Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 30 - Evidence - Meeting of February 28, 2013
OTTAWA, Thursday, February 28, 2013
The Standing Senate Committee on Agriculture and Forestry met this day at 8:07 a.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 how Canada measures internationally in terms of innovation and research in the agriculture and agri-food sector).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, senator from New Brunswick and chair of the committee. I will ask all honourable senators to introduce themselves.
Senator Merchant: I am Pana Merchant and I am a senator from Saskatchewan.
[Translation]
Senator Robichaud: Fernand Robichaud, St-Louis-de-Kent, New Brunswick. Good morning.
[English]
Senator Callbeck: Catherine Callbeck from Prince Edward Island.
Senator Plett: I am Don Plett from Manitoba.
Senator Buth: JoAnne Buth from Manitoba.
Senator Eaton: I am Nicky Eaton from Ontario.
[Translation]
Senator Maltais: Ghislain Maltais, Quebec.
Senator Rivard: Michel Rivard, The Laurentides, Quebec.
[English]
The Chair: Thank you. First, I would like to express that Senator Oliver sends his regards. He may join us this morning, if time permits, from another committee.
That said, honourable senators, this morning the first panel will focus on innovation in the agriculture and agri-food sector from the producer's point of view. We have Mr. Jim DeLong and Mr. Ralph DeLong to make a presentation. After they make their presentations, the senators will ask questions.
We want to thank you for participating in the Standing Senate Committee on Agriculture and Forestry. When we look at the mandate, the order of reference from the Senate of Canada on agriculture, I would like to share with you that the committee is authorized to look at developing new markets domestically and internationally. It is also in view of enhancing agricultural sustainability for Canadians and improving food diversity and security.
I was informed by the clerk, Mr. Pittman, that Mr. Jim DeLong will make his presentation, to be followed by questions from the senators.
Jim DeLong, Owner/Operator, DeLong Farms: Good morning honourable senators, committee members and support staff. Thank you for the privilege of addressing the committee this morning to give a producer's perspective on innovation in the agriculture and agri-food sector.
I am a business partner with my brother Ralph on a mixed farm on the south shore of Nova Scotia. We produce eggs from 34,700 hens and have an 85-beef cow herd. We sell hay, harvest Christmas trees from 1,200 acres and harvest wood. In the fall we operate a Christmas wreath factory. We grow a small acreage of sweet corn, pumpkins and squash. Until last fall our family operated a restaurant for 45 years.
It cannot be overstated how, down through the history of this country, the agriculture sectors have developed, innovated and grown under federal programs. Without the help and guidance of education facilities, experimental farms, and government research and extension, this could not have been achieved. The successes, past and future, are mostly dependent on this technology transfer system.
Another major factor in Canadian agri-food success has been the establishment and maintenance of supply management. This is sacred.
Agriculture Canada has given us many good programs and goes to bat for us, as Canadian farmers, defending free trade agreements.
Federal programs ensure success at home, touching on young farmers, helping the livestock sector growing forward, business risk management, food safety, and science and innovation. We very much need and appreciate the programs, but one size does not fit all.
In order to be a successful agriculture and agri-business nation, we need profit. Every time financial assistance is needed, it seems the existing programs have been altered and you no longer qualify. Also, regarding the science and innovation programs, when commodity groups need some research and innovation done, they must come up with a percentage of matching funds. It is impossible to achieve in this economy.
Education facilities and experimental farms are retiring experts, not replacing them. The remaining top research staff are not able to do the needed research to their needed potential because they are underfunded.
Financial cuts have brought some sectors to a standstill. In department extension, when services are cut, some of the reasons we get are: You are a mature industry; why do you need our help? Or, we do not do that anymore. Meanwhile, our international competition just took some more of our market.
The CFIA used to be the world standard when doing business in Canada. Now customers or customer countries are demanding third-party auditing or that their inspectors be brought in to do the job at a cost to the producer with no compensation in price. Then, if there is a problem, the CFIA is called in to do the clean-up work.
We are encountering more international non-tariff barriers. Countries are demanding import protocols for which we need science and political help to overcome.
Extension services in Nova Scotia are mostly user-pay. This is really prohibitive if funds are tight. Programs are being rolled over for the provinces to assume, but will adequate funding come with it? Farm improvement programs, such as land drainage, are nearly gone. We are seriously feeling the pressure of the cutbacks and the downgrade in services.
Canada will always need food stability. Our trade partners are willing to sell us cheaper food for now, but when the food supply from outside is interrupted, we need to maintain our self-dependence.
Also, rural Canada still needs jobs and rural wealth. What you put into something is usually what you get out. We still need adequate innovation and assistance.
Thank you. Are there any questions?
The Chair: I can assure you, Mr. DeLong, you will have questions.
Senator Plett: You have quite a diversified operation in eggs and dairy; and Christmas trees and wreaths. You talked a fair bit about subsidies and help with research. If you had to make a wish list of three kinds of government help, what would they be? I am not necessarily talking about subsidies only but any kind of help.
Mr. J. DeLong: I have one correction to make: we run a beef herd not a dairy herd.
Much of what I am talking about is not subsidies back to farmers. There are many programs. I brought my brother in because, to be successful, you usually have someone behind you who makes you look good. This is the guy who keeps this farm running in terms of the accounting, bookkeeping and management. I am out in the field working most of the time.
My list of three wishes would be: research and innovation first; and re-establishing the CFIA second, because they were a very good and efficient body to work with. Now, we are being asked to have third-party auditing. I cannot be quoted on this, but I believe that the third-party auditing is for liability reasons. The CFIA does a more than adequate job on the front line of protection. The third wish would be programs going forward that keep income stabilization on the farm — good year/bad year — because as you know, weather affects almost every crop that is grown. Those would be my top three choices.
Ralph DeLong, Owner/Operator, DeLong Farms: If I may add, we export about one half of our Christmas trees. We deal with trade barriers and issues such as keeping the border open. There is no point in producing the plants if they are going to rot at the border. We need a system for opening trade and maintaining trade. Last year, we had no trouble at the border with our Christmas trees. If you lose one day to three days on most commodities, then you have lost the entire truckload.
Senator Plett: As you know, the government is working diligently with the Canada Border Services Agency to try to improve that. It is a distinct area where the government is trying to make improvements. I appreciate that information, and maybe it answers my next question.
You have a diversified operation with three different areas to make your living. What area do you believe would benefit most from government intervention or help? Your kinds of businesses have been around for hundreds of years. Where do you need the most help and for how long?
I will ask the last question now so you can answer all three. What ratio should there be between industry money, private money and/or government money in research and development, and innovation?
Mr. J. DeLong: Do you want to speak on that?
Mr. R. DeLong: I can start.
Many of the programs are ongoing. To say how long comes down to government policy more than government money. Maintaining trade and opening trade is a fight that never ends and it requires constant vigilance. On our poultry side with the eggs, maintaining that is really maintaining the supply management system. As you know, that has been a 40-year battle and, if anything, it gets harder not easier. Maintaining that backup by federal and provincial governments is key to maintaining that part of the rural prosperity or rural wealth creation.
The ratio of government versus private sector is hard to say. We both have spoken about that and the difficulty for commodities to come up with their 10 per cent, 20 per cent or 40 per cent of huge bills on research. To come up with a number would be a number pulled out of the air. It is really hard for me to say.
Mr. J. DeLong: I can speak on that.
The Atlantic Provinces have a Christmas Tree Research Centre at the Dalhousie Agricultural Campus in Truro, Nova Scotia. It has potential to be a $6-million project. Right now, the Christmas tree market is so over-supplied that there is an international glut in North America.
The Christmas tree farmers of Atlantic Canada are having trouble raising $300,000 for the project we have going now to meet our commitment. If we had to raise $2 million, we would have to shake our heads and walk away. There is no possible way we could meet a 33-per-cent commitment.
If you go to seed corn like with Monsanto, DEKALB or any of those big genetic seed companies, I am sure they can eat quite a piece of that, but for struggling, less-prosperous but very-important-to-rural-Canada crops, it would be impossible for those crops to meet these goals of 30 per cent, or even 20 per cent. It is crop-relevant.
Mr. R. DeLong: We do support the idea of private, because too many poor ideas come ahead if you are just spending government money.
Senator Plett: I would echo those sentiments.
As a closing comment, you mentioned supply management and that has been a 40-year struggle. I certainly believe the government before us was supportive of it, but most certainly this government has given every indication in the world that they are supportive of supply management and will continue to be so. There, you have some assurances. Our government policy is very clearly supportive of supply management.
Senator Merchant: Thank you, gentlemen. I will ask my questions from a consumer's point of view. I will first ask some questions about the eggs.
It is very difficult for consumers, or at least for me, to differentiate between the different kinds of eggs I find on the grocery aisle. I do not understand eggs from free-run chickens or eggs with omega-3. I know it is difficult when you go to the grocery aisle to know exactly what the differences are in quality.
My second question is this: On the supply management side, you spoke about international competition. I am wondering about eggs, because I imagine they are a little more difficult to send across borders. I do not know how you do that. Where is the competition coming from, and what does supply management mean for the consumer? Do you know if we are paying extra because of that and how much extra are we paying?
These are just questions I am wondering about. I am not taking a position in any one of them.
Mr. R. DeLong: As to the first question about which eggs to pick off the shelf, talking about free range, organic or those strains of eggs, those are niche markets and they respond to consumers' ethical decisions. We use conventional cages and conventional production systems. I am in the barns every day with the chickens and I have full faith that we are taking good care of our birds and that animal welfare is being properly followed. For most consumers, I think just buying the standard eggs off the shelf is good for them. However, as I said, some would prefer to make an ethical issue that disagrees with what I just said about how I care for my birds. As for omega-3 and others enriched eggs, once again, that is a personal health decision. Ours is a standard egg that we produce. That is a personal decision.
The second question was to do with exports of eggs. There are no particular restrictions on Canada exporting eggs. It is a price issue. A lot of eggs are exported in a processed form rather than shell form, a liquid pasteurized product versus the fresh shell eggs you buy in a store. When you talk about competition, you are talking about dealing with a fluctuating world price or a U.S.- based price, whereas supply management in Canada provides a stable price that retailers and consumers can plan on, rather than seeing wide swings.
Senator Merchant: Does that add to the cost of the eggs we buy? Do we pay more for eggs in Canada because of the supply management issue?
Mr. R. DeLong: In my opinion, you do not pay more. The price you see in retail is part of this whole problem we have in Canada. We compare our prices to United States prices, and eggs and milk are not the only things that cost more on the retail shelf than they do across the border. Supply management, in my opinion, does not add to the cost of the retail prices.
Senator Merchant: You explained the different designer eggs and the consumer choices, but on other products on the shelves, now you are required to put a lot of information on the product to educate the consumers as to what their choices are and how to make them. Is there something like that being done with eggs? Is there any way to educate the consumer? Do you advocate putting anything on the different packages that would be helpful? You say it is a personal choice, but how do you make choices if you do not really understand what you are looking for and what your choices are?
Mr. R. DeLong: Those package labels are quite full. If you look at other commodities in the grocery market, you will see it is more promotion than information on a lot of things. If a consumer wants to make an informed decision, I suggest they go to the Egg Farmers of Canada's site. There is a lot of information there so consumers can go and research things if they care to properly research those decisions.
[Translation]
Senator Rivard: Gentlemen, in your company's presentation, you mentioned that you hire some 30 employees to work for a period of 10 months or so. I am supposed to be asking you about your research activities and findings, but I am certain that the chair will not mind if I deviate for a moment, because this has to do with a hot topic. I am referring to employment insurance reform.
If your growers work 10 months a year, do you know if they are on employment insurance the other 2 months? Do they find work in your other businesses, be it egg production or your restaurant? Or do they simply wait those two months out until they start working again?
[English]
Mr. R. DeLong: We do not have translation at this end.
Senator Rivard: I will try my English. For the Christmas trees, you have 30 employees working about 10 months a year. For the remaining two months, what do your employees do? Are they trying to find a new job, or do they go on Employment Insurance?
Mr. J. DeLong: Most of them go on Employment Insurance for those few months. They also try to pick up subsidizing work in between coming back to their job in the spring. That would be roughly what they do.
Senator Rivard: Do you have any concern about what could happen if they wished to work 12 months a year and decide to move to Western Canada? Do you think that you will be obliged to import Mexicans or Colombians? Do you have any concern about the reform on Employment Insurance program?
Mr. J. DeLong: We have been involved with Employment Insurance and keeping up on the changes in that program. So far, they have assured us that we will not be affected. We do have a mass exodus from our local area of people going to Alberta and Western Canada to work, but so far we have been able to maintain a local employment force.
The farms around us all use foreign labour. We have not had to do that yet and have been able to pick up adequate local-source employment. It is a concern, but it seems like the system is well taking care of us. They have not forced us into that situation.
Mr. R. DeLong: Our employees are skilled in the work they are doing. They are trained year after year so, yes, bringing in new people every year would be a real problem.
Mr. J. DeLong: That could destroy us, almost, because there is so much equipment operation that has to be done the same way every year. Shaping Christmas trees is an art; it takes you a lifetime to get good at it. Thank you, sir.
Mr. R. DeLong: It is a concern to us that we can only employ for so many months a year and have to take advantage of that system for seasonal labour.
Senator Callbeck: Thank you for your presentation. I hope you are not getting the weather in Nova Scotia that we have here in Ottawa.
I want to ask you about funding. You said that now a lot of the programs are matching funding and that is very difficult to get. Has the financing become tighter and tighter? Is it harder and harder to get the money?
Mr. J. DeLong: I am involved in a program and once I spoke before at the Dalhousie Agricultural Campus in Truro. It is called the Christmas Tree Research Centre. We were in under the wire, so did not have to meet the high percentage. As I said, out of a potential $6-million research program at the college, we have only had to try to raise $300,000 so far. We are having quite a difficult time doing it because Christmas trees are a cottage industry. However, it is still worth $50-odd million to rural Nova Scotia; that means jobs at home that keep small communities going.
In the New Germany and New Ross area, which is on the south shore of Nova Scotia, it is the lifeblood. That money in the fall is the lifeblood to keep those small communities, and the Antigonish area at the other end of the province, through the winter into the next working season. It is imperative for us in rural Nova Scotia. In these times when the American dollar is even and the Canadian dollar is high, profitability is very low. It is difficult to get monies for research out of producers.
Senator Callbeck: You say $6 million and I think you said you only have $300,000.
Mr. J. DeLong: That we have to raise, yes. Matching funds.
Senator Callbeck: You are looking to get this, then, from your own producers?
Mr. J. DeLong: Yes.
Senator Callbeck: Okay. How much have you got so far?
Mr. J. DeLong: We have probably $120,000.
Senator Callbeck: Right now is your organization doing any research?
Mr. J. DeLong: Yes. It is mostly disease control, because with the changing environment we are getting warmer summers, warmer winters and not the deep frosts setting in. I know you cannot believe that up there this morning, but there are warmer winters, warmer summers, different precipitation patterns and different insect patterns. We are researching insects, insect solutions and needle retention.
Our biggest competition besides the artificial tree is the Fraser fir Christmas tree, produced in the Carolinas of the United States. We need to discover what causes needles to hold or fall off prematurely on the balsam fir. That would greatly impact our market share. We would be able to regain back a major percentage that we had lost to our competition and that would mean a lot to the rural wealth of Atlantic Canada.
Senator Callbeck: Where does the money come from for the research you are doing now? Is it the federal government or producers?
Mr. J. DeLong: It is ACOA. Three minor provincial programs and the university are also putting money in.
Senator Callbeck: After you complete the research that is being done, how do you get that information to your producers?
Mr. J. DeLong: That is done in technical sessions.
Senator Callbeck: This is this Nova Scotia, or does this include —
Mr. J. DeLong: The Atlantic provinces.
Senator Callbeck: Okay. I have other questions, but I will go on the second round.
Senator Eaton: To follow up on Senator Callbeck's questions, you talk about the Atlantic provinces, but does Quebec not also produce Christmas trees?
Mr. J. DeLong: Yes, they do.
Senator Eaton: Ontario?
Mr. J. DeLong: Yes, very much.
Senator Eaton: Do you all share research or information? Surely what will benefit you would benefit everyone.
Mr. J. DeLong: We do so. We do technology development and many of the people who do business internationally do business in Atlantic Canada. They, or their representatives, are mostly at the tables when we are having these technical sessions out of Quebec and Ontario. They come to ours and we go to theirs.
Senator Eaton: Do you pool your research money?
Mr. J. DeLong: No, we do not. Different facilities do different research.
Senator Eaton: You are not siloed?
Mr. J. DeLong: What do you mean by that?
Senator Eaton: In other words, one research facility in Nova Scotia would share what they find with the research in Quebec or Ontario. Do you pool your information or not?
Mr. J. DeLong: At the technical sessions, we are all privy to the results, but they do not because the universities have their intellectual property laws.
Senator Eaton: I see. That is something that could perhaps be improved on or opened up.
Mr. J. DeLong: We are working on that as we speak. I am going to a meeting tomorrow morning to talk about that very issue.
Senator Eaton: Thank you, that is very interesting, Mr. DeLong.
With all Canada's free trade initiatives now — we heard this morning about free trade with the EU, and going forth there will be Korea, Japan and the TPP — obviously our supply management system will have to be negotiated and looked after. We have heard about that. However, do you see huge hurdles, or do you see Canada being able to maintain its supply management system? At the same time, will you benefit from more open borders? Do you see that as a hindrance or a help?
Mr. J. DeLong: I believe that will be a help. I am very confident in the quality and the price of the product we produce. I spoke in my opening remarks about more international non-tariff barriers. I cannot make an accusation that it is protectionist, but it is making it more difficult and more expensive to access markets that seem to it be favouring somewhere else. The same rules are not for everyone; it is not a level playing field.
Senator Eaton: Which area of the world has the most non-tariff barriers or barriers for you? Where do you see the worst?
Mr. J. DeLong: Once we go out of the U.S., it seems to be just more and more coming all the time. I referred to CFIA. They have been wonderful a service for us and suddenly other countries are saying that they need their inspectors to verify and to ensure. I do not know why, but they need their inspectors to verify the product.
Senator Eaton: Are you thinking specifically of countries in the EU?
Mr. J. DeLong: No, it has been South America and Mexico.
Senator Eaton: Thank you very much.
Senator Robichaud: Welcome. You started by saying that what was most important to you was research and innovation. You spoke about Truro, but what about Kentville? Do you have ongoing work and research with them?
Mr. J. DeLong: We used to use quite a bit of the extension called AgraPoint International that is now called Perennia. We used to rely quite a bit on the technical expertise for weed identification and crop recommendations, but not so much anymore. That has been more centralized in the Truro area. In the past, we used the research farm very much and had courses there. That is now more focused on the fruit and vegetable trade.
Senator Robichaud: Do you get the same services now from Truro?
Mr. J. DeLong: As I said in my opening remarks, much of that is now user-pay. In some situations for some crops, the cost has become quite prohibitive. You need to have a real problem, and I do not find that they provide as much technology transfer as they used to do. My son, who is 24 years old, does not get nearly the same access to technology courses that I had access to at that age.
Senator Robichaud: Why would that be?
Mr. J. DeLong: It is because those same services are not provided as readily. The monies are not there to provide those courses.
Senator Robichaud: We heard a witness talking the other day about biofuels. You have quite a varied operation. How much of the land that you own are you using? Is there space where you could grow some other kind of products that could be used for biofuels? Would it help your situation if this project were to come through?
Mr. J. DeLong: Rural Nova Scotia has pretty much grown back up in Alder bushes where it is not the best farmland. Yes, there is a big opportunity to revitalize rural Nova Scotia with any crop that would generate opportunity and profit.
Senator Robichaud: I think the situation in some parts of New Brunswick would be the same. A lot of the land is not being used for agricultural purposes.
Senator Buth: You clearly have a very progressive and diversified operation. I was interested in the Christmas tree production and industry. You commented that there is a glut of Christmas trees on the market now. What do you see as the long-term forecast for the Christmas tree industry?
Mr. J. DeLong: It is a very viable industry. Some 15 years ago, the United States subsidized vacant land to be planted with Christmas trees as an opportunity market. The trees were planted in the western and central states and in the Carolinas and Virginia with not much thought about where they would sell that many trees after they were planted. I would say that we are in the last three or four years of that major glut. It was good arable land used for that crop. Now, it is reverting to other crops, such as corn for energy.
There is opportunity in Canada for the Christmas tree production to double or triple, or maybe more. Landfills are not looking for any more aluminum and plastic, which the artificial tree is made of. Christmas trees are a renewable resource. They are environmentally friendly and produce rural wealth and opportunity. The opportunity for the Christmas tree industry is very large.
A new EU market may be opening up. They have been used to silviculture cleanings from Scandinavia and German, or wherever they still have forests. They now face a shortage for the Christmas tree market. That would be a very large opportunity for Atlantic Canada, because of our access to shipping, and for Ontario and Quebec, too.
Senator Buth: What type of marketing do you do in terms of Christmas trees? Is there a cooperative marketing program to try to increase real-tree use rather than artificial trees?
Mr. J. DeLong: Nova Scotia has the privilege of belonging to the National Christmas Tree Association, which is the American Christmas tree body. They look after us very well. If we have border issues, we can petition them and they address it immediately. They have an advocate in Washington who addresses issues with border security people.
We have a levy check-off system in Nova Scotia that funds our council and its activities are progressive. We have growers' co-ops, but we could use a little help with marketing. The Washington Christmas tree and the Boston Christmas tree were always major trade missions, but they have been neglected. You would see fish sales and sales of other Atlantic and Canadian products take a greater foothold in the American market if these opportunities were promoted again. I was told that, in the day, the lighting of the Christmas tree at the embassy in Washington was the second biggest event there. That trade mission has fallen off and there is just a Christmas tree and a fundraiser.
Yes, there are great opportunities through different organizations, but not near what we need to promote natural Christmas trees.
Senator Buth: Does your levy system fund the research programs?
Mr. J. DeLong: No, not at all. It is just 1 per cent of the loose roadside value of a tree. It barely covers what we do now.
Senator Buth: Why would you not look at increasing the levy system in order to collect enough funds to meet that requirement for research?
Mr. J. DeLong: The growers cannot stand any more financial pressures on them. Nova Scotia is the only province that has it and that is good, as we are very proud to have that. The United States is in the process of trying to implement a levy, which would help both countries. We are in favour of that. It would be a border check-off and they would collect it on their end and our end from Americans and Canadians. The growers of Atlantic Canada cannot take any more financial pressures.
Mr. R. DeLong: Outside of supply management, there really is no mechanism to collect levies. It is an honour system, so some people are paying disproportionately more while some are paying nothing on a levy system. A larger levy collection system is difficult to administer or to make it work.
Senator Buth: Do you not have opportunities under your provincial legislation to do a levy system? In each of the Western Canadian provinces, there is legislation that allows grower groups essentially to collect levies.
Mr. J. DeLong: In Nova Scotia, we do not have a legal power to enforce it. It is legally in place but how to legally enforce it is foggy. The Canadian Cattlemen's Association is working on how to enforce levy check-off.
The Chair: At the beginning of your presentation, you said that you were somewhat concerned by third-party inspections. Could you please elaborate and give us some examples of what is involved? How does that impact your operation?
Mr. R. DeLong: Traditionally, we worked under CFIA regulations, and we continue to do that. For our egg grading, we have a federal plant.
We work under the CFIA as far as maintaining federal registration and meeting those requirements in our product. With Christmas trees, we work with CFIA getting inspections done for export or whatever is required as far as proper phyto-sanitary papering.
We see now a change coming where retailers, wholesalers or different companies are demanding something in addition to CFIA, and we have put in a third-party audited system. We have done that in our egg-grading station. It has been really too expensive for the size of the business we have, but nevertheless you either do it or you are out of the business, so we have had to do that. You see the requirements of third-party food safety programs and try to just keep up with what the requirements are.
Senator Plett: I want to continue along the line of some of the questioning that has already been done. I would like more specific answers, if possible.
It seems to me from some of the answers you have given that many of your problems seem to be provincial barriers as opposed to federal. Maybe I misread that. If I did, please correct me on that.
We have talked about Nova Scotia, Quebec and Ontario for growing Christmas trees. Where are the most Christmas trees grown in Canada? Is it one of those three provinces, or are there Christmas trees grown in British Columbia? Can you tell me maybe the top five provinces?
Mr. J. DeLong: It would be Quebec, Ontario, Nova Scotia and New Brunswick. The rest of the provinces would have little tiny pockets, but nothing that would probably count very much for the production out of those other four provinces.
Senator Plett: Most of it is Ontario, Quebec and east.
Mr. J. DeLong: In Western Canada, it mostly comes up out of the Oregon or Washington area.
Senator Plett: Thank you. You are involved with eggs and beef, and we know that there are federal programs there. It seems to me that you would benefit by collaboration with at least the four provinces, if it is not a federal program. Are the provincial barriers actually that difficult that you cannot get together with four provinces and strike one organization where you collaborate on whether you put levies on or whatever you do to become a level playing field, as opposed to possibly running competition with Ontario or Quebec?
Mr. J. DeLong: Is that possible? Is that what you are asking?
Senator Plett: Is it possible? If so, why is it not being done?
Mr. J. DeLong: I do not know. I would say that is at a level higher than us. I would say that comes back to provincial departments. It is different growing environments. What works in Nova Scotia will not at all work in Quebec or Ontario. They are different environments. Quebec and Ontario have gone to growing more Fraser fir than they have balsam fir, which is our traditional Christmas tree, because of their environment. They seem to be making more money at growing that crop than the balsam fir. I can grow two balsam fir in the same time period I can grow one Fraser fir in Nova Scotia, so that is more profitable for us. I would say it different crops and different technical needs.
Senator Plett: Fair enough, but in Ontario or Quebec, given the fact that they have different needs, are they running into the same monetary issues and the same difficulties there? Do they also need help from outside sources to keep their Christmas tree industry alive?
Mr. J. DeLong: I am sure they do. The Christmas Tree Research Centre at the Truro Campus is the only research centre for Christmas trees of its kind in Canada. The University of North Carolina does research and has for 25 to 30 years for the Fraser fir industry, but we are only in our fifth or sixth year of research in Canada on this issue. I do not know of any research in Quebec or Ontario, other than a little bit of insect research that is done with their forestry services. That would be all there is. Research in Christmas trees is very new in Canada.
Senator Plett: Yet, you are a fairly old industry.
My last question is again about education. You talked about it, but again I would like to have a little more clarity. You said that there were courses available for you that are not available for your son. Again, I find it strange, as we move forward and as we are trying to be more innovative and so on, that there would not be courses available. Is that a provincial program or programs that have been dropped? Your industry is important to your province. It sounds to me like a great industry and that the Province of Nova Scotia should do everything in its power to keep it alive. Why are they dropping courses?
Mr. J. DeLong: There is one easy answer to that: financial cutbacks. We had two Christmas tree extension officers with DNR. Two years ago, their positions, with no notice to the industry, were just terminated. One of their answers was, ``We do not do that anymore. You are a mature industry. What would you need our help for?''
As you know, in Atlantic Canada, there is probably no more mature industry than the wood industry. That is pretty near what the people came here from Europe for, those fantastic forests. Suddenly, the forest industry has probably been in the poorest shape in Atlantic Canada that it has ever been in and has had the most government money injected into it. That would be a great question for provincial governments. Why is extension to almost every commodity being cut?
Senator Plett: Without wanting to be at all partisan, because far be it from me ever to be partisan, I trust that will be a question you will ask in the next election campaign. Thank you.
The Chair: I am looking at the time. Our next witnesses will be coming by teleconference from Europe. They are the OECD officials. We are on the second round, and we will conclude with one question from Senator Callbeck.
Senator Callbeck: You have spoken about extension services being cut back and, in many cases, eliminated by the provinces and by the federal government. What is there tends to be user-pay and very expensive. Could you give us a specific example of the cost so we could get a better understanding of what you are talking about?
Mr. J. DeLong: She is asking about the programs we pay into and what it costs us.
Mr. R. DeLong: We do not do some testing on our poultry now because what was free before is now costing $600 and the information was not worth the $600. Therefore, we do other testing that we consider worthwhile.
It used to be that the courses or the technical sessions that Jim spoke of were provided by the extension services. Now it is user-pay. Commodities have to raise the money or have registration fees to cover these costs. I guess that is not such a bad thing. Nevertheless, that is a significant change from 20 years ago. I cannot give you the dollar figures, because I do not know them, but those are some examples.
Senator Callbeck: I am wondering about your cost of producing Christmas trees as compared to the cost in the U.S. We had an apple grower here a couple of weeks ago who talked about it being difficult to compete with the United States, and he especially mentioned labour costs and the fact that he was having trouble getting people to work. Obviously, you have local people and that is tremendous. Can you talk about your cost for producing in Nova Scotia as compared to the U.S.?
Mr. J. DeLong: The basic difference in cost is that your fuel and labour costs are cheaper and that is a very big factor in all production costs.
Mr. R. DeLong: Financially, our biggest disadvantage is transportation to that market. That has always been our biggest challenge.
The Chair: On behalf of the Standing Senate Committee on Agriculture and Forestry, thank you very much for sharing your comments, vision and recommendations with us.
To the witnesses from OECD, thank you very much. My name is Percy Mockler and I am the chair of the committee. I will ask the senators to introduce themselves and take this opportunity to thank you for accepting our invitation.
Senator Merchant: My name is Pana Merchant and I am a senator from Saskatchewan.
[Translation]
Senator Robichaud: Good morning. I am Fernand Robichaud, from Saint-Louis-de-Kent, New Brunswick.
[English]
Senator Callbeck: Catherine Callbeck from Prince Edward Island.
Senator Plett: My name is Don Plett and I am from Manitoba.
Senator Buth: Good morning. I am JoAnne Buth from Manitoba.
Senator Eaton: Good morning and welcome. I am Nicky Eaton from Ontario.
[Translation]
Senator Maltais: Good morning. Senator Ghislain Maltais from the province of Quebec.
Senator Rivard: Michel Rivard, The Laurentides, Quebec.
[English]
The Chair: Thank you very much, honourable senators.
[Translation]
To the Organisation for Economic Co-operation and Development, I want to thank you for accepting our invitation. As you have observed, the order of reference for the Standing Senate Committee on Agriculture and Forestry comes from the Senate of Canada. The purpose is to examine research and development —
[English]
This includes efforts in the context of developing new markets domestically and internationally, enhancing agricultural sustainability, and improving food diversity and security.
From OECD we have Mr. Ken Ash, Director, Trade and Agriculture Directorate and Catherine Moreddu, Senior Analyst, Trade and Agriculture Directorate.
I invite Mr. Ash to make his presentation and, following that, there will be questions from the senators.
Ken Ash, Director, Trade and Agriculture Directorate, Organisation for Economic Co-Operation and Development: Thank you very much for the invitation. Let me begin with just a few words of background to provide context for some of the data that we will share with you.
The first important feature to understand is that global agriculture today is very different than global agriculture has been for a very long time. I am sure you are all familiar with the market trends. After 60 or 70 years of declining real prices, less than a decade ago prices began to flatten in real terms, and more recently they have begun to increase. This is obviously a very clear indication that demand is growing faster than supply and that the productive performance of the sector is beginning to lag. I think it is widely recognized around the world that more attention and emphasis needs to be placed on investment in agriculture, on further innovation in agriculture and, perhaps, on a redirection of emphasis of effort away from traditional commodity-type programs that have been common in many OECD countries.
Let me give you a couple of facts looking at the returns from investment in agricultural innovation. They are incredibly large. Estimates put rates of return on R & D spending investment between 20 per cent and 80 per cent. There is even some analysis that suggests the returns to investments and productivity growth, when you take into account the very long time lags associated with those returns, could even be as high as 10 to 1. These are incredibly high returns on investment, obviously much higher than the benefits associated with some relatively flat income-type transfers that are characteristic of much of agricultural support in OECD countries.
As well, the innovation is important in terms of improving environmental performance and assuring food safety. We do not have numbers to quantify that.
Here are a couple of facts on trends in research and development spending. We do have data on Canada. Over the last 20 or 30 years, we have seen that, when government outlays expressed as a per cent of gross agricultural value added, there is a significant decline in the share of government outlays. The amount of money as a proportion of value added spent on agriculture has long been much higher than that spent on non-agricultural R & D relative to value added in the rest of the Canadian economy. In fact, 20 or 30 years ago, Canadian outlays on R & D were almost double, on a per value-added basis, of those in Australia and the United States. The outlays now have virtually converged, so the spending across those three regions is very similar.
Let me just make a brief comment about what this means in terms of performance. We note across Canada, the U.S. and Australia a slight decline in the annual growth rate in agricultural total factor productivity. I think most observers would expect that decline to continue over the next decade. This may not be such a big surprise. If you remember where I started, after decades of decline in real prices, you might expect under-investment in agriculture, including in agriculture innovation. That market environment, again as I said at the outset, has changed. We would expect the incentive to begin to reinvest in agriculture, in particular in agriculture innovation. It is now something that we are all facing.
Let me stop there. If you have specific questions, we will do our best to address them. If you want to talk a bit about some of the conclusions that we draw from this rather quick analysis on the implications for future policy directions in Canada and elsewhere, we would be happy to try to spend a bit of time on that.
Senator Plett: I have a couple of basic questions about the organization. Can you tell me how many member countries are in the OECD?
Mr. Ash: There are 34.
Senator Plett: Tell me a little about how the funding works. How does Canada get involved in the funding of your organization?
Mr. Ash: We are 34 countries, so we are global but not universal. Our membership includes most of the larger mature developed economies. Our funding is paid by member countries on a proportionate basis relative to their share of OECD country GDP. In other words, Canada's GDP as a proportion of all OECD country GDPs would be Canada's contribution. I do not know today how much you pay, but it is somewhere between 3 per cent and 4 per cent of our entire budget.
Senator Plett: You said in your closing comments that if there were specific questions about policy and so on, we should ask. I do not have a specific question, but I would like you to give me a brief summary of any suggestions, and this may be far too broad, you might have for Canada in terms of what direction we should go.
Mr. Ash: Let me make a couple of points. We try to discourage a focus on R & D spending only. It is important to realize that the full set of incentives or disincentives for governments and for the private sector to invest in agricultural R & D is much broader than that measured by public R & D spending. The first point I would like to make is that the broader, economy-wide environment, the nature of your innovation policy outside of agriculture, the degree of macroeconomic stability, and the clarity of your regulatory framework — all of those basic governance conditions — are important in particular for attracting private sector investment in anything, including innovation and agricultural innovation. That is the first point I would like to make.
Second, when looking at your performance in agriculture, it is very important to look at your existing specific agricultural policies, some of which might encourage further innovation and some of which might not. I will give you an example. Public spending on education, universities and extension services has tended to decline over the course of the past couple of decades. We believe, and the available evidence suggests, that this is a very important aspect of innovation. It is one thing to produce it in the lab, another thing to get it to the country, and still another thing to have it adopted on farms in the way that it was designed to be adopted. That is one specific example.
An awful lot of agricultural policy in Canada and in many other countries is aimed primarily at what I would call ``traditional commodity-based support.'' Such policies were introduced decades ago with the intention of improving farm income prospects in farm households and, maybe indirectly, discouraging structural adjustment on farms.
Today, the market environment is very different from when those policies were introduced. Markets are strong, prices are high and demand is growing. Rather than investing perhaps as much as you do in income transfers essentially to producers, public investments in R & D in innovation, in extension and those kinds of things that allow the farmers to make more money from the marketplace would be a direction that we would encourage. I will stop there.
Senator Plett: That was great. I have one follow-up question to that. You talked about private sector industry and government funding. Are there criteria that you use in recommending a split between private sector industry and government funding or support? How much should private sector be putting into R & D and how much should government put in?
Mr. Ash: We would not want to give a ratio that would work, because it would not work in all cases. In more general terms, we would encourage public spending to focus more on what might be referred to as the basic or more pure science and technology, such as developing new areas of technology and taking some of the higher risks, whereas, we would encourage the private sector to work a little closer to the ultimate client and the demand side to address the needs of farmers and industry and to look at partnership arrangements. We think in terms of more pure and more applied research when we think of government-industry rather than proportions.
I will be a little flippant and say, you will know you are successful when almost all of the money is coming from the private sector.
Senator Plett: I appreciate that answer, thank you.
[Translation]
Senator Robichaud: Thank you both for being here. You talked about research and innovation. From what I gather, you think governments, whether federal or provincial, should focus their efforts on basic research, when it comes to innovation. Over the course of our study, we have noticed that, when new techniques were put in place, the problem had to do with transferring them to industry and farming. It was termed the valley of death. What role do you think governments should play in that transfer?
[English]
Mr. Ash: I will make two comments: The transfer would be easier if there were a demand for that particular technology prior to the research taking place and the discovery being made. The more demand-driven your agricultural innovation system is, the easier it will be to transfer the results from the lab to the field. However, that does not answer your question.
The role of the government, we would suggest, would be to focus its effort in the education, in the extension and in the advisory service element of the entire ag-innovation system. Producing trained and qualified people, and having available advisory services to assist is a very strong area for the government to be involved in. I think that would be the very general answer to that question.
[Translation]
Senator Robichaud: Madam, do you have anything to add?
Catherine Moreddu, Senior Analyst, Trade and Agriculture Directorate, Organisation for Economic Co-operation and Development: Good morning. I just wanted to say that innovation is much more readily adopted not just by consumers, but also by industry and farmers, when there is a clear regulatory framework ensuring that the innovation is good for people's health and the environment.
Senator Robichaud: Yes, I totally agree. But there is still the transfer problem. You said that if the need is market- driven, the innovation has a better chance. The fact remains that some major discoveries are made in labs and prove very successful. That is where the problem comes in. When the market arrives on the scene with innovative approaches, they are accepted with relative ease. My question was really about the transfer of university-initiated research that could benefit the entire industry, either in the short or long term. Thank you.
The Chair: Would you care to comment?
[English]
Mr. Ash: Again, we appreciate the concern you are raising. I am not sure there is a simple answer. It has to do with communicating more consistently. If you have a product that is a good product and for which there is a demand, it will sell easier. That applies to technology just like it applies to fresh vegetables.
It is important to have an innovation system that is well connected and to have laboratories and universities, and provincial extension services in your case, connected and well aware of each other. I used to work a long time ago for Agriculture Canada, and visits to research stations of provincial extension services are a very practical example of this kind of thing. It is about communicating and having networks so that there is a smooth stream of results out to the farm communities and the needs of the farm communities being expressed all the way back to the laboratories. It is a two-way flow that is, I think, incredibly important.
[Translation]
Senator Rivard: Thank you. Almost three years ago, in Prague, the OECD held its conference on the challenges for agricultural research. Since then, the OECD has come out with findings related to the burdens on natural resources. Can you tell us whether, once the problems were identified, any corrective measures were taken? What do you think?
[English]
Mr. Ash: That is the most difficult question I have heard in a long time.
Let me say this: The work that you are referring to was an early effort to engage the international community in a conversation about the reality that, for decades, with hindsight, it is clear that there has been under-investment in agriculture in developed countries and even more so in developing countries. The biggest area of under-investment relates to public and private spending on innovation, R & D, tech transfer and extension.
I referred at the beginning to the incredibly high rates of return on agricultural spending. There was no investment because prices were declining in real terms. It was not an interesting sector. What became clear a few years ago was that the market prospects for the sector were much more interesting and prices were strong and expected to remain strong for quite some time.
The event we had was a bringing together of the international community to talk about the need for more R & D spending and more investment in the sector. Three years later, what is different is that there is no more debate about whether or not it is important to innovate. The conversation now is about how to do that. How do we increase public spending at a time of declining budgets and fiscal constraint all around the world? How do we attract more private sector investment when they have gotten used to not spending on agriculture? There are the questions that you are asking. How do we get good ideas and good products from the lab to the field, and how do we ensure that they work well on the field?
I have two final comments. The very general answer to your question is different if you are in Canada or in sub- Saharan Africa. In developing countries, in particular, there is such a large gap between productivity rates today and what they could be theoretically that we argue very strongly that in developing countries it is about technology transfer and getting what is available to people and to help them use it.
In developed countries like your own, it is much more an issue of science and technology, pushing out that productivity frontier, and developing new and better ways to do things. In the last three years, I would think that is about as far as we have gone.
[Translation]
Senator Rivard: The question was, as you put it, difficult, but your answer was clear.
[English]
Senator Callbeck: Mr. Ash, I have a couple of brief questions. You mentioned that Canada contributes 3 per cent to 4 per cent of your budget. What is the total budget?
Mr. Ash: I can tell you what the budget is for my directorate. Of the whole organization, I do not know. Maybe I can get the answer for you in the next half hour. I do not get to spend the whole organization's budget, so I do not worry about it. I can only tell you mine, which is, for agriculture and fisheries, about 7 million euros per year. For trade policy, which I am also responsible for, it is about 5 million euros. I will send a quick BlackBerry message and see if I can get an answer to your question.
Senator Callbeck: You talked about private sector investment. Do you have figures on that for the OECD countries? If so, how does Canada compare?
Ms. Moreddu: The OECD collects data on agriculture R & D expenditures in many countries, and they do it by sector of performance and by field of science. Unfortunately for Canada, there is no data on the private sector. It is only the budget outlay.
Mr. Ash: These are rather specific questions. If you give us a moment, we will try to see if we have the Canadian public expenditure number with us.
Senator Callbeck: That is fine.
Ms. Moreddu: I do not have the number because I only did it as a percentage. I have it in percentage of value-added of agriculture as 2.2 per cent in 2010.
Mr. Ash: Public expenditure on agricultural research as a percentage of the gross value-added of agriculture is 2.2 per cent in the most recent year.
Senator Callbeck: In Canada?
Mr. Ash: In Canada.
Senator Callbeck: How does that compare with other countries?
Mr. Ash: I have two countries in mind. In Australia and the United States it would be a little bit less. What might be more helpful for you is, if we look at the last 30 years, Canada's spending on R & D as a per cent of value-added in the sector was about 2.5 or 3 per cent, and it has come closer to 2 per cent today.
In Australia and the United States it started closer to 1 per cent and has increased, so now it is just below 2 per cent. You have Canada coming down and Australia and the U.S. coming up. They have almost met, not quite, at around 2 per cent of gross value-added in the sector. That gives you a partial snapshot.
Senator Plett: I would like to take a stab at the answer that Senator Callbeck asked for and then, when our guests come back with it, I want to see how close I am. I think it is 347 million euro for 2012. We will see how close I am when they come back with the answer.
Senator Eaton: Thank you both very much. One thing we found in doing our study is that there is a lag or a difficulty in taking innovation from what we call ``bench to field.'' In other words, the difficulty is taking it from the university bench and getting the farmer to apply it. Is there one of the OECD countries that does it better than others? We are trying to learn. With this report, we are trying to find best practices.
Ms. Moreddu: It is a general issue that everyone mentions. You have countries where the research is funded by levies from producers. In this case, the research is much more applied to what the needs are.
In many countries, especially in the EU, they are now starting to develop networks where researchers, farmers, consumers and NGOs are getting together to identify problems and find solutions. I am not sure how marginal it is in the research. I think research is still very much top-down, but agri-reform recently has been to make it more bottom- up.
Mr. Ash: Can I try to add to that? If what we are looking for is a country that does everything best, then I think we will be disappointed, but there are examples. Ms. Moreddu referred to the check-off systems and they are common in Australia, for example. They have essentially established a mandatory check-off for producers. The funds are matched or complemented by public monies. It goes into something called the research and development corporations and then the allocations or decisions are made by groups made up of farmers and government officials. There is a very direct relationship both in the funding and the conduct of the work.
There is a system that is admired very much as well in Brazil where they have established an organization called Embrapa that works directly with farmers and with the scientific community; it essentially acts as a connection between the folks, whether in university, scientific labs or benches, and farmers. There is a very common thread.
The common element in all of these systems is clear, two-way communication, expressing interest in needs and responding with technologies and advice.
Looking for one country that does everything the best, I do not think we will find it these days.
Senator Eaton: I am not looking for one country that does everything the best. In this report we are looking for best practices in the translation of research to actual use. That was my question. I think you have answered it by giving me several examples.
You talked about more innovation and more investment. Do you have areas of innovation either generally or climate-based? For instance, could you tell us in Canada where you think innovation would be the most helpful, in what areas of agriculture?
Mr. Ash: No, I think your farm community and business sector can tell you that much better than I.
Ms. Moreddu is French. I am Canadian, but I have not lived there for 14 years. I think it is absolutely essential that these kinds of decisions are made in a very local, site-specific way. If we look at the entire world —
Senator Eaton: Which you do. You look at 34 countries.
Mr. Ash: I can give you a global perspective. I do not want to give you a Canadian answer to that question.
From a global point of view, we have to find a way to produce more food using less water. That would be the first thing I would say to you. There is enough land in this world, but there is not enough water in this world going forward if we do not begin to use it more efficiently. That means a whole bunch of things. That does not mean just technological solutions. It means we need to charge for water, what it is worth. We need to use it more efficiently and we need to have irrigation systems that do not spray water up in the air randomly. We need to use much more scientific approaches.
The whole area of climate change — leaving aside using the water that we have — the changes that will come about, as yet unclear changes associated with climatic patterns, will require a response for both crop and animal production. It will require that we do things both to mitigate the output of greenhouse gases and to adapt to the changing production conditions that we find ourselves in. I think those are the two common global issues that will be needed.
We should always answer things in threes, so I will give a third one: finding an alternative to produce feed stocks for fuel that does not draw upon basic food stocks would be another area where I think we could spend a little more effort.
Senator Merchant: You have just answered my question. You also said that we have to get used to paying more for water. Will consumers have to adapt then to higher agricultural and agri-food prices, or is there a way to control the price increase?
Mr. Ash: I think it will mean higher prices than consumers were used to over the past decade, but maybe not that much higher from where they are today. A lot depends on whether or not governments and industry carry on as if we were in the same world we were in 20 years ago, or whether we all recognize that there is a growing demand and that we need to do things to ensure that supply growth keeps up with that.
If we maintain business as usual, then you can begin to get used to higher food prices. However, if we do the kinds of things that we know we can do — if we begin to investigate innovation, if we reduce some of the significant waste that there is in the food system — then we will begin to see a leveling out of food prices.
Water is an important element, but there is a lot more to the entire chain of production, obviously, than just the price of water. So much depends on how we respond to the opportunity that we have before us. If we begin to improve our productivity performance, improve the use of water and improve the functioning of the food chain so less is lost in waste, then we will continue to enjoy relatively low prices.
Senator Merchant: However, with the population of the world rapidly increasing and the estimate that by 2050 there will be over 9 billion people to feed, there will be a lot of pressure on our natural resources and our environment. What are the best strategies worth considering right now? Are there maybe one or two really great strategies that you might recommend?
Mr. Ash: It is incredibly important to understand that today there is a great deal of public investment and policy and regulation surrounding agriculture. Most of it is designed for an agriculture system of 1950, 1960, 1970 and 1980. Very little is designed for the kind of agriculture that we find ourselves in today and expect we will be in tomorrow. We are not advocating new money; we are advocating a different approach to agricultural development. Rather than, as I mentioned before, dead-weight subsidies that transfer income to farmers, the preference is public investments in innovation, in infrastructure, in people — invest in people, in skills, in training. That will get you the kind of results that will put agriculture in a very strong position in the future, whether there are 8 billion, 9 billion or 10 billion people on the planet.
If we do nothing, we will see high prices. If we do the kinds of things that I am talking about, that I think most people in positions like mine would advocate to you, then I think the prospects both for the sector and for the consuming public are very good.
Senator Buth: Thank you very much for being with us today.
I will follow up on a comment that you made, and I may have misheard it or forgotten essentially what the train of thought was. You made the comment that we should be looking at non-traditional commodity research. Did I hear that right and can you elaborate on that a bit?
Mr. Ash: I do not recall what I said either, but I was attempting to say that a lot of agriculture policy is commodity- based, price-based policy support. Canada has a system of supply management. You used to have a wheat board. You have a system of risk management designed to transfer monies to producers when there are bumps in the road.
Much of that kind of policy was put in place at a time when agricultural incomes were relatively low, when the prospects for earning money from the marketplace were relatively poor and when the risks associated with agriculture were relatively high. Today's agriculture markets are very strong. The returns to production agriculture are historically high, yet as we look a little forward, we know we do not have any more land and water that will be produced any time soon. We know the impacts of climate change on balance are negative. We know that if we do not change from a policy environment that is conditioned to a sector that experiences price declines year after year, then we will not be able to have a supply increase at a rate that will match the significant demand growth we are all expecting.
I am talking about moving away from commodity-based programs to public investments in the sector in innovation, in people and so on. We think that will yield much higher returns and generate the kind of supply increases that the world absolutely needs.
Senator Buth: Thank you for that clarification. That is quite consistent with what our Minister of Agriculture continues to say, that we need to make sure that farmers are getting more money from the marketplace and not the mailbox.
Going back to a report that we have looked at called Challenges for Agricultural Research from the OECD, which came out in 2010, four areas emerged from the conference. One of those comments, essentially, was that policies and incentives should be developed which recognize and reward environmental gains made by landholders. Is that something you have looked at in terms of policies and incentives for environmental incentives and comparisons between countries?
Mr. Ash: I would have two responses, I guess, to that. The area where we, the global community, have invested heavily in terms of environmental concerns — I have talked a bit about water — is climate change. Here, I think a key message that we need to keep in sight is that when you have these kinds of global concerns, then global responses make a lot of sense as well.
An institution has recently been created called the Global Research Alliance. It is a virtual network. A group of countries have agreed to pool their plans on research related to mitigating the negative impacts of climate change on agriculture and to pool their efforts and their results.
When we talk about improving environmental performance, one way to think of it — especially in dealing with more global environmental concerns that are really important not to keep in sight — is that Canada is not facing these questions and these problems alone. Every other country is, and the opportunity is there to piggyback on, to benefit from, and to contribute to research that is happening all around the world with today's information communication technology. It is free and it is easy. It is a matter of people wishing to communicate and share ideas. That is one area where we have been very supportive of an initiative that was originally launched by New Zealand and with subsequent support from Canada and many other countries.
That is maybe an indirect answer to your question. I do not know if you want to come back again, but I thought it was important to provide that illustration of a best practice of a way to do research more efficiently.
Senator Buth: Thank you very much.
[Translation]
Senator Maltais: I have a few fairly brief questions. I would ask that you keep your answers fairly short as well. You said the OECD was doing a lot of research as far as new farming technologies go. Can you give me an example of one that would apply to Canada?
[English]
Mr. Ash: I can be very brief. We do not undertake scientific technological agronomic research. We undertake economic policy research. We do not work on technologies here; we are not scientists.
[Translation]
Senator Maltais: Do you work closely with the European Community, the European Parliament?
[English]
Mr. Ash: In the same way we work in very close cooperation with the Canadian and U.S. and all other member governments, yes.
[Translation]
Senator Maltais: In Europe, now that the iron curtain is no more, agricultural products from countries in the east flow freely. Trade flows freely with countries in the west as well. Is there a specific control mechanism in place or none at all? Is agricultural trade governed by very strict standards?
[English]
Mr. Ash: There are very clear food safety standard guidelines that must be met by all EU members. There are national standards and standards for the movement of goods across borders, and they are enforced via the European Food Safety Authority. There is a pan-European responsibility, but of course the heart of the responsibility rests with the individual member states of the EU.
[Translation]
Senator Maltais: Would you care to add anything?
Ms. Moreddu: If you are asking whether there are any trade barriers between European countries, the answer is no.
Senator Maltais: No, I wanted to know whether a European standard applies or whether each country has its own standard. Take Hungary and France, for example. Are there European standards, or are there Hungarian standards and French standards?
Ms. Moreddu: There is a minimum standard across the European Union. Within the EU, some countries have tougher standards than others, but there is mutual acceptance, regardless.
Senator Maltais: Thank you.
[English]
Senator Plett: I do not have a question, but more of a comment, and I trust Senator Robichaud will want to listen to it.
Mr. Ash made a comment that we no longer have a Canadian Wheat Board in Canada and I need to clarify that. We clearly still have a Canadian Wheat Board; we just did away with single-desk marketing and now have dual marketing in Canada. Thank you very much.
[Translation]
Senator Robichaud: I think I get the last word. The report Senator Rivard mentioned, Challenges for Agricultural Research, talks about something.
[English]
There is a paragraph that mentions the worry that the rest world will gain from GM technology, but not the European Union. Very closely linked to this is the urgent work that needs to be done with the public on these new technologies to demystify them, explain clearly and precisely, and engage the public on the matter. Has there been any progress along those lines?
Mr. Ash: My colleagues are all chuckling. Let me make two points. The stance of the European Union and some of its member countries on genetic modification has not changed, to my knowledge. That does not change what the report says about the importance of relying on a science base, communicating that science base, and getting information to consumers in good time so that good science is not rejected. It remains very important.
Does it make sense to advance science in the interest of agricultural productivity growth? Yes, it most certainly does. The more that science is well communicated, the more successful we will be. However, if your question is whether the EU stance on GM has changed, the answer is not to my knowledge.
Senator Robichaud: What could be done to make that change and instruct the community as to the benefits of these new technologies?
Mr. Ash: I think a lot of things are happening already. The conversation on GM today is very different than when I arrived here 14 years ago. There is now a conversation; there did not used to be a conversation in Europe. One of the biggest pressure points for access to the latest science and technology comes from industry inside the EU. However, at the moment, consumer fears and worries are such that governments remain where they have been for a while. I think it is incredibly important to continue to communicate consistently good, accurate information, not exaggerating, not underplaying, but providing a good evidence base.
[Translation]
Senator Robichaud: On the screen in the background, I can see three words: Fair World Economy. In terms of the countries in need of a strong economy to meet their food demands, how do we involve them in this whole movement? That is a problem, is it not?
[English]
Mr. Ash: I am not sure I caught all of the question. Again, in the same way that it is important to communicate about science and technology, it is important to communicate about economic cooperation.
What is in the name of our organization, and in the work that constitutes what we do every day, is not that it is about trying to make decisions for governments. It is about giving you the kind of information that we can access from other countries and inform the choices that you make. That is what we try to do with all our members and it is what we try to do with the very large and growing number of countries that are not currently members of the OECD. Our business is to inform and to help you make the best policy decisions.
Someone asked what our budget was. I should know what it is. It is available on our website, apparently, and it is 347 million euros per year.
Senator Plett: Let the record show that I had that number before our guest did.
[Translation]
The Chair: Anything else, Senator Robichaud?
Senator Robichaud: I thank you and encourage you to continue doing the work of your organization. Thank you for speaking with us.
[English]
The Chair: Before bidding you goodbye in Paris, there is a question I would like to ask and to have your opinion on as we look at world markets. The subject matter is traceability.
When I look at the challenges that we have had lately with horse meat, do you have any comments — in order to protect — on the element of traceability from the producer to the consumer, and what would you recommend to the agricultural side of the world?
Mr. Ash: I think it is already a fact that systems exist in most countries that allow a product to be traced from its final point of consumption back to its origin. That permits taking remedial action. In a first, best world you want to prevent those types of things from happening. Whether it is because of accidents or because of deliberate action — people trying to make a little bit more money than they otherwise might have — that kind of issue requires close attention each and every time there is a case.
However, I think it is also important to keep in perspective that our food system, both yours in Canada and the food system in general globally, is incredibly safe and these kinds of accidents are relatively infrequent. They need not to happen at all and that is a very tough ambition, but I think many of the traceability systems that exist nationally already work very well.
The Chair: The members of the Standing Senate Committee on Agriculture and Forestry want to thank you. Before I go to Ms. Moreddu, where are you from in Canada, Mr. Ash?
Mr. Ash: Have not you recognized it yet? I am from the East Coast. I am from Newfoundland originally.
The Chair: We will be in your province next week visiting farmers. Thank you very much, Mr. Ash.
[Translation]
Ms. Moreddu, thank you for sharing your comments.
[English]
Thank you very much on behalf of the Standing Senate Committee on Agriculture and Forestry. I will now adjourn the meeting.
(The committee adjourned.)