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Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 16 - Evidence - Meeting of May 3, 2012


OTTAWA, Thursday, May 3, 2012

The Standing Senate Committee on Agriculture and Forestry met this day at 8:03 a.m. to examine and report on research and innovation efforts in the agricultural sector (topic: The impact of investment at the federal level on industry players from an academic perspective).

Senator Percy Mockler (Chair) in the chair.

[Translation]

The Chair: Honourable senators, I declare the meeting in session. I welcome you all to this meeting of the Standing Senate Committee on Agriculture and Forestry.

[English]

I want to thank, on behalf of the Standing Senate Committee on Agriculture and Forestry, the witnesses for accepting our invitation. My name is Percy Mockler, chair of the committee, and I am from New Brunswick. I would now like to ask the senators to introduce themselves.

[Translation]

Senator Robichaud: Fernand Robichaud, Saint-Louis-de-Kent, New Brunswick.

[English]

Senator Merchant: Pana Merchant, Regina, Saskatchewan.

Senator Mahovlich: Frank Mahovlich, Ontario.

Senator Plett: Don Plett, Landmark, Manitoba.

Senator Buth: JoAnne Buth, Manitoba.

Senator Demers: Jacques Demers, Quebec.

[Translation]

Senator Maltais: Ghislain Maltais, Quebec.

[English]

The Chair: The committee is continuing its study on research and innovation efforts in the agricultural sector. The mandate of the committee is to look at developing new national and international markets, improvements in sustainability of agriculture going forward and improvements of food safety and diversity.

Witnesses, thank you very much for accepting our invitation to share with us your views and your recommendations going forward. I think we have the common denominator that Canada is the best country in the world.

Today we are focusing on the impact of investment, at the federal level, on industry players from an academic perspective.

[Translation]

This morning, honourable senators, we welcome Dr. Douglas Hedley, Executive Director of The Canadian Faculties of Agriculture and Veterinary Medicine.

[English]

We also welcome Dr. Michael Trevan, Dean of the Faculty of Agricultural and Food Sciences, University of Manitoba; and Dr. Peter W.B. Phillips, Professor, Johnson-Shoyama Graduate School of Public Policy, University of Saskatchewan.

We will be asking Dr. Trevan to start, to be followed by Dr. Hedley and Dr. Phillips. After your presentations, senators will be asking you questions.

Michael Trevan, Dean of the Faculty of Agricultural and Food Sciences, University of Manitoba: Thank you. First, may I say thank you on behalf of my 12 other dean colleagues across Canada in the Canadian Faculties of Agricultural and Veterinary Medicine for the opportunity to appear here before you to discuss with you what is to us a vital subject. I will say no more than that at this point in time except, because I am here representing all of them as well as myself, to pass the floor to our executive director, Mr. Hedley, to make the opening statement.

Douglas Hedley, Executive Director, The Canadian Faculties of Agriculture and Veterinary Medicine: Thank you. First, very briefly, the Canadian Faculties of Agriculture and Veterinary Medicine is an organization created 21 years ago by letters patent, and it has been operating since that time. In fact, we just held our spring meeting at McGill University in Montreal.

We have 13 members — all five veterinary faculties and all eight agriculture faculties across Canada. One, in fact, will be merging with another larger university as of July 1. That is the Nova Scotia Agricultural College, which will become a faculty within Dalhousie University. All of the veterinary faculties are internationally and domestically certified.

I want to begin my remarks with very fundamental features of the agriculture food supply and demand around the world. The metrics are very clear. In the next 38 years, we will have to increase our production in agriculture around the world by at least 70 per cent if we expect prices to remain at current real levels. By the time you add in agricultural products as feedstocks for a wide range of products, you find out that, in the next 38 years, you must double the output of agriculture in the world. Productivity, then, becomes fundamental to the stability and level of prices for food, not only in Canada but around the world. If we do not do that, then you will drive more people in the world into poverty, including Canadians. These are very simple metrics that give you some idea of the productivity gains we have to have.

The difficulty is that our productivity gains, not only worldwide but also in Canada, are falling off. Our current rates of growth in productivity in most of our major crops, particularly in the grains, are well below levels that we would need to meet that increase in demand around the world. We would have to increase overall productivity, worldwide, from about 1.1 per cent to 1.3 per cent, as it is now, to nearly 2 per cent per year throughout that entire 38-year period. Those are your metrics for what you are facing with respect to long-term food supply.

Our faculties across Canada are doing their part. There are many ways they are doing that. I have outlined some in my notes. In particular, I draw your attention to the "One World, One Health" worldwide attempts at linking food to human health and to the health of animals.

Canada has a resource base that is very large in comparison to our population. As a result, we have an opportunity as a country to dramatically increase our exports. That means we need the trade arrangements with the EU, the Trans-Pacific Partnership, as well as bilateral trade arrangements with India, Korea, Japan and other countries around the world where demand is increasing.

I draw your attention to the paper by Michael Gifford that lays out the logic behind that. It was just published and is a superb paper.

The foundation upon which innovation in Canada is based is the basic and applied research and its capacity in plant and animal health and production. The universities are also the pipeline for high-quality personnel, as well as everywhere from the technician in agriculture and food through to research foundations in the graduate programs, the PhDs and post-doctoral programs.

In the graphic, I have presented a study that we are in the process of concluding with Science-Metrix in Montreal. We find that the universities of Canada are producing 75 per cent of all the published peer-reviewed papers in Canada relating to agriculture, food and nutrition. That is the single biggest engine in Canada for generating innovation. The 11 universities from which our members are drawn, and 19 other universities in Canada, make up that list. Some were missing simply because they had too small a number of papers to be included in those totals. Agriculture and Agri-Food Canada has a fairly large program, but it is not very large in relation to what the universities are doing in science output.

Our faculties alone have over 1,000 PhDs in the pipeline. That is your future for research. We know how to work together, and that is why the graphic at the end, generated by Science-Metrix, shows the connections among all the universities, not only our own members but also the other universities around Canada that are involved in agriculture, food and nutrition.

We also work internationally. We have many ties in the U.S., Europe, India, Africa, China and elsewhere. Those linkages become important in terms of the collaborative research efforts around the world. Those are our engines for research and development, so what is the difficulty? The difficulty is that, to put it as bluntly as I can, agriculture and food is not a sexy area for research. It does not draw attention the way many other areas have, whether that is space or cancer research, all of them particularly important, but in our view it really does not draw the attention of government the way it should. Yet the agriculture and food sector, from one end to the other, is one seventh of Canada's workforce and represents about 9 per cent of Canada's GDP. It has a strong, positive trade balance and as a result is contributing to the health of the Canadian economy.

I want to point out that you have working at the present time the Expert Panel on the State of Science and Technology. This is a report done by the federal government about every three years. They will be laying out the priorities for the next three to five years on research. No one on that committee has any connection or background in agriculture and food or veterinary medicine.

NSERC, one of the tri-council members, has a governance council and, of all the members, none has any background in agriculture and food, yet they will be setting the priorities for research. The standing committee of NSERC, the Committee on Grants and Scholarships, COGS, has no member with any connection to agriculture and food. After discussions with NSERC, we finally have one member on the Committee on Collaborative Research and Development overseeing priorities in the selection of research in that area. Unfortunately, they have not put her name on the website yet. It is Leslie MacLaren, the co-president of Nova Scotia Agricultural College. That is one member out of all of those committees setting priorities for agriculture and food research.

What are the opportunities we can exploit? First, research and education in agriculture, food and veterinary medicine and its relationship throughout the food system and human health needs to be recognized as a high priority, particularly through the tri-council of NSERC, SSHRC and CIHR.

Funding for agriculture and food research can come from three sources. Clearly the first is public funding. The public must fund that research because private companies simply cannot do the basic research if they do not see a way of making money out of the product. It is a market failure, if you wish, and it is the standard reason that government needs to get involved in various markets. That is one of them. It is ideally suited to where the benefits cannot be captured by a private firm.

Private investment is also critically important. Making money out of it is the reason for existence. As a result, we have seen pretty major improvements in a number of crops. I would point to corn, soybeans, canola and flax, where the private sector has been involved in moving those crops forward substantially in North America over the last many years.

You need to have your intellectual property rights in place for that to happen, otherwise any research done would become general knowledge available to everyone and they would not see their way in doing it. In the research done by Richard Gray at the University of Saskatchewan it is shown that those companies are putting a lot of money back into research from the sale of seeds and other products they have generated.

Check-offs also play an important role in funding research. Check-offs are essentially a way in which farmers can contribute to the sources of funding for research. It means when a farmer sells a product, in our current terminology, part of it is taken either voluntarily or in a mandatory way to put into a research fund. There are many successful check-offs around the world. Australia is probably ahead of the world in the grains and oilseeds industry in that regard. They have a large check-off and all of it is devoted to research.

Unfortunately, our check-offs are mostly voluntary. Where it is checked off when you sell, a farmer can ask for that money back at the end of the year and does. However, we do need that industry-driven research.

My third point is that productivity improvements in agriculture take a long time. If you are going to generate a new variety from scratch, from the time you do a cross in, say, wheat as a plant breeder, you will take 5 to 15 years before you get that product on the market. The time span is 5 to 15 years for outputs in agricultural productivity. Long-term research programs — and I am not talking about projects but large programs — devoted to agriculture and food and veterinary medicine and the accompanying funding commitment are a requirement to achieve consistent and measurable gains.

Finally, I think we need to look at the set of relationships among all the players, in particular farmers, governments and the private sector in how they work together. What normally happens is that a professor will do a project, write two or three science papers, throw them up on the shelf and hope that someone, sooner or later, will come along and use them. We have to get over that notion. What we need to do through a program of research is to find the large problems that need to be solved within that large context that I painted at the beginning on food demand and supply, and set up a set of relationships by agreement — public-private partnerships — so you do not have an abrupt end to research and an abrupt start to the private sector using that research. Instead, you have a transition over a long period of time as you move from fully public funding to fully private use of that technology.

There are public-private partnerships, and I would simply flag that the IDRC, International Development Research Centre, in Canada, and Syngenta Foundation in Switzerland are ahead of the world in putting together how you implement successfully in agriculture public-private partnerships. They just held a conference in Ottawa that I attended, and they are now looking at implementation mechanisms. The difficulty is that it is mostly being done in the third world, not in Canada. We need to look at how to put those together. Government does not make a very good partner, and there is a good reason for that: the Financial Administration Act. If you are going to give money to another party, you do it by contract. You have a contractor-contractee, principal-agent problem. As a result, government thinks they are managing it completely. They do not know how to be a partner. We have to find out how to get them to be a partner within all of that research with the universities, the farmers and the private sector.

We have the opportunity. We have the trade arrangements coming online over the next few years. With all of that, we need agriculture and food and veterinary medicine providing the basic and applied research that drives innovation, competitiveness and growth in agriculture to change dramatically. The interesting thing is that the U.S. is ahead of us. The President of U.S., from the White House this month, put out a blueprint for the bioeconomy. If you read it, you will see that all the elements I talked about are in it: how to fund it; how to focus attention on it; and how to put all that together with trade, competitiveness and economic growth.

The Chair: Thank you. Professor Phillips, please proceed.

Peter W. B. Phillips, Professor, Johnson-Shoyama Graduate School of Public Policy, University of Saskatchewan: Good morning. It is a pleasure to be here today. Having read a number of Senate reports, I find they have more depth and insight than many of the reports coming from the Agriculture Committee of the House of Commons. You have an opportunity here to have an imprint. The agricultural policy in Canada is in a state of flux. That is not always a bad thing, but it means there are some opportunities and real risks.

I will not repeat much of what Mr. Hedley said because we come from similar backgrounds so we have similar ways of looking at the world. The gap you are looking at is not trivial. Employees in the agri-food sector add value equal to about half of the national average. It is higher in the export-based sectors in the West and about 70 per cent lower in the supply-managed sectors. That does not mean your problem is trade competitiveness. That means your problem is competitiveness with the farm or the business down the street or the city down the road. It will not be the Mexicans that clean the agricultural clock in Canada. Rather, it will be the small-business person that has figured out how to use information and communications technology or some other technology, draws away the skilled labour and the capital and, ultimately, buys up the land that can no longer productively produce. This is not an international problem. It has international dimensions and opportunities, but it is fundamentally about the vitality of much of Canadian agriculture and Canadian economy.

The Canadian government has spent a lot of time talking about its investments in science and technology and its frustration that it is not getting a lot of bang for its buck. It is an interesting set of work that started back with the Canada's Advantage strategy in 2007. You have had the Science, Technology and Innovation Council, STIC, working on it and the Jenkins group. Those of us who are not part of the inside group creating those exercises have what we think is a damning critique: They do not have any idea how innovation happens outside of the manufacturing and ICT sectors. There is nothing relevant in what they say about what is going on. The impression is that it all happens with entrepreneurial firms using patented technologies supported by venture capitalists that create market opportunities often by giving away the product, versioning and building it into a world platform. It is a great model for certain parts of the economy in society, but it is irrelevant for agriculture, forestry, mining and fishing.

It does not matter where you are in the world, there are three big actors, as Mr. Hedley said. Keep in mind the perspective. In the agriculture sector worldwide, 65 per cent of the R & D in the technological development comes from the public sector. You cannot do it without the public sector. Yet, there is a mentality in not only national policy but also international policy fed back through the OECD that the public sector is the problem — if they just got out of the way, the private sector could make this go. That is not true in the agri-food field. For many of the same reasons that Mr. Hedley pointed out, I think that is true.

I will spend four or five minutes to give you some of the emerging evidence coming from the scholarly community about ways that Canadian agri-food policy might be more effective and efficient — not how to cut it and eliminate it but how to stabilize it and direct it in ways that you will get high value for the money.

The root of the problem is that we do not invest enough. We cannot gloss over that. There is an international acceptance at the organizational and scholarly levels that if you want the productivity gains Mr. Hedley talked about, you need to feed the pipeline. We invest less than 1 per cent of GDP, gross value added in the sector, in R & D. That is a fair bit lower than the Canadian average but is still not bad because some countries invest very little. Most people are saying that you are probably looking at doubling that.

On a crop-by-crop basis looking at our competitors, such as Australia, the numbers seem to be almost twice as much per capita or per acre of production. There is an under-investment across the piece, and it is not just a public investment, but public investment is at the root of it. Property rights, regulatory systems, market uncertainty and coordination are all major issues. The government has done some good things, but there are risks embedded in the policies that the federal government has initiated. The IPR system is much better than it used to be in the agri-food sector. We have patents in parts of the system, plant breeders' rights and a variety of commercial contracts and collaborative partnerships and arrangements that at least allow the industry to extract some of the generated value and to pay for their investments.

If there is a difficulty in the Canadian system, it is that the Canadian government and the Canadian universities have jumped on the bandwagon, a little late in many cases, thinking that there is a golden goose out there. Everyone is thinking about the one or two big blockbuster technologies that endowed universities for decades based on the intellectual property returns. In the agri-food space, only three or four institutions of about 600 land-grant and other institutions have ever been in the black on their agriculture file. There is not a lot of money to be made, yet we spend a lot of time and energy. People view intellectual property in the agri-food sector a bit like a lottery: You cannot win if you do not play. The flip side of lottery is if the playing becomes the focus of your exercise, you have a problem.

I think in some cases we do. We have more effort going into negotiating the overwriting and interlocking rights, liabilities and obligations of commercializing technology than we do in actually creating and advancing the technology in terms of its productive capacity.

I have argued in the past that public good and private greed are a good mix. I am a little worried that we have public greed and private good mixed up in here. That is probably the worst mix, because the private sector is better at being greedy and effective. Greed is a good thing in many cases. I am an economist. I know that greed makes the world go around in some cases.

The second area is regulation. Cost is not the issue. Everyone spends all their time saying we need to make regulations cheaper. The actual cash cost of complying with regulations in the broad agri-food space is not the problem. The problem is the time; not just the absolute time but the variable and uncertain amount of time. If you are doing a cost-benefit analysis on whether you are going to invest further in a new piece of technology, you need to know when it is going to hit the market. If it could be anywhere from two to ten years out, what number do you use to start the revenue flow? Ten years is a long way out. The average is five, and most of them may come in at five. That may be the average and the median and the most important number, but the outliers, the ones for which there is no scientific or other legitimate basis for extending the technology, end up being the ones that they use in the elements.

As we move to the new model of one project, one evaluation and using burden tests for new regulations as we set guidelines and barriers, those all make good sense in many places as long as they do not become new barriers to entry through the regulatory system. I think the regulatory system has some power there.

The third area is uncertainty in the market. The bottom line is that agri-food research earns very high rates of return, and everyone claps their hands and says that is wonderful. That means that we are under-investing massively. If there is an unrealized return on the table, that means that there are barriers to entry and barriers to access, and part of the barrier is the public sector itself. It does invest, but in some cases it is retrenched. It is hard to get money out of the tri-council; it is hard to get money out of the NCEs. Virtually anything Industry Canada has its fingers on is out of bounds for agriculture. It is a problem when the public sector part of agriculture — and Canada is a big agricultural state — is exempted from the system.

Finally, on the federal funding itself, Mr. Hedley has talked about the Financial Administration Act, and I agree with him 100 per cent, but I think it goes way beyond just the bean counters' role in the system. This country was built on clusters of research activity. The federal government has accepted clusters as a policy measure. The Department of Agriculture and the NRC have been major contributors to creating successful agri-food research clusters.

I say "have been." Clusters are all about creating special places where special processes are created where special people do things. Agriculture Canada, in particular, has gone out of its way to not contribute over the last five to ten years. There is no leadership at the regional level. You have a matrix management system. There is no sense of continuity within program bases, and now that NRC is talking about going to research platforms and away from centres, you are talking about a two-to five-year thinking horizon. Many of the senior scholars and researchers in these institutions are now looking to go abroad because they can work for 30 years on a project in the Fraunhofer Institute or with the U.S. government, but here they will have to re-up their life every two years.

As a person who lives in the research world, even though I have a permanent salary, I spend about 40 per cent of my life negotiating contracts in and out, not doing any work, just complying with paperwork of systems. That is what you are proposing to do with many of your civil servants who have been very critical actors in the system.

Let me leave you with one final thought. There is a lot of debate about what is the right structure and size of research. Should the individual investigators just go off and do what they want? Should it be a big team? The evidence is becoming clearer that what we were worried about with teams and industrial actors as part of the research system did not turn out to be true. The latest research we have done into canola in particular has shown that partnership actually generated higher returns than sole-authored, sole-funded research. The optimal number is three, as it turns out: one government, not two; you can afford one Financial Administration Act but not two or three; one commodity group — they are critical, they bring the pull-through; and usually one other university granting or industrial group.

In addition to that, the longer-term interdisciplinary teams seem to add differential value. You often get the capacity to have individuals who can bridge between these teams. If you create small teams, they get very focused and do very good work, but it becomes isolated. This should involve the international side.

I will give you a good example. As part of the wheat summit that we held in Saskatchewan in January, we brought many of our potential international partners around wheat research into Canada. We had an excellent discussion and everyone said this should be the number one priority area not only for the industry and governments but for public health and public good around the world over the next 20 or 30 years. If we do not get wheat yields up, we will have a food security problem.

One of the sort of pass-by observations was from the director general of CIMMYT, which is the group that brought us green revolution wheats. They are the ground zero, the international place where wheat research happens. Canada is a major investor there through CIDA and IDRC. The head of CIMMYT asked why it is that he only talks to bureaucrats about getting money and cannot have a scholarly and scientific discussion about the evidence and research they are working on and bridge into our research in Canada. The short answer, as best we can tell, is there seem to be some administrative burdens. We are spending millions of dollars on a national priority and we cannot get any of the benefit back in Canada.

A colleague in the United States who did a similar study around that kind of thing showed that virtually all their yield gains in wheat over a 20-year period were because of their funds that went into places like CIMMYT and were brought back through tech transfer by partnerships and relationships.

I think you have an exciting opportunity here to have a unique impact on a policy area that is in flux. It is an important policy area. It is on the international stage in a substantive way for the first time in my career, and I think Canada could be part of the solution. If it is not, it may be part of the sustained problem of lapsing productivity.

The Chair: Thank you very much, Dr. Phillips.

Senator Plett: Thank you, gentlemen. It is good to have three people from the Prairies testifying here. Welcome.

Some of my questions were answered in your remarks. I will make one or two observations and then ask a question.

Dr. Hedley, you said that one seventh of Canada's workforce is in the agricultural industry and that you create about 9 per cent of GDP. I had dinner last night with a group from a different sector, also a very important sector. They had many of the same asks that you seem to have. They said that they make up 15 per cent of the workforce, which is almost the same as one seventh, and make up 5 per cent of the GDP. It seems that every industry that we speak to makes up a significant part of the GDP and a significant part of the workforce and are all saying that they need more government funding.

I do not disagree with you that we may need more. Dr. Phillips in part indicated what the percentages should be in the public-private partnership that you spoke about, Dr. Hedley. Could you gentlemen touch a little more on that? We are in a time of restraint, as we need to be. Yet, every industry, rightfully, wants to do more research and innovation, and that is necessary.

When we have to increase our food source by 70 per cent, that is tremendous. However, we have increased our food source over the last 40 years. My dad farmed when I was six years old and probably took 10 bushels to the acre of wheat off the field, and now we are taking 50 or 60 off? Yet, we have heard witnesses say we have almost maxed that out, but if we have the same rate of growth over the next 50 years, I think we should do fine.

You spoke about regulation, Dr. Phillips. I think the more government involvement we have, the more regulation we have, the more inefficient we are. I think the private sector is far more efficient than anything government could ever do, and throwing money at the problem really is not the answer. In layman's terms, please tell me briefly what government should do. Should they just throw money at it and let the private sector deal with the innovation? Should they do it themselves? I know there are a few broad questions there, but if you could explain that, please.

Mr. Hedley: First of all, the reference to one seventh of the workforce is not just in agriculture. It is the entire food system, all the way through to restaurants, retail, imports and the like. It is a large sector in terms of employment.

Let me turn to funding. It is a time of restraint. There is no question of that. When I talked about check-offs, the Honourable Bill Mcknight put Part 3 in the Farm Products Marketing Agencies Act back in 1992. There is only one national check-off at the present time, after 20 years of effort in trying to put together a national check-off. It is cattle, and it took 10 years to put together. It was long, hard work to get that in place because of the division of federal and provincial powers and the way that is handled in the Constitution.

It tells you that it is not enough, in terms of making check-offs work on a mandatory basis. Until they are mandatory, you cannot count imports. That is the issue. When people cannot count imports on that check-off, it gives your importers an advantage.

Let us look at how they might do it. It may not need more money, but consider that the preliminary estimate for 2011-12 — in terms of direct payments to farmers — is $1.55 billion by the federal government. Think about what would happen if just 1 per cent of that went into research money to the agriculture and food sector. That is $15.5 million per year. When you work it all out and look at the share of the federal government and all those payments going to farmers, it means you are putting into research the equivalent of one medium Tim Hortons double-double for every $317 going to a farmer. That is the leverage you have.

As it is exclusively federal money, the federal government can do that without going through the federal-provincial arrangements under the Constitution. Take just 1 per cent and you have a major program for research in the agricultural sector.

Mr. Phillips: Let me make a couple of quick observations. I take your concern that we are all repackaging the numbers different ways. One of the worst things we ever did for understanding economies was to create the national income accounts that talk about primary, secondary and tertiary industries. You disconnected what happens on the farm from everything else. Yes, agriculture on farm represents less than 3 per cent of gross domestic product, but it actually generates a ratio of about 3:1. The farm trucks that are going down the road, the trains going by, the wholesale and retail distribution system and the food system are all part of that. It is the same in mining and in energy.

If you look at the economy based on where the value chain starts, you will find that most of it is resource-based in this country, and most of it goes through this committee, such as forestry, mining. I do not know if you have fisheries. Mining obviously has a relationship to the others. Natural resources are the major drivers. The whole economy would be 70 or 80 per cent assigned to sectors we tend to have exempted from federal priority areas because they are not sexy. I agree with Mr. Hedley 100 per cent.

Secondly, on the funding question, it partly is more money, but it is partly using the money you have well. I will give you a good example. I am funded by Genome Canada, and I am funded by NCEs and I am funded by NSERC. In NSERC and NCEs, I have been told no matter how good your science is, go away. We are no longer allowed to put money into your research even though it meets the test of being internationally competitive.

In Genome Canada, I got the same response when they went to the last competition. What ended up was the applied bioproducts and crops competition. They said, "We would really like this one to be health." They wanted to do health. Health is sexy. Health is about saving people's lives, so they asked for business cases. The business cases had to have the top science evidence supporting their request. When it went to international peer review, it blew them away. The agriculture one was the one the international scientists, including health scientists, said was more important and more substantive than the biomedical one. That is not to say we should not be doing biomedical. It means if you are going to be a world player in technological change and scientific advancement, you have to let your best teams win. You do not just say, sorry, we are sidelining a portion of our team that can score goals because we have these other ones that really look good on TV. You know, they wear great uniforms, and that is a bit what we have done in this country.

Most of the strategic investments that the federal government drives — and the policy statements that are justifying those — have exempted agriculture, forestry, fishing and mining. If you look at where your revenues come from, where your people come from and are employed, and where value added is, that is it. All of the ICT, biomedical and environmental technologies we are talking about only make sense if they are interconnected with those primary sectors.

If you undercut the economic vitality of your core industry, all these add-ons are not going to add much. They are at best, infill.

Senator Plett: I have one follow-up. Indeed, the people that I was having dinner with yesterday would be considered — I guess in the conversation we have had here — as the sexy group. Yet, they have the same problem. They also wanted more money for research.

As we strike more free trade agreements — we have done a great job and our agricultural minister has done a great job in opening up markets for us around the world — and as we do more of this and other countries have regulations that they put on us in order to buy our product, whether it is GMOs or whatever it might be, will that not, by itself, drive some research and innovation on the government's part? If we want to sell, we want to export and we have regulations, are they going to say, "Well, we better do something so that we can sell into that market," or does that not connect?

Mr. Trevan: I think it is an interesting question. Take GMOs and the European Union. A lot of the resistance that there has been to the adoption of GM wheat comes because that is perceived to be an import market of Canadian wheat, a traditional market for Canadian wheat, even if it is absolutely not a very big market for Canadian wheat.

Although all the science would point to the fact that genetically modified crops are not bad for your health, there is a public perception, which drives policy because the politicians know who their voters are, that this is a bad thing. That will take several generations to change.

The real question for Canada is, if you want to increase productivity and you see that the way of doing it with wheat is to go down this GM route, how does that fit with your existing trading partners, and what opportunities might it close to you in terms of being able to sell more of this product?

Let us say we can double wheat production in Canada by adopting the GM route. Would we be able to sell it to anyone? The issue is one of complexity that goes beyond the trade agreements with governments. The WTO said Canada and the U.S. can sell GM stuff to Europe. That is allowed. They will not buy it. You have to look beyond those trade agreements. You have to look to the market as to what actually is available there. Sometimes if you are really innovating, you have to be able to create that market. I bow to the expert knowledge of Senator Buth on this from her background, but canola was started as a curiosity experiment particularly at the University of Manitoba where the researcher asked permission from his head of department, "I would like to do this on the side. It is not what I am meant to be doing, and produce from inedible rapeseed an edible crop," but it was not just that that actually gave us now a market for canola or an industry of the canola, which the last estimate I saw was $40 billion a year. There was another secret to it, and that was Richardson's, now Richardson International. George Richardson at the time was in charge of that operation. He had two companies. He instructed those two companies to make sure that canola was traded every single day of the year there was trading for two whole years, even if they had to sell and buy the canola between themselves. That established the market in canola.

You need those sorts of partnerships to occur. The problem we now have is that there is a tendency for public investors, federal governments, provincial governments, particularly their Treasury Boards, to occasionally come along and lift up the carpet to see what goodies are appearing from underneath from their investment, expecting some sort of investment return. If you are investing fundamentally in things that will produce innovations in the medium to long term, you will not see that return in the lifetime of one government. That is part of the conceptual issue that we have to get over.

We find ourselves working with some of the country's best innovators: farmers. There is a huge amount of innovation that goes on on the farm. If we go to the example of wheat, we go farther. If you look over 100 years of wheat in Canada — it has been a bit longer than that now — productivity has increased by about 240 per cent on average. Almost all of that productivity has come from changes in agronomic practices on the farm. The minority of it has come from breeding programs.

The breeding programs are only really necessary to keep the wheat one step ahead of the latest disease or disease adaption. It is those agronomic practices where a lot of the real innovation is. If you do not have public money funding those innovations, there is no industry out there to do it. You can have private money through the check-off, but if you do not match that with the public money, there will never be enough to produce those sorts of innovations we really need.

Mr. Hedley: I have just a few things to add. First, since the mid-1980s, public funding of agriculture and food research in Canada by government has fallen quite sharply. It started to level out from what it was in the period of the late 1980s, throughout the 1990s and early last decade. We are down substantially in real terms from where we were in mid-1980s.

Second, you mentioned the trade agreements. The interesting thing is that trade agreements enable trade. You have to be able to take advantage of it. However, trade agreements also mean that you have to give to get. What are you going to do in terms of access within your own domestic market to be able to gain access to a market abroad? They will not give it to you free, which means that they have the ability to compete in your domestic market when you get the opportunity to compete in their domestic market. If we are not competitive, then we will lose.

We have the resources. I think we have the engine for innovation reasonably well developed in Canada, so to make use of those trade arrangements we had better get on with the productivity gap.

I would point out that food safety is increasingly an issue in international trade. In fact, our members are working with the CFIA in establishing upgrade programs as well as training programs with other countries, particularly China. We are putting that together over the course of the summer so that we have a partnership between CFIA and the universities in Canada in supporting the issues of food safety and trade.

Mr. Phillips: Let me address two points. In your trade question, I detected a sub-question about how could research relate to that. There are a number of issues. It is not just food safety. In addition, it is the provenance, which has nothing to do with whether it is safe or not; is it what people want, and then the authentication processes around those.

It is nice we brought the canola story up because it is a beautiful example of Canada actually getting its act together and bringing a totally unique product into a global position. It existed, but not in its current form. It did all three of those things. It did it in a way of engaging the federal enterprise. While I agree that the people in Winnipeg were part of it, when I think of the main story of how the science came out, I think of people like Burton Craig from the then Prairie regional centre of the NRC. I think of Keith Downey, the deemed father of the original canola seed, which had low glucosinolates and low erucic acid. They were both federal bureaucrats, both working beyond, in many cases, their official mandates but being tolerated within the system. The tolerance does not exist anymore. Similarly, I move forward 30 years to people like Wilf Keller, who moved from Agriculture Canada to NRC and helped create the PBI centre around global oilseeds research.

The federal government is inextricably linked to this. I am having difficulty finding where that next big push is going to come from, from all of your large investments, because people are so disconnected and discombobulated. The flip side of that is that we have technologies that we actually create, and then we say, "Well, you are local, you are not really an expert on this, so you find a market somewhere else that will use it, and we will test it."

I will give you an example. It might be near and dear to some of your hearts. You might have even met these people. I am a very small bit player in an international consortium that Canada set up called the International Barcode of Life project. It is really about explicitly identifying species that may commingle in some way, shape or form, be it in the food chain, adulterated food, substituted foods, inner boundary movement of invasive species or endangered species. These are the cutting points of trade policy of the 21st century. Here we have the best technology that we have seen for a long time. We invented it. It was invented here at Guelph. It is a national effort. No one in Canada will use it. The Americans have already picked it up and used it. The Australians are talking about using it. If we are not careful, two, three years from now it will be the standard and all the technology and all the body of evidence we have had that we bought up at ten cents on the dollar, because it is just digits right now, will disappear and we will all of a sudden have to go elsewhere to authenticate our products.

Those are the kinds of problems we have. This is not unique to agriculture. We are just the flip of the way some people say innovation happens. Some people say innovation only happens when it is invented here and we buy into it. We have a perverse idea that if it is invented here it cannot really be that good. We do really great stuff and others pick it up and use it.

We have alluded to Australia already. Their model is our model. They took it. They tweaked it a wee bit and now they are knocking our socks off internationally in the area of agriculture research, doing exactly what we do, but doing it the way we said we would do it.

Senator Robichaud: I am pleased to meet you again, Dr. Hedley. We have different roles, but I still ask the questions and you still have the answers.

In starting, the engine was the research being done in universities. There was a lot of research, and some of the researchers were hoping that someone would pick it up rather than let it lie on the shelf. Then you mentioned that somehow this is the engine but the vehicle is not at the rendezvous all the time. How much research is laying there that we have not used, and how do we get this vehicle started?

We found that, in forestry, when we did our report, there was a lot of research that was done, but they identified the problem as the "valley of death" — they would go to a certain point and then they could not get not only the funds but the people to use it and apply it. How much of that is still out there that we have not used?

Mr. Phillips, you mentioned that other people are using things we have done. How can we change that?

Mr. Hedley: That is an extremely important question. Let me come back to two or three of the things I said.

I agree with you that there is a lot of research out there that is lying on shelves. Mr. Phillips has pointed out that maybe others in other parts of the world are using it before we use it or think of using it in Canada, and that is true. There are no boundaries on published science research. I can go to the web and pull in information on a whole range of sciences done all over the world. We build on that in our own science engine.

The difficulty is that we think about doing research and handing it off at some point to the private sector to use, and that model does not work. That is why I suggest some sort of public-private partnership where you can agree on the problem and you agree to a time frame on how you will move from the basic research to the applied research to the pilot plant to the scale-up to full private production.

You have to have that research all along the way. Most of it is public research, particularly at the front end. However, it is not a wall between public and private; it has to be a transition over a long period of time. There are a lot of really good examples of that around the world, whether that is in Mexico, South America, India or Africa. They are working very well. That is why I noted that the IDRC and the Syngenta Foundation work on public-private partnerships.

That is the arrangement we have to figure out. It must be a program, not a project. It must be a relatively long-term one and must understand the private sector need, so you drive your science by that need. It is not, "I have a disease problem this year; can you solve it for me in the next 24 months?" We are saying where do we want to be five to ten years from now? How do we get there? What will it take? What is the private sector input? What is the public input? How do they work together over the period of that agreement? That is a fundamentally different concept than what we have used in the last 20 years.

Canola was the example of how that worked. We do not have that today.

Senator Robichaud: Is that not a case of the chicken or the egg? If you have to line up all your ducks before you start your research, you may never start your research.

Mr. Trevan: In one sense you are absolutely right. I think a lot of this comes from a science base that is entirely speculative. One of the most important, early biotechnology inventions, if you discount brewing and baking, which goes back about 5,000 years, was that of the monoclonal antibody, which allows you to detect minute quantities of very specific components. It is used in things like pregnancy tests, for example. The first-ever use was to detect kangaroo meat in Australian oxtail soup.

That was entirely publicly funded work at a government-funded research station outside of Cambridge in England. It was work undertaken by an Argentinean and a Swiss working at that station. They were just interested in the scientific problem of whether you could fuse two cells together and get a hybrid cell that has different properties. The cells they chose to fuse together were a cell that produced the antibody and a long-living cancer cell. You fuse them together and you get a long-living cell that produces one specific antibody molecule that binds to one specific chemical group.

When they were asked by the government agency that was meant to be looking at innovation in government and whether stuff was patentable, they could see no particular application for this and neither could the government experts looking for applications. Therefore, no one ever patented it. It became public knowledge and it spawned a huge industry. Had that been protected through patent, through government agents, it might never have gotten to the market. There are a lot of examples of things like that which never get into the market.

That is one of the best examples I know of where you need that fundamental research and inquiry, but then you need the entrepreneur who sees the ability to take that and move it on.

One of the problems, not just in Canada but in many other places around the world, is that the way things are set up very often by governments and institutions gets in the way of that. Even simple agreements between universities and Agriculture and Agri-Food Canada as to how to get the scientists to work together can be very difficult.

We had a case at the University of Manitoba where we wanted to put health researchers with people from Agriculture and Agri-Food Canada into a building owned by a hospital foundation, with some of the research scientists at the hospital also contributing. It took two and a half years to negotiate the contract. That is not a good basis for the generation of science and the adoption of innovation. There are a lot of those structural barriers in the way of this sort of stuff.

One of the big structural barriers, frankly, is the matter of technology transfer offices in universities. Even the best of them — MIT — only makes 5 per cent of its annual revenue from the patents it sells onto the market. It is not a big deal. In fact, most universities probably spend more money on their technology transfer offices than they actually get back in revenue in a year.

There are always these barriers, particularly when it is public funding. We have invested in this, and the attitude seems to be we need to ensure we get a return on our investment. All of the academic work on why innovation works says that if a government looks for a return on its investment, innovation does not happen. That is a fundamental point that somehow someone needs to address.

Senator Robichaud: Thank you. A lot of people have identified that problem. You have very knowledgeable people in Agriculture and Agri-Food Canada, at the universities and in the research field. As you just said, when you try to get them together, it takes two and a half to three years.

Mr. Trevan: Yes. In some senses it has been an interesting change over the last decade or decade and a half. Before I moved to Canada nearly eight years ago, I was visiting Canada because we had a research collaboration with a scientist who worked for Agriculture and Agri-Food Canada at the University of Manitoba. When we started it was about 1997. That was an incredibly easy thing to do. This scientist was sent by Agriculture and Agri-Food Canada to work in our laboratories in London for a year. It was an interesting piece of work related to Fusarium in wheat.

We would go and visit him every so often. What I observed in that Agriculture Canada building on the University of Manitoba campus was that a lot of the plant scientists from the university would wander in for coffee and doughnuts in the morning and sit and listen to the weekly seminar. To get into that building now, you have to stand at the desk, sign the security book and wait for the scientist to come meet you. We deliberately put barriers in the way of that interaction. If you do not allow that interaction to happen freely and do not positively encourage it, it will not happen.

We have now tried very hard to get that informal collaboration. Most ideas come from coffee breaks.

Senator Robichaud: Why were those barriers put in place where those people could not come together?

Mr. Phillips: It is not any one institution, but everyone thinks there is gold out there, and they want to make sure that no one pilfers it. Intellectual property offices and business offices now run everything. I am a personal grant holder from Genome Canada. I had a grant that actually expired before I got my money because the contracting took too long. It had nothing to do with the research or the management of the research. It had everything to do with someone thinking there might be some value generated by the scholars, so, as a result, the scholars did not do the work because they could not get the money.

If you set your goal as commercial dollars being the only way you can get value for your investment, you let the IP offices run your systems. They erect the barriers. You can see it in every public institution in Canada. Once the gates went down, the serendipitous events stopped, and they started to get isolated. People started to go around them. They started to leave the building so they no longer became the special places where innovation happens.

Mr. Hedley: There are a lot of little things, quite apart from the big ones, and access is clearly one of them. For example, if you have a professor from a university who on a joint project will go in and work in a federal lab, that professor cannot connect to the Internet because the only Internet access is internal to government, and they might see something on the internal Internet. You have to rewire that building with a second Internet interface just to have them on the Internet, and the Internet is a critical issue in research today. That is just one.

Another is IP. In a discussion with any group outside of government, government starts by saying, "If we have $1 in a project, we own the IP," the intellectual property. Even if it is $1, they own it. That is where the negotiation starts. They have a number of private arrangements that modify that, but as Mr. Phillips says, it takes two or three years to get those arrangements made.

The Chair: That will be another matter when we talk about intellectual property because it was brought up by other witnesses as well.

Senator Buth: Thank you very much for being here today. There have been good presentations and good discussion. Of course, I am always pleased to hear the canola example.

I just want to set the record straight, though, that there were two fathers of canola, one from Saskatchewan agriculture, Keith Downey, and the other from the University of Manitoba, Baldur R. Stefansson. It would not have happened without both.

We have been talking about a variety of issues here, and I have been trying to write down specific things you would recommend to us because, at the end of this, we need to write a report with clear recommendations, which might be a series of recommendations of three sentences. I would like from each of you one recommendation in no more than three sentences. They have to be very specific.

The one I wrote down that you brought up, Dr. Hedley, was a mandatory check-off, that the government explore the use of a mandatory check-off across commodities. You cannot use that one because I have already got that one.

I have heard others, but it is hard for me to wrap my head around. What are your specific recommendations? If you could each give me a specific recommendation, that would be great.

Mr. Phillips: I will start. I will cheat and bundle up a bunch and say they are different aspects of the same thing.

I think the federal government needs to re-embrace the collaborative model of research and commercialization. That means all those things like clusters, breaking down the barriers erected for intellectual property protection, engaging in longer-term, more integrative projects and engaging more internationally. If they do not do collaborative research, they will become increasingly isolated. They are not big enough to do it alone.

Senator Buth: What has your experience been in terms of the Canadian Agri-Science Clusters that the federal government has put a lot of dollars and work into?

Mr. Phillips: At the operational level — it is important — they are getting value for money. At the strategic level, they are dissipating the benefits. If I think operationally, the Agriculture Canada, NRC scientists and other federal scientists embedded in the clusters I have looked at are probably breaking rules. They are engaging in real and substantive ways with their partners in industry, government and the commodity groups in the communities in which they are based.

However, for whatever reason, the federal government has sort of denuded its strategic leadership in all of its scientific enterprise, particularly in the agri-food space. For example, in Saskatoon, we do not have a senior federal bureaucrat in the agri-food space. It seems incongruous that you do not have a senior federal bureaucrat when it is one of your largest agri-food and research investment enterprises. What you have is a person who has a title who sits on a plane four days a week flying around Canada, managing things somewhere else, and then there are people somewhere else managing bits and pieces in Saskatoon.

The idea that you do not need leaders any longer and that everyone should be team players is fundamentally flawed. When this department was successful, and the agri-food department has been successful in a variety of ways, it was always because it had leadership. Agriculture Canada needs leadership. NRC needs leadership.

While I am intrigued by this idea of platforms, I am nervous because when the vice-presidents of NRC tell me what that means, they say they are expecting a two-to three-year payout. Research takes 15 years, so if you expect a return on your investment in two to three years, and the scientists say, "Sorry, we do not have anything for you," they all get fired or shuffled to the next project. That is the worst way of investing your money. You might as well not bother.

Mr. Trevan: I think Mr. Phillips used four of the points I was going to make already.

To me, the key one is a look at how it works properly in other jurisdictions, for example, the U.S., where you walk down a corridor in an agriculture research building and you cannot tell who is a university faculty member and who is a federal employee. It is that seamless. There are plenty of other examples of that around the world. To me, that is one of the most important things you could possibly do.

If you want to find out how to make that work, find out which rules are being broken by Agriculture Canada scientists and change them. They are not breaking them because they like breaking rules; they are breaking them because those rules are getting in the way.

Mr. Hedley: The great difficulty of getting it down to three sentences is that I would have to tell you that I did not have time to get it short.

The one area that I would raise with you again is that we need priority on the agriculture and food system for research. It does not have that now in any of the tri-councils or the funding mechanisms within government or Industry Canada generally.

You need a program of research. That does not mean you send in a proposal and get funding for two years and then you send another one in and maybe get four years out of it. I am talking about a program that is problem oriented, solves the Fusarium problem in wheat, for example, from beginning to end. If it takes 12 years, do it, but get rid of it. It is costing you money in crop insurance and stabilization payments, yet we are giving all the money there, but we are not trying to lower the cost of that by putting some of it into research.

That is why I suggest funding a program; it is not new money I am talking about. Simply take 1 per cent of the federal money and you have a large research program, with priority and problem-driven.

Senator Mahovlich: I just want to say that you are right about the coffee breaks. I used to sit with Tim Horton and have a cup of coffee with him when we played together, and he came up with a great idea. I advised him it was a bad idea because doughnuts were fattening and people would not eat them.

You mentioned 38 years and we are 70 per cent, the increase. Where will we get all the soil to grow the wheat and vegetables to feed the world? Is the world getting larger? Are we getting more soil? Are leaves falling? Are we making more soil? Is the weight of the world increasing? Has it all washed into the oceans? Where is all the soil going? Have we done a study on that?

Mr. Trevan: There is no more really available soil, and that is the big problem.

Senator Mahovlich: We cannot manufacture soil?

Mr. Trevan: No, we cannot manufacture soil. We can cut down Brazilian rain forests until we are blue in the face and it still will not solve the problem. There is not enough land base with the existing paradigm of agriculture to produce that extra 70 per cent. We have to change the paradigm. If you are going to change the paradigm, you have to innovate in a big way. That is why I think the work of this committee, in actual fact, is very timely.

Professor Jonathan Foley at the University of Minnesota came up with four strategies. First, stop cutting down rain forests. Second, decrease the productivity gap — that is, if you take a crop like corn and grow it in North America, you will get a certain yield. If you look at some places around the world, like Central Africa, the yield may be only 1 per cent of that. If you can raise the lowest yields to even 60 or 70 per cent of the highest yields, you have solved a big bit of the problem.

His third strategy was change eating habits. That will happen as the populations of China or India, which are about two fifths of the world's population, roughly, become more economically prosperous; they are demanding more meat. As they demand more meat and our limited ability to produce more meat hits the market sometime in about 2025, the curves of population growth and agricultural productivity cross. At that point in time, prices, particularly of things like meat, will go through the roof and people will stop eating meat because they cannot afford it. I think that solution may actually occur on its own.

The other thing he suggested — the one I will substitute for one of his — is solve the waste problem. India, as a country, produces enough food to feed itself. The issue there is waste in the system; up to 40 per cent of what they produce can go to waste. They lose more grain in fields to rats and mice than Australia produces in a year. If you could actually capture all of that waste, then you could feed another billion people.

There are strategies out there, but we have to start doing things in different ways. There is no more land to plant.

Senator Mahovlich: There is no more soil.

Mr. Trevan: There is no more soil.

Mr. Hedley: Let us understand all of the natural resources requirements. Land is one. Dr. Trevan is absolutely right, there is no published research that I know of that suggests you can have more than a 2-to 5-per-cent change in your cultivated land area in the world and not create massive environmental damage, such as some of the stuff in the Brazilian rain forest.

The other big one is water. China is facing a massive water problem, and so is India. Canada has a water resource. It has land far in excess of what its population needs. That is why I say Canada has the opportunity, but we need the basic and applied research into farmers' hands as well as in our food processing industry so we gain the value added in the processing industry to move our product abroad when we get the trade agreements.

As an observation on those trade agreements, a lot of our trade is with the United States. It is a north-south trade. That is true of food, both raw and finished product. The interesting thing is we do that because of the NAFTA agreement. However, as the U.S. makes bilateral arrangements with other countries, the gains we made in NAFTA are eroding into those other countries. The life of NAFTA is now limited in terms of the gains that Canada got. It is eroding because the U.S. is making those other trade arrangements. It is why we need to make similar ones like the EU, Japan, Korea and the Trans-Pacific Partnership.

Mr. Phillips: Two quick points. The FAO did a study that confirms what you have already heard. If we adopt best available technologies, we will not have a problem. The difficulty is doing that. It is not that we need massive change of technology. We just need to defuse it more. There are mechanisms and there is progress, but it is just slower than people say.

That may lead you to ask why we need to do any research at all. The short answer is, going back to my first point, the existing system is not competing against farmers in Mexico, Brazil, China and the United States. The existing system in Saskatchewan is that when a farmer makes a choice about whether to sustain farming or not, he is competing against the other demands on his resources. His son and daughter, whom I used to train in the agriculture school, do not go back to the farm because they can earn $60,000 to $80,000 with a three-week salary off the farm.

The banker says, "You are doing okay now but I am not sure I want to give you half a million dollars for the next combine. I am just not sure it is a good investment. Just make do." He wants to go to the bank to get more money to do some land improvement. They say, "No, you are doing okay."

What eventually happens is that all the resources the farmer needs to sustain his productivity diminish. It puts him in a more vulnerable position and right back into farm insurance and income stabilization.

Right now they are in very good shape. You do not wait until they are in a disastrous state before you start reinvesting. This is an opportunity to build on the successes of the last while.

Senator Eaton: Gentlemen, all of you are fascinating and have a lot to say. With the brain power sitting at the end of the table here, would you be able to agree amongst the three of you which three priorities Canada should have? This would be helpful. We all know how government processes work, the whole system works. It is very slow.

However, if we went at it from the other side, if you came back to the government as a group, Dr. Hedley, you represent the Canadian Faculties of Agriculture and Veterinary Medicine and if you went to Minister Ritz and said, "On behalf of all of us in research across Canada, we would like these three or four priorities to be concentrated on," could you agree amongst all of you to come up with three or four?

Mr. Hedley: The simple answer is yes.

Senator Eaton: Have you done it?

Mr. Hedley: I do not think we can do it here this morning.

Senator Eaton: No, I do not expect you to this morning. I am just saying that perhaps it would add to our report and give all of us something to really lobby with if we could go back and say, "Canadian faculties of agriculture agree, minister. These are four priorities."

You have Senator Buth's recommendations — four or five research projects. Give each region in Canada their research project.

Mr. Hedley: That is the worst thing you could do. Sorry.

Senator Eaton: No, no, alright. Tell me why.

Mr. Hedley: Whereas there is need, in biological systems, to adapt them to local conditions, the kind of programs I am talking about are much broader than that. To have a little bit distributed everywhere —

Senator Eaton: No, no, I am not saying distributed everywhere. People in B.C. might do something that helps New Brunswick or Nova Scotia, but just come up with five priorities.

Senator Robichaud: You started with three and then went to four and now five.

Senator Eaton: Well, I am being generous.

Senator Plett: Now you might be able to do your five.

Mr. Trevan: The more we have, the easier it is.

Mr. Hedley: I have no question that we could provide that for you. I would need a time frame, first of all.

Senator Eaton: If we gave you a month, could you come back in a month?

Mr. Hedley: A month to six weeks, yes. I do not see a problem with that.

Senator Eaton: Before the end of June, before we rise?

Mr. Hedley: Before you rise, yes.

The Chair: That would be much appreciated.

Mr. Hedley: I am certain we could do that.

Senator Eaton: That will give us something to go with.

Just as a little side bar, are there provincial priorities? Is there a division? Are there problems between the provinces and the federal government? In other words, do provincial agricultural ministers get into the mix as well as the federal agricultural minister? Is that a problem?

Senator Plett: It is in Manitoba.

Mr. Hedley: I believe the answer to that is yes. I sat at the federal-provincial table for many years.

Senator Eaton: We should simplify that?

Mr. Hedley: Yes. I think we are talking — at least I am talking — about what new structure we could create that would allow a public-private partnership to be a program of research or a platform for research to give the emphasis in agriculture and food and animal health.

Senator Eaton: Will you come back with a model for us?

Mr. Hedley: I think so.

Senator Eaton: Okay. Thank you.

Mr. Hedley: I think we could agree to one and to lay out some of those priorities. Yes, I will commit to that.

Senator Eaton: You of all people are on the ground, and you know what you need to function. You know what you need.

Mr. Hedley: Yes. The one point I would make is that this is not exclusively for Minister Ritz.

Senator Eaton: I am not saying that.

The Chair: No, this is for the committee.

Senator Eaton: This is for the committee, but it gives us something for our report. It puts meat into the report, and there are actual things we can go and lobby for.

Mr. Hedley: Yes. It involves Foreign Affairs because of the relationships abroad.

Senator Eaton: Yes.

Mr. Hedley: They have scholarship and grant money, by the way, for research abroad.

Senator Eaton: Well, you see, we —

The Chair: Okay.

Mr. Hedley: Interesting, but there is a large number of departments that are involved.

Senator Eaton: That will be very helpful to us. Thank you very much.

The Chair: I notice that Dr. Phillips has a comment.

Mr. Phillips: I am glad Dr. Hedley made that point. Many of these points Minister Ritz might agree with, but most of them actually live outside his department.

Senator Eaton: We can go to the ministers.

Mr. Phillips: It has to be at an executive level. The federal government has created a national policy of R & D that excludes the sector. There have been major representations, by most regions in Canada, saying that that is a mistake, and there has been no movement. I think you need to have a broader discussion about where agri-food research fits at the federal level. That is point one.

Senator Robichaud: First recommendation.

Mr. Phillips: Point two, I think there are a number of them, and I think it was more of a misunderstanding. I think we could probably identify things like Fusarium or wheat.

Senator Eaton: Yes, well, we want five.

Mr. Phillips: There could be a couple, but I guess I caution you about trying to find a single model because I am sitting at the apex of one of these discussions that says, "Give us three; we will do it." It is new money, so it is not just shuffling deck chairs. What is holding us back is not the three or five priorities, and it is not the people around the table. It is the model. Everybody is coming with a fixed model and the idea that it has to be my model or I walk. When you get three partners at the table, you get three models that do not fit. Rather than saying that there is a model, what you want to say is that there is a set of principles on which we can build models. We will have a lot of models because what will work in things that may be relevant to the canola sector will not work in the wheat sector, in the pulse sector or in the animal health sector. You have to build to suit the terrain you are trying to influence.

Senator Eaton: I still think it would be helpful to know what your five priorities are. Thank you.

The Chair: The recommendations that the report will be making are not necessarily to one department. It will be across the base. That should influence not only governments but also the private sector and other forms of decision makers.

Senator Mercer: I think our work is done, chair. We will get these five recommendations. We can now have a couple of extra free hours during the week because our work here is done.

No. Thank you very much, gentlemen, for a very informative discussion, and you have stimulated some pretty interesting questions from my colleagues. I want to go back to this issue of check-off, which several of you have mentioned. I think you said that the only check-off that is working in Canada is in the cattle industry. I thought there was check-off in dairy, as well, that contributes directly to research in the dairy industry through the Dairy Farmers of Canada.

Mr. Hedley: Yes, in fact there is, but it is not under the check-off legislation in the Farm Products Agencies Act. It is within the supply management tripartite agreements between the producers, the provinces and the federal government.

Senator Mercer: But it is a model that works?

Mr. Hedley: Yes.

Senator Mercer: One of the reasons the dairy industry is as strong as it is is the continuing research into everything that needs to be researched in the sector.

Mr. Hedley: That is correct.

Senator Mercer: As we have talked about, we heard here before that the yield per cow has gone up significantly in the last 40 years, but we also saw the corresponding decline in the fertility rate of cows. We saw research at the University of Montreal, Faculty of Veterinary Medicine, on just that aspect of the fertility of the animals.

There is no magic bullet here. I understand that, and the five suggestions you will bring back to answer Senator Eaton's question are not going to be the be-all and end-all. We will not be able to fix the world with your five recommendations.

Mr. Hedley: That is right.

Senator Mercer: However, is one of the things that we should be looking at imposing some form of check-off that forces industry and government to say, "We need to do this to provide for the future long-term viability of agricultural research in this country by imposing a check-off system like in the cattle industry or a system similar to what the dairy producers have managed to do through the supply-management system?"

Mr. Hedley: Yes, I would agree with that. The Constitution gets in the way, and that is why the current act under which the cattle check-off exists enables but does not mandate. That is why I was looking for alternatives to trying to solve the problem of the individual federal and provincial powers where the federal government could do it simply by a 1 per cent tax on payments to farmers. In relation to crop insurance, it is a very simple calculation.

The federal government pays 36 per cent of the cost of all premiums in crop insurance. Therefore you are taking 1 per cent out of the 36 per cent, not out of the 100 per cent. You get a terrific leverage of the federal government in minimizing the impact on the farm but also in asking them to contribute to their long-term productivity.

Senator Mercer: I like that. We will mark that down, and that is not one of the five, okay? No, that is number six.

Senator Eaton: My five are different.

Senator Mercer: Thank you very much.

[Translation]

Senator Maltais: Thank you very much, gentlemen. I can see that you are good professors, because the explanations you provide are excellent. One thing intrigues me. We have met with other scientists, other researchers. We have even met with them in the field. They do not quite say the same thing as you. I do not want you to take this the wrong way, but could there not perhaps be a lack of communication among Canadian researchers?

[English]

Mr. Hedley: The point of the one graphic we received from Science-Metrix shows the linkages across universities on working together, including our own members as well as 19 other universities in Canada. That includes their relationship to Health Canada, Agriculture and Agri-food Canada, Environment Canada and Natural Resources Canada. That community is working together in a publication of science. That is not an input measure, which is the way most people will normally measure research. They say that this many dollars went in. They do not look at what comes out. We are saying that universities alone are doing three quarters of that output.

[Translation]

Senator Maltais: Let me give you one concrete example; I believe you were deputy minister at the time. The example is raw milk cheese. Every scientist in Quebec, Ontario and the Maritimes rose up against the Health Canada and Agriculture Canada decision. Those scientists made you reconsider. How come we are up against the same obstacle today and they are not able to make you reconsider?

It was quite a difficult time, remember, and the scientists, from universities in Ontario, Quebec and the Maritime provinces, rose up against a decision that could be called inappropriate. They succeeded in convincing the Government of Canada — Health Canada and Agriculture Canada — of the benefits of raw milk cheese. That is partly why scientists are valuable.

To look at the dairy business and the cattle business, we visited universities where an enormous amount of research is being done on dairy production, cattle genetics and greenhouse crops. Those researchers deal with private enterprise a lot and receive commissions from the private sector. For canola or wheat, how come it is so difficult to see the private sector working in close cooperation with the scientific community, given that you are asking for additional resources in order to keep those customers happy?

I understand that China and India are potential clients, as are others with an interest in free trade with Canada, since Canada has agricultural surpluses. But there has to be the capacity to do it. So scientific research is becoming extremely important, in order not to come to the same conclusion as Senator Mahovlich, namely that a 70 per cent increase in our agriculture would damage our own soil to the extent of causing famine for ourselves or our descendants in the year 3,000.

[English]

Mr. Trevan: I will answer the question on the cheese issue. To my palate, it is a great shame that I cannot buy unpasteurized cheese in Manitoba. The issue is such that if you start to make cheese with pasteurized milk your process for guaranteeing the safety of that product is simpler. It is not that it cannot be done with unpasteurized milk, but the conditions under which you make the cheese have to be very, very carefully controlled. Intrinsically, so long as your herd is healthy, there is no problem. This is why scientists will argue over the issue because one group will say they need the absolutely best safety method and others will say that this method is good enough.

On the issue of why there needs to be more than just the immediate private industrial firm type of research is the time scale. The time scale to successfully breed a new variety of wheat may be 10 years. If you are an industry, you are concerned about balancing your bottom line, if not this year at least next, and so the two time scales are very different.

On your point about what are we going to do to Canadian soil, my faculty at least — and I suspect all of the others are very similar — says that what we do is about having a healthy, sustainable industry, environment and people. In other words, the work we do is looking as much at environmental sustainability in agriculture production as it looks at the health of rural communities, where the farming is occurring, as it looks at the final health of the consumer of that food product.

Coming back to the previous question, it means you need to at least be dealing with departments of environment, health and agriculture.

[Translation]

Senator Maltais: Your research into new wheat and canola production is aiming at better production with better quality and better yield. We have heard from scientists in Ontario, Quebec, and even the western provinces who have cautioned us about the deteriorating water table, especially around the larger cities in more populated provinces like Ontario and Quebec, because livestock production, of hogs, for example, creates sickening smells.

The additional production that you are researching requires more yield using less space and less this, that or the other. Does your research involve protecting water tables?

[English]

Mr. Trevan: Absolutely, yes.

The Chair: Dr. Phillips has a comment on your first question, Senator Maltais.

Mr. Phillips: I believe they relate to a couple of your points. These visualizations from Mr. Hedley are maps that we are increasingly starting to use to understand the ecosystems of research. They are not hierarchies. Universities look like hierarchies. There are presidents, deans, full professors, associates and assistants, and to anybody in a government sector that implies there is an ability to push and pull things through the chain. There is not. My university is made up of 1,000 self-employed entrepreneurs clubbing together for certain central functions. We are all self-employed in the sense that we choose what we do.

In that sense, the pathways that the systems create are not necessarily the pathways that we follow. Those maps can be very useful. We are finding that two people who may sit side by side in the same building over a career may never do anything jointly, but they collaborate through a third or fourth party somewhere else. The world has changed a lot, and universities have accommodated that. That is very hard for hierarchies to accommodate. You were asking why we cannot get together sometimes. It is because the hierarchy says, "You follow my rules;" whereas the team says, "Rules, what are rules? We do what we want. We do what we need to do to get the job done." It is a question of accountability in the traditional governance sense versus the softer accountability in the context of actually trying to achieve the desired goal.

The second observation is this: That gets compounded when you are dealing with regulatory science versus bench or lab science. The regulators do not do the same kind of science. They need the kind of evidence they have. I deal with regulators on a regular basis because I study them. They are faced with hundreds of new ideas thrown at them every day. They live within certain legal boundaries of what they can and cannot do, and new science is coming around all the time. The communication vehicles are often weak. It is not necessarily the fault of governments, so this is one I do not actually blame government for.

The scientific community today is more like the media community. If you have a good article, it does not get published quietly in a journal. Rather, somebody will come to you and say, "Hey, you have a good article. We would like to profile it as the lead article in this journal." Remember that these journals are for profit. They are no longer not-for-profit. It is one of the best businesses in the world to be in. It has the highest return on investment of all industries. They will come to you and say that they want to publish your article and here is why: They can get it on the desk of 4,000 editors of science and editors of public policy within 12 hours of publication. They will do a full-court press conference for you and be your coordinator for the media follow-up.

You wonder why breaking science is everywhere — television, radio, newspapers and the web. That is not just random events. This is the way science is run. When you are a regulator, each one of those little changes is probably immaterial. Over time, they add up to something. When you are bombarded with the latest hype of the day, it is really hard to have a good dialogue. I think that is part of the challenge, and it is compounded. I have mixed feelings about some of the administrative rules, but that is compounded by the interpretation of federal rules that say you have to be careful about what you say without being vetted by others; and that I think has changed a bit.

The Chair: I will add that social media compounds communication.

Mr. Phillips: Oh, definitely. That is even worse.

Mr. Hedley: Regarding the senator's question, corn by its very nature today in North America, most of Europe and much of the developing world is a hybrid. It does not reproduce. That allows private companies to invest in those varieties. With wheat, that is not true. It is not a hybrid at the present. It is not IP-controlled as is canola. As a result, no one in the private sector will do that work on the research.

There is one other feature of agriculture research that we have to get into our heads: productivity research, which is difficult, quite frankly. When you do research on a space arm, build one and it works, you know how. It is done. You do not do it twice. When you have a human disease and you find an injection or a pill to cure it, the problem is solved; and by and large, it stays solved.

Let us go to agriculture. When you look at trying to maintain yields, whether crops or animals, you have a continuous erosion of that productivity capacity in that plant or animal; and that is why you have to keep doing it. It is called maintenance research. New diseases come along and new weeds come along. We have invasive species that are coming into Canada. We are seeing climate change, which gives us a different ecosystem than we had 20 years ago. Therefore, we need drought tolerance and flood tolerance. All of those things have to be built in continuously.

A very high proportion of the research we do in productivity does not increase productivity, it simply maintains it. Until you get over that threshold, you cannot make many gains. It is fundamentally different than many other products of science, such as a space arm. The media have treated that space arm very well. Believe me, I do not see many media standing in a cornfield or a wheat field and saying, "Yeah, this is really hot stuff"; but it is.

The Chair: Mr. Hedley, you are right on.

Senator Merchant: I thank all three of you for the sincerity of your presentation this morning. I sense a frustration between the academic arm of your universities and the way that we in government act at times. For instance, you mentioned boards that have only one person who really understands what the whole thing is about. How do you communicate this to any government? A senator talked earlier about feeding the world and the moral issue around that. You said that here in Canada we are blessed with resources, including water. Biofuels became a very sexy thing, and suddenly all the corn production is going for biofuel when we know that environmentally it is not a big plus. When a government takes a wrong turn or when there are things that we could be doing to help each other, how do you communicate that?

Mr. Hedley: We do it in quite a number of ways. When NSERC removed the last vestige of agriculture and food from its priority list two and a half years ago, I immediately called NSERC and said that we had a problem. That was when I started looking into the membership on the committees. I had no success. As a result, we wrote an editorial and put it in a number of newspapers almost 16 months ago. Within 24 hours, the president of NSERC was on the phone to my president. We sat down and talked with her for over two hours in a general meeting at the University of Guelph one year ago. NSERC has many priorities. We have no choice but to accept what the state of science and technology tells us as a committee. We do not object to that, and they did not include it. In fact, they took agriculture out. By the way, biology is there. Certainly, you folks do biology.

That was the message we got. We have written another editorial on productivity gains that went out sometime in March. I am pretty certain it was in The Western Producer and Manitoba, Edmonton and Lethbridge papers. Excuse me for saying it, but I spent 29 years in government so I know what it is like on the other side. From the outside on this issue, it is a little bit like pushing on a rope.

The Chair: Mr. Phillips, do you have a comment?

Mr. Phillips: Let me make an observation because I think sometimes we are our own worst enemies. I have spent a lot of time in and around the agri-food file. For my sins, I was a provincial bureaucrat during the 1980s and 1990s when farming was in dire straits not only in Western Canada but also across Canada, partly through trade policy problems. I think we did an excellent job of conveying the degree of stress at that time. We only half jokingly said that we had a scorched-earth policy of convincing the world that we had a group of starving peasant farmers who, in the absence of substantial state support, would be a sustaining problem for a long time.

That was good politics and maybe good policy of the day because it marshaled resources to sustain the industry, but that was a generation ago, and the new generation of agriculture is not that. In the innovation literature we often look for exemplars of good, long-term sustainable models of economic growth and development. One that always seems to pop up on everyone's radar screen is the 3M company, which has a business model of wanting a quarter of their gross receipts to come from things that did not exist three years ago. That is a pretty high standard. Most of agriculture probably fits that model.

This is an extremely innovative part of Canada. It is generating high returns, but that message is not in Ottawa. This is using advanced science. When you talk about nanotech, biotech, advanced instrumentation, GPS and many of the new sciences that get people excited, their primary point of call is agriculture, forestry, fishing or mining. Yet we have tried to divorce ourselves from the idea that we have a resource base to our economy and society.

There is this perception in reality. I do not want to leave you with a negative view of agriculture, but we need to somehow reinvigorate the policy and programming agenda around agri-food research.

The Chair: We have that role to play.

Mr. Trevan: I would like to leave you with one thought that I introduce to first-year students who come from all over the university. Eating is the only thing you absolutely have to do to stay alive. Everything else is optional. If it is not the most fundamental requirement of a government to actually sustain its citizens, I do not know what is.

However, governments can go wrong, and I will give you one very brief example. I was at a meeting with the Royal Society of London a year ago. It was meant to be about innovation in agriculture but turned into climate change in agriculture, which was fascinating. The U.K. government, up to that point in time, had adopted a principle through its department of environment that by the year 2050 all sectors of U.K. society should reduce their greenhouse gas emissions by 80 per cent. Someone had done the analysis of what that meant. It meant that U.K. agriculture would abandon cattle, dairy, sheep and goats. They might have a few pigs and chickens and half of the arable land will be planted to energy crops. Please let us think about the broad issues, not the narrow ones.

The Chair: We will send you in writing a question about the impact that mechanization has on research into yield precision, tilling and harvesting.

Senator Robichaud: Would it be good if we recommended having representation from different groups that have to do with science and research?

Mr. Phillips: Yes.

The Chair: If you want to send additional information to the clerk, please do so.

On behalf of the senators on the Committee on Agriculture and Forestry, thank you very much.

(The committee adjourned.)