THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Thursday, March 21, 2019
The Standing Senate Committee on Agriculture and Forestry met this day at 8:05 a.m. to study how the value-added food sector can be more competitive in global markets; and, in camera, to examine and report on issues relating to agriculture and forestry generally (consideration of a draft report).
Senator Diane F. Griffin (Chair) in the chair.
[English]
The Chair: I’m Diane Griffin, Chair of the committee, and we have three panellists who are going to help us in our study of the value added to agriculture and agri-food, the study we’re currently involved in. I would ask senators to introduce themselves.
[Translation]
Senator Maltais: Senator Ghislain Maltais from Quebec.
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Doyle: Norman Doyle, Newfoundland and Labrador.
Senator Oh: Victor Oh, Toronto, Ontario.
Senator Kutcher: Stan Kutcher, Nova Scotia.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
[English]
Senator R. Black: Robert Black, Ontario.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Moodie: Rosemary Moodie, Ontario.
Senator Mercer: Terry Mercer, Nova Scotia.
The Chair: Thank you. Today we have Gregg Curwin, Former Chief Executive Officer and Founder of TruLeaf; as an individual, Simon Somogyi, Arrell Chair in the Business of Food and Associate Professor, University of Guelph; also from the University of Guelph, Derek Vella, Manager, Guelph Food Innovation Centre.
Thank you for being with us today.
Gregg Curwin, Former Chief Executive Officer and Founder, TruLeaf: Thank you. Good morning everyone, and I appreciate the opportunity to come here this morning, following up from a great visit we had with some of you last week at our facility in Guelph.
I’m based in Halifax, Nova Scotia. I started this company nine years ago as a means to scale sustainably — nutrition, really, was the model, not so much farming, to address what I would still deem are burgeoning health issues around chronic disease.
For this morning, what I thought I would do from my vantage point and perspective is to break it down into growing technologies and plants. I’ll comment on those two buckets now.
Around the growing technology of TruLeaf, it is encompassing what I think is one of the biggest emerging trends — and I don’t think it’s a trend; it’s a seismic shift — of controlled environment agriculture. You’re growing plants in a controlled method, which today could be greenhouses or hoop houses or anything usually with a roof and a somewhat controlled environment. In our case, we’re into vertical farming. Vertical farming is growing technology, multi-level, 10 to 12 levels high, using no sunlight.
Within controlled environment agriculture, vertical farming is a fast-growing space globally, originating out of Japan probably 10 or 15 years ago, which is where I discovered the concept and started it in Bible Hill, Nova Scotia. This reinforces the fact that great technologies can be developed in rural communities.
Within the suite of technologies that’s emerging in growing food and plants, there are key elements. LED lighting is a rapidly emerging technology as it relates to plants. If you see some of the science coming out on light spectrum versus plants, it’s fascinating. Water and hydroponic technologies is another rapidly evolving space, and we created a modified approach of our own.
HVAC systems. You wouldn’t think much of this, but obviously the cannabis industry is driving a lot of these technologies as well. We use a company here in Ottawa for our HVAC design called Seresco. They normally just design dehumidification units for pools, but now all of a sudden they are in the indoor growing and controlled environment space. The HVAC installation at our facility in Guelph that some of you saw last week is about $2 million. They have suddenly gone from a small company to a big company, addressing this emerging space of indoor agriculture.
The next two or three I want to highlight are featured because they are important and they have a big impact here in Canada. Our automation and robotics facility, which we’re commissioning this week in Guelph, is a $19 million, state-of-the-art, world-leading automated indoor growing facility. As we’re probably all hearing from your journeys in visiting other places, automation and robotics are fundamental. We have really created our own process. Whether you’re in a field or indoor growing, our environment lends itself to automation and robotics where seeds are coming in and few humans are touching the product until it gets packed.
With the automation and robotics, we’re still increasing a large number of jobs, but they’re high-value jobs in engineering, computer science and plant science. However, I think we need to be better in the country in understanding this world of automation or robotics as it relates to indoor growing. Most of the technologies that I’m describing today are not developed yet in Canada.
I can’t impress upon you enough the role of data in producing more food. You have been hearing about how important data is in agriculture and capturing data points, and right now you’ve heard of examples of drones catching a data point of a field crop. That’s still only one, two or three data points a year, fundamentally. On our farm, we can get 5,000 to 10,000 data points a day, and Guelph is complete with sensors and designed to capture these data points.
This is powerful, because as we capture our data and marry it to machine learning, you ultimately could, because this environment is so controlled, be in a position where the plants start to dictate to the facility their needs for lighting, nutrients and water. Yet when we’re working in data, our journey has taken us to Boston, primarily because our acting CTO is from Prince Edward Island but lives in Boston. I can’t impress upon you enough how the use and understanding of data, which is very impactful in other industries, is all a new frontier. The more we learn about this data and use it, as I’ll explain, in the plants is very powerful.
Finally, with the suite of technologies I’m describing, which I believe holds tremendous potential for the country to develop offshoot companies in industries to service indoor growing, it’s really the design innovations that come with it. There is a term that someone coined called agritecture, which is really taking architecture and designing new facilities. You’ve seen greenhouses on rooftops. We’re building a massive new hospital, I hope, in Halifax in the coming years. There is no reason why indoor growing couldn’t be built into that designed environment or built into a downtown Toronto condo building. I think it will happen, and the more we get creative with this design thinking and taking this suite of technologies that we have, I think that holds tremendous potential.
That captures the suite of tech that we’re into today. Those are the primary ones, and there are others.
Finally, there is seed, and I think this is the biggest one. Our colleagues from the University of Guelph will know more, but with seed editing and indoor growing, seeds have been bred for fields and not for indoor growing. We’ve learned over time that there is a tremendous opportunity with seed editing — not genetically modified — to create seeds ideally suited for an indoor growing environment to elicit the response we want. It could be taste, more nutrition or a phytochemical.
We’ve talked to Monsanto and Baird, another seed-editing company, and with CRISPR technology this would have been a six- or seven-year journey years ago and now it’s down to about two, and our company is deeply involved with that. Imagine creating a seed that gives us a great yield and taste but also has certain levels of phytochemical nutrients that are profoundly impactful on human health. That’s our modus operandi for TruLeaf. Seed is really important and a great opportunity for the country.
Getting into plants, my background was working in health care in Halifax, Nova Scotia, and beyond for a very long time. It always fascinated me why the roles of plants and food wasn’t profoundly impactful in the traditional medical system. My world was biological devices and pharma. We have forever had food in one silo, nutraceuticals in one silo and pharmaceuticals in one silo. I always envisioned a time when they would converge in some form, and that’s what we’re doing with TruLeaf.
If you think of food and where the opportunity lies in Canada, using these indoor environments you can create more functionality. That could mean higher levels of nutrition, which is our objective, because we have control over it. You don’t have as much control in a field. In increasing functionality you’re increasing nutrients and having a big impact on human health if you get those plants to the consumer.
Second is yield. Everyone in agriculture is concerned with yield, as they should be, as we’re learning Mother Nature is challenging right now for yields and crops. In our perfectly controlled environment, by using certain types of technologies we can increase yields dramatically by the changing light spectrum or changing seed. We can control how bitter or peppery an arugula is by changing lighting in the environment.
On the food side, you then translate into other big, emerging pieces that are relevant to Canada, such as food security or insecurity, particularly where we live in Nova Scotia is. How do we, as a country, continue to increase the food that we produce at home versus importation?
Then you have other offshoots, such as packaging. Plastic is enemy number one right now. Again, there are other impactful layers to this model.
What’s fascinating in the nutraceutical space is that we have the ability to control dosing. In this industry, which Canadians are proficient at, most of them are synthesized, meaning they are chemically created. Everyone wants to go to botanicals, but it’s difficult to dose a nutrient from a field because you have such variability. In our controlled environment, we can control it down to the decimal point.
That goes back to the suite of technologies and is really important because then we can make defendable claims. The nutraceutical industry has been struggling with credibility the last two or three years, and rightfully so, because there hasn’t been enough regulatory rigour. Anybody can make any claim. It’s important for this session to understand the regulatory burden, but that also that the botanical, plant-based nutraceutical space is a huge opportunity.
The last is biofarming. I’m talking to a couple of pharmaceutical companies where you use our farming technology to create new drugs, plant-based therapies and vaccines. One company is working on a replacement for herceptin, one of the most widely used breast cancer drugs in the world. It may become cheaper, safer and more predictable if you can grow it in our type of design. That’s a massive opportunity, which I think Canadians could be a leader in. We are aware of the burden of the pharmaceutical costs that continue to rise at a rapid rate.
In closing, there are some significant socio-economic impacts for the country, and one of them is what I would deem curriculum. In my travels and talks — and my colleagues from the University of Guelph are better suited to speak to this — we are ill-prepared and, in my opinion, at the university educational level we’re not addressing the needs of the future of food production. Food production will very much be technology-based. We created a slide one day for a talk in Niagara Falls called STEMF. We commonly use STEM when referring to science, technology, engineering and math. We added an F because to increase food production you need STEM, but from my vantage point our universities are not addressing the emerging need. I still can’t hire people today for vertical farming: I have to take them from here and here. There is a huge opportunity in the educational system.
Additionally, we’re aware of the massive needs of our northern and remote communities. They could be as remote as Cape Breton or Iqaluit, but imagine taking this technology and disrupting the way food is currently sourced and supplied; that is a massive opportunity.
Regarding health care, we unequivocally know that plant-based consumption dramatically affects disease reversal and avoidance in a lot of areas, yet is still not being addressed, in my opinion. If you look at our medical schools today, and I think Senator Kutcher could comment on this, we’re not training our young men and women enough in medical school in the thinking around the role of nutrition in disease reversal and avoidance. If you walk into any hospital in this country, you might scratch your head to look at the food they actually serve patients and staff. Here is a massive opportunity to address this.
That’s my statement for today. Thank you very much.
The Chair: Thank you.
Our second presenter will be Mr. Somogyi.
Simon Somogyi, Arrell Chair in the Business of Food and Associate Professor, University of Guelph, as an individual: This is the first time I have appeared before this committee, and, as a migrant having lived in Canada for less than five years, it is an honour and privilege to be invited to speak about our country’s future in food and agriculture.
My background is in understanding food consumers and the activities of individual firms in the supply chain that delivers food to consumers. I have conducted research on food consumer behaviour and supply chains in numerous countries around the world, particularly in Asia, and my discussion today will focus on opportunities for Canadian value-added food products in that part of the world, particularly in China.
I will be discussing two points. One is focused on on-farm value-adding and the second on branding and market development in China.
First, much of the value-adding in the Canadian food sector, at least in terms of value and volume, is occurring in our large cities and by multinational producers and companies we generally refer to as food processors. This sector of the food supply chain is important, but we need to incentivize value-adding further up the food supply chain, particularly at the farm level and in sectors that have major export opportunities.
One such sector is dairy. There is a dairy boom occurring in middle class markets in China, particularly with products such as infant formula, yogourt and fresh milk. Due to our supply managed sectors or regulations within marketing boards, it is difficult or impossible to competitively supply these products. But, in my opinion, there are ways to do so. One such example would be the following recommendation: The creation of a special class of milk under the Canadian Dairy Commission Special Milk Classes Permit Program. Currently, this program bases prices for non-confectionery dairy products on U.S. average milk prices. However, a new class of milk could be created, accessible only by primary producers or farmer groups who work as a cooperative or in some type of collaborative effort, allowing them to access out-of-quota volumes and prices equivalent to competing countries such as Australia or New Zealand.
This would be used for the production of value-added products or goods solely for export. This would assist primary producers to invest in on-farm value-adding infrastructure and activities, and they could be given special access to schemes such as the Canadian Agricultural Partnership AgriMarketing program for the sale and marketing initiatives of these products. This would also help diversify their operations from purely production into processing, branding and marketing, thus providing opportunities for growth and economic development in the rural and regional communities in which they reside.
Similar to the Fisheries Act Fleet Separation Policy, where downstream supply chain members such as processors and shippers cannot operate harvesting operations, a policy such as this could be adopted in the dairy farming sector, emulating what most of the large dairy processing companies in Australia and New Zealand that compete in the Asian markets operate as or have in the past. While there are already dairy cooperatives and alliances in Canada, there is no reason why this cannot be done on a smaller scale for primary producers who wish to create and market value-added dairy products for niche Asian markets.
Second, the Barton Report has challenged us to increase food exports to $85 billion by 2025, and this lofty goal is unlikely to be attained by producing more products for markets we have traditionally served. Canada is an emerging and growing player in markets such as China where a booming middle-class consumer segment is driving demand for high-quality, value-added food products. The Barton Report has also highlighted the concept that Canada can be a global leader in safe, nutritious and sustainable food. Creating and marketing safe, nutritious and sustainable food is important, but we need to focus on other product attributes to be successful in China.
My consumer research in China has shown me that the most important factors that wealthy middle-class consumers consider when purchasing food products are high-quality, value for money, prestigious and then, to a slightly lesser degree, safe, nutritious, trusted and authentic. Canada’s reputation for clean, safe, healthy and green is a good first step, but we need to do more. To succeed in that market, we must over deliver on quality and value for money and offer prestige. Being a safe and trusted nutritious producer is important, but not a differentiator as our competitors such as Australia, New Zealand and areas of the EU zone are already doing this.
So how do we get our products on the plates and in the pantries and refrigerators of Asian consumers and convey our brand image? Currently, our food producers travel to market and undertake trade missions and shows. An alternative option for Canada is to create a daigou network. The average Canadian has probably not heard of the term daigou, but it is a household name in countries such as Australia and New Zealand. Daigou is Mandarin for “personal shopper,” and these daigou are Chinese nationals who live in countries such as Australia and New Zealand and promote, purchase and ship high-value food products to Chinese residents. Through their use of Chinese social media, they heavily influence Chinese consumers’ purchases and, more importantly, Chinese consumers’ perceptions of food brands. A recommendation is for Global Affairs Canada to develop and create connections with daigou networks, bring key daigou influencers to Canada, showcase our food products and, importantly, assist in the creation of logistics and shipping systems to get daigou purchases into the homes of Chinese consumers as rapidly as possible.
The Chair: Thank you for your presentation. We will move on to our final presenter, Mr. Derek Vella.
Derek Vella, Manager, Guelph Food Innovation Centre, University of Guelph: Good morning, senators. My name is Derek Vella, and I am the managing director of the Guelph Food Innovation Centre at the University of Guelph. Today I will be speaking about how the value-added food sector in Canada can be more competitive in global markets: specifically how small companies in the food sector can seed innovation here at home.
Over my career, I have worked with some of Canada’s largest and smallest food companies in activities mostly focused on creating new value-added products for Canadians. What I hope to share with you today is some of what I have learned working with these diverse companies, specifically in three main areas: establishing innovation, scaling manufacturing and the importance of brand.
In my current role at the Guelph Food Innovation Centre, I work mostly with small, medium and pre-revenue companies to research and develop new products and ideas based on consumer insight or technical innovations that larger companies are either unaware of or have chosen to ignore.
Our clients are often very small but have a high potential for recognizing emerging trends and technologies due to their research or their relationships within various markets. Often the work they undertake will lay the groundwork for developing products and expertise that larger companies will see as valuable when the currently emerging trends begin to mature and find larger markets.
Our clients are.often active in federal and provincial programs aimed at increasing investment in research and development, but too often the work done on these initiatives does not result in companies that reach maturity easily. This is largely due to gaps in transitioning from the R&D stage into the necessary resources to develop. Fostering these small companies with new ideas is important because they provide an early pipeline of innovation, but for those ideas to become commercial they must survive long enough to grow independently and also be recognized and acquired. While larger companies certainly have innovation programs, this model of innovation by acquisition is not uncommon, especially in the rapidly changing value-added food space.
An excellent example of this is the alternative meat and dairy space that was rarely considered by the larger food industry five or ten years ago; however, it is rapidly experiencing growth. Those companies that created novel niche products for markets many years ago and have survived are now being acquired and will be scaled for international export.
Having networks and programs that allow ready access to technical and marketing expertise is key to helping these companies make the right decisions to stay afloat. Innovation centres like ours and similar business-oriented programs provide some of these services. However demand is extremely high. A critical consideration for new companies in ensuring acceptable manufacturing options are available to launch in the first place is a massive barrier.
This is partially due to the loss of manufacturing facilities in Canada, but also due to changing consumer interests that drive product decisions. For many early-stage companies, working with small volumes and high costs is a reality. This often means that new manufacturing builds are unrealistic. In order to bring their product to market, their best option is to outsource manufacturing to a co-manufacturer or a co-packer.
While these partnerships can work very well in the beginning, finding an acceptable manufacturing partner can be very difficult due to mismatches in cost, volumes and capabilities. The needs of emerging companies rarely mesh well with larger, established food-manufacturing facilities which are reliant on the efficiencies of long product runs with little customization. Add to this the changing consumer expectations for food being increasingly fresh, novel and customized, which means that the unique packaging and processing requirements for value-added foods are often not available in Canada at all.
Just as we have innovation centres that allow companies to take their first steps, we also need facilities with the capacity to bridge the gap between the very small and the very large. This is especially true with newer technologies such as high-pressure processing, aseptic packaging, and extrusion: capabilities that are in high demand but are not commercially available at all at this scale.
We must promote the diversification of our food industry and manufacturing by maintaining our existing manufacturing facilities first, and adding to it manufacturers at all scales that can support the activity of companies as they grow according to their stage of development, as well as meeting the needs of retailers and exports.
Last, I would like to address the importance of Canada’s reputation regarding the export of value-added products. Canada’s agri-food sector, as Simon alluded to, is fortunate to be globally recognized as having an extremely safe and healthy food supply. This reputation will be critical for value-added products abroad to succeed in an increasingly competitive marketplace. We will need to communicate the value of Canadian products, as well as the prestige, in a way that addresses the higher cost of producing food in Canada, which is critical to success. Equally important will be to protect and promote our brand and build a reputation as a country known for bringing innovation to market. Thank you.
The Chair: Thank you. Three excellent presentations. You won’t be surprised that we have a long list of people wanting to ask questions.
[Translation]
Senator Maltais: My first question is for Mr. Curwin. You talked about a model to produce nutritious agri-foods, which is rather new. Basically, you are testing it out in Nova Scotia. You mentioned something I’m quite interested in, vertical farming. It’s a type of farming that was developed in Japan quite a few years ago specifically because the country lacked farming space. With the experience you’ve gained, have you figured out how to grow vegetables in greenhouses at a cost that would be affordable for an average consumer with two or three kids, taking into account your energy costs? Under your agri-food model, are you able to grow products that regular families could afford?
[English]
Mr. Curwin: Thank you for the question. We took an unorthodox approach to the design of our model. To address your question of cost, we started working with a major supermarket chain and they said if you can get your cost to this level we could scale it with you in Canada. That started three or four hard years of work in Truro at our lab, understanding the cost of production.
Today we have figured out the cost of production. You’re correct, energy is a large input, and there are a lot of levers we can pull on that. Today we’re selling various forms of salad greens, micro greens and herbs. The largest automated farm, which some of your colleagues visited last week in Guelph, will be putting out a million pounds a year. We have the cost of production for the leafy greens sector that we can scale in Canada and beyond.
We are asking the consumer to pay 20 per cent more versus the incumbent, which is California. We are displacing California imports. We have that in hand today, knowing full well that we can get packaging costs lower. We’re looking at a large facility in Montreal because hydro is almost four cents a kilowatt hour. We also know that LED lighting is becoming incredibly energy efficient and that there are other sustainable energy models we can use. We have addressed that. What we’re interested in now, as we get better at cost of production, are the other vegetables we can grow. We are fascinated with the mushroom sector that today is grown in multi-level format.
We are interested in strawberries. This technology will evolve to that. You start to see other vegetable crops come into play that normally would not have.
[Translation]
Senator Maltais: Mr. Somogyi, with respect to value-added dairy products and export markets, we need to change our approach. Instead of making yogourt, we need to make powdered milk. Do we have the technology to make milk-based products that could be sold to major markets like China? Is the technology advanced enough that we could make milk-based products for export?
[English]
Mr. Somogyi: Yes, when it comes to the value-added dairy products that we currently produce, making them available for export markets, particularly in China, would mean tweaking flavours and formulas, making sure that the health and safety regulations that countries like China have in place are met. We have the technology to do it. It would be more a case of tweaking or changing the product’s flavour, texture, those sort of sensory qualities. That would be the easy thing we can do, and it’s relatively simple from a technology point of view. I think the consumer in China is focused on brand. It’s focused on prestige, as well as safety and quality. Those attributes are not technical. They are created by the company that produces that product. So, yes, we can do that.
[Translation]
Senator Maltais: Thank you very much.
[English]
Senator Doyle: Given the world of new markets that are opening up in the agri-food industry today because of new trade agreements, are there elements of federal agri-food policy that need modification to meet the challenges of these new trade agreements? I heard you mention daigou policy. What is that?
Mr. Somogyi: It is less of a policy than a term for a person who is a personal shopper for Chinese consumers who, obviously, reside in China. They use their social media networks, which can have hundreds of thousands of people on them, to promote products. It seems like a small thing to be able to bring people like that here to showcase our products, but the power of doing that is exponentially greater than the effort.
My recommendation for a daigou network is more of a direct activity that Global Affairs Canada can provide at a relatively low cost. From a policy perspective, there is nothing we would need to do to bring in these people from immigration or any other major issue that I can see. We already have a large Chinese-national community in Canada, so promoting and assisting them is another option as well.
Senator Doyle: Are there areas of science or innovation where Canada is falling behind or lacking in that regard?
Mr. Somogyi: Senator, I think your question at the beginning was about product as well. Countries like Australia and New Zealand have got to the point where they are exporting fresh milk to China, not powdered, but ultra-high-temperature treated milk. They have that product on the shelf for $10, $12 a litre. That has come about, not because they make a great milk but because they have worked heavily with immigration and customs in China to rapidly move product onto the shelves because it’s quite a perishable product.
If a policy recommendation can be made, it is around engaging with importers and customs with the new trade agreements — for example, CPTPP and China — to assist that and to make the logistics and supply chains for those products as rapid as possible.
Senator Doyle: Thank you.
Senator Mercer: Thank you for being here. It was good to see you, Mr. Curwin, in your operation last week.
You presented us with some interesting opportunities in the agriculture and agri-food field. Are we ready for this? I think the answer is no, but how do we retool our agriculture schools across the country to produce students who are thinking about the new agriculture as opposed to traditional agriculture? Traditional agriculture will always be there, I suspect, but this is a real opportunity for us to make some changes.
If that is so, should there not be a couple of demonstration projects to prove, not just to yourselves and your shareholders but to Canadians, how valuable this could be? I’m thinking of a plant in Iqaluit where the food prices are so high that if this is going to work well, Iqaluit, and other northern locales, will be the great recipients of cheaper, fresher produce than they get now.
The last time I was in Iqaluit, on a break in our work I purposefully went to the grocery store. I am a grocery shopper on my own in Nova Scotia. I walked around and took notes on the prices. I have no idea how someone in the middle class, let alone at a lower level, can afford to buy food in the North. How do we retool the schools? How do we demonstrate, on a large scale, that this works?
Mr. Curwin: The Dutch did a great job decades ago of building around a massive industry in the greenhouse sector. They became proficient at their universities, proficient in training and assembling those technologies. Now Dutch greenhouses are exported all over the world, and you just have to drive down the road to Leamington, Ontario, to see that technology. That’s a great example of when the focus is there from industry to training the young men and women.
In our experience, it is incredible the amount of interest that we get from particularly university students wanting to come to work with us. I spend a day a week at Saint Mary’s University as the entrepreneur in residence, and we are working on a lot of food projects. I’m seeing the excitability of young men and women in trying to address our food challenges whether it is waste or access.
My experience when I went to Truro to the agricultural university in Nova Scotia, thinking when I started that I had no idea what I was doing, and I clearly didn’t at the start. The agricultural college in Truro was deeply rooted in what I would call traditional agriculture. It was dairy and poultry. We are very much high-tech horticulture and growing. The young men and women really want to get into this sector; they just don’t know where to go.
The University of Guelph is doing a really good job at pieces of it. When I started TruLeaf I went to Japan a few times to capture that knowledge because it doesn’t exist in Canada. There are greenhouse training and technology, but the suite of technologies I described this morning — so to answer your question about pilots, the University of Guelph, that’s why we set up in Guelph. We work closely with them. We launched in Nova Scotia, but this is such a big opportunity in the educational system to train young men and women around controlled-environment agriculture.
Canada could and should be a leader by the very fact that we live in Canada, and for a good part of the year we are not growing a whole lot.
Mr. Somogyi: I feel part of the problem is parents. When we raise our children, we want them to become doctors and lawyers and high-paying, easy jobs. When we think of agriculture, we think of farming, long hours and dirty. We think of an unpleasant work environment for low pay. That needs to change.
We also find there is an issue with the media in that whenever there is a story about agriculture, it is usually bad news. Prices have dropped, there is a trade war problem, or there is a drought or something like that. We put a negative connotation around agriculture. But agriculture is becoming digitized, and at the University of Guelph we are focusing strongly on that part of the work.
Recently released in the budget was a national food policy and money around that. We should be taking resources around that and educating not just what people should be eating but the careers within agriculture. Because food is not just nutrition; it is also an economic driver, as Gregg said, of our economy.
I would like to see careers in agriculture, topics in agriculture and food, for that to be discussed in our schools today.
Senator R. Black: My question carries on from this one. Mr. Curwin, I love the technology, really enjoyed the tour last week, and I am a big supporter of it. Realistically, what’s the opportunity for the technology today in rural and Northern Canada?
I see the value, but we don’t have high-speed Internet across Canada, and we won’t have it, according to the budget, for 12 more years across Canada in rural and northern areas. Power accessibility at an affordable cost, natural gas accessibility, data — you spoke about data — and that brings in the Internet and then labour availability. I absolutely think the food security issue is a big thing and it will support it, but, realistically, how is it going to work in Iqaluit or rural/northern Manitoba, or wherever, where they may not have some of the technology you need to use?
Mr. Curwin: That is a good question. We studied Iqaluit for a year and went from top to bottom, right from design to operations, so it is happening today. We were the first company in North America to take a shipping container and turn it into a farm. That’s in its very blunt model. The Cree First Nation in northern Manitoba purchased a small vertical farm from South Korea and placed it in their community to grow food.
The model has to shift in northern remote communities to selling lettuce at $10 a pound to a grocery store to thinking of it as an investment in infrastructure and not so much as for-profit. So if you go to that thinking, then the designs can easily go into Iqaluit.
So we looked at Iqaluit and had a design for a 2,000, 3,000 square foot vertical farm. Energy is your number one challenge, but once you start to do the unit economics versus importation and subsidies, it starts to flatten out pretty quickly. And if you deploy some energy-saving models, the model gets better.
We are talking to a First Nations community right now in Cape Breton, and it’s the same thing. The benefits are profound, though, Senator Black, when you start to think of youth employment, jobs and training. So the technology is rapidly advancing. I would envision, and what we proposed three or four years ago, is to take Iqaluit and build a phase one farm. That also becomes a distribution hub to the outports as well.
There are certain green plants that grow in Nunavut very briefly at certain times of the year that are incredibly nutritious, because they are stressed, and we were going to try to optimize that so that we can grow it in Guelph and sell it in downtown Toronto. So the technology is there. The unit economics, I think, would work. Our Guelph model is selling it to Loblaws at $10 a pound.
Senator R. Black: But access to the Internet and all that infrastructure, can this take place without it?
Mr. Curwin: Yes, it is all design. The technology can allow you to design without Internet. It can allow you smarter energy options. It can allow you to grow as big as this table or as big as this room. The very big innovation of this technology is that you can have a need, such as you have described in Iqaluit, and design appropriately. It is really not one-size-fits-all.
Senator Oh: Thank you, witnesses. It is nice to see you here again.
We went to see your vertical building. That is probably the way of the future for agricultural production. We saw the digital purple lighting, is that because you are not seeing sunlight? So the plants grow under this digital purple colour. Could you explain that?
Mr. Curwin: Our initial design thinking was not to use weather, not use sun and deploy LED lighting, knowing that the LED technology is rapidly advancing. So the cost of LEDs are coming down dramatically. There are a few Canadian manufacturers. The efficiency of LED lighting — better colour spectrum, better energy use — is increasing dramatically. I’m hoping I am going to answer your question, senator.
What is fascinating around LED lighting is its interaction on photosynthesis of plants. It is incredible what’s going on when you use a blue spectrum, a white spectrum, a green spectrum and a UV spectrum.
It is still early days, but our initial research is showing a profound impact on yield and on phytochemical production. We’re studying micro-broccoli which has a phytochemical called sulphurophane, a profound anti-cancer property. By playing with LED lighting and tuning up and down, we are seeing a dramatic impact. So within the LED lighting, we’ve seen the cost come down by 50 per cent in three years. So that is going to allow other companies and technologies to scale this in Canada and export. Did I answer your question?
Senator Oh: Yes. It so happens that this weekend I will be going to my entrepreneurial friend’s place where they are developing a digital Agrilight platform technology in Toronto. They are pioneering the world’s first sterile lighting for agriculture. So you could see future agriculture shifting from rural areas into the city centre.
Mr. Curwin: Yes. You are seeing that globally. You are seeing companies like ours build facilities such as you saw. Building food production closer to urban environments has profound socio-economic benefit.
In our model, senator, as you saw, we are growing 12 months a year, and 12 months a year agricultural production is incredibly beneficial from a GDP perspective to the province or the country. But definitely urbanization and design thinking around how to be creative with this technology to meet the need of the consumer.
Senator Oh: Thank you. I have one more question for Mr. Somogyi. Are you aware that between Kingston and Belleville there is a Chinese company invested in producing baby formula?
Mr. Somogyi: I am aware of that. I think it is a goat-based baby formula, if my memory serves me correctly.
Senator Oh: Yes, baby formula.
Mr. Somogyi: Those are products that Chinese consumers are very much interested in. It’s good to see that we have a product. Goat is a very niche product, and it makes market development from the consumer perspective a little bit trickier, but it is good to see that we have some companies that are trying to get into that product area.
Senator Kutcher: I am actually very encouraged by today’s panel. I am a newbie on this committee, and I want to share that what I’m seeing is a cultural shift in thinking. You may have already been well into it, but for me it is fairly new. Embracing the future and using the emerging tools of today is where we need to go. I am trying to figure out how to get six questions into one. Here we go.
Brand consciousness is an important issue, not just in the Chinese market but everywhere in Asia. Our marketing in that part of the world is relatively homogenous. It’s actually overly reliant on one market, which is China. Do you have any thoughts about how your ideas could be modified or used in other emerging markets like Japan, Vietnam, Cambodia and Malaysia? As a corollary to Mr. Vella, with the importance of advancing innovation centres in food sciences in Canadian universities, how many are there, how many should there be and how do we get there?
Mr. Somogyi: Very quickly, the technology part is important. I’m glad you mentioned that market and brand development is important. Technology allows us to produce more and produce it more efficiently, but it can get to market and no one wants it. I think it is the simple, tried and tested approach of going to market, talking with importers, talking with wholesalers, looking at what consumers want.
So many times the companies that I have worked with know how to make their product very well and know basic macroeconomic figures or statistics from a certain market, but don’t know exactly what the consumer wants and what importers want. From a policy perspective, linking producers. I focused in my statement on value-adding on farms, but making sure we can get farms to invest in value-adding and also market development that goes along with that. Going to market, seeing products on shelves. Really importantly, what competitors are doing. What are their prices? What are their formulas? Why are they successful? That is also another important element.
Mr. Vella: On the innovation centre front, across Canada there is a constellation of various innovation centres that are municipal or based in colleges or universities. At the university level, we tend to have one or two per province. In terms of the number of how many we should have, it’s an excellent question. What I would say is let’s convert that question to what activities should be going on in those various centres.
Currently there is a considerable amount of overlap, I would say, between the activities being done. In some cases it’s doing innovation, in some cases it’s doing more of a production capacity for smaller companies.
Increasingly we see specialization. At the University of Guelph, for instance, we are turning our eyes towards doing production within the dairy space as well as the meat space, because it is largely unaddressed at other centres. That also extends into the alternative meat and dairy space. Whereas Niagara College, for instance, would be focused on fermentation.
There are key capacities still missing in terms of processing. The biggest thing we need to bring to innovation centres is the know-how and the networks that surround them to be able to take those developments and turn them into a commercial product. Another way of saying that is to take a look at the investments going into creating innovation and figuring out what your outputs can possibly be: that is shoring up the businesses, helping them grow and helping them have places other than offshore or the United States, where they are then going to take that technology.
As I talked about, commonly these companies will get started, they may stumble, they may fold due to necessity, and then that technology will be picked up at a later date by somebody else and then be developed outside of country. In terms of making the most use of those centres, we really need to focus on ensuring that the activities going on are unique, specialized and focused on final deliverables and not just the activity.
Senator Bernard: Thank you all for your presentations this morning. Part of my question has been asked, but I will follow up, and I’m also interested in the whole issue around research and development and the connection with universities and what’s happening there.
I was intrigued, Mr. Curwin, by your notion of STEMF and thinking about how people around the world have been moving in the direction of promoting STEM. What ideas do you have for how we can now move that to STEMF?
Mr. Curwin: I gave a presentation in Guelph — Simon may have been there — and the vice-president of the University of Guelph came up and I think I used that STEMF slide. He had a lot of questions around that. I can share my experience of working with young men and women.
If you look at emerging technologies, there is nothing in the curriculum today really where they are training and exposing the young men and women from an educational level to use these together. I take my experience at St. Mary’s University, where I’m working a bit. Engineering is over here, science is over here, technology — ICT — is over here, but I haven’t seen yet where there is a university or educational system that is marrying them all together to fulfil the need, and it’s a huge need. There is tremendous interest from young men and women to get into this space. So I think it’s really about cross-pollination of the disciplines.
I had a meeting at St. Mary’s last week with the dean of arts, the dean of science and the dean of business. We all got together on the scene, because we’re doing some cool things at St. Mary’s on food. How do we cross-pollinate with these students, who have the need and interest, to expose them to this technology?
First, we have to take the silos within the universities and perhaps figure out a better way to systemize this. And once we do that, then you will see these industries and these technologies really advance. When I started, I had nowhere to go. That’s why I ended up in Japan. Even to this day, nine years later, it’s still a huge opportunity that’s unmet.
Senator Bernard: Thank you. May I make a statement?
The Chair: Make an observation; go ahead.
Senator Bernard: Mr. Somogyi, you mentioned the need for us to be promoting amongst parents and educators with young people. I think we have an excellent model in Nova Scotia that could be used to help with such promotion, and that’s a program called Hope Blooms.
Mr. Curwin: I’m very familiar with it, yes.
Senator Bernard: What has happened with that program is phenomenal and it could be used as a model to promote this whole industry.
The Chair: Thank you, senator.
Senator C. Deacon: Thanks to each of you. The way I summarized my key learnings this morning, after listening to many presentations and really enjoying the last week is the focus on interdisciplinary training and how you work across so many emerging areas and get to the point of being able to function quickly. I want to hug you, Dr. Somogyi.
Our innovators across the country are tech-centric. They need to be customer-centric, and we need to create that pull. It’s crucial to being able to fund discovery. I just love the idea of being customer-centric. And Dr. Vella, responsive innovation, we need to be quick and focused. If I have over-summarized, please tell me.
Could each of you give the committee one recommendation of what the federal government could do differently to better enable your areas of focus to be successful? We don’t have time to do that.
I don’t think we are scared enough yet in Canada about how quickly we need to change and how quickly we need to move, but I would like us to know specifically what we need to do differently to help us move faster.
Mr. Curwin: From my perspective as an entrepreneur who took an idea on a cocktail napkin to now a fairly large company, it comes back to finance and capital. To this day, we’re very much a circle trying to go into a square. Within a federal format, regionally ACOA has been helping us on debt-to-build infrastructure, and being focused on a specific industry and mobilizing financing capital that’s targeted, measured and accountable.
To take the space of controlled-environment agriculture, that’s a great opportunity to take a look at the agri-food policy both at a federal and regional level to pick a sector. Again, I go back to controlled environment, not just because it’s my industry but we live in Canada and that’s the only way to address some of these needs. It is a targeted financial strategy on whatever type of financing it is. As you know, because we’ve had these discussions, my struggle of getting equity and raising capital for this company has been one heck of a journey. If the federal government can enable — not doling out money — and lead and help, because we’re busy trying to build a business and that’s hard enough, as you know very well.
Mr. Somogyi: I will reiterate my point about dairy. My feeling is that there is massive potential for dairy in Asian markets. Current supply management systems don’t allow that. We’ve seen compensation to the dairy sector in the budget two nights ago. Compensation is fine, but it will not grow the industry or grow the sector or grow the communities within which those dairy farms exist.
I would like to see a class of milk that can only be used by dairy farmers who value-add and can only be used for those products in export markets. I believe that would have a profound effect on our dairy sector.
Mr. Vella: I think it comes down to what Gregg is saying: applying finance to promote the diversification of Canadian food manufacturing. We need an ecosystem in which new companies can grow up in versus going abroad.
The more those manufacturing facilities and networks of people and know-how, be it in academia or within business, that are there to work cooperatively for any of the ends we are talking about, will facilitate any new development that is done and ensure the success of them actually launching.
Senator Miville-Dechêne: Mr. Somogyi, I will continue on this path of dairy. We have had a few witnesses from the industry because of what’s happening with free trade agreements.
I was surprised by the level of resistance to the idea of exporting. When the question was asked, we were told: “It’s impossible. We can’t compete.” The openness was to try to increase the internal market. That’s what I saw. I’m trying to reconcile what they are saying and what you are saying. Obviously they are different stories.
Is it just a question of resistance because the status quo is more comfortable, or is it because the supply management system does not allow it? As you said, it has to be changed for farmers to do so.
Explain to me what is the possibility of change and innovation without tearing down the system. I am part of those who think there are some positive aspects to supply management, especially for dairy. Quebec is relying on it. What is the solution? What is the path?
Mr. Somogyi: As you mentioned, senator, our dairy sector is domestic-focused. In part, my opinion is that it is comfortable. It is hard to win away from home. I like my sporting analogies. The away game is the hardest game you play, and export is hard.
As I mentioned in my statement, I think a class of milk that is purely for export, that can only be used for value-added products, particularly I focused on those that can only be used by farms to invest in whatever processing technology they need to create brands, to create products that can only be sold in export markets, I think is not an option. I know there is significant complexity around this.
Senator Miville-Dechêne: Can your idea be applied in the supply management system?
Mr. Somogyi: And not be competitive, yes. You could do the current thing I’m proposing without having a special class of milk, but because of price you would not be competitive in the export market.
Senator Miville-Dechêne: Would you only see that in powdered milk, other products? You were talking about Australia with this great fresh milk at $12 a litre. It seems to be a great opportunity. We have good milk.
Mr. Somogyi: We have excellent milk. We have high-quality products, but with infant formula, with fresh milk, with yogourt, these are products that are emerging as the middle-class Asian consumer becomes more westernized.
We have the products and technology already. We just need a system that allows the shackles of supply management to be taken off. I think that is the way to make the dairy sector grow.
Senator Miville-Dechêne: I want to clarify. Does it mean tearing down the whole system or tweaking it? That’s what I’m asking you.
Mr. Somogyi: My apologies. I didn’t comprehend that properly.
It doesn’t mean tearing down the system. Supply management is purely about production of milk and products for the domestic market.
This is a side issue. You can still, as a producer, in my mind, and all things being equal, be involved in the quota and supply-managed system, but this might be a class of milk that you access on your overproduction or whatever it may be, that you can then value-add and put into the export market.
Senator Miville-Dechêne: Have you written on that? If you have, could you send what you’ve written to the committee?
Mr. Somogyi: This is the only thing I’ve written on it, but I’m willing to expand on it.
The Chair: Please send that to the attention of Mr. Pittman, and he will get it out to the rest of us. Thank you.
[Translation]
Senator Dagenais: I’d like to thank our witnesses. I have two questions, the first being for Mr. Vella. International trade deals—the one with Europe is a prime example—can hinder our product exports. The chain of production has to be well-defined in order for a product to be certified. I think it’s marvellous that we can make food more flavourful by using certain seeds or lighting. However, could that have other effects on the food?
Do innovative technologies sometimes limit export market growth for basic products as compared with processed products? If so, what can the government do to help with that?
It’s a long question, but the last one I’ll be asking during this first round.
[English]
Mr. Vella: When it comes to the development of export products, I want to clarify that I did not speak on the seeds or the lighting aspects, Mr. Curwin did, but I can speak to it somewhat.
When we develop products for external markets, it’s important that we take into consideration and have an understanding of what the regional tastes of that market are and the regulatory framework that we’re going into.
Often, we can take an existing product. To use the example of milk, one of our regulatory requirements here may not be suitable for China. More importantly, our production capabilities here, because it’s focused on the domestic market, may not be acceptable for export to China due to long transit times and prevailing expectations in terms of what the product is. We don’t have a large UHT. UHT is a technology whereby you can stabilize milk at non-refrigerated temperatures for a long period of time.
We could produce this material for export. We currently have some facilities that do this domestically, but because we are largely serving a domestic market there is not much demand. We would need to invest in larger scale technology specific for export, and that must be done with the foresight and the confidence of investment of going into those markets.
On a product-by-product basis, I don’t want to say that it’s a trivial matter to investigate what regulatory frameworks we are going into and to design accordingly, as long as they don’t contravene the requirements that we have for Canadian production, which is sometimes the case. That is the use of certain ingredients or technologies may not be acceptable here at all, in which case we can’t enter those markets.
[Translation]
Senator Dagenais: My next question is for Mr. Curwin. The market for innovation is there, and I’d say our record on the innovation front is excellent. You spoke about the use of lighting in vertical farming. How much does the price of electricity affect your ability to offer competitive pricing in export markets? Electricity is costly, but is it reasonable enough that you are able to compete?
[English]
Mr. Curwin: When we look at our business model, that is our number one challenge, and it’s our number one opportunity.
We knew we would get smarter, better, faster in our operations, food safety, labour, packaging, the traditional ones, but energy is the challenge and the opportunity.
We started in Nova Scotia. I understand we have a number of senators here from Nova Scotia.
Most of our electricity is generated by coal, so that’s not a great story. We then moved to Guelph where it is a little bit of a better story, and now we’re looking at Montreal, which is a great story from a cost perspective.
Cost of energy is our number-one challenge and opportunity. How are we addressing it? When I started the business nine years ago, I knew there would be levers to pull. If you look at some of our designs now, most definitely we can deploy more options. Solar and wind was not in play for us three or four years ago. Now it is. Incredibly efficient LED lighting systems are doing exponential technology.
It is really about marrying the right location. We have been studying the Caribbean for some time. This is a great example where you can use cooling from the ocean. You can use ample sun. You can use ample wind. Their need is profound and our technology would be a massive benefit there. I have been to many islands, and the need is not only for locals but to address the tourist season. Most of them don’t have a great energy story.
To answer your question completely, there are lots of levers to pull. It’s still evolving, but I firmly believe we will get to a point where — right now we’re working on a zero-carbon design for another province. We know we can deploy, in the right locations, sustainable energy models. We can get our brand and our product to zero carbon. Right now we capture and recirculate almost 99 per cent of our water. We have a great water story. We have no chemicals or pesticides. We have no run-off to the land. If we get our energy model to zero, which I believe we can, with a little more innovation and investment, the consumer will love that. I hope I answered your question.
[Translation]
Senator Dagenais: Thank you, Mr. Curwin.
[English]
Senator Moodie: Thank you, gentlemen, for giving me the opportunity today to ask this question. My question is about brand development, about public perception and a little bit about public acceptance. Increasingly Canadian consumers are concerned about food production, food safety and about the content of their food.
You’re focusing on some fabulous new initiatives and new approaches. Your success is going to be pivotal on their acceptance and their confidence that what you’re doing is safe and acceptable to them.
How is this increasing demand for greater transparency by Canadians affecting the acceptance of your new technologies, of these new approaches? How is it affecting your competitiveness, your ability to actually introduce your technologies? At the end of the day, what are you doing to bolster your brands to help people understand that your technologies are good and will be helpful? Give me some insight into how you are dealing with the end market.
Mr. Curwin: That was one of my concerns when I started the business: Is the consumer going to think this is Frankenstein food? Pardon my terminology. I haven’t seen that at all. I think it’s about market pull and push. The Canadian consumer has a massive appetite — pardon the pun — for local, clean and pesticide-free. And you’re right, from all ages they want to know how it’s grown, where it’s grown, what you grow and pesticides. Your labour story is also now becoming transparent. We never encountered any pushback, even dealing with every major supermarket and restaurant chain in Canada.
We focused on the quality of the product and the brand. We have a great brand. Some of your colleagues were at Goodleaf Farms last week, that’s our packaged product. I think the consumer has broad acceptance now and they realize — and I think this is a key point — that the consumer’s thinking has gone beyond the idea that, “All my food will be just lovely food grown in rolling fields with tractors.”
I have always explained to my key stakeholders that we are actually the new John Deere. We don’t make tractors: we make smart, automated farms. When the consumer sees the value proposition and they taste and buy our product, they know right away. I have done many in-store demonstrations myself, so I know first-hand. We see rapid acceptance. They look at the lights, but there is no push-back. They’re accepting of greenhouse-grown vegetables already. All of your peppers, cucumbers and tomatoes are pretty well all grown in greenhouses. By the way, greenhouses are adding more LED lighting to try to extend their growing season.
I have not seen any push-back. I was worried about it, but if you focus on a quality brand and transparency to the consumer, I’ve found it hasn’t been an issue at all. If you’re getting into genetically modified, that’s a whole other discussion.
Mr. Vella: For the most part, our activities are congruent with the kinds of fears that you’re talking, in the sense that we are practising consumer-focused product development and trying to create products in line with the expectations of the consumer. This is often focused around transparency, convenience, helpfulness, shelf life and having the idea of the food be as good as the food they are in fact eating.
This is not an easy thing to accomplish. Oftentimes when people think of food science and food product development, they think about the things we are putting in the food. Certainly, in traditional food manufacturing, that was the case. Increasingly, the technology is going into all the preservation, manufacturing and transportation techniques that go into not putting things into the food and still being able to deliver a safe, delicious and desirable product.
This speaks to all the things we are talking about. Instead of stabilizing products, bring it closer to the consumer. Instead of creating a product that is full of chemicals, find ways to safely deliver it with no chemicals and no residues. That’s applicable to our domestic markets. In terms of export, it’s also applicable to be able to create those technologies, to be able to take them offshore as well.
While the trends we see in the North American consumer may not have reached some of our external markets, it’s only a matter of time. It is only a matter of time before that hierarchy of safe and convenient also extends to safe, convenient, great to think about, healthy and no preservatives. The trends we’re seeing in North America are setting the stage for a very robust community of value-added food production, but we need to be in those markets in the first place to be able to access them.
Mr. Somogyi: We have to get the technology. We have to get the safety right. That is important, but it’s important to remember that, for some food categories and for some food consumers, transparency isn’t that important. For fresh leafy greens, vegetables, meat, dairy, consumers are concerned about health issues, but when it comes to consumer packaged goods, like boxes of granola bars or cereal, whatever it may be, consumers don’t care.
The other point is that, in the research I’ve done on consumers in Canada, the main motivating factor for the vast majority is price. One in eight Canadian families is facing food insecurity. When they come home from work and they have children and they have to put food on the table, they think about price and price only. No disrespect to my colleague Gregg and his clamshells of leafy greens, but that is for a very specific market segment that can afford it.
Transparency is important. We have to get it right because it impacts our brand but some consumers just don’t care.
Senator Moodie: I would like to follow up on that question of how you’re addressing food insecurity and making the argument of what can be done to ensure that families have access to food that’s affordable to them.
Mr. Somogyi: I think it’s interesting. We all recognize through the new Canada Food Guide that we should be eating more and more fruits and vegetables. That’s true.
As Gregg mentioned, for many times of the year, particularly around the cold times, we can’t get fresh product. There is one section of the grocery store where no one wants to buy: the frozen section. It may not look as nice and it may not taste as nice, but in some cases it is more nutritionally beneficial than the product that has come from a long way away. We need to educate people. My big focus is on educating children, because they don’t have set ways in their head about eating.
The national food policy that we have seen come out is a great step forward. I would like to see this idea of, don’t just eat with your eyes, eat what’s good for you. And let’s not forget frozen products that are just as good for us at certain times of the year.
The Chair: Thank you.
Senator C. Deacon: Your point, Dr. Somogyi, it is fair to say that when new technologies and products come on the market sometimes they are suited for one small segment of that market as they scale. I want to be clear that you’re not saying that when you have new technologies it’s not helping to solve that problem. It may not be helping to solve it today, but it could be helping to solve it tomorrow as we scale.
Mr. Somogyi: I fully agree.
Mr. Curwin: To roll all this together, if we think about innovation, curriculum, education, finance and funding, we’re only 20 per cent more than California. Almost 85 per cent of leafy greens in Canada are imported from a central area of California. We will soon be at par. The prices are increasing dramatically for fresh food. As we get better at cost of production, we’re not asking the consumer to take a big leap. I think culturally, and particularly in the mid- to low-income section, my vision for this company was to access nutrition and food and scale it. We’re trying to get people to say they will spend on good quality, nutritious food, but as we know, socio-economically, a lot of people won’t make that decision. So it goes back to culture, education and all these pieces we are talking about today.
The Chair: The question I have is for Mr. Curwin. From your testimony, I’m getting the impression that electricity is an exceedingly important factor. There are provinces like Prince Edward Island, Nova Scotia and New Brunswick, where the price of electricity is high, so I would see that as being a possible detriment in terms of value-added innovation happening in those provinces.
Another thing is getting the product to market. Part of the TransCanada highway, near the New Brunswick border in Quebec, is not twinned. I realize you’re still at a smaller stage, but is that a factor that you would take into consideration when you’re considering exporting from the Maritimes into other provinces?
Mr. Curwin: Yes. Actually, senator, P.E.I. was one of my first choices to go to and using all of the wind power, because we wanted to be somewhat sensitive to carbon. We were distributing out of Truro, Nova Scotia, and to all four Atlantic provinces. We’re now at a design stage of building a large facility — I don’t mind sharing — in Florenceville, New Brunswick. McCain Foods is a partner of ours. We looked at the logistics of that, and what’s exciting is we can build.
As most of you know, Florenceville isn’t exactly an urban centre, but it is an eastern distribution hub for us. We would go into four provinces, we’re looking at Maine and down into the northeastern United States, which becomes attractive if you’re exporting agricultural products because of the exchange rate. That’s not an issue from a highway or logistics standpoint. It becomes more attractive for us to look at a region like Eastern Canada where we can invest and build a distribution hub to go not only into four provinces, but on to the United States as well.
The Chair: The part of the highway I was asking about was north of Florenceville to get your products to Montreal.
Mr. Curwin: Strategically, we have an option on land in Montreal at the moment. I think it is important, from our perspective, to address the cultural uniqueness of the Quebec market, so we want to invest and build in Montreal to distribute in Quebec and be a Quebec grower. There’s no urban centre in Atlantic Canada except Halifax, so we would go into central New Brunswick and distribute broadly there.
The Chair: Thank you. I’d like to thank the panel.
We’ve had a great discussion this morning. I know we could go on for a lot longer, but we’ll have to acknowledge that we’re running out of time. We’re going to take a brief pause and then we’re going to go in camera.
(The committee continued in camera.)