Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 34 - Evidence - Meeting of April 30, 2013
OTTAWA, Tuesday, April 30, 2013
The Standing Senate Committee on Agriculture and Forestry met this day,
at 6:13 p.m., to examine and report on research and innovation efforts in
the agricultural sector (topic: commercializing research).
Senator Percy Mockler (Chair) in the chair.
The Chair: Welcome to this meeting of the Standing Senate
Committee on Agriculture and Forestry.
My name is Percy Mockler and I am the chair of the Senate Standing
Committee on Agriculture and Forestry. I will now ask honorable senators to
Senator Callbeck: Catherine Callbeck from Prince Edward Island.
Senator Merchant: Pana Merchant, Saskatchewan.
Senator Tardif: Claudette Tardif from Alberta.
Senator Frum: Linda Frum, Ontario
Senator Buth: JoAnne Buth, Manitoba.
Senator Duffy: Mike Duffy, Prince Edward Island.
Senator Eaton: Nicki Eaton, Ontario.
Senator Maltais: Ghislain Maltais, from Quebec.
Senator Rivard: Michel Rivard, The Laurentides, Quebec.
The Chair: Mr. Francis, thank you accepting our invitation to
share with us your opinions, comments and recommendations as the Standing
Senate Committee on Agriculture and Forestry goes forward with its
examination of research and development efforts in the development of new
markets domestically and internationally, in enhancing agricultural
sustainability, and in the context of traceability and improving diversity
in agriculture for the future.
As you are from BioAlliance Inc. from Prince Edward Island, I have no
doubt that you will share some very important information.
Please proceed with your presentation, which will be followed by
questions from senators.
Rory Francis, Executive Director, PEI BioAlliance Inc.: Thank you
very much and good evening to everyone. It is a great pleasure to be here to
participate in the important conversation that you have been having for the
last several months. It is a privilege for us to provide some insight from
our perspective in Canada's smallest province on the kinds of mechanisms we
have found to be effective in translating research to commercialization and
opening new markets.
My comments will be as much about the intangibles as the tangibles — and
I will explain what that means as we proceed — in terms of a system of
innovation that can move new technology to the marketplace. As we know, much
technology and research has been developed that is relevant to the
agriculture/agri-food sector in this country and in the world. The very
great challenge is how to successfully move those technologies to the
marketplace and turn that knowledge into economic impact and economic
The systematic nature of how to bring parties together to advance that
research and that knowledge to the marketplace is a big challenge anywhere
in the world. We have learned some things about how to get beyond some of
those barriers that I believe are worth consideration.
I am wearing at least three related hats in my presentation this evening,
and perhaps a bit of a fourth one.
My paying job is Executive Director of the Prince Edward Island
BioAlliance, which is a private-sector-led not-for- profit that has, over
the last eight years, coordinated a partnership of businesses, research,
academic institutions and government agencies in our province to develop the
bioscience sector. It is a new sector and a new part of the economy of our
province, and one that is growing. I will say more about that momentarily.
The second hat I wear is as founder and board member of the Prince Edward
Island AgriAlliance, which is a three- year-old organization similar in
structure and governance to the BioAlliance in terms of being a
private-sector-led partnership of producers, processors, research
organizations and government partners. It is a collaboration of private-
public partnership focused on the renewal of the agricultural and agri-food
sector in our province.
The third hat I wear is that of President of the Eastern Canadian
Oilseeds Development Alliance, which is a child, if you will, of
AgriAlliance. We founded the Eastern Canadian Oilseeds Development Alliance
in 2010 as a partnership of canola and soybean producers from Ontario east.
As well, we have processors, exporters and researchers focused on those
particular crops and their advancement in Eastern Canada.
I am also a board member of the Canadian Agri-Food Policy Institute based
in Ottawa, whose work as a catalyst for dialogue and change in the agri-food
sector has been important and has influenced my understanding of some of the
challenges we have across Canada in this sector. I understand that CAPI
presented to you about one year ago. Our president, David McInnes, made a
presentation at that time. I will mention one of the projects that I think
is illustrative of some of the things that I will talk about this evening.
I will give you a quick profile of both the agri-food sector and the
bioscience sector, which sectors are related in our province. In fact, the
relationship is what we consider a strategic advantage for us in terms of
developing those sectors.
The agri-food sector is the grandfather of the Prince Edward Island
economy. It has been around for over 150 years, ever since anyone could move
stumps and plant potatoes, or anything else that might grow. It continues to
be the province's largest industry with over $400 million in farm cash
receipts and another $3 million from value-added food processing. We have
about 400 companies working in that area. It is responsible for about 10 per
cent of the province's GDP, which is second only to Saskatchewan in
importance relative to overall GDP of any province in the country. About
7,000 people work in the sector, about half of those in primary production
and half in processing.
As is the case across Canada and the U.S., there are challenges in terms
of competitiveness of some of the sectors in P.E.I. There are some emerging
and exciting new opportunities. Because it is the most important industry,
we must obviously pay a lot of attention to it in terms of growth,
development and impact on the economy. Of course, as many of you are aware,
the potato is still number one in terms of value in the agri-food sector.
The bioscience sector is much younger, of course, only about 10 years old.
It was about 2005 when we established the BioAlliance as a coordinating
mechanism. There were about 12 companies at that time that could be called "bioscience
related." We now have 38 companies in the province with about $100 million
in sales. About 1,000 people work in the sector and about $68 million is
invested in R&D each year. The focus is on bioactive compounds derived from
terrestrial and marine sources, including agricultural sources, so plant-based
sources of bioactive compounds that can be used in various health
applications that can range from functional ingredients in foods all the way
through to pharmaceutical ingredients. That is the focus area. You can see
the connection already between the biosector, our market focuses and the
agricultural sector in the province.
The kind of products produced by companies in the sector would include
cosmetic ingredients, feed ingredients, natural health products, personal
care products, vaccines, pharmaceutical ingredients, diagnostics and so on.
As I mentioned, the convergence of technologies and market opportunities in
the bioscience and agriculture sector is a strategic opportunity. The
development of technologies in bioscience is creating a market opportunity
that reaches back along the supply chain to the primary producer in a number
of areas that allow for new market opportunities at the primary production
area, new jobs in processing and access to markets that our growers, for
example, would never have heard of five years ago.
At the board tables of AgriAlliance or BioAlliance, the conversation is
similar in the sense that it is all about how to create the right conditions
and the right set of partnerships along supply chains that can grow the
economic contribution of each of these sectors to the province's economy.
The endgame is about successful companies, job creation and investment in
R&D because that is such an important stimulus to the ability to create new
products for new markets. It is about successful businesses and reaching
from research to farm to other value chain partners and to the consumer.
We have a health product continuum, from food to pharmaceuticals, when
you look at the combined efforts of these two areas of market focus.
In Prince Edward Island, we have established what we would consider an
innovation system within our biosector and, more recently, in the agri-food
sector that we would suggest has brought together the key ingredients of an
ecosystem for successful technology commercialization. That is what I was
saying off the top. How do you bring the right components together to allow
for a technology to be successfully commercialized and to achieve the
economic impact that we are all looking for?
The elements of that ecosystem, then, we would refer to as a cluster
model. That is not our term; it is a Michael Porter term. The components are
fairly well understood. You need to have a relevant and accessible science
platform; skilled human resources; access to the appropriate kind of
capital, depending on the stage of development of the company; affordable
facilities and infrastructure. You need to be able to incubate small- and
medium-sized enterprises and to bring them along with the right mentoring
services, and you need to have the support of public policy and programs.
It is a bit like making soup; just because you have the ingredients does
not necessarily mean the soup will taste right. It is a very dynamic process.
You have the opportunity to taste that soup, add a little of this, add a
little of that, taste again. It is an ongoing process because it is a
In that soup, what we have found is that it is really important to have
what a gentleman by the name of Richard Bendis calls an "innovation
intermediary," a catalyst that brings the partnership together, understands
what that partnership needs to look like and creates a nucleus within that
cluster, whether it is agri-food or bioscience. With the right business
environment, with that right facilitation of the partnership within the
cluster, you can achieve the kind of transfer of technology from research
bench through companies through commercial enterprises to the marketplace.
You can attract companies because you have an environment — an ecosystem —
that is attractive. People can see that companies are successful in our
backyard. They are making money, hiring people and getting to the
marketplace. You can attract investment. With that kind of coordinated
mechanism for companies in the agri-food sector, supply chains that are well
connected and relationships that work, companies want to be there. Investors
would prefer to invest in that kind of an organized cluster rather than
where companies are sitting on their own without the kind of support and
network that they probably need to survive.
It is also really important in terms of attracting and retaining brain
power because these are all brain-power businesses.
What we have found in terms of establishing these kinds of facilitating
structures, like BioAlliance, AgriAlliance and ECODA, is that it has to be a
private sector-led process. It has to be outside the political process
because, obviously, the risk is that, every four years, if it is owned by
one government, the next government might decide this is not the best idea.
This is not a sprint; this is a marathon. You need to have consistency and
consistent leadership in terms of the focus and direction of the development
of that sector. You need to be able to build value-chain relationships and
to move new technologies along the supply chain. Supply chains need
innovation at all points along the path if they are going to be successful
because that is what other countries and companies are doing, so we have to
be better than that in terms of our ability to move technologies along and
through supply chains. That is a challenge sometimes because we often have
producers and processors that will compete on price. They will have
disagreements over fair pricing for products and so on, and that is
However, we must have that understanding that, yes, we will have that
conversation about price. In the meantime, we had better be collaborating on
innovation and how we can trust that we will work together on innovation and
on moving technology into our systems at primary production, processing and
so on, in order to achieve competitiveness in the marketplace. Otherwise, no
one will be able to pay the bills, anyway.
We also find that we can provide, through the use of these facilitating
structures like BioAlliance, system navigation for companies. It is kind of
a complicated world. There are many government and other agencies that have
important tools in their toolbox, but companies do not necessarily know
which ones are right ones, at the right time. Some navigation can be useful
in sorting that out.
Also, we need to have some tough love. For business plans that really
will not work, someone has to be able to say, "This is not going to work"
and to reduce the risk to public and private funds early on. Fail early and
fail cheap if it is not going to be a successful venture.
The other aspect of what we are trying to do is more on the
communications and branding side of things, and that is to create some
excitement about what this is all about. In the biosector, creating
excitement is not all that difficult. It is an exciting new industry. It is
fresh and people can relate to the new opportunities.
The agri-food sector frustrates me quite often. It is very difficult to
get people excited. I think it is because it is an older industry and
because everyone has seen this movie before. They will kick the tires a
little longer before they believe that there is something new that is worth
pursuing. It is hard to get people excited, and that is not good for the
industry because that means it is tougher to attract the next generation if
they are not seeing excitement and feeling that this is a place to invest
their careers and livelihood. That is a real concern.
I mentioned the Eastern Canadian Oilseeds Development Alliance, and I
have a couple of last thoughts here. Again, as a facilitating structure to
bring supply-chain partners together to allow research and innovation to
permeate the supply chain, this entity, which involves seven Canadian
universities and five Agriculture Canada research centres in Eastern Canada,
is focused on developing the canola and the soybean industries, particularly
the identity-preserved, non-GM food-grade soybean sector, with Japanese
markets primarily, for soy milk, tofu, miso and very specialized
applications of food-grade soybeans.
The amount of research going on through this ECODA initiative, funded 75
per cent by Agriculture Canada, is quite dramatic. A number of new
initiatives are coming out of that research program. We have managed two of
these now and hope to manage a third one under Growing Forward 2. That is
the value of the facilitating structure, the ECODA entity, which is a small
piece of infrastructure that brings together producer groups, processors,
exporters and the researchers. That is the magic of this whole entreprise.
If you do not get that alignment, then things do not happen. It is difficult
for any individual group to begin that conversation and create that
alignment because there is always a sense of self-interest on the part of
one of the groups, so you need an independent arbitrator and facilitator in
In conclusion, I would say we have an abundance of opportunity. The real
challenge is how to align interests in order to achieve success in bringing
those partnerships together. We must be able to drive innovation through
supply and value chains for existing markets to stay competitive and to
establish new international export markets. That requires effective
relationships along with supply chains. Those are the intangibles, the human
relations. Human nature is sometimes our biggest challenge in bringing
together these kinds of initiatives. It often requires an effective
innovation intermediary and that comes down to building trust, alignment and
a shared interest to achieve economic success.
I will stop there, Mr. Chair.
The Chair: Thank you for sharing your thoughts with us. Since you
are from Prince Edward Island, I will ask the Honourable Senator Callbeck to
Senator Callbeck: Welcome, Mr. Francis, it is always great to have
Islanders as witnesses and to hear people from Prince Edward Island talk
about what is going on in the province.
As you said, you wear a lot of hats and you have been a real driving
force in these areas in the province. I want to ask you about the bioscience
cluster. It would be interesting for members of the committee to know who
the partners are here, how many are involved as well as their roles in the
development and research.
Mr. Francis: Thank you, senator.
We have now 38 companies that are in the PEI cluster, which is a rather
dramatic increase over the last 8 or 10 years. We tend to exceed people's
expectations in terms of Prince Edward Island not exactly being a place
where it is expected that there should be a bioscience cluster. It is a
rural, somewhat backwater part of Canada, some would say, and we need to
continuously bring people to Prince Edward Island to show them that is not
the case. The quality of the infrastructure we have established, the science
platform, the companies and what they are doing is really world-class.
The companies are obviously key. Our largest three companies, to mention
a few, include BioVectra, a homegrown company that Dr. Regis Duffy
established 40 years ago. It has been responsible for another large company
called Sekisui, which is a spin out of BioVectra now owned by a Japanese
firm expanding in Prince Edward Island. Novartis is a large multinational
company that has their fish health research and development assets in
Victoria, P.E.I., and their vaccine manufacturing for aquaculture facilities
in Charlottetown. That is a business with 115 employees. BioVectra has 200
employees. These would be sustainable companies for our part of the world.
Other companies from there go down in size to individuals in the lab doing
proof of concept and starting their journey, if you will.
Other partners that are really important on the science side include the
National Research Council, which was the Institute for Nutrisciences and
Health. With some changes in the NRC's strategy, the institute names have
disappeared, but the importance of the NRC to our cluster cannot be
underestimated. They built the technology platform there and the new area is
called aquatic and crop resource development, which is fitting for what we
are doing for our cluster's focus. The University of Prince Edward Island,
especially the Atlantic Veterinary College and science faculty, have changed
dramatically in terms of focus on R&D of that institute over the past
Agriculture and Agri-food Canada's research infrastructure in P.E.I. as
well as Holland College, Canada's Smartest Kitchen and their Technology
Access Centre are very important in terms of the culinary side of food and
food product design in particular. The BioFoodTech Centre is a provincial
Crown corporation. The funding agencies include the Atlantic Canada
Opportunities Agency and Innovation PEI, a provincial Crown corporation. The
NRC's IRAP program is very important program for small businesses in
particular, and the National Science and Engineering Research Council to
name a few. We have regional partners as well. As a small jurisdiction, we
have a network that we reach out to the world in terms of accessing
technology and brain power as required.
Those are some of the important partners and the important aspect is that
we really work. I have taken the liberty of providing two documents. The
first is the strategic plan that BioAlliance launched in September and that
is a single plan that all the partners buy into and support. We have a board
of directors which represents that partnership of businesses, research
organizations and government agencies, and that is unique. The DNA of that
organization is about the strategy and everyone leaving their hat by the
door with the belief that if we can grow the cluster, it is good for the
universities, federal and provincial governments, business and our
communities. It is that kind of attitude that permeates the strategy and
allows us to make things happen. We do not have different groups on
different ends of the rope pulling in opposite directions and going nowhere.
We have everyone in the same boat rowing together and that is really our
Senator Callbeck: Could you give us an example of how you have
spotted a new market opportunity and the steps you have taken to take
advantage of that opportunity?
Mr. Francis: I think we look primarily at companies that are
spotting new market opportunities. It really needs to be commercially led.
It is our production capacity in P.E.I. and the agri-food sector that needs
a market outlet or that there is a market for it. We need an intermediary
between production capacity and the marketplace that can really add the
value and achieve market success. The primary producers do not often go to
the market directly; they need partners. Sometimes they do not accept that,
but that is the truth of the matter.
We have become good at identifying which companies are a good fit. I
mentioned a couple that we have attracted to Prince Edward Island in the
ag-bio side of things — Technology Crops International, which built a $10
million refinery in Kensington. It is an oilseed refinery and the crops that
are being contracted to growers to produce are crops like crambe, which is
an oilseed crop; borage; calendula; meadowfoam; and high erucic acid
rapeseed, which are crops that our growers would not have heard of five
years ago. The acreage is still modest — in the thousands of acres and not
the hundreds of thousands of acres — but the value added of those crops and
the opportunity to put cash crops in rotation with potatoes is what is
important in terms of overall sustainability of farming operations, value in
the years where you are not growing potatoes. Technology Crops is a company
based in Winston-Salem, North Carolina, and their only refinery in the world
is in Prince Edward Island. They are bringing oilseeds from other parts of
North America and Europe to Kensington, Prince Edward Island, to do the
refining. The products are cosmetic ingredients, specialized industrial oils,
nutraceuticals and pharmaceutical ingredients, which are high value products.
It is a great example. The partnership around the establishment of that
company in P.E.I. establishing infrastructure was extensive. The degree of
cooperation and coordination around that was really quite special in how it
Sevita International would be another example. Sevita's head office is
about an hour straight south of here in Winchester, Ontario. The CEO is
David Hendrick. This is a company that has spent about 14 years developing
the non-GM, identity-preserved, food-grade soybean business in Japan. One
would think that is just another soybean. They did an amount of work on
breeding and genomics to bring the right traits to those beans, because for
the manufacturers in Japan, it is like making fine wine when you are making
miso and tofu. To the Japanese, you are making fine wine. There is that
degree of specificity on what kinds of traits are required. Some of the
research programs supporting gaining competitive advantage in Japan through
this company and the growers who are supplying have really been doing the
science to understand the phytochemical fingerprint of the soybeans that
meet the requirements of specific manufacturers in Japan. It is like making
a cabernet sauvignon. The degree to which they are going into the molecular
biology of the seed in order to make sure that you have an advantage in the
marketplace and therefore growers have a market is fascinating. Those are a
couple of examples.
Senator Buth: Thank you for being here this evening. Where do you
find the risk takers?
Mr. Francis: Well, you do have to look. Entrepreneurs are an
interesting group. We are at the point where they are coming to us. If you
can establish credibility as a location where entrepreneurs have a better
chance of success because of the business environment, they will find you. I
think it is relationships. You know through your networks and contacts what
early-stage companies have some really interesting technologies. You need to
have a very strong network of contacts, and then have some good brain power
working with you that can assess whether those companies and technologies
have a chance of being successful in the marketplace.
Senator Buth: Do the companies bring the ideas and you support
them with the R&D? You used the example of Sevita. Who looked for those
Mr. Francis: That is the company's knowledge of the marketplace.
In that case, it is their knowledge. Just to take it a little further, once
they are part of our cluster, we do a number of things. We hold
bio-partnering events, networking sessions and so on so that companies and
researchers are bumping into each other a lot and establishing relationships
that can provide companies who understand the market with new ideas for new
product offerings. For example, it is definitely worth looking at the
application of some of the co-products from soy production and the
processing of soy — oil, for example, in the aquaculture business. Sevita
may not know everything they need to know about the aquaculture business, so
part of our role is connecting people who really know about the ingredient
side of developing aquaculture feeds with Sevita, who really know their
soybeans, and allowing them to determine whether or not they see a new
opportunity there and whether there is a business case for pursuing some
research in that area.
Senator Buth: That is interesting, because when we have been
talking to witnesses, what we have heard most often, or what I have heard,
is that here is the bench, and the researcher comes up with something, and
they are looking for a partner over here, and what often happens is things
hit the valley of death in between. What I hear you saying is no, it is like
this; it is the soup.
Mr. Francis: It is absolutely not linear. It is a soup. I think it
is about bumping people into each other. We do have the situation where the
researchers are sitting here, and the businesses are sitting here, and there
is actually a cultural divide. It is not just an institutional divide but a
cultural divide. We need to facilitate conversations that can bring those
There is an organization called Springboard Atlantic, which represents
the transfer offices of 18 universities in the region, along with NSERC and
ourselves and others that use connector events to try in particular focused
areas to bring the companies and researchers into the same room for a day.
We have them spend five minutes pitching what they do, their focus, their
issues on the business and the science side. It is what they do and what
they have and where they think they may have something to offer in terms of
solutions. Ninety per cent of that will go nowhere, but 10 per cent might,
and you only need 10 per cent to make it worthwhile. It is the intangibles.
It is the relationships and creating opportunities and getting people out of
their silos and out of their academic settings and into a relationship with
the businesses, which is not something all universities like to do. Frankly,
there are some barriers there. We try to find the win-win situations.
Senator Buth: You made the comment that you look for really good
business cases. Are you sourcing capital for the projects and the funds?
Mr. Francis: No. We might facilitate, but the companies have to
source their own capital. We do not invest like Ag- West Bio invests in
Saskatoon. We do not invest, but we would connect companies to capital,
depending on the stage of development. We do spend time, particularly with
the early-stage companies, on their business plans and whether or not we
really think they have something worthwhile. We bring in some experienced
folks who have been in the investment community to do essentially SWOT
analysis of their business plans and tell them sometimes what they do not
want to hear. They have some real challenges if they want to get to market
with that kind of approach, or they are missing some things, or they need to
shore up their regulatory strategy or improve their market assessment, or
perhaps they have not thought it through or perhaps they have the wrong CEO.
Some tough love at an early stage is important to ensure that those
companies are able to progress. Some of them will not, but that is business
The Chair: There is a supplementary question before we go to
Senator Merchant: Thank you. I wonder what the role of government
is. When you are talking about these connections, whether it is local,
provincial or federal government, what role do they play?
Mr. Francis: They play a very important role, for sure. However,
it is not necessarily a lead role. The role is everything from the programs,
particularly for early-stage companies, and we are talking about the company
side of things, to access to capital. Generally, the investment community,
angel investors, venture capital and so on will not finance early-stage
IRAP has been a very important tool in the tool box in terms of moving a
technology's proof of concept of new technologies, and that program has been
expanded by the federal government. It is a very important piece of the
Atlantic Canada Opportunities Agency has a couple of very important
programs. The first is the business development program, which is a loan
program, and second, the Atlantic Innovation Fund, which is a very
enlightened piece of public policy that has been around for 10 years now. It
is a conditional loan program, but it de-risks the process of moving
technologies from proof of concept early stage closer to the marketplace.
Access to the capital at an early stage is an important role. It is not big
money, but it is taxpayers' money, so it has to be managed appropriately. It
is enough to allow the company to prove whether or not they really have a
business opportunity there and progress on that.
In our case, the provincial government can really fill the gaps. Perhaps
because we are a small jurisdiction, we do this very well. In a coordinated
way, if your company is bringing a particular business proposition forward,
we will actually have all of those federal, provincial, National Research
Council, Agriculture Canada representatives in the room, listening,
understanding the business proposition, the business plan of the company,
and then responding with a customized approach to the extent that it is
possible — sometimes these programs are pretty much square-edged boxes, so
you have to get in the box — and trying to customize to ensure the focus is
not on the program but on the business plan and how we collectively see the
way forward for working with that company.
Part of our role is to facilitate getting those partners together in a
way that no one is going outside of their mandate; everyone probably has a
better chance of exercising their mandate because you are part of this
collective effort, and it is a de-risking for both public funds and for the
That is how we coordinate some of those government players. Everyone has
seen the value of doing that. In large jurisdictions, frankly, maybe the
egos are bigger. The organizations are a little more siloed, so the
entrepreneur has to basically knock on every door and try to put it together
themselves. I think customization takes a lot of the stress out of trying to
get companies to move forward.
Senator Merchant: With the tighter budgets, the economies, how
does that affect you? Are you constantly growing?
Mr. Francis: It is always an issue. There is always probably more
demand than supply of resources. My personal view is that there is always
more money than good ideas. If it is a good idea and a good business case,
the money is there.
Senator Tardif: Thank you for your excellent presentation. I am
most impressed by the work you do and the results you have achieved. Is
there another organization that offers a similar platform in the
agricultural or biosciences sector anywhere else in Canada?
Mr. Francis: Certainly when we set up the BioAlliance, I stole a
lot of ideas from Ag-West Bio, because they broke the ice in the 1980s and
early 1990s with the model they had put together as a cluster model.
Saskatchewan and Prince Edward Island always seem to have a lot in common.
Senator Tardif: Those smaller provinces maybe, smaller
Mr. Francis: I think it is the rural base with our feet on the
ground; I do not know. Whether it is health care, economic development or
agriculture, we always have similar approaches. That was certainly one
Bioenterprise, which is an organization based in Guelph, Ontario, is also
playing a similar role and has a good approach of working with early-stage
companies and establishing supply chains that are very effective. The people
in that organization, Gord Surgeoner and others, are really good at working
with the producer, processor, supply chains, and helping them to be
There is a group around Laval University in Quebec that is in the
nutrisciences and health area, a very good group of people, well-connected
to the industry, and facilitating the economy in that area.
The bigger one on the pharmaceutical side of things is MaRS, in Toronto.
It plays a similar role in the drug development world in particular. There
are a few other examples in the country. They all have their own
Senator Tardif: Who carries most of the burden of the initial
research and investment in your industry?
Mr. Francis: The federal government, in terms of initial
investment in research. I do not think it is different in many countries of
the world. The market does not pay for that early-stage research. You have
to have that foundation in place through our investment in public
infrastructure, the university community in particular, and how those are
funded through NSERC, SSHRC, CIHR and other organizations. It is certainly
federally driven and funded, and the province certainly plays a role in that
Senator Tardif: Does your platform help attract more industry
funding for R&D?
Mr. Francis: Absolutely, and more business investment in R&D as
well. We know this has been a conversation with the Jenkins report a couple
of years ago, looking at Canada in the sense that our productivity levels
are below where they should be because businesses are not investing
sufficiently in R&D. We get into a whole conversation about under what
circumstances that is true or not. There is certainly some truth in that. We
have seen a significant increase. I cannot quote the numbers off the top of
my head, but it has increased from 2002 to 2010, which is the last year
Statistics Canada numbers are available. The private sector and business
investment in R&D in Prince Edward Island is something like three or four
times what it was. This is a substantial increase, and that is the direction
we need to keep going in. We need to see the private sector investing in
Our other metric in terms of success of the cluster is not only whether
we are seeing government funds invested — federal, provincial and otherwise
— but whether we are seeing private sector and risk capital coming into our
companies. For us, that is a very important yardstick of success. It cannot
be simply government investment; it has to be private sector as well.
Senator Tardif: You are absolutely right. That has often been a
criticism of the industry, that they are not investing enough in R&D and
that Canada is substantially down as compared to other countries, such as
What is the effect of your platform on the research priorities of
university or other research centres, for example, in Prince Edward Island?
Mr. Francis: Certainly to speak for UPEI, the previous president,
Wade MacLauchlan, and current president, President Alaa, have been very
responsive. They have been board members of the BioAlliance since its
inception. This is about walking the talk — new research chairs and
investment in facilities that respond to some of the priorities we have set
out in the kinds of strategy documents I have circulated here tonight.
That is really important. People are at the board table. If you have a
conversation about priorities and where you want to invest in the science
platform and nothing happens, you have a bit of a problem. However, that has
not been the case. We have had the good fortune of leadership at the
university level, at Holland College. Brian McMillan and the college
established a bioscience technology program there a number of years ago as a
two-year program, with intake every second year. There is now an intake
every year. The program has grown. High-quality graduates are snapped up by
the businesses because they are excellent employees. The responsiveness of
our partners has definitely been a big part of our success to this point.
The National Research Council has also been a really important player.
There is a big change going on now within the NRC nationally. The good news
is that our institute, as a newer NRC centre, was designed around working
with the private sector. Those folks get up in the morning thinking about
working with private enterprise. That is not necessarily the case across
Canada in some of the more academic centres. We have been fortunate in terms
of the culture of the group in Charlottetown. They are certainly now part of
a national program, but we think that provides us access to a bigger network
of expertise and provides the companies access to a bigger network.
Senator Rivard: Our committee is looking at research, development
and innovation in order to find new market opportunities, strengthen
sustainable development and increase food security and diversity.
We heard recently that the beef industry was about to ask the federal
government permission to irradiate meat. We know it is already done for
potatoes, onions and spices.
Should we allow them to do so without any scientific research on this
subject, as we export more beef than we eat, and as we have to stay
competitive on these markets? What is your opinion on that?
Mr. Francis: I will not pretend to be an expert in food safety or
irradiation, and I would only be giving an opinion based on probably less
knowledge than you have about the matter. I would proceed cautiously with
voicing my opinion on that.
As I understand it, irradiation has not been a matter of science; it has
primarily been a matter of public perception. Public perception has a lot to
do with whether people make the purchase in the market or not, so it is an
important aspect of food safety and those considerations.
Certainly there are concerns as a response to issues related to E. coli
and improving food safety. I am sure the regulatory agencies that are
involved will do an admirable job of sorting through the safety side of the
technology. It would probably be up to Canadians to vote with their wallets
eventually on whether this is something Canada wants to pursue.
Senator Rivard: Yes, it is to eradicate E. coli epidemics. It is
the reason why the beef industry wants permission to irradiate meat. I
appreciate you don't have a personal opinion on that, but I think that this
will push prices higher.
On the other hand, if they can prevent E. coli epidemics, this is a good
thing. But dont't you think it might raise concerns on international
markets? We are presently negotiating a free trade agreement with the
European Community, we are negotiating with Japan, and the higher the
prices, the least competitive we get.
Senator Eaton: Thank you, Mr. Francis. I read the material you
provided. You are talking about inadequate technology transfer for
implementation of best practices. Could you elaborate on that?
Mr. Francis: In particular, I think that reference was to the
producer level and being able to move the results of research. Agriculture
Canada research has dominated the research landscape in Canada for a number
of years through their research institutes. My criticism personally —
Senator Eaton: I do not take it as a criticism. I think it is
probably happens all across Canada.
Mr. Francis: It has been a criticism of mine. I have been
criticizing Agriculture Canada quite openly. The movement to the farm of
knowledge that scientists are developing is not good enough. We are not
getting the impact on the farm of some high-quality research.
We have a couple of initiatives in our province as we speak to try to
address that. As an example, we have a new model of technology transfer —
probably not new in the world, but new to us. It comes down to the producer
paying for technology transfer. A network of growers has bought into an
agronomic service. This is a private sector initiative and the agronomist
who is running the program is taking the knowledge that he or she feels is
relevant to economic impact on the farm, demonstrating it at the commercial
level, measuring the results on the farm at the end of the year and
providing that information back to the grower so that the grower knows
whether that practice is worth executing.
Senator Eaton: Is it like a consultant who goes to the farm and
advises on what should be changed in order to increase production levels?
Mr. Francis: It is more than just advice. The farmers want to see
where the work was done. If they try to do it themselves, when it gets busy
in the harvest season they may forget which was the research plot and the
produce will go in with everything else. It is managed, on-farm application
of the research in a way that the farmers can see the economic benefit. It
is measuring the economics that will determine whether the farmer adopts the
practice. Farmers do not change their practices easily. If you do not have
some good evidence that they can observe, they will go back to what their
fathers did. Therefore, the innovation does not take and we wonder why we
did not make progress in terms of production levels, quality or whatever the
Senator Eaton: You have spoken about innovation and all the things
you are doing. In this study we have found that brand has become a very
important issue in terms of safety, reliability and quality of product. That
is important with regard to free trade agreements. We are concluding one
with the EU and we are going after the TPP and certainly Asia. We have
ongoing trade with the United States.
If the potato is synonymous with P.E.I., are you doing certain things to
brand P.E.I. potatoes as more delicious than potatoes from New Brunswick? It
is a competitive world.
Mr. Francis: Prince Edward Island has had a brand, both as a place
and as a potato, for many years. On the eastern seaboard, Prince Edward
Island potatoes are still recognized as a quality product. The brand is
important. I have always felt that we have underachieved in terms of using
Senator Eaton: When I think of P.E.I., I think of Anne of Green
Gables, which I grew up with. Why can your potato not be a brand?
Mr. Francis: That is difficult to do these days, and I will tell
you why. There are a few stories we can talk about. We have a huge
consolidation of the retail marketplace in Canada. We have only a few big
retailers, and private labeling has become the name of the game for them to
compete among each other and internationally, so they do not necessarily
want to have a location label. They would prefer to have their own brands —
and we know them all — on their packaging. As a strategy, the retailers have
not supported labeling local brands, if you will.
That has changed somewhat in the last few years as concerns have arisen
about where food comes from due to issues about the quality of beef and so
on. The worm is turning somewhat back to having confidence about where food
comes from as having brands that represent places become more important
again. We may be seeing a bit of a turning point on that aspect.
We established an initiative in 1997 called the Prince Edward Island Food
Trust, which was all about the brand. It established higher quality
standards, consistent sizing and unique presentation in the marketplace.
That was about trying to establish, at some higher level, the P.E.I. brand
Senator Eaton: We heard from some very interesting women from
Quebec, last week, talking about sourcing food, being able to trace the
origin of food. I would think that that would be a huge advantage for some
place like Prince Edward Island.
Mr. Francis: Yes. I do not think we know how to be expensive, so
branding to gain margin is not something that comes naturally. It is a
cultural bias. We have the opportunity to brand beyond potatoes in Prince
Edward Island. We certainly have mussels branded well internationally, but,
as for the branding of Prince Edward Island beef, you have to have the
processing piece in your backyard or you cannot do that. Obviously, you will
lose the brand control. The quality of the product is absolutely
outstanding, but the branding effort has not happened yet.
Senator Eaton: Thank you.
Senator Duffy: Mr. Francis, like the other senators, I am
delighted to see you here. You have been an innovator for over 30 years in
P.E.I. You started as a young man, and you have built an impressive resumé,
helping us to build a better province.
Picking up on one of the questions Senator Tardif asked earlier, we hear
a lot in the news these days about skills shortage. I know that you, the
university and Holland College are working closely together. Are we seeing a
bias in terms of young people going into diagnostic chemicals and these
higher tech jobs? Is it mostly young women? I am a little worried that, in
our region of the country, the dropout rate of boys in high school is
astronomically high. These are great jobs for people who stick with it.
Mr. Francis: That can be a complicated question. You are right;
the evidence shows that we have issues with dropout rates, particularly
among males. Most of them are now in Fort McMurray. As they grow up, they
are working in high paying jobs in northern Saskatchewan or northern
Senator Duffy: Have the high schools and colleges gotten onto this
enough to give you the people that you need?
Mr. Francis: No. We probably have a paragraph in our strategy
document that would suggest that — and this is not only a P.E.I. issue — the
quality of K to 12 must improve. In Atlantic Canada, our literacy and
numeracy rates are a problem, so we have to address that challenge. We are
losing in terms of —
Senator Duffy: Our future.
Mr. Francis: Our future, in terms of the potential of individuals
who are not reaching their potential in the school system, whether it is in
technical training or academic training afterwards. It is a loss to the
system and a loss to our workforce. As we know, in Atlantic Canada, we are
not attracting the immigrant population that will be necessary to fill some
of our workforce needs as the demographics are working against us.
Senator Duffy: Getting back to Cousin Regis, all islanders are so
delighted and proud of what Dr. Regis Duffy has done over the last forty
years. With regard to DNA testing, this committee is currently interested in
the whole question of food safety and traceability, from farm to fork. It
seems to me that one of the testing or tracing methods might be DNA, and, of
course, Dr. Duffy's initial products related to testing in a kit that was
quite innovative and became very successful. Do you happen to know, through
your work, whether there is anyone looking at that whole DNA sector? That
would, again, fit in with traceability of products.
Mr. Francis: A company called the Centre for Aquaculture
Technologies, which is in my home community of Fortune Bridge, Prince Edward
Island, has expertise in that area and other areas related to fish breeding,
in particular. As for the genotyping of food products, they have all the
skills required to do that kind of tracing. For example, in the fish
business, it is a white fish. Is it haddock, halibut or cod? Sometimes you
cannot tell on the shelf, but genotyping can certainly give you the answer.
That is one company I am familiar with that can do that kind of work.
Senator Duffy: I want to hand off to my colleague. I want to thank
you for coming. The picture you paint is one of a bright future. We often
hear in rural Canada — and perhaps even more so in rural P.E.I. — that there
is no future for rural Canada. There is a lot happening that somehow gets
overlooked, and I congratulate you for your leadership and innovation in
helping make that happen.
Senator Callbeck: Thank you. Looking at the brochure that you
presented us with on the bioscience cluster development, on page 9, there
are some very ambitious targets. For example, employment, within three
years, will be 100 per cent higher, and private sector revenue will be 100
per cent higher in three years. This started in 2012, so we are not even at
the halfway mark. Are we pretty much in line to make these targets?
Mr. Francis: Well, I can take them one by one. In terms of
employment targets, I would say we are not in line; we are underperforming
there so far. We have had good growth even through the downturn. Our larger
companies have expanded quite extensively. We are probably 30 per cent of
the way. We are not 50 per cent of the way.
With respect to private sector revenue growth of $200 million, we are
probably on track on that front.
Senator Callbeck: Is that right?
Mr. Francis: The numbers are very good. There is considerable
expansion. With R&D expenditures, we have the 2010 data now. We are at $70
million. Reaching 100 will take continued growth on the business side of
things because the R&D side of things is certainly business-driven. It is
going to be a challenge there, but that is what these numbers are for, to
challenge us, to drive our strategy and to keep us moving forward.
Senator Callbeck: You spoke about the importance of agriculture to
Prince Edward Island as more than 10 per cent of the GDP. I believe it
employs over 7,000 people. What is your greatest concern about the agri-food
industry in Prince Edward Island and in Canada?
Mr. Francis: In Prince Edward Island, my biggest concern is that
the next generation of brain power will not choose agriculture and agri-food
as their career. How do we transition what are now large and profitable
operations worth $3 million or $4 million? How does that transition? How
does that succession planning allow for continuation of those farm
enterprises? It is a challenging business, so you need smart people. You
need to be able to attract the brain power of the future into the industry.
That is a real energy we need.
Senator Callbeck: Thank you very much for coming. It is great to
hear that these things are going on in Prince Edward Island. Congratulations
on your accomplishments.
Mr. Francis: They are many people's accomplishments, but thank
The Chair: Senator Callbeck, thank you very much.
Mr. Francis, thank you for sharing your thoughts with us.