Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 3 - Evidence - Meeting of October 25, 2011
OTTAWA, Tuesday, October 25, 2011
The Standing Senate Committee on Agriculture and Forestry met this day at 5:05 p.m. to examine and report on research and innovation efforts in the agricultural sector (topic: Innovation in the agriculture and agri-food sector from the producers' perspective.)
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, I declare the meeting in session.
[Translation]
Honourable senators and guests, welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
Mr. Bacon and Mr. Phillips, thank you for accepting our invitation to appear to share your opinions, vision and knowledge about the industry. We appreciate it.
By way of introduction, I am Percy Mockler, from New Brunswick, chair of the Committee. I ask each senator to identify themselves to the witnesses and to those watching on television.
[Translation]
Senator Robichaud: Fernand Robichaud from New Brunswick.
[English]
Senator Fairbairn: Joyce Fairbairn, from Lethbridge, Alberta.
Senator Mahovlich: Frank Mahovlich, from Ontario.
Senator Plett: Don Plett, from Manitoba.
Senator Ogilvie: Kelvin Ogilvie, from Nova Scotia.
[Translation]
Senator Rivard: Michel Rivard, Laurentides, Quebec.
[English]
The Chair: Today we continue our study on research and innovation in the agricultural sector, developing new markets domestically and internationally and enhancing agricultural sustainability and improving food, diversity and security. Today's meeting will focus on the understanding of innovation in the agriculture and agri-food sector from the producers' perspective.
We welcome Mr. Gordon Bacon, Chief Executive Officer of Pulse Canada. Pulse crops include peas, beans, lentils, chick peas and fava beans. We will also hear from Mr. Richard Phillips, Executive Director of Grain Growers of Canada.
Mr. Bacon, please proceed with your presentation.
Gordon Baker, Chief Executive Officer, Pulse Canada: Thank you for the introduction to pulse crops. Not many people recognize that Canada is the world's largest producer and exporter of peas and lentils and a top-five player in peas and beans. We account for between 35 per cent and 40 per cent of global trade. Pulse Canada represents grower associations in Alberta, Saskatchewan, Manitoba and two in Ontario, as well as the processors and exporters of pulse crops in Canada.
In a word, our role as an association is to improve the profitability of the industry. To be profitable, we have to build demand for pulses; to build demand, we have to offer value; and to capture value, we have to control costs. I welcome the opportunity to share some of our ideas about innovation. Let me start by our approach to innovating to provide value in the food business.
What do consumers value in their food? The answers provide the foundation on which the agriculture and food industry has been built. Answer the question: What value can Canadian agriculture and food provide to consumers in order to stand apart from the competition provides the foundation on which Canada's agriculture and food sector will be built for the future?
Let us go back to the question and consider how consumers value food. Food has to be affordable, safe, nutritious and tasty. Food has to be readily and consistently available. These are the things at which Canadian agriculture excels. While these are simple food values that consumers take for granted, there is a vast network of regulations at the government level and a complex food sector supply chain that allow Canadians to correctly presume that these food values are delivered to them on a reliable basis.
No one is more committed to ensuring that the goals of food safety, reliability and security are met than food producers and processors of food in Canada. The industry spends significant time and resources trying to anticipate where challenges might emerge and where we can spend time and resources analyzing our products so that we can say with confidence that we are meeting and exceeding these consumer food values.
It is important to recognize that delivering food values to consumers requires ongoing investments. At a time when governments around the world are looking to reduce expenditures, we need to understand that not only do public investments in the food system benefit Canadians; they also benefit people in nearly every country in the world. The pulse industry alone exports pulses to more than 150 countries around the world. Investments in agricultural research in Canada help to provide food security for a trade-dependent world and also to benefit Canadians. There is both public good and humanitarian good in public investments in our food chain. Let us continue to recognize that both the public and private sectors will need to continue to invest in meeting this basic requirement of food.
I want to shift into talking about game-changing innovation and innovative approaches to thinking about food that can address some of the world's emerging challenges. Let us talk about where government can play a key role, working alongside industry, to position the Canadian agriculture and food sector to build a strong future.
Let me start with something that I hope is more than just a rhetorical question for you. How many senators, or how many members of Parliament, think about health care challenges and costs and then turn their thoughts to the role that agriculture and food should be playing to keep people healthy? If your silent answer was not an "I do," then I hope soon it will be an "I will."
We know that diet and lifestyle are the master levers of medical destiny. Yet, I wonder if we are spending far too little time and resources investing in ways to keep people healthy. The United Nations has named cardiovascular diseases and diabetes as two of the four non-communicable disease priorities. A focus on the food we eat, which is a hand on the dietary lever, has to be the front line in the battle to improve health and reduce health care costs. It is far more cost-effective to keep people healthy than it is to treat those who are already ill.
Food to improve health can be straightforward. Let me give you some ideas that we think can make a big difference as we face the health challenges associated with people getting big.
Let us be motivated by the idea that something we are doing has to change. We cannot continue to get bigger both in our weight and in the cost of trying to provide public health care. While it is difficult to change what people eat, we can change what is in the food they are already eating. Let us look at the impact that changing ingredients in food can have.
In the package of information that I have handed out to you, I have highlighted a simple formulation change in a food that all Canadians are familiar with — pasta. Pasta is a good food. If we take pasta made from 100 per cent Canadian durum semolina and substitute 25 per cent lentil flour, we can go from a good food to a great food. This simple reformulation boosts fibre by 100 per cent and increases protein content by 25 per cent. Both of these changes are key. It is becoming clear, through medical research, that protein plays an important role in weight management. Higher fibre diets are also important in weight management. The benefit is that people who eat both high-fibre and high-protein diets are less likely to snack. Thus, they end up consuming fewer calories. With the linkages between weight control, cardiovascular disease and improvements in blood sugar control, weight control is a key to healthier Canadians.
Without getting into a review of the medical facts, which are provided in the package that was handed out to you, I simply want to stress that we have the opportunity to look at improving how Canadians eat by improving what they eat. Consider what you have consumed in the past 24 hours. Then imagine how much healthier it would have been if it could have been reformulated with 25 per cent pulse flours.
The example of good to great for that plate of pasta raises another food value that I want to mention. How many people in Ottawa, or in any city in Canada, think of the role that food choices make in their impact on the environment? The reality is that the choices of what house you live in, what car you drive and what food you eat are the most important environmental choices that an individual makes during their lifetime. Your food choices are made three or more times a day, whereas a car choice might be made once or twice in a decade, and a home choice might be made once or twice in a lifetime. Your food choice matters to the environment. The good news, again, is that agriculture can help you make choices that are good for the environment.
As an agronomist and a farmer, I can get really excited telling people about how pulses reduce the environmental footprint of annual crop production. As legumes, pulses take nitrogen from the air and use solar power to transform this into a plant nutrient. The magic in this is that solar power is replacing natural gas as the power behind the conversion from atmospheric nitrogen to plant-available forms. Because nitrogen is essential to all plant growth, we do have to use nitrogen to feed plants to feed the world. Optimizing the use of solar-powered fertilizer production only makes sense. Again, the package of information will provide you with the detail about how pulses and annual cropping systems can contribute to a healthier environment.
Can all of us articulate a clear government plan of action for the role that agriculture can play in ensuring healthy people and a healthy planet? Has government created the enabling environment for companies and individuals to look to food to provide more solutions? The path forward should include a clear articulation of what success will look like, so that we can ensure that our investments are targeted and that the expected outcomes are clear. As I heard recently, agreement about the destination makes the development of a strategy that much more clear.
Private and public sector investments in innovation will drive the future success of agriculture. With limited resources, the challenge that we all face is to convince people that some of the existing resources might better be spent on a new direction. Perhaps we need innovation more than we need stabilization. The question we have to ask ourselves is: Where are we trying to find stability? I would encourage you to think a little bit about our past reliance on markets like Russia, which is now one of our competitors in the wheat industry, or about the changing role of China, which, not too long ago, was intent on becoming self-reliant in grain production, and now accounts for 60 per cent of the global annual trade of soybeans being imported into Canada. The reality is that markets are changing around the world, and it will be innovation that allows us to move to where we will find these new opportunities.
In closing, I want to shift quickly into talking about innovation. It is important to add value to innovation to improve efficiency. As I mentioned at the beginning, farmers have to control costs if they are going to be competitive. Whether we are competing in the commodity market or the food-ingredient market, we have to offer products at prices that are competitive in comparison to those of our competitors around the world. Continual improvement in making efficiency gains is the reality of any business. We have to deliver more at less cost.
There are some key areas that cost farmers that I want to mention briefly. Transportation is the first area. Pulse Canada has strongly urged the government to get on with the commitments it made in dealing with transportation issues. We believe the strategy is a good one and that the time for implementation is now.
The second area is in harmonizing global approaches to protecting human health and the environment with the regulation of pesticides. We believe Canada is well positioned to provide leadership at the global level to address some of the things that really add to food insecurity and concern about price volatility. Again, this will need an investment in key agencies like PMRA, the Pest Management Regulatory Agency.
In conclusion, I would like to say that we need to change the way we look at food. Food can be central to our health care strategy and a major contributor to our environmental strategy. Investments in agricultural innovation, which means investments in research and in efforts to harmonize food policy, will be key to Canadian agriculture's future success and to Canada's approach to health care, as well as to the contribution that Canadians can make to the environment. Let us plan our destination. Once we have agreed on a destination, our focus for innovation will become clear.
In the material I have handed out to you, we have a wide range of information. Now, or at some future time, I would be happy to answer any questions that senators may have.
Richard Phillips, Executive Director, Grain Growers of Canada: Before I begin, I just want to thank the Standing Senate Committee on Agriculture and Forestry for having the foresight and the wisdom to study agriculture research and innovation in Canada. It is an area that the Grain Growers of Canada has advocated making a priority for many years. I see at least one senator nodding. I met with some of you on this issue.
I have been involved with the Grain Growers of Canada for five years. We represent the interests of tens of thousands of successful wheat, barley, oat, canola, corn, pulse, rye and triticale growers.
I have a farm at Tisdale, Saskatchewan, and I grew up watching black-and-white television and watching Mr. Mahovlich play hockey on CBC Saturday nights way back in the days. My mother is a big fan too.
Today I would like to raise three key areas important to research and innovation in agriculture in Canada, and one on international markets.
First, an increase in overall research funding is needed. Increased funding for agriculture research is one policy area where farmers from all parts of our country actually agree. I think those of you who have been around this committee understand that farmers are divided on many issues, but this is the one that unites all of us.
We do appreciate that the federal government has started putting more money into research in the last few years, and we also recognize there has been an effort through both science clusters and the Developing Innovative Agri- Products, DIAP, program to ensure that actual commodity associations are bringing more influence to bear on their research priorities.
The private sector is also a huge investor in research and innovation in Canada. It is primarily just in three areas. It is in corn, soybeans and canola. The public sector often does work on core agronomics and diseases where there may not be a commercial return and, without that return, there is limited incentive for the private sector to invest. These are all pieces of the puzzle, the private and public, but what we really need is a Canadian vision for agriculture research, a vision that looks beyond the next harvest. Recent issues like food prices, food safety, biofuels and sustainability have highlighted this need.
Canadian farmers today are producing more food with fewer resources than ever before. It has actually been new research discoveries and new technology that have made this possible, but Canada cannot risk losing its agricultural competitive edge.
The United Nations forum on food has said that farmers will need to produce as much food in the next 50 years as has been produced in the last 10,000 years. The world population is expected to expand to 9.1 billion from the current 6.8 billion, and yet Agriculture and Agri-Food Canada core research funding is far lower today than it was in 1994. Allowing for inflation, it would take an increased investment of $26 million per year for 10 years — that is each and every year you would have to add $26 million — to take us back to 1994 public research levels in Agriculture Canada.
An environment that encourages research and innovation and provides fair market access for our exports creates a competitive advantage for Canadian farmers, but we also realize the fiscal reality of trying to achieve a balanced budget in these turbulent times. The Grain Growers of Canada has a new proposal: Change Agriculture and Agri- Food Canada's accounting structure. Change the accounting for royalty income allocation within AAFC. Currently, income from successful innovation that comes back to AAFC goes into the departmental budget and displaces normal government funding.
I will go off the text for a second here. If an Agriculture Canada scientist develops a new variety of wheat or something on pulses for the food processors and it is privatized, royalty incomes come back to Agriculture Canada. Today, that goes into the agriculture budget, and that much less money comes in from the federal plans. We are saying that has to change. This is our suggestion for you.
We suggest that, in the absence of increased direct federal contributions, at a minimum, the federal government should lock in the current AAFC research budget where it is today and then tie it to inflation.
Next, the government should allow all royalty streams generated by AAFC discoveries to be added on top of the AAFC research budget. This is a no-cost way to increase the Agriculture and Agri-Food Canada research budget. It is the royalties paid by whoever wants the discoveries that will increase the budget.
The other important effect of this would be to send a strong signal to AAFC scientists that if you discover value, you will recover value. If you work on projects that align with what farmers or food processors or end-use customers are looking for, then more money will flow back to your program. It is win-win.
I want to be clear with people. Let us say it was $250 million today. We are saying let us lock that $250 million in permanently, tied to inflation only, but then for all the discoveries that Agriculture Canada makes and privatizes, whether to grain farmers or oilseed farmers or food processors, all those royalty streams from good discoveries would flow back and increase the budget, rather than the government putting in all the cash itself to increase the budget. That is what we are suggesting to you for consideration.
One way or another, we would like to get back to those 1994 research levels.
I want to give you one example of public research in the field of nanotechnology on fertilizer. Work is being done to create "smart" fertilizers that seal themselves when there is too much water, thus preventing leeching into water systems or reducing the amount of product even needed on the fields. They take a granular fertilizer and coat it with the nanotechnology. The moment it senses there is too much rain falling, and in southern Manitoba, you would understand that, it would seal itself up and the fertilizer would not leech down into the soils but stay in the granules. Right now, it leeches in and you see issues in Lake Winnipeg and Save Lake Winnipeg and there is more hog manure coming in because there are too many nitrates and too much phosphates too going into the lake. This is a way we could actually apply less fertilizer and it would be there when the plants need it.
The other piece of this nanotechnology, and they are working on this at the university here in Ottawa, is they can set that up so that when the root tip actually touches the granular fertilizer, that is when it opens up and lets the fertilizer out. It only releases the fertilizer when the root tip actually touches it. Again, that prevents leaching. When I look at sustainability as one of your goals, I think this is the kind of research that could help us as Canadian farmers to be far more sustainable going forward. It also sells well out to the general public.
There are other options, going back to funding research again. As producers, we do not expect government to do everything for us. Are there other models out there that would put more money into research and attract private dollars as well? There is the option of a certified seed tax credit to encourage more use of new seed and end point royalties. Recent legislation before Parliament will strengthen the ability of farm groups to get check-offs. The Western Grains Research Foundation and the Canadian International Grains Institute are two important bodies out there where there has been a check-off taken off, but with the coming changes in grain marketing in Western Canada, we need to bring in new legislation to cover that off. We are hoping to actually widen that. Right now, there are a lot of loopholes where many farmers do not contribute to research, and we would like to see that broadened out because they are all gaining from that research.
We also think the federal government has a role in looking for ways to encourage private and public partnerships. That seems to work well in canola, corn and soybeans, but we do not see a lot of public-private partnerships in pulse crops or in the cereal grain sectors.
Finally, turning to international markets, we have been very happy with the current agriculture minister's commitment to opening markets through trade agreements, but, just as important, through ensuring market access. The Market Access Secretariat is a good example of the government helping us to keep trade flowing. A report was just tabled yesterday on the work being done, and perhaps the clerk could get copies of that report. I can certainly leave one with you. This should actually be distributed so everyone can look at the work being done, not only opening new markets but keeping our existing markets working so trade can continue to flow.
At the Grain Growers, we believe that the government does not owe farmers a living, but it does owe us a policy environment where we can make a living. Invest with us in research to keep us competitive, and invest in opening and maintaining markets. With your help and the right tools, the future of agriculture has never looked brighter.
The Chair: Thank you. We will now turn to questions from honourable senators.
[Translation]
Senator Robichaud: First, I would like to thank Mr. Phillips because, when he came to meet with me at the office, I asked him to submit to us some suggestions for our committee's future business. The list of suggestions he sent me has helped us determine the terms of our study. I want to thank you, and I hope you will be satisfied with the impact the committee has on research and innovation.
[English]
If royalties were put back into the budget of Agriculture and Agri-Food Canada, how much money would that be? I thought that the researchers got a patent on their work and most of the money went to private institutions, not to Agriculture and Agri-Food Canada.
Mr. Phillips: That is a good question. Right now, the agriculture budget would increase by $5 million to $6 million a year. That is the level of the current royalty stream coming into Agriculture and Agri-Food Canada that is displacing the dollar. We would anticipate that within 10 years that could be doubled or tripled if this were put in place. Scientists like to be published and recognized for their work. If they see a way to increase the budget for their research program through something like this, you will see a lot more motivation in the public service to do good work.
Royalties are negotiated. If a university discovers something or if Agriculture and Agri-Food Canada discovers something, they go to a private company and negotiate a profit or royalty sharing. A certain part comes back to the original innovator, which would be the university or Agriculture and Agri-Food Canada, and the private sector company would keep some of that when they sold the seed or processed the food. Currently, $5 million to $6 million a year would come to Agriculture Canada. That would grow quite quickly, we believe.
Senator Robichaud: It would accumulate over the year. You said there might be a lot more than that.
Mr. Phillips: Yes.
Senator Robichaud: You talked about smart fertilizer. Is it commercially available and, if not, how much more do we have to do?
Mr. Phillips: I will speculate and say that we are probably within five years of having this available if we continue the level of work that is going on today. In fact, I would encourage you to call the research scientist, Dr. Carlos Monreal, for the record, at Carleton University. We meet with him every two months. I would encourage you to have him come here to explain. Chemistry was never my strongest suit at university. The smart fertilizer technology is not far away.
Senator Plett: How is Grain Growers of Canada funded? Where does your funding coming from?
Mr. Phillips: Most of our funding comes directly from the farm organizations that belong to us through the fees they pay to the GGC. We are made up of wheat growers, barley growers, the Alberta Barley Commission, all canola growers across Canada, the Alberta Oat, Rye and Triticale Association, the Prairie Oat Growers Association, the Manitoba Corn Growers Association and the Atlantic Grains Council. As well, when there is a convention, I can make a little money through sponsorships.
Senator Plett: How much of your money is spent on research and development? You have been talking about government spending money on research and development.
Mr. Phillips: My gross budget is in the area of $200,000, which pays for my salary, my assistant and the office rent. I suppose I could take a pay cut and invest in research. Our association does not but my members put a lot of money into research. For example, the Alberta Pulse Growers would fund research directly with a check-off from the growers. The Saskatchewan, Manitoba, Alberta and Ontario canola growers would fund research directly with their check-offs. The Alberta Barley Commission funds a lot of research with its check-offs. Some farm groups are voluntary memberships and would not fund a lot of research. Producers are putting in tens of millions of dollars.
Senator Robichaud: When you say "tens of millions," do you mean $20 million or $30 million or $40 million? Do you have a figure?
Mr. Bacon: I can say that the pulse industry alone through farmer check-offs is spending more than $10 million a year on research. In Saskatchewan, it is a mandatory non-refundable 1 per cent levy; Manitoba is 0.5 per cent and Alberta is 1 per cent but refundable. The rules differ by province but farmers currently pay a levy on wheat and barley sales that goes into research. There are significant investments. I do not have the number adding canola, wheat, barley and pulses together.
Mr. Phillips: Canola would be more than pulses.
Senator Plett: Further to that, you said that it is set by province, and yet you are a Canadian organization. Why would you not set the same standards for all provinces?
Mr. Bacon: Pulse Canada receives its funding from the provincial groups. These check-offs are set up under provincial legislation. Basically, we do not invest, but how much does Pulse Canada invest in research? The answer is nothing because all of those investments are made by Manitoba or Saskatchewan pulse growers directly. You can see in our annual report the contributions by province and that we get a significant amount of our funding from the federal government. Some of the innovative work we have done on human health and environmental sustainability is funded under Growing Forward, the agriculture policy framework that is a federal-provincial-territorial responsibility.
Senator Plett: My next question is around genetically engineered grains. In 1997, 0.01 per cent of the total harvest of soybeans was genetically engineered. In 2007, 62.5 per cent of the soybean harvest in Canada was genetically engineered. Why was there an increase? Where are we going with this? What other grains are genetically engineered in Canada?
Mr. Phillips: Soybeans have increased just like canola increased. Canola would probably show you the same numbers. As a producer, one main reason is that we can now keep the weeds out of the fields. Before we used to have to apply Treflan, which is a chemical to control weeds in canola. It had to be worked at right angles into the soil four to five inches deep and 48 hours apart. I grew up with clouds of dust billowing down the field around my tractor as I tried to work it into the soil. It dried out the soil and the soil erosion and wind erosion were incredible losses. With the genetically engineered seed that is resistant to spray, we can seed the crop and spray afterwards to control all the weeds. This greatly increases the yield and has allowed canola to expand into areas where we never could before because the soil-based herbicides were very limited in the weeds they could control. Therefore the acreage has expanded a lot.
There still is a substantial number of non-genetically modified soybeans grown in Canada as well. Certain markets will pay a premium for them. For example, the Japanese or Europeans will pay farmers a premium price, maybe as much as $1 per bushel more, to grow those beans free of GM crops for shipping to those markets where they are sensitive to it. Most of the soybeans go into the feed market, where they are not concerned about whether the feed is GM or non-GM.
Senator Plett: Does the fact that we are genetically engineering our grains allow us not to summerfallow, whereby we do not plant a crop for one year in order to regenerate the land?
Mr. Phillips: Yes, it does. On our farm, when we grew up, if we wanted to grow canola seed, we would often summerfallow the land one year in advance to try to kill as many weeds as possible because the chemicals at that time only killed a limited number. You tried to clean your fields up. As a result we had more summerfallow and, due to that, more water and wind erosion.
Mr. Bacon: I want to highlight the role that development of a viable pulse industry in Western Canada had in reducing summerfallow acres there. Different crops use water in different ways. Pulse crops tend to use water on the shallow layer of soil. There are many factors, whether it be genetically modified crops like canola, changes in tillage equipment, movement from reduced tillage to zero tillage, direct seeding, or the suite of farm chemicals that are available to Canadians now, that have helped farmers make a much better environmental statement about their farming operations. It is a combination of many factors, including the development of tools like genetically modified crops.
Senator Plett: You were talking about transportation as a key area, and you said that Pulse Canada is strongly urging government to get on with the commitments made on March 18. Can you tell us what those commitments were?
Mr. Bacon: Yes. The first and foremost commitment was that shippers would have the right to a service-level agreement. Legislation would be drafted to give them both that right and the right to a dispute settlement mechanism, if shippers and carriers are not able to come to an agreement. There was discussion about having enhanced public sector reporting of some of the key measurements of transportation efficiency. There was discussion about having a facilitator appointed to get into the discussion about service-level agreements and also to take a special focus on what we can do to enhance the entire transportation supply chain.
At a recent transportation conference in Winnipeg, it was noted that vessel demurrage charges were three times higher than they were the previous year and five times higher than average. The issue here is these costs of inefficiencies are borne by farmers. We, as the shipping community, not only within agriculture but also with a broad coalition of rail shippers, have supported the government's action to make some changes, so that we can take a systematic approach to looking at how we can ring additional efficiencies out of the transportation system. The shipping community has been very supportive of the March 18 announcement, and we are encouraging government to get on with the commitment of action that they made at that time.
Senator Mercer: I just wanted to follow up on our comment about transportation of pulse products. I also sit on the Standing Senate Committee on Transport and Communications. A few years ago we did a study on containerization. When we met with pulse people at the time, the single biggest problem was the availability of clean, empty cars at the right place at the right time. Another concern was filling them, particularly at the Port of Vancouver. Every time I have met anyone in the pulse business since then, I keep asking the same question. Has it improved? The issue, as you know, was that as the products sit on the dock in Vancouver, they are losing quality for every hour and every day that they do so. If we wait too long, by the time it gets to India and China it is nothing but expensive animal feed.
Mr. Bacon: The industry has continued to evolve since we appeared before the Senate Transport Committee. One thing we have seen remarkable growth in is that pulses are now shipped in bulk to port position. They are then stuffed into maritime containers at port positions because the big challenge was to get enough equipment on the Prairies to fill them.
I just wanted to cite why the pulse industry is very motivated to have changes in transportation. Container vessels leaving from Canadian ports routinely overbook by 40 per cent to ensure that they can sail with a full vessel. Given the lack of reliability of the entire supply chain, they are overbooking by 40 per cent. This means that companies who are trying to get products on boats are often told that the boat is full. Our goal is to improve the efficiency of the entire system. Can you imagine if we followed the same kind of statistical reporting with airlines? The lack of predictability, the transportation time variability and the way that both things manifest themselves in poor system performance are really the key to what we are getting at. I want to relate a quick story. I was fortunate to be invited to witness part of the Canada-Colombia free trade agreement, the notification of the effective date. It was interesting to hear one of the Colombian importers say, "The 15 per cent tariff advantage you have over the U.S. has to be taken into consideration with your lack of reliability as a supplier. Even though you have a tariff advantage, it does not mean you are a preferred supplier because you are not seen as a reliable supplier of product." This is a message we have received all over the world. That is why the shipping community is united in saying that we can do better. We have a sophisticated system that is underperforming.
Senator Mercer: Mr. Phillips, I want to talk a bit about your idea on royalties. I think it is fascinating. I am not so sure I want to see it all go into the general revenue of Agriculture Canada. I would be more interested in perhaps looking at a scheme where we put some of it into an endowment for the future. I remind everyone that, in 1930, three doctors in Toronto invented pablum at the Hospital for Sick Children. That one invention funded pediatric research for 25 years. The royalties from that invention helped to establish one of the most successful medical foundations in the country, the Hospital for Sick Children Foundation.
Do you think we could generate enough revenue via the royalties if half of them were to go into the general revenue of Agriculture Canada and the other half were to be put into an endowment fund? We would have some target that we would want to get to, whether it be $500 million or $100 million. The endowment would be for when we come into those lean years where the patent may run out and we have nothing coming on stream for a while, so that we do not lose the research ability because we have spent all funds as we have received them.
Mr. Phillips: I think we are probably open to suggestions. In my discussion with Agriculture and Agri-Food Canada, they said that some of that might even have to go to the general overhead and administration. It will not go just to the researchers because someone has to do payroll for the research program and there is other overhead administration. They said they would probably not see 100 per cent anyway. We would be open for suggestions on that. I do not know what the model is, but I think that if we sat down with Agriculture Canada and the farm groups we could come up with something. I like the idea to keep setting some aside for the lean years. It is the principle of Joseph, actually.
[Translation]
Senator Rivard: Mr. Phillips, in your presentation, you say you would like the federal government to go back to making research and development grants at the 1994 level and then adjust them on the basis of the cost of living. Could you give me an approximate idea, when, for example, you spend a dollar on innovation, what percentage does the federal government represent compared to your industry? Do the provincial governments have research and development programs as well?
[English]
Mr. Phillips: It depends on the province, but Saskatchewan, Alberta and Manitoba do some variety testing. They will take the different varieties of wheat and grow them in different parts of the province. Then farmers can come out to the fields or see the records to see which varieties yield better in which parts of the province. Provinces put in money. The farmers put in a lot of money. The actual oilseed crushers put in money for research as well.
The federal government puts in money. The federal government's piece is public research. The global numbers are large, but then it is not all just for the grain farmers. Agriculture Canada does a lot of work on the supply management industries. They do research on chickens and turkeys and dairy and feed rations. They do a wide range of work. It is not all just for us. I do not have the exact number in my head as to what percentage of the overall budget is just for grains, though.
[Translation]
Senator Rivard: Can we say, for example, that 75 per cent of what you invest in research and development comes from the federal government? Is it an exaggeration to think that three-quarters is provided by the federal government?
[English]
Mr. Phillips: I will just have to make a commitment to get back to you and provide that information. I do not know off the top of my head. I would have to find out how much out of the budget is just for grains and then add up how much the canola people are putting in, the pulse, flax, barley and oats. We have a lot of check-offs, and I would have to add that up. I will make a commitment to get that back to you. I am sorry that I do not have that tonight.
[Translation]
Senator Rivard: Earlier you mentioned Colombia, among others. Would your biggest client be Asia, South America or the United States, for example, or do you export virtually around the world?
[English]
Mr. Bacon: I can answer for the pulse industry. Our single largest customer is India. China has emerged as our second largest customer. A small number of countries account for a vast majority of sales. About 75 per cent of five countries would represent 75 per cent of total exports, but the total list is 150 countries. It also varies by crop. The largest market for beans will be the U.S., followed by the U.K. For peas, it is India. If you add them all together, India is our largest customer.
Mr. Phillips: For a lot of the other crops, the United States still remains one of our largest and most important customers.
Senator Mahovlich: You mentioned that the world population will be 9.1 billion 50 years from today, and it is 6.8 billion right now.
Mr. Phillips: It will be 9.1 billion in 2050.
Senator Mahovlich: India seems to increase, so there will be a larger demand for the products that we serve India. Is the government aware of this? It looks like we are on a roll. We have great potential here, and we should go forward and invest in what will happen in the future, I think. You have a heck of a good argument.
Mr. Bacon: Completely. There is a growing world population and, from an environmental perspective, we do not need to be clearing more forests or breaking more grassland to feed them. What we do need, in my view, is a more intense agricultural production, which means we have to use all of the available tools. We need to address the needs of North Americans and the affluent world, but we also play a big role in providing food assurance and food security for the developing world. As I said in my presentation, we have both a return on investment from a humanitarian perspective as well as addressing the needs of the developed world.
Mr. Phillips: It is also using the resources very carefully. We cannot continue to keep over-fertilizing and seeing stuff wasted. Those days will come to an end. The cost of the inputs continues to rise. It is also using the water wisely. In Canada, we are blessed with a relatively abundant rainfall. We are well positioned going forward in that we do not have to fight for water in this country, like other places do.
Senator Mahovlich: What country is our largest competitor? Would it be Brazil?
Mr. Bacon: It will depend on which crop you are talking about.
Senator Mahovlich: I am talking about total exports.
Mr. Bacon: The United States is one of the biggest because of their corn and soy production. In agricultural exports, you are probably looking at the United States. Brazil will be a major competitor in the international soybean markets.
Senator Mahovlich: We do have large ground to cover here. We have more potential here, do we not, given the size of our country?
Mr. Phillips: I think all the good land is being farmed now. In Brazil, they are still opening up tens of thousands of acres.
Senator Mahovlich: They are cutting down forests.
Mr. Phillips: They also have grasslands that they are working up. It is not all the Amazon. They have big, huge areas of just grassland that have traditionally been pastured that they are opening up at well. It is not all forests. They have a lot of other good land. In Canada, the good land is all being farmed. Can we produce more with what we have? The investment in research and innovation is what brings that about. We simply cannot farm more acres to produce more food like they can in Brazil.
Senator Mahovlich: It is like the Holland Marsh in Ontario. We are limited to the Holland Marsh. We cannot expand, and that section is developed.
Mr. Bacon: I think it is interesting to see that China is making massive infrastructure investments in Africa, and there is work in our sector to produce yellow peas in Africa. There is a big push to increase pulse production in Eastern Europe, because some of these great grasslands of the steppe area have been underutilized for the last 25 years. There are areas where production can be increased as well. As Canadian agriculture, we can think about how we will remain competitive. We are not the lowest-cost producer in the world. I do not think that is a goal we should strive for. That is why, in my presentation, I wanted to talk about what the focus is going to be and how we differentiate ourselves from the low-cost competition. Farmers will not be profitable if we have to be the low-cost supplier of food to the world. We will always need to be competitive in commodity markets, but we need to think about what our unique angle will be to carve out our own niche in the food industry.
Senator Eaton: I am sorry I was late. I was at a transportation caucus advisory meeting, which was very much apropos of what you are talking about.
Give us some good stories of what we have come up with or what Canadian research has produced in the last 10 years in terms of new products.
Mr. Phillips: Actually, there have been quite a number of the wheat varieties. We grow a lot of wheat in Western Canada, and a lot of those wheat varieties originated from Agriculture and Agri-Food Canada research. In fact, if you go back a little bit further, almost all the original canola genetics actually came from Agriculture and Agri-Food Canada too. They have done a lot of that core research, and then they will licence that out, and maybe a private sector will take it and add on to it. That is what the farmers will buy in the end. In some cases, in the cereal grains, it is just Agriculture Canada. All the oat varieties, virtually all the varieties of barley and a lot of the varieties of wheat are all from Agriculture Canada.
Senator Eaton: Are you working with universities?
Mr. Phillips: Yes, and universities work together. At the University of Saskatchewan, the university and Agriculture and Agri-Food Canada are located so close together it is almost one.
Mr. Bacon: I would like to highlight some of our gains in the area of knowledge in terms of consumption of food products and the positive impact that they have had on human health. In the package of material that the clerk was given, we have highlighted some of the roles that increased pulse consumption can have in weight management, cardiovascular disease and diabetes. I think that while farmers would be very pleased to hear about the stories where research has benefited them, I think Canadians in general will perhaps be more interested in talking about some of the opportunities to be looking at Canadian agricultural products to improve health and the environment.
Senator Eaton: Does that mean you will change — and I am not a scientist — the molecular structure of some of the pulses or some of the grains to have less starch or more vitamin D? In other words, look at what they have done to milk. Are those directions you are taking research?
Mr. Bacon: Right now, the research is just with the product that we have. I talked in my presentation about reformulating food products that Canadians are already eating, simple reformulations to increase protein and fibre levels. We are working from the understanding of human nutrition that we have now. A great deal of research is needed because you will need to be very clear that if you are increasing a certain component, you are not having any detrimental unintended side effects.
The good news just with the products we have is that we can make a difference. However, as you point out, there are many examples in the food industry where we have increased certain components associated with positive health outcomes.
Mr. Phillips: In terms of what you are asking about, much of the work in wheat, barley, pulses and oats is not about molecular engineering but about old-fashioned plant breeding. They almost hand select the plants that have the traits they want.
Senator Eaton: You have heard the Prime Minister and Minister Ritz talk about free trade. They are keen to develop free trade agreements with China and India; and the EU is in negotiation right now. Do we have things that will create trade barriers and make it difficult to negotiate in terms of the way we farm pulses or grains?
Mr. Bacon: You are asking questions that are very important to our industry. We have been long-time advocates and supporters of bilateral trade agreements to ensure that Canada has access equal to that of other exporting nations. For example, last January the Prime Minister was in Morocco to launch free trade discussions. Effective January 1, 2012, Canadian peas will be at a 30 per cent tariff disadvantage and Canadian lentils at a 2.8 per cent tariff disadvantage.
Senator Eaton: The disadvantage is to whom?
Mr. Bacon: To the Americans, who have negotiated a Free Trade Agreement with Morocco. This is why we have to level the playing field. Non-tariff trade barriers give us the most grief on a day-to-day basis, for example, differences in global food policy. Maximum residue levels allowed from crop protection products, pesticides, are an enormous challenge. This is why I believe that agencies like the Pest Management Regulatory Agency, under Health Canada, need to be given additional funding so they can play a leadership role internationally in working toward global joint reviews of new registrations and ensure that we have the entire world working together to remove some of these non- tariff trade barriers.
Senator Eaton: Is it a kind of certification?
Mr. Bacon: Yes. The Codex Alimentarius Commission is the international body designed to establish international plant quality standards. Unfortunately, Codex is years and years behind. Thirteen of seventeen products we use in lentils do not have a Codex standard, which creates great uncertainty in a trade environment. To use a specific example, if you were exporting lentils to India, our biggest customer, and you found residue of a product that is commonly used, what is the legal framework to determine whether the product is in compliance? India references a Codex standard and Codex does not have one.
Our concern is that this adds risk to trade — the trade takes risk premiums — and that means farmers in Canada are affected and consumers in India are affected. We are trying to identify all of these non-tariff trade barriers and a strategy to deal with them.
Senator Eaton: Where does Codex operate out of?
Mr. Bacon: The Codex Alimentarius Commission is a joint agency of the Food and Agriculture Organization of the United Nations and the World Health Organization and is headquartered in Rome. It was set up in the 1960s. There are some clear things that could be done to bring Codex up to a standard where they could play a much more vital and vibrant role internationally. This is an issue for the plant industry as well as the meat industry.
Senator Eaton: Could you send the committee a list of recommendations on how we could update Codex or push to do that?
Mr. Bacon: Absolutely. We could include the role that Canadian agencies can play and where our investment in funding in terms of driving those costs out of the system could help. We would be glad to do that.
Senator Mercer: If my memory serves me correctly, Canada played a key role in the establishment of this back in the 1960s, did they not?
Mr. Bacon: I am not sure.
Senator Mercer: It seems to me that Agriculture Canada and Health Canada played a key role in establishing this.
The Chair: Witnesses, when you want to provide documents to answer questions, please do so through the clerk of the committee.
Senator Fairbairn: As you probably know, Mr. Phillips, I am from Southern Alberta in the foothills of the Rockies and surrounded by everything else. When you spoke at the beginning, it sounded as though all the doors were opening down on the ground to try to lift this up, probably with your help and wanting to be with you. Are you doing a great deal of that kind of thing off the ground, maybe towards universities? An area like Lethbridge is just itching to get into this kind of initiative. The kinds of things that are happening are a little different each year, particularly when there are mountains and rivers and valleys. Does much of that come out regularly with people who can understand that they could help and be part of what you are trying to do? Is it working well in that area of Canada?
Mr. Phillips: Lethbridge does a have a large Agriculture and Agri-Food Canada research centre. When I was double-checking numbers, I phoned a senior person in that research station to verify my numbers on the $5 million to $6 million of royalty income. Within our organization, we have the Alberta winter wheat producers and Lethbridge is a big centre for research on that. We have the Alberta Pulse Growers, the Alberta Barley Commission, the Alberta Oat, Rye and Triticale Association and Alberta Canola Growers. In Alberta, it is interesting because even though people grow canola, corn and all the private sector crops, farmers like going down to Lethbridge. When they hear stuff from an Agriculture and Agri-Food Canada scientist, they are perceived as being a neutral voice of authority. All of my member groups work closely to have good relationships with the university and with the Agriculture and Agri-Food Canada centre in Lethbridge. We work hard at that.
Senator Fairbairn: Thank you, and keep going; I am sure they will too.
Senator Duffy: This is a fascinating subject. One of the issues that we have to deal with is food safety. I have heard you talk about some of the improvements that have been made in productivity and the various scientific advances that have made our agriculture so productive and an industry that we are so proud of.
In the past, people talked about genetic modification. Some of the more extreme elements in our society referred to the products of GM as FrankenFoods. What is your assessment of that kind of campaign against genetically modified foods? Where is it today? Have you been able to reassure those who were scared by this kind of tactic that in fact modification of genetics is a positive for our agricultural sector?
Mr. Phillips: It is hard to convince everyone. The phrase "genetically modified," even to me, does not sound right. That is an issue. Have we convinced the people who are really opposed? No. Are we going to? Probably not. We look at what consumers are doing. Yes, there is some growth in farmers markets. Some people want that; and some people buy organic. When you go to a farmer's market, you see people with a couple of bags of carrots. When you go to any of the big grocery stores, you see people coming out with cartloads of them. Consumers, even if they are polled, say they do not want GM foods when purchasing for their families, but price and quality are considerations. Whether it came from a GM product or not is far down the list of priorities that most consumers would place on that. In that way, we have made pretty good progress.
Mr. Bacon: Pulse crops are not genetically modified anywhere in the world, so I am not here representing a GM industry. As Canadians and people around the world, we can have a large amount of trust in the science behind the valuation that goes on before these products are ever released. Frankly, they are far more closely evaluated and tested than some traditional plant breeding methods, which include mutagenesis, which involves the use of radiation and chemicals to change genetic structures. We have a set of odd standards in that traditional plant breeding includes things like mutagenesis, which is not as carefully tested as intentional genetic modification.
I like to phrase the discussion around this in terms of a social responsibility to feed 7 billion people today, which is headed to 9 billion in the future. When we already have 1 billion of them chronically under-nourished and a planet with limited resources, my personal view is that we have to use all available tools to feed a growing world population in a sustainable way. This will require us to use genetic modification and any other tool that is available. We need to have the sound science systems in place, and we do. We need to continually work to ensure that our food is safe.
I agree with Mr. Phillips. It is difficult to change people's minds about these issues, just as it is difficult to convince them that food that was subjected to pesticides in its production is safe. Yet there is a very large body of evidence to say that we have a very good regulatory system in that area as well. If you have trust in global regulatory systems, then you have to look at risk from the perspective of knowing that there is science all over the world that is designed to ensure that the product and the output are safe.
Senator Duffy: I was intrigued to hear you talk about how developments have reduced erosion. Erosion by wind and water is a major concern, not only in the west but also in the east. That, from what you tell me, has dramatically improved as well.
Mr. Bacon: We have undertaken a few pilot projects. We are involved in some global sustainability initiatives. There is a keystone project out of the U.S. that looks at five major sustainability metrics and scores where we were 15 years ago and where we are now in terms of water quality, erosion, organic matter in the soil, et cetera. We have shown improvement in all of those areas. It is the equipment we are using, the technology we have access to and the diversification of our cropping system. We have a very good environmental story to tell regarding food production in Canada. I think we can even do a better job in terms of environmental sustainability by changing what people eat. The more pulses we eat the better environmental story we have.
Mr. Phillips: The wheat people might not agree.
Because of the new technologies and the way we farm now with minimum tillage, we are not burning nearly the fossil fuels that we used to burn. We used to go over the fields three or four times with our tractors before the ground was fit to seed. Now we go over once. Our fuel bills are a fraction of what they were even 10 years ago.
Mr. Bacon: Pulses use half the non-renewable fuel energy of other annual crops. This is because of my comment on the use of solar power to produce nitrogen fertilizer. It is a fact. If we want to talk about improving the sustainability story of canola, canola grown in rotation with pulses is where you get the gains. This is not entirely about a pro-pulse commercial. You are judged by the company you keep, and crops grown alongside pulses have a better environmental story. This has been a marketing advantage for Canadian wheat in Europe, where McDonald's sets certain standards. The reason we are doing pilot projects with Unilever, Sustainable Food Lab and others is because a growing number of food companies around the world have said that they want to reduce their environmental footprint by 50 per cent in the next five years. By 2025, all of their raw ingredients will be sustainably sourced. We are trying to position Canadian agriculture to take advantage of that and to fully understand the contribution that these diversified cropping systems can have to ensure that the measurement systems are in place. I believe that Canadian agriculture needs to take advantage of environmental sustainability, because it will position us in the world as a preferred supplier.
Mr. Phillips: I want to follow up on what Mr. Bacon is saying. It does not just apply to the canola in rotation, but also to the wheat and barley. What Mr. Bacon means when he talks about solar-powered nitrogen is that if you grow a pulse crop, they actually create nitrogen and leave nitrogen in the soil. That means I can reduce the amount of fertilizer I, as a farmer, have to apply next year. This leads to farming more sustainably by the measures. That is why we are getting the marketing advantages.
Senator Robichaud: Do I understand that there is less resistance to GMOs in certain parts of the world, like Europe?
Mr. Phillips: In Europe there is still a fair amount of resistance. You can be shipping a boatload of wheat, but there might be some GM corn dust or canola seeds or something like that, especially on the feed side. Europe has actually just moved to create a low-level presence policy that will allow small amounts of GM in their feed industry. We are actually pushing for that to apply to human food as well because zero is a small number when you are working in a grain elevator. There are always a couple of kernels that leak or blow around or are on your farm. That is some of the work we are doing to keep trade going, to try to negotiate a low-level presence policy. When we were complaining about Europe's policies, they asked what we have. We did not have a policy either.
Canada is in the final stages now, having public meetings across the country, to put in place our own low-level presence policy as to what is acceptable if something comes in that has not been approved yet. I am not sure I am answering.
Senator Robichaud: I see.
Mr. Phillips: If you are asking where the major areas of acceptance are, they are in Canada, the United States and a lot of Latin America. In Southeast Asia, people are eating canola, corn and all sorts of crops. The major resistance, I would say, is in Europe and within upper-strata income groups in North America who can afford to pay premiums for what they want.
Senator Robichaud: Most of the land is being used now. Is there any danger in intensive use of the land? Sometimes we hear that if too many things are done in the same place you will take everything out of the land. Have we mastered that?
Mr. Bacon: I think there is some very interesting research that has been done. I will cite some from Western Canada in which intensive cropping rotation, continuous cropping, oilseeds and reduced tillage have actually shown that we are increasing levels of organic matter in the soil. Through reducing tillage and having this diversified cropping system, we are actually rebuilding organic matter. That has two major values. It reduces the amount of fertilizer that is needed because some of it is being supplied by organic matter that is breaking down. Also, organic matter is very important to hold soil moisture. The research that we are citing in some of our sustainability work is taking a look at this.
It is about using the right technology so that we are not over-fertilizing. We are using safer and safer crop-protection products all the time. I think we have greater concerns about some of the developing world where the same level of technology is not being used. Frankly, if we look at where some of the greatest rates of soil erosion are, they are in the developing world. You can make an argument that we need to have more technology used to improve the sustainability of cropping systems. The evidence I would cite would be to compare some of the sustainability metrics from Canada to the cropping systems in some of the developing world where we are seeing high rates of soil erosion. When the soil is gone, you do not have a productive system for 10,000 years.
Mr. Phillips: Three winters ago, I did some volunteer work in Nicaragua. We were up working on the steep slopes in the mountains, and people were burning off their stubble every year, which is the worst possible thing you can do. It is an age-old belief, like it came from an old tribal legend, that if you burned off the stubble every year, you would have a good crop. That means there is nothing to hold the soil there when the rains come, so they were depleting things, but people did not have that agronomic understanding of it. In countries like that, you are back to working at the absolute basics. Let us build some small dams to terrace and slow down the water flows. Let us pick up the rocks and build the rocks to catch it. You really are one field at a time, one village at a time.
When I worked in Ethiopia, it was the same thing. In Ethiopia, they actually get the long rains and the short rains, but they have denuded the land so much for firewood or for homes or for whatever that when the rain comes, it is gone and there are huge cuts of erosion and the soil washing away. A lot of improvement in farm practice has to happen in the developing world.
Senator Eaton: To get back to GMO seeds and the push-back, the push-back from GMO seeds has also affected Africa tremendously. Do we have any kind of education or lobbying program to try to overturn those prejudices? It is doing terrible things to Africa. I gather that India has started to produce its own best breed variety form of GMO practice and has increased its food yields enormously, but Africa has not. It is still, as you say, erosion, and no GM crops allowed.
Mr. Phillips: In African countries, where they are trying to sell their produce into the European market, that is where they are very sensitive about that, because the Europeans have told them they have zero tolerance level and, if there is anything mixed in the corn coming up there, they are not going to buy it from them. That is what is driving it in Africa more than a health concern on the ground in Africa.
Senator Eaton: Are we trying to overturn some European prejudices? Is it just they want to sell their own products? They do not like the competition coming from North America, so they put up this myth about GMO seeds, or is there a real scientific basis for their push-back?
Mr. Phillips: There would be almost zero peer-reviewed science in the world that would show risk. Some of it is a philosophy. The Europeans have a different philosophy towards food in the first place. I do not know if it is to keep us out of their markets so much as that is just what their consumers want. We do our best. We do not have any GMO barley or wheat or oats. We sell a lot of Canadian crops into Europe, but not canola, corn or soybeans unless they are preserved to keep it out.
Mr. Bacon: Europe is not free of genetically modified food. They are consuming genetically modified food. They are selective, and they are slow in approving traits. There are many examples. There is no place in the world that is completely free of genetically modified food.
I think you are right in that there is an element of preserving some protectionist policy in terms of the speed at which traits are approved, but there is no doubt that there is a strong and vocal population who will never be convinced that they want to consume genetically modified, just as there are people who prefer to eat organic food as opposed to food grown with the use of crop-protection products, even though again there is no peer-reviewed science that says we have known risk factors. The days of having known risk factors in pesticides are 40 and 50 years old, but you cannot change a consumer's mind.
Our best hope is to ensure that we have systems that recognize that you cannot have zero of anything. The only way you do that is not to trade. If we can have acceptable levels, the low-level presence policy, it allows us to serve the consumer with what they want. If they want non-GMO product, as an exporting nation, that is what we have to provide them.
Mr. Phillips: If they are willing to pay for it.
Mr. Bacon: From a global perspective, it will be a focus on environmental sustainability that will help focus attention on use of all the tools that are out there. We simply cannot feed and we are not feeding the people today. The question then has to go back to people: How will you ensure 7 billion and then 9 billion people are properly nourished without decimating the planet in the process? I believe the answer has to be that you make use of all available tools.
Senator Mahovlich: Talking about sustainability, when I drive outside the city of Toronto, where there were farms, it is all development now. Should we be concerned, or should the development just continue?
Mr. Phillips: I am not from Ontario, but I have driven the highway enough times. Whatever can be done to increase urban core growth versus continually expanding suburbs would be a good thing. A lot of cities were originally built where the farmland was fertile, and that is just how civilization developed. The wider they spread, the more actually the best land gets eaten up. I shiver every time I see a news story in the Ottawa paper that someone wants to develop more of the green belt. Do not go there.
Senator Mahovlich: We should be concerned.
Mr. Phillips: Build up, not out.
Senator Plett: Mr. Phillips, you touched partly on what I was going to raise with your comment about when you had been doing volunteer work and they were burning stubble. I have a couple of questions on that. First, in my province, and I do not know about yours, these guys are still burning stubble. Do we need to learn here? Is it actually harming the land here when we burn stubble? It is being burned all over where I live.
Mr. Phillips: The Red River Valley is a microcosm of a unique place where the soil is so rich and you have so much growth that it is hard to work it all back in. When they are burning flax, flax is exceptionally difficult to work back in the soil anyway. You do not have the same erosion concerns that you would have on the side of a hill if you are burning stubble off. It is a little different. You have no shortage of organic matter in that microcosm. I will not condone it, but I will not comment negatively on the farmers either.
Senator Plett: We are sometimes frustrated when smoke comes over our villages.
We certainly are all supportive of innovation and of the large equipment that is being purchased and used and so on and so forth. You mentioned early in your remarks the project in Manitoba for saving Lake Winnipeg. We hear over and over again of concerns that people have with fertilizers getting into water streams. I am not a big believer in that if you put something into the ground, that it will find its way into the water stream. I do not believe that. However, we do have a lot of livestock farmers that are fertilizing above ground. Most landowners have become tremendously efficient with their drainage systems because they want to get their crops in early in spring and they want to get rid of the water. Not wanting to be critical of farmers — I know you would not be one of these — but for many farmers, their only problem with the water is getting it off of their land. If it is off their land, it is fine. How much problem do we have with that?
There is where I see a problem with fertilizer. The guys are spreading manure over top, and the drainage is so good. Of course, the rains come, and you cannot get onto the land to work it into the land, and we have this draining into the ditches and going down into the waterways. Is that a large problem?
Mr. Phillips: I would say it goes back to that microcosm of that area south of Winnipeg. I do not hear this in Saskatchewan. We just do not have the same concentration of hog barns or dairy barns that they do in Southern Manitoba, in the same drainage area. I do not know what the solution is there other than that they need to inject that stuff in the fall. There are injection systems. I am not sure why the producers there have not invested in that. Maybe it is more expensive or slower to do that.
When I talk about making better use of the fertilizers, I am talking about the granular fertilizers that go into the soil, not just the smarter fertilizers. I am sure you know this, but there is a global positioning system in the tractor cab. Many of the bigger tractors now have auto-steer. When a farmer comes around the end of the field, he can take his hand off the wheel and it will steer straight down.
Were you a farmer in your younger days?
Senator Plett: No, but I worked on farms.
Mr. Phillips: In these clouds of dust when I was driving 30 years ago, you did not even know where you were until you were overlapping fertilizer here and not putting any over there. When the dust cleared and you turned around, you maybe thought it was because I stayed out late. Sometimes it was. Every time I was going at the wind it looked like I stayed out late.
As farmers, we can do that. We have tools and technologies to minimize that sort of stuff. In Manitoba, I know it is a difficult issue. I do not know what the solutions are for all that pork manure. I do not know what the answer is there.
Senator Plett: I hope I have not gotten my hog farmers into trouble because I do support the pork industry and I want to help them as well. Thank you for the answer.
[Translation]
Senator Rivard: Last week, we heard from the dairy producers. Everyone knows that the dairy industry is in surplus and that they lose products every year. Can we say that you sell your production and meet the demand, or are you stuck with surpluses? For example, we know that Canada is signing a free trade agreement with the European Union. Although the Europeans are touchy about GMOs, do you think that, under a free trade agreement with the European Union, you could sell perhaps 10 or 15 per cent of what you currently produce?
[English]
Mr. Bacon: I think the difference between the pulse industry or the grain industry is that the product can be stored for long periods of time. It is stored dry so that farmers can make the choice; if they do not like the price in the market today, they can wait till next week or next month. Sometimes farmers will store grain for more than a year waiting for a price they find more attractive. Obviously, with a perishable product like dairy products, that is less of an option, or you have to build refrigerated storage. I am not a dairy expert.
In terms of a free trade agreement with Europe, I do not think it will do anything to change a consumer's mind. Ultimately, as it relates to whether the European consumer is willing to buy something, we try to make sure there are no government barriers to it, but I do not know that we will see any change any time soon in the European consumer's views toward genetic modification, just as I think that there will be always consumers who choose organic.
To go back to an earlier question from Senator Eaton, we need as an industry to do a better job of communicating the sound science on which our food safety systems are based so that we do not have people becoming alarmed for no reason.
[Translation]
Senator Rivard: The witnesses have left us a 32-page document containing some very appetizing recipes, and I congratulate them on that. That is very good. I realize that Agriculture and Agri-Food Canada probably made a big contribution. Is this brochure available in French as well?
[English]
Mr. Bacon: Yes, it was. I did not bring copies with me, but when I go back to the office I again will have some of this information sent.
[Translation]
Senator Rivard: I am very pleased to hear that because this is an important clientele, but I can tell you that it is very well done and very appetizing. I am going to take it home for my wife.
[English]
Mr. Bacon: Senator, the brochure was in French but the contents were all in English.
Mr. Phillips: We will also commit to circulate the canola recipe cookbook as well.
Senator Robichaud: How much more research is there to be done on fertilizers and pesticides? You mention pellet smart fertilizer, but in what you produce, is there much room for improvement? I know that in dairy and the use of fertilizers there is a lot of work to be done, but in grain production and lentils, is there much to be done still?
Mr. Phillips: Some of the work yet to be done is on the placement of the fertilizer and the distance from seed, and whether we have the machinery close enough. If you have too much fertilizer on the seed, you can basically burn the plant roots. There is more work to be done on that one.
Probably the next really big breakthrough after smart fertilizer would be if they could develop a wheat or barley crop that could actually fix nitrogen in the soil, like what pulses do. That would probably be the next really big breakthrough. We could be 20 years away from that. There is work being done on that.
On the pesticides, it tends to be the big companies that do the research on pesticides. It is Bayer, Syngenta, Monsanto, BASF. The big companies are the ones that invest hundreds of millions of dollars. They have a thousand products that they look at that might kill these weeds and they narrow it done to three or four, or just one eventually. They are the ones with the deep enough pockets for that.
What we are looking at in terms of the public research here, on the crop side, is the varieties. A lot of the work goes into the varieties and the cereal grains for better yields or disease resistance. Those are the sorts of things where, if you develop them, you can use less pesticide. Maybe Mr. Bacon can talk about the human health side, such as at the St. Vital Centre where they do the clinical feeding trials.
Mr. Bacon: Just to the senator's question, I think also picking up on what Mr. Phillips said, one of the areas of major investment now is to come up with plant varieties that use available fertilizer more efficiently. This is certainly something that the canola industry is looking at, and, as Mr. Phillips mentioned, plants that are able to extract fertilizer from the soil more efficiently and more growth for the same amount of fertilizer, and also in the area of micronutrient work and the role that some of these minor elements play in proper plant nutrition. Plants are similar to people. They need the right amount of nutrition at the right time. Any one deficiency will limit the plant in some way. We are again still trying to squeeze out these last bits of efficiency in crop production, and water use efficiency of course is related.
Senator Plett: Mr. Phillips just alluded to a St. Vital Centre. Is that in Winnipeg?
Mr. Phillips: Yes, Saint Boniface.
Senator Plett: They are side by side.
Mr. Bacon: The Government of Canada, Agriculture and Agri-Food Canada has a centre for research in agriculture, and it is linked to medicine. This is where some of the flax work has been done in terms of flax's contribution to health, and where some of the pulse work contribution to health has been done. We have the beginnings of a strong link between agriculture and health outcomes. Much of our work, including our partnership with Agriculture and Agri-Food Canada, is to work closely with major food companies and encourage them, provide them with answers they have on reformulation of food products.
We do have a need to increase the body of medical knowledge to correlate consumption of certain food products with better health outcomes, whether it is cardiovascular disease or blood sugar control for diabetes, and we can go down the list. This is an area of innovation that is very important. We work with companies to reformulate bread so that you are including more pulse flours and getting an improvement in glycemic response, again, blood sugar control. We try to identify what the major diseases are affecting Canadians and what kind of food solutions we can put forward to complement the pharmaceutical approach to medical care.
Senator Duffy: Following up on what Mr. Phillips said about GPS and steering of tractors, a problem we have that seems to be continuing in Prince Edward Island — it has diminished somewhat but it is still a worry — is the washing of pesticides into watercourses and streams. We have had too many fish killed over the last few years. It would be my hope that you all in the industry would continue your work to ensure that there is enough setback and that, through these more scientific methods of spraying and planting, farmers are not endangering our watercourses. It is a real issue, especially in places that have nearby watercourses, like P.E.I.
Mr. Phillips: If you really wanted to be Big Brother and if you made it mandatory that there be GPS in all those tractors, the government could, in theory, capture that information and know if someone actually broke the law. I read the Atlantic Grains newspapers and I see where people, if they apply anything within 30 feet of a waterway, they are breaking the law, yet people still break that law, sometimes by accident on rental land.
Senator Robichaud: Thirty feet or thirty metres?
Mr. Phillips: Maybe it is 30 metres from the waterways. I do read about those infractions happening in Prince Edward Island. In theory, if you field map well enough, you can set the alarms on your GPS systems. It will warn you when you are getting too close, and then you have no reason, unless you are really sleeping. You should not be sleeping and driving, in any event.
I wanted to make another commitment of information that we could bring, and that is that CropLife and all the big companies have done a lot of work on GM crops and on the safety issues and public awareness stuff. I will ask them if they could circulate some of their materials as well. Senator Eaton was asking about that.
The Chair: Before we close, I would like to share some information with the witnesses. First, thank you for coming. I would like to make some comments and observations on what you have presented. I have a few questions, but I will ask the clerk to send the questions in letter form so that you can answer.
I would also appreciate your comments on the following: As we talk about food production in agriculture, you did not talk about soil compaction. You mentioned soil erosion, and we would like to get your professional comments on that.
Second, to give you an example of what has happened in Eastern Canada — and we have also seen it in Western Canada, when they developed potato crops — years ago we would have rock pickers to pick the rocks in our fields. As time went by, R & D specialists told us that we must keep our rocks in our soil in order to retain moisture, which leads to better crop quality. The committee would like your comments on that.
[Translation]
You mentioned fertile farmland. When it was mentioned, Senator Mahovlich alluded to the fact that, in certain regions of the world, such as Brazil, they were clear-cutting in order to transform the forests into farmland.
Could the amount of farmland in Canada or in certain regions of Canada be increased in order to enhance production? If so, in what sector could that be done? Would it be forests, wetlands or new farmland?
[English]
The next area we would like to have your comments on is whether individual grain farmers are part of the crop innovation system. How can the Canadian government foster the creative capacity of Canadian farmers?
The last question for which we would like to have the benefit of your professional experience, comments and knowledge is the following: Have you found the AAFC Science Cluster program to be helpful when it comes to defining industry-wide research priorities?
We will share these questions with you so that you can get back to us. We would appreciate that, Mr. Phillips and Mr. Bacon.
Senator Robichaud: You have handouts on pulses and cardiovascular disease, on pulses and diabetes control, and on weight control. What role is Health Canada playing in trying to promote this?
Mr. Bacon: I can say with great happiness that we have a very good working relationship with Health Canada, and Agriculture Canada and Health Canada are working together to expand this role. They have been very helpful in terms of defining research methodologies so that the results are going to be meeting the requirements that Health Canada has. We have made real strides forward in the last four or five years in developing a very good relationship with Health Canada, and Health Canada is showing real interest in changing the system to help food play a bigger role.
The Chair: Mr. Bacon and Mr. Phillips, I was listening to a group of economists talking about world production. They were saying that the country that would have the four Fs would certainly be leading the way in economic activities and food production. Namely, the four Fs are food, fuel, fertilizer and forestry.
We thank you very much for sharing your knowledge with us. We might ask you to come back.
With this, honourable senators, I declare the meeting adjourned.
(The committee adjourned.)