THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Thursday, April 11, 2019
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study on how the value-added food sector can be more competitive in global markets.
Senator Diane F. Griffin (Chair) in the chair.
[English]
The Chair: I’m Senator Diane Griffin from Prince Edward Island and chair of the committee. Today, the committee is continuing its study on how the value-added food sector can be more competitive in global markets. We have a panel here today, but before we go ahead with the folks on the panel I’d like to ask the senators to introduce themselves.
Senator C. Deacon: Good morning. Colin Deacon, from Nova Scotia.
Senator R. Black: Good morning. Robert Black, from Ontario.
Senator Oh: Good morning. Senator Oh, from Ontario.
Senator Kutcher: Good morning. Stan Kutcher, from Nova Scotia.
Senator Klyne: Good morning. Marty Klyne, Saskatchewan.
Senator Mercer: I will say good afternoon. Terry Mercer, also from Nova Scotia.
The Chair: There’s a strong maritime influence on this committee, as you may have noticed, panellists.
For our panel today, we have a video conference from the Embassy of Canada to the Kingdom of the Netherlands. From the Netherlands Foreign Investment Agency, we have Maarten Schans, Senior Advisor Agri Food; and from the Embassy of Canada to the Kingdom of the Netherlands, Diederik Beutener, Trade Commissioner. He is our man in the Netherlands. Thank you for accepting our invitation to appear.
Before we hear from you, I have to go into a comparison here between our two countries. You can dispute it after, if you like. This is some background information on food processing in the Netherlands compared to Canada. The total agri-food and seafood exports from the Netherlands in 2016 were valued at $136.6 billion, which puts them at number two for exports globally, while Canada had $64.6 billion, which puts us at number eight globally. The total processed food and beverage exports in 2016 for the Netherlands were valued at $73.1 billion, while Canada’s were valued at $33.5 billion — so over twice as much in the Netherlands. The numbers are quite impressive and are even more so when we consider the amount of agricultural landing that the Netherlands has, which is 18,370 square kilometres, compared to what we have here in Canada, which is over 626,000 square kilometres. Clearly there is something to be learned interest the Dutch model.
I would now invite the witnesses to make their presentations, after which we will have questions by the senators.
Diederik Beutener, Trade Commissioner, Embassy of Canada to the Kingdom of the Netherlands: We thought it would be good to combine efforts and have both Maarten Schans and myself here at the embassy presenting to you. I’m a trade commissioner here since 2001. I’m locally engaged, so I’m a Dutch citizen just like Maarten. My responsibility is the agri-food sector of Canada, promoting its products here in the Netherlands, but also investment attraction, so Dutch investment into Canada, and research collaborations, specifically in agri-food. Maarten and I have seen quite a development in recent years. We have worked together for roughly seven or eight years already.
Just for your knowledge, the Netherlands Foreign Investment Agency has been a very strong partner of the embassy for a number of years. I can remember even 25 years ago working for another agency and the NFIA was delivering services. Maarten will tell more about what NFIA stands for, but I can tell you that the agency is probably exactly what we find so interesting about the Dutch. It is very easy to work with them. It’s open to international missions and corporations. We are in need of such support because we have a tremendous amount of agri-food and other sectors coming into the Netherlands to do fact finding and business. You can imagine that agencies such as Mr. Schans’ are of high value.
Maarten Schans, Senior Advisor Agri Food, Netherlands Foreign Investment Agency: First of all, good morning and many thanks for the invitation to discuss this with you. I work for the Netherlands Foreign Investment Agency as a section specialist in agri-food. The Netherlands Foreign Investment Agency is a part of the Dutch Ministry of Economic Affairs and Climate Policy, and our job is to attract foreign investment into the Netherlands. I do this particularly in the agri and food area.
From the side of the Dutch and from the side of NFIA, we are convinced that foreign investments are very important to keep our ecosystems going and to contribute to our economy, as well as to take the benefit of those already in the Netherlands. I think that we will also go back to one of the main lines in what I hope to discuss with you later in this session. It’s all about collaboration and building ecosystems that consist of parties that bring something into the system but also take something out of the system so that the ecosystem can grow.
Foreign investments are very important to our economy, and we are particularly focused on the foreign-owned businesses that are active in the Netherlands. We do account management on those companies, and we hope those companies will be successful and grow. We monitor our investment climate based on the signals that we get from these companies, and, of course, we want to keep our investment climate in shape, attracting new investments.
We are currently in touch with businesses that are not yet present in the Netherlands but are looking for a place in Europe. Of course, we hope to bring the Netherlands under their attention, not only for the benefit of the Dutch economy but also for the benefit of the success of that company. We want to talk with that company in five years after they have set up in the Netherlands and hear from them that it was an excellent choice to set up in the Netherlands.
I would like to leave it there for now.
Senator R. Black: Thank you for your presentation and for joining us today. My question centres around the challenges you have faced in the last few years around accessing international markets. We heard some wonderful stats earlier about access to your exports. What challenges have you faced? How have you overcome them? Hopefully we can learn some things from your challenges and how you have overcome them. Thanks.
Mr. Schans: Well, we started this presentation with some statistics. If I take the statistics from my side, if you look at the size of countries, we are on number 135 in the rankings. In terms of agri-food exports, we are ranked number two. We don’t like to say that ourselves, but we are a very small country. Being a very small country means that you need to be on your toes all the time. Our internal market is quite small, quite in contrast with your internal market.
We need to be successful in export. That means we need to be successful competing against producers in their country, in that respective country, and we need to bring something extra. We need to bring something at a competitive price, and we need to be able to produce it in the Netherlands and export it to that country. That means we are under continuous pressure to do better and to bring high-value-added products at a competitive price. That’s not something that is a one-off is a continuous pressure that the sector is feeling. The sector is on its toes continuously and trying to do better at competing in foreign markets.
That has resulted in the system we have built up in the Netherlands or has actually evolved in the Netherlands over quite a large number of years. If you look at the history of the Netherlands, it is a history of people finding one another in common challenges and actually collaborating to overcome those challenges. That’s exactly the thing we are also doing in agri-food and in other sectors where we need to compete with the outside world.
Senator R. Black: What challenges specifically might you have faced five or ten years ago? I like the word “collaboration.” I also like the follow-through that you spoke to during your presentation after a company has been there five years. Are there any specific challenges that we should learn from that you faced head-on in those early days?
Mr. Schans: I would like to come back to the fact that the Netherlands is not a country that is making profits on commodity products, but we are very much making up our profits with high-value-added products. If you look at the Chinese market, Chinese consumers at this moment do not trust the infant nutrition produced by their local manufacturers. The Chinese consumers like products that are made in the Netherlands because they know that they are safe and they are high-quality.
If you get that opportunity, and if you also have the challenge that there is not much money to be made with dairy commodities, then you need to build an ecosystem where you can actually develop these high-valued-added products. You need excellent know-how for that. You need a system where universities work with companies. You need a system where companies are competing against one another but also trust each other enough to collaborate wherever possible. If you look at the research that is ongoing in food and health, and at the research that is ongoing in health claims, that research is that much more costly and that much more fundamental, and it makes no sense for a company to do that on its own. At the same time, it’s quite demanding for a company to work together with its competitors.
The Netherlands is a small country where competitors meet one another simply because they are very close. It allows them to discuss challenges that they are both facing. It also allows them to discuss where they might collaborate as companies among one another, and it also allows them to discuss with universities where these companies can work together with universities to build the know-how, which is more interesting to build together than to build as a single company. That basis of collaboration also extends to collaborating with the Dutch government providing the infrastructure to make this collaboration possible.
Senator R. Black: Thank you.
Senator Kutcher: I would like to just follow up on one of your comments related to entrepreneurship and high-risk tolerance. Now, Canada was just starting to realize that it was over here during the Dutch Golden Age, and the Dutch East India Company may have been the forerunner to your current setup. You can correct me if I’m wrong, but I think tulips were one the currencies of the world until the bubble burst.
I think the Dutch created the first global, value-add agri-food chain with tobacco products. You took tobacco from the Virginias and processed it in Holland and sold it all around the world. That is a long tradition of entrepreneurship and high-risk tolerance. How do you foster, nurture and support that?
Mr. Beutener: From the embassy’s perspective, language skills are quite key. My son is 12 and already speaks three languages fluently. At age 15, he will probably speak German, French, Dutch and English fluently. As an exporting country, that is essential.
In our business schools, we have programs where we try to get entrepreneurial skills evolved and people educated on entrepreneurship. In our discussions with AAFC, Agriculture and Agri-Food Canada, some five years ago, the first pillars of success of the Dutch food industry were seen as the ports of Rotterdam and Amsterdam and the fact that we are in a nice strategic location. The culture of the Netherlands and our entrepreneurship may have been key to it. Of course, some studies were done, and automation of the food industry came up as a key factor. Knowledge centres are available here, but on the cultural side we never really fleshed it out. As AAFC, we never really went any further on that perspective.
Maarten, do you have any views? For us, this is common knowledge. The Dutch were traders.
Mr. Schans: I think the Dutch have been traders ever since the times you just mentioned. I think we need to be. We are very much business driven. We are very much outgoing. We need to earn our money in export markets simply because we have a small market ourselves.
Regarding entrepreneurship, we are also facing a challenge somewhat because the Dutch are also not very big risk-takers. We are very much looking to avert certain risks, for example, by working together or by doing research together. That sometimes means some new developments may not come from the Netherlands. Some new technologies are being developed in agri-food and in high tech. The entrepreneurial spirit in, for example, Silicon Valley may be a bit bigger than the entrepreneurial spirit in the Netherlands itself. We are not the biggest risk-takers. If you make a mistake in the Netherlands and your business goes down, you will feel quite ashamed, and perhaps you will be hesitant to try a second time. If your business fails in the U.S., then you get up and start again.
That’s one of the challenges in the Netherlands we are trying to overcome at this time, trying to increase the entrepreneurial spirit. We are working together with entrepreneurs in Silicon Valley. We want to see what we can learn from them on how to get more entrepreneurial spirit in, for example, our education system. Of course, we hope they can learn from us. In the meantime, we have businesses in Silicon Valley and businesses in the Netherlands working together. Our research institutes are working together.
On the aspect of risk-taking, I would not say the Dutch are the among the biggest risk-takers. That’s also one of areas where we try to learn from others who may be even more entrepreneurial in that aspect.
Mr. Beutener: Going back to educational systems, when I look at the number of Dutch students visiting Canada for internship and student exchanges, it’s quite high. It’s hard for us to fill the slots for Canadian students here in the Netherlands. Canadian students seem to be reluctant to come to the Netherlands. Canada is twice as big, population-wise, but we certainly see that Dutch students are more eager to go to Canada to explore and to learn.
Senator Kutcher: Thank you.
The Chair: You made a very good point there. You mentioned that your son in a few years will have fluency in four languages. I suggest that is a major advantage for the Netherlands compared to what our students might have here. The most we expect is to be bilingual, not “quadruple-lingual.” That may also account for why you are getting fewer Canadian students applying to take up the internships. Language is a very important advantage for the Netherlands. It’s wonderful.
Senator Oh: Good afternoon. With my background, I’m from Asia, originally from Singapore. I have known Netherlands products since I was a kid. Probably everything that you put on the shelf, we have it there.
You focused a lot on foreign investments and high-value-added products for export. Your domestic market is small, virtually non-existent, so you export all your products overseas. How do you attract your foreign investment for valued-added products into your country?
Mr. Beutener: That’s right up Maarten’s alley, of course.
Mr. Schans: For example, for a company from Canada entering into the European market, then I think actually the Netherlands would be a great place from which to start. That has to do, first, with our strategic location in the heart of Europe, in the heart of some thriving economies in Europe, of which the Netherlands is one. Strategic location is very nice, but you can do nothing with a strategic location if you do not have the logistical infrastructure. Without a doubt, we have one of the best logistical infrastructures in the world, whether by water, road, train or air or by Internet, which is becoming more and more important as well. So we have the strategic location. We have the logistics.
We have a business cluster that would be great for companies to be part of, whether it’s in terms of filling your supply chain, finding customers, finding suppliers, or finding partners to work and collaborate with. That strong business cluster is combined with a knowledge infrastructure that is very strong in the area of agri-food. If you look at future global challenges, there are big challenges in agri-food and automation, producing at lower costs, and automation of production. We have a strong cluster in agri-food but we also have a very strong cluster in high tech, for example, developed around a company like Philips. There are big global challenges in producing more foodstuffs with less stress on the water system. Our history is built around managing water and making excellent and bright use of the water we have.
If it’s about food, it’s more and more about food and health. We have a strong cluster in life sciences and health pharma. We are also challenged to produce at lower energy costs; it is a scarce commodity with which you have to act very wisely. We feel we have quite some knowledge there. We do not have knowledge only in the area of agri-food, but we also have strong universities and research organizations in those other areas.
Again, as we are a small country, we are used to working with one another to collaborate. Collaboration is strong between companies, between companies and knowledge institutes, but also between different technological areas. We are quite well equipped to find solutions for the challenges that the world is facing.
We are a strong export nation, so if you have those solutions, we are also quite a good place to export those solutions to the rest of the world. Companies are not on their own in that. If you are a foreign business, you can be very well served by my organization, the Netherlands Foreign Investment Agency. If you are a company working from the Netherlands and you want to export, then we have a strong network throughout the world to also support companies where the support is actually required. That support is available to Dutch companies like Friesland Campina, Philips and Heineken, but it is very much available to all the companies doing business in the Netherlands and from the Netherlands.
Last but not least, we have a very strong collaboration between businesses, knowledge infrastructure and policy-makers. We want our policies to serve society and also to serve the success of the businesses in our economy. That collaboration should be a reason for foreign businesses to set up in our country. If you set up in the Netherlands, you do not set up to be successful in the Netherlands; you set up to be successful in Europe and the rest of the world.
Senator Oh: I saw your list here. I know the Netherlands doesn’t produce anything like cocoa beans, palm oil, soybeans, all the important ingredients. None. You have none. You only import it and then process for value-added.
Mr. Schans: It’s interesting that we do not produce any cocoa, but we still have the biggest cocoa port in the world and we are one of the most important countries in terms of cocoa processing. We don’t have any palm oil, but if it’s about sustainable palm oil production or if it’s about finding new applications for palm oil in your food products, then the Netherlands has very strong R&D and expertise in that area.
Senator Oh: Canada just started producing infant formula for export, but you have already taken half the market in China.
I think, chair, we have to do a fact-finding trip to the Netherlands and learn something there.
The Chair: That’s a great suggestion.
Mr. Schans: I think that success is very much a success, first of all, of the Dutch businesses that all present doing their business in the Netherlands and exporting from the Netherlands to China. First of all, it’s the success of the businesses that feel the urgency to export and that feel the urgency to work together. A government can add to that and can provide the right framework. Knowledge institutes can add to that and provide a high quality work force and the right know-how, but the system can only work if there are businesses that feel the pressure to go to the outside world.
I can also imagine that if you have a whole market that provides you with a marketplace and you don’t need to rely on export, then perhaps you can be a little bit more laid back and not take action. In the case of the Netherlands, we do need to take action. If we don’t feel the pressure ourselves, we will not be able to compete in the outside world. Actually, that pressure has contributed to us ending up in the place where we are, and that’s, I think, a very nice place to be.
The last reason to set up in the Netherlands, completing my list — I don’t know whether you have ever visited the Netherlands, but children in the Netherlands are among the happiest in the world, not only because of infant nutrition, but because of the other aspects of the Netherlands. For foreign companies and foreign employers, the Netherlands is a great place to house your foreign employees and also attract an international workforce who are trained at Dutch research institutes. We have a large number of foreign students studying at Dutch universities simply because our studies are in English. We need to have our studies in English because the Netherlands is too small to translate the books into Dutch. When we go to school, when we go to school or university, our school books will be in English, and that’s a very natural way of being able to speak English and communicate in an international world.
Senator Oh: That helps a lot. Thank you.
Senator Mercer: Gentlemen, thank you for being here this afternoon. We do appreciate it.
In terms of the documents that were given to us in advance, agri-food is valued as one of the key sectors in the Dutch economy. As such, the sector has developed an innovation agenda known as the top sector agri and food policy, which is reviewed and renewed every five years. I’m interested in the review process and in knowing where you are in the current cycle. Are you at the beginning, the end or the middle? Where are you in that five-year cycle?
Mr. Schans: First of all, that agenda is very much an agenda that is built in a collaborative effort. The action points that are in the agenda are actually action points that are compiled on the basis of input of businesses. On the basis of that input of businesses, innovation agendas are drawn up. Of course, there are also key performance indicators that are being defined to see whether those programs are doing what they are intended to do.
In that sense, you could look at these key performance indicators as the number of people who are working in the agri-food sector, the height of exports and the importance of agri-food exports to the overall exports of the Netherlands. Those are the kinds of key performance indicators that are being measured. Also, R&D intensity and the amount of money spent on R&D is one of the key performance indicators. Based on those kinds of issues, the programs are continuously monitored and continuously adapted when necessary. There is continuous monitoring of whether these programs are still aiming at the things that the industry requires.
Of course, these programs are being renewed in a five-year cycle. I’m not directly involved in drawing up those programs, so I cannot tell you exactly where they are at this stage. I can tell you that, of course, in line with the current discussion on sustainable development goals, sustainability and sustainable development goals will have a much larger role in future programs. At this moment, the government, industry and stakeholders are drawing up a climate agreement in which they state a number of ambitions — for example, ambitions with regard to CO2 emissions.
In line with that climate agreement, there are also challenges, and the innovation programs will change. There will be more attention paid to the application of smart technology to contribute to those kinds of goals. Energy and sustainability, water consumption in agriculture, health aspects of food, healthy consumption, healthy food choices and also matters like food safety are a continuous point of attention in those programs.
We already talked about entrepreneurship and SMEs. There is a special chapter in this program for small- and medium-sized businesses. There will be more budget in the new program to involve small- and medium-sized businesses into fundamental and applied sciences. Of course, digitalization is a continuous point of attention, so there will also be a specific SME action plan to support SMEs in digitization of their companies and businesses.
Senator Mercer: Thank you for that.
You mentioned research and research organizations. Dutch research organizations are world class and possess extensive technical capabilities. Have you seen any recent results, positive results, coming out of the research organizations in the Netherlands?
Mr. Schans: I’m just thinking of what kinds of examples to give right now. What kinds of results are you thinking of?
What comes to mind is we were just talking about how the Netherlands doesn’t produce any cocoa and doesn’t produce palm oil. We also don’t produce any bananas, but a couple of months ago it was in the news that the areas where they are growing bananas are currently being threatened by a viral disease that is threatening these huge growing areas where the bananas are being grown. Wageningen University came up with a clear solution for this disease. If that’s the kind of results you’re looking for, that’s one result.
I could also mention is that lowering sugar levels and salt content in foodstuffs while still maintaining the taste of those products is a continuous challenge for the industry. I think the research institutes in the Netherlands, together with the industry, came up with some very nice tools for the industry to lower levels of salt and sugar. I think those are the kinds of very straightforward results that these universities bring.
Senator Mercer: Thank you. My wife will be very pleased to hear about the lower sugar and salt because I get preached to daily about my intake.
We have a new trade agreement between Canada and the European Union. It’s been hailed as a breakthrough for us, but our farmers are very nervous because we’re going to expose our market to the good quality products from the European Union. What opportunities are there for Dutch farmers with that new free trade agreement, and more importantly from my point of view, what are the opportunities for Canadian farmers going the other way?
Mr. Beutener: Maybe this is a good one for me to answer. As embassy, every quarter, we do business events on CETA, the Comprehensive Economic Trade Agreement. Being active in agri-food, I’m within a team of seven trade commissioners, and I’m most active in that file, most knowledgeable, because the agri-food sector is seen as low-hanging fruit. There are a lot of opportunities for our agri-food sector to do business in the Netherlands.
Most recently, what we’ve seen, senator, is an increase in our seafood exports to the Netherlands. We’re talking about import duties dropping in the live lobster business, but also oysters. We’re seeing a dramatic change in import duties for salmon. We’re heading now into the seafood show in Brussels early May where about 62 Canadian seafood companies will be exhibiting. That’s an extremely high number never seen before.
With other sectors in agri-food, I’d like to pinpoint, for example, the cranberry sector that is doing extremely well. Some of the cranberry products dropped from 17.6 per cent import duties to zero at the implementation date of September 21, 2017. A company such as Berrico based just outside Amsterdam is showing significant growth in the sales of its Canadian cranberry products here in Europe. They are the exclusive importer distributor for cranberry products from Canada and have hired new staff. The factory in Quebec has hired 40 new staff and has acquired a production line from the Netherlands for cranberry production. It’s all good stuff.
Overall, we see about 29 per cent increase in your agri-food exports to the Netherlands, 29 per cent between 2017 and 2018. Yes, for me, statistics are looking good. Across the board in Europe, you see an increase.
Maarten, is there anything you’d like to add?
Mr. Schans: I think there are a lot of opportunities for Canadian products to enter the European market, as Diederick already pointed out. Diederick and I have also made combinations in the area of seafood and seafood processing, where Canadian produce and Dutch technology are being combined into a new product, or at least into a new processed product.
Opening up your market also, of course, increases competition. I think in the area of dairy, the European dairy sector is highly developed, and I think CETA could also very much result in something that is perceived as a threat to some Canadian producers because they get some competition from European partners that they didn’t experience before. You could also translate that threat into a challenge and an urgency to actually look at your processes and get on your toes and increase efficiency of production and improve your product quality.
Mr. Beutener: Maarten, if I may help, NRC IRAP is sending Canadian firms into the dairy industry in the Netherlands to acquire food processing equipment such as laser-cutting tools to cut cheese or packaging technology that the Netherlands is known for. You see an increase of sectors getting nervous in Canada, and they start looking for the best options around the world — Italy, Germany, Denmark and the Netherlands — where food processing technology suppliers are well developed. I think that’s an area where I, as a trade commissioner, need to try to help our SMEs in Canada and connect them to the right programs that give them access to financial incentives to buy that equipment from nations that maybe are a little bit ahead of us in Canada.
Senator C. Deacon: Thanks to both of you this morning. This has been fantastic. I really appreciate the fact that this meeting has been set up.
I spent my life in the technology sector, but most recently I spent some time helping at the Dalhousie faculty of agriculture in Truro, and there were a lot of Dutch exchange students there. Boy oh boy, were they impressive — natural entrepreneurs. To Senator Kutcher’s comments, I think it’s genetic. I think that’s what has happened in the Netherlands. I think we need to cross-pollinate.
I want to focus on two specific things, because you’ve got examples that can help. One of my points of frustration is the fact that our producers and processors have to deal with dozens and dozens of different areas of government, and not one of them has this file. Nobody has ownership of making sure that our agri-food industry is more competitive globally. I think there are probably government programs working absolutely counter to one another — with urgency.
I want to learn more about your top sector agri-food policy and how it is led. Who has the file? The word “urgency” has been said a number of times by you, Mr. Schans, and we need that desperately. We need some national leadership here. I want to understand a little bit about how that is led at a national level, if you could.
Mr. Schans: How it’s led? We always say business is in the driver’s seat. I think in terms of priority-setting and in terms of what priorities should be on the table, I very much believe that businesses are in the driver’s seat.
The ownership is really a shared ownership of the ministry of economic affairs. There is a so-called top team agri and food. In this top team agri and food are representatives from the ministry of economic affairs and a number of companies’ representatives, people that actually work for a company but are being freed up by their company to participate in this team, and who also speak on behalf of not only of their company but of the sector. Furthermore, there’s representatives of the knowledge institutes.
I think the ministry of economic affairs is really the ministry which is in the driver’s seat regarding these top sectors overall. Of course, depending on the top sector you’re talking about, different ministries come into play. The ministry of agriculture is very much involved in this top sector of agri and food. If you talk about the top sector on medical life sciences, then the ministry of economic affairs is involved but our ministry of health is also very much involved.
The fact that there are multiple ministries involved doesn’t lead to no one actually sensing ownership. It’s really a shared ownership. Perhaps that’s also something which is a bit typical of the Dutch. The fact that there are multiple parties at the table that do the program together doesn’t result in people moving responsibilities from one side to the other and nothing happening.
Is that an answer to your question?
Senator C. Deacon: Yes. I wish I had the same confidence that we might be doing things with that level of cooperation without absolute leadership in one area. That’s an interesting answer for me to contemplate.
I really felt at home when you started with your initial comments about entrepreneurial spirit, the need for an ecosystem with mutual benefits, the need for global investment and attracting investment into the industry. Also, you mentioned the commercialization end of taking ideas and turning those ideas into profitable business lines. I think you’ve really taken lessons learned from the tech sector and applied them in the agricultural sector, which I don’t think we’ve done in Canada. Has this been something that you’ve done naturally for a long time because of the Dutch focus on the agri sector, or is this something that has been part of this new top sector agri and food policy that you have?
Mr. Schans: To be honest, I think it has been happening for a long time. Of course, with the top sectors, at this moment we have nine top sectors in place. The fact that we have these top sectors in place and that we also have top sector teams that you can address makes it easier to make the connection between agri-food and high-tech systems. We’ve clearly identified the crossover between high tech and agri-food as a very important one. Having an agri-food team and having a high-tech team with clear agendas makes it much easier for these two columns to sit together and see where they can actually work together. The top sector approach has made this collaboration easier. I also believe that the collaboration has been ongoing for a very long time already.
If I look at our horticultural sector, I’m very much active in the area of agri-food, and I have a colleague who works as a specialist in high-tech systems. We’re always debating whether horticultural fits under agri-food or under high-tech systems because he always tells me that horticulture in the Netherlands actually is high tech. To name a company, one of his favourite companies is a company called Philips; one of mine could be a plant breeder like Rijk Zwaan. One of the secrets of Dutch horticultural is the LED lighting by Phillips, which was developed quite a number of years ago by Philips simply because they understood that there was more to be earned with high-tech lighting than with the commodity lighting products that everybody was competing with amongst each other. This cross-technological collaboration and the collaboration between different technological areas in the Netherlands has been ongoing for a long time.
Senator C. Deacon: Thank you very much. If there is a top sector agri-food policy or report, something along those lines, that could you share with our clerk, I’d be very grateful. I think that’s something we have to really look at.
Senator Klyne: Good day to our panel. Thank you very much for the insight. It’s very engaging.
When I was looking at these numbers last night, again I marvelled at the Netherlands. I was once marvelled by what you could do on this relatively small land mass with hog production. Now I’m marvelled even more at this. When I think about Canada, it reminds me of our revenue per acre. In Western Canada, the revenue per acre is much lower than it is in the east because on the east there’s a lot more value-added processing. That’s just probably by our cultures. There used to be the crow’s nest rate that benefited farmers in the west and manufacturers in the east. Our forefathers saw fit for Canada to be set up where Western Canada would provide unfinished goods to the east. They would add the value to it and then we’d buy it back. However, when they took away the Crow Rate, they never replaced it with anything, and we lost a little bit of steam there, but we’re gaining that back.
As part of the innovation supercluster initiative, Canada launched the protein industry supercluster program, what we refer to in the Prairies as PIC, the Prairie Industries Cluster. As you are probably aware, that aims to increase the value of Canadian canola, wheat and pulse crops for high-growth market exports in China and India, where protein consumption is on the rise. What’s working for us with this cluster based in the Prairies is we have a diverse but complement partnership for scale, horizontally and vertically. There’s a number of partners I wish I could mention, but I would be remiss if I didn’t mention AGT Food and Ingredients, a Canadian processor of foods and lentils, particularly pulse crops, one of the largest in the world working out of our backyard. That’s one good thing that works for us.
To bring this together, the Advisory Council on Economic Growth report gives the example of the Netherlands rising to become the world’s third-largest exporter of agri-foods thanks in part to a successful partnership between government and your agri-food businesses. So re-enter the supercluster around the protein industry’s cluster. I’m wondering about lessons learned and transferable knowledge from your experiences. I am looking for your thoughts about this approach we’re taking with the supercluster and what opportunities and challenges you think this program will present for the food processing sector.
Mr. Beutener: Before the supercluster protein industry in Canada was getting its first funding a few months ago, we saw the cluster already coming to the Netherlands in 2017-18. With NFIA and with some of the Dutch provinces, we’ve taken the supercluster contacts through the Netherlands.
You might not have seen it, but the good news is that the next two protein summits are held late May and early June in Saskatoon and Calgary. The protein summit is something organized by Gerard Klein Essink at Bridge2Food, an event organizer out of the Netherlands who has a significant database and network in the food ingredient industry. As an embassy, in 2016 and 2017, we started working on superclusters or what was coming before that.
At the moment we start seeing — and this is good news for Maarten — seeing Canadian firms out of Alberta active in plant proteins, which are trying to set up in the Netherlands. They choose the Netherlands because France and the Netherlands are strong in plant protein and helping mask the bad taste that pulses typically have. The research is quite strong.
You also see firms such as AGT and their counterpart in Canada coming to the Netherlands for NIZO, which is a contract research institute that is heavily focused on plant proteins, to collaborate and to figure out the next generation products in plant proteins. That’s already going quite well.
We will have 25 or more Dutch delegates at the protein summit, which is quite extraordinary. There will be, by the embassies of the Netherlands and myself, meetings scheduled with the goal to, as two nations, come closer on the topics that the supercluster was set up.
I’m grateful that you asked the question because I’m very much focused on it right now.
Senator Moodie: Thank you, gentlemen. This has been a fascinating discussion and very educational for me.
Talking about education, we in Canada seem to have a lot of opportunities in our agri sector. We see it as an area in which we need to focus, but I don’t think I would be remiss in saying we have had some challenges in persuading our young people to become engaged, to seek the right education and to seize on these opportunities. I’m wondering what steps you have taken as a country to make the agri-food sector more appealing to your young people. How do you pull them from the traditional post-secondary pathways? Do you have any special programs to share with us — funds, bursaries? What are the incentives to those programs?
Mr. Schans: If you look at employment, the Netherlands has approximately 17 million inhabitants. Of those 17 million inhabitants, approximately 650,000 people are employed in the agri-food business. That means that you don’t need to go far to encounter somebody who is actively engaged in this business. That also means that the agri-food business is perceived as quite a challenging industry. If you look at horticulture, it is a high-tech business. There are good jobs to be obtained there, and also in processed foods. It’s an industry that is very much appreciated and, of course, as we have a big industry in the Netherlands, companies are sometimes struggling to find employees. This also results in the fact that, in part of the top sector programs, companies and government want to make the public aware of what kinds of nice careers can be built in the food sector.
There is a lot of direct contact between individual businesses in the regions and regional education institutes. That works two ways. The industries can provide input into the educational programs that the students are receiving and, of course, the companies can also interact with students, provide them with training jobs within the company, and that’s an excellent way to recruit your future staff. I think a lot of those kinds of programs are ongoing, both on a regional and national level.
Mr. Beutener: In Nova Scotia, specifically at Dalhousie University, there is a Dutch-Canadian collaboration brewing. We are seeing interesting developments around something called the iHORT HUB that Raj Lada, a professor at Dalhousie, is spearheading. The iHORT HUB is a living lab for indoor farming where professionals and students active in agricultural technology, indoor and vertical farming can work together and experience what is possible with Dutch technology and materials and Canadian crops in a Canadian climate. In Nova Scotia, it’s a bit harsher than the Netherlands or the North Sea. Raj Lada was here at the Dutch college in Holland working with the dean and for six months was able to ignite, both in the Netherlands in Nova Scotia, some collaboration on the iHORT HUB. We are not there yet. We are still trying to figure out, with the team from Minister Colwell in Nova Scotia, how we get this to the next level. The Dutch embassy in Ottawa is also engaged. But these are things that students find fascinating — agri-tech, indoor farming, vertical farming. These are, again, places where high tech and agri-food start melting together.
The Chair: Following up on Senator Moodie’s question, which basically related to education and inspiration for your own students to get interested in the industry, how are you doing for labour in general? Do you have enough labour to actually produce the agricultural products, both in the field and in the processing plants, and do you bring in temporary foreign workers? We do a lot of that in Canada. We have temporary foreign workers because our area is larger and more remote and we seem to have trouble recruiting enough Canadians to do the work. How have you found this in your country?
Mr. Beutener: We have a significant problem. A challenge, we say in the Netherlands. We bring in people from Eastern Europe, for example, to work on our mushroom farms for the harvest and in greenhouses for picking of fruits and vegetables. Recently we were made aware of the fact that a Dutch-Canadian collaboration was starting to happen amongst two manufacturers of robots. The aim was to build a robot that is able to harvest mushrooms and also immediately package those mushrooms. The federal government program called Going Global Innovation, which sits under Global Affairs, was used for the travel expenses of the R&D staff coming in from Canada. You see more of those collaborations where the end goal is to help entrepreneurs with the fact that labour is sometimes hard to find.
Mr. Schans: I think this also explains why we are very much working on high tech to feed the world. There is a lot of automation coming in replacing manual labour, also because of labour costs.
I also believe we are a very open society. As Diederik already explained, there are a lot of workers being employed in the Netherlands from foreign countries working in our horticulture sector. I would say that, overall, the work force in food production and food science in the Netherlands is very international. We are very much open to receiving foreign workers from the rest of Europe or from outside Europe.
There is a continuous shortage. That also means that companies have to provide very good labour conditions to actually entice people. They have to provide them with good career opportunities. They have to provide them with learning on the job because, of course, the work is also changing due to the continuous automation.
We see there is competition between the food sector and other sectors. For example, if you look at sectors like horticulture and mushroom production, some of the people who work in those sectors are much more willing to work, for example, in jobs in logistics than in these jobs in agriculture and, of course, that puts pressure on the system. This pressure also entices companies to come up with new ideas to either attract people to work in their company or to come up with other solutions, which could be automation.
The Chair: Thank you. Getting enough labour seems to be a common problem in a lot of places.
My other question has to do with government. You have mentioned that the government has been involved in helping to create clusters, you have mentioned that it’s industry driven and you mentioned great collaboration between industry and government.
Basically, government has two methods of working. Economic instruments, through incentives or whatever means, would be one method government has to get a desired result. The other method is regulatory instruments. Our report will be to the Government of Canada, and we will be indicating what we would like to see the government do to foster greater valued added in the food industry. If you were to give us your top two recommendations that we could make in that regard, what would they be?
Mr. Schans: I was very much afraid you would ask that question.
To be honest, when we started, it was a long time ago when the Dutch government and the industry started with top sectors. Before we had top sectors, we had innovation programs on clusters, and people started with working on an innovation program on the high-tech industry. To be honest, the food sector in the Netherlands was very much annoyed that the Dutch government was working with the high-tech sector and the food science industry really felt left out. They were quite angry and approached the government and asked why the high-tech sector gets a program and they are left out. They wanted a program as well.
I mention this example because I do not believe that, as a government, you can really enter into a system as we have built in the Netherlands if your industry is not feeling the need to change something. There should be an urgency from the side of the industry. If the industry doesn’t feel any urgency, then you can provide an infrastructure as a government, but the industry will only move if they feel an urgency to move.
I know that’s not a top two, but it’s the best answer I can give.
The Chair: Thank you.
Senator Kutcher: I noticed in your material that about one third of the world’s largest agri-food companies have R&D facilities in the Netherlands. Was that an active decision and you went out and polled these companies who have incredible capacity, or did they just sort of show up at your door?
Mr. Schans: Every morning I wake up and they just show up at our door. I wish that were true.
To be honest, I think there are a lot of companies that do R&D in the Netherlands because, before they did R&D, they did a lot of other stuff here, like production, marketing and sales and distribution. From those kinds of activities, their presence in the Netherlands grew, and doing R&D, or at least setting up a physical R&D presence, is not something that you would do as a first step in a territory that is unknown to you. A lot of those companies that do significant R&D in the Netherlands have other very significant production activities as well, or their products may be going through Rotterdam harbour to the rest of Europe. They would not be doing those R&D activities in the Netherlands if they didn’t continuously find the know-how and the researchers they are looking for or that they can pull in the researchers that they need from the outside world.
I also believe that we have some very good incentives for companies to support them in doing R&D in the Netherlands. We have some fiscal schemes that make that financially very interesting. If you do R&D in the Netherlands and you get IP out of that R&D, we also have some fiscal incentives to help you profit more from that work. We very much believe that for companies to be successful, they should be innovative. They should do R&D and we would like them to do that R&D in the Netherlands.
But they don’t show up automatically.
The Chair: You are not that lucky.
Mr. Schans: They are very welcome.
The Chair: Yes.
Senator C. Deacon: Mr. Schans, I couldn’t agree more. There are very few products in the world where customers beat a path to your door. You have to fight and earn them every day. You do a good job of that, and I’m sure considering leaving the Senate and coming over and setting up business in the Netherlands. You are getting it right. It’s very impressive.
One of the things I really want to learn more about is how industry is involved in this leadership group that you said is helping the government to organize its priorities and programs through the top sector initiative. I think industry leadership is critical. You made another really important point, and that’s if industry is not feeling they are on a burning platform and if they don’t feel that sense of urgency and tenacity to really go and do this, there is not much we can do to help them, other than to help them get scared, because they should be scared in this disrupt-or-be-disrupted world. Help me understand how industry is engaged in helping to establish priorities and keep the focus on in a coordinated manner within the government of the Netherlands. You talked about the involvement, and I would really like to understand it more.
Mr. Beutener: As an anecdotal, what I found interesting is a discussion between one of your witnesses — Marco Valicenti and Walter La Haye — of a very innovative company in food value here in the Netherlands. He said he found that top sector was actually quite difficult for them. He’s an SME himself. He felt that the top sector for agri-food was led by multinationals, or led too much by multinationals, such as FrieslandCampina, DSM and Unilever. I would love to hear what Maarten has to say on that. I’m sure it’s not that simple. But I saw Mr. Valicenti taking good note of that, because I’m sure that within AAFC they have thoughts about how to set this up properly.
Senator C. Deacon: That’s a very important point. Thank you for that.
Mr. Schans: I’m struggling a little bit with your question. I’m struggling with it because I’m not actively involved on a daily basis with this top sector team. I’m going to give you the best answer I can, though.
Within the top sector, there are several working groups that are working on different topics. There are working groups that work on innovation programs and on what the priorities should be in the innovation programs that are being executed by companies in collaboration with knowledge institutes. They do this so the money going toward university programs is also steered according to the priority setting made in this group.
Apart from working groups on the innovation agenda, there is also a working group on the human resource agenda. The topic was already discussed in this session, but having a workforce of enough people, and enough people with the right skills, is also a great priority, so there is a different working group for that.
Diederik already explained that, at the beginning the top sector approach, there was also some criticism in the field that the top sectors were only there for the large companies that could afford to free up someone and make them participate in a working group. To be honest, I don’t totally agree with that comment. At the time, I was still very much involved, and I know there were some people who worked in SME companies who were people with vision who made themselves available to participate in these working groups. They still get some criticism that they were working for the large companies.
In the meantime, the top sector is also continuously evolving. There is now also a working group that specifically focuses on SMEs. That’s not an excuse work group for the SMEs but rather a working group that is also supported by the larger companies, because the larger companies also know very well they also need these SMEs to be successful in future.
They’re working groups in which people from different background exchange views and bring in input they gather from the people they represent, and based on that, agendas are being written. These agendas don’t end up in a desk to never be worked out; they’re agendas that are being executed. They’re also agendas that are being evaluated in time to see whether they actually bring what they were intended to bring from the beginning.
This is the best answer I can give.
Senator C. Deacon: Thank you. Just in terms of the key performance indicators that are monitored in this area, I really look forward to receiving whatever report there is that helps understand how those have evolved over time. Your KPIs have to evolve over time as priorities change, so it would be interesting if there is any history there you can share. This has been a very informative session. Thank you very much.
The Chair: Thank you, senators.
I would really like to thank our panellists. It has been an interesting hour and a quarter of discussion. It’s been great to have you here today. We would have liked to have visited you first-hand, but that couldn’t be the case. We didn’t have that approval for our study. However, I have been to the Netherlands on my own in the past and was very impressed with the countryside and the crops I saw there. I would have liked to have seen the processing facilities, but c’est la vie.
We will continue the meeting in camera.
(The committee continued in camera.)