THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Thursday, April 4, 2019
The Standing Senate Committee on Agriculture and Forestry met this day at 8 a.m. to study how the value-added food sector can be more competitive in global markets.
Senator Diane F. Griffin (Chair) in the chair.
[English]
The Chair: Good morning. I’m Senator Diane Griffin from Prince Edward Island, chair of the committee. Today, the committee is continuing its study into how the value-added food sector can be more competitive in global markets.
Before we hear from our two witnesses today, I have a couple of tasks. One is to ask if the senators are agreeable to having the meeting videotaped. Are you okay with that? Okay, great. You can watch it on the Fergus television station later on.
Second, I’ll ask the senators to introduce themselves, starting with the deputy chair.
[Translation]
Senator Maltais: Senator Ghislain Maltais from Quebec.
Senator Dagenais: Jean-Guy Dagenais from Quebec.
[English]
Senator Doyle: Norman E. Doyle, Newfoundland and Labrador.
Senator Oh: Victor Oh, Toronto. Welcome.
Senator Kutcher: Stan Kutcher, Nova Scotia.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
[English]
Senator R. Black: Rob Black, Ontario.
Senator Moodie: Rosemary Moodie, Ontario.
Senator Mercer: Terry Mercer, Nova Scotia. And I think we should mention the fact that this may be Senator Maltais’s last meeting.
The Chair: We will do that, or do you want to do that while you are here?
Senator Mercer: I won’t be here when you do it, so I’d like to say it has been a pleasure working with you. You’ll be difficult to replace, and we’re going to miss you. We’ll think of you at every Tim Hortons.
Senator Maltais: Thank you, Terry. Thank you very much.
The Chair: Any time we’re at one of the Canadian research stations and we see apples, we’ll think of him. We’ll have some comments later on in the meeting, and Senator Maltais will probably have some comments for us too.
At this point, I’d like to introduce our two panellists. We have with us, from the City of Toronto, Michael Wolfson, Sector Development Officer, Economic Development & Culture; and from the Taste of Nova Scotia, we have Emily Haynes. Welcome, folks. I understand Mr. Wolfson is going to be the first presenter, so the floor is yours.
Michael Wolfson, Sector Development Officer, Economic Development & Culture, City of Toronto: Good morning.
Madam Chair and distinguished Senate committee members, I am the food and beverage sector specialist for the City of Toronto’s Economic Development Division. In addition to sector support, I bring an economic development lens to all of the food-related issues of importance to Toronto City Council, such as equity, poverty reduction and the Toronto Food Strategy. I have made a 40-year career in the food manufacturing, distribution and brokerage business in Toronto. In my private sector days, I primarily worked with small- and medium-sized food manufacturers that exported and imported products from both the U.S. and Canada.
When importing and exporting food and beverage products in the 1970s, innovation flourished in this country. Retail was in the hands of many companies, and those that led those food businesses were innovators like Dave Nichol, Sam Steinberg, Max Wolfe and the Sobey family. Food and beverage entrepreneurs entering the industry could begin in their home kitchen or family farm. Brands like ED Smith, Renee’s Salad Dressing, Honey Cup Mustard, Chudleigh’s Apple Pies and many others found success by selling their products to many retail chain operations.
The governments of the day provided trade missions to many U.S. states, with little money required by Canadian businesses. I attended events in Detroit, Boston, Washington/Baltimore and Anaheim. That was the time that Canadian food and beverage manufacturers gained a reputation for unique, safe and trusted products internationally. Private label brands like President’s Choice were recognized around the world for unique offerings and high-quality ingredients.
Allow me to fast-forward to today. The retail trade in Canada has consolidated to the extent that there are few options for manufacturers. The cost of getting your products on shelves or in food service in Canada is quite high. Regulations by both government and private-sector retailers are such that you can no longer set up a food business from the kitchen of your home. Growing food and beverage businesses are now competing with IT companies for access to capital, and the returns in food and beverage are not the same, so financial institutions and venture capitalists are reluctant to invest. Yet, this industry continues to grow, led by many new, culturally diverse small- and medium-size food businesses with strong roots in Canada.
Toronto is a major centre for this industry. In the census metropolitan Toronto area, there are over 1,000 food and beverage producers, with total employment exceeding 65,000 and revenues of over $17 billion. Over 75 per cent of these businesses are small- to medium-sized producers. Some of the entrepreneurs I knew in my early years have grown to multi-million dollar producers with multiple production facilities in the Toronto region.
In an effort to sustain and increase the flow of new, innovative food products and companies in Toronto, we created and sponsored a food incubator and commercialization centre facility in 2007 that has now grown to over 20,000 square feet. In it, we allow new and existing food businesses the opportunity to produce products in a certified food grade facility and teach them how to operate a successful food business. To date, we have assisted over 200 businesses and helped to create over 500 jobs.
In my research leading up to the opening of the food incubator, I discovered that, in Canada, less than 3 per cent of all money spent on research and development is ever commercialized. We must do a better job. Value-added food production is an expensive industry because of regulations and cost of capital. Building and supporting a network of commercialization centres across Canada that can assist innovative, emerging and growing food businesses and enhance the reputation of Canadian food and beverage products worldwide will go a long way to making the value-added food sector in Canada more competitive in global markets.
Before I conclude my brief comments, I would like to discuss how I think the fundamental issue for the growth of this sector is the realization of the importance of this industry to the future of the Canadian economy. Dominic Barton’s report pointed this out. Yet, the sector is still vastly misunderstood. In my 17 years in the current position that I hold, I have been told by one minister of government that all processed foods are bad for you. I corrected the minister by saying all foods are processed. I have never seen someone bite into a cow or take a carrot from the ground and start eating it. The majority of our food processors across this country are artisan, quality, health-conscious producers that use a lot of local input to make their finished products. Change the push mentality that has seen the majority of public sector investment directed to rural and agricultural activities and focus on the value-added food manufacturing that occurs primarily in the urban centres. If you want the farmers of Canada to succeed and prosper, support the food manufacturing sector.
Thank you for your time today. I would be pleased to answer any questions.
The Chair: Thank you for your presentation. I grew up on a dairy farm. I have never bitten into a cow, but I’ve certainly grabbed the carrot from the ground and eaten it fresh. It was great. As Senator Doyle demonstrated, yes, I processed it when I wiped it on my sleeve.
Those of you who were on the tour recently in southern Ontario will remember Food Starter and what a wonderful opportunity that was. I was sorry to have missed that part of the tour.
We have some gifts from Nova Scotia just distributed to us, so I will call upon our next presenter, Emily Haynes.
Emily Haynes, Executive Director, Taste of Nova Scotia: Thank you, honourable senators, and thank you, Mr. Wolfson. I very much appreciated your presentation and echo and agree with many of the sentiments you raised.
Thank you for the opportunity to be here with all of you today. It’s an honour for me to have the opportunity to talk with you about Taste of Nova Scotia and the role that Nova Scotia plays in Canada’s agri-food landscape.
I will start by giving you some background on Taste of Nova Scotia for those of you who may not be familiar with who we are. We are a province-wide, membership-based marketing association with over 200 restaurant, producer-processor and industry members. We are celebrating our thirtieth anniversary this year, as we were founded in 1989 as the Taste of Nova Scotia Society. It was launched as a joint venture between the public and private sector to promote restaurants that had a commitment to quality, standards and local food. In 1994, the Quality Food Council was established to promote producer-processors with a commitment to quality and Nova Scotia inputs. In 2007, the Quality Food Council and the Taste of Nova Scotia Society merged to form the Taste of Nova Scotia that we know today.
Today, we continue to thrive as a membership-based association focused on promoting Nova Scotia’s culinary industry through marketing initiatives, export development, culinary tourism, education and more. Our vision is to be a leading resource for promoting the culinary industry in Nova Scotia, and our core mandates are to help our members grow their businesses, to assist in having Nova Scotia recognized in public forums as a global authority on culinary and to encourage our members to support their membership and their fellow Taste members.
Taste of Nova Scotia is unique in that we are an industry hub that represents all sectors of the culinary industry. We work with seafood producer-processors, agri-food producer-processors, beverage alcohol producers and restaurants. We work in a variety of areas, including culinary tourism and export development. We manage 50-plus culinary events annually. We work in education, buy local and so much more.
As a membership association, our goal is to constantly bring value to our members through our various initiatives. We provide opportunities for connection, promotion and growth through these various areas, and annually we purchase more in goods and services from our members than we bring in in membership dollars. We’re focused on bringing a direct investment right back into our members through purchasing products from them and hiring them to do events with us. We have a gift basket business where we purchase member products and sell them in gift baskets. You do have some of our member products in front of you today that represent our agri-food value-added products.
We currently have 110 restaurant members, 88 producer-processor members and 15 associate members who are parts of industry-related businesses that relate to the culinary industry in Nova Scotia, such as culinary tours operators. Our members are spread out through all seven regions of Nova Scotia, with 73 per cent of our membership residing outside of Halifax, showing that the economic impact in rural Nova Scotia that our culinary industry has is significant. These are businesses that are largely found in rural communities — our fishing communities and our agricultural communities. They bring so much value to the communities that they are in. They enrich them by inspiring entrepreneurship, by enriching the community with interesting places and by making interesting places to live, places for people to gather and connect. They create jobs. They help represent and strengthen the brand of Nova Scotia and help tell our story through food and drink.
Much of what we do at Taste of Nova Scotia is possible because of the vast network of industry partners, funding partners and stakeholders, including some key ones I’d like to bring attention to. The Nova Scotia Department of Agriculture were instrumental in founding Taste of Nova Scotia in 1989 and today continue to be the sole funder for Taste of Nova Scotia. We also work closely with Tourism Nova Scotia on culinary tourism product development and promotion, and we work very closely with the Atlantic Canada Opportunities Agency, who provide essential funding through marketing initiatives, export development, education and more. As you can see, we have a number of other partners who we work and align with to advance Nova Scotia’s culinary strategy.
Storytelling is a large part of what we do in the marketing of food and drink with Taste of Nova Scotia. In Nova Scotia, we have a unique opportunity to tell our story through food and drink. Every bowl of chowder, every glass of wine and every piece of apple pie tells the story of who we are and where we are from. They tell the story of our cool climate and geography, our endless coastal landscape, our rolling agricultural landscape, our farmers, fishers, artisans, winemakers, brewers, distillers and chefs. They tell the story of their commitment, passion and innovation. They tell the story of our past, our present and our future. How we tell that story is what differentiates us. There are many stories to tell across Nova Scotia’s agri-food industry.
There are some points that I would like to highlight today. First, Nova Scotia’s international agri-food exports totalled $360 million in 2018, up 15 per cent from 2017. Agri-food products are Nova Scotia’s third-largest export category, accounting for 6 per cent of international exports in 2018. In 2018, our key export markets were the United States, Netherlands and China. Nova Scotia wild blueberries are Nova Scotia’s largest fruit crop, with over 1,000 producers managing 40,000 acres. Approximately 95 per cent of the wild blueberries produced are sold to a processor. You have an example of a processed wild blueberry product in front of you. You have the Van Dyk’s Pure Wild Blueberry Juice which is a wonderful success story showing the value-added of taking a primary product and processing it into an exceptional, high-quality, pure blueberry juice. This company has had tremendous success. They’re found in retail all across Canada and are having great success in international export markets as well.
There are currently more than 3,900 farms in Nova Scotia. We have 23 wineries and 84 grape growers with close to 1,000 acres under vine. You can drive through the Annapolis Valley and see beautiful vineyards, apple orchards and beautiful farmland. That’s an important thing to talk about in terms of the way our agri-food industry allows us to eat our view. The author Michael Pollan talks about the concept of eating your view. You can go to the Annapolis Valley and sit at Luckett Vineyards overlooking the Gaspereau Valley. You can look out over the vineyard that grew the grapes that made the wine in your glass. You can look out over the Gaspereau Valley at the farms that grew the food on your plate. You can eat your view. You can do that in fishing communities around Nova Scotia. In fact, you can do that in rural communities all over Canada. These agri-food companies help preserve the landscape of our country. They save fishing communities. They save agricultural landscapes. That’s such an important thing. It brings more value than just export. It helps attract tourism, create beautiful places to live and visit and helps strengthen our brand and identity as a beautiful destination with beautiful landscapes.
Currently, there are 218 registered agri-food businesses in Nova Scotia who show export potential. We currently have more than 50 craft breweries in little old Nova Scotia, which is more per capita than any other province in Canada, and 70 per cent of these breweries are located in rural communities. We have 11 craft distilleries, with 80 per cent located in rural communities.
The Chair: Ms. Haynes, we are getting into a crush for time. Could you begin to wrap up, please?
Ms. Haynes: Absolutely.
The export piece for the agri-food industry is important. Our greatest asset in export is ultimately Canada’s reputation as one of the most respected and trusted brands in the world. That’s something we recognize in Nova Scotia. When we go to Shanghai or to Europe, not everyone may be familiar with Nova Scotia but everyone knows Canada. It is a trusted brand and one that we continue to align with when we’re looking at export markets.
It’s so important that we continue to focus not just on international export markets, but, as Mr. Wolfson alluded to, the importance of supporting the growth of the industry and of reducing barriers to access to grow the agri-food industry. There are examples of product in front of you today, Made with Local granola bars. It’s a company that started at a farmers’ market. They were making them in their kitchen at home, wrapping them in Saran Wrap and selling them at a farmer’s market. In a few short years, they’ve grown to this beautiful packaging. They are in retail across the country. I firmly believe that if they chose to pursue international export, that opportunity would be there. This Made with Local granola bar company is purchasing from local producers and value adding. Then you have the apple chips in front of you from Noggins farm, from the beautiful Honeycrisp apple. The product is exceptional inside. With enhanced opportunities for packaging and distribution, there is definitely a market for them to grow in retail across Canada as well as international export. This is an important thing to continue to focus on, removing barriers to growth and production and continuing to support opportunities for export development for these small companies, whether it be in Nova Scotia, Atlantic Canada or across Canada.
Thank you so much for having me here today.
The Chair: Thank you to both of our panellists. I might note that two new senators from Nova Scotia have joined us at the table here, Senator Colin Deacon and Senator Wanda Thomas Bernard. We have four Nova Scotians at the table, and some of us live nearby. We have a number of senators lined up to ask questions. We’ll start with Senator Maltais.
[Translation]
Senator Maltais: My first question is for Michael Wolfson. Could you explain the difference between processed products and further-processed products?
[English]
Mr. Wolfson: There is no large difference between the two. Further processed product would be, for example, the blueberry syrup or the blueberry bottle that you have in front of you. The processed product maybe would be the cleaning of the blueberries and the packaging of the blueberries. Further processing would be preparing a product that’s beyond the original actual product itself.
[Translation]
Senator Maltais: What would be your answer to this study carried out in Europe, entitled NutriNet-Santé, which is on the front page of newspapers this morning, in an article in Le Devoir among others, entitled “Further-processed food: death on a plate?”
[English]
Mr. Wolfson: All food has some form of processing. The majority of the Canadian processors that I have met are not adding a lot of additives or preservatives in food products. That’s what I believe they’re referring to in that particular article, but you don’t have to produce a food product like that. There are technologies today in packaging so that you can produce a clean label and have it for the consumer in many formats. Those kinds of articles are the things that lead to the misconception of this industry.
[Translation]
Senator Maltais: Thank you, Mr. Wolfson.
Ms. Haynes, I must congratulate you. You are an excellent ambassador for your province and your food products, which we know well. Nova Scotian cuisine is well renowned. We have a permanent ambassador here in Senator Mercer, who reminds us of that twice a day, and with good reason.
This morning, to my great surprise, you distributed these little bags of Honeycrisp apple chips. Quebec is a big consumer of your apples, despite the fact that they cost a lot once they arrive in our province. My grandchildren love these apples and they demand that I only buy this variety. Unfortunately, they aren’t available long enough. Perhaps, if you made fewer chips, you could send us more fresh apples. Honeycrisp apples are also grown in the south but they aren’t as tasty. Nova Scotia is the Honeycrisp expert, and all Quebec households know these apples.
Nova Scotian cuisine has a characteristic feature: it is based on small-scale agriculture and fishery. So it is a very good mix that provides exceptional cuisine.
I also wanted to mention your wines, which are increasingly popular. Because of the infamous provincial tariff barriers, it’s very difficult for us to purchase Nova Scotia wine unless we go to Nova Scotia, as I did last summer.
Are your products sold only in Nova Scotia, or do you also sell them to the United States? As a Canadian, I would certainly love to buy some, but it is impossible. Are you considering distributing your wine to other provinces?
[English]
Ms. Haynes: Thank you for your lovely comments on Nova Scotia. Speaking of apples, my mom grew up on a century-old farm in the Annapolis Valley that predominantly grew apples. I ate so many apples as a child I believe I am now part apple.
As to your question about wine and the interprovincial trade barriers that make it difficult to find a diversity of Canadian wine from all of our winery-growing regions, such as Nova Scotia, British Columbia, Ontario and Quebec, it’s difficult for us to find a diversity of wine in Nova Scotia and vice versa, it’s difficult for our wineries to export their wine to other Canadian provinces.
Ultimately, the responsibility has fallen on the individual wineries to work to open up opportunities to have their product in other provinces. Some have had success. It’s with great work that they have done that. Benjamin Bridge winery is known for its sparkling wines and Nova7, which is the cult classic wine that they have been producing for, I believe, 11 years. They’ve been successful in distributing their wine across Canada, and some other wineries have, too, like Jost Vineyards and Devonian Coast Wineries.
It continues to be a struggle not just for wine but for other beverage and alcohol producers making spirits, cider and craft beer. There certainly is an opportunity to facilitate greater opportunity for beverage and alcohol producers to have access to Canadian markets.
[Translation]
Senator Maltais: I would have a suggestion for you. Nova Scotia should take the lead in this file. In every province, the distribution of alcohol is largely controlled by governments. Would it be possible to create an alcohol distribution association with the 10 provinces and territories that would include all of the government entities, be it the LCBO in Ontario, the Société des alcools in Quebec, and your own body? Would it be possible to create this kind of association? It would allow for much more rapid trade. The consumer would be the winner. Rather than wines from New Zealand or Australia, I would prefer to consume the wines of Nova Scotia, Ontario and British Columbia. They are from here; these are my neighbours.
I like South Africa, but it is far away from home. Would there not be some way of creating an association of alcohol distributors in Canada that would get all of the provinces together? In that way, the smaller producers would have the same opportunity as everyone else to place their products in the various provinces. You are the appropriate person to create that association. You are an excellent salesperson.
[English]
Ms. Haynes: Thank you. You are correct that these are government policies that ultimately need to decide the direction, but in working with industry. It’s very important that industry is at that table and that the wineries, distilleries and breweries are helping inform these policies that will best represent their business, their industry and their interests in opportunities with interprovincial trade.
This is certainly a point of discussion and something that requires a lengthy and healthy debate between government and industry on how we facilitate this in the best interest of industry, the consumer and the Canadian economy.
[Translation]
Senator Maltais: Thank you.
[English]
The Chair: Looking at the clock, there are 11 of us still to ask questions and we have some people lined up for a second round. Come with your single best question, make it a good one, and we’ll put you on for second round if we can get there.
Senator Mercer: Senator Maltais has already covered a lot of ground. I would recommend that you all visit Nova Scotia, as Senator Maltais did last summer, and bring your wallets, because we need the boost to the economy.
Taste of Nova Scotia is a great success story. I congratulate Ms. Haynes and the membership. You listed the members of 110 restaurants, 88 producers and 15 associate members. I would add 900,000-plus Nova Scotians who are supporters and very proud of the work that you do.
Senator Maltais brought up the question of interprovincial trade, which is a problem, but Nova Scotia has also done something that you do when you want something changed, and it has shown some leadership. Of course, Nova Scotia is one of the few provinces where you can import wine from other provinces. As those of us who have travelled to British Columbia, for example, have discovered, we have been able to ship wine home to Nova Scotia, and vice versa. That’s the leadership that is needed to get Ontario, Quebec and others doing the same thing.
What are the expansion plans for Taste of Nova Scotia? I think the success story needs to be built on.
While I have the floor, and knowing I only have one question, I wouldn’t want to leave Mr. Wolfson out. He made the very important statement that we must do a better job of value-added production in expensive industries because of regulations and capital costs. How do we get these costs down and, at the same time, increase production?
Ms. Haynes: Expansion of Taste of Nova Scotia, for us, would be to continue to grow our membership as the culinary industry in Nova Scotia grows. We have seen tremendous growth over the last 10 years in the number of producer-processors and in the beverage and alcohol industry with craft breweries, wineries, distilleries, cideries and meateries. We are seeing more restaurants open. As the industry grows, our membership grows with it, as well as our opportunities to work in more diverse fields within the culinary industry of Nova Scotia.
Senator Mercer: I think the integration of the wineries, the farms, the restaurants and the tourism works well. I live in a rural part of the province, but I don’t live in a wine-producing part. I’m not that far from the Annapolis Valley. The best restaurants in Nova Scotia now, almost all of them, are on wineries. That’s the value-added. You mentioned Luckett’s, and it is beautiful scenery as well as quality food and excellent wine.
Mr. Wolfson: Getting costs down is not that easy to do. Costs of raw materials, costs of hydro, cost of water — they are all going up. The point that I was trying to make is, in doing a better job, we have to start to concentrate more on the commercialization piece as opposed to research and development. We have great organizations that provide lots of dollars in Canada for research and development, including NSERC and a number of others. I know that we went with Food Starter to speak with NSERC, they said to us, “You guys are doing a great job of practical education, but because you are not a registered education facility, like a college or a university, you can’t get any NSERC dollars for that.” So I think we have to concentrate more on providing some support for the commercialization piece, more so than the research and development piece. Without commercialization, research and development money goes down to the U.S. or someplace else to get commercialized.
Senator C. Deacon: Hear, hear.
Senator Oh: Welcome, and it’s nice to see you here again in Ottawa.
First, for Emily, the committee travelled to Shanghai — I believe that was three or four years ago — and some of us were at the FHC Food and Hotel show. I remember I saw Taste of Nova Scotia was there, and lobster, oysters, wines and everything was there. I want to say you have done a good job of promoting Canada. In China, you have a good brand, the maple leaf brand, including the Taste of Nova Scotia. Are you still carrying on doing this all over the world or at any other important food shows?
Ms. Haynes: Yes, Taste of Nova Scotia works in export development. We do it partnership with our government partners. We work predominantly with the Atlantic Canada Opportunities Agency, the other Atlantic provinces, Newfoundland, Prince Edward Island, New Brunswick, as well as with some of our provincial partners, Nova Scotia Department of Agriculture and Nova Scotia Business Inc. We work with them to lead international export missions to key trade shows. We often work with Agriculture and Agri-food Canada through their flagship trade shows, and Food and Hotel China in Shanghai is one of them. We have been doing that for a number of years. We also do the seafood expo global show in Brussels every year, and we have had the opportunity to work on some other key export projects in the E.U., the U.K. and Asia.
Senator Oh: Very good, thank you.
Mr. Wolfson, you mentioned less than 3 per cent of the research actually makes it to commercial lines. The day we went to your lab, I saw most of the people there doing the research and producing the food. It was a diverse community. Can you talk about these new immigrants who come in here? They had the market overseas. They see things differently. They need to make a living, and they need to invest. How do they come to play this role for Canada?
Mr. Wolfson: One of the key functions of the food incubator is we allow new immigrants, and even ones that have started businesses outside of Canada, what I call a soft landing place. This is a place where they can come. No company is going to come to Canada and set up a food production plant. They don’t know whether there is a market here for the product. They don’t know how to operate within Canadian regulations and so on.
A facility like that offers them a place to come, make sure that they are producing in a safe, Canadian standards way of production, get their products into the market and make sure that they have a market for their products in Canada. Then once they do and they move out of a facility like that, they know they have got a market and they can invest in a facility and hire employees.
It is one of the few commercialization centres. There are lots of research centres and product development centres, like Canada’s Smartest Kitchen in Prince Edward Island, like the Canadian Food and Wine Institute in Niagara, and Red River College is now starting a program. But for somebody to go in and work hands on, like you saw, developing products for themselves, there aren’t that many facilities across the country. There needs to be more of a coordinated effort to develop those types of places.
The Chair: We have twelve minutes left and nine people wanting to ask questions, so panelists, short answers, and senators, one short question.
Mr. Wolfson: There is no end to the passion in the food industry.
The Chair: I know, and it’s great.
Senator Doyle: The City of Toronto is a very culturally diverse kind of place. Have you seen any great increase in food processing related to cultural diversity? Is the province involved at all in funding it or maybe the federal government funding processing opportunities and what have you?
Mr. Wolfson: Not as much as I would like. In terms of the culturally diverse food products, in the last year and a half — and I’ve been in the industry a long time — I have come across food products I have never heard of before. People have come to Food Starter to start a business-producing Brigadeiros, which is a phenomenal Brazilian chocolate truffle on steroids. You can’t believe the pleasure you get in eating these. You met one of the producers of a product called kibbeh, which is a Middle Eastern hors d’eouvres or snack-food product. We have had people come in and produce empanadas. There are lots of people from outside the country with culturally diverse products that are coming into our facility because they have got the experience of doing food products in their own countries, have immigrated into Canada and want to produce the same products here.
Senator Doyle: There are no programs to help or to assist?
Mr. Wolfson: The only program that we have got — I’m not sure if it’s still in operation — is a federal program to attract investment into Canada, but that’s it. No, not so much on a provincial or federal level.
Senator Kutcher: Thanks both of you. I learned more about Taste of Nova Scotia, and what great swag. You must be the apple of your mother’s eye.
What I would like to know from both of you is what are the proactive linkages bringing people to you that your organizations are thinking of doing or are doing that encourage the entrepreneur to a commercial success pathway in two sectors? One you have discussed with Senator Doyle — that is reaching out to cultural communities — Peace by Chocolate in Nova Scotia being one that was created but wasn’t reached out to — and the second one being the education sector. Community colleges, both NSCC and George Brown, are renown for their culinary institutes. What work are you doing to reach out to bring those students into your incubators and commercial success platforms?
Mr. Wolfson: We’re working with the majority of colleges in the city as well as outside the city. Niagara College, George Brown and Centennial College all have culinary programs, and they all provide student co-op programs that allow some of their students to come and work with the entrepreneurs in the facility to learn both the entrepreneurial piece from them as well as hands-on what it’s like to run in a food business.
What I would like to see the colleges do — and they are starting to now — is move a little bit away from the culinary and start to do programs around food manufacturing, because there is a need for those students. I was a graduate of George Brown College’s culinary program. I worked eight months in the food service sector and realized I didn’t want to spend my whole life working on weekends and at nights, but I still loved the food business, so I went into the manufacturing side. It’s a much more stable lifestyle, if you will. A lot of the students are accepting programs like that.
Senator R. Black: Mr. Wolfson, we have heard, since we toured the Toronto area and the food terminal, that the Government of Ontario may be looking at selling, privatizing or changing the location. How will that impact value-added food businesses in the Toronto area? Any thoughts?
Mr. Wolfson: On the Ontario Food Terminal, wow. The Ontario Food Terminal is the stock market for fruits and vegetables in Canada, and they set the pricing. If you take away the Ontario Food Terminal, you allow —
Senator R. Black: Or move it.
Mr. Wolfson: Or move it, you allow the independents not to be able to compete against the chain operators. The independents keep the chain operators honest on the pricing of fruits and vegetables. It’s a very important piece. The majority of the independents are in the Toronto region. I wouldn’t know where you would move it to outside of the Toronto region.
Senator Moodie: Mr. Wolfson, welcome today and thank you for being here. My question is around emerging trends. I’m interested in your expertise as the sector specialist for the City of Toronto. To understand some of the figures around new emerging trends such as the farm-to-table trend that we are seeing, how is it affecting and enhancing growth of the industry, perhaps interfering with established distribution? Give us a sense of the impact of farm-to table. Also, a little more about the growth of ethnic food products in terms of the figures. What is your sense of the expansion of this market?
Mr. Wolfson: So farm-to-table — or we can refer to it as local food — is a very growing trend. The biggest trend right now is in online food purchasing. We are in the process of developing a Toronto food strategy for the next 10 years — we hope to have it out by May or June — that will look at that particular trend and how that is going to affect the retail community. Are retailers going to be that big a footprint in their stores in Toronto — a lot of them are looking at online purchasing — and how do we get food to those individuals who aren’t as experienced in online purchasing? They are the ones who probably need food the most, and how do we make sure they get access to good-quality food products?
Senator C. Deacon: Thanks to both of you for being here.
A phrase came out of your presentation, Mr. Wolfson, about the cost of regulation as one of the costs or inputs in this industry. It’s really important our analysts capture that notion.
Both of you spoke about scaling our high-quality products. If the customer isn’t buying these products, nobody wins. There is a phrase “fork-to-farm.” It is important we turn that around and make sure customers are driving these businesses because, if customers aren’t driving it, we’re not going to get the sales. Can you talk about access to scaling — advice, programs and tools — and what we need to do to make sure that our exceptional products become more customer-centric? The cheapest money is sales, so they get more sales and we can scale globally and don’t just have great products sold locally capturing opportunities, but we’re finding another path for those that have the ability to take on world opportunities.
Ms. Haynes: Well, for international export markets, there is a lot of work being done. From our experience, we see a tremendous amount of support from the federal and provincial governments to provide opportunities to access new markets for those companies that are export-ready. That is the key — they have to demonstrate export readiness. Some companies you see potential but they may not be there. Their packaging may need work, or their production, their ability to accommodate larger-scale production, may need work, but their product and quality is there. That is one of the keys.
We get back to talking about that access to facilities to grow. If you have a great company and a great product but they can only support the local market with their current production facility, how do you bring them to that international level? It is very costly; so finding those opportunities — maybe it’s co-packing opportunities, or more incubator-style food hubs that allow people to come in and take their product from that farm market product to retail to international export. It’s a tiered approach. There is an opportunity for greater access to more affordable production to grow our current agri-food products, whether it’s in Nova Scotia or elsewhere.
Mr. Wolfson: I have seen many companies with this curve. They start at a farmer’s market and grow rapidly. Then they reach a point where, if they don’t get an influx of capital from somewhere, they go along and then just drop off. That influx of capital allows them to increase their productivity and buy pieces of equipment to produce larger. If we can set something up that allows them access to that capital. Because, as I have said in my presentation, the financial institutions aren’t willing to lend to those people and investors aren’t willing to invest. Somehow we have to give them access to capital so they can increase their productivity.
Senator C. Deacon: Thank you very much.
Senator Bernard: Thank you both for being here.
One of the things I’m always concerned about is food insecurity, especially when 82.1 per cent of Nova Scotians on income assistance are food insecure. As I walked in, Ms. Haynes, you were speaking about the beautiful Annapolis Valley — and I’m a proud Nova Scotian — but as you were speaking about the Annapolis Valley and all that happens there in terms of food production, my mind went to the film by Nance Ackerman — “Four Feet Up.” Have you seen it? It’s a very powerful film that speaks about food insecurity. It tells the story of one family through the lens of a child. They live in the Annapolis Valley. They talk about how they watch fresh fruits and vegetables from the valley being transported out, and those are things they cannot afford. I wonder if either of you can speak about the connections you may have around food and food insecurity and how we can address that in our country.
Ms. Haynes: You’re right. We see food insecurity in Nova Scotia and all over Canada. It’s affected by a number of things. People’s economic ability to afford food is one, as well as transportation issues with actually getting food to diverse communities around Nova Scotia, as well as access to areas to purchase the food. If there is no public transportation to get you to a grocery store or to a farmer’s market or to a farm gate, these are issues.
But we’re seeing innovation in a number of areas that are addressing food insecurity. There is a program in Nova Scotia, Square Roots, which works with farms and restaurants. They have a program where they are actually working with farms and even some grocery stores to take product — especially from the farm that maybe wouldn’t go to retail because it’s damaged, but it’s still safe to eat and it’s still delicious — and they’re finding opportunities to bring that to communities and to people who may not have access to those fresh fruits and vegetables. As we see that innovation and as we see more awareness around it, we see more policy and industry getting on board to help create solutions for food insecurity problems that we see in Nova Scotia and elsewhere.
Senator Bernard: Is taste of Nova Scotia partnering with any of those organizations?
Ms. Haynes: One of our board members has just brought the Square Roots program to our attention, so we’re looking to meet with them to learn how we can help our membership engage with them so they can take their program to a larger provincial scale and contribute to more communities around Nova Scotia.
[Translation]
Senator Dagenais: Thank you to the witnesses for being here. Ms. Haynes, I have a comment to make about the Nova Scotia businesses that export their products. The products are labelled “Taste of Nova Scotia” rather than “Product of Canada”. Is this new? I think the labelling is different because normally, when we export, products are always labelled “Product of Canada”. This makes me think that your products are better known than other Canadian products.
[English]
Ms. Haynes: As members of Taste of Nova Scotia who are producer-processors, members with approved products are permitted to put our logo on their packaging to identify them as a Taste of Nova Scotia product. However, in terms of international export, we firmly believe that brand Canada is the strongest brand when going into international markets to identify the trusted quality behind brand Canada, so we certainly encourage our members who are looking at international export to ensure they are using brand Canada on their packaging.
Senator C. Deacon: I would thank Ms. Haynes for bringing breakfast. It was very kind of her.
Ms. Haynes: We like to feed people.
The Chair: We would like to thank our panelists. As you can see, we could have gone on longer, but our next panel is ready.
Our next panellist is coming to us by video conference. We have David Hughes, Emeritus Professor of Food Marketing, Imperial College London. Welcome, Mr. Hughes, the floor is yours. It’s great to have you here today.
David Hughes, Emeritus Professor of Food Marketing, Imperial College London, as an Individual: Good afternoon for me, good morning to you. I haven’t got a big-deal presentation.
By way of background, I earn a living by talking around the world about global food industry developments and what it means for you, whoever “you” might be. “You,” for example, could be a food processor in the U.S. Last week, it was a dairy cooperative in Vancouver, where I was talking to the board. But I could be anywhere. I don’t sound it, but I am Canadian. I’ve lived and worked in Canada for 10 years, and I frequently visit. I have a view on value-added, and I am happy to share it with you as far as Canada is concerned.
From my perspective, Canada is a world-famous producer and exporter of commodity food ingredients, which is brilliant in its own right, but as a result of that, the reflection is that there is no great consumer knowledge around the world about what Canada produces. I remember looking at data from U.S. consumers, who share a huge border area with Canada, and the general view Americans will take of Canadians with regard to food is that Canada is really good at food — they are excellent with food, very trustworthy and it’s safe food. Then you ask the question, “What exactly do Canadians produce?” and there is a long silence. Someone might eventually blurt out, “Maple syrup.”
Never underestimate, from a consumer point of view, how little people know about Canada and Canada’s food. We Canadians — and I share it with Brits — have the problem around the world that no one says, “Let’s go out for Canadian.” You might say so about Italian or Chinese, but as far as consumer knowledge of food goes, there’s very little. Whereas, if you take Italian or French food production and ask people in Canada whether Italy is good at food, the answer is, “Yes.” If you ask what they produce, people will rattle off a long list of high-value food products. To some extent it’s the same in France. We don’t have that. In history, it has been a strong commodity focus.
Why didn’t it turn into greater value-added? If I go back to 1973, which is when I arrived in Canada as a food policy analyst for the feds, looking at what constrained the development of value-added in the 1970s — and this lasted for a long time — it would be customers, whether it be the Japanese or whatever. They had tariffs and non-tariff barriers to encourage the export of basic commodities from Canada and not the value-added additions of it, because they wanted to have that value-added in their own countries. To some extent, that still exists, but I think this sets a background where Canada became a world expert and being really good at commodity ingredients. So there was no particular push to get into value-added.
Once you get into value-added, particularly the nearer you get to consumer food products, so the risks go up. From an agri-business company perspective in Canada, moving toward value-added and more consumer-oriented products brought bigger risk, so why wouldn’t we just focus on lower margin but lower risk exports of ingredients?
Reflecting on that, I can see over time and even now, there is a lack of consumer knowledge in many Canadian agri-business and food companies of international markets. They have not had that history and culture of amassing knowledge of exactly what consumers want in specific export markets.
Proximity to the U.S. didn’t help in terms of value-added because the huge food companies of this world, and certainly of North America, were based not far from our own border. That sort of constrained development of value-added, I would suggest. Is it hopeless, therefore, to look for value-added? Not at all.
I have been tracking what happens, and I’ve been involved directly in the food industry myself. I’ve only recently had “professor” tagged to me. I have run food businesses. I see a sea change in food processing, not least in North America. The big food companies — the Unilevers, the Danones, the Nestlés and the General Mills — have had a tortuous five- to seven-year period, and they’ve been really squeezed. In North America, they’ve seen little or no sales growth. Almost all the growth in North America in prepared and value-added foods over the last five years has come out of small, emerging, often millennial start-up food companies that have stolen all the growth. So big food has been under the hammer, and we have had the emergence of these “pesky” Millennial start-ups.
What intrigues me is that the entrepreneurs for these companies haven’t come out of the existing agri-business sector. They’ve tended to be those who’ve earned money elsewhere, not least in Silicon Valley or coming out of financial services, and who want a different commercial life. They have invested heavily, with venture capitalist support, in start-up companies with value-added consumer food products.
Do I see this happening in Canada? Yes, to a degree. As I say, I do a fair amount of work in Canada. I can give examples across the country where really interesting start-up companies are just mimicking what I see coming out of California and other parts of the U.S.
We’re seeing a renaissance, if you will, of interest in the food industry, which in history has been perceived as being relatively low-margin. But that renaissance has been fuelled by those with little or no food industry background. I think that’s good. As I say, there are good Canadian examples of it that I can share with you if anybody is interested.
What’s the constraint from a Canadian point of view? To some extent, there is a lack of value-added food processing infrastructure. For example, let’s take one of your more recent superclusters that is being financed, as I understand it, courtesy in part by federal monies: plant-based proteins. Those are pulses, peas and lentils. What’s clear to me is that in the area of pulses and peas, Canada has enormous potential. We’re really good at producing these. However, we have surprisingly few fractionation plants in Canada where you can take the raw material and break it down into its component parts, which adds much higher value. The supercluster program, as I understand it, is focused in part on providing funding to attract investments from outside Canada and from within Canada to make the plunge into those higher-value processing plants. I think that offers enormous potential.
There is a lot that could be done, but there is historical baggage that has been part and parcel of constraining the development of higher-value food and drink products in Canada.
Who does it well outside of Canada? I often look at Denmark. Denmark is a tiny country, even by Canadian standards in terms of population. Go to Copenhagen. There are three specialty food-ingredient companies within a 30-kilometre radius of each other: Chr. Hansen, Novozymes and DuPont that does specialty food ingredients. They are three of the highest profitable food companies in the known world.
Why does that happen in Denmark rather than in, say, Canada? I think that reflects history, too, in that Canada has always been so competitive internationally in basic food commodities that there has been a margin to be made just by exporting them without adding the value. In Denmark, on the other hand, they produce commodities, not the least milk and pork products, but in those, they were not competitive internationally. They had to think early on about how to get the maximum value, how to add value to the commodity, and they have done so. Now it’s reflected this their export performance.
That starts us off with some points that you may like to follow up with me.
The Chair: Terrific. Yes there are points, indeed.
[Translation]
Senator Maltais: Mr. Hughes, Canada is renowned internationally for large crops and productions such as grains, pork, cattle, potatoes and many other products. Over the past 20 years, Canada has gotten into further processing, which used to be called bulk processing. For a few years — and I agree with you, we are lagging behind on this — Canada has begun to do secondary and tertiary processing. This has allowed us to access many new markets thanks to the many free-trade agreements we concluded with other countries.
Today, as we speak, the committee is doing a study on the value-added food sector. To add value, there has to be secondary and tertiary processing. You are a professor emeritus, and you know very well that further processing presents a potential danger to the health and safety of citizens, no matter where they are. What are your thoughts?
[English]
Mr. Hughes: The more processed the food, the more dangerous it is from a food safety perspective or from a nutritional perspective? That’s the question to you so I’m clear about the question.
Senator Maltais: Yes.
Mr. Hughes: There is a clear trend around the world towards less processing. In terms of the consumers, almost every country I go to is looking for clean labels. They want few ingredients and ingredients they can recognize. They point out that we’re going to put this in our mouths, so we should be able to pronounce the ingredient. The preference is for a lighter touch when it comes to processing. Notwithstanding what they say, probably the biggest driver of demand for consumer food products, once you have gotten past great taste, is great convenience. That sits with difficulty with unprocessed food products. Yes, from a nutritional point of view, the less you process foods, arguably, the more nutritionally positive it is, but the fact of the matter is that if people are going to be able to eat it on the run, and I know this is not a pretty thought, then they require it to be processed in some form. So we have these tensions.
What I’m saying here is that heavy-duty processing, extreme processing, underpins the problems that big food companies have had over the last 10 years. The Kraft Heinz and the General Mills of the world have seen demand for their highly processed food products dwindling, and they have been stolen by the start-up companies who focus on fewer ingredients, ingredients with better provenance — which I think is important from a Canadian perspective — and it has a lighter touch when it comes to processing. Notwithstanding that, I don’t think we’re going to see less processed foods in world markets.
[Translation]
Senator Maltais: Thank you.
[English]
Senator R. Black: Dr. Hughes, with your knowledge of the food and food markets globally, and your understanding of where we are in Canada and the knowledge that we’re working on a value-added study here in this Senate standing committee, what recommendations would you have for us that you would like to see included in this report?
Mr. Hughes: Wouldn’t it be nice if there was three silver bullets I could lay in front of you? The issues that you’re addressing are complex. The position Canada is in reflects our history and developments that come from that.
I’m really encouraged to see the development in Canada in terms of the new entrants coming into the food industry where it’s perceived as being more attractive than in history. Go back 10, 20 or 30 years and graduates would pooh-pooh the idea of entering the food industry because they had other more attractive options, whether it be in high-tech or financial services. Now the wheel seems to have turned a little, and the so-called millennial group, young consumers, seem to be reattaching themselves back to their food and from whence it came, and it is attracting bright, interesting people who may be constrained in terms of capital but want to get into this business. This should be encouraged.
Does the federal government have a big role here? I mentioned the supercluster program that has been launched by the government, and that’s a good deal. I have a lot of time for that, to focus on areas where Canada has clear strengths and building on those strengths. If we take the Prairie example of plant protein, that’s a huge super-trend around the world where, particularly in higher-income countries, consumers are electing to moderate their meat consumption but increase plant-based product consumption. There is a clear opportunity here for Canada. Actually, Canada is very good at livestock meat and plants. I think you have a role there in terms of encouraging cluster development.
Back to the example I gave of Denmark, one of the reasons they’ve been so successful, and indeed in Holland, is that the government has been supportive of food cluster development, and I think that’s something that should and could do well in Canada.
Frankly, I think there is a limited role for government. You should be doing the things you do anyway, which is developing free trade agreements. That’s enormously important for Canadian food exporters, and particularly of value-added food exports.
Senator R. Black: Thank you very much.
Senator C. Deacon: Thank you, Mr. Hughes, for your informative testimony and answers to the questions.
I’m focused on those pesky millennial start-ups. They delight me in every way. We need a lot more of them, and we need to help them scale. We’re getting good at that in Canada. As Dolly Parton says, we have always been pretty good at turning money into ideas, but we’re not as good at turning ideas into money. We have to get a lot better at it.
Let’s zero on your recommendations on those pesky millennial start-ups. I have no end of optimism as to how much opportunity they can create for Canadians. We learned a lot around tech start-ups, but we need to shift our attention to include value-added food start-ups. Let’s zero in there and basically extend the question of Senator Black.
Mr. Hughes: Let me go back to difficulties that big food, bad food, has had over the last seven years. Every single big international food company has put underneath its umbrella, under its wings, venture capital company to look for opportunities to co-finance, support and then maybe even buy these pesky millennial start-ups. In my professional time in the food industry, which is now like 40-plus years, there have never been better opportunities for start-up food companies to look for and access venture capital from the food industry itself, which I think is sort of brilliant, whereas some people say, “Isn’t it a shame that these little guys start up, they build a business and then they get gobbled up by General Mills or Unilever or Danone.” It depends on whose perspective you take on that. If you are the little guy who has been gobbled up for $50 million to $100 million, frankly, I could get used to that. For start-up companies, there are opportunities now for them to access venture capital, if they wish to, from the industry itself.
When they are in that very start-up period, then they do need help. For example, you mentioned scaling up. I’ve been in Alberta relatively recently. If you look at the Leduc Food Processing Development Centre, the sort of incubator-type approach is very useful in itself. From a Canadian point of view, what always intrigues me — maybe it comes with being a federation — is that every province wants to have something in food processing that will be of an incubator type. I don’t think Canada needs 10 or 12 different ones of those. But you do need some opportunity for start-ups to be able to go and to get an opportunity, to start small and then grow. Clearly there is room for federal and provincial finance in that regard.
Senator C. Deacon: Thanks very much. I want to zero in on one thing. It is rather interesting, the Leduc story, because that is where the oil industry started, Leduc, Alberta. I want to zero in on why it’s good. I believe I know why it’s a good thing for start-ups to have those exits. Could you explain in your words why you think it’s a very good thing and that we should get used to that? You build a company and it gets sold. What sort of virtual cycle gets caused by that?
Mr. Hughes: I don’t know if I can give you examples in Canada. I can certainly give you examples in the U.K. where, when start-ups that have been successful and are then purchased, the entrepreneur then moves to other places in the food industry and replicates the success, so success does breed success.
Also, if you are small, you build a business and then you are bought out, I think the best examples of success are when big food companies support the development and then eventually purchase small food companies, but keep the initiator, the original entrepreneur, involved in the business. If you want it writ large, let’s take something like Unilever who, 15 years ago, if we all remember, bought Ben & Jerry’s, and Ben & Jerry’s was a much loved ice cream company that was perceived to have great values and be concerned about the environment, et cetera. March forward 15 or 20 years, Ben and Jerry are still involved with Ben & Jerry. What’s more, customers/consumers understand that. I think it has been good for the food industry overall. As I say, I think it’s win-win wherever you look at it. We don’t have to feel sorry for the ones that were bought out for $50 million.
Senator C. Deacon: Thank you.
Senator Moodie: Thank you, Professor Hughes. My question is around changing trends. That seems to be my theme today. As meat consumption is still relatively high in North America, we think we are seeing a trend in Canada where people are moving away from eating as much meat. In fact, based on health concerns and recommendations, Canada’s Food Guide of 2019 is certainly focused on diminishing the amount of recommended meat intake.
The question that I have relates to meat alternatives. Some of those big food companies we see are moving into vegan, Beyond Meat Burgers and things like this, ideas that there are alternatives to meat. What role will meat alternatives play? How can the Canadian agri-food industry capitalize on this trend, in your view?
Mr. Hughes: Great question.
First of all, back to our or your 2019 Canada’s Food Guide, I have a big smile because if you are the meat or dairy industry, you are a little bit peevish about that guide. When you look at the picture, you can barely spot the meat, but that’s by the by.
You’re right. In Canada, per capita meat consumption actually is in decline, in stark contrast to our neighbours in the U.S. where it continues to increase, and it’s at astonishing levels — 106 kilos per capita, which defies the imagination as to how they have the time to eat that much meat. In most higher-income countries, meat consumption per person is, at best, static but actually in many just slowly declining, particularly for red meat.
First of all, if you are in the meat industry, do you have to panic about this? No, because the emerging world is eating more meat, and demand for meat worldwide is continuing to be strong, and I see that happening for another 10, 15 or 20 years.
Back to your question about meat alternatives, what is indicative is that the alternatives are either plant protein-based meat analogues or cell-based meat, which is growing meat from livestock cells. That will have a future, but it’s not within the term of your committee, I would suggest. I mean, we’re going to wait 20 or 30 years before you get cell-based meat on the market at any level.
Right now, if I look at meat markets around the world, in my terminology, I say the protein canopy has just gotten broader. What do I mean by that? In history, we thought of protein as being essentially meat, particularly in Canada. Remember, you went to Dominion stores 40 years ago mainly because of the meat, and Canada liked a big lump of meat in the middle of its plate. But now protein is much more than meat. It’s also plant protein and dairy protein. It could be insect protein. It could be spirulina protein. What is indicative is that most major meat companies, including, for example, Maple Leaf in Canada, are now investing in companies and products that are meat-like but not meat. I think that will just continue. On the continuum, what we will see, on one side, will be the full-on, big piece of steak, meat with a story, Alberta, Aberdeen Angus, et cetera, and then move to the other end of the continuum where there will be plant-based burgers that have nothing to do with meat.
Is this a fad? Absolutely not. This week, I was in Italy talking to food companies Monday and Tuesday, and I was around supermarkets there. Italy has a really strong food culture, and I didn’t expect to see these sorts of vegetarian, vegan-type products to any great extent in Italian supermarkets. There are metres of shelf space there. Wherever I go, I see them. Let’s go 20, 30 years out, and: I would expect to see us eating as much protein as we do now; however, the proportion of it which is livestock-based will be less. As I say, is this a bad thing for the livestock industry? No, because there are opportunities in international export markets. Is it good for our health and nutrition? I think it probably is. I don’t think we were designed from a DNA point of view to be pushing 100 kilos of meat per person into our bodies, so I think we’re moving in a good direction.
Are there opportunities in Canada? Absolutely. Take, for example, the whole flexitarian movement. What is a flexitarian product? For example, in the U.K., more than in Canada at the moment — you’ll see it coming in Canada — flexitarian meat products are 50 per cent meat, 50 per cent pulses, haricots beans, for example. I can go into major supermarkets in the U.K. and buy pork sausages, which are 50 per cent lean pork and 50 per cent haricot beans. They are delicious, high in protein and high fibre and lower in fat. I think it’s a great development for Canada, particularly for the Prairie provinces, where we are world class at producing the lentils, the peas and the beans that will be an integral part of flexitarian meat products going forward, and at much higher levels than they are now. They’re a great opportunity.
Senator Kutcher: Professor Hughes, I much appreciated your insights and the lively manner in which you have delivered them. Thank you for that.
It seems that there is consumer confusion about the value and safety of processed food, and even what processed food actually means. This is important because the market is driven by consumer decision-making. Could you share with us any effective strategies that have been applied that substitute knowledge for confusion and help develop good food literacy for consumers?
Mr. Hughes: It’s tough. Consumers have a raft of perceptions about food, many of them bearing little or no relationship to reality in all sorts of areas. We were talking about this in Rome this week, as I mentioned, when I was working with some poultry guys, where there’s a perception, for example, that poultry is stuffed full of hormones and antibiotics. Yet, in most countries, hormones have been banned in poultry production for 10 years, but it still carries on. Never underestimate the degree to which consumers can be irrational. On the one hand, they are saying they want fresh, prepared foods, and then, as I mentioned, when it comes to their actual purchasing behaviour, they will do something quite different.
What I think is a helpful trend is this increasing desire from consumers to see traceability and transparency in their food. For example, even if it’s a processed food product, they are increasingly asking: Where did the ingredients come from? Not every consumer wants to work his or her way back through the supply chain to work out who farmed the ingredients. Those questions are increasingly being asked. For the ingredients, where did they come from? Who produced them? Were they a proper farmer? How was it produced? I think that’s a very positive development.
Your question, specifically, is complex because we have to accelerate the rate that we can bring the consumer back into better knowledge of how food is produced. For that, you have really got to start like an infant school. It’s longer-term progress, but I think we’re moving in the right direction. Maybe that doesn’t answer your question, but I think we are moving in the right way.
There are some brilliant little sub-examples of this. I was talking with a group the other day in the U.K., and one of my fellow speakers was a farmer. There is a program in the U.K. called Facetime a Farmer. There are 200 farmers around the U.K. who, every month, each visit the same class once a month, by Skype or by Facetime or whatever it might be. The seven-year-olds see them on their farm, and they discuss what they are up to and what time of the year it is. It’s turned out to be astonishingly popular with the children, who are fascinated. They know nothing about how food is produced, and shockingly, neither do the teachers. It becomes the highlight of the month. Little initiatives like this can have disproportional clout over the longer term, and it’s important we understand more about the food we put in our mouths.
[Translation]
Senator Dagenais: Thank you for coming, Mr. Hughes. From your presentation, we understand that Canada has invested large sums to sell the “Canada” brand. You spoke of the fact that the population in general and that of other countries do not know our products well. Merchants and importers, however, know them well. They buy them, but you say young people do not know them much at all. How much do you think this ignorance about our products costs our companies and producers?
[English]
Mr. Hughes: Of course, I can’t stump up a figure, but let me reverse the question and ask: How much money are Italy, France and Spain making because of knowledge of consumer products that relate to food — and, again, often quite wrongly? For example, if you take olive oil, for one reason or another, Italy’s olive oil is perceived as being premium, when, in fact, in most cases, Italian olive oil is a concoction that includes Greek and Spanish olive oil. They have captured the mind’s eye of the consumer.
From a Canadian point of view, too, it sort of sticks in the craw, doesn’t it, that you can say, even to Canadians, “Would you like the Canadian pasta or would you like the Italian pasta?” And they will say, “I think we will go for the authentic pasta.” Yet, this is pasta that is made in Italy with wheat imported from Canada. That’s a sort of giddy limit, isn’t it.
You mentioned the brand Canada. I think brand Canada is important, even though they don’t know much about the sort of food that we actually produce. Why? Because there is a halo, to a large extent, around Canadian food. The expectation is that Canada produces good, safe food with high integrity, et cetera. As I mentioned, as people increasingly ask questions about where the ingredients come from, it is a strong positive if they can say the wheat or the canola or whatever does come from Canada. Don’t underestimate the value of the brand Canada.
You have to be careful of what you do brand. I think the earlier speaker was talking about brand Nova Scotia. Again, let me tell you — and I’m sure you know — never underestimate how little people know about your country, even well-educated, intelligent people. If you ask them about the provinces of Canada, they have no clue. I do a lot of work in Australia, which I often think is very similar to Canada in terms of its commodity orientation. Just like Nova Scotia, let’s take Tasmania. The Tasmanians will say, “Make sure it says on the bottle ’Made in Tasmania.’” I’m careful to point out to them to remember that most people outside of Australia don’t know the difference between Romania and Tasmania, so don’t confuse them. I know and love Nova Scotia and have visited and worked there, but for most people, they would have no idea. I’m not decrying their brand. It’s clearly a great brand in Canada, and it might be a great brand in Scotland, too, where they understand the connection. But never underestimate the ignorance of your customer.
Senator C. Deacon: Thank you very much, Mr. Hughes, for your informative and animated presentation. It has been fantastic.
You have just gone to where I want to be, which is branding and the importance of branding to enabling access to customers and building that strong, loyal relationship with customers. In the tech start-up community, we have had a real understanding of that for quite sometime, but I don’t know that we have really understood how important it is in the food industry in order to scale into the highest value opportunities that exist and to really focus on what we need to exploit in the brand and build that brand. Could you just take us further down that road, because for me, that’s a hugely important point.
Mr. Hughes: Right. I bashed on a little bit about big food, bad food. If I went back 10 years ago, then the idea for most big food companies, for the General Mills or for PepsiCo, was to say let’s rationalize the number of brands we have got. Let’s focus on 10, 20 or 30 mega brands, brands with a billion dollars worth of sales at turnover because they are intrinsically more profitable than the smaller brands.
What we have seen more recently is a complete turn around to that, and I think you know the reason why. It is that consumers, particularly these pesky millennials, take the view that, “Hang on, these big brands and the companies that own them don’t share our values. We have got to set a values that just don’t relate to yours. And what is more, we don’t like your values.” The success of these smaller start-up companies has been that customers have increasingly felt comfortable with them: “We think you’re on our side. We like to buy from and support companies that share our values.” That’s what branding is about. It is saying, we stand for something and it’s in concert with what our customers stand for.
I think you’re seeing a huge turn around in the global food industry, led by the Unilevers, to the lesser extent Danone and Nestle, where they’ve suddenly understood we have to redesign our model. We have to produce food products that consumers want to eat, which are really tasty. Remember, we pop them in our mouths and we want them to be tasty and nutritious. But at the same time, they have to be good for the environment, good for the local community, good for the farmers, good for the animals. Companies that are addressing this and managing to communicate this to their consumers are seeing success. I think it’s possible for big companies to do this as well as little companies, but it has been led by little companies who really understood how it is to get that attachment with your customer, and so the Unilevers have had a lot to learn from these little start-ups.
Senator C. Deacon: So authenticity and traceability are critical to establishing that higher value with the end customer.
Mr. Hughes: Authentic, transparent, traceable are part and parcel of doing business now. You have no place to hide. As we all know, if there is an issue or a problem with your product, then the world knows in seconds. It takes years to build up big, strong brands, and it takes seconds to destroy them.
Senator C. Deacon: Thank you very much.
The Chair: Thank you. Professor Hughes, I would like to thank you for your participation today. As noted by other panelists, we have covered a lot of ground. We greatly appreciate that. Thank you very much.
Mr. Hughes: Thanks very much for the opportunity.
The Chair: You’re welcome.
Members of the committee, I want to take a few minutes. As was noted by Senator Mercer earlier on, this potentially could be the last meeting that our deputy chair, Senator Maltais, is with us. I have to ask permission to have a meeting on Tuesday evening, so we don’t know if that will be granted or not. I hope it will later today. But if that’s the case, I think by next Thursday, we will have a replacement member on the committee.
So we’re looking forward to seeing you Tuesday night, but in case you’re not here, I wanted to take this opportunity to publicly thank you for your service on the committee. Senator Maltais has been on this committee and served many roles over the years. He is the immediate past chair, and under his reign, there were some pretty good reports produced for this committee that I think have been well received throughout the country. I have appreciated his mentorship and his experience on the committee. As you know, he is a well-travelled senator. Whenever we have even travelled within Canada, he seems to know somebody everywhere or know of their products or their industry. It has been fascinating to have worked with you. We’re going to miss you, I must say. I would like to give you a few moments now, if you have any goodbyes to say to the committee. Then if anyone else has anything to say, we’ll do that too.
[Translation]
Senator Maltais: Thank you very much, Madam Chair, for those kind words. Yes, I have been a member of the agricultural committee for more than seven years. I worked with Chair Mockler. I’ve been chair of the committee and I’ve also worked with you, Madam Chair. Over all of these years with the Standing Senate Committee on Agriculture and Forestry, two things have stood out for me over all: the consumer and the producer.
These aren’t parallel columns. They can’t work in isolation. They have to meet at some point in order to provide consumers with quality products and ensure that farmers have an income. Agriculture is primordial in Canada. It may get criticized, but every morning we need croissants, muffins, eggs, toast and jam. We also need vegetables, lettuce, and meat. We will always need agricultural producers.
Agriculture evolves over the years and will continue to evolve. It has to evolve in the direction of consumers’ demands, and increasingly, producers are going to have to grow organic products, which will reduce their GHGs, even minimally.
Madam Chair, I would like to thank the members of the committee. I will allow myself a brief aside. Senator Mercer and I have sat together from the beginning. We travelled a great deal in Canada, the United States and abroad, even in China. Senator Mercer has always been very supportive. He is a great agricultural humanist. We’ve enjoyed discovering many products. We’ve visited egg producers, apple producers, wine and blueberry producers. He has given us a better understanding of Nova Scotia.
I want to thank him. I know that these words are recorded and that he will be able to hear them. I would also like to thank my three Conservative colleagues, who are almost always present at our meetings, except when we are supposed to attend two meetings at the same time. It isn’t always easy, but they are almost always in attendance. Jean-Guy, Norm, Senator Oh, I thank you for the trust you placed in me. I want to thank all of the new members of the committee: Senator C. Deacon, Senator Kutcher, Senator R. Black, with whom we had a lot of fun, and Senator Moodie, whom I did not get a chance to know better. I urge you to continue your excellent work under our very able chair, who does excellent work.
I think the big winners from all of the work you will accomplish over the next year will not be yourselves but the Canadian population. I was struck by something Mr. Wolfson said in his presentation concerning poverty reduction.
There is much talk about this, a great deal, in fact. What are we going to give those people? Over the next few years, look at our agricultural surplus rather than studying what is happening in other countries. We have to look at what is going on in our own country. I invite the new senators to go and walk around the Byward Market. You don’t need to go far, it’s about 500 feet away from here. If people reach out to you 50 times, there’s no point going to see what’s going on in the far reaches of other countries. Let’s look at what is going on here, please. Our agriculture produces surpluses. Perhaps we should look at how we can feed these people. That is the message I want to leave you with. Thank you very much for your attention.
[English]
The Chair: Thank you. Are there any other comments? I know that’s a hard act to follow. We appreciate your input and we’re going to miss your input, so happy retirement.
Senator Doyle: He will not retire.
The Chair: He’ll not retire. He’ll keep busy.
Senator Oh: We’ll call him back.
The Chair: There is an idea.
Thank you, folks.
(The committee adjourned.)