Proceedings of the Standing Senate Committee on
Agriculture and Forestry

Issue 28 - Evidence - Meeting of February 5, 2013


OTTAWA, Tuesday, February 5, 2013

The Standing Senate Committee on Agriculture and Forestry met this day at 5:04 p.m. to examine and report on research and innovation efforts in the agricultural sector (topics: the impact of investment at the federal level on industry players from an academic perspective; and innovation in the agriculture and agri-food sector from the producers' perspective.)

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Welcome to the Standing Senate Committee on Agriculture and Forestry. My name is Percy Mockler, a senator from New Brunswick and chair of the committee. I would ask all senators to introduce themselves.

Senator Mercer: Terry Mercer, from the north end of Halifax.

[Translation]

Senator Robichaud: Good afternoon. My name is Fernand Robichaud, and I am a senator from Saint-Louis-de- Kent, in New Brunswick.

[English]

Senator Merchant: Pana Merchant, from Saskatchewan.

Senator Callbeck: Catherine Callbeck, from Prince Edward Island.

Senator Plett: Don Plett, from Manitoba.

Senator Buth: JoAnne Buth, from Manitoba.

Senator Eaton: Nicky Eaton, from Toronto.

[Translation]

Senator Maltais: My name is Ghislain Maltais, and I am a senator from Quebec.

Senator Michel Rivard: Good afternoon. My name is Michel Rivard. I am a senator from The Laurentides, Quebec.

[English]

The Chair: I take this opportunity on behalf of the Standing Senate Committee on Agriculture and Forestry to thank today's two witnesses for accepting our invitation to share their thoughts, recommendations and views on the committee's order of reference: that the Standing Senate Committee on Agriculture and Forestry be authorized to examine and report on research and innovation efforts in the agricultural sector. In particular, the committee shall be authorized to examine research and development efforts in the context of developing new markets domestically and internationally, enhancing agricultural sustainability, and improving food diversity and security.

Our witnesses today, from the University of Saskatchewan, are Dr. Reuben Mapletoft, Distinguished Professor, Department of Large Animal Clinical Sciences, and Dr. Sheila Schmutz, Department of Animal and Poultry Science.

[Translation]

Thank you for accepting our invitation.

[English]

I invite the witnesses to make their presentations, followed by questions from senators. Dr. Schmutz will make her presentation first to be followed by Dr. Mapletoft.

Sheila Schmutz, Department of Animal and Poultry Science, University of Saskatchewan: Thank you for inviting us to present. We appreciate the invitation. I believe that you have received our speaking notes. I will address briefly what I have organized into three topics, the first of which is potentially marketing more livestock to Europe. Following on the procedure of the CETA, the Canada-EU Trade Agreement that seems to be moving forward, there will be an increased chance to trade with Europe. At present, we have a piece of legislation that Canadians should be very proud of: the Animal Pedigree Act. Perhaps this act has not received the prominence and importance that it has in recent years, but it provides us with a unique opportunity to trade all of our purebred livestock with Europe on a very good level because they have similar legislation, which our neighbours to the south do not have. We have a better standing in that regard.

The other trade issue I would like to bring forward is the use of hormones in beef cattle, which is a barrier to trade with Europe. New technologies would suggest that some of these hormones or growth promotants are making some of our meat tougher, and not all feedlot cattle are being fed them anymore. Both Australia and New Zealand have figured out a mechanism by which Europe will accept a portion of their cattle without accepting all of their cattle so that producers who choose to go the no-hormone route would have an opportunity in this new market.

The second topic I would like to address is one that I refer to as "urban agriculture." For a long time, many people have thought of horticulture as an important part of agriculture in the growing of vegetables and fruits. People behind us in the next panel will address fruit-growing on a larger scale. To me, urban agriculture really means small backyard gardens, community gardens and the opportunity for local improvement of fresh produce during the summer months to people in more remote communities that might not have access to this. This may improve the health of Canadians, particularly in the North, where they could have access to such types of growing. In addition, in many cities the planting of trees and beautification is not only an important project but also will help us to reduce our carbon footprint, which is of concern to many Canadians.

Increased pet ownership has often gone unnoticed and is not really considered part of agriculture. However, with the aging population in Canada and throughout the world, many studies suggest that pet ownership actually decreases the chance of depression, increases the opportunity for exercise, and reduces blood pressure. This is seen particularly in the aging population where this seems to be an important role. The mandate for agriculture could include domesticated animals as well.

The final point I would like to make relates to research funding. You would be surprised if an academic appeared before you and did not say that we were very pleased that NSERC and funding agencies in Canada are doing an excellent job of providing both basic research and applied research. I would like to illustrate with a story from my situation that would suggest that even we researchers cannot always distinguish which is basic and which is applied. I did not grow up on a farm. I grew up in a small town. I did not have any degree in agriculture but was given the opportunity to study the genetics of cattle, and colleagues like Reuben Mapletoft helped me to advance in that regard, as did some of my own graduate students. In one basic study, we studied a gene called leptin that is important in the fat deposition pathway. It changes how much and how quickly cattle put on fat. I had no idea how to market this particular item. I assumed that maybe purebred breeders might select for certain cattle for niche markets that wanted leaner or fatter cattle. One of my graduate students at the time, Leigh Marquess, ended up starting a small company called Quantum Genetix, and he applied it in an entirely different way. He is now marketing his product to many feedlots that sort cattle on the basis of their actual leptin genotype, and they can better predict which market the cattle fit into. In turn, Leigh gave money to our own lab to do further research, and that was matched by the Collaborative Research and Development program, an industry-oriented grant. He in turn benefited from SR&ED tax credits to have funded research and development, which actually caused more graduate students to be hired. His small company has blossomed, and it has taken me full circle back to European trade because, when the flax GMO crisis erupted a couple of years ago, his was the first lab in Canada to take on the challenge to test for the GMO flax to make sure that we could maintain our flax market to Europe.

I thank you very much, and I welcome your questions and comments.

The Chair: Thank you very much. I will now ask Dr. Mapletoft to speak.

Dr. Reuben Mapletoft, Distinguished Professor, Department of Large Animal Clinical Sciences, University of Saskatchewan: Thank you for your invitation to appear. I prepared notes for you, which I presume you have before you. I timed how long it would take me to go through those notes, and it was 27 minutes. Therefore, I have decided that perhaps, in the interests of time, I ought to go directly to the summary at the end and highlight some of the points there and perhaps expand on two or three. That is what I will do.

The first point I want to talk about is point No. 3, that research designed to increase food production must also include storage, transportation and distribution of food. Despite the need to increase food production to feed the growing world population, we have already accomplished a great deal through our investments in agricultural research. For example, productivity on the Canadian prairies has increased 300 per cent over the last 70 years. I would submit to you that we are already doing a great deal with our investments in agriculture. We have to do better with the food we already produce.

Point No. 4 is that we must ensure that future research efforts and selection and management schemes utilize the natural advantage that ruminants have in sustainable production of meat and milk. It has been suggested to me by people from Third World countries that what they really need is more protein. Many of them produce sufficient carbohydrates already. In this regard, I think meat, eggs and milk will be an important part of diets around the world in the future. Ruminants will play an important role there. By ruminants, I mean cattle, sheep and goats. They have four stomachs. Their digestive system is microbial fermentation, so they are able to take very low-quality roughage and convert it to high-quality edible protein. I think this will be an important factor in the future.

Point No. 5: Canada should increase investment in research and development, especially in agriculture. Rates of return on investments in agricultural research have been reported to be around 500 per cent over a 10-year period. However, it would seem that agriculture research is of a relatively low priority. The Natural Sciences and Engineering Research Council of Canada has taken agriculture off its priority list. Now, in their defence, they say that agricultural topics do fit into several of their other categories, but the fact is that agriculture is no longer considered a priority.

Point No. 6: NSERC Discovery Grants are the cornerstone of agricultural research, and financial support should be increased. For university people, NSERC is the primary source of national funds for their research, and the NSERC Discovery Grants are especially important. Why are they important? Well, the big reason is that NSERC Discovery Grants allow us to do fundamental curiosity-driven research. So much of our research today has to be end-point driven, and yet, discovery really depends on that curiosity, the willingness to pursue the unknown. We have maintained that NSERC Discovery Grants must continue and must have increased funding, and Dr. Schmutz alluded to a specific case in her lab where an NSERC Discovery Grant led to a spinoff company and several other things.

Point No. 8: NSERC must increase financial support for the training of high-quality personnel. Graduate students and post-doctoral fellows represent our future, and yet financial support is inadequate. As a result, we are losing our brightest and our best. They are going into other professions where the opportunities are greater. They are also going to other countries where early-stage careers can be developed. We just do not have enough positions for our new graduates.

Point No. 9: The bureaucracy and paperwork associated with the administration of research grants should be reviewed. At the University of Saskatchewan, the administrative cost of research has increased more than 300 per cent over the last 10 years. In research services alone, staff numbers have gone from 10 to 70 in the last seven years, and this is due in large part to the need for compliance. I would not want to suggest for a moment that researchers not be accountable, but the time and money consumed in this process are enormous.

Point No. 10: Research initiatives directed toward embryo pathogen interactions, especially as applied to the utilization of new reproductive technologies, should continue. I discussed this at some length in the longer document, but I have just learned that the last member of a once outstanding research team in Nepean, working in this area, is about to retire and that the program will not be continued. Disease continues to be an important concern. The international movement of embryos is an important factor, and the application of new reproductive technologies is very, very important to our breeding programs in the future. I think that we must continue this work to ensure that infectious diseases are controlled with the use of our assisted reproductive technologies.

The last point, No. 11, that I want to discuss is that regulatory officials should take decisive action, where scientific evidence supports it, to allow animals produced by assisted reproductive technologies to enter the food chain.

I am referring specifically to cloned animals and transgenic animals. The International Embryo Transfer Society, in reviewing cloned animals, found that meat from cloned animals posed no risk to human health. The Food and Drug Administration of the United States looked at this critically and said that meat and milk from cloned animals constituted no health risk. Yet Canada, after several years of study, has not made a decision on this. The same thing applies to transgenic animals. The Enviropig project at the University of Guelph has been terminated because those animals are unlikely to enter the food chain because of the lack of regulations in this regard. I guess I would like to suggest that, in order for Canada to maintain its place as a leader in the application of these technologies in animal breeding programs, our regulatory officials must be prepared to make hard decisions.

Thank you very much.

The Chair: Thank you. I would also like to recognize, for the record, the presence of Senator Duffy, who has just joined us.

Senator Plett: Thank you again, both of you, for appearing. Dr. Mapletoft, I think it is unfortunate that we could not hear a 27-minute presentation and have a little more than the summary at the end.

Let me try a few questions. I will start with Dr. Schmutz, if I could. I would like to talk just a little more, please, about your comments about hormones in our animals. I think you said Europeans do not accept our meat that has hormones in it. Am I correct?

Ms. Schmutz: Yes, senator, that is correct.

Senator Plett: Australia and New Zealand have done away with at least part, or all?

Ms. Schmutz: I unfortunately put linked notes that you did not get in your hard copies. Both Australia and New Zealand have established programs in which the proportion of their animal production that does not use hormones has access to the European market. They were not able to convince their producers to stop using hormones entirely. In Canada, we seem to have just accepted that because some of our producers use them, none of them will have access to Europe. We have not really pushed that initiative.

Senator Plett: So we send no meat to Europe?

Ms. Schmutz: We send no beef to Europe.

Senator Plett: We are talking strictly beef here.

Ms. Schmutz: We are talking strictly beef, as far as I know.

Senator Plett: Can you tell me why we are not making moves in that direction?

Ms. Schmutz: The feedlot owners, to the best of my understanding, would say that it is in their best interests to grow the animals as large and as fast as they possibly can. They believe the hormones help make that happen faster. Even though the hormones do cost them additional money, they still say the cost-benefit analysis to them is worth their using the hormones. It does make the meat tougher, and they do acknowledge that, but they say they do not get paid for tenderness, they get paid for weight.

Senator Plett: I personally think we have some pretty good steaks in Canada, but perhaps if I would eat an Australian steak I might be happier. I am not sure. We obviously must have enough of a market. If we did not, would that not drive this?

Ms. Schmutz: I am not an economist, so I hesitate to say too much, but my understanding is that as our dollar has risen, our major market to the south has shrunk. They were interested in our beef in the U.S. primarily when it was cheaper, but now that it is costing at least as much as their beef, they of course will support their own local product first. Currently, we have lost a considerable share of our previous market to the U.S. That, riding on the BSE crisis of a few years ago from which we have never fully recovered, has been a problem.

Senator Plett: It might encourage some of the feedlot owners to change their mind.

Ms. Schmutz: Perhaps.

Senator Plett: Doctor, I have never heard before that pet ownership should be part of agriculture. I may be wrong, but I thought that whatever is in agriculture, we eat. I am sure you are not promoting that. How would you make cats and dogs part of agriculture?

Ms. Schmutz: If we are going to say that trees and flowers are part of horticulture, which is part of agriculture, the analogy could be that horses, which we do not typically eat in Canada, although a few people do and they are commonly eaten in France, are now classified as companion animals, and so are dogs and cats. In a university setting, a biology department studies wild animals, but they do not really study pet animals that are also domesticated species. Many current agriculture schools throughout the world have widened their mandate to include all domesticated animals, to include cats and dogs and horses, not just cattle and pigs and chickens.

Senator Plett: Thank you for your answer. I am not sure that we are on the same page yet, but I certainly appreciate that.

Dr. Mapletoft, I have really just two questions. You talked about your priority here being that research to increase food production is necessary but must also include storage, transportation and distribution of food. Are we not doing that?

Dr. Mapletoft: I made that point because just about every place you look nowadays you will see that we are producing probably enough food for 9 billion people, yet we are told repeatedly that we are wasting about half of it. I am trying to suggest that, yes, okay, let us increase food production for this growing world population, but let us also make better use of what we are producing right now. Our investments in agriculture have paid tremendous dividends over the last 50 years, and this is the proof of it.

Senator Plett: Fair enough. I have not read your whole presentation, and I hope I will be able to do that, but you make a list of recommendations here. This is a comment rather than a question. In each case, there is nothing really specific. Canada should increase investment, financial support should be increased, increased financial support for training, with no percentages or numbers, just pie-in-the-sky increases. I am sure that is not what you intend, and maybe the presentation itself has a better explanation to it.

Dr. Mapletoft: I would hope that the document itself does have a great deal more information on each of those points. It really is a summary point of each section that I wrote in in the document. I also have to confess to you that this document was written while I was traveling in Europe, so I did not have access to some of the details that I wanted at that particular time. As a matter of fact, I added some additional details in my oral presentation today that were not in that document. Perhaps I have a bit more now than I had when I wrote that.

Senator Plett: Let me just suggest, with the indulgence of the chair, that if you have any information for us that would give us numbers, we would appreciate that, and I think the chair would welcome your sending that through the clerk. Thank you very much.

Senator Mercer: Thank you both for being here. It was an informative presentation. I apologize for the fact that we could not hear all 27 minutes, because I am sure it would have enlightened us. I do like the fact that you have given us 12 points, and I want to ask you about a couple of them.

Item No. 3 is that research to increase food production must also include storage, transportation and distribution of food. With respect to that, is there some detailed research going on with storage and transportation? In my other committee, the Standing Senate Committee on Transport and Communications, we have talked about the movement of containers across the country. We have heard in this committee that the availability of proper transportation at the proper place and at the proper time creates a huge problem in agriculture. When a crop is ready to be shipped from Saskatchewan to the Port of Vancouver or the Port of Halifax, if the containers are not there or the trains are not there at the right time, the quality of the food deteriorates as time passes by. Are you suggesting that part of the academic research should cover that as well?

Dr. Mapletoft: I have to confess that I am not an expert in that area, so this is more of an opinion than anything else, but I was again trying to make the case that we have to do better with what we are presently producing. That was just one of the aspects that I thought was important.

Senator Mercer: I think your comment about half the food in the world being wasted is a very good one. We continue to have this 9 billion target in front of us, and we will have to feed the people.

With respect to Item No. 9, the bureaucracy and paperwork associated with the administration of research grants should be reviewed, you talk about the numbers increasing over the last number of years from 10 to 70 people required to do that. I am assuming as someone who has been on the periphery in part of my career in helping to fund various organizations I worked for that there is a peer review process that goes on with respect to the grants applied for. Is the problem in the review that is done by peers? Is it the peer review process, or is it somewhere in between there and the university? Someone has an idea and wants to pursue the research so they put together a proposal that they think is solid, and if the peer reviewers saw it they may think it is solid as well, but in the middle there are many people who want compliance with some hurdles that may or may not be necessary.

Dr. Mapletoft: That is not what I was trying to suggest. It had to do with the administration of the grants themselves.

I mentioned in my longer document that the NSERC Discovery Grants are relatively bureaucracy-free, and researchers like that. Once they get the grant they can go ahead and work on it. They have five years to produce results or they have to go in another direction. It is primarily associated with the administration of the grant at the local level.

Senator Mercer: Is that at the university level?

Dr. Mapletoft: Yes.

Senator Mercer: It is your problem as opposed to government's problem, or the granter's problem.

Dr. Mapletoft: It is government's problem because the government is asking us to meet certain requirements, and on certain grants, for example, you are required to give a progress report every six months. You are spending all your time doing progress reports and no time doing research.

Senator Mercer: I am concerned about one thing you told us, and I wonder if they give insight as to why. Why does NSERC not have agriculture as a priority anymore? Did they enlighten you?

Dr. Mapletoft: I have to confess that I am not in the know. Dr. Schmutz served on NSERC committees and she may have some insight into that. It seems that other things had higher priority, and it changes from time to time, and that may be the reason.

Do you have anything to add?

Ms. Schmutz: All I can say that in the strategic program of NSERC they normally pick five key areas; and, as Dr. Mapletoft says, that does periodically change. Both of us were known at a time as biotechnology people, and biotechnology was on probably 10 or 15 years ago and is off now. I have not followed the strategic program well enough to tell you when agriculture came off the list.

Senator Mercer: Mr. Chair, perhaps it might be a good idea in the future that we talk to NSERC specifically about that issue.

Dr. Schmutz, you say some growth promotants currently used in beef cattle make the meat tougher. We have some experts on both sides of this table on beef consumption. Most of us say that much of the beef we consume is fairly tender. You have made this reference and so I assume there is some scientific study behind this that determines that the use of growth hormones does make the beef tougher.

Ms. Schmutz: Yes, senator; again, because of the way I referenced with hot links instead of numbers, there were references. In the study of meat science I have consulted with a few of my colleagues on meat science. I visited the meat science department at Texas A&M University where they were studying it, and it seems to be fairly well documented that this zilpaterol, which is the most popular growth promotant at the moment, does actually make the meat tougher. This is not to say that we do not have a good-quality steak. I am saying it could be even better if we did not use that product.

Senator Mercer: If we are out there competing in a world that does not have growth promotants, then we are assuming the beef is tenderer.

Ms. Schmutz: Yes, for example, certain packing plants or slaughterhouses have decided that they are going to go for a higher-quality beef as opposed to a large production of beef. Those particular packing plants are saying to their order buyers that they do not want cattle that have been fed zilpaterol coming through their slaughter plant because they have perceived this decrease in quality as well.

Senator Robichaud: What proportion of cattle is fed hormones compared to the non-injected cattle?

Ms. Schmutz: I tried hard to get that information so I could give you a number. It would certainly be well over half, but whether it is verging on two thirds or three quarters I cannot answer because many of the smaller feedlots are not using it, but the larger feedlots that have a highly sophisticated management system are more likely the ones that would be using it and they do not necessarily like to talk about it.

Dr. Mapletoft: I would like to make a comment, please. We have to remember that growth implants or growth supplements are a lot of different things. On one hand we talk about steroid hormones, on the other hand we talk about metabolic hormones and feed supplements, so there are many different things. As Dr. Schmutz indicated earlier, our market was based on the U.S. for many years and so we produced what the Americans wanted. We have lost that market and now we are looking elsewhere.

The Europeans, in my opinion, have used steroid hormone implants as a non-tariff trade barrier, but we have to live with it for the very same reasons. New Zealand has had to stop using steroid hormones in their dairy cattle because the Europeans said, "We will not buy your milk if you do not." It is a very complex issue.

[Translation]

Senator Rivard: Dr. Mapletoft, I had an opportunity to read your brief, and I would like to draw your attention to the last paragraph, where you talk about the food safety issue, and the E. coli 0157 vaccine in particular. You dislike the fact that the vaccine is not mandatory.

Is there an economic study showing what the additional cost would be — per gram or per pound — if that vaccine were mandatory? We do have to remember that consumers end up paying. If that vaccine were made mandatory, would production costs or the sale price increase, and by what percentage? Are there any economic studies that demonstrate that?

In the last paragraph of your report, under your 12 recommendations — you stopped at 11 earlier — that could be part of the twelfth recommendation. I think it should have been the first or second recommendation, instead of the twelfth.

[English]

Dr. Mapletoft: First, thank you very much for reading it.

I have mixed feelings on that last point. Food safety is a tremendously important issue. I also admit in my document that I consult with the company that developed that vaccine, so I have mixed feelings about recommending this. I ended up suggesting that we need a food safety policy, and probably the vaccine would be part of that scenario. Many other factors have to be considered as well.

As for costs, I have not studied this in great detail and I cannot tell you whether the study had been done, but I can tell you quickly that probably the vaccine would increase the cost of an animal by $25 or $30, so it is not large when you consider the safety issues.

Senator Merchant: Dr. Mapletoft, you have just answered the question that I had underlined in your 12 points, so now I will go to Dr. Schmutz.

I am interested in dogs. You are doing some research on dogs and you said that it is a quality-of-life issue for an aging population, that dogs are a good thing for people to have. My question is related to the research you are doing at the University of Saskatchewan. Healthy dogs are good to have, but there are dogs that have some genetic defects, such as hip dysplasia or eye problems. Are you concentrating on that kind of thing? Are you doing some research? I will mention two or three points. Is there some trade in dogs? I know that the Japanese like to get Shetland sheep dogs because they are small and easy to keep. Is there a trade benefit with dogs? Are you working on the Munsterlander hunting dogs?

Ms. Schmutz: Actually, my research is on an economically important trait that is not to do with health. It is coat colour, which may sound unusual. In many breeds, in compliance with the Animal Pedigree Act, dogs have to be specific coat colours. Certain dogs, such as Doberman Pinschers, have health issues related to skin allergies because of the mutation that causes one of their coat colours and side issues on health. I study that, but it is a basic research part of my lab in terms of pigmentation, which has been commercialized. A lab in Toronto offers those tests, and many labs in other parts of the world, including the U.S., Europe and Australia, have picked up those tests as well. I never patented those tests, which are in wide use now; and I am happy that they are in wide use. The pet ownership population feels that they are of some value to them.

The trade would be in those tests and the laboratories that market them. There is some trade in dogs between countries, but I am not particularly well versed in that. The Animal Pedigree Act will protect us. The pedigree that my husband and I breed, the Large Munsterlander, which you mentioned, meets the APA requirements, as does the European stock. We would not be able to source quality breeding stock from Europe if we did not have such an act. We are willing to adhere to that act.

Senator Eaton: Dr. Schmutz, it will be interesting, if Canada ends up signing a free trade agreement with the EU, to see what the effect will be. Perhaps farmers in Canada will say no to growth hormones and other growth promotants. Do you see that happening? Will the marketplace drive them out of use?

Ms. Schmutz: I am not convinced that they will eliminate their use. I am trying to urge the use of a mechanism so that we could somehow certify the producers who are not using them so they would have access to the European market. Even if we have only one quarter of the producers not using them, it would be useful for them to have access to the European market. If a few people have access, it might influence other people to comply.

Senator Eaton: If we had a certification, like with GMO foods.

Ms. Schmutz: Yes. Australia and New Zealand use mostly growth hormone, but they have a government certification program such that producers who do not use the hormone are able to access the European market.

Senator Eaton: We need a certification program.

Ms. Schmutz: That is what I would urge.

Senator Eaton: That could be one of the recommendations we put in the report.

Dr. Mapletoft, you talk about not attracting young people to agriculture. Does agriculture need to be recast in a different mode? All we hear about today in universities is the need for science and math. However, much of agriculture, agricultural research and horticulture is science. Do we have to recast it to make it sexier? Do people see that agriculture is not the same old farm that it was 100 years ago — all manual labour, passed-on wisdom, and not scientifically based?

Dr. Mapletoft: You misunderstood my point. I was referring to science. We are losing our best young people from science all together.

Senator Eaton: From all sciences, not just agriculture. I am sorry.

Dr. Mapletoft: It is already pretty sexy.

Senator Eaton: My question is moot. Let us move on to something else.

Does the EU allow cloned or transgenic animals to enter the food chain?

Dr. Mapletoft: This is currently under study, so they have not allowed them yet.

Senator Eaton: Does India, Japan or Korea allow them? I am trying to think of future markets where we are trying to promote trade deals.

Dr. Mapletoft: I do not know the answer to that. I would suspect not. The U.S. was probably the first country to allow cloned animals. Discussions are going on in the U.S. concerning transgenic salmon. It will be precedent-setting once it is decided.

Senator Eaton: Will you be comfortable eating transgenic salmon?

Dr. Mapletoft: Yes. We have been eating transgenic plants for some 30 years. What makes animals any different?

Senator Eaton: I am not sure.

Senator Plett: Where are we losing science students to?

Dr. Mapletoft: Business. My son has a PhD in immunology, and he has gone into business. Students are going into the veterinary profession, and we cannot get them out of practice. The sciences are just not an easy career. They are not lucrative careers. Also, many of our Ph.D. students went to countries like New Zealand to find research jobs because we do not have them in Canada. It is a complex issue. I would say that business in particular is taking our brightest young students.

Ms. Schmutz: At the undergraduate level, I am pleased to say that in the last three years the agriculture student population in Canada has dramatically increased. Senator Eaton made an excellent comment about the change in the view of more science. I agree totally that at the higher level of education it is a problem. However, I am encouraged by the number of bright young people entering agriculture. At our university, we have a problem in that we do not have the space to teach them all; but we consider it a good problem to have.

Senator Robichaud: You mentioned in your brief that there are several new assisted reproductive technology schemes, including cloning. Explain where the advantages are. It is an artificial process, is it not? It is not natural.

Dr. Mapletoft: I suppose in the simplest sense, identical twins are clones; and that is a natural process.

At the International Embryo Transfer Society meeting just held in Europe, there was a practitioner session when various regions of the world talked about what was going to happen in the near future. The person who presented from Europe had a very interesting take on this, I thought.

They were doing everything in the lab. They were cloning, producing embryos with stem cells and doing transgenics. They kept replicating this within the lab until they got the genetic makeup they wanted; and then they produced an animal out of it. I am not saying it is a fait accompli. This is what they are projecting they will do. This is the type of thing that we might well see in the future.

Senator Robichaud: Why do we need that? Can we not produce what we need the way we are doing it now? What advantage would it be to agriculture in general?

Dr. Mapletoft: When you produce an animal or an embryo of a specific genetic makeup, cloning techniques can be used to increase their numbers. That would probably be the primary use, but it can be done in a lab. You do not necessarily have to produce cloned animals.

The Starbuck bull was produced with the idea of increasing semen production from the original Starbuck. That is still probably not a bad idea, but people in the dairy industry tell us that genetics are moving so fast that, by the time you produce a clone, probably the genetics are outdated in any case.

It is more of a laboratory technique that can be used, as part of the whole series of techniques, for genetic improvement.

Senator Robichaud: Thank you.

Senator Buth: Thank you very much for being here. It has been an interesting discussion. I want to follow up on the cloning part of it. My impression is that you are saying that we can see improvements with cloned animals so that, if you get a specific animal that has high milk production or the best meat, cloning that animal allows you to increase that genetic makeup and get more animals that have that specific improvement in terms of milk production, et cetera.

Dr. Mapletoft: Yes, that is true. Cloning itself does not constitute genetic improvement. It is simply reproducing what we already have that we have created or that exists in nature. It is just producing more of the same.

Senator Buth: I was interested in your comment that different countries are looking at cloning and whether clones should be allowed into the food system.

I think there is misperception out there regarding whether or not something is safe versus something that we are doing artificially. I have a lot of background in GMO canola. Coming from that area, there has always been this issue of an immediate decision by the general public — usually with a lot of misinformation from some groups — that something is not safe.

I am wondering if you can maybe talk about science versus perception because you clearly have some experience in embryo technology.

Dr. Mapletoft: Your point is well made. Perhaps I should have had another point and called it education. Misinformation seems to be something that is more readily accepted than scientific information. Yes, we will have our special interest groups and the radicals that will misinform the public, but I do not think we can make our decisions based on that. We have to make science-based decisions. If I had a recommendation to make, it would be just that. We are caught in that very issue with genetically modified animals and cloned animals right now.

The science says that there is no worry, and yet we are hesitant to act because of the misinformation that exists among the public.

Senator Buth: Thank you for that.

I would like to go back to the hormone issue and back to this issue of misinformation.

I appreciate your comment, Dr. Mapletoft, regarding the EU using this as a technical trade barrier.

Can you tell us what countries are using hormones and what countries accept beef animals that have used hormones and compare that to what the EU is doing?

Ms. Schmutz: To the best of my knowledge, Canada and the U.S. use growth promotants in many of their beef cattle. New Zealand uses a smaller proportion but does use some, and Australia does as well. Then we quickly run out of beef growing countries.

We have beef growing in South America, but the beef growing in Europe is more amalgamated with their dairy production. Many of the male animals not used for milk production become their meat. They do not really have a beef feedlot system as we do. It is perhaps because of a different idea about that, but they did reject the hormones in the milk as well. To the best of my knowledge, none of the European countries use them. Dr. Mapletoft travels more in South America than I do, so he might know better about the regulations there. That is all I know.

Senator Buth: In these beef producing countries like Canada, the U.S., Australia and New Zealand, the hormone has been researched and deemed to be safe?

Ms. Schmutz: It is believed to be safe from an educational point of view, but, again, one can skin the cat many ways. Some of the hormones that enter our water system near big feedlots could be a problem if they are estrogenic or androgenic. The growth promotants I am talking about are not so much. We know that some of the hormones that are given to cattle, if they are accidentally given to cows that you hope to breed, will make them sterile. They have tremendous effects on that particular animal. There is a body of scientists who would say that the meat is certainly safe, but the idea that the use of the hormones is totally safe in our environment would be disputed by some others.

Senator Buth: Thank you very much.

Dr. Mapletoft: I was going to make a comment about South America. I spend a lot of time in South America. When it comes to Europe, I think that South America gets a free pass on a lot of things, soybeans in particular.

Of course, Europeans are quite firm about genetically modified plants. There are genetically modified soybeans grown in Brazil and Argentina, and yet they send soybeans to Europe without any problems at all. There are many issues here that are not necessarily science-based.

Senator Mercer: I have a very quick supplementary just to sort of close the loop. Two of our big competitors in the beef industry are Argentina and Brazil. Do they allow growth promotants and hormones in their beef, and are they limited in their exports to Europe because of that?

Dr. Mapletoft: I cannot answer that; I do not know. They have other problems related to export. The Government of Argentina will not allow them to export beef because they have to maintain low beef prices within the country. As far as I know, they do not use growth promotants.

Senator Mercer: Perhaps we could ask our researcher to look at that.

The Chair: Yes. We can also submit the question to the witnesses, and they can get back to us through the clerk.

Senator Callbeck: Ms. Schmutz, in your presentation and your document that you sent us before, you mentioned leptin, the research that you did and the way that is now used at some feedlots. How widespread is it in feedlots?

Ms. Schmutz: Well, in Canada, we tend to refer to an area around Brooks, Alberta, as "feedlot alley" because the largest concentration of feedlots in Canada is there. More than half the cattle are fed there, and in that area, probably only half of the feedlots are using it.

In the U.S., the largest feedlot is in Texas. It is Cactus Feeders, and it is also using it. In the State of Washington, several feedlots are using it.

In terms of the whole market, it would still probably be less than 20 per cent, but, again, smaller feedlots do not always take up technology as quickly as very large feedlots do. In the very large feedlots, it would be a higher proportion, but, if we consider the whole, I doubt that in your area anyone is using it.

Senator Callbeck: If you are talking about the larger ones, roughly what percentage? You say that overall it is probably 20 per cent.

Ms. Schmutz: In Feedlot Alley in Alberta, about 50 per cent of the large feedlots are using it. Texas is mostly owned by one guy, and he is the only one, so that would be 100 per cent, but that is not really fair because he owns everything.

Senator Callbeck: Why would there not be more of the larger feedlots in Alberta using it?

Ms. Schmutz: I would say that in terms of economics, they would have worked out that they were not sure that the testing system that they had to pay for gave them enough benefit. They alternatively could have been selling to packing houses that were into mass production as opposed to quality production. The packing plants differ, and different feedlots have different packing plants that they tend to supply. If you are mostly mass producing to a packing plant that is not paying extra for quality or using grid pricing, it may not be of economic benefit to that feedlot.

Senator Callbeck: How long did it take before the research that you did in the lab was picked up by the feedlots?

Ms. Schmutz: It was a minimum of 10 years before the first few feedlots started using it, and that research is now at least 15 years old.

Senator Callbeck: What can be done to try to speed up the time from when something is found in the lab until it is actually put into use?

Ms. Schmutz: I admit in my report that one of them is a flop. One of the problems is that what you do in a small research setting often looks very promising, but you have to go in baby steps to a few large-scale commercial feedlots in different areas, and then you have to finally convince bigger consumers. I am not convinced that you could hope that a basic research finding in a lab would really make it to market in less than about five to seven years.

Senator Callbeck: Five to seven is a big improvement on ten.

Ms. Schmutz: True.

Dr. Mapletoft: I think she is being very optimistic in five to seven. I think she has done incredibly well in ten years. I would say it is probably more likely 15 to 20 years.

Senator Callbeck: Do you see things we can do to decrease that time?

Dr. Mapletoft: We are assuming that every discovery is going to be an important one. I think that is the critical issue. It takes years of testing under different circumstances. As Dr. Schmutz pointed out, she thought she had a winner and she did not. She could have gotten down the road a long way there for naught.

The Chair: To both doctors, thank you very much. In the event that we want additional information, we might correspond with you through the clerk so that you can give us additional information.

The committee will now have the opportunity to hear two other witnesses. We have, by video conference, Dela Erith, Executive Director of the Nova Scotia Fruit Growers' Association, and from the Ontario Apple Growers, Brian Gilroy, Chair. We are informed that the first presenter will be the video conference, the Nova Scotia Fruit Growers' Association, to be followed by Mr. Gilroy, and we will then move to the question period.

Dela Erith, Executive Director, Nova Scotia Fruit Growers' Association: Good evening, members of the Senate committee. Thank you very much for inviting the Nova Scotia Fruit Growers' Association to present to you. The fruit growers' association is a not-for-profit, incorporated entity that has represented the Nova Scotia tree fruit industry, which means packers, growers and processors, continuously since 1863. Its purpose is to assist its members in the growth and development of an economically and environmentally sustainable industry.

The Nova Scotia crop includes apples, pears, peaches, plums and cherries. Apple is the predominant crop. Nova Scotia produces 9 per cent of the Canadian apple crop. The farm gate value for apples is $14 million, contributing $70 million to the Nova Scotia economy.

To stimulate the apple sector in Nova Scotia, in 2001 the NSFGA developed a long-term industry vitalization program. This strategy includes six activity pillars overarched by science and innovation. There are many vital components that influence the long-term success of the sector, components such as climate, grower expertise, input costs, markets and new technology, as well as consistent access to credible, third-party science that is positioned in close proximity to the industry.

Over the last 10 years, the implementation of the strategy has restored a level of profitability to the progressive farms. Young people are entering the sector, enthusiasm has been restored, and Nova Scotia growers feel that there is a future in their apple businesses.

The financial risks of continuous business adaptation are high, and there are significant ongoing challenges connected with attaining and maintaining a fully profitable sector, such as having a strong science and innovation program.

In 2012 the NSFGA engaged the George Morris Centre to investigate whether or not the industry could grow profitably. The simple answer was yes. New market opportunities, both domestic and export, are available. In order to supply those markets, production levels of high-value varieties need to increase, and use of new orchard technologies and quality of product need to be maximized while the cost of production is minimized. All of this action requires the support of science and innovation.

Growers take the high financial risk of adaptation and growth. Renovating and/or establishing new Nova Scotia orchards costs $22,500 per acre, which does not include the capital cost of raising orchard efficiency through the use of state-of-the-art automation technology. Growers are the ones who undertake economic and financial assessments of technology investment strategies for planned growth.

Understanding that successful adaptation and growth need the support of a long-term science and innovation program, the NSFGA and collaborators developed a 10-year research model for the Atlantic Canada tree fruit industry. The significance of the ACTFI research model is that both science and innovation are required to support the long-term ecological and economic success of the industry.

There are many definitions for innovation. Agriculture and Agri-Food Canada may have a definition, but it has not been clearly communicated to industry; therefore, the NSFGA has chosen to use the following language to describe its understanding of innovation: Science creates new knowledge and ideas. Value is added when innovative action converts the new knowledge or idea into something with commercial value. An innovation is a novel creation that produces value regardless of size. Innovation is driven by risk and reward.

The viability of the industry is dependent on its access to science and on its ability to innovate and/or use the results of someone else's innovation. This is truer today than it has ever been, considering market expectations, global competitive pressures and the extent and pace of structural change. To be successful, innovation needs to be included in three levels of business activity: one, core — optimizing or enhancing existing products for existing markets; two, adjacent — expanding existing products for adjacent markets; and three, transformational — developing products for markets that are immature or do not yet exist.

Over the past 100 years, private-public partnering created a sound science and innovation program for Nova Scotia tree fruits. The knowledge base, ongoing intellectual capacity and supporting infrastructure that has been established is of great importance. The industry cannot maintain itself or grow without it.

In the early 2000s, AAFC began to destabilize its science program. This process put undue amounts of stress on the Nova Scotia apple sector as it was beginning its renewal process. This was a time when the need for a stable science and innovation program was critical.

Despite AAFC's policy efforts to vastly reduce production science in favour of an unclear innovation process, collaborative private-public science partnering continued in the Nova Scotia tree fruit industry. The Kentville research station tree fruit science team has maintained its integrity despite AAFC policy, which was directed to significantly reduce the number of scientists in the system and turn those remaining into proposal writers and fundraisers.

In 2013, after more AAFC reorganization, it appears that Agriculture Canada may be renewing its interest in local tree fruit science. This is good. Unfortunately, AAFC policy has now made it too expensive for the industry to activate the science. The cost to participate in the Growing Forward 2 AgriInnovation Program, Agri-Science Clusters and Agri- Science project funding streams is 25 per cent for not-for-profit incorporated entities.

Further, very successful funding programs, such as the Canadian Agricultural Adaptation Program that was locally administered and did not cost as much for industry participation as the AIP, are being discontinued. This means that the industry is being forced to a single, unaffordable AAFC funding program. This would appear to be change for the sake of change.

Statistics Canada tells us that return on investment in agriculture is minimal or non-existent. In general, Canada is recognized as being an ineffective innovator, putting less public funding into science than other less wealthy countries. Knowing this, in 2013 the federal government increases the cost of science and innovation to agriculture. As far as we are concerned, there is a logic gap in that decision.

Agricultural science and innovation benefits the health and welfare of every Canadian citizen, not just the agricultural community. Under Growing Forward 2, science and innovation should have been made less expensive and more accessible to growers, not less accessible due to increased industry cost. Even with the benefit of SR&ED tax credits, the Nova Scotia apple industry cannot afford to make a 25 per cent contribution to leverage Agriculture Canada program funds. Under Growing Forward 2, the Nova Scotia apple industry will have great difficulty leveraging the AAFC funding required to action the science and innovation that is essential to support core, adjacent and transformational apple products.

Initially, lack of supporting science and innovation will slow the growth of the industry; it will become unprofitable and the industry will regress. Stakeholders will go out of business, the economy of Nova Scotia will be negatively affected, as will the Canadian economy, and Canadian food security will be further challenged. The cost of science that is undertaken for the public good should not have to be carried so heavily by the food producer.

Thank you very much for giving us this opportunity.

The Chair: Thank you very much. Now I will call on Mr. Gilroy, the chair of the Ontario Apple Growers, to make his presentation.

Brian Gilroy, Chair, Ontario Apple Growers: Thank you for the opportunity to speak to you this evening.

I am an apple grower from the Georgian Bay area and the chair of the Ontario Apple Growers. Our organization represents 215 commercial apple farmers. Apples are the most significant fruit produced in Canada in terms of tonnage. Nationally, apples are the second most valuable fruit crop after blueberries, depending on the price of blueberries, with a farm gate value of apples at $160 million annually. In 2011, this represented 21 per cent of total fruit farm cash receipts in Canada.

In Ontario, we produce 42 per cent of our national apple crop, with a farm gate value of approximately $70 million. This includes sales to fresh and processing markets, as well as on-farm and pick-your-own. We grow about 17 different varieties of apples in Ontario, and our major apple producing areas are along the shores of Lakes Ontario, Lake Erie and Lake Huron, and Georgian Bay. The top five varieties grown in Ontario based on acreage planted are McIntosh, Empire, Northern Spy, Red Delicious and Gala.

Apples are one of the most challenging crops to grow. There are many different varieties that all have their own unique characteristics for effective growing and storing. The pest and disease complex affecting apple production is one of if not the most complicated of all crops. The Canadian market, however, is a small one on the global scene. Our apple production represents less than 0.6 per cent of the world's annual apple production.

Today, I am here to talk to you about research and innovation in Canada's apple industry in the context of developing new markets, enhancing agricultural sustainability and improving food diversity and security. I will touch on where we are seeing successes, identify areas that need improvement and make recommendations on steps needed to grow and sustain the industry and how government can assist in this regard. The briefing document provided will give you additional information on each of these areas as well.

Recent on-farm research and innovations supported by the Ontario Apple Growers include examining the economic benefits of using orchard platforms for pruning, training and harvesting, as well as investments in weather mitigation tools like frost fans, wind machines, hail netting and our very own hail cannon, and optimizing sprayers through improved equipment calibration.

We are also seeing increased management at the farm level as a result of more stringent food safety and traceability requirements from produce buyers. The Ontario Apple Growers have led the way with appletracker.com — a web- based crop management tool that helps farmers with record-keeping to meet food safety requirements.

The OAG participates in consumer taste panels to understand what consumer preferences are in all aspects of apples, including taste, appearance, texture and colour. This work is being done with different demographic and ethnographic population groups. This helps us in our search both within Canada and globally for new apple varieties that will grow in our climate and satisfy those preferences. Our breeding activities include planting these potential new varieties on test plots so that we can evaluate them and do further research in hopes of discovering the next great Ontario apple variety. Not only will newer varieties help us build our position in the domestic market, but also they will bring higher financial returns to growers.

We have made progress with respect to new variety development, new technologies and product quality. Unfortunately, this has been greatly hampered by rapidly escalating costs and an inability for farmers to recover those costs from the marketplace. This leaves very little money available for us to reinvest in their operations. The global economy means that prices for our products are often dictated by the lowest available price from other jurisdictions. Many do not face the high labour and increasing input costs for things like fertilizer, energy and crop protection that we have here in Canada. The price differential of crop protection materials between Canada and the U.S. has been observed for years and remains at about 56 per cent higher in Canada.

Economies of scale impact all business factors. Many of our apple farmers and packers are relatively small operations. This makes it difficult to coordinate and implement new technology. Consolidation has happened amongst many of our competitors, resulting in operations that are able to be innovative and to adapt quickly to new market realities.

The Canadian apple industry needs a united voice. The Apple Working Group of the Canadian Horticulture Council meets two to three times a year but has lacked a true national focus. The Ontario apple sector would welcome a national research and promotion agency to represent the interests of all apple farmers at a national level. The resources to move such an initiative forward have been beyond our financial ability up to this point.

The growth of a strong local food movement in recent years has been a great boost for Ontario apple growers. We are also fortunate to be able to benefit from the popular Foodland Ontario buy local campaign, which is heavily supported by the Ontario government. It is recognized amongst consumers and is the envy of many jurisdictions. As well, retail stores are familiar with the program and allow point of sale materials to be placed next to in-store displays of Ontario-grown products. However, despite this, we must still compete with international competitors on size, quality and price to make it onto the Ontario retail store shelves. In normal years, Ontario apples are in retail stores for at least 8 if not 12 months of the year.

As an industry, we would like to make the following recommendations: The first is government investment for on- farm infrastructure. We feel there is incredible potential for Ontario's apple industry, and our apple-growing capacity is only a fraction of what it could be. If we are able to find and develop the best varieties for our marketplace and increase production, we can store and market apples for 12 months of the year. As 2012 has shown us, Mother Nature can deal devastating blows. There are many strategies farmers could implement to help mitigate weather risks, but often there are no funds available in a farm business for this type of investment.

An infrastructure program supported by government would help advance the implementation of on-farm innovations. This could include innovation or new technologies to help reduce the cost of production, ensure environmental sustainability and increase competitiveness. Changes in government policies with regard to finances or taxation would also help bolster innovation.

Second, continue government investment in research. In addition to innovation, this includes support for core research, such as pest management and resistance. We need publicly funded research capacity to deal with societal concerns about food safety, environmental sustainability, managing climate change, renewable energy, plant biomaterials, rural development and other issues. Long-term and short-term research programming should be in place that addresses both the immediate needs and longer-term issues, such as breeding or genomics, which can take years to bring to fruition. Earlier, we heard the discussion around how long it takes to get a certain agricultural livestock thing going. When it comes to tree fruit, 25 years is kind of a minimum.

Governments of all levels have been downloading the cost of programs with societal benefit on to farmers, such as food safety, minimum wage, water and environmental regulations. Globalization has made us price takers, unable to return the higher costs from the marketplace. As farmers, we cannot supply inexpensive food while at the same time absorbing all the additional expenses on behalf of society as a whole without undermining the future sustainability of our sector.

Governments can help support our sustainability as an industry — in Ontario alone, horticulture provides 30,000 on- farm jobs and a further 8,700 jobs in specialty processing — by being respectful of additional costs being downloaded to farmers and by providing offset programming to compensate.

Thank you for your time. I would entertain any questions from committee members.

The Chair: Thank you, Mr. Gilroy.

Senator Mercer: Ms. Erith, congratulations on 150 years of your organization. It is a remarkable feat in this day and age. As a Nova Scotian, I know there is nothing more beautiful than apple blossom time in Annapolis Valley. It is a wonderful place to be at that time of year. I encourage all colleagues to visit.

I have some of very short questions. We have apples, pears, peaches, plums and cherries. What about blueberries and grapes, which are two other fruit products in Nova Scotia?

Ms. Erith: That is correct, Senator Mercer, but the Nova Scotia Fruit Growers' Association really only deals in tree fruits. It is an old name and I think they thought they would do everything in the beginning, but they can do only tree fruits.

Senator Mercer: One hundred and fifty years ago we were not growing many grapes and were only getting the wild blueberries at the side of the road. Today, they are big crops. I understand you are at the research station tonight in Kentville. This is a great asset to us in Nova Scotia. I know my colleagues were impressed when we were there.

I want to talk about new product development. Our second witness talked about new varieties possibly being introduced in Ontario. Tell me about new product development — some of the things we have been able to do in Nova Scotia with respect to new products, apples in particular.

Ms. Erith: This apple is a phenomenon that occurs probably once in a lifetime and has markets around the world. Given the relationship between the Nova Scotia Fruit Growers' Association and researchers at the Kentville station, we have been able to put together a world-class program.

Researchers from other countries — Italy, France, et cetera — have come to visit to ask how the station has been so successful with being able to help the growers with their production methods, their harvesting techniques and timing and their harvest methods. We have now been recognized as the best Honey Crisp grower in the world.

Senator Mercer: Honey Crisp is a relatively new variety in Nova Scotia. What is the time difference from the time we started to the time we became successful? I had a Honey Crisp apple last night, so I am trying to do my part. How long did it take from the beginning to the very successful situation now?

Ms. Erith: It was brought out in Minnesota in the 1960s, and then it took a long time before it was planted with any significance. In 1996, it was planted in Nova Scotia on a trial basis, and then it was planted seriously between 2005 and 2011 in this province. Now it covers about 9 per cent of our local production. That is a long time.

Senator Mercer: It is a long time but not necessarily a long time when you consider the development of other products. Thank you very much.

Senator Plett: Mr. Gilroy, you stated in your presentation that apples are one of the most challenging crops to grow. Why is that? I would think that you plant a tree and let the apples grow.

Mr. Gilroy: Each apple variety has its own unique characteristics. Honey Crisp, for example, is very prone to bitter pit and is very weather-dependent. It grows best in a cool climate, and Nova Scotia's climate is extremely good at growing one of the best crops. Georgian Bay and the north shore of Lake Ontario also grow very good Honey Crisp, but in places it requires additional calcium to be sprayed on that tree. People apply Epsom salts. Northern Spy has the same challenge and requires calcium sprays to be put on or else it develops an internal breakdown called bitter pit.

The pest complex is evolving. New pests come, and new pests go.

As we have tried to use softer crop protection materials, old insects that we have not seen in 60 years are re- emerging, so, as we go to lesser and better use of crop protection materials, new things evolve. We also have new invasive species for apples. The brown marmorated stink bug has been imported from China through the U.S. to Canada. It is now in the Niagara region, and it has decimated crops in the Northeastern United States. It is an ongoing process. As the crop protection materials are being reviewed, we are being encouraged to use different materials. There are pros and cons to those changes. One of the real cons is cost. The new generation of materials usually costs more. The main thing that we try to control is apple scab; probably close to 50 per cent of our crop protection sprays are to control that disease. All of the new materials that have come out are single-site modes of action, and the old materials are multi-site. Within a very few number of years, resistance to the new materials is being found, so there are failures, which cost the farmer a lot of money.

Senator Plett: I appreciate that. You have given me a reason why any crop is difficult to grow, actually. Grain farmers have aphids, grasshoppers and this and that type of issue. They have to put fertilizers on to grow. All the things that you are telling me are basically the same, so it is really no more challenging than being any other type of farmer.

Mr. Gilroy: We will have to agree to disagree on that one.

Senator Plett: Fair enough. That is not the first time that has happened with a witness and me.

Who produces the most apples? Is Ontario the largest producer of apples in Canada?

Mr. Gilroy: In Canada, yes.

Senator Plett: Who would be next? Nova Scotia we have heard from.

Mr. Gilroy: Quebec has just passed British Columbia for second place.

Senator Plett: British Columbia was going to be my question. Is the climate better to grow apples in Ontario than in British Columbia?

Mr. Gilroy: It is different. Different varieties grow better in different climates. A lot of varieties require more heat. Red Delicious, for example, requires a lot of heat to finish. Ambrosia is an up-and-coming Canadian variety that grows extremely well in most climates. The problem with that variety is getting enough volume to cover the cost of the extra things that have to go into growing it.

One thing I should bring up, which refers back to your last question, is that when an apple tree goes into bloom and looks beautiful and it is a full bloom, we need only 6 to 8 percent of those flowers to become apples to have a full crop. The key is to balance that out. Apples have a tendency to be biennial — a heavy crop one year and hardly anything the next. Our goal is to level that out so that it is a consistent crop. That is not easy. Often, it will require hand thinning, going in and taking off the apples that are too many.

Senator Plett: That is why, in my parents' backyard, one year we would have tons of crab apples and the next year none.

Mr. Gilroy: It is natural.

Senator Plett: You spoke about a national voice. I would like to ask both witnesses: Why do all of the organizations — yours, the organization in Nova Scotia and all others — not get together and create a national voice?

Mr. Gilroy: We are in discussions about that right now. There is a move to have a promotion and research check-off for all apples — imports and domestically grown.

It has been a focus of this government to try to have more commodities able to do some industry fundraising for research and promotion activities. We are certainly supportive of it.

Senator Plett: Ms. Erith, would the organization in Nova Scotia be supportive of that as well?

Ms. Erith: If we were going to do that, we would have to have the legislative right to collect the levy. We do not have that for apples in Nova Scotia. We would have to go through the process of getting the legislative right to collect the levy. That would be our first step.

Senator Plett: Thank you.

You spoke of government downloading, and I guess this might be the second item that we will agree to disagree on. I am of the mindset that industry needs to first do their part. I am sure that you are, and I do not want, in any way, to belittle that. However, how much does your industry spend on research, and how much do you spend versus what government supports you with?

Mr. Gilroy: I brought a copy of our annual report, which has a full breakdown of funds that are spent on research.

We are extremely good at seed money and being able to access other funds from other parts of the industry — crop protection material companies, storage companies and those types of things. For 2012, when it came to research, we were able to secure $539,157 of government money, and our grower amount was just a little under $40,000, so we have done extremely well at that.

We also administer a lot of these projects, and in-kind costs do not count towards this. This is strictly cash funding.

One of the things that happened with Growing Forward was that we went to a cluster system of agricultural research, and it was a very tough first round. It was new for everyone, and things got changed. I do not know if you have ever seen Hamburger Hill with Clint Eastwood? Well, he had a word to describe the cluster, and it was all of that and more.

A lot of our researchers spend a lot of time fundraising to do the research. They have to go around and get dollars and then do excessive report writing. Some of our researchers are not good fundraisers but they are good researchers. It is really important to look at who does what and who can do it the best.

Senator Plett: Thank you. I am sure the clerk will pass around those brochures.

Mr. Gilroy: He cannot touch them, apparently. They are not bilingual.

Senator Plett: Just make sure you leave them right there when you are done. Thank you.

Senator Eaton: Mr. Gilroy, I can attest to how beautiful the Georgian Bay is. I spend the summer there every year. I would disagree with Senator Plett. I am considered a sophisticated gardener who can raise most things from seeds. Apples are by far the most difficult thing. They make pears and plums a child's game.

Does the Ontario Apple Growers have an affiliation with research being done at Guelph? Do Ontario agricultural colleges such as Guelph support you in any way?

Mr. Gilroy: Yes. There is the Simcoe Research Station, and Dr. John Cline conducts a lot of apple research out of the Simcoe Research Station. We are also connected with the Vineland Research and Innovation Centre in Vineland, Ontario.

We are challenged to fund varietal development because it is such a long-term process. In the University of Minnesota, they have had some big hits with Honey Crisp. Cornell University developed the Empire and Cortland apples. In 125 years, they had basically three hits that were big commercially.

They are also doing some work on fire blight resistant root stalks. That is a disease that can totally wipe out an orchard in a matter of weeks.

We are fully connected with the research available, and we are also part of a research project on genomics out at Kemptville.

Senator Eaton: When you talk about new varietals, are there any apples that are a product of a genetically modified background? If we sign this EU trade deal, do you see that as a market opportunity for Ontario apples?

Mr. Gilroy: Our second largest export market used to be Great Britain. Great Britain has done a lot of work to revitalize their apple industry, and we have pretty well lost our U.K. connection. I do not know whether it is the same in Nova Scotia or not.

We just finished a benchmarking study on the Canadian apple industry. I am sorry. I could have or should have brought that information with me. One of the key factors is that we need to focus on our domestic market. There is lots of opportunity for growth there. Apples are a symbol of health and wellness, and we all know what the gorilla in the room is when you talk about our economy, and it is health care. We are willing to work with any and all government agencies to help improve the health of Canadians, and I have a personal interest in the health of the Far North.

Senator Eaton: Right now, you feel that you have a lot of opportunity in the domestic market.

Mr. Gilroy: Yes.

Senator Eaton: Do you see an opportunity in cider?

Mr. Gilroy: It is growing. The British Columbia grower cider is the number one cider sold in Canada. Just two weeks ago, I met with the new chair of the Ontario craft cider organization. It is seen as a real growth opportunity. In Germany, they are not only great lovers of beer but also of cider. There are over 600 cideries in Germany.

Senator Eaton: That could be an export opportunity.

Mr. Gilroy: Yes, value added of some kind.

Senator Callbeck: Ms. Erith, you talked about the George Morris Centre. Would you explain that centre, please? Where is it located?

Ms. Erith: It is located in Ontario.

Senator Callbeck: What is it its main purpose? It did a study, but is it mainly looking at fruits?

Ms. Erith: It is an agricultural consultancy centre. Its main objective or purpose is to look at agriculture. It has done a number of studies on Canadian agriculture.

Senator Callbeck: You said that you had a study done that came back saying that the industry could be profitable. Did they look at the finance —

Ms. Erith: The industry could grow profitably. It is easy enough to grow a business, but you have to be able to grow it profitably.

Senator Callbeck: That was what I was getting at. Did they assume that the farmers would be assuming all the risk in growing this business or that government would be helping out here?

Ms. Erith: They assumed that the growers would assume the risk. It was grower risk that was being discussed. There was no discussion about what the government would or would not put into it. The government did not enter into the discussion.

Senator Callbeck: You mentioned in the next paragraph the Atlantic Canada tree fruit industry. Is there an Atlantic Canada association?

Ms. Erith: No. There is an association in New Brunswick. There is one on Prince Edward Island and one in Nova Scotia. To be honest, I do not think any apples are grown in Newfoundland.

Senator Callbeck: This model, the 10-year plan for the Atlantic Canada tree fruit industry, was that with the idea of these associations working together?

Ms. Erith: Yes, that is the idea. We do a lot of work with New Brunswick and Prince Edward Island. We include Prince Edward Island and New Brunswick in a lot of the research work that we do. We feel that they are not very big, either of those two provinces, when it comes to support, and they need as much support as they can get. We are as close as they will get to anybody else, so we should be helping them and working together.

Senator Callbeck: When did this 10-year research model start? In what year?

Ms. Erith: We developed it in 2012, but we had been doing research for years.

Senator Callbeck: It is relatively new then.

I noticed that ACOA announced $47,000 of assistance to develop the Nova Scotia Fruit Growers' Association project to identify opportunities and actions that can advance innovation and technology. How is that coming along?

Ms. Erith: That is coming along very well. ACOA helped to pay for that George Morris Centre project, and ACOA money helped pay for some work being done with the growers on improving their knowledge about orchard automation systems and new management software that they could use in their orchards to manage their orchards. We are now using software such as orchard tracker, which Mr. Gilroy talked about bringing into the industry, to get the growers to become familiar with it and use it.

Senator Callbeck: Mr. Gilroy, you mentioned about the association spending roughly half a million dollars on research and $40,000 came from the growers. In the province, what would be your estimate on how much money you spent on research here? Obviously there would be some going on at the universities or colleges, or maybe there is not.

Mr. Gilroy: Earlier there was talk about the importance of post-harvest and maintaining the quality of food for a long period of time. That has been one of our ongoing focuses because apples are the most delicate of little things — more delicate than an egg by far — and the cold chain has to be preserved and whatnot.

The person who does that world-class research is an employee of the Ontario Ministry of Agriculture, Food and Rural Affairs. What has happened over time is that the number of people involved in agricultural research continues to be eroded. We heard about a scientist who is retiring in Napanee, I think, and that position was not going to be filled.

Out in the Okanagan Valley, Summerland is the varietal development apple headquarters for Canada, and they are losing scientists left, right and centre. I believe there are three scheduled to retire and not to be replaced over the next two years. It is the loss of those positions that is of great concern to us.

Senator Callbeck: Who is the real competition?

Mr. Gilroy: Washington State. It is the bully and it is huge. They have single farms bigger than all of the Ontario apple production.

Senator Callbeck: I believe you said Canada has 0.6 per cent of the world's apple production. What would Washington's be?

Mr. Gilroy: The U.S. is second biggest after China. China is by far the biggest. They produce close to 50 per cent of the world's production. The U.S. is next, and I believe Italy is third.

I will provide the apple benchmarking study with a lot of those statistics. I have it in a format that I can email.

The Chair: Mr. Gilroy, does China have the same varieties as North America?

Mr. Gilroy: Their main variety is Fuji, which is quite a sweet apple. They really like sweet fruit. Canadians actually taught the Chinese how to grow apples commercially back in the 1960s, I believe it was. A trade mission went over and did a really good job of showing them how to do it. It is coming back to haunt us quite a bit. A lot of their production went to make apple juice concentrate, and they basically took over the world production of that commodity. Poland is second on that one. Their production is mostly Fuji, and that is the one that is imported into Canada as well.

Senator Buth: I have a couple of questions for you, Mr. Gilroy. I was actually going to ask who your main competitor was. You mentioned China and you also said it is primarily Washington State, and you also mentioned that there is an increased attention to food safety, environmental protection, traceability, et cetera.

Do the imports have to follow the same guidelines in terms of those types of programs that you would have to do?

Mr. Gilroy: Yes. Not all of them. In South America, and I forget how many years ago, there was a raspberry issue coming out of Honduras, I believe. A lot of the South American countries are actually keeping pace, if not surpassing us, in food safety requirements because they are totally export-dependent.

When it comes to what is required here, as of 2012 it was required for all of the Weston group grocery chains to have CanadaGAP certification, which is a food safety program that was developed by growers for growers, and relatively speaking it is working out pretty well.

Crop protection material use is unknown. We have had some really welcoming minimum residue level requirements in the past, but apparently that will change so that if we do not have access to it here it should not come in on anything else.

Senator Buth: That is a shift in the program then.

The other question I had for you was on the crop protection side of things, where you make the comment that the price differential remains at about 56 per cent higher in Canada compared to the U.S.

The Pest Management Regulatory Agency has had an Own Use Import Program. Have the apple growers used that program, and has it made any difference?

Mr. Gilroy: Two years ago, a miticide we used called Agri-Mek was 600 per cent higher in Canada than across the border. We had some farmers apply to the grower own use program, get to the border, go across the border and they had all the paperwork done. The company selling it got a letter from the supplier saying that you cannot sell it to them because they do not have their New York State pesticide handling certificate. Roadblocks were continually put out. However, it did bring the cost of that material down to just a little over double instead of 600 per cent higher.

It has made a difference. It was a voluntary thing for the company to allow it, and it is now going to become mandatory that if there is a significant price differential it will be on the list.

Senator Buth: That is a significant improvement in the program then.

Mr. Gilroy: Things are evolving, yes.

Senator Robichaud: You mentioned that Washington State was the biggest producer in the United States. How do they compare as to subsidies and research, and for all the different things that you have to do in your industry? Are they being supported?

Mr. Gilroy: Yes.

Senator Robichaud: Would it be to a great extent?

Mr. Gilroy: It is really difficult to get hard numbers, but from what I understand, Washington State University is one of the primary research facilities in North America. Washington State production is so big that they produce as many apples as almost the rest of North America put together. That does not include Mexico. They are huge. In the 2012 crop year they had by far their largest crop in history and it is growing. It is a bit scary. They have access to an export market fund that subsidized their apples at $2 a bushel to the export market, and those are significant dollars. They have an office in Toronto. It is a very attractive market.

It is a challenge to deal with people that big. One of the big dilemmas with apple growing is that the farmers depend on the price they get for their crop. The packing plants depend on volume. As volume increases chances are price is going to drop, so they are working opposite to one another. It is one of the great challenges we have in the Canadian apple industry. Does that help?

Senator Robichaud: Yes, it helps. You say for every bushel they export to Canada they get $2? Is it a Washington State program?

Mr. Gilroy: I think it is a federal program. I am pretty sure it is a federal program. They use that to buy shelf space. They use it for volume discounts, for promotion incentives, and often that money would go to retail head office as opposed to reducing the cost of food to the consumer.

Senator Robichaud: They are in direct competition with our products, are they not?

Mr. Gilroy: Yes.

The Chair: Mr. Gilroy and Ms. Erith, thank you very much for sharing your opinions with us. If you feel, as we go forward, that you want to add anything, please do not hesitate to send us your comments through the clerk.

Honourable senators, in saying thank you to the witnesses, I will now declare that the meeting is adjourned.

(The committee adjourned.)