Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 36 - Evidence - Meeting of June 6, 2013


OTTAWA, Thursday, June 6, 2013

The Standing Senate Committee on Agriculture and Forestry met this day at 8:35 a.m. to examine and report on research and innovation efforts in the agricultural sector. (Topic: Role of intellectual property rights for innovation in agriculture.)

Senator Percy Mockler (Chair) in the chair.

[Translation]

The Chair:I welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.

[English]

Honourable senators, before we introduce our witness officially, I would like to take the time to introduce ourselves.

I am Senator Percy Mockler from New Brunswick, chair of the committee. I would ask all senators to introduce themselves.

Senator Mercer: I am Senator Terry Mercer. I am the deputy chair of the committee, and I am from Nova Scotia.

Senator Callbeck: Catherine Callbeck, Prince Edward Island.

Senator Merchant: Pana Merchant from Saskatchewan. Welcome.

Senator Plett: Good morning. Don Plett from Manitoba.

Senator Buth: JoAnne Buth, Manitoba.

Senator Eaton: Nicky Eaton, Ontario.

[Translation]

Senator Maltais: Good morning; my name is Ghislain Maltais, senator from the province of Quebec.

Senator Rivard: Good morning, I am Michel Rivard, senator from the province of Quebec.

The Chair: The committee is continuing its study on research and innovation efforts in the agricultural sector.

[English]

The committee is continuing its study on research and innovation efforts in the agricultural sector. We are focusing on the role of intellectual property rights for innovation in agriculture.

The order of reference was given by the Senate of Canada to the Standing Senate Committee on Agriculture and Forestry to be authorized to examine research and development efforts in the context of developing new markets, domestically and internationally, enhancing agricultural sustainability and also improving food diversity and security.

Honourable senators, we have this morning Mr. Jim Wispinski, who is the President of Dow AgroSciences Canada.

Mr. Wispinski, thank you very much for accepting our invitation to share with the Senate Agriculture Committee your views, your comments and your recommendations so that Canada will continue to move forward in agriculture in the years to come.

I have been informed by the clerk that you will make a presentation. It will be followed by senators asking questions.

Jim Wispinski, President, Dow AgroSciences Canada: Thank you very much, Mr. Chair, and good morning, honourable senators. It is a real pleasure for me to be here today to talk to you about Dow AgroSciences, our views on the importance of innovation and on the importance of intellectual property in the agriculture and agri-food sector in Canada.

At the outset, let me first congratulate all of you on taking time to investigate these very important topics. Never has innovation been more important to Canada in agriculture and never has the opportunity for innovation been greater than it is today. The need is very great.

As background, Dow AgroSciences is a wholly-owned subsidiary of the Dow Chemical Company. We are one the leading agricultural companies in the world. Our purpose at Dow AgroSciences fits very well with today's theme because our purpose is to deliver innovative technology to meet the needs of a growing world. We take great pride as an organization in having broad market reach, in having leading brands in diverse markets, and in providing support to agriculture in developed and emerging geographies.

It is a really exciting time to be in agriculture, as all of you are well aware, and it is a really exciting time for me to be with Dow AgroSciences as we are undergoing rapid worldwide expansion. We have facilities in more than 40 countries and product sold in more than 130 countries.

In Canada, we have a history stretching back some 70 years. Today I am proud to lead the organization, which has about 250 highly skilled people working in Canada, across Canada, in a variety of jobs, in commercial, in research and development and in operations. They are very dedicated to the cause of bringing innovation to life in Canada.

Canada is the home for Dow AgroSciences for our global canola breeding and research station located in Saskatoon, Saskatchewan. We also operate field stations, research stations in Blenheim, Ontario and St. Marys, Ontario, that are focused on corn and soybean breeding, testing and research.

I would also like to highlight for you that Dow AgroSciences runs the only private cereal research and breeding facility in Eastern Canada at its Nairn, Ontario facility. We rebuilt that facility in 2012 and opened a state-of-the-art facility there. This facility combines state-of-the-art plant-breeding techniques and has a main goal of developing wheat varieties that have agronomic improvements sought by Canadian farmers. Some of those agronomic improvements that we are focused on include yield improvement, improved standability and natural genetic tolerance to disease.

With that background, I do appreciate the opportunity to share with you a little about how Dow AgroSciences invests in developing innovative chemical and biotechnology solutions to help our producers meet the food, feed, fibre and fuel needs of the world.

I cannot emphasize enough that we cannot do this without solid science-based regulatory policies. These need to be supported by a strong innovation agenda and they need to be supported by strong intellectual property protection. In crop protection and seed market segments, as we continue to invest in and grow existing technologies as well as advance new technologies, these are critical elements.

Let me share a couple of technology examples. The Enlist weed control system was recently approved in Canada, and it is a herbicide-tolerant cropping system that combines novel traits along with a new advancement in herbicide technology. This technology provides farmers with a new tool to continue sustainable agricultural practices, which include minimum till and no till and reduced inputs to produce their crops. We do this while providing this solution to their most pressing weed management problems in both corn and soybeans.

Our efforts in research and development also include the development of novel agronomic input traits and output traits. No one here needs to be reminded of the reality of the world's population growth, but it is just not as simple as population growth. It is about population growth and the changing diet that are driving increased protein demand. Because of this increased protein demand, it is driving even greater demand for crop production and the need for innovation.

Additionally, in many countries there is an increased focus on health and nutrition driven by higher standards of living across the world and driven by an aging population. Thus, as a company, we see both demand-driven and wellness-driven market opportunities, and we focus our innovation efforts on both of those areas.

From an output trait perspective, we have a vested focus on product advancement in healthy oils, as an example. The example I will use is the use of omega-9 canola oil, Nexera canola oil, which is produced by a brand of canola that we developed and sell. The omega-9 canola oil is used by major food companies. Their adoption of this oil has resulted in more than 1 billion pounds of trans fats being removed from the diets of consumers in North America. This change has had real health benefits and has resulted in increased market opportunities for canola within the North American market.

Nexera canola also enjoys healthy export markets to Asia and, importantly, provides increased returns for Canadian growers. It is one of the flagship products that we talk about when we talk about innovation developed within our company in Canada. We also see many further opportunities for innovation in agriculture to deliver improved health and nutrition.

Moving back to the input traits, we are very committed to increasing yields by improving genetics and stress tolerance and helping to ensure effective weed control and insect control.

Innovations using both advanced planted breeding and biotechnology lead to seed hybrids and varieties with greater yield potential and agronomic improvements. In order to enable growers to benefit further from these new varieties and hybrids earlier or as soon as possible, and to further encourage increased investment in plant breeding, we would advocate that modernization of the variety registration process should be a priority. In some crops, like corn, Canada's system works very well. In key crops, like soybean and wheat, improvements to the variety registration process would be welcomed.

As you are aware, agriculture is a $70 billion sector, contributing more than 8.8 per cent to Canada's GDP and employing more than 2 million people country wide. The government does provide very valuable support and contributions to the agricultural sector. I do not want to downplay these in any way. However, I also believe that there is room for improvement in order to establish a clear vision and direction of Canada's agricultural policies and to further support Canada's role as a global leader in agricultural innovation.

I would advocate for two areas of focus from an improvement standpoint. First, continue to make gains in regulatory efficiency and harmonized approval systems. Second, work towards bettering Canadians' understanding of the role and importance of agricultural innovation. Frankly, everyone in agriculture has a role to play in that.

Additionally, the government could undertake more effort to strengthen public perception on the credibility of our regulatory system. It is one of the most rigorous systems in the world and in emphasizing the need for private sector investment that is supported by strong intellectual property rights.

It is critical for Canada to have appropriate policies, government strategies and intellectual property rights because it really does encourage investment in research by private sector companies such as Dow AgroSciences, investment which we try to attract to Canada, and to benefit Canadian agriculture, either by the investment being in Canada or by the investment being in crops that are critical to Canada's success.

For success in research and innovation in agriculture, Canada really does need to maintain a predictable, steadfast, science-based regulatory system.

I would like to take an opportunity to highlight for you a few working-level examples of where the Canadian regulatory system both excels and perhaps where we would see some opportunities for further improvement.

Within Health Canada, the Pest Management Regulatory Agency, PMRA, has an informative website, clear data requirements, a set review process, established delivery timelines and an open communication policy for registrants, even while operating under reduced resources. Harmonized joint reviews work very well, and registration timing can be among the fastest in the world, while maintaining one of the most rigorous global assessments in the world. They have moved to electronic submissions, which are very efficient. The PMRA is open to consultations on new and innovative ways for increased efficiency of data reviews; for example, value-based on regulatory history and streamlined data packages where appropriate. Let us continue to build on this Canadian regulatory strength and encourage other key trading partners to streamline and move submissions, especially maximum residue limits and tolerance limits, through their regulatory systems more quickly for Canada's trade advantage. This allows Canadian growers to have faster access to new technologies and facilitates the trade that is so important to Canadian agriculture.

Currently, a cost recovery exercise is occurring within the PMRA. Although, as an industry player, we have no illusions that the fees will stay the same, we would like to see any potential fee increases matched with review timeline commitments and further efficiencies. This is the type of approach that will continue to ensure that Canada remains globally competitive.

We also note that the Canadian Food Inspection Agency, another critical regulatory agency, is taking great strides in regulatory efficiency within the fertilizer section, where they have updated and simplified their regulatory approach.

We would also like to commend the CFIA on their current operational efficiencies through their variety registration office, which has a set process and established delivery timelines; as an example, the canola variety registration process.

We would also like to commend the CFIA for their plant biotechnology permit office, where import permits and confined field trial application reviews have transparent delivery standards and the agency is able to consistently deliver on those service standards.

I would also like to take a few moments to bring forward some areas where in conjunction with our industry partners, we have been working with the CFIA with the goal of achieving gains in efficiency across all sections of the agency. Dow AgroSciences presents to this committee for both awareness and a request for support to help make these desired outcomes a reality.

First, for submissions involving plants with novel traits that require understanding of reviews and/or outcomes between both the CFIA and the PMRA, we are requesting that process improvements be established.

Additionally, as I highlighted previously, certain offices within the CFIA, such as fertilizer variety registrations and biotech permits, are working under established delivery timelines for completion of reviews. This is, however, not the case with plant with novel trait reviews within the CFIA and, as you can imagine, this has significant impact on the predictability and on our business planning processes. Establishing review timelines would further build on what we view as a world-class plant with the novel traits regulatory system in Canada.

As you are well aware, agriculture now works in a global business environment. We need open communication and a willingness of government to interact with business in a transparent and predictable manner. Without a consistent, science-based regulatory system, Canada loses on a global basis.

In closing, as you or I talk with Canadian farmers and as you walk through any supermarket in Canada, you can clearly see sustainable advances that have been made in agricultural productivity, in food production and in food quality. We have a lot to be proud of. Canadian consumers have been very well served by Canadian farmers, who have embraced this technology and made it available to them.

More than ever, Mr. Chair and honourable senators, there is a critical need for innovation. Global population forecasts show that overall food production must be boosted by 70 per cent over the next 40 years. Although our natural resources are limited in Canada, our potential for agricultural advances is not. Everything we do is built on unlocking the power of science to serve this growing and changing world. We really do look forward to working with the Canadian government, growers and other stakeholders to unleash the true potential that Canadian agriculture can bring to the world.

Again, I thank you for the opportunity to speak with you today on this very important topic, and I would be pleased to answer any questions you may have.

Senator Mercer: Mr. Wispinski, several times in your presentation you talked about IP protection, intellectual property protection. You were not specific in either one of those cases. Could you give us specific issues that you are concerned about? Obviously we have heard about intellectual property protection issues before, but could you be a little more specific about what is not working or what is missing from what we have now?

Mr. Wispinski: Canada is actually a fairly favourable environment, a reasonably competitive environment on intellectual property. I would say the one area that was highlighted before the committee by some previous witnesses would be to modernize our plant breeders' rights and take that up to the newest version of UPOV, 1991. That is a critical issue that needs to be addressed.

Senator Mercer: I was impressed with your numbers on omega-9 oil, 1 billion pounds of trans fats removed from food products in North America. Have you reached your full potential with that? Are there opportunities to increase the use of omega-9 oil that would move that number of 1 billion pounds up significantly?

Mr. Wispinski: We continue to work a lot with food companies around the world, in particular in North America and Asia, to continue the adoption of omega-9 oil. We believe that there are significant growth opportunities within that to further increase it and remove trans fats and reduce saturated fats in many places, which has tangible health benefits. We also have other innovations in our product development pipeline, which include working on plant-based omega-3 production or introducing no-sat sunflower oil as another advancement within our technology. The opportunity for innovation to drive some of these macro food ingredient changes and really change diets we believe is an important area of focus, and one that we are investing in.

Senator Plett: Thank you for being here this morning. I have two fairly basic questions. In North America, from what I read in some of the material that we have, there are basically four major players in the innovation and technology area. Chemical companies would be Monsanto, Syngenta — which I had not heard of before — Dow and Dupont. What is your opinion on that? Is it, in fact, the case that there are really basically four major players, and is it good that there are not more big companies out there doing the work that you are doing?

Mr. Wispinski: You are right that there is a relatively small number of people that are really investing in agricultural chemical research. I would add a couple of other names to the list. Part of it is that the stakes are very high to invest in agriculture chemical research. To bring a new product to market on a global basis is $256 million, so it takes a critical mass to be able to bring new products to market. I have been in this industry for 28 years now, and even though there is a relatively small number of players, the competition is as intense as it has ever been, from my personal perspective.

Senator Plett: I suppose competition is good.

Mr. Wispinski: Competition is good. It makes all of us better.

Senator Plett: Exactly. We have also heard, and you mentioned it in your presentation already, and we hear it every time we have someone presenting here, that we will need to feed 9 billion people. Of course, we have climate change, which is according to some people more prevalent than according to others, but nevertheless it is there. We have droughts. We have floods. What are you doing to work with GM-enhanced crops that would be more drought resistant and could possibly cope with even more water and more flood issues?

Mr. Wispinski: Senator, you are absolutely right that innovation is needed to adapt to climate change and to varying climates, whatever viewpoint people have on the climate change issue. We are investing in both biotechnology as well as in advanced plant breeding to make plants with traits with drought or stress tolerance, but also with plant breeding to make the varieties and hybrids more adaptable across a range of environments. It is a significant area of focus for us so that the plants can produce high yields in a multitude of environments and across different geographies and different weather conditions. It is a key area of focus for us and others in the industry.

Senator Callbeck: Thank you very much for your presentation. You are the president of Dow AgroSciences Canada, but in your presentation you did not mention Dow AgroSciences Canada; you just mentioned Dow AgroSciences. Is Dow AgroSciences Canada an affiliate?

Mr. Wispinski: Yes, senator. We are the affiliate of Dow AgroSciences LLC, which is a global organization. When it comes to research and development, we rely on a multi-pronged approach. Our discovery labs work largely on a global basis, but a lot of local research is done in Canada. I highlighted the Canadian canola research centre in Saskatoon, which serves not only research in Canada but we take that research from the Canadian facility and leverage it into other geographies around the world where canola is very important. I apologize for any misunderstanding, but it is an integrated system.

Senator Callbeck: You talked about the research that is done in Canada. You may use it in other countries. What about intellectual property rights for discoveries that scientists make in Canada? Who owns those rights?

Mr. Wispinski: Discoveries that are made by any scientist within our company are owned by the company.

Senator Callbeck: So that is Dow Chemical Company?

Mr. Wispinski: Yes.

Senator Callbeck: Where is their head office?

Mr. Wispinski: Our agricultural head office is in Indianapolis, Indiana, and the corporate for Dow Chemical is in Midland, but obviously we have legal entities around the world and Dow AgroSciences Canada is the legal entity in Canada.

Senator Callbeck: You own several seed companies, I believe. I saw a list of them a minute ago. Are any of those seeds produced in Canada?

Mr. Wispinski: Yes, we produce canola in Canada. We produce corn and soybean in Canada, and we produce wheat in Canada for production in Canada. We export some of those seeds to the U.S. and import some seeds from other geographies as well.

Senator Callbeck: Monsanto was here the other day. They indicated that it is best if you are buying their seed to buy it every year, because your production will be much better than if you replant the seed. Is that the same with yours?

Mr. Wispinski: Yes. I would say that hybrid seeds is one use. In order for the significant investment to go on in developing new varieties, which is an annual investment, we invest in plant breeding every single year to develop new varieties so that we can introduce new hybrids and new varieties every year.

There needs to be a return to the developer, and that is part of the system, but there is a benefit to the farmer. Farmers are the best business people in the world. They only buy products if there is a benefit to them and to their farming operations.

Senator Callbeck: In your presentation, you talked about room for improvement to establish clear vision and direction of Canada's agricultural policies to support Canada's role as a global leader in agricultural innovation.

The second thing you said is to work towards bettering Canadians' understanding of the role and importance of agricultural innovation. How would you propose to do that?

Mr. Wispinski: I went on to say that we all have a role to play, and I think we need to develop partnerships to really improve the understanding of agriculture within Canada. I think the government can play a greater role. We as industry work through trade associations to try to help with that. We need to engage in dialogue as individuals to help gain that understanding of agriculture with Canada.

We are more removed as a society from primary producers. We need to engage with the primary producers to help play a role in bettering the understanding of agriculture with consumers. It is a really important issue.

Senator Callbeck: It is. Who should be taking the leading role here?

Mr. Wispinski: Again, I do not know if I would advocate that anyone in particular should take a role. I think we all need to get involved and make it happen.

Senator Callbeck: Generally, something does not happen unless someone steps up to the plate.

Mr. Wispinski: I think the government could take more of a leadership role and certainly help make that happen. Industry, we are trying, but we also have constraints. We are seen as having a vested interest and being biased.

Farm groups are starting to take a leadership role. How do we get the right coordination of all of those vested parties? Perhaps government could play a role in helping make that happen.

Senator Eaton: In your presentation, you talked about agronomic improvements sought by Canadian farmers, i.e., standability, natural genetic tolerance to disease and yield improvement. We are going into free trade agreements hopefully with the EU and with some Pacific nations like India and China. Do you know of specific requirements that those countries, if we were to keep on exporting our wheat, might want or demand?

Mr. Wispinski: We certainly look at all of the different crops in profiles and for Canadian commodities to create new markets.

Our omega-9 canola oil is a great example. It has a health benefit. We have been able to garner a higher share of the U.S. market because of that particular profile and help better the canola industry. Every crop would have specific requirements in different geographies. It is important that we continue to find those innovations that make our crops more competitive on a global basis.

Senator Eaton: Are there things that you are presently working on now that are being tested that might have different properties?

Mr. Wispinski: I would use another example, where we are working on improving the value of the meal from canola. That will make the meal component in canola more valuable to users of the feed.

That is another innovation example that we hope to bring to market in 2015-16 to make a real value contribution to Canadian agriculture.

Senator Eaton: Going off in another direction, you made a point saying that you could not emphasize enough that we could not do without the sound science-based regulatory policies that support a strong innovation agenda.

Did you make that point because you feel in some ways that it is being threatened?

Mr. Wispinski: It is constantly under challenge, if I can use those words. Maintaining strong science-based regulation is so very important. It is easy to advocate based on fear for some groups, and that challenges, frankly, some of the strong science-based regulations.

Senator Eaton: Are you thinking about Vancouver and Toronto not allowing pesticides, for instance, and the fear that some people feel about GMOs?

Mr. Wispinski: I think when there are challenges to science-based regulation, no matter where it happens, at what level of government, if you are banning pesticides in an urban environment, the perception is that you are banning them for safety even though the PMRA has reviewed them from a safety standpoint.

The biggest concern that I have with that is, what perception does that give to our farmers who are using those products in food production where they are safe and they are absolutely necessary for food production? Yes, there are some of those challenges that take place.

Senator Eaton: I will ask you the same question I asked the Monsanto people yesterday. When something like that happens, say in Vancouver and Toronto — you are too tactful to mention them; I am not — banning GMO pesticides, do you try to educate the public? Do you go out and try to promote science-based agriculture and fight back in any way?

Mr. Wispinski: We do try to promote science-based agriculture, science-based regulation, and defend it at every opportunity we have. It is very difficult for individual companies or even the industry to be able to do that in a broad population and really be able to get that message across.

We are continually getting better at it. We are continually getting better at communicating the science behind our products, but communicating science to the general public is a challenge. It is an art. We are getting better at it, but we have a way to go, obviously.

Senator Eaton: Yes. Thank you.

Senator Merchant: Correct me if I am wrong, but are pesticides or herbicides a little like the flu vaccine? Bugs mutate and adapt to things. Do you constantly have to change the composition to keep ahead of the game?

This is worrisome to some people because things get into the soil. Do they break down eventually? Do they just accumulate? What is happening? We are using more and more pesticides and herbicides. Some people worry about it.

Mr. Wispinski: I know.

Senator Merchant: It gets into the drinking water or the aquifers. Maybe you could explain.

Mr. Wispinski: Let me take that in two parts. First, do weeds or insects become resistant to some pesticides? Certainly, they have. There is the potential.

We promote and advocate stewardship practices similar to your analogy of the medical industry: rotate the types of products you use to control the pests, to prevent the onset of resistance. That is a critical piece.

Yes, we do need to continue to innovate so that we can stay ahead of the challenges that are brought by resistance being developed in weeds or insects. I hope that addresses the first part of your question.

With respect to the second part of your question, when these products are reviewed by the Pest Management Regulatory Agency or regulatory agencies around the world, they are looking at all aspects of the review, which include environmental impact and the degradation cycles of the products in the environment, and those are important parts of a review. As I have said, the Canadian regulatory review is one of the most stringent in the world, and we should be very proud of the regulatory regime we have in Canada.

Senator Merchant: What happens, then, to these things that get into the soil? Do they break down?

Mr. Wispinski: Certainly they break down in the environment, and part of the review is to make sure that they do.

Senator Merchant: There is this move to organic, and certain people will only buy organic food now. How do organic farmers survive if they do not use chemicals and those kinds of things? Do they survive because there are just a few of them and the market is not very large? How do they grow crops without using chemicals and pesticides?

Mr. Wispinski: Consumers having a choice is a good thing. Organic producers generally produce on a smaller scale, although there are some now that are larger scale and generally more intensive, so there is a higher cost of production involved. Generally, as you know from the grocery stores, they also command a premium in the marketplace because of it.

The innovations of agricultural chemicals and crop protection products to innovations from biotechnology are absolutely essential. They are critical for us to be able to feed the world. Having choice, where people can afford the choice, is a good thing.

Senator Merchant: Why are things not more expensive when chemicals must be expensive? While I understand that you say there is a lot of competition, here again, to give you an example, when you have only three or four companies — I am thinking of going to the gas station to buy gas for the car. There are three or four or five major companies, but the price is all the same; there does not seem to be competition.

How do you encourage competition when you have these huge players in the market? It appears there is no competition, just by looking at it from the outside.

Mr. Wispinski: From my perspective, as I said in response to another question, there is, in my view, very strong competition among the major players.

Farm crop inputs are an important input to crop production, and there is a cost. The farmers, as I said, are strong businesspeople, and they buy the products that best fit their needs. Those products give them the best return for the dollars they spend on inputs. They are making the choice to use those products because they provide a return and help them with producing food, and our farmers are among the best in the world. I have great respect for their abilities to make those economic decisions.

Senator Merchant: Thank you.

Senator Buth: Thank you for being here this morning, Mr. Wispinski. Frankly, it is good to have somebody talk about the omega-9 oil story because it has been a remarkable success story.

Mr. Wispinski: Thank you.

Senator Buth: Can you comment on how farmers obtain value from the system?

Mr. Wispinski: The food companies pay a premium for the oil, for the benefits that the oil delivers in stability and health profile. That really gets transferred down into a premium to the growers, and the growers, on average, are receiving a greater return on Nexera canola than on other canola. It has a real benefit to them, last year to the tune of about $35 an acre more, from the data sources we have, in returns to them on their farming operations.

Senator Buth: What would that be, approximately, in terms of percentage?

Mr. Wispinski: Five to 10 per cent improvement on return.

Senator Buth: Thank you. Can you comment on whether or not you have any collaboration with universities in Canada and with Agriculture Canada researchers in the past or currently? How do those collaborations work?

Mr. Wispinski: Thank you, senator. We do have a number of collaborations with research institutions across Canada, such as Agriculture and Agri-Food Canada and the Plant Biotechnology Institute, which is part of the National Research Council. We announced collaboration last week or the week before with the Government of Saskatchewan and the Crop Development Centre at the University of Saskatchewan and for wheat research at the University of Alberta and the University of Lethbridge. I will miss some, and I hope I do not offend those organizations that we have collaborations with by not mentioning them.

They are important. Some are basic science collaborations, some are testing collaborations and some are joint product development collaborations, and those are important research investments and initiatives for us.

Senator Buth: How do you deal with intellectual property issues related to those collaborations?

Mr. Wispinski: They are usually negotiated up front. Clarifying them is very important. Successful collaborations usually involve sharing of the benefit, as is inherent in collaborations, and some are royalty-based structures. Some are purely us investing in order to help do specific parts of the research, but some are royalty-based structures as well.

Senator Buth: Thank you.

The Chair: As I introduce Senator Oh, I had the opportunity as chair of the committee to be invited to a Chinese delegation, and one topic they talked about was agriculture, so Senator Oh, thank you for joining the committee.

Senator Oh: Thank you. Welcome. This is a very interesting topic, Mr. Wispinski.

In the last paragraph of your remarks, you mention that we need to boost agriculture production by 70 per cent over the next 40 years. In the Pacific Rim, Southeast Asia and Asian countries, such as China and India, there are huge populations, and as their population increases, there is less and less good farmland available. In addition, every year they have many natural disasters that affect agricultural production.

Do we have any special or strategic plan in working with those governments on the agricultural side? When you look at it, it would be good for Canadian farmers because the market in those countries will be huge for the next 40 years. The population in the ASEAN countries alone is comparable to India.

Mr. Wispinski: Senator, you have hit on a couple of very important points. We do have business operations throughout the Asian countries playing similar roles to what we do here in Canada, such as taking innovations and either developing them locally or taking them globally in order to help bring those innovations to life within those geographies.

It also represents a tremendous opportunity for export countries like Canada, where the demand will increase significantly. We have the opportunity and the obligation to drive innovation to help feed that, and we have a great agricultural structure and great producers in Canada to take advantage of those market opportunities.

Senator Oh: Thank you.

[Translation]

Senator Rivard: We know that the issuance of a patent does not guarantee exclusivity to its holder. We know that you may also face expensive legal proceedings that can also be very lengthy, and all this results in underinvestment. How can you and the researchers protect yourselves against this risk that someone will challenge the validity of a patent?

[English]

Mr. Wispinski: Patent challenges are part of the landscape and a part of doing business. When preparing the patent, we spend a lot of time making sure that the patents are written right to capture the essence of the novelty of the invention. When they are done in that way, then we work through the legal system to defend against the challenges. It is important that there are opportunities for people to challenge patents. Do we always like it? No, but I think it is an important part of making sure that there is that balance in the system.

[Translation]

Senator Rivard: I would like to continue discussing the possible trade agreements with Europe, concerning which Senator Eaton asked some questions.

Your company is already established in certain European countries. You would not be affected by a possible trade agreement between Canada and the European Union, in the sense that plants would not be closed in Europe because Canada can make products at a lower cost. Does the fact that you have tentacles all over the planet explain why you are not affected, or are affected to a very small degree, by free trade agreements with other countries, or, on the contrary, do you believe that trade between Canada and the European Union could be very advantageous for your company, as regards Canadian facilities, of course?

[English]

Mr. Wispinski: I would have a twofold answer. We applaud free trade agreements. Free trade agreements help our agricultural commodities create markets in other geographies. We have a great opportunity, and we are an export nation when it comes to agriculture, so those free trade agreements that facilitate that do help Canadian producers and have an advantage to our Canadian business because of it. At the same time, we will invest in technologies for different geographies. We invest in advance plant breeding within the European market. We invest in biotechnology for the Americas market, because of some of the acceptance.

I applaud the Government of Canada's initiative to be a leader in low-level presence policies to facilitate trade. I advocated in my comments about continuing to accelerate efforts to harmonize maximum residue limits, MRL limits, to facilitate trade and make sure that technology is available to our Canadian farmers. Those are very important initiatives. As much as those can be talked about in the free trade agreements that the government has undertaken, I think that is advantageous to our farmers.

Senator Callbeck: I am trying to clear this up in my own mind. My understanding is that when one of your competitors, Monsanto, sells seed, that you have to use their herbicide; is that right?

Mr. Wispinski: In many cases, you would use the herbicide that the trait does. In some cases, it is the herbicide from that company, but not all cases.

Senator Callbeck: I know in your case, it is not. You are producing seed, and herbicides can be used from other companies, but I thought with Monsanto that that was not the case. Am I wrong here?

Mr. Wispinski: I cannot probably comment completely on all of Monsanto's technologies, nor would it be appropriate that I do. In some cases, where the use of the herbicide is tied to the traits in the seed, there would be some patents. There are usually alternatives, in many cases. When the patents expire, then it opens it up to other herbicides to be used. Other times, it is that the herbicide only works with that trait that is a part of the seed. The other important thing, senator, is that the growers have options in which seeds to buy and which trait packages to buy. Part of the competition is that they are making those choices as a total systems approach. I hope I am articulating that.

Senator Callbeck: With the herbicides that you sell, you sell some that go with your seed, but you also sell other herbicides that would go with Monsanto and other —

Mr. Wispinski: For example, we could sell a form of glyphosate that can be used on Roundup-ready crops today, whether it is our seed or Monsanto seed, and that occurs, or alternate herbicides that can go and be used on those crops. With the weed control system, we intend to sell a herbicide that is used with that weed control system partly because we have made advances in the herbicide reducing the volatility and reducing the drift to improve the stewardship of that, and so we would strongly encourage the use of that herbicide with the weed control system and the seed that goes along with that. However, farmers could use other herbicides in that system as well.

Senator Callbeck: If they want to get the best results, it would be by buying the products you recommend.

Mr. Wispinski: That would be what we would be promoting, absolutely.

Senator Callbeck: Yes. Thank you.

Senator Eaton: For this report we are pulling together, when you are talking about regulations, I think it is important that we include something about regulations and innovation. You specifically talk about plants with novel traits and how the regulatory system has fallen behind. We heard yesterday from Monsanto that Argentina and Brazil have accelerated their regulatory system and that we are going to start following behind.

What would you like to see happen? What can we put in our report very specifically about fixing up those regulations, in particular perhaps about novel plants?

Mr. Wispinski: Canada has a lot to be proud of with the plant with novel trait registration. It is looked at as a role model for regulation in the world. I think the biggest thing that we could do is predictable time line service standards for the review of plants with novel traits.

Senator Eaton: Why are we not doing a good job with plants with novel traits? Is there something specific to a plant with novel traits? What is a plant with a novel trait? Is it wheat with extra protein in it or something?

Mr. Wispinski: It can, in Canada, mean a number of different things. It is a regulation where a biotech trait goes through as well. If I take that narrower definition, it is reviewed with multiple departments within CFIA that need to review that, and, in some cases, with input on the file from the PMRA. If we can map out the timelines to take that through the review and get an approval or a modified approval or a not approval through the system, that allows us then to make commercial plans based upon knowing what the time lines are. That is important for us to be able to do the investments behind the scenes that allow us to commercialize that product quickly.

Senator Eaton: It is that particular track that we should try to speed up.

Mr. Wispinski: Yes.

[Translation]

Senator Maltais: Your company does business all over the world, particularly in the United States, Canada and to some extent Europe. Have you had failures, for instance like those of other enterprises when they released certain products into the air that had an adverse effect on the production of grains such as corn, wheat, soy or others?

[English]

Mr. Wispinski: We have had some incidents that we have investigated and have dealt with, none that have disrupted trade. We take great efforts to follow all of the protocols and put stewardship practices above what the government regulations are to ensure those. Any time that an incident happens in another company or anywhere in the world, we review all of our protocols to further strengthen them.

It is an important issue, but, again, I would re-emphasize a really important point, that biotechnology has been used for over a decade, it has been used on millions and millions of hectares around the world, and it has never had a food safety incident to this point.

The protocols are in place; yes, they are very important issues. There is a tremendous amount of stewardship going on to ensure that that is dealt with. The innovations are safe and the innovations are critically needed.

[Translation]

Senator Maltais: Are the safety rules you apply to crops in general in Canada and the United States also applied in Mexico?

[English]

Mr. Wispinski: I am not sure I am qualified to answer the specific rules in Mexico. We take a viewpoint of internal stewardship of following our protocols, meeting the standards in the country or our protocols, whichever are most strict. We follow pretty much the same protocols around the world within our company. I am not in a position to follow up on specifics in Mexico, but I could get that information and follow up subsequently for you, senator.

The Chair: If you could provide us the information, it would be helpful.

As we conclude, there is one question from the research staff that I would like to bring to the attention of the president. We know there are over 17.3 million farmers in the world. We know that Canada has a little over 290,000 farmers across Canada. With our experience in the world, Canada is being asked on a regular basis for transfer of technology. We know the role that you play in this.

Intellectual property rights are sometimes too far-reaching, sometimes can be harmful to innovation and also can have the challenge of prohibitive costs for buyers of the particular product. Do you have any comments, Mr. Wispinski, in terms of the agricultural biotechnology sector, whether Canada's current intellectual property system, with your experience and the experience of your company, stimulates or curbs innovation?

Mr. Wispinski: Our Canadian intellectual property laws do a good job of stimulating innovation. It is important that we continue to focus on ensuring that they are competitive on a global basis. We work hard, I work hard, to try to attract research from our global organization to be done in Canada, to be done on crops that are important to Canada. It is very important that our intellectual property system is competitive.

In many cases, it is; in some areas I think there are opportunities, as I mentioned in the seeds area, where we can further improve, and we need to continue to review it on an ongoing basis to ensure that we are staying competitive with our intellectual property system.

The Chair: Do you have any closing comments?

Mr. Wispinski: My closing comment would be to reiterate my opening comment. Congratulations to you, Mr. Chair, and all senators for looking at innovation. It is obviously a subject that is very near to my heart and I am passionate about because, as I said, innovation in agriculture has never been more needed than it is today and the opportunity, because of the advances in the science, has never been greater than it is today.

Thank you very much for the opportunity to present.

The Chair: The committee thanks you for being here with us.

(The committee adjourned.)