Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 14 - Evidence - Meeting of March 27, 2012
OTTAWA, Tuesday, March 27, 2012
The Standing Senate Committee on Agriculture and Forestry met this day at 5:36 p.m. to examine and report on research and innovation efforts in the agricultural sector (topic: Understanding the innovation in the agricultural sector and agri-food from the point of view of the agricultural input sector).
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: I thank the vice-chair for those comments, and I welcome them. I would like to welcome everyone to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
Witnesses, thank you for accepting our invitation. We appreciate you sharing your knowledge, vision and recommendations with the Agriculture Committee. My name is Percy Mockler. I am a senator from New Brunswick and chair of the committee. I would ask senators to introduce themselves.
Senator Mercer: I am Senator Terry Mercer from Nova Scotia.
[Translation]
Senator Robichaud: Fernand Robichaud, Saint-Louis-de-Kent, New Brunswick.
[English]
Senator Merchant: I am Pana Merchant from Saskatchewan.
Senator Mahovlich: Frank Mahovlich, Ontario.
Senator Buth: JoAnne Buth, Manitoba.
[Translation]
Senator Maltais: Ghislain Maltais from Quebec.
[English]
The Chair: Thank you, honourable senators.
The committee is continuing its study on research and innovation efforts in the agricultural sector. The order of reference from the Senate of Canada is to make a report and that the committee would be authorized to examine research and development efforts in the context of developing new markets domestically and internationally, enhancing agricultural sustainability and also improving food diversity, security and life cycles.
Today we are focusing on understanding innovation also in the agriculture and agri-food sector from the point of view of the agricultural input sector. Honourable senators, today we welcome Patty Townsend, Chief Executive Officer of the Canadian Seed Trade Association; Jean Szkotnicki, President of the Canadian Animal Health Institute; and Rick McRonald, Executive Director of the Canadian Livestock Genetics Association.
I have been informed, honourable senators, that the first presenter will be Ms. Szkotnicki, to be followed by Mr. McRonald and then by Ms. Townsend. With that, Ms. Szkotnicki, the floor is yours.
Jean Szkotnicki, President, Canadian Animal Health Institute: Chair and standing committee members, I would like to thank you for inviting me to appear before you to talk about innovation as it relates to the animal health industry and more importantly to agriculture.
As was mentioned, I am President of the Canadian Animal Health Institute. We are a unique organization that represents the animal pharmaceutical industry, unique in that we are representative of both the innovative and the generic side of the industry. That is very different from what you see on the human health side. We have about $620 million per year in sales with our members, and our members represent about 95 per cent of sales. We represent the transnational companies, some small domestic companies and some discovery firms, et cetera, in the Canadian market. I like to say we are the one-stop-shopping when it comes to the animal health industry relative to the membership.
Our industry is important in that it provides critical input for Canada's meat and livestock industries. It promotes and improves human and animal health and well-being. It makes essential contributions to food safety, contributes to sustainable and competitive agriculture, supports global trade and economic development and contributes to a Canadian economy based on innovation and knowledge.
Innovation is the key to our future. We have a saying. The pipeline is critical to the profitability of the animal health business and having new products to bring forward. It is also important to the future of agriculture.
I wanted to give you one example of a recent situation where we had a circovirus outbreak, and the senator from Quebec would probably be aware of it, and those from Ontario. There was a circovirus outbreak in the hog industry with some huge death losses. It was a very severe situation to the Ontario and Quebec hog industries. Our industry was able to rally and bring in a new vaccine to the marketplace that actually brought the disease under control. It was an amazing situation because the management of the circovirus disease was possible through a preventive vaccine, a new vaccine to the Canadian market. We were able not only to bring one vaccine but three, with different companies competing with each other. More importantly, it improved animal well-being and also impacted human safety. Due to the use of the vaccine, we saw a drop in the use of antimicrobials to treat hogs that were sick. That is important as we talk about things like antimicrobial resistance. We also saw improvement in production efficiency because we minimized death losses and got the disease under control. Again, that is important to the producer sector.
To best manage my time today, I would like to focus on four areas and a number of recommendations within those areas. Within the boxes on the text I provided you, the blue text boxes — maybe you are not in colour, because the clerk tells me he does not photocopy in colour. I understand that. We believe these recommendations need to be acted on if we are to have timely availability of innovative animal health management tools in Canada for the livestock industry.
The first area of discussion is about importation and use of non-approved drugs in veterinary medicine in agriculture. Health Canada has a policy that allows for the importation and use of non-approved animal medications. These are medications that do not go through a Health Canada risk assessment. Animal owners can import and use finished products for their own use, and health professionals such as veterinarians can use bulk chemicals or active pharmaceutical ingredients in veterinary medicine. This situation is unique to other developed countries in the world and is a disincentive to bringing new innovation to the Canadian animal health market.
There was a study done by the International Federation for Animal Health, and it estimated that these products had an opportunity value of $100 million, so that is a significant amount of product being brought into Canada and used in production without having gone through a Health Canada review. Of course, there is a cost for going through the review process.
Our recommendation is that Canada should introduce an own use importation program for animal drugs consistent with the pesticide grower own use program that is administered by the pest management regulatory agency. This would provide Canadians with assurances that products meet Canadian safety standards while giving animal owners access to foreign over-the-counter products.
Similarly, we think Health Canada should implement controls over the importation and use of active pharmaceutical ingredients that are consistent with programs in other areas. We are not asking for anything unique relative to the global situation of developed countries, such as applying the prescribing cascade. At the back of my submission is an appendix that outlines that cascade, where you start with a licensed animal health product for that species; if there was not something available, to a licensed animal health product in another species; to a human product; and if that was not available, then to an API. That is a legislated approach, API being active pharmaceutical ingredient.
The second area I would like to talk about is competitive regulatory performance and requirements. Development of new animal medications is lengthy. It can take about 12 to 15 years to bring a product to market. It is costly, with about $250 million in development costs in the nature of the studies that we are required to do to support a drug submission. It is risky, as 1 in 7,500 of the molecules that are assessed becomes a commercial product.
Regulation needs to be flexible to enable commercialization of new innovative animal health products. The pre- market review — and this is really important — must be science based and risk based and requirements proportional to the risk. We have some things that are higher risk, which I would put most food animal products in that category, and others that are lower risk. For example, should we be spending our review time on reviewing companion animal products that are regulated and approved in other countries?
Our recommendation is that for modernization initiatives that are ongoing right now, the Feeds Act and the Health Products and Food Branch as it relates to veterinary drugs needs to focus on science and risk-based and also be flexible to accommodate the availability of new, safe animal health management tools for agriculture. We also think that the veterinary drug directorate, we are pleased to say, is working with the U.S. FDA in trying to harmonize and bring equivalency to the two programs so we can have products, health management tools, registered in both countries at the same time.
Typically, there has been a lag where Canada follows five to seven years after the U.S. Our producers compete in international markets with cattlemen and other producers that may have access to new technologies. Also, we want to make sure that in some of the new areas, such as bioactive stem cell technology, et cetera, Canada is up to speed on the science enabled to bring these products to the market place.
Modernization initiatives of the Health Products and Food Branch also need to recognize the differences between human and animal medicine to ensure oversight of safety and risk of using things like the non-approved drugs in agriculture and veterinary medicine. Remember, much of the act was developed for the human industry without thought of the animal industry. We need to recognize those differences and take control where we need to manage safety in a different way.
Canadian veterinary drug technical requirements for environmental assessment and other review parameters need to be consistent with that of our major trading partners as well if we want to see innovation come to Canada.
The third area I want to talk about is patent protection. Patent protection is the same on the animal health side as it is on the human health side. It provides time for the innovator to recoup costs in the development of an animal health product. A lengthy review time can erode that 20-year period. We are seeing in the animal health industry that in fact by the time a product, particularly on the food animal side, gets registered or licensed for use and sale in the Canadian market, there are only five years left of market exclusivity. Other countries extend that patent life and our recommendation is that Canadian patent laws need to be consistent with those of other developed countries and allow for patent extensions reflective of the pre-market review times.
A second recommendation in this area is that the pre-market regulatory review programs need to be competitive from a performance or a service delivery standpoint. We need to be able to review in 180 days if that is the standard that other countries are doing. There have been great improvements in the Canadian regulatory process, particularly with veterinary biologics in veterinary drugs. It is something we need to keep an eye on always and look to competitive review times with that of other developed countries, like that of the U.S. and the European Union.
The fourth area of discussion is data exclusivity; and I hope you do not mind getting technical on some of these things. Data exclusivity is the period of time during which the generic drug manufacturer is prevented from relying on the innovator's clinical trial data submitted to the regulatory agency to support a product's safety and efficacy. The animal health industry deals with multiple species rather than just one, as is the case in human health. Another big difference between the animal health industry and human health is the multiple species we deal with. Often the products are licensed for sale on major species, for example beef, and then later there may be interest by the company in conducting additional clinical trials to support another species. The challenges on the animal side are that exclusivity does not apply to new indications for existing drugs in the market place. Recently, we have seen a growth in the aquaculture industry, the goat industry and the sheep industry. One of the limiting factors in their growth is that they do not have medications available to meet those species' needs. For our companies, there is no incentive to do the added research to get the additional label claim for that species of aquaculture, sheep or goats, as examples.
Countries such as the U.S. give data exclusivity to a firm. They give 7 years and the EU gives 10 years. This supports a new indication, as we have seen, as more of these products are being brought to the market place. Our recommendation is that the modernization of the Food and Drugs Act and the regulations need to be initiated with the intent of expanding data exclusivity to cover animal drugs, thereby helping to support label extensions while being with similar provisions made in other developed countries.
In closing, the four areas that I thought to bring forward today are importation and use of non-approved product; regulatory performance and harmonization of requirements with other developed countries; patent protection, which is key to the encouragement of innovation; and data exclusivity to help bring innovations to products in the market place now. Moving forward on these recommendations will ensure that Canadian food animal producers will have access to innovative animal medications that are safe and effective, and importantly, they will have them in a timely manner relative to other countries. These products are critical to animal and food safety and international market access to Canadian producers' competitive return on investment.
Rick McRonald, Executive Director, Canadian Livestock Genetics Association: Thank you for this opportunity to make a presentation on behalf of the Canadian Livestock Genetics Association, which I will refer to as CLGA.
CLGA was formed in 1999 by the merger of three previous industry trade associations and given a specific mandate to deal with market access, animal health and market development. Previous witnesses before this committee have underscored the importance of exports for the agri-food sector, and CLGA's raison d'être is exports. Why? Sales of products offered by our members provide income directly to Canadian producers and supply the revenue to fuel the engines of research that keeps Canada ahead of the genetic curve and enhances the sustainability and security of domestic production.
Currently, our members' export sales total approximately $150 million, but that could easily double as we continue to regain markets lost due do disease occurrences in Canada, specifically BSE and avian influenza. Our membership is rooted in dairy, small ruminant — sheep and goats — and poultry genetic sectors and includes producers and marketers of live animals, semen, embryos, and day-old birds and hatching eggs, along with others that provide support services to the industry. Although we have 65 members, this includes breed associations, so in a very real sense the work we do benefits all producers in these sectors. Our products are listed above but we are really selling the Canadian breeding programs and philosophies.
It is our practice to ensure that the buyer has the knowledge and skills that will maximize the expression of the genetics he has purchased in his own country. In some cases, that process of skills development is partly supported through Agriculture and Agri-Food Canada's agri-marketing program. An investment in superior genetics and in acquiring the skills and knowledge to properly manage animals can help other countries achieve their goals of a sustainable food production system.
I will highlight four areas of importance and then come back and summarize three recommendations that we have.
We would not be able to export our superior genetics if we did not have a superior national animal health status. Historically, Canada has had a good animal health reputation that has allowed us to access over 100 countries with the products that our members sell. Our investment in animal health as a country had begun to lag somewhat behind those of our competitor countries and some of the countries to whom we sell. We reached a watershed really on May 20, 2003, when we had to announce to the world that we had a case of BSE in a Canadian-born animal. This was significant in many ways.
Nine years later, we still have not recovered all of the markets that we lost because of BSE and, perhaps more importantly as a result of that, the world became focused on science-based conditions for trade. The OIE's role as a standard-setting body under the WTO became entreched.
Where we used to get by because we were Canada, we now have to prove that we are free from a certain disease, and there is a constant parade of officials from other countries coming to Canada to evaluate our animal health and food safety measures. BSE impacted on the bovine and small ruminants sectors. Then, in 2004, avian influenza in British Columbia had a similar impact on poultry genetics. Again, not all the markets have been regained this many years later. To further complicate issues, these things all happened as we began to recognize the impact of things like climate change, population growth, movement of people and goods around the world, the threat of zoonotic diseases, emerging and re-emerging diseases, and the concept of one-health, where you have to consider animal health, human health and environmental health altogether.
As founding members of the Canadian Animal Health Coalition 10 or 12 years ago, CLGA recognized the importance of partnering with other industry sectors and the government to address the challenges facing us. It is due to the initiative of the coalition that we now have a National Farmed Animal Health and Welfare Strategy and a National Farmed Animal Health and Welfare Council.
The foundation of a robust animal health system, not only for market access but also in terms of our ability to document and deal with our animal health situation, is a surveillance system. CFIA has recently moved responsibility for this activity to its science branch, and the first recommendation of the National Farmed Animal Health and Welfare Council is to develop and implement a new surveillance plan. This must have high priority as we move forward because without it we do not know where we are and cannot make the necessary plans.
I want to now deal with regulatory change. The Agriculture Policy Framework, APF2, and Growing Forward all failed to recognize animal health, and this led to delays in our beginning what we had to do to modernize our animal health system. In 2012, while still delivering under its current mandate, CFIA has now begun the process of regulatory and inspection modernization and is involved in other initiatives that will basically redefine what the agency does and how they do it. Unfortunately for those of us who work on the animal health side of things rather than in food safety, the timelines are too far out, and we need to address issues like compartmentalization, health testing and lab accreditation, the availability of vaccines and pharmaceuticals, and outcome-based procedures that are all included in these packages of modernization. We have to deal with them sooner rather than later. Some members have been waiting for these things to happen for a long time already, and we have seen some companies, particularly in the poultry genetic sector, start to invest in other countries that have a friendlier regulatory system. There is a real risk that we will actually lose these companies, that they will invest and move out of Canada, unless we can make the environment more friendly for them to operate in.
In the area of research, I will talk specifically about the dairy genetics industry. Canada is already a world leader in livestock genetics. Genetic improvement is the main driver for dairy cattle productivity in Canada and responsible for sizable economic benefits at the farm level. We have a supply-managed system in the dairy industry in Canada, but it is important to note that the cow that we develop within our supply-managed system is in high demand around the world. It is not just the cow but also the embryos and the semen that we can market from those genetics.
These benefits are over and above the cost of inputs such as semen and feed and health inputs. With respect to genomics, which the dairy industry adopted more readily than any other agricultural sector, we except additional benefits of about 60 per cent per year, which is a conservative estimate.
Our world leadership position is very dependent on research and innovation in both genetics and genomics. The industry itself has been paying for research, through the Canadian Dairy Network and at various universities and research centres, through joint industry funding, through DairyGen, or through individual company funding, such as Boviteq, which is a division of the Semex Alliance, one of our members.
However, we need renewed support in this crucial area of research funding. Currently, only 10 per cent of the approved Genome Canada project, led by the University of Alberta, is earmarked for dairy research. In anticipation that Growing Forward 2 will include funding for ongoing research, the industry is working together on a proposal for a dairy genetics and genomics component in this program, with industry support. Also, we are very concerned about the ability of some universities, particularly the University of Guelph, which has played a key role in this historically, to maintain their research capacity in dairy genetics.
Turning to market access, responding to the agri-food industry's request and recognizing the importance of trade, Agriculture and Agri-Food Canada created the Market Access Secretariat in 2009, I believe. The secretariat continues to evolve, but the important thing is that it is successful. A team composed of industry, the Market Access Secretariat, the Agri-Food Trade Service, and other support and programs offered through the Market and Industry Services Branch of the Department of Foreign Affairs and International Trade, technical contributions from CFIA, and increasing coordination between the federal and provincial governments mean that Canada has a really strong presence, given the size of our country, in terms of market development and market access and retention overseas. We need to continue to refine and perfect that partnership as we go forward.
In summary, there are three things that I will come back to. Growing Forward 2 must specifically identify and address animal health and welfare. The initiatives underway need to proceed as quickly as possible, with disease surveillance given top priority. Science and health-of-animals regulations will be addressed in the regulatory modernization in 2015. As I said before, that is way too long. We need the flexibility to deal with certain issues on an expedited timeline. Growing Forward 2 must provide substantial funding for research in dairy genetics and genomics.
The Chair: Now we will turn to Patty Townsend.
Patty Townsend, Chief Executive Officer, Canadian Seed Trade Association: Thank you very much, Mr. Chair and honourable senators. I am struck by the similarities, even though you would not think there would be similarities between the plant-based seed industry and the livestock sector. I am sure you heard this over and over from all of your other witnesses, but I am really struck by the similarities in overall objectives and challenges. I am very happy that we have been invited to talk to you today about innovation and in agriculture and agri-food in Canada. I want to take a couple of seconds — well, more than a couple of seconds — to introduce the Canadian Seed Trade Association.
We are a 130 member company organization, and we are involved in all aspects of seed, from research and development in plant breeding to production, processing, marketing, sales, and international trade. Our membership is very diverse. We range from small, single-farm, seed-grower retailers right up to the large, multinational companies, from small-packet vegetable, herb, and spice marketers to the big grain handlers on the Prairies, and from organic seed-producing companies to the giants of biotechnology. We are a very diverse membership, but our members are all united behind our mission, which is a simple and short one — to foster seed-industry innovation and trade.
I will recite for you again the challenges we are facing in agriculture, and I am sure you have heard them before. Right now, we have a world population of about 7 billion people. One in seven of those people are already hungry. They already do not get enough food to meet their basic requirements. By the year 2050, we will have 9.1 billion people in the world, and over 80 per cent of that population growth will happen in developing and less developed countries.
In order to feed that population, the United Nations Food and Agricultural Organization says that farmers around the world will have to double their current production. To put it in another way, farmers, by 2050, will have to produce as much food as has been consumed since the beginning of humanity. It is a massive challenge on its own, and the challenge is complicated by the fact that we are doing it when challenged by growing urbanization, increased competition for land base, declining fresh water supplies, and the effects of global climate change.
It sounds really gloomy and dark. In a nutshell, we will have to feed more people using less land, less water, less fertilizer, fewer inputs, and fewer resources, but we are up for the challenge.
The answer is innovation through public and private sector research and development plant breeding. Agriculture and Agri-food Canada says that nine out of every ten bites of food taken around the world starts with the planting of a seed. We like to say that seed is the foundation of innovation. The innovation that will be required to feed the world all starts with a seed. CSTA's members are innovators. We invest 27 percent of our combined operating budgets in plant breeding and research to develop new, more productive, healthy and environmentally sustainable varieties to farmers, and healthier products and more environmentally sustainable products to consumers around the world.
If you look beneath the surface, it is not all rosy. Ninety-five per cent of the private sector investment in plant breeding research and development is in three crop kinds: corn, canola and soybeans. Only about two per cent of the private sector investment is in cereals, particularly in wheat, despite the fact that cereals are still the largest acreage planted in Canada. The explanation for that is that the private sector, my members, can only invest if they can recover their costs. The ability to do so is much greater for corn, canola and soybeans because of the regulatory and intellectual property protection environments that enable and facilitate that investment.
We have an example that we often use. One of our member companies is a wheat breeding company in Ontario, and they developed a variety called FT Wonder a few years ago. It was superior variety, disease resistant, and it took them over six years to develop, with an investment of about $1 million. It was a traditional breeding variety, not a genetically modified variety. In the five years of that variety's commercial life, they never recovered their investment. It is very difficult to justify the presence of the private sector in particular in plant breeding and research in cereals.
I left a submission with the clerk, and I see he has distributed it to you. It goes into more detail about the challenges facing the seed sector, but I want to focus on only two. These guys had four; I have two.
In order to create an environment that fosters seed-driven innovation, we need a flexible regulatory system that is founded very strongly in science. We are very appreciative of the fact that the government has continued to stress the importance of science as a basis for regulation and trade, and we hope that that continues to be the basis for innovation and trade despite the challenges that we see internationally and domestically on science. The most current regulatory challenge we are facing in the seed industry is our system of variety registration. The canola sector has been quite successful in its efforts to put in place a more enabling system to promote timely registration of new varieties. The corn sector, on the other hand, took an entirely different route and was successful in having corn completely removed from the system of variety registration. For most other crop kinds, it is still a very long, tedious process, and you cannot sell a seed in Canada unless it is registered as a variety, for most.
When I started at CSTA, I went back in the books, and it has been more like three decades, but this time around, after a decade, we did finally get put in place a framework for a more flexible variety registration system, but it has not had any impact on us yet because the regulatory amendments required to make it function have not happened, and it has been more than two years since that framework was put in place. The framework allows three routes to registration. The first route, the status quo, requires that the crop kind or the variety is recommended by an official committee and it undergoes up to three years of trials, grown out in fields and compared to check varieties. The second stream does not require that merit testing, but it does require a recommendation from a committee. The third stream, or Part III of the new framework, allows that application to be made directly to the Canadian Food Inspection Agency, which is responsible for the seed program. It does not require recommendation from an official committee or merit testing.
Our most pressing need for a more flexible system right now is in forage — that is grasses and forages used to feed livestock, for ground cover, and they are environmental products as well — and in soybeans. For forages, there are so many different varieties of forages and so many new varieties that could come on, but in most cases we do not have functioning recommending committees even though the variety registration still requires a recommendation from an official committee. In soybeans, the window of market opportunity in soybeans opens and closes much more quickly than the variety registration can currently function. What we have been trying to have a value chain in both of those crop kinds and have those crop kinds moved into Part III of the registration system where they can apply directly to CFIA and get a registration without merit testing and without recommendation from a committee. However, there is a one-line regulatory change that needs to be made. We did all the rationale in the value chain. We demonstrated value chain support. However, it still has been two years and we still do not see that regulatory change. It has not even been published in the Canada Gazette Part I.
Another serious impediment to innovation in the plant sector is our system of plant variety protection or plant breeders' rights. Canada is currently the only developed country in the world now whose plant breeders' rights legislation does not comply to the most recent international convention on plant variety protection, or UPOV 1991. The consequence for that is twofold. Canadian plant breeders do not have adequate tools to protect their own intellectual property, their own inventions, and they cannot regenerate the funds that are required for reinvestment, but just as important and sometimes even more important is that we cannot attract international genetics or new varieties internationally because companies will not bring their varieties to Canada because we cannot protect them in the same way they are protected in other countries. We signed that 1991 convention in 1992, signaling our intention to ratify. It has been 20 years, and we still have not ratified.
Those are the two most pressing issues we raise with you today. We appreciate the stated commitments of the Government of Canada to creating a positive environment for investment in Canadian agriculture, and we are asking this committee to support that we actually implement those commitments.
The Chair: We will follow with a question period, starting with Senator Mercer.
Senator Mercer: Thank you, panelists, for being here. It is very informative and consistent, I have to say, with the messaging we have heard from other witnesses, disappointingly so, though.
With respect to patents in all three areas, I am interested in knowing who owns the patents as you develop new products, whether it be on the animal side or the seeds or whatever. Who owns the patents, and how much of that money that is realized in the use of patents gets reinvested in research?
Ms. Townsend: In the seed industry, patents can be granted on traits or on events, and at this point not on whole living modified organisms. However, new patents have been recently issued that allow for the patenting of groups of cells. The patents are owned by the inventor. In our case, patents are granted to protect genetic material, mostly developed through genetic biotechnology, so in canola, corn and soybeans. Those are the companies that are now investing 27 per cent of their combined operating budgets in research and development.
Ms. Szkotnicki: On the animal drug side, again, the patent is owned by the inventor. Often it is a university that is the inventor, and then what happens is there are negotiations with a pharmaceutical firm and royalties go back from the sales of the product. As I mentioned, the animal drug industry comes under the same patents as the human health industry, and we are required by law to put as much as 20 per cent of profits back into research and development as part of that obligation or the commitment from the Canadian government toward patents. Our patents are relative to the molecules and can also be a part of the processes used if there is a special process in manufacture or development of the end product.
Mr. McRonald: We do not deal much with patent, but sometimes there will be a process in a genetic evaluation that could be owned by a university or industry consortium. I am thinking of the application of genomics in dairy cattle breeding, which will run out next year. Right now, the artificial insemination industry, which invested the money in the development of the process, is the only part of the industry that can get access to the genomic information on bulls; and soon Canadian producers will be able to do that. The availability of that information will expire in another year or so.
Senator Mercer: That may sound good for the producer but also for the researchers and the innovation that we are expecting.
Mr. McRonald: It will change. Genomics has already changed the animal breeding industry tremendously and that potentially will change the structure of the industry. If I am a dairy producer and I can suddenly test my bull for its genomic value, I may decide not to sell that animal to an artificial insemination centre and go through the process of progeny testing but instead go off and market that product myself. Not everybody will be able to do that. Probably more people will try at the beginning than can really do it, but it will introduce a degree of fragmentation in the industry that will last for a while.
Senator Mercer: We understand the importance of genomics and the value of a good animal in breeding. We have heard about Starbuck and Starbuck II in our study. I also understand that from some of the research being done on animals the resulting learning may have an effect on humans. We were at the University of Montreal Faculty of Veterinary Medicine in St-Hyacinthe where they were investigating the fertility of dairy cattle. From that study some very positive things were learned about ovarian cancer. It is interesting that they are working on animals but it may be something that every woman in the world will be happy to hear about if it pans out.
The time it takes for a product from development to approval in this country is so frustrating in so many areas, whether a veterinary drug or other animal health product. A number of years ago we had witnesses before the committee who said that things were going along well and approvals were so much better and faster. Six months later, we had people before the committee who said it was back the way it was before. We investigated to find out what had happened. The one person whose job it was to do the approvals was doing such a good job that he or she was promoted; and the high production stopped.
In our recent trip to the United States, we talked a lot about testing once and approving twice back and forth across trusted relationships. A prime example would be the United States and Canada, or perhaps Great Britain or New Zealand or Australia and Canada, where we should be testing drugs, seeds or whatever once in one country and, with a reciprocal agreement in place, approving it in the other country. Do you think that would work? If you like it, do you see any pitfalls for researchers in Canada?
Ms. Szkotnicki: I will answer your last question first. In Canada the Veterinary Drugs Directorate was considered the model agency in the world dating back to the 1980s. It was considered lean and robust by the global animal health industry. There was more commitment to funding of research in Canada because of the dynamic implication of the regulatory system. I am supportive of a North American umbrella regulatory program. We have a north-south movement. Checks and balances need to be in place. For example, the veterinary drug labels on FDA registered products versus Health Canada registered products are almost harmonized. I would say that 80 per cent are harmonized. The same safety risk management lines that you see with the FDA exist in Health Canada.
What value are we providing when we do that additional work? Canada should be exploiting the good work of other developed countries and then focusing on some of the new innovation in areas where we do not know exactly the technical requirements. I use the example of bioactive and stem cell technology, and there are many new medication diagnostic tools coming down the path. We could actually focus our work on some of the newer products coming into the marketplace rather than on the me-too products that are already in a foreign jurisdiction.
I would add that in our industry we have post-marketing monitoring. By law, the pharmaceutical industry is required to report adverse events from all over the world to Health Canada. If you have that product in the marketplace, you know there has been a pre-marketed assessment by FDA. Every year of marketing in the United States is 10 Canadian years of experience. Sometimes we are not getting products for five or seven years after the United States; and remember that we compete north-south in the movement of livestock products. That is 70 years of real life experience with some of these products. We need to look at where we can use the resources in the best way and exploit the good work while maintaining the authority to make a decision when we may not agree with the FDA.
That is a good approach, and we are seeing more joint work with the Centre of Veterinary Medicine and the FDA and the Health Canada's VDD, which I support wholeheartedly.
Ms. Townsend: In the seed industry we like to call it asynchronous approvals. It has been the bane of our existence for a while, particularly for our members involved in products of biotechnology. I will talk about international first and then go back to some asynchronicity that we think exists domestically.
Many countries do not have functioning approval systems, and many groups of countries, like the European Union, do not have functioning regulatory systems. It is bad in food and feed and worse in seed. In the seed industry now, there is only one event approved in Europe for environmental release, or use as seed. We know that most of the seed production fields are directly overlapped by a lot of grain fields of canola, corn and soybeans that are anywhere from 70 per cent to 95 per cent genetically modified crops. We have a big problem with seed exports from Canada, particularly to the European Union but to other countries as well because they maintain zero tolerance and can test to levels of 0.0000 the last time I checked. That is small dust in a container that would show up as a positive test for genetically modified.
In the last three years, we have seen the export of seeds decline significantly. The European Union is our second largest export market behind the United States for seed. For the last three years we have gone into a trade deficit situation in seed because our customers in the European Union are requiring affidavits declaring that there is zero genetically modified material. In some cases, zero canola seeds and in most cases it is zero products of biotechnology. They cannot guarantee zero when you can test down to a level like that, so they forego the sale.
We have had shipments turned back and destroyed because of that. It is a big issue in the forage industry because it exports a lot to Europe in terms of percentage of total exports. They have lost a lot of sales. For example, alfalfa has declined substantially. Timothy and clover have had even larger declines in exports.
I guess our first option is that we would really like to see more synchronicity in the approval system around the world, but we would also like to see what we call mutual recognition where we trust the science in another country and that country trusts our science and, if it is approved for food feed or environmental release in Canada or the United States, that is accepted in other countries as safe in those countries as well. Aside from maybe a risk assessment process on the environment if the environment is substantially different, we think they should accept that and that should allow product to move.
In absence of that, we are working hard on trying to put in place an international policy on what we are calling low- level presence, which is the unintended presence at low levels of a product of biotechnology that is approved at least in one country but not in the country of import. The seed industry has been working closely with the grain industry and on its own to put in place that kind of a system to facilitate trade.
To go back into asynchronicity domestically, Canada has a different system of assessing and approving what we call novel products than any other country does. We submit it may be a good system, and we base our novel assessments on a product, not on a process. A product that is new and could pose an environmental or health threat is considered to be novel and goes through a regulatory process with confined trials, feeding trials and health and safety trials before it can be released into the marketplace. There are three different assessments. There is an assessment for novelty for food, for novelty for animal feed and for novelty for environmental release. For the most part, they operate fairly independently. There is very little communication between those three processes. If you look at it, it is three streams with no connection between them. In many cases, a company trying to get a novel approval needs to submit the same information, the same data packages, to three different places for assessment and answer on three different time lines. Canada does not give a novel approval until there is full approval for all three, which is a good thing because quite often that could get us into another problem if it is approved for livestock feed and not for food or environmental release, but we think there is an awful lot of room for improvement in the assessment and approval process in Canada itself as well.
Senator Robichaud: How is the system that you just described done in other countries?
Ms. Townsend: It is different in almost every country. Senator Buth knows as much about this from her experience in canola and probably more than I do. It is different in every country. Some countries will allow for separate approvals so it can be approved for food and feed and not for environmental release, which is a very common one. That is what has happened in Europe, where we have a lot more biotech products approved for food and industrial processing and feed, but only one for environmental release. We know that grain grows, so quite often grain is planted and it becomes seed then. That is the same in a lot of other countries where those approvals are done separately.
We submit that in Europe, even though their actual assessment process is quite good and functional, it is the political complications that come into play. Once it is given a recommendation for approval by the actual department, the politicians get a hold of it and they get to make the decision. I apologize to the politicians.
Senator Merchant: Could you give us an idea as to the time it takes, then, to get the approval? You said you have to have these three streams. Can you provide an idea of approximately how long it would take?
Ms. Townsend: There is a set time. I am sorry that I do not have it in my head right now. The clock ticks, but it can stop at different points in the process. I know that when a member of ours wants to introduce a new product of biotechnology, it can take up to 10 years.
The Chair: If there is additional information on that matter, please provide it to us.
Ms. Townsend: Sure.
Senator Buth: This may be a comment in terms of the question that was asked to Ms. Townsend on regulatory systems in terms of genetic modification. Typically, Canada and the U.S. take a couple of years to do an approval and, as you mentioned, it can take up to 10 years in the EU. If they actually followed their system, it should take no more than two and a half years essentially. Unfortunately, they do not follow their system, according to the time lines.
You have all made comments about regulatory systems and the need for better regulatory systems in Canada and harmonization. I am familiar with this, having worked in the crop sector for so long, working with the Pest Management Regulatory Agency and the commitment they have towards harmonization and joint reviews. I am wondering if you can comment on whether or not there is harmonization occurring within your specific product areas. You did mention, Ms. Szkotnicki, about the work between FDA, Health Canada and Veterinary Drugs. More specifically in terms of the new regulatory cooperation council that President Obama and Prime Minister Harper have made a commitment to, are your issues on that list of issues to deal with? Perhaps you can comment about what you would like to see done at that cooperation council. Are you part of the process?
Ms. Szkotnicki: I am going to answer your question, but I just want to back up one step.
Our industry, many years ago, started an international harmonization process. The members of the process are the EU, the U.S. and Japan. Observers are Canada, New Zealand and Australia, and there are some new South American and African countries coming on board. It is unique in that it brings industry and government together. We are working on guidelines. Canada was a late entry to the process. I can say one of the reasons that we have seen regulatory improvement is because the minute we joined the VICH, we adopted 29 of the guidelines that they had already developed. We had some people on the working committee. When I say "people on the working committee," I mean scientists working within the regulatory agencies plus scientists within the pharmaceutical industry that work together to develop the guidelines. That has been really critical because what industry is looking for is predictability. When you are developing these risky products that are costly to develop, you really need that predictability. You need to know what is being asked for. Canada needed to do some catch-up in that area.
With regard to the Regulatory Cooperation Council, first, we are part of the process and have been part of the process. We had already initiated some of the work. I say "we" because we work with our colleagues in the United States on the industry side. Our governments work well together. Our regulation and even the Food and Drug Act and the Food, Drug and Cosmetics Act of the United States mirror one another in many ways. There are subtle differences, but there is more similarity than not.
Yes, we are working with them. You need patience. I think that is the hardest part to deal with. I wonder if there is a true commitment to some of the outcomes. I worry about that. Certainly I get a sense that the United States does not need to be part of this process. They have time frames. They do not have performance targets like we have in Canada for their review process. They have to meet performance or there is clawback on their funding. They worry if Canada is going to slow them down. I think that sometimes means they come to the table dragging their heels.
In saying that, I do get a sense of cooperation, and I get a sense that we are focusing on trying to see equivalency in the system. I hope it ends up where we may even see some mutual recognition of the good work that the different scientific review bodies do so we that we do not have to re-review something that has already been reviewed by another agency. I think we are moving in that direction; it is not going to happen overnight.
Mr. McRonald: Our needs are obviously a bit different. Most often, they boil down to animal health and market access issues. We are involved in the Regulatory Cooperation Council initiatives, from that point of view. As in Ms. Szkotnicki's case, there has been some indication that the U.S. is being dragged into this kicking and screaming by the President and the Prime Minister making this agreement.
One example where things have worked is that, for quite a long time, the Government of Canada could not get the USDA to even talk about zoning and regionalization. Zoning is where you would define an area that has a certain disease, while the rest of the country does not. It means recognizing that part of the country is free of a disease while another part is struggling to control it and eliminate it. They would not even think about or talk about it. Now, suddenly, as a result of the Regulatory Cooperation Council, they are at the table, talking about it. This is extremely important for both of us because we share this continent. It is very likely, if there was a serious outbreak of a foreign animal disease, that it would impact both of us. We cannot go through what we went through with BSE, for example, which was not even a major outbreak of disease. The border was shut immediately, and it took four and a half years to get partial reopening. We still do not have an opening for sheep and goats for breeding purposes. We cannot ship them to the United States. That is another thing that has happened recently. They would not even talk about that for a while, and now they will allow us to transship, under certain conditions, live sheep and goats through U.S. territory.
Hopefully, that is what the Regulatory Cooperation Council will do. If we have nice agreements on the border being thin and so on, but the rule-making process in the United States can take 10 years or more to resolve an issue, then we really have not gained very much. We are seeing some indications that that is starting to change, and that is a very positive thing.
Ms. Townsend: The CSTA is not directly involved in the Regulatory Cooperation Council, but our members are, through other organizations that we work closely with, like CropLife Canada, CropLife International, and those organizations.
It is interesting when you look at the seed regulatory process in Canada; it is vastly different from the seed regulatory process in the United States. For example, there is no variety registration system in the United States. Seeds are approved by an assessment, a novel assessment. They do not call it that, but they are deregulated and sold. There is no process of variety registration.
Some companies in Canada would like to move to that kind of a system, but other of our members see value in the variety registration system, in protecting the Canadian brand and ensuring that farmers continue to have access to continually improving varieties. We just need to make it much more flexible and much more enabling.
Interestingly enough, in the novelty system, as Senator Buth would be aware but many of you would probably not, there are pilot projects underway, between the Plant Biosafety Office in Canada and its equivalent agency in the United States, to do joint reviews of plant biotechnology. They are underway seeing whether or not they can actually have simultaneous applications and joint reviews and have them finish at the same time so that we can have at least a Canada-U.S. approval for food feed and environmental release. We also work through the North American Plant Protection Organization and the International Plant Protection Convention to do things like harmonize processes to facilitate trade, through phytosanitary requirements and that sort of thing.
Senator Merchant: As a senator from Saskatchewan, I am going to ask a question that I am very interested in and that I think we are interested in out West. It is about seed. You have about 130 companies that you work with. Your association is about 90 years old. I am just wondering what role Viterra played in marketing and innovation? Do you know where that part of the company is going to go?
Ms. Townsend: Viterra is one of CSTA's 130 member companies. Viterra is a big player in the seed industry in Western Canada and has its own plant breeding in some crop kinds. They have their own research farms, plant breeding scientists, and plant breeders and geneticists. Unfortunately, I do not know where they will go yet. I have asked the question and have not received an answer. I have been told to be quiet and wait. I guess we will find out when everyone else finds out where the seed part of Viterra will go.
They are a very strong player in CSTA. We have Viterra representatives on our board of directors, and they are also actively involved in a lot of our committees, including those that look into oilseeds, pulses and cereals research and development on our plant breeding and research committees. I am just as anxious to find out as you are.
Senator Merchant: Can you tell me how long it takes, from the moment someone has an idea about a new seed, for that idea to actually develop into a seed that can go into the ground?
Ms. Townsend: It can take anywhere between five and ten years, depending on the way the idea is developed. If it is traditional plant breeding, it has historically been longer because you do it by hand — hand selection, hand pollination and crossing and breeding. It is a bit shorter if you are using products of biotechnology, except for the approval processes. It can take anywhere from five to ten years and cost anywhere from $1 million to $10 million to $50 million.
Senator Merchant: When people are getting these ideas, it will take that long, so they have to be way ahead of the curve to try to think about the possibilities, 10 years from now, in the marketplace.
Ms. Townsend: Yes.
Senator Merchant: They are trying to develop the idea now, but they have to project, to have a vision. You mentioned that the population is multiplying and what the demands will be. It must be very challenging to try to project 10 years from now.
Ms. Townsend: It is interesting to note that we have what we call a pipeline of innovation in our industry. The pipeline is actually bulging with new innovation. This work has been going on for a long time, and it has delivered. It is estimated that 90 per cent of the productivity gains or the increase in the supply of food has been because of yield increases. It has been known for a long time, and the work has been going on for a very long time. We have some very good scientists and plant breeders in Canada. Our problem now is that the pipeline is getting so full that we are very worried we do not have adequate resources, both human resources and financial resources, for the regulatory approval process to work to allow this to come onto the market in a timely manner.
In terms of seeing the future, our members do, very carefully and very well, see the future. They work very closely with farmers and end users and consumers to determine what the market needs might be, with that focus on the need to feed the world, to use fewer resources, to protect the environment, and to deliver healthier products. The innovation work is there, and it continues. It is just ensuring that, once it is at the point where it reaches the regulatory approval and assessment process, the resources are there to allow that to happen in a timely manner.
[Translation]
Senator Rivard: A great deal has been said about regulations for livestock security. Do the same regulations apply for all livestock or would there be different regulations for what we might call domestic animals, pets like cats, dogs, maybe even ferrets?
[English]
Ms. Szkotnicki: The regulations for veterinary drugs come under the Food and Drugs Act. It covers both food animals and companion animals. There is a higher burden on the food animal side because there is the human food safety component to deal with. It is the same regulation for what we call "target animal safety." It is similar on the companion animal side as on the food animal side.
[Translation]
Senator Rivard: With respect to patents, the report mentions that they are generally valid for a 20-year period and that, in some cases, there can be an extension.
How can the federal government, as regulator, determine the appropriateness of granting a patent for more than 20 years if the rule is 20 years? Let me make a comparison. For instance, we often meet with people who come to see us, lobbyists or pharmaceutical manufacturers. And we know that those who copy pharmaceuticals are anxious for patents to come to an end because, the day they do, there is an avalanche of generic products.
In your field, how can you convince regulators to grant a patent for more than 20 years? Under what exceptional cases could you establish the life of a patent at 25 years rather than 20?
[English]
Ms. Szkotnicki: The pressure for extending the patent life to add on the period of time it takes to do the regulation is coming through the current Canada-European trade agreement. Europe is already giving that extension to cover the regulatory review time, but Canada is not.
I would also remind you that a generic company depends on the innovation just as much as does the innovator. Obviously, the innovator needs to recover their costs for development. In watching maintenance of products, we go through a number of different regulatory questions on an ongoing basis where there is a question about safety. Right now, I have one product that we are dealing with regarding Health Canada and the Canadian Food Inspection Agency. It is the innovator that has the data to defend the maintenance of keeping that product on the market.
There are times when you have to recognize the synergy between the innovator companies and the generics. You want to ensure that you have the interest in having innovation come to the Canadian market, particularly in a timely way. If we are not equivalent to the rest of the world, then we will be number 22 to have our own discovery. It will sort of be after the fact.
Senator Eaton: You are all fascinating; I could spend a lot of time with each one of you. I guess the free trade initiatives with the EU, Korea and Japan, and if we get into the Trans-Pacific Partnership, will give you additional challenges.
Mr. McRonald, you referred to the fine reputation we have in dairy genetics. Why do we not have the same fine reputation with respect to our hog and beef genetics, apart from BSE, which Britain went through worse than we did, and the cases that appeared in the U.S.? What can we do to try to make our beef and hog genetics as good a brand as our dairy genetics? If we have these people to feed, we will have to do that.
Mr. McRonald: I do not represent the hog or the beef industry. I will say off the top that we export a lot of breeding pigs. The Canadian Swine Exporters Association is a very close partner of CLGA and performs a similar role to CLGA for pure-bred swine. We o export a lot of pigs; and as far as I know, our pig genetics is seen around the world as good genetics.
The beef industry is very different than the dairy and swine industries. Again, there is another association called the Canadian Beef Breeds Council, which looks after market access issues with respect to beef breeds. It is structured a little differently than CLGA because we have many, many breeds in the beef industry. It is an association primarily of the breeds with exporters as auxiliary members, whereas we are the other way around.
One thing that the beef industry has not done is embrace artificial insemination and genetic improvement programs in the same way that the dairy industry has done. That is a function of how you raise the animals. The owner of farmer of dairy cows is with the animals a lot more. They are managed in a closer environment than beef cows, which are bred and sent out to pasture for the summer; and they come back in the fall, hopefully with a calf. It is very different.
Senator Eaton: Is that a cultural change? That could be managed, if you wanted to manage it.
Mr. McRonald: It could be a cultural change. We are in Ottawa with the Beef Value Chain Roundtable meetings this week. They are talking about the low number of beef cows that we have in Canada right now. Our national herd is at low ebb. They are talking about expanding that. If that were the dairy industry, you would use sexed semen, because most dairy cows are bred with artificial insemination. You can use sexed semen and increase the number of heifers rapidly. That will not happen in the beef industry because they do not practice a lot of artificial insemination — some, but not a lot.
If you want definitive answers on beef, I encourage you to invite someone from the beef industry to testify.
Senator Eaton: We have done that but I guess we have not had the remark before about how good our dairy brand is internationally, and perhaps that our beef and hog were not quite so.
Mr. McRonald: That surprises me.
Senator Eaton: It is interesting to hear your point of view and your insight.
Mr. McRonald: Canadian beef and cattle have been exported since just after the Second World War. As semen became available, it became marketable and then embryos later on.
Senator Eaton: To keep on with the trade and export, Ms. Townsend was talking about the EU. We all know how they feel about genetic seed, even about honey. If we conclude free trade deals with places like Japan and Korea and if we become part of the TPP, do you foresee other trade barriers like the one you are facing in the EU, which are non- tariff trade barriers? It is political more than it is based on scientific data.
Ms. Townsend: The trade barriers are already there, regardless of whether we have an agreement. When we make our input to government as it launches more free trade agreements or negotiations, we need to ensure that approval systems are included, that science is included as the foundation and that a functional regulatory system is an objective.
Senator Eaton: Do you face those same trade barriers with Japan and Korea?
Ms. Townsend: There are some trade barriers in seed in Japan and Korea as well, yes. We have tariff issues with the TPP as well. Japan maintains pretty good tariffs on seed as do some of the other TPP countries. There is another barrier we are finding that we have identified to government. When we do an input when a negotiation or consultation is launched, we first outline the tariffs.
That is something we would call the low-hanging fruit. It is a lot easier to deal with than a lot of nontariff trade barriers. Then we address some of the other requirements we need, which are more extensive than tariffs; that is, approval systems based on science, mutual recognition, synchronicity and harmonization if we can and lacking that, a functioning low level presence policy to facilitate the trade of seed that contains genetically modified trades.
We see these as an opportunity where we did not have an opportunity to have that kind of dialogue. We see the launch of negotiations and consultations as an opportunity to address those issues.
Ms. Szkotnicki: One of the other things that Canada needs to be aggressive at is our participation in the Codex process, which is the standard setting body for the safety standards. They set kind of the game plan for the WTO, the World Trade Organization. In our world — the world of beef hormones and some of the input products we develop that are production enhancers — the EU has said we do not want to use those, we do not agree with them, yet there is no safety objection to them. There are eight steps in the process. The first seven steps are scientific review where the scientists are supposed to be neutral, they are experts in the areas that they are reviewing and at the end of day they make a recommendation, and the last eighth step is political.
We have had a number of products get stopped at that eighth step so you never have that international safety standard set and that is impediment to our trade. One of the reasons we are going to those separate trade agreements is because you can maybe have that safety discussion with Japan and they will accept that tolerance if we are using a ractopamine or something like that.
Senator Duffy: Following up on Senator Eaton's comments, we have heard over and over again about the nontariff barriers. Canadian brands are important. There is the BlackBerry. Despite what people say about the Apple iPhone, it is still a distinctive Canadian brand around the world. How do we get the Canadian brand in food, food products and our livestock to the millions of people in Europe who are being fed such incredible propaganda against genetically modified food? They are against the seal hunt, they are against fur and they are against our oil sands oil. They are against so many products from Canada that are perfectly safe and renewable and yet there is this amazing propaganda campaign against it. If we can produce in our food the same quality product we have produced in Waterloo, how do we get the message out to those people who have been brainwashed that somehow our products are not safe?
Ms. Townsend: We think about this all the time in the seed industry, particularly our companies that use biotechnology to develop these amazing new innovations. It is probably going to take a crisis, particularly in Europe where there is a need for a product. To be almost facetious we almost find if there is a need for a product they do not look for products of biotechnology. They do not look for hormones or those types of things, but all of a sudden if a domestic market wants to be more protected, they look for those things. What will happen is the European Union will all of a sudden be faced with this problem. It will be a problem they cannot control; farmers want the products so they get them in ways that may not be the ways we would think.
You can import a product for food and processing, you can plant it and it will grow, and so the crisis could be that way. It will be hard for them to maintain those kinds of regulations if the product is being grown, or the crisis could be that they fall short and need something and it will come. I do not think it will be a matter of us being able to change any minds. I think the fear is there and we are not going to be able to address that in the short term. However, I think the crisis that will probably come will overcome the fear in the long run.
Senator Eaton: Is it fear or protectionism?
Ms. Townsend: It is both. It is protectionism fuelled by fear. In my opinion — and I worked in international trade before I worked in the seed industry — when you want to protect a market the best way to protect it is fear.
Senator Duffy: Is the current crisis in Europe a financial crisis? Is the need for food in the future and improved production techniques that we are mastering here in North America eventually going to force them to move in this direction? How long can they live in their bubble?
Mr. McRonald: I totally agree. Fortunately, we do not deal with the consumer in the livestock genetics side and so we do not have to put up with that. We get other barriers thrown at us, but in the broader sense I totally agree. I think we are seeing this starting to happen in China, who will not import live cattle from us, but are unable to achieve goals in dairy production. They have set goals they admit they cannot meet.
We have told them they can buy our cattle again and we will provide the skills, along with the cattle, to help achieve their goals. They are starting to talk about after not wanting to talk about it for a long time; it is starting to happen. I think you are right, the need for food, the desire for food security and a sustainable agricultural production system is going to have to take a front seat to these kinds of barriers that stop trade at this point in time.
Senator Duffy: Of course the ultimate barrier is in Africa. It is outrageous to me that millions are starving and people who do not know the science are busy fear mongering among the populous that to eat or grow food by our modern techniques is somehow wrong. It is immoral.
Senator Mahovlich: You just mentioned the demand in China and no one has mentioned India. Melinda Gates has given $1 billion to help feed India and this is not going to stop. The demand in India is growing. Do we have difficulty with India? Do they have rules that we cannot meet?
Mr. McRonald: Yes. They have rules coming out your ears and levels of bureaucracy; it took many, many years. Let me go back and talk about semen. We have been trading bovine semen since the 1960s, and I do not think anyone has ever identified a disease outbreak that was the result of properly prepared, frozen and delivered semen. In other words, it is straightforward and simple. It took a long time and three years ago India said they will let semen in, but they have put stipulations in the health certificates.
Senator Mahovlich: It has to be sacred.
Mr. McRonald: That is another issue, but it is true. They put conditions on the health certificate, so technically we have access for some product but then tried to get an import permit and could not. There are still a lot of layers of barriers and now we have the same issue with embryos. There are some people in India who want to buy live animals and again it is the same thing. We cannot get the health certificate, let alone get a permit. There are all kinds of barriers. At the same time, the Indian government has come to Canada and said we want you to do a study of our dairy industry and tell us what we should do. We have to modernize it because we are self-sufficient in dairy production but our consumption is going up higher than we can increase using the system we have. They admit part of it is the religious issue. You come and look at it and tell us what we need to do.
There is a close relationship between India and Saskatchewan so the Saskatchewan Research Council, with funding through the agri-marketing program at Agriculture Canada, conducted a study and a recommendation was made. There have been trips to India and Indians have come to Canada, but high on the agenda is access for our genetic products. We still do not have those problems totally resolved. These things seem to take an awful lot longer these days than they ever did before, but it will happen. What Senator Duffy said will drive it. The Indians do not want to import dairy products. That will eventually drive them to change this and we will have to let these other products enter in order for us to continue to be self-sufficient.
Ms. Townsend: In the seed industry we are seeing more and more regulatory barriers to access. We just encountered one in Turkey where without notice they have changed their import requirements for seed of all different crops. We are seeing some other ones in the entry countries to the European Union where, all of a sudden, they have decided they need to protect their domestic industry. We will just have to keep plugging away at it. Through our government and our international industry associations, we will have to keep pushing science because science is the only thing that can be measured.
In the long run, we do need to feed this growing population. We cannot plow down more rain forests and bring more land into production. We are already using 70 per cent to 80 per cent of world's fresh water in agriculture. We are down on the supply of phosphorus fertilizer. We know that. We cannot continue to use the environment the way we are using it and we know we have to do that. It will just take a while for people to realize that.
Senator Robichaud: Ms. Townsend, when looking at research and innovation you say that in your sector the pipeline is full of our innovation and there are a lot of things happening. The bottleneck is the approval process, or is it?
Ms. Townsend: It is part of it, yes.
Senator Robichaud: What are the other parts?
Ms. Townsend: Investment. As I said in my presentation, right now an awful lot of that innovation in the pipeline is in three crop kinds, which are canola, corn and soybeans. Those pipelines are filling up and there are exciting things out there that would really help to improve productivity, yields, environmental sustainability and healthy qualities.
We are concerned with cuts to our regulatory agencies and focuses in different areas such that the approval process will be a logjam to getting those products into the market. We are concerned that we will not be able to build the same sort of innovation pipeline in other crop kinds like cereals and forages, because we do not have the regulatory or the intellectual property protection environment that is required for more investment. We know that funding of public sector research has been declining and that is typically where the research in plant breeding has been done in areas like forages and cereals.
We know that there is a role for public-private partnerships and for private sector investment but, as I said, the private sector cannot invest if they cannot recover that investment. That means we need to have functioning intellectual property protection in open-pollinated crops like wheat, barley, oats, peas and beans. The primary intellectual property protection vehicle is plant breeders' rights, or plant variety protection, and we are not getting any interest internationally to share their innovations with us because we cannot protect it. We are not able to protect it using plant breeders' rights as well in Canada as could happen in other countries, so plant breeding in genetics is a very transportable thing and it can happen in other countries if they cannot regenerate their costs to do it here. For example, we saw Monsanto invest in wheat in Australia. They do not have a plant in Canada at all. Those are the things we are facing in those kinds of crops. In corn, canola and soybeans the concern is around the regulatory structures and the approval processes and the length of time and the flexibility, but in a lot of other crops it is creating an environment where we can invest.
Senator Robichaud: How do we do that then?
Ms. Townsend: We need to improve our plant breeders' rights legislation. It currently complies with the convention of 1978. As I said in my presentation, we are the only developed country that does not comply with UPOV 1991 and we are 20 years behind. First we need to bring our legislation into compliance with UPOV 1991.
We were told by a UPOV person just this last fall that they are working on UPOV 2020. If we do not get at least into compliance with 1991 we will be 40 years or more behind. We have had member companies come to us and say they thought they had agreements with international companies to bring new, exciting varieties of cereals into Canada for testing to see if they were appropriate for Canada and then, two weeks later, they received a letter saying they did not realize we were not compliant with UPOV 1991. They will not bring their variety to Canada because they cannot risk not protecting it and generating investment. That is a really big thing. We need to have an intellectual property protection environment that allows for companies to invest.
We also need to have a more flexible variety registration system. We need to have a change in mindset. We need to start talking about some of the new technologies that can be developed. Perhaps we need to start looking at things like biotechnology in cereals. Perhaps we need to look at biotechnology in forages to ensure we can feed livestock and have the ground covers we need, increase drought tolerance and development in a more timely fashion. It is a mindset, it is a regulatory process and it is also an intellectual property protection environment change that is required.
Senator Robichaud: In biotechnology we have the people who can do the research and move on that, and you say right now they are not. Do I understand you correctly?
Ms. Townsend: Biotechnology is very extensively used in corn, canola and soybeans in Canada.
Senator Robichaud: Those pay for themselves because there is a high return.
Ms. Townsend: Yes. In cereals, I think it is growing. I believe that the farm community acceptance of using these new technologies in cereals is growing, but at this point I am not sure anyone who is an investor is ready to make that leap because they do not see that yet.
Having said that, Syngenta now has a wheat breeder in Canada and Bayer has just hired a wheat breeder, so it could be they are seeing an opportunity in the future. However, at this point there has been no decision to proceed with biotechnology in cereals.
Senator Robichaud: Do any one of you see a need for, if I may use the term, seed money for research? I think there was a lack of research in Canada.
Ms. Szkotnicki: I would not say there is a lack of research in Canada. A lot of the research happens at the agricultural colleges and the vet colleges around the world. What I was trying to say was companies themselves do not have their own separate research facilities in Canada. They will run clinical trials. One of the good things about the fact that we are having discussions with the U.S. is that the studies done in Canada will be accepted by the FDA as part of a submission package. When we had a robust regulatory system it was an incentive to do more trial work here in Canada and that was very good.
On the biotech side, we have had good news and bad news. The good news is that we have had a vaccine where Canada was the first country in the world to register a DNA vector vaccine, and Senator Duffy might be aware of this. It resulted in a plant being invested in by Novartis in P.E.I. It is an exciting new situation, and they are manufacturing product for the world. This is the global manufacturing site for that product because we invested in the biotech.
On the other side, we also dealt with bovine somatotropin. It became a political issue and was not within the scientific realm. Companies backed off on Canada, and in fact the FDA backed off on Canada, because where was that focus on dealing with the scientific parameters of safety and advocacy? We lost that. You need to have a strong science program, a strong risk-based program, and build trust between the regulatory agencies if you are going to see that interest in Canada. Remember that, in our industry, Canada is a small market. It is 2 per cent of the global market, so you really have to be lean, mean, robust and flexible. That is not with compromising science. I do not mean that at all. We can and we have, and biologics is an example of great work by the CFIA in the vet biologics area.
Mr. McRonald: Just to respond on the issue of research, I indicated in my presentation that it is not biotechnology but genetics and genomics research in dairy. We are very much hoping that Growing Forward 2 will provide more funding for that work, because right now the share of the Genome Canada research devoted to dairy is only 10 per cent, so we are hoping for more in the next go around.
[Translation]
Senator Maltais: I will be brief because I am not as knowledgeable as my colleague, Senator Buth, in this area. At the beginning of your brief, you mentioned that you found a vaccine for a hog virus in Quebec specifically. Bravo! You referred to a very rare species called aquaculture. I have asked this question to almost all the witnesses who have appeared over the last two months and we even went to Quebec. Aquaculture seems to be an area no one wants to talk about. I do not understand. When we compare ourselves to Scandinavian countries, we have the same climate, the same oceans, the same species. However, we are still eating trout from Japan sold in the big shopping malls. Where do things stand in the area of aquaculture research, let's say for salmon specifically? Thankfully, Nova Scotia, New Brunswick and B.C. do some but other provinces and some environmental groups are fiercely fighting against aquaculture. I eat salmon from New Brunswick and I have yet to die from it.
Why is Canada so far behind in aquaculture? Where are you in your research?
[English]
Ms. Szkotnicki: Aquaculture is a really important area, and it is an area of potential growth because we have those natural resources. I totally agree with you on that. I think there are a number of reasons why we are not seeing any movement in innovation and research. There certainly is some, but there are more barriers to the growth of that industry for a number of different reasons. I will say red tape. There is no predictability, because you have federal jurisdiction on top of provincial jurisdiction on top of municipal jurisdiction relative to environmental and cage sites and things like that so there is uncertainty as to whether you can keep these sites and manage these sites.
I talked in my presentation about the availability of products to deal with health issues. Certainly the sea lice and anemia have been big issues. There is no data exclusivity. I mentioned that what other countries are using are products registered for beef or pork and other species, and then they are doing additional clinical trials in a lot of cases to get the aquaculture label claim, but you need that IP protection. For our pharmaceutical industry to conduct that research and go through the regulatory process, which takes a number of years, they need to have that IP protection, because most of these products are off patent that are going into aquaculture in Chile and in Scotland and other areas of growth, Japan, et cetera.
I think you need to manage the regulation and the oversight of the regulation and simplify it and articulate what it is, because there is a lot of uncertainty, and then we need to manage the IP protection.
[Translation]
Senator Maltais: Why is it that Scandinavian countries have such success in aquaculture? Are you in contact with them? They must have the same sea lice we have. It is the same ocean. Lice are lice. Why is it that we have no relations with countries similar to ours? You refer to Japan, fair enough. But Japan is not famous for its salmon exports, is it? Trout, yes. If they have managed to get it done in Scandinavia, why are we having such a hard time of it?
Senator Robichaud: We need a change in government.
Senator Maltais: We already tried that and we ended up with something worse!
[English]
Ms. Szkotnicki: It is largely a new area. There is a lot of uncertainty. I can tell you the data package for Slice, which is a treatment for sea lice, developed by Merck, or Schering-Plough at the time, is a data package that went around the world. Canada was not in step with the process and did not meet the same time frames as Scandinavia. We were eight years later before we got the product registered. It is a matter of having that robustness of the regulatory process in the case of the sea lice situation.
[Translation]
Senator Maltais: I understand, it is the previous government's fault.
The Chair: Senators, I would ask that we please focus on our committee's mandate.
[English]
Senator Buth: On adopting UPOV 1991, we hear concerns from some groups about farmers' right to save seed, and that is typically thrown out as the reason that the government should not move forward for adopting UPOV 1991. Can I have your comments?
Ms. Townsend: Canada's legislation is not even in compliance with the UPOV convention of 1978. That is because Canada's legislation does provide for farmers to be able to save the production from seed to use as seed again on their own farms. That is what a lot of people call the farmer's right to save seed. However, 1978 does not provide for that and does not have an allowance for it. It is truly an exception to the plant breeder's right. Canada's legislation was developed right on the brink of moving to the UPOV convention of 1991, and that is why it got approved by the UPOV 1978. The UPOV convention of 1991 actually has a section in it that provides for a farmer's exception to the right, and it allows farmers to save the production from their seed to use as seed on their own farms in following years.
It is actually spelled out, as is the breeders' exception, which is not clearly spelled out either, which allows the protected varieties to be used for further breeding. It is not spelled out clearly in 1978 as well. Both of those exceptions are spelled out clearly in 1991. Counter to what has been said that farmers will no longer be able to save seed, UPOV 1991, Canada can choose to put that exception, because it is an optional exception. Many countries do not use that exception and they do not allow for farmers to save seed. CSTA does not object to Canada including that optional exception in our legislation. It will be entrenched, and it will actually comply with the UPOV convention.
Senator Buth: We should not be concerned about those issues?
Ms. Townsend: You should not be concerned about those.
Senator Buth: Thank you.
The Chair: Honourable senators, thank you very much. Witnesses, your presentations were precise and accurate. We got the message. Thank you for sharing your views and your vision with us.
With that, honourable senators, I declare the meeting adjourned.
(The committee adjourned.)