sectors. That's one reason why, for example, in the Netherlands, they've done very well as you see that collaboration with industry, government, and universities or colleges.

There are specific examples in which the collaboration works very well, but overall I think that a lot of work needs to be done in that area.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

Mr. McInnes, do you agree that although there's a bit of research and development going on, the commercialization is quite limited?

[David McInnes]

In fact, I just wanted to tack on to the question that Carla answered. What we're seeing is that, at the small and mid-size company level, they do depend quite a bit on incubators across the country. Whether in southern Ontario, western Canada, or eastern Canada, these incubators bring together scientists, food researchers, along with food companies and others to try to help along product development. At that level there's actually quite a robust growth in start-up companies, and I think that's a hopeful sign because—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry. You mentioned there's robust growth in the start-up companies.

[David McInnes]

At a very small level, that's correct.

[Chandra Arya, Liberal, Nepean, ON]

That's quite interesting, especially going back again to what Ms. Johnston said about the industry being stable but losing ground.

[David McInnes]

I think it's important to look at the fact that there are a number of ways to look at the industry. I tried to outline in my remarks that, if we look at the very largest companies such as multinationals operating here, right back through the start-ups—

[Chandra Arya, Liberal, Nepean, ON]

Okay. I have only 30 more seconds, and I have one last question.

When you talk about new manufacturing start-ups, how is the funding position? Is funding readily available for these new companies?

[David McInnes]

I'm not sure, on a macro sense, as to how they're being funded, but I do know that the incubators are very helpful, particularly because these companies are targeting, for example, the ethnic food market or the products that we are all buying every day that are captivating our taste buds, like artisanal foods, for example. This is very much in demand, and we're seeing a lot of activity. These incubators help to do the research and bring that together.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Nuttall, you have five minutes.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Mr. McInnes, one thing you started off with was that the most important thing for the food processing agri-market is trust. I was in Taiwan, actually, not too long ago, on a mission there. It's a place we're trying to reopen our beef exports to. Then further on you went into climate change being very tied into that trust issue. Do you believe that climate change is more of a factor for our food processing industry than hydro? That seemed to be part of the case you were making.

[David McInnes]

What I was saying is that, as our research revealed, there are a whole series of factors that determine the success, failure, or struggle of an individual company, whether they are day-to-day hydro costs, access to labour, or border issues. Whatever they may be, there are a whole series of factors, which is reasonably expected.

What we're trying to articulate is that, when we look at the overall trends of where the consumer is going and where retailers are going, the attributes around trust from nutrition, ethics, and sustainability are huge game-changing opportunities for Canada to innovate around. We're adding to how we can differentiate when we present that.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

I'll accept that.

I guess I look at food as one of those things. Yes, you need food safety because that's where the credibility of the food is. I think it's one thing that people just need. Someone's always going to be there to buy it.

It's interesting, because in my riding we've been approached by a couple of maple syrup people who are making vodka and wines out of maple syrup. Their target is northern Europe, because it's popular there now. The only issue they brought to us—we have a steady flow of maple syrup, we have all these things—is the hydro rate, the cost of hydro. It leaves us in a position in Ontario where we're not even competitive with Newfoundland. I find it difficult.

If you were to do a survey of agribusiness, especially of food processing in Ontario, what would they say is the number one issue they're facing?

[David McInnes]

When we did our research, we got all the issues that you probably can think of and identify, such as the cost factors, cost of doing business, the business climate, business environment issues, which we still believe we have to pay very close attention to as a country, because investment will go to the places that have a low-cost environment. However, we're thinking about where we want to be in the future and the trends in consumer demographics. If you look at companies such as Nestlé, Unilever, and even Loblaws, and many of the largest companies, they're all trying to identify those niche attributes that could sell product. We're really working on two different planes at the same time.

Do you want to jump in?

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

I only have so much time. I think I have only one minute left.

[The Chair, Liberal, Dan Ruimy]

You have one minute.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

In southwestern Ontario, one of our companies had about 200,000 square feet of greenhouses, and they put in requests for permits for another 100,000 square feet, a 50% increase in their capacity. After building it, they closed their doors and went across the border. The number one reason was hydro.

What I hear from all the food processing guys every time is “hydro, hydro, hydro.” In my riding, I have a gentleman who owns millions of square feet of food processing in the United States. He doesn't employ a single person in Canada, except for his receptionist, and it's because of the cost of hydro.

[The Chair, Liberal, Dan Ruimy]

You were bang on five minutes. Thank you very much.

Mr. Masse, you have five minutes.

[Brian Masse, NDP, Windsor West, ON]

I want to continue with regard to southern Ontario, obviously, since I represent Windsor West here.

With regard to the southern economic development file, do you know whether the federal regional economic development agency has been partnering with any of your businesses and organizations and whether it has been successful over the last number of years? Especially, I am interested in some of the artisan stuff that has been taking place, the niche marketing. You do see it especially with “buy local”, and so forth, and the organic element is huge. Have they been able to access capital, or have you heard much from them? They may not be part of the larger voice, but they're out there at the farmers' markets and really trying to get into the grocery stores. That's one of the challenges they face. Do you know what type of incubation supports they've been receiving?

[David McInnes]

I'm afraid I don't know specifically about that organization. I do know that many of the other larger research firms and entities, whether it's Genome Canada or the National Research Council, are devoting much more attention to the food and agriculture space, but I can't answer about that one in particular.

[Brian Masse, NDP, Windsor West, ON]

To move forward with regard to food safety and international trade, I was talking with the previous witnesses about trade between Canada and the United States, and between Mexico and the United States.

Ms. Ventin, I noted that some of your companies here would be doing business among Canada, the United States, and Mexico. I'd be curious about your position or your thoughts on whether the border processing taking place between United States and Mexico is similar to that between Canada and the United States with regard to food safety, inspection, and processing under our current trade agreements.

[Carla Ventin]

The North American market is definitely important for our member companies. Concerning how products are treated differently between the Canada-U.S. border and the Canada-Mexican border—

[Brian Masse, NDP, Windsor West, ON]

Yes. Is the U.S. comparably treating inspection and safety reviews of products coming in from Mexico to the United States, as they are from Canada into the United States?