Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 25 - Evidence - Meeting of October 30, 2012
OTTAWA, Tuesday, October 30, 2012
The Standing Senate Committee on Agriculture and Forestry met this day at 5:17 p.m. to examine and report on research and innovation efforts in the agricultural sector (topics: innovation in the agriculture and agri-food sector from the producers' perspective; and coordination between federal, provincial governments and the private sector to fund research and innovation in the agriculture and agri-food sector).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, I would to take this opportunity as chair of the committee to thank the witnesses for accepting our invitation to share with us their comments, recommendations and vision of agriculture going forward.
I am Percy Mockler. I am the chair of the committee, a senator from New Brunswick. At this time, I would ask honourable senators to introduce themselves to our guests.
[Translation]
Senator Robichaud: Fernand Robichaud, from Saint-Louis-de-Kent, New Brunswick. Good evening.
[English]
Senator Merchant: I am Pana Merchant, from Regina, Saskatchewan.
Senator Mahovlich: I am Frank Mahovlich, Ontario.
Senator Callbeck: Catherine Callbeck, Prince Edward Island.
Senator Plett: My name is Don Plett, and I am from Manitoba.
Senator Buth: I am JoAnne Buth, from Manitoba.
Senator Duffy: Mike Duffy, from Prince Edward Island.
[Translation]
Senator Dagenais: Jean-Guy Dagenais, Quebec.
Senator Nolin: Pierre-Claude Nolin, province of Quebec.
The Chair: Honourable senators, today the committee is continuing its study on research and innovation efforts in the agricultural sector. We will hear from two panels. The first panel is on innovation in the agricultural and agri-food sector from the producers' perspective.
[English]
The second panel will focus on the coordination between federal and provincial governments and the private sector to fund research and innovation in the agriculture and agri-food sector.
Witnesses, our order of reference is to examine research and development efforts in the context of developing new markets domestically and internationally, enhancing agricultural sustainability and improving food diversity and security for Canadians and the world through our exports.
Before I introduce the first panel, honourable senators, at 6:45, as chair, I will ask for an in camera meeting of the committee so that I can share with you the information for the other responsibilities that we have on the committee in view of the study of the grain act.
Honourable senators, for our first group of witnesses, I have the honour to present to you Mr. Jeff Holzman, Director, Market Research, Potash Corp; and Mr. Robert Godfrey, Senior Manager, Policy, Canadian Fertilizer Institute.
Again, thank you for accepting our invitation and being here to present your views. After you make your presentations to the committee, we will follow with questions from senators.
Jeff Holzman, Director, Market Research, Potash Corp: I appreciate the invitation to discuss with you today the fertilizer industry's role in meeting the world's food requirements. I have provided a presentation ahead of time, and through my formal remarks I will be referring to several of the slides that we have provided in the presentation.
I understand that part of the committee's role is to look at innovation as it relates to agriculture. While I will not be talking specifically about new product developments or new production techniques, per se, I will focus on how we can better use the products that we currently have in the fertilizer industry to better global agriculture and look at the some of the research and development we are doing with our existing products, both within Canada and abroad.
With that, I would like to start on slide 3 in the handout and just a quick overview of Potash Corp. We are a global nutrient company. We produce the three primary crop nutrients that are required to grow healthy plants — nitrogen, phosphate and potash. As our name suggests, our core business is the potash business, with five operations in Saskatchewan and one in New Brunswick, but we also are a significant producer of phosphate and nitrogen, with two phosphate mines in the U.S. and nitrogen operations in the U.S. and Trinidad. As well, we have global companies that we are invested in, all potash-related companies, in Jordan, Israel, China and Chile.
On slide 4, you can see we are the world's largest fertilizer company by capacity, with over 20 million tonnes of primary nutrient product capacity. We are the largest in the world by that measure. Second to us is Mosaic, which also has significant Canadian potash operations in Saskatchewan. The third Canadian-based company, our associated company that shows up on the list, is Agrium, ninth on the list, with nitrogen, phosphate and potash assets in Canada.
Moving to slide 5, the crux of the challenge globally that we face is meeting the projected demand for food, according to FAO when you look over the next 20 to 40 years at the type of food consumption growth that is expected. A lot of that is in developing countries in Asia, and starting to be more in Africa and Latin America as well, so the challenge ahead of us is to meet that projected food consumption.
On slide 6, in terms of how we will meet those consumption targets and raise production around the world, 77 per cent of that is estimated to come from increased yields. The biggest contributor as we move forward to increasing grain production will come from increasing yields. Increasing cropping intensity will be a smaller part of that. That is double and triple cropping, so cropping intensity.
The last piece is increasing acreage. Unfortunately, there really is limited arable land available for agriculture around the world outside of some expansions that could take place in Brazil, the former Soviet Union and likely, over time, in Africa. Offsetting that partially is urbanization taking place in markets like China, India and others, where you will see a reduction in arable land available for agriculture. To meet those targets for production, we need to see it through increasing yields.
The question is, how does the world increase yields to meet these targets? Research shows that basically 50 per cent of the world's yield increases have historically come through fertilization practices. That is the single largest contributor to yield based on scientific research. The other 50 per cent comes from different types of management practices — irrigation, seed technology, cultivation and pest control. In our view, and certainly the focus of our industry, having those crop nutrients available is the single biggest contributor to crop yields. You can see on the chart on the right a breakdown of different key crops grown globally. The type of contribution that fertilizer makes to yield is in some cases 50 to 70 per cent, depending on the crop. It is a significant contributor to yield potential.
In terms of the specific contribution that each key nutrient makes, whether it be nitrogen, phosphate or potash, they all have different functions within the plant in terms of how they impact yield potential and they are all needed by the plant. Our core nutrient, potash, is mined from natural mineral deposits left by ancient evaporated seas. The deposits that we are mining in Saskatchewan are around 1,000 metres below the surface. We are mining those reserves, and that product, after it is refined, is applied by farmers around the world. The key is having these three nutrients in the right balance to get the optimal benefit for the plant. If one nutrient is limited, you do not get the full yield potential of plant, and you see that on slide 9.
When you talk about innovation, as I said, it is not new product development; it is just better use of the products that we have at our fingertips today. When you compare the yields in countries such as U.S. or Canada to China or India, you can see the direct link between balanced fertilization, which is the chart on the left-hand side of slide 9. A market like the U.S. or Canada, with very balanced nutrient application, is compared to, for example, China or India, which use a lot more nitrogen than phosphate or potash. The end result is that the yields in those areas are lower than in many developed countries. It is not the only contributor to the lower yields, but it is one of the major ones. A lot of our research focus in these offshore markets is getting the education out in terms of the impact on yields from balanced fertilization.
Shifting to Canada's role in the fertilizer industry, you can see from the chart on slide 10 that on a global scale we are a fairly small producer of nitrogen and phosphate, but our advantage lies in the production of potash, with nearly a third of global potash production. That is our strategic advantage. We are a small consumer of all three nutrients. Our contribution or strategic advantage as a fertilizer industry is in terms of the potash side and supplying that nutrient on a global basis.
You can see where that advantage comes from on slide 11. Canada right now has almost 50 per cent of the known reserves of potash. When you look at Canada producing basically one third of the global potash, it lies with our advantage in having that actual natural resource, those deposits, and most of those are in Saskatchewan.
You can see on slide 12 the profile in terms of global production of potash and where it is consumed. The majority of production is occurring in Canada, in Russia, in Belarus. Those are countries that have large deposits of potash, but the consumption is occurring in many countries that do not have those natural deposits, and they are importing most of their requirements. You can see the consumption bar in places like Asia, China, India, Malaysia, Indonesia and Brazil that do not have those natural deposits and are relying on Canada and other large producing countries to meet their soil fertility needs.
Taking that a step forward, on slide 13, our consumption of potash and other nutrients is relatively low on a global scale. The majority of potash that we produce is sold into the export market, whether it be into the U.S., Brazil, China or India or other Asian countries. The majority of product we produce is sold for export, and there has been significant growth in the export market over the last couple of decades. It does not always go on a straight line. There are bumps along the road. We are dealing with developing markets that do not always grow on a straight line. Certainly the trend line is significant, with the agronomic need and the need to meet their growing populations with improving diets. There is growth both in food consumption and the need for crop nutrients to produce that food.
Slide 14 shows that percentage growth, whether it be in the various Asian countries or in Latin America. It is very significant long-term growth, and that is on a historical basis. That is where we see the majority of the growth in the future and really where Canada's potash will be going in the future.
I would like to finish my formal remarks by talking about how Potash Corp is preparing in this environment, where we see pressure on global food production and the need for crop nutrients to meet that demand. We are preparing by investing in our advantage, which is in the potash industry. We are going through an expansion program right now that we initiated in 2003; it is an $8.2 billion investment in our facilities to raise our production capability to meet this future demand. It is a significant investment, one that will take place over the course of more than a decade. It started in 2003 and we will be finished around 2015.
Some of the unique features of the potash industry are the timelines and the capital costs required to build out the required capability. Some of our projects take up to seven years from beginning of construction to when they are fully ramped up. Those are capital-intensive projects that take significant amounts of time. However, that is our commitment to this global food development and the long-term needs.
Some of the other innovations are not just new capacity but also increasing the efficiencies of our operation from an environmental standpoint and overall in the efficiencies of our plant. They are not necessarily new products, but rather trying to look for ways to have that product available.
The other thing we are doing is investing time and research in those offshore markets to help with the education process, as I talked about, with the nutrient imbalances we see in some of these markets, and trying to educate our customers and farmers in these various jurisdictions on the benefits of crop nutrients in the right form.
The Chair: Thank you, Mr. Holzman. We will start the questions.
Senator Plett: Thank you, gentlemen, for coming out this afternoon. We appreciate it.
You have spoken quite a bit about what Potash Corp is doing to expand, and so on, and at the start of your remarks you touched on population increases. We know that by 2050 we will have about 9 billion people in the world. I spoke the other day to a farmer in Manitoba who said he thought the biggest driver of the price of feed was biofuels and corn especially.
In light of the need to feed more people, competition with biofuel and with corn, and so on, how will we keep up? Clearly our crop yields have increased, and you spoke about that; crop yields have increased tremendously in the last twenty years. Will we be able to continue our increase our crop yields? At what point will we have put as much fertilizer in the ground as we possibly can to yield good crops?
Mr. Holzman: As I noted, the products are there and the potential is there to increase our productivity. Yields in North America are higher than in the developing world, so I think a lot of that incremental yield growth will come in a lot of these offshore markets that have the opportunity. It is not just better fertilization practices but better seed technology and some of the other more modern developments that can help raise their yields.
Specifically to the North American situation —
Senator Plett: That is what I would like to talk about.
Mr. Holzman: I do not think we have met our full potential here, either. I will talk first about the U.S. because the first part of your question was on biofuels, and I think a lot of that originates in the U.S.
We have seen a little levelling off in crop yields over the last couple of years. Whether it has been due to weather or other factors, we do not know, but we have not been maintaining the soil fertility levels to the levels they should be over the last decade or so. We are starting to see some of the implications of that.
Part of our discussion points more recently have been with agronomists, and a lot of the university community is getting the message out that we need to start addressing soil fertility before we start putting yield potential at risk within North America. We have the technology and the products available that we can continue to increase yields. When you listen to the seed companies, they talk about the genetic potential, but there is a whole system. Soil fertility and other best management practices are part of that. The technology is there. We just need to ensure that it is being fully used.
Robert Godfrey, Senior Manager, Policy, Canadian Fertilizer Institute: I will pick up on Mr. Holzman's remarks. I am with the Canadian Fertilizer Institute, which is a trade association that represents companies such as Potash Corp. We actually represent the manufacturers, wholesalers and agri-retailers, so we are the entire supply chain. We have about 46 members from across the country, many of whom are North American and globally based.
Specific to your question, he is talking about best management practices. Something we presented to this committee about back on November 24, 2011, was on 4R Nutrient Stewardship, which is a massive project that has been undertaken globally by the fertilizer industry. This has been developed working with the International Plant Nutrition Institute, the United States fertilizer industry, crop advisers, agri-retailers and farmers. It is meant to specifically to improve fertilizer efficiency, to improve crop yields and to protect the environment. This work has produced what I have referred to as the 4R Nutrient Stewardship Initiative.
I point to three different projects in Canada. We are currently negotiating a memorandum of understanding with the Province of Prince Edward Island and the Province of Manitoba, which will be specific. The signatories to these agreements include local farm groups, such as Keystone Agriculture Producers in Manitoba, the PEI Federation of Agriculture — the farmers in the area — as well as the departments of agriculture and the environment, as well as local watershed groups. It is to look at how to improve the yields and the efficient use of fertilizer.
In Prince Edward Island, for example, you have over-fertilization where in some cases some farmers are putting on more than enough fertilizer. In parts of the Prairies you have the opposite, where in some areas they could apply more. We are looking to refine the research and science on how to improve fertilizer efficiency and ultimately improve crop yields.
Senator Plett: Who funds your organization and how much money do you spend on research and development?
Mr. Godfrey: The industry itself funds our organization, which is composed of 46 members. It is the entire supply chain — everyone from Potash Corp mining the product or manufacturing — in the case of ammonia products — and it goes all the way through to the Viterra kinds of companies who distribute it to the actual agri-retailers who then distribute it straight to the farms.
Our budget on a yearly basis is just short of $4 million. On a specific number in terms of how much of that is research and innovation, I would have to get back to you. I would not feel comfortable putting an absolute number on that today.
Senator Plett: Thank you. If you would please do that through the clerk, we would appreciate it.
Senator Robichaud: We would be very interested in the answer to Senator Plett's question regarding how much research is being done about the use of fertilizers, especially in the field of innovation. There must be a limit to how much fertilizer you can put down. Of the potash being used now, how much of it is used by the plant and how much just flows away and is not used?
Mr. Holzman: Potash and phosphate are not mobile in the soil. You can apply potash in year one. The plant will not take up all of the nutrients in the first year, but potash will remain in the soil bank and be used in subsequent years. With potash in particular, there is no nutrient leaching issue. With nitrogen, you can get more losses in the soil. It depends on the rate applied, the moisture conditions and different factors like that.
I think the nitrogen issue mainly comes down to what Mr. Godfrey talked about with the four Rs. There is a certain environmental component to the 4R program in terms of the right time, right place and right product. A lot of that is looking at ways to minimize losses within the soil, in particular on the nitrogen side.
Senator Robichaud: Surely you have done research so that the farmers know in the second year how much to put into the soil. It does not have to be as much as the first and then the third. There is a rotation that comes into it. Is that all available to the individual farmers?
Mr. Holzman: Individual farmers would typically do their own soil tests. They would soil test their own piece of land so that they would know the nutrient requirements. That soil test would tell them that they need a certain amount of nitrogen, phosphate and potash based on the crop that they are growing and the nutrient requirements of that crop. I would say that in North America the majority of farmers actually do soil testing so that they can understand their own requirements.
Senator Robichaud: I am sure that you are familiar with the research being done in nanotechnology. We have been told that with that technology you could significantly reduce the amount of fertilizer that would have to be put in the ground because it would be put in with each plant and not just generally sprayed on the field. Are you following that research? Of course it would mean that you would sell less potash if it could be used more effectively. I do not want to put you on the spot. It is just that people have come here and told us that.
Mr. Godfrey: I would caution against saying "using less.'' The 4R Nutrient Stewardship Initiative is the right kind of fertilizer, at the right rate, at the right time, in the right place, the right temperature of the soil, the right time of the year, the right place in relation to where it needs to be on the field. An awful lot of agri-retailers across this country actually work hand-in-hand with the farmer in figuring out, based on what they are growing and where they are growing it, what they should be using, whether it is a nano-product or whether it is potash, and at what kind of rate they should be putting it on. Maybe this year they did not put on as much. Perhaps next year they will put on more. It changes year to year, field to field, crop to crop.
We are simply trying to refine. I do not want to say "less'' or "more.'' I want to say "efficient'' — the efficient use of fertilizer. In some areas, there will be more application, and in some areas there will be less.
As for the memoranda of understanding I talked about, we have a third one in Ontario. I cannot actually think of the watershed right now, but it is $50,000 per year per project. It is over $150,000 per MOU, times three. That is what we are doing specifically right now.
Over and above that, on the North American side, we have a 4R research fund. It is something that the industry is starting to drive, and it is being put together by the Fertilizer Institute, which is actually based in Washington, D.C., and the Canadian Fertilizer Institute. It is being heavily funded by companies such as Potash Corp. They will be looking at the science. They will be going out and actually hiring agronomists. They are going out into the academic world, and they will have them actually sit down. The figure that we are throwing around at the moment is in the millions of dollars. We are trying to refine the 4R Nutrient Stewardship Initiative because we feel that it is an innovative way to go out and educate farmers and the agriculture community on how to efficiently apply the product so that any farmer can get the best bang for their buck, essentially. They can grow the most efficient crop in the most economically efficient way possible and get the social and environmental benefits that come with that.
Senator Robichaud: I understand that part. You have to grow as much as you can with the fewest products that you need to put in the ground. The bottom line is that that is how it comes out. I am just interested to know what research you are doing. That is the question.
Mr. Godfrey: We are doing field trials, as one example. In Prince Edward Island, for example, we have hired an agronomist. His name is Dr. Robert Coffin. He has been given a certain amount of money to go out and experiment on the products, with different rate applications on different crops, to get a report. He is working heavily with potatoes as he used to work with Cavendish Farms, which is a large processer in that province. He is essentially able to present a report at the end of the year that shows what he was able to achieve with these application rates, under these conditions.
Building upon that, year after year, he is taking this research out to the farmers, presenting it to them, arguing his case that using these rates and using this seed is how you can improve your profitability. This is how you can improve your operations.
That is just one example. We are also working with Dr. Mario Tenuta in the province of Manitoba. He is using corn and doing the same thing. We are going out and doing real life trials using crops and the products, whether they are nano, potash or nitrogen. This is something going on in conjunction with the International Plant Nutrition Institute, as well as the Fertilizer Institute in the United States. This is a global initiative.
Senator Robichaud: Thank you.
Senator Nolin: Gentlemen, we live in a bilingual country, so I will ask you my question in French.
[Translation]
Mr. Holzman, I am concerned by the fact that potash is the result of a mining extraction operation. I understand that you are the director of market research. I would like to know — and if you do not have the answer, perhaps your colleague does — what sort of research you do. Certainly, unless you are testifying that this is not the case, certainly there are greenhouse gases that result from your extraction process. What level of research does your company do to try to minimize those greenhouse gas emissions?
[English]
Mr. Holzman: It is not really my area of expertise.
Senator Nolin: Maybe your colleague will answer that question.
Mr. Holzman: I can answer it fairly generally. One of our key goals as a company is managing our environmental footprint. We set targets that are approved by management and the board each year that try to minimize our environmental footprint. We report on that each year through our sustainability reporting and put a lot of emphasis on that.
[Translation]
Senator Nolin: I appreciate your answer but I would like to have more details.
Mr. Godfrey, do you have any information about it?
[English]
Mr. Godfrey: I can tell you that in the production of potash in particular, one of the biggest things that they have been doing in the last few years is being heavy users of natural gas. They are very efficient in how they produce their product.
Further to that, I can tell this committee that I spent most of the today in discussions with both Environment Canada and city officials in conjunction with its environment committee, which is made up of our members, looking at negotiating a greenhouse gas emissions reduction agreement. We are a long step from actually signing anything, but we are in discussions. We have made proposals and, on the potash side, things are very positive. A lot of the emissions actually occur underground, so they are fairly controllable.
On the ammonia side, things are a bit more intense. In the last 30 years, there has been a drastic improvement in efficiency in terms of the use of natural gas and ensuring that our environmental footprint is as small as possible.
We are in confidential negotiations with Environment Canada, but I can assure you that we are talking and hope to have an agreement sometime in the future.
[Translation]
Senator Nolin: I want to explore another area of interest with you. Depending on the industry, a percentage of your sales goes to research and development. Take high-tech information industries, for example. You would not be off the mark if you figured on an investment of around 20 per cent of your annual sales. That is a huge amount, and in the pharmaceutical industry, the amount is even higher.
What is your industry's investment target for research and development? Why are we interested in those questions? The committee's study is seeking to get a better picture of innovation, of what the industry is doing to meet research targets. What is your target, and what percentage of your sales is reinvested in research and development?
[English]
Mr. Godfrey: As I have indicated before, I do not have an exact number, so I would not feel comfortable guessing at that today. However, I can assure this committee that I will go back to my office and do my best to provide a number. I do not know if I can go as far as a percentage, but certainly I can look at providing you with a number.
As I have indicated, specific to the 4R Nutrient Stewardship, which is our biggest project right now, there is a significant amount of investment in the millions and millions of dollars. I can assure you that our industry is very interested in research and development on our products.
The Chair: With respect to the senator's question, can you provide the answer to the clerk of the committee, please?
Mr. Godfrey: I can provide that, yes.
[Translation]
Senator Nolin: This is a point of interest. Your members are commercial enterprises. Their objective is to produce income for their shareholders. The industry has an interest in research. I am curious to know, when you do not invest in research, at what point does that become a detriment? That is what I am trying to understand. If you have information about that, please send it to the committee clerk. Thank you very much.
[English]
Senator Merchant: There is desire by consumers to go organic. Are you following this closely to see why this is so? Is it because of environmental issues that people are more interested in organic foods? Is it because of health issues as they perceive them? Do you have some research to explain that? Are you concerned about this? Is it a North American phenomenon or are European countries more interested in this?
Mr. Holzman: The interest is predominantly in Europe and North America. Whether it is a perceived health preference and there really is a health benefit, the jury and the research are still out. I will not weigh into whether that is the case because ultimately the consumer can decide. When there are organics on the shelf, consumers can make the decision for themselves.
The research in terms of the challenge of meeting the needs of 7 billion people now and 9 billion by 2050 would be very difficult if we did not have conventional farming practices around fertility, seed technology and pesticides. In our view, organic is a consumer's choice. In terms of being able to feed 7 billion people, it is important that we have modern agriculture and the tools available to meet that demand. That is why you do not see it as prevalent in, say, markets like India or China, where they are not looking necessarily at choices between organic and conventional. It is a greater issue in the developed world.
Mr. Godfrey: Specifically, we see it as part of farming. A nutrient in the soil is a nutrient in the soil.
Senator Merchant: Are you doing your part to educate the consumer so that they understand the choices that they have to make? What role do you play in making it clear that there is no difference or is a difference? Do you have any interest in engaging the consumer in an intelligent kind of way?
Mr. Holzman: As an industry organization, Nutrients for Life Foundation Canada and some of the other foundations talk about the role of food production, global agriculture and maybe dispel some of the myths that are put forward at times around the safety of foods grown by conventional means. There is an education process through organizations such as Nutrients for Life that Potash Corp had. We were one of the founding members in developing that program. It targets the schools in North America to get information to students on where food comes from and the safety of food. I do not know that it is necessarily organic versus conventional. At least we are talking more about the safety of our food and the importance of conventional agriculture.
Mr. Godfrey: It is important to educate them on what our industry does and its role in feeding them and the world. We do not necessarily argue, but we certainly look to educate.
Senator Merchant: You mentioned three large Canadian companies: the Mosaic Company, Agrium Inc. and Potash Corp. How do you market potash? Do you market through Canpotex? Do you have a marketing board? How much more money do you get by doing it in this fashion? Is it 5 per cent, 10 per cent or 20 per cent? You do better by doing it this way; is that right? Certainly, other people in the world do not perceive this as a fair way to market potash.
Mr. Holzman: Canpotex is the export marketing organization for the three Saskatchewan potash producers. They only export product to the offshore markets. Anything sold in Canada or the U.S. is sold by the individual companies, so they are a marketing organization as well. They handle all of the transportation logistics and the sales to offshore markets. They bring transportation efficiencies in getting product from Saskatchewan to the West Coast instead of duplicating with all the rail cars and other things you would need. Many efficiencies benefit the customer as well. There is not an answer in terms of how much more we would receive doing it another way. The response is that it is an efficiency for the producer and for the customers. When we get responses from our offshore customers, sometimes there is a perception that they do not like the fact that there is a marketing agency. From my understanding and discussions with customers, one is the quality of service and supply they receive, timeliness and the logistics efficiencies they receive from Canpotex. It was founded in 1972 and we have customers that have been with us since the beginning and are long-term supporters of the organization. Sometimes there are some misconceptions in terms of customers that perhaps do not like that organization, but I think we have testimonies to suggest it has been an efficient way to move product a long distance to these markets.
Senator Buth: Clearly, fertilizer is key for crop production around the world, and we are blessed in Canada to have the resource and investment that we do. That was demonstrated in your presentation.
I have a question about sustainability. Slide 11 essentially depicts world potash reserves, where they are located and what percentage they are. Are there estimates of how many years of potash we have left and is there any long-term strategic planning in terms of how we will manage this in the future?
Mr. Holzman: As a public company, we report our mine life in years and every year we must report that. A lot of them are 80 to 100 years of proven reserves at our mines, and I would venture to guess the life of those reserves extends well beyond that, but that is from a reporting standpoint. That is how they are classified. These are long-life reserves.
As a company, one of our top priorities is long-range planning. We cannot be planning for a month or a quarter ahead. We do 25-year mine plans to lay out where we will operate over a 25-year period to ensure we are maximizing the longevity of these reserves and can do it as efficiently as possible. It is top of mind in ensuring we are good stewards of this resource over the long term.
Senator Buth: Is there research going into new mineral deposits in terms of potash and phosphate?
Mr. Holzman: Over the last number of years in Saskatchewan there has been a lot of activity in terms of exploring the deposit and the number of companies that have been exploring it. Certainly there is good knowledge that the deposits exist, but you must do the development work to prove it out. That is being done and it is a process that evolves over time. As I noted, it is a capital intensive process. It is one thing to understand where the reserves are; it is another thing to actually spend the capital to develop the deposits. That will be over time. The barrier, if there is one, is having the capital available to develop these deposits.
Senator Buth: Mr. Godfrey, I am curious in terms of your organization overall and not just the research and development area. What are the top three issues facing your industry in Canada and what asks do you have from government?
Mr. Godfrey: That is a big question. It all depends on what you are looking at. Sustainability is a massive topic in our office. I keep talking about this 4R Nutrient Stewardship Initiative. To go back to the R&D, we just signed an agreement with the government. The government gave us a grant of $700,000 over a three-year period as part of the Agricultural Greenhouse Gases Program. It looks at how we can provide producers across Canada with science-based information and advice on how to develop these best management practices using the nutrient stewardship initiative. One element will be to provide information on associated economic benefits of using BMPs for the application of fertilizer and other crop nutrients. The project will involve web-based extension and collaboration tools, as well as traditional meetings and print communications to reach farmers in all major agricultural regions. There will be significant additional in-kind contributions made by CFI, the International Plant Nutrition Institute and other farm organizations. Sustainability and getting out the message on how to best use our product is top of mind.
On the economic side, we had a pre-budget submission that I can share with this committee. It dives into a lot of our asks, specifically to the government, on taxation.
The Accelerated Capital Cost Allowance is something we are conscious about. We would like to see that at least extended, if not permanently written into the tax code, as it has been very beneficial to our industry.
We are looking at the Rail Freight Service Review, which is a major initiative this government has undertaken. We have also made submissions on that which I can provide to the committee. We are eagerly waiting to see legislation that should be brought down, as we are told, in the next 30 days to a month. Rail transportation is extremely important to our industry. We are looking to see that our producers be allowed to work with the two railways to sign service agreements that are backed with dispute resolution, where we have mandatory mediation and arbitration so we can level the playing field. Some of our members are big enough that they have these agreements in their confidential contracts already, but we would like to see this extended to all our members. Using commercial negotiation is something we are fond of and are looking forward to.
Also the Fertilizer Safety & Security Council is a major part of my organization which specifically looks at the safety of our products, ensuring it does not fall into the wrong hands. Some of our products have been used in explosives. We have an ammonium nitrate code of practice and ammonium code of practice that we are currently reviewing. My colleague sitting behind us runs the Fertilizer Safety & Security Council and this is a major project.
It is a global initiative as well. Those are some of our major things, and in the essence of time, I will share my pre- budget submission with you.
Senator Buth: Share that with the clerk. That would be great.
The Chair: With the time we have left, I would ask senators if we could be to the point and if the witnesses could shorten or provide written answers.
Senator Callbeck: Mr. Godfrey, it is great to have a fellow Islander here. You are with the Canadian Fertilizer Institute and you said you have 46 members.
Mr. Godfrey: At least.
Senator Callbeck: Do all the manufacturers belong to this?
Mr. Godfrey: All the major manufacturers in Canada, yes.
Senator Callbeck: You said your budget is $4 million.
Mr. Godfrey: About that, yes.
Senator Callbeck: You said your budget comes from dues, but then you talked about that $700,000 you are getting from the federal government.
Mr. Godfrey: That would be part of the $4 million.
Senator Callbeck: How much are you getting in dues from the manufacturers?
Mr. Godfrey: It is all based on a levy program. I do not know how confidential that is, so I would have to check with my president before I could really answer that question.
Senator Callbeck: You say you are negotiating with Prince Edward Island. You mentioned the PEI Federation of Agriculture and the Potato Board. Obviously you have a project going there now with Dr. Coffin in the field trials.
Mr. Godfrey: We have been working with Dr. Coffin for a number of years. Specific to the agreement I was referring to, we have an agreement in principle on the 4R Nutrient Stewardship. The signatories are the PEI Potato Board, the P.E.I. Federation of Agriculture, the P.E.I. Department of Agriculture, the P.E.I. Department of Environment and the Kensington North Watershed Association, as well as CFI.
Senator Callbeck: That has been going for a number of years.
Mr. Godfrey: No. On November 19, we are looking to formally sign this agreement in Prince Edward Island. It will be $50,000 a year over three years. The actual MOU will set up an advisory committee that will look at how best we can improve fertilizer efficiency on Prince Edward Island.
Senator Callbeck: That is what you are negotiating, but there has been a program with Dr. Coffin.
Mr. Godfrey: Yes.
Senator Callbeck: Is the information that Dr. Coffin gets from the field trials available to all the potato farmers?
Mr. Godfrey: I think he has presented it to the Cavendish Crop Field Day, to the potato growers. I can certainly look into seeing if Dr. Coffin would share his report with you.
Senator Callbeck: Thank you.
Senator Eaton: If you want to send your answers to the clerk, because of time, by all means do so.
Following on Senator Plett's question, why do you think North American farmers are using less fertilizer? Is it a matter of cost? Is it lack of education? Is it boredom? Have we reached a plateau? When you are trying to encourage people to use more fertilizer, you must have examined the reasons why they are no longer using as much fertilizer.
Mr. Godfrey, how much processing of fertilizer is actually done in Canada, and what percentage of the fertilizers used in Canada are made in Canada?
Mr. Holzman: That is probably the number one question we have been talking about as a management team over the last couple of year in terms of North American fertilizer use. There was a bank of potassium and phosphate that had been built up over the last couple of years. Addressing one of the earlier questions, it does remain in the soil, so applications in the 1970s, 1980s and 1990s built up a bank in North America. That soil bank has been somewhat drawn down over the last decade, and only in the last few years has the issue come up and we have gone beyond the point where we can continue to draw that bank down. We are starting to see some of the potential yield implications come up, and it has drawn more attention to it. We think moving forward there will be a lot closer look by farmers at these soil tests and the nutrient needs of the soil.
Senator Eaton: With the modern machinery, those big combines, does the GPS not tell you that some areas need more fertilizer than others?
Mr. Holzman: Not all farmers use it, but more and more have yield monitors that can map an entire field to see which areas are yielding higher and which are yielding lower, and you can try to map that with your soil fertility levels and try to get an idea of what may be limiting your yields in some of those areas. Farmers can be more precise with some of their fertilizer applications but, in general, talking on a broad base, we have seen a drawdown in the nutrient bank. There is the technology that can identify the areas of need, and that is something we will see moving forward.
[Translation]
Senator Dagenais: My thanks to our two guests for coming to meet us today. Mr. Holzman, you said that a producer using fertilizer can enhance his production, but is it worth it for him? Given the cost of the research, is it profitable? In a word, is it worth it for a producer to use fertilizer and so on, given what research costs?
[English]
Mr. Holzman: In terms of crop profitability on a North American basis, the last few years have been some of the more profitable years. If you look at some of the farm returns, they have been the most profitable years that they have seen in a long time.
In terms of the fertilizer cost, we often measure that against the U.S. corn farm revenue, because that is the largest consuming fertilizer crop in the world. Right now, the fertilizer cost as a percentage of corn revenue is around 12 per cent. On average, historically, it has been 18 per cent. We feel right now that the affordability of fertilizer at today's prices is very strong. It moves around, but looking at today's pricing, the profitability is very strong.
I am not sure I fully understood the question on how the research component factored in.
[Translation]
Senator Dagenais: You are saying that it is profitable for the producer to use the fertilizer, but, in terms of the cost of the research — you mentioned an amount of $700,000 — is the profitability of the production genuine?
[English]
The Chair: The question is about how the cost of research impacts on the costs or the farmers' profits.
Mr. Holzman: I do not think it really factors into the profitability for the farmer. The research we would do is not a major component of the overall cost of fertilizer. It would be a minor component. A lot of the agronomy work that goes on, whether at the universities or others, is more public research as well.
The Chair: Can you provide us the percentage of your sales, or however you calculate it, of the amount that you do in research?
Mr. Holzman: As a percentage of sales.
Senator Duffy: Thank you, witnesses, for coming. I would like to echo my colleague Senator Callbeck in welcoming Prince Edward Islanders to the panel. They always bring good, refreshing and enlightening information to the committee.
Mr. Godfrey, you are a young man. Did you have any hesitation getting into your own farm in Meadowbank, one of the most beautiful parts of our island?
Mr. Godfrey: My younger brother is still farming there today.
Senator Duffy: We heard talk 10 years ago that farming was on the rocks and things were terrible. What is your current outlook?
Mr. Godfrey: I think The Globe and Mail did a story on this recently. It has never been a better time to be a farmer.
Senator Duffy: That is good to see, and it is good to see young people like yourself as emerging leaders in the industry.
Following up on what Senator Callbeck raised, I thought your 4R initiative was very good. You know in Prince Edward Island that the overuse of pesticides and the impact of spills into some of our creeks and streams have been devastating. Are you telling us today that the Canadian Fertilizer Institute now takes that seriously and you are in a specific program designed to train farmers how to apply fertilizer in a way that does not damage the environment?
Mr. Godfrey: Specific to those spills, they were pesticides, and we do not comment on pesticides.
On the fertilizer side of our research, there are three components to the 4R Nutrient Stewardship Initiative. You have benefits that are economic, social and environmental.
The agreement that we are signing with Prince Edward Island has certainly looked at the efficient use of fertilizer, specifically in the Kensington watershed. That is probably where we will start. Research is suggesting that there is an over-usage of nitrogen fertilizer in that watershed.
Senator Duffy: It is great to see the industry taking up its end.
Finally, Mr. Holzman, I see a big hole in Africa when I look at your map and slide show. Is there a danger that African governments are opposed to fertilization because of misinformation and that we may see an area of huge need not receive fertilizer and other enhancements for agriculture because of superstition or misinformation?
Mr. Holzman: That is a challenging area in terms of understanding the benefits. It is not just fertilization but modern agriculture techniques and what they can bring to agriculture productivity.
Between that and other infrastructure challenges, it will not be an issue that is solved overnight. Again, internationally, fertilizer-related institutions are certainly trying to do work in that area, but it is not something that will be solved easily.
The Chair: I want to remind all senators that Potash Corp is a very good corporation across Canada.
We want to thank you. We have asked some questions that we would like a follow-up on, so please do. That ends our first panel. Thank you again.
Honourable senators, for the second panel, we have Dr. Stan Blade, Chief Executive Officer, Alberta Innovates Bio Solutions. By video conference we have Mr. John Jacobson, Chief Executive Officer, British Columbia Innovation Council.
Thank you for accepting our invitation to share with us your comments, views and recommendations on going forward in innovation; emerging markets, both domestic and international; and comments regarding maintaining the safety and security of our food products.
I have been informed that we will start with Mr. Blade, to be followed via video conference with Mr. Jacobson. We received hard copies of your presentations, and I will ask you to make a verbal presentation for approximately five to seven minutes, following which we will move into the question side of our meeting.
Stan Blade, Chief Executive Officer, Alberta Innovates Bio Solutions: Thank you very much for the invitation to speak to the committee.
I would like to state that Alberta Innovates Bio Solutions is a government agency. Its sole shareholder is the government of Alberta. In the slides, you can see that we have a goal to invest in science and research to grow the prosperity of Alberta's agriculture, food and forestry sectors. We do that by investing money in a number of areas that I would like to explain to you. In Alberta, agriculture, food and forestry represents about $25 billion-worth of economic activity in our province.
Our corporation, an agency of the Government of Alberta, makes investments. Our current portfolio is in the range of about $70 million of our own money. That builds into a full project portfolio of about $170 million. Our current budget this year is around $28 million, investing to guarantee that prosperity of agriculture, food and forestry.
We have a talented board. As you can see before you, our chair is Mr. Art Froehlich and our vice-chair is Mr. Ray Price. You can see a range of people there from industry, academia and other parts of the value chain within agriculture and forestry.
The government of Alberta has charged this board with both fiduciary and governance responsibility. They identified the large strategic targets that I will speak to, and we are then able to execute on those particular strategic themes that the board has set out for us.
You see on slide 4 a list of drivers for agriculture that speaks to all the things that agriculture and the food industries have to deal with. You will recognize that we live in a very complex environment. We think that agriculture and food certainly have to work very smoothly and in a very elegant manner within these very complex areas.
I was just speaking to Verlyn Olsen, the Minister of Agriculture and Rural Development in Alberta. As he has spoken to a number of producer groups across the province, it has always been on that theme of innovation. We know that the $25 billion that we have for these two renewable industries is not guaranteed. It is not an entitlement. We want to make sure that we are investing in those new ideas, that new science and that new technology that will drive us forward.
I just have a couple of slides on statistics. The important thing to remember is that, last year, agriculture paid $10 billion into the pockets of Alberta producers. I would point out, specifically for Senator Buth, that the canola industry in Alberta was worth $2.6 billion, so this is very serious business. Those renewable industries are putting money into the pockets of farmers across our province, and we want to be very sure that we have that as a sustainable economic activity in the future.
We have a number of core functions, which I will not spend a lot of time on. The essence is that we are not just a funding agency. The Government of Alberta has charged us with really thinking about how to lead and integrate all of the activities that go on within agriculture and food within our province. I would like to take the rest of my time just to outline five of those and to answer some of the questions that you have asked in this committee.
The first activity is sustainable production. That means that we have to be able to produce the things in our landscape that the world wants, and we work very closely with the federal government, especially the federal government research system. We are investing in Agriculture and Agri-Food Canada researchers to breed dry beans in southern Alberta. We are working with them to invest in curing a particular cereal disease, stripe rust, that is very problematic for us. We are also doing things around new ideas and new products, working with Agricultural Canada scientists and Agrium on a new intelligent fertilizer kind of technology. We work very closely with the scientists and the infrastructure of scientists within the federal system, and we consider that very important.
The next activity is advancing the bioeconomy, thinking about what else we can produce from the biomass in agriculture and in forestry — new kinds of products, new chemicals, new materials that perhaps we have not seen before — using the co-products that come from our agriculture streams. We have made a number of investments in that area. In fact, we have invested in private companies for them to develop new bioproducts using Alberta-grown biomass, and we work extremely closely, again, with a number of federal government agencies. We have partnered with the federal government to be active within the International Energy Agency's Task 39 which deals with bioenergy.
As to the question that you asked about IP, our corporation, as an agency of the Government of Alberta, does not take an equity position. In fact, within our legislation, we are not allowed to do so. The thinking behind that is that the more complex intellectual property negotiations become, the more difficult it is to move those things beyond the lab bench. We invest in good ideas, ensuring that there are receptors in the community — whether it be for new practices or new products — and working with the private sector.
Our third area is safe and healthy food. We know that Canada is really in a position, because of its land base, its resources of water and other things and its people, to be a great producer of food. We are very interested in all elements of food security — availability, nutrition and safety. We are making investments in low sodium meat products. We are making investments in the kinds of things that we can grow within Alberta that will be beneficial for the diets of individuals, such as those suffering from Type 2 diabetes. We are thinking about how the food producers and processors of the province of Alberta can react to food for health opportunities within this country and beyond our borders.
The fourth area is ecosystem services. Land managers in agriculture have a tremendous opportunity. We are working with the federal government on the Greenhouse Gases Program. In the case of Alberta, we have a $300 million fund that is put together by major emitters of greenhouse gases. Alberta Innovates Bio Solutions has been given a significant amount of money — almost $5 million — to see what can be done around biological sequestration as opposed to other ways to mitigate carbon issues. We think that both agriculture and forestry have a strong role to play there.
I will wrap up, Mr. Chair, by talking about prions. As you know, Canada faced a severe issue in 2003 with the onset of BSE in this country. At that time, Alberta had no research capability to do with prions. We now have an established global network of people that we have brought to the province of Alberta doing work on prions and protein misfolding diseases to the point where, to answer your question about international activities, we will have the world's researchers come to Banff in May 2013 to not only learn about what Alberta is doing, but also to share what the research community is doing with the rest of the world.
Mr. Chair, in summary, what are we doing? We are working in research, and we are working closely with Agriculture Canada and other federal research scientists. We are co-investing, in many cases, with federal programs. Alberta Innovates Bio Solutions is putting in money as well to make sure that we get the right things done. We are working in areas of policy around bioproducts and other things, such as a national round table thinking about how we can have more of those bioproducts coming to the marketplace. We are involved in ecosystem services and prions, and there again we work with third-party groups that the Government of Canada funds, like Genome Canada and others.
I will leave it there. Thank you very much.
The Chair: Thank you very much, Mr. Blade.
Now, I will ask Mr. Jacobson to make his presentation.
John Jacobson, Chief Executive Officer, British Columbia Innovation Council: Thank you very much. I am pleased to be here today with you. There is lovely weather here in Vancouver. I am sure it is a little bit windier there.
The British Columbia Innovation Council has a mandate to encourage the development and application of advanced and innovative technologies to meet the needs of industry in British Columbia. Our priority sectors are agri- food, forestry, mining, natural gas, technology, clean tech, green economy, international education and tourism. This is a fairly broad mandate. We are created by legislation. In the legislation, we are the designate for facilitating discussions with other levels of government. It is in that capacity that I am here today.
The programs that we deliver directly are about entrepreneurship and the growth of new companies and new industries in the province of B.C. We draw the line at actually investing in companies, and we focus our efforts, instead, on investing in people. We do that through the British Columbia Regional Science and Technology Network, the BCRSTN, as well as through the university industry liaison offices, through which we deliver entrepreneurship programs and other programs that will build capacity to take university innovation and turn it into products and services that create economic growth.
As for the agricultural innovation landscape in B.C., clearly the Growing Forward Framework Agreement put a lot of assets on the table. From that, we have the Canada-B.C. Agri-Innovation Program, the Renewable Energy Feasibility Studies Program and the greenhouse sector where we have put money directly into supporting the carbon tax that was hampering that business. The website agrifoodbc.ca is operated to provide information for farmers and for other agricultural producers.
I will address the questions that were raised in the invitation to the meeting quite directly. I will quickly talk about these slides and then open the floor for questions.
In terms of how we see Agriculture and Agri-Food Canada, of course, as a national ministry, we see it setting the national policy framework, determining the national outcomes for innovation in agriculture and ensuring that the planned outcomes are achieved, that is, measuring the results and quality assurance of the programs. They do this by partnering innovation with the private sector and with government institutions, including the provinces and the advanced education sectors.
Of course, through tax policy and other incentives, we create the opportunity to create new products.
The main role that we see for these programs has to do with extending what was done in Growing Forward. It will, I gather, run out of currency around the end of this current fiscal year, but from our perspective in B.C., that was a successful program. It had the flexibility that allowed for B.C. priorities to be supported. It enabled commercialization and innovation and encouraged the faculties, post-docs and graduate students in our institutions of higher education to collaborate with the business community on research topics.
In terms of requirements for funding on research projects, BCIC approaches it by creating collaborative advantage by working between industry and the post-secondary institutions, as well as by encouraging cooperation on programs between the institutions themselves. We have a number of programs within the province that are multi-institutional. We also create competitive advantage by building on our natural opportunities in terms of regional capacity for various products and services, continuously driving up the quality and down the cost and maintaining safety through the whole program.
In terms of assessing the research activities between the stakeholders and the coordination, we are focusing our attention on the universities, the colleges and the institutes that are creating new intellectual property and knowledge and getting it applied and brought through the university gates into the community. We are focusing on ensuring that priorities are met without creating opportunities for duplication at different levels and across different institutions; on looking for gains both federally and provincially in building the tax base, the institutions and capacities of the communities; and on creating capacity within the faculty, industry experts and students that produce the excellence in expertise on which our whole society is built.
Intellectual property in B.C. within our institutions is a responsibility of the boards of governors of the institutions, and each one has a slightly different approach. Nonetheless, they all have university industry liaison offices that are tasked with providing access to that intellectual property in an organized fashion so that it can be licensed and moved into the community.
In terms of collaboration, there are university industry liaison offices and entrepreneurship programs that bring together graduate students, undergraduates and faculty with members of the business community to expose the students to the opportunities and to develop their ability to be able to assess technology and its ability to create new businesses and new opportunities.
We are looking at a cross-disciplinary approach to a number of broader business social and economic issues where individual faculties may not have all of the pieces of the required capabilities, whereas multiple faculties working together and multiple institutions working together can do that. That includes international research because by their very nature post-secondary institutions are international and global in reach. The collaboration across institutions from Europe to the Far East is done with electronics these days. It is still a very vibrant community of people solving problems that extends across the borders.
In terms of the things we would recommend, BCIC is willing and happy to continue to provide input on these programs based on the development of policy. Our recommendations are to elevate the priority of commercialization, which is our principal mandate within the policy framework to ensure that it is easy to do and that development is out beyond the university gates into the community; and to build a federal role that provides support for innovation and research in key areas that is sustainable and incentivizes participation by the institutions and by the industry.
The Chair: Thank you, Mr. Jacobson.
Senator Buth: It is interesting to hear the recommendations to continue the partnerships with the federal government. I have a hard time wrapping my head around things like "continue what you are doing'' and "partnerships.'' I would like something tangible. Give me one success story where federal government participation has been very important.
Mr. Blade: I think of the example that we started six months ago in collaboration with the Canadian Food Inspection Agency. There are new tools available to look at how to handle pathogens. We got together with Genome Canada and the Canadian Food Inspection Agency. We put money $600,000 in a pot and asked the question of researchers across the country, including Government of Canada researchers within CFIA: What new technologies can we use to enhance the way we ensure food safety in this country? That was a good example of using federal agencies, provincial agencies and the research community to use a new technology that will provide us with some additional answers to how we can ensure a safe, secure food supply.
Senator Buth: What is the new technology? What pathogens are you looking at?
Mr. Blade: The call that we have is around listeriosis using a genomic technology so that we can identify very small amounts of listeria in the usual kinds of commercial processing in this country.
Senator Buth: What kind of timelines are you looking at for funding and outcomes?
Mr. Blade: Selections of the project will happen within the next two months. We would anticipate that there would be a first report coming back within 12 months as people deal with the biology of this and the science of this genomic approach.
Senator Buth: Let me just clarify. Essentially, you have partnered with CFIA and have put in money from two organizations.
Mr. Blade: That is right — from Alberta and from the federal government through Genome Canada.
Senator Buth: You essentially asked for proposals from the research community?
Mr. Blade: We told them what technology was to be used and the expected outcomes. We wanted our scientists to come up with the best ways and the best ideas to execute that.
Senator Buth: It was very driven in terms of specifics.
Mr. Blade: Absolutely.
Mr. Jacobson: Unfortunately, I am not a content expert on agricultural products and development in British Columbia, so I will have to decline to make something up on the spot. I am sorry.
Senator Robichaud: Following on your answer to Senator Buth, will that technology be applied on the processing side or will it be on the shelves when the consumer purchases the product?
Mr. Blade: There is no way to predict what the science will show us. We are looking across the board, from the animal itself and the way it is managed all the way through to the processing system and to the way that consumers would look at a product. The most likely possibility is that these technologies would be applied within the processing system.
Senator Eaton: I have a question for Mr. Blade. We did a study on forestry and heard from FPInnovations, which was very interesting. I look at you and wonder if you are not the FPInnovations of the agricultural sector. Talk to me about translation of innovation into the private sector. It seems to be the big hurdle we had in forestry and in agriculture. How do we get something from the lab into the store?
Mr. Blade: Thank you for the question. If I may compliment the standing committee for its forestry report, I think there are some key messages there.
As opposed to using technology commercialization or other terms, we think about knowledge exchange. How do you start out? You actually get those receptors in the private sector involved right from the beginning. I spoke to a couple of these, but if we are investing in bean breeding in southern Alberta, that is important to our producers, but also important to Viterra, one of the main companies that is very involved with the pulse industry across western Canada. We have done that.
The smart fertilizer project I spoke about involved Agrium from the beginning. They were as interested in the outcome as anyone else to see what the science was going to bring us.
It is allowing industry to work with us. I think our board, because of their industry background, sets some very clear targets for the kinds of things that we invest in. We then find the appropriate industries and clearly they have to be as motivated to put money and time into the development of these projects. The science is then done, but I do not want to sugar-coat this. We work in biological system. This takes a long time. We make investments in genomics. We are investing on our own, as a government agency, a corporation of the Government of Alberta, in genomics because it will take 10 years before it hits the marketplace. However, there are other areas in some of the places I have outlined — some of the food work we do with Maple Leaf and others — which the industry wants to be involved in. We see that new knowledge and technology coming into play.
Senator Eaton: When you say you work with universities, do you work with universities doing innovation research, agri-research all across Canada or strictly in Alberta?
Mr. Blade: We have no limits to where we make investments. We work with universities within Alberta and across Canada. We also make a number of investments in universities in other parts of the world where Canada does not have a specific set of expertise or capability. We bring them an Alberta issue — but usually that transcends one particular province — to make sure we get the interesting science. That will allow us to pursue new opportunities.
Senator Eaton: Do universities come to you or do you go into universities?
Mr. Blade: That is an excellent question. Until five years ago, the model was that we would just wait for whatever people threw over the transom, hoping some great idea was going to land. We are much more proactive now. Canada, and indeed Alberta, is relatively small when you look at the research infrastructure that is there. We now have open calls on targeted ideas, but we also go to the key leading research teams and say we are interested in a particular topic. This is the kind of money that we want to spend, give us a proposal, tell us what your milestones are and tell us what the outcomes will be. We are becoming more active in that kind of research investment.
Senator Robichaud: If I may, you are more productive.
Mr. Blade: I think more representative to address the needs of all sectors of the agri-food chain.
The Chair: Dr. Blade, before we conclude, the forestry report identified new sectors of the bioforest economy. I see in your goal number two that you are looking at new chemicals, materials and energy from biomass, development of new bio-industrial products and processes, growth of bio-industrial sector.
Could you provide the committee through the clerk, or would you have, a brief comment to identify those new products that you feel that are coming down in the road map?
Mr. Blade: We can certainly provide some additional detail, but I would bring one example. Three weeks ago we announced a new project with Magna auto parts. In this case, it is using wood fibre from the province of Alberta and researchers from Alberta and Ontario to look at new, strong, light renewable products that could potentially be used in the auto parts industry. It is back to earlier discussions linked to Magna auto parts and their interiors group, looking at a new technology and a new material. This time it is coming from the forest as wood fibre as a new potential component of auto parts manufacturing.
The Chair: We also see it in biofuels.
Mr. Blade: Very much so.
The Chair: With agriculture.
Mr. Blade: That is correct.
Senator Duffy: I thank both of our witnesses for coming. I know the feeling of losing a line. I spent many years battling that.
Mr. Blade, from watching the scientific world from your position, would you say the growing trend is to have targeted research as opposed to universities doing just pure research, investigating for the sake of investigating? Is this just in Alberta or is this a nationwide or worldwide phenomenon?
Mr. Blade: I think it is important to have new knowledge coming through the pipeline, and there will always be an important element of that blue sky research — the role that serendipity will always play — in scientific inquiry. That being said, we have a relatively small budget. Having $28 million to move a $25 billion industry, one must be judicious in the way that you make your investments. We are starting to see some real payoffs from ensuring that we are very clear on what we want to get out of the investments we make in science.
Senator Duffy: Would that model apply to Canada as a relatively small player on the world stage, that we should be targeted and focused on?
Mr. Blade: In my role, I have the good fortune of seeing how a number of research systems around the world are making these kinds of investments, and I would say globally there are jurisdictions that are making remarkable investments. I think it is important that Canada find those key targeted areas and make the kinds of investments that will be required as science becomes more expensive, but it has the potential for paying even greater benefits.
Senator Duffy: Thank you very much.
The Chair: Dr. Blade, thank you very much for sharing your comments with us. There is no doubt in my mind that on the vote, you can provide us with additional information. As we progress through the final reporting of our findings to the Senate, you are welcome to make further comments.
Mr. Blade: Thank you, sir.
The Chair: Honourable senators, we will now move into an in camera session for five minutes.
(The committee continued in camera.)