International Trade Committee on April 27th, 2015

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here. I appreciate the good discussion we're having today.

Mr. Letenneur, I would like to start with you. Just to make sure I understand, do you source all your salmon from Canadian aquaculture operations?

[Nicolas Letenneur]

No. My salmon comes from Chile.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

From Chile?

[Nicolas Letenneur]

That's because our industry uses only frozen salmon.

I am going to continue in French, because my English is not good enough.

Processing requires purchasing frozen raw materials for reasons involving bacteria and quality control. Canada produces mostly fresh salmon that is sold in restaurants and groceries. However, industrially we almost all use frozen salmon only. Canada does not produce any but we would be very interested if the industry were to develop that niche.

They are two completely different markets. In the fresh product market, salmon is paid for immediately. Salmon is stored and sold much later in the frozen product market. Norway and Chile have developed expertise in that area. We would like Canada to step up. Buying Canadian products would be preferable for us.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

So that would all come from Chilean aquaculture operations.

[Nicolas Letenneur]

Yes, Norwegian and Chilean.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay. Thank you.

My next question is that it's interesting that you talk about exporting a process—

[Nicolas Letenneur]

Excuse me, I have problem with my audio.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Is it okay now?

[Nicolas Letenneur]

Yes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

There we go.

Economically speaking, you talked about technology transfer as a very good way for you to expand internationally. I have a couple of questions, which will take me to Ms. Laflamme after, because this a little bit of an offshoot of that as well. Do you see any issues with any of your processes being patented and any issues with exporting them as a good way to do technology transfer? Does it cause you problems because you're exporting that technology? Are there any issues from a patent process for you?

[Nicolas Letenneur]

No, there is no patent as such involved in our technology transfer process. We enter into a contract, through a lawyer who specializes in franchises. There is no patent involved. We transfer a series of recipes. Some equipment is made here. These are prototypes that are not necessarily patented. As far that goes, there is no real problem.

However, the financial side, and obtaining support, all of that is a greater problem at this time. The existing program was interrupted five years ago, which blocks us completely.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Next, you mentioned that for every foreign project you do, that's five to ten more people in your headquarters in Quebec City. That's impressive. But once that technology transfer does take place, what happens to those people? Do they continue on supporting the technology transfer? How does that happen?

[Nicolas Letenneur]

The complexity of the technological transfer arises after the transfer as such. At this time, we have set up the plant and everything is going well. The management of a food processing enterprise is complex. There is support for the implementation of the HACCP plans. In fact, the whole thing evolves constantly.

In short, you need employees who will then transfer information to the foreign partners. Every time we add a plant, we need certified personnel for each project so that things go as smoothly as possible. I do not have 10 plants at this time, but we have a very serious project and I hope that it will soon become reality.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay. Thank you.

Ms. Laflamme, I just want to pick up on one of the comments you made before. It seems to me, based on the use of the trade commissioner service, that expanding that in the budget is probably a good thing for us to do. You would agree with that?

[Michelle Laflamme]

Yes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You also talked about U.S. investors, the lack of venture capital, trials in the U.S., and that's what I picked up on. Do you find, when you look at trade deals and things like that, that we should be looking more at regulatory harmonization? I'm expecting, for what you're trying to sell, that you have to do these trials in all the countries you're bringing your product into. Would regulatory harmonization help with some of that?

[Michelle Laflamme]

I'm going to talk about our experience in the United States, because every country can be different.

Regarding regulations, I don't think that they will have an effect. I may be mistaken, but I do not think so.

In the United States I had the opportunity of speaking to other business leaders who were looking for funding, as I am. All of those businesses that were looking for funding had access to more venture capital than I do in Quebec.

Currently in Quebec, there are at most two or three funds that take an interest in businesses like mine. That is not very many. They do not conclude many agreements in the course of one year. The number is not very high.

Moreover, the amount that is invested is much lower in Quebec and in Canada than in the United States. In that country, businesses have access to much larger amounts for the same equity interest. A $2 or $3 funding level for a $5-million investment here will in the United States be equal to about a $10 or $15-million investment.

[The Vice-Chair, NDP, Don Davies]

I'm sorry, Madam Laflamme. I have to cut you off there.

Ms. Davidson, you have five minutes.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thanks very much, Mr. Chair.

Thanks to all of our witnesses here today. It has certainly been interesting listening to you this afternoon. I commend each of you on your entrepreneurship. It's absolutely fabulous that we have this kind of talent and that it's being developed the way it is.

I want to start with our video conference witness, Mr. Hall.

You talked about the different programs you've used and the different areas of government that you have been able to access and that have been helpful to you. One thing that you talked about in particular is the NRC program, IRAP. I think one of your suggestions was that it would be worthwhile to develop a program similar to IRAP. Could you elaborate on that a little more and tell us what particular targeted approach you might be looking at, what the size of the program would be, and how it would operate?

[Brandon Hall]

For those of you who are not familiar with the NRC's IRAP, you would have a technology adviser, or in this case, an expansion or export adviser. In the case of IRAP, you have this person who goes out to young start-ups, investigates the plethora of companies, and picks certain ones that are promising and show some good development. They approach a company to see if there's a project they can fund to help propel that company to the next level.

What I was thinking with regard to the trade and export is that right now it's just this big pie. Everybody is allowed to have access to all of these programs, but it's not targeted and specific. They don't say, “This person is your adviser and we're going to come in, help you expand your company, and pick a target market.” For example, let's say that I wanted to go to Ohio and go into the salt mines there. Somebody could come in and help me investigate that market. We would set up a project and a business plan and they would help fund that through the government. Rather than this broad spectrum, it would be more targeted, similar to the R and D process.

Does that answer your question?

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

It does, and that's very helpful.

That leads me into my next question, which is about the export market development program that has been announced, with $50 million over five years to share the cost of new export opportunities and exploring that with SMEs. That's $10 million per year for the next five years.

How do you see that program rolling out and working well for your businesses? I'd like each of you to answer if you could. Maybe we'll start with Mr. Leclerc.

[Denis Leclerc]

Well, it's a good step. You said $50 million...?

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Yes.

[Denis Leclerc]

It's divided by five years. That's $10 million.