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37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Thursday, June 12, 2003

1110

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food)

Mr. Simon Kennedy (Director General, Policy Planning and Integration, Strategic Policy Branch, Department of Agriculture and Agri-Food)

1115

Mr. Phil Macdonald (National Manager, Environment Release Assessments, Plan Biosafety Office, Canadian Food Inspection Agency)

1120

The Chair

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

Mr. Phil Macdonald

Mr. Howard Hilstrom

Mr. Simon Kennedy

Mr. Howard Hilstrom

Mr. Simon Kennedy

1125

Mr. Howard Hilstrom

Mr. Simon Kennedy

Mr. Howard Hilstrom

Mr. Phil Macdonald

Mr. Howard Hilstrom

The Chair

Mr. Bernard Bigras (Rosemont—Petite-Patrie)

1130

Mr. Tom Richardson

Mr. John Culley (Program Director, Research Planning and Coordination, Department of Agriculture and Agri-Food)

Mr. Bernard Bigras

Mr. John Culley

Mr. Tom Richardson

1135

The Chair

Mr. Tom Richardson

The Chair

Mr. Tom Richardson

Mr. Phil Macdonald

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mr. Simon Kennedy

Mrs. Rose-Marie Ur

Mr. Simon Kennedy

Mrs. Rose-Marie Ur

Mr. Simon Kennedy

Mrs. Rose-Marie Ur

Mr. Simon Kennedy

Mrs. Rose-Marie Ur

Mr. Simon Kennedy

1140

Mrs. Rose-Marie Ur

Mr. Phil Macdonald

Mrs. Rose-Marie Ur

Mr. Phil Macdonald

Mrs. Rose-Marie Ur

Mr. John Culley

Mr. Phil Macdonald

Mrs. Rose-Marie Ur

Mr. Phil Macdonald

Mrs. Rose-Marie Ur

Mr. Phil Macdonald

Mrs. Rose-Marie Ur

The Chair

1145

Mr. Dick Proctor (Palliser, NDP)

Mr. Phil Macdonald

Mr. Dick Proctor

Mr. Phil Macdonald

Mr. Dick Proctor

Mr. Phil Macdonald

Mr. Dick Proctor

Mr. Phil Macdonald

Mr. Dick Proctor

Mr. Phil Macdonald

Mr. Simon Kennedy

Mr. Dick Proctor

Mr. Phil Macdonald

1150

Mr. John Culley

Mr. Dick Proctor

Mr. Simon Kennedy

Mr. Dick Proctor

Mr. Simon Kennedy

The Chair

Mr. Howard Hilstrom

Mr. John Culley

Mr. Howard Hilstrom

Mr. John Culley

Mr. Howard Hilstrom

1155

Mr. John Culley

Mr. Howard Hilstrom

Mr. Simon Kennedy

Mr. Phil Macdonald

Mr. Howard Hilstrom

Mr. Phil Macdonald

Mr. Howard Hilstrom

Mr. John Culley

Mr. Howard Hilstrom

Mr. John Culley

Mr. Howard Hilstrom

The Chair

Mr. Bernard Bigras

Mr. Phil Macdonald

Mr. Bernard Bigras

1200

Mr. Phil Macdonald

Mr. Bernard Bigras

The Chair

Mr. Claude Duplain (Portneuf, Lib.)

Mr. John Culley

The Chair

Mrs. Rose-Marie Ur

The Chair

Mrs. Rose-Marie Ur

Mr. John Culley

The Chair

Mrs. Rose-Marie Ur

Mr. John Culley

Mrs. Rose-Marie Ur

Mr. John Culley

1205

The Chair

Mr. Tom Richardson

The Chair

Mr. Kerry Preete (Vice-President, Monsanto Canada Inc.)

1215

1220

The Chair

Mr. Weldon Newton (President, Keystone Agricultural Producers, Canadian Federation of Agriculture)

1225

The Chair

1230

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

1235

Mr. Kerry Preete

The Chair

Mr. John Dossetor (Vice-President, Government Affairs, Monsanto Canada Inc.)

The Chair

Mr. Howard Hilstrom

Mr. Kerry Preete

Mr. Howard Hilstrom

Mr. Kerry Preete

Mr. Howard Hilstrom

Mr. Kerry Preete

Mr. Howard Hilstrom

Mr. Kerry Preete

Mr. Curtis Rempel (Roundup Ready Wheat Lead, Monsanto Canada Inc.)

Mr. Howard Hilstrom

1240

Mr. Kerry Preete

Mr. Howard Hilstrom

Mr. Kerry Preete

The Chair

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mr. Weldon Newton

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

1245

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

The Chair

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

The Chair

Mr. Weldon Newton

The Chair

Mr. Bernard Bigras

Mr. Kerry Preete

The Chair

Mr. Weldon Newton

Mr. Bernard Bigras

The Chair

1250

Mr. Weldon Newton

Ms. Jennifer Higginson (Trade Policy Analyst, Canadian Federation of Agriculture)

The Chair

Mr. Bernard Bigras

Mr. Kerry Preete

The Chair

Mr. Weldon Newton

The Chair

Mr. Bernard Bigras

The Chair

Mr. Weldon Newton

The Chair

1255

Mr. Kerry Preete

The Chair

Mr. Dick Proctor

Mr. Weldon Newton

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

Mr. Weldon Newton

Mr. Dick Proctor

Mr. Kerry Preete

Mr. Dick Proctor

Mr. Kerry Preete

1300

Mr. Curtis Rempel

Mr. Kerry Preete

The Chair

Mr. Weldon Newton

The Chair

Mr. Claude Duplain

The Chair

Mr. Kerry Preete

Mr. Weldon Newton

1305

The Chair

Mr. Weldon Newton

The Chair

Mr. Claude Duplain

The Chair

Mr. Bernard Bigras

Mr. Kerry Preete

The Chair

Mr. Bernard Bigras

Mr. Kerry Preete

Mr. Bernard Bigras

The Chair

Mr. Kerry Preete

1310

The Chair

Mr. Weldon Newton

The Chair

Mrs. Rose-Marie Ur

Mr. Kerry Preete

Mrs. Rose-Marie Ur

Mr. Kerry Preete

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 038

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, June 12, 2003

[Recorded by Electronic Apparatus]

Á (1110)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, can we bring the meeting to order.

I am pleased this morning to welcome to the committee members from the Department of Agriculture and Agri-Food and from the Canadian Food Inspection Agency to deal with the matters of genetically modified wheat and its effect on Canadian agriculture.

We have with us this morning Mr. Tom Richardson, who is the acting assistant deputy minister, strategic policy branch; and Simon Kennedy, director general, policy planning and integration, strategic policy branch.

From the Canadian Food Inspection Agency we have Mr. Phil Macdonald, national manager, environment release assessments, plan biosafety office.

Welcome, gentlemen. You may begin your presentation, and afterwards we will have questioning, keeping it as succinct as we can. We have one hour for your presentation and receiving questions.

Mr. Tom Richardson (Acting Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chair. Simon and Phil will both make some very brief introductory comments. I would also like to mention that we have some other officials here, namely specialists in trade and science, etc., so we're well prepared to answer your questions.

Simon will start.

Mr. Simon Kennedy (Director General, Policy Planning and Integration, Strategic Policy Branch, Department of Agriculture and Agri-Food): Thanks, Tom.

Thank you, Mr. Chair and members of the committee. We appreciate the opportunity to come and talk to you about this issue today. I would like to make some brief opening remarks to give some context to how we are looking at this issue.

Canada's success in agriculture has depended on the sector's ability to innovate and to make use of new scientific applications. In the early 1900s, for example, careful selection of the best samples from a cross of the Red Fife and Hard Red Calcutta wheat varieties gave rise to a new variety called Marquis. The resulting strain produced high yields and matured early, making wheat production in western Canada viable given the region's short growing season. The creation of the Marquis and subsequent varieties was crucial to the settlement and economic development of the prairie region.

To take another example, many years later Canadian plant breeders developed a genetic variation of rapeseed called, as you all know, canola, which has become an increasingly important Canadian crop that has helped diversify the sector and create new export markets.

A final example is that government scientists have bred cherries for later harvesting. This innovation has allowed Canadian producers to capture premium world markets and has helped revitalize and expand the cherry industry in Canada.

Some innovations have yielded environmental benefits. New agronomic methods have allowed for zero tillage where cultivation does not require breaking soil and exposing it to wind erosion. Zero tillage has been particularly beneficial during recent drought periods in the Prairies.

The need to innovate and take advantage of new products and technologies is no less strong today, giving the increasingly competitive nature of global trade in agriculture. Advances in food science and technology, especially in the area of biotechnology, have the potential to usher in a wide variety of new products that serve a diversity of important purposes. Techniques such as somatic cell nuclear transfer, a technique that produced Dolly the sheep and Starbuck 2 the dairy cow, and transgenics, which involves transferring genes between species, are developing rapidly and being applied to both crops and animals. Rapid advancements in genomics have applications for agriculture in the future. On the horizon are agricultural crops that are resistant to drought, cold, salt, pests, and disease, and crops with enhanced quality and nutritional attributes.

Beyond food production, agriculture has the potential to be a cost-effective means of producing medicines and industrial products. These developments could have important benefits for the quality of life of Canadians and for the economy and for producers. Many new products could also have significant environmental benefits.

At the same time, however, consumers are becoming increasing discerning and discriminating about the specific attributes they demand in their food products. To take some examples of which you are all familiar, there is a growing market in organic products, some consumers are demanding pesticide-free and GM-free products, and there is a growing concern around the world about the treatment of animals in the value chain.

To stay competitive, industry must strive to meet growing consumer demands for product differentiation and the ability to provide proof that products meet specific specifications of the consumer.

This brings us to GM wheat. Roundup Ready wheat, a GM variety that is tolerant to glyphosate, a broad-spectrum herbicide product, has been submitted to Health Canada and the Canadian Food Inspection Agency for food, feed,and environmental safety approval. The Roundup Ready technology presents possible agronomic and economic benefits for farmers. These include reduced pesticide use, increased yields, greater quality consistency, simplicity of use, and effective weed control. Some of these benefits would translate into environmental advantages.

Roundup Ready technology has been applied to varieties of canola, corn, and soybeans, all of which have been approved and commercialized in Canada. However, there is some question about how receptive our markets would be to Roundup Ready wheat. For example, the Canadian Wheat Board has indicated that 82% of its current foreign customers have indicated they will not buy GM wheat. The Canadian Wheat Board also estimates that some of these markets will not buy any of our wheat if Roundup Ready wheat enters the production and handling system, citing concerns about the grain handling system's ability to segregate GM from non-GM varieties.

In light of rapid developments in technology and new products under development, roundup ready wheat will not be the last new product, on the one hand, that promises significant benefits, nor the last new product, on the other hand, that could pose challenges to industry if industry lacks the means to allow for product differentiation. Indeed, many of these products are difficult to distinguish from conventional ones, and delivery channels currently are not designed to keep products separate in all cases through the production chain.

Therefore, an interdepartmental effort, led by Agriculture and Agri-Food Canada, is underway to develop a framework to help industry ensure that new products of agricultural innovation that are approved for health, safety, and environmental impact be introduced in a way that is sensitive to demands for product differentiation. In the development of this framework, the approach will be built on two fundamental principles.

First, government's commitment to a science-based regulatory system remains paramount. Canada's current rigorous science-based regulation of new products for health, safety, and environmental impact is world renowned and respected for its effectiveness.

The second fundamental principle is that innovation in agriculture must lead to economic development and benefits to Canadians. As mentioned earlier, innovation is critical for long-term success of agriculture in Canada and has the potential to serve a variety of important purposes.

In the course of developing this framework, key stakeholders will be consulted extensively. A variety of proposals for how to address concerns about the introduction of some new products of innovation have been advanced by stakeholder groups here at this committee today and directly with the department. These proposals will be considered closely in the course of developing the new framework.

In conclusion, Minister Vanclief has stated in the House of Commons that he's committed to considering options for minimizing the likelihood of negative market impact associated with the introduction of innovative new agricultural products. Government officials are developing a framework to help industry ensure the responsible commercialization of these products.

Phil Macdonald will now provide some opening remarks on behalf of the agency.

Á (1115)

Mr. Phil Macdonald (National Manager, Environment Release Assessments, Plan Biosafety Office, Canadian Food Inspection Agency): Thank you, Simon. And thank you, Mr. Chair, for providing me the opportunity to address you today regarding the Canadian Food Inspection Agency's role in the safety assessment of genetically engineered wheat.

First of all, regulatory functions of the agency are separate from the agriculture sector promotion function of Agriculture and Agri-Food Canada. These functions are kept independent of one another by the assignment of different distinct mandates of the departments and the agencies.

The Canadian Food Inspection Agency is a science-based regulator in this context. The Canadian Food Inspection Agency has the responsibility for assessing the safety of agricultural products and foods that are part of Canada's food production system. When conducting safety assessments of seeds, plants, livestock feeds, veterinary biologics, and fertilizers, the Canadian Food Inspection Agency considers human, animal, and environmental safety aspects.

Health Canada plays a role in the review of all novel food products before they can be sold to consumers. This rigorous science-based review process is applied to traditionally developed products with new characteristics and biotechnology-derived products alike.

As you know, the Canadian Food Inspection Agency has received an application from Monsanto Canada Incorporated for novel Roundup herbicide-tolerant genetically engineered wheat. The agency's plant biosafety office is currently in the midst of conducting an environmental safety evaluation for the potential environmental release of this wheat, along with a livestock feed evaluation.

Before authorizing the environmental release of this genetically engineered wheat for general cultivation, the Canadian Food Inspection Agency biosafety scientists will evaluate the environmental safety data provided by the applicant, and this will be with regard to characterizing the new trade, which in this case will be the novel herbicide tolerance; characterizing the new plant, including of course the complete molecular characterization; and examining the environmental interactions of the plant and how these may be changed by the presence of the novel trade.

We consider the following: does the plant have the potential to become a weed of agriculture or to be invasive of natural habitats; is there a potential for a gene float of wild relatives, and what would the consequences be if this occurred; does the plant have the potential to become a plant pest or to affect the health of other plants in Canada; is there a potential impact on non-target organisms, such as native butterflies or other fauna; and finally, are there other potential impacts on biodiversity?

The basis of these evaluations is our knowledge of conventional wheat and the current cultivation practices of this product.

For this genetically engineered Roundup herbicide-tolerant wheat, the agency's specific focus will be on how the addition of another Roundup-tolerant crop will fit into current farm management practices.

Canada already experiences widespread cultivation of Roundup-tolerant canola, and commonly canola and wheat are grown in rotation. With this reality, the agency will carefully evaluate the management of this new Roundup-tolerant crop and its possible adverse effects on current no-till farming practices that rely heavily on the use of Roundup herbicides as a sustainable farming practice. The latter is currently key to minimizing soil erosion.

The Canadian Food Inspection Agency will be collaborating with its colleagues at Health Canada's Pest Management Regulatory Agency to address these issues regarding this new use of the Roundup herbicide for wheat.

As for the livestock feed safety evaluation, the Canadian Food Inspection Agency's feed section is engaged to ensure that the GE wheat is as nutritious and safe as conventional wheat when used as livestock feed.

The bottom line for the agency is that the applicant must meet all the necessary criteria to demonstrate that this new wheat's environmental, human, and livestock feed safety is assured and that all of the scientific questions are completely addressed.

At this point in time, we are at the early stages of carrying out an environmental assessment of Roundup-tolerant wheat, and environmental issues must be addressed before it can be authorized.

For your information, the Canadian Food Inspection Agency generally communicates closely with its counterparts at the United States Department of Agriculture on the scientific issues surrounding the environmental release of any plant with a novel trade. Roundup-tolerant wheat is no exception. The agency is maintaining frequent exchanges of views with U.S. regulators to share scientific expertise and regulatory concerns.

The Government of Canada's policy is that no plant with a novel trade, such as this genetically engineered wheat, can be commercialized in Canada before approvals are received; in other words, the environmental release, livestock feed use, and novel food approvals are all successfully completed. In addition, for many crops, such as wheat, variety registration from the Canadian Food Inspection Agency is also necessary before a crop can be legally sold.

The decision to apply for environmental feed or food approval and for a variety registration test rests with the breeder or owner of the novel plant. The Canadian Food Inspection Agency does not solicit applications. Its obligation is to assess all applications it receives according to rigorous science-based evaluation procedures.

Á (1120)

Food safety and public health are of foremost importance to the CFIA. For this reason, our regulatory system for biotechnology-derived products is science based and stringent, and founded upon principles developed through technical and broad-based stakeholder consultations. Many organizations have voiced their concerns over potential market impacts of the introduction of genetically engineered wheat in Canada. The CFIA has no authority to consider socio-economic factors such as market concerns in its regulatory activities; however, we do have authority regarding scientific safety issues, and we'll be addressing these as they relate to this novel herbicide-tolerant wheat.

In conclusion, I hope you'll understand that it would be inappropriate for me to comment on a specific application by Monsanto. We welcome your consideration of these issues.

Thank you very much.

The Chair: Thank you, Mr. Macdonald.

Mr. Richardson, you're through with your presentations? We will now begin questioning.

Mr. Hilstrom is first, for seven minutes. Let's try to be succinct, so we can get as many questions as we can this morning.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Thank you, Mr. Chair.

On the issue of safety of GM foods, the European Union recently released a scientific report saying they are as safe and as healthy as any food grown without the use of GMO. Is that true? Are you aware of those reports?

Mr. Phil Macdonald: Thank you, Mr. Chair.

I am aware of those reports. Although food is obviously the responsibility of Health Canada, we are current with the science. Certainly, for all the things that we've approved currently in Canada, we have conducted a thorough safety assessment. These things have their full approvals.

Mr. Howard Hilstrom: Yes, safe and healthy.

Greenpeace's stand on GMOs is that it would like to get rid of all the GMOs inside Canada, the corn, soya bean, and canola. The only thing I can say about that agenda item is that Greenpeace is a real screwball outfit. Is that going to happen? Are we going to get rid of all the GM foods if it gets its way? Is Canada going to go that way?

Mr. Simon Kennedy: Well, as Phil has indicated, we have a science-based assessment process. A lot of the products that are out there have gone through that and have been determined to be safe and environmentally responsible and so on. So the question as to what happens will be determined by the marketplace. It will be determined by what consumers want. If consumers en masse decided, for whatever reason, that these were products they didn't want, then there wouldn't be any. But other than that, there's no basis upon which to do that at all.

Mr. Howard Hilstrom: That's a good policy, because you just stated the Canadian Alliance policy as well. I believe the government is right on this and that you folks are very right.

Let's talk about wheat and other GM crops. There could be many more coming down the line, so we'll talk in general terms.

The Wheat Board has been putting forward the idea that there should be all these other non-scientific considerations. My question is, why would incorporating market acceptance issues directly into the regulatory approval process be any different from the trade barriers put in place, for instance, by the EU on our beef? Is that not what subjective things would be considered to be, non-tariff trade barriers?

Mr. Simon Kennedy: We're certainly looking very carefully at the proposal the Wheat Board has put on the table, along with the proposals that others have advanced, but the linkage you've identified is certainly of concern to us as well. We have a science-based system, and if we begin to insert directly into the science-based system other factors that are really based more on this issue of consumer preference and so on, then we do open up a potential vulnerability for Canada, because we've been very successful in sticking to a science-based system that serves us very well internationally.

Á (1125)

Mr. Howard Hilstrom: The Canadian Wheat Board has a collective mentality that it feels everybody is better off if everybody's in the same boat and there's only one marketer. As a result, the weight that could be put on its opinion, being the only marketer of wheat for western Canadians, should be taken with a big grain of salt.

If we were to have 10 marketers out there, maybe the opinion would be that we could service x number of customers with x amount of tonnes. They would be happy to get this because they would see no problem with it or even an advantage.

So are you trying to find out the opinion of customers of Canadian wheat besides the Wheat Board, which has a very vested interest in maintaining its power over western Canadian farmers?

Mr. Simon Kennedy: We have certainly received representation from a variety of interests--people you might characterize as overseas customers of Canadian wheat, domestic growers, and a variety of sectors in agriculture. There is a diversity of opinion in terms of how they wish to pursue the issue of introducing this kind of new technology.

We do, however, have concerns about the proposal that you introduced concerning the application of a cost-benefit analysis directly into the regulatory system. I think the government certainly understands what is driving the Wheat Board to make that proposal, which is that regardless of what the scientific assessments may say, consumers often make their purchasing decisions and state their preferences, not just in terms of what the objective scientific assessment would indicate but for a wide variety of reasons.

We have certainly done some work within Agriculture and Agri-Food Canada. We are aware of the work that is going on internationally. There is evidence to suggest that there are large groups of consumers who have difficulty with Roundup Ready wheat, and we have to take that very seriously. Our objective is to ensure that these two new technologies produce benefits for the industry, but in order for that to happen, we need to ensure that those who wish to purchase products from that technology have the chance to do so. However, those who wish to have the conventional products must also be able to do that because we don't want to damage one market to secure another.

Mr. Howard Hilstrom: I have one last question. Around 80% or 85% of Canada's exports go to the United States. We have to be cautious even though we don't send that much wheat down there. It is an important customer, but we have to be cautious with our overall relationship with the United States from Canada's whole economic interest.

My question is, how coordinated is the application for crops such as wheat? How coordinated is our approval process with the United States so that neither one of us jumps out in front of the other and approves GMO wheat or GMO flax before the other?

Mr. Phil Macdonald: Mr. Chair, that's an excellent question. We have a long and friendly working relationship with our colleagues at the USDA. We have a history of technical bilaterals. We have harmonized our technical information so that we have common scientific information and technical criteria for the assessment process.

As a general practice, we work very closely with our colleagues at USDA FAS, who are also responsible for the environmental release issues. In fact, this wheat file is no exception. We have worked quite closely with them. We continue to share scientific information as well as concepts and technical expertise.

Mr. Howard Hilstrom: Nobody will authorize it before the other country does, because we're in a North American market here.

The Chair: Thank you, Mr. Hilstrom.

Mr. Bigras.

[Translation]

Mr. Bernard Bigras (Rosemont—Petite-Patrie): Thank you, Mr. Chairman.

Thank you for being here with the committee. I think it is a matter that is of interest to committee members. We have been wanting to hear your views on this for a long time.

What struck me when I read the file was the close relationship that exists between the Canadian government and Monsanto. Your agency provides genetic public property material to Monsanto. You have contracts with Monsanto for field tests on genetically modified wheat. You invest a minimum of $800,000 in Monsanto. So the least we can do is try to ensure some transparency in all that.

Could you tell us about the contract terms your agency has with Monsanto? Are you able to tell the committee about the terms of those agreements?

Á (1130)

[English]

Mr. Tom Richardson: Thank you, Mr. Chair.

I would ask John Culley from our research branch to respond to that. He's been involved with the contracts and he can provide the information to the committee.

Mr. John Culley (Program Director, Research Planning and Coordination, Department of Agriculture and Agri-Food): In the interests of time, I'll respond in English, if that's okay with the chair.

Mr. Kennedy pointed out that for many years we've had a long relationship in developing innovative products for Canadian producers and for the Canadian agrifood sector. This continued through canola. On the GM wheat, we agreed six years ago to participate in a project in which we provided our breeding germplasm. For example, the first was Marcus wheat. We provided the company with breeding expertise in germplasm. The material that was used in the wheat project was also released to Canadian producers in the traditional form. It's AC Superb, and that's now well used across western Canada.

We've worked with Monsanto to help them develop their product. In terms of the agreement, we did enter into an agreement in 1997, as Mr. Bigras has indicated. That project has been completed. We are now fulfilling the terms in terms of providing information back to the company, but it is the company that is responsible for the commercialization of that product. They will make the decision whether to bring it forward for registration and for commercial sale.

So with all due respect, I would suggest that they talk to the company about the terms of that release.

[Translation]

Mr. Bernard Bigras: Since the agency is Monsanto's partner and public funds were invested, I assume the committee is entitled to know the terms of that agreement, in their entirety. So I would ask you to table the contract so that the committee can be informed of the terms, since you are a party to the agreement, since you are a public organization and you are accountable to the public.

Secondly, in the regulations pertaining to the inclusion of a wheat varietal, can you confirm to us that over the past few years you changed the rules, and specifically the definition of merit in clause 3.3 of the operational procedures manual, entitled “Voting Procedures”? Let me quote that section: “Candidates presenting risks for the production or marketing of their own class or another class can be rejected, regardless of their merit in other respects.”

Why did you amend the registration rules? Why did you withdraw article 3.3? Is it not precisely to give Monsanto more opportunities over the coming years for its genetically modified wheat? Why did you amend that section? You know full well that the amendment is very controversial.

[English]

Mr. John Culley: In terms of the second part of the question, I would have to refer that to my colleague at the Canadian Food Inspection Agency, which is responsible for variety registration.

In terms of the terms of the contract, for the last 10 or 12 years we've been involved in collaborative research projects with the private sector. Over half of these are with public grower organizations. A few are with large companies such as Monsanto. The terms of our contract with them are that the exact details of the contract remain confidential and business confidential. There's a series of regulations under the access to information law that apply to that. My understanding is that those things would have to be done in a confidential manner.

Mr. Tom Richardson: Mr. Chair, we certainly feel we're following the rules on commercial confidentiality, but if you so wish, we would certainly provide you with our understanding of how we are adhering to those laws for the committee's consideration. We can certainly provide that information. Our understanding is that we are following the obligations within that law.

Á (1135)

The Chair: In response to Mr. Bigras' request for information, we quite understand that the confidentiality of certain matters that might be requested to come before this committee would be not in keeping with the--

Mr. Tom Richardson: Right. But if there is concern that we aren't following the law as it is, we could submit to you how we do it, what we understand the process to be.

The Chair: I think that would be in keeping with Mr. Bigras' request for information.

Mr. Tom Richardson: Okay, we'll do that.

Phil will answer the second question.

Mr. Phil Macdonald: Mr. Chair, I apologize as well, but I would like to answer in English.

With regard to the mandate of the prairie recommending committees, they are recognized under the seeds regulations by the minister to oversee the scientific assessment of new varieties. Their mandate is to recommend varieties to the variety registration office at the CFIA, which is responsible then for accepting those recommendations.

The committee had overstepped its mandate, including the marketability clause. The CFIA let them know that this was outside the mandate given to them under the seeds regulations.

The Chair: We are out of time. Maybe we'll do that in another round.

Ms. Ur, please.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): The debate about GM wheat, is it the same debate in the United States as what we are having here in Canada?

Mr. Simon Kennedy: We are aware of concerns that have been raised in the U.S. about this technology as well and about the issue of consumer acceptance. As part of our efforts to develop the framework I described earlier, we certainly want to be talking to the Americans, the U.S. government and a wide variety of stakeholders. In moving forward, that is one of the things we would certainly be looking at.

Mrs. Rose-Marie Ur: Dr. Hucl, a professor at the University of Saskatchewan, indicated a 1% threshold for tolerance level. Is that the agreement by the department?

Mr. Simon Kennedy: I don't think we are at that stage right now, talking about that level of detail. Certainly tolerance levels and segregation systems and those sorts of things are part of the mix of tools that are being used now by the industry to ensure that they can deliver to customer specification. I think those kinds of discussions around those sorts of things will naturally be part of what we look at as part of this framework. In terms of the specifics around wheat or what the tolerance level might be, again that is a level of detail that we are certainly not at, at the moment.

Mrs. Rose-Marie Ur: Right. There are many unknowns as to the effectiveness of the segregation system for GM varieties. Do you have any idea? Have you looked at the costing that would result from implementing a segregation system for the GM varieties? Who would bear the cost?

Mr. Simon Kennedy: One of the things I know is that in part of the process of developing the framework we have a number of work groups that will be looking at issues such as the ones you have described. They will be looking at international trade issues, looking at the issue of the kinds of conditions that we might be looking to industry to meet before a product was brought into commercial use. Then there would be the sorts of things such as costs, who would bear the costs, and what the costs might be under various scenarios, and those sorts of things.

It is a pretty significant exercise, and we are doing that work now. I don't have that kind of detail at the moment. This is something we will have to be doing.

Mrs. Rose-Marie Ur: How much referencing are you taking from the primary producers when you are looking at that analysis?

Mr. Simon Kennedy: Certainly one of the things we want to do as part of the consultations is talk very closely with the primary production sector.

Mrs. Rose-Marie Ur: I think that's very important.

Also, in your presentation you said you were developing a framework. Can you expand on that?

Mr. Simon Kennedy: If I could just describe a little bit further to the opening remarks, our sense when we look at the evidence--and it certainly bears it out--is that innovation has served Canada very well. Innovation has served the agriculture sector very well over many years. When we look at the kinds of innovative technologies and developments that are coming into use today and that we foresee for the future, we see tremendous promise for the Canadian economy, for the quality of life of citizens, and for the agriculture sector, including primary producers.

At the same time, we are also well aware that some of these new technologies are not necessarily well received by all consumers. As an export-oriented sector, agriculture has to be very mindful obviously of where the international consumers are. In developing a framework, we don't want to have the government taking the decisions in terms of what the market wants. We really feel that is up to the industry and it's up to the market to decide. We don't want the government in the position of saying that consumers really don't want this product so the government will step in and prevent it from being introduced. Our role is health, safety, and science-based assessments.

At the same time, we are asking if there's a mechanism or some means by which we could facilitate industry coming together with some of these products that may cause controversy in international markets and working with the industry to develop a solution that would work for the industry. It is not about preventing the introduction of products; it's about what are the basic conditions you might want to have in place before the products are introduced so that we preserve market access and we don't run into the situation that some are fearing with GM wheat, that this is a technology that's proven in crops that exist today.

It's a technology that has potential benefits. If it were to be approved, there may well be producers who want to have access to those benefits. At the same time, we need to ensure that if there are markets that have significant concerns about that product, they have the opportunity to keep getting the traditional varieties of wheat that we have now so that the benefits flow to everybody.

Á (1140)

Mrs. Rose-Marie Ur: I'll turn my questioning to Mr. Macdonald.

I believe this is under your purview. What research is currently being done at Swift Current?

Mr. Phil Macdonald: As far as GM wheat trials go, we've authorized this year some trials for Roundup Ready wheat, for research. I'm not aware of what trials may or may not be going on at Swift Current, I'm sorry.

Mrs. Rose-Marie Ur: So you don't know how many test sites in Canada are currently used for research on GM wheat?

Mr. Phil Macdonald: For this year, no, I don't know the exact numbers. I could bring those numbers to the table.

Mrs. Rose-Marie Ur: I think those questions were asked at a previous meeting when we met--

Mr. John Culley: My understanding is there are about 40 separate trials. Some of them relate to the development of the information on the lines themselves and some on the agronomic impact production fit, if any, for GM wheat in western Canada.

Mr. Phil Macdonald: For all the trials, it is probably worth noting here, Mr. Chair, that these trials are all very much limited in size. Under the confined field trial guidelines, the maximum field trial size is a hectare and you're limited to no more than five field trials per province. That would be for every genetic event. In this case, that would sort of govern what you're looking at for overall size.

Mrs. Rose-Marie Ur: It must be quite difficult to conduct these test plots with other production close by. The air doesn't stop, I'm sure, around the perimeter of a hectare of test plot.

Mr. Phil Macdonald: All our trials are authorized under very strict terms and conditions. One of the things the agency takes seriously, as part of the confined field trial program, is our responsibility, first of all, but second of all is to make sure there is compliance on these sites. They're authorized with very strict terms and conditions.

All field trial sites are inspected during the current season to make sure the conditions of reproductive isolation and proper handling and monitoring have been adhered to. They're also inspected again at the conclusion of the trial. The applicant is responsible for providing their field notes, their seed logs to show that all seed material has been disposed of and that they've adhered to all the terms and conditions. Again, that would be 100% of the trials.

For the wheat trials, they're all inspected during a closed harvest period as well.

Mrs. Rose-Marie Ur: It's been brought to my attention that there's speculation out there that perhaps there may be a requirement to use more chemicals in order to produce GM wheat. Is that an accurate statement that I've heard?

Mr. Phil Macdonald: That's an excellent question. Of course, for the farmers around, they're well aware that these are difficult questions to answer. Agronomic producers will choose to use pesticides and herbicides for a variety of reasons, depending on past pressures and their own agronomic pressures.

The overall effect in some cases can be a reduction, or the use of more beneficial herbicides or less environmentally harmful herbicides or things with less residence time. Certainly the issue here for us in our scientific review is that anything they undertake has to be as sustainable as conventional wheat production, which, as I am sure all of you are aware, does in itself rely on herbicides for weed control.

Mrs. Rose-Marie Ur: We have to be very cautious on that one. We're dealing with product, getting it through PMRA.

The Chair: Let's move to Mr. Proctor, for seven minutes.

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Mr. Dick Proctor (Palliser, NDP): Just a quick follow-up. Regarding the 40 test sites, is that information available to the public?

Mr. Phil Macdonald: The actual locations of the field trials is confidential business information.

Again, this harks back to the compliance issue for our applicants. We insist that they have control over their field trial sites and that they are responsible for everything that goes on there and any material that may remain or may possibly be removed.

Again, the actual field trial locations are confidential business information. However, we do post on our website the general locations, the trades, and the companies, the proponents, as a summary for the season. It is available on the plant biosafety office website.

Mr. Dick Proctor: Would you have to go through access to information to access the real information?

Mr. Phil Macdonald: Again, the exact trial sites are confidential business information. However, the general locations are publicly available on our website.

Mr. Dick Proctor: You indicated, Mr. Macdonald, that in the business CFIA is in you cannot consider socio-economic factors. You used to be able to do that. You had a definition of merit clause that was around and was quietly taken out a couple of years ago. Mr. Brackenridge was before this committee last month and indicated that.

The question I have for you is, can you explain to us what is the justification for having that definition of merit clause removed?

Mr. Phil Macdonald: I reiterate, Mr. Chair, that these were terms and conditions from the recommending committees, which derive their authority under the seeds regulation. The final authority does reside with our variety registration office based on recommendations from these recommending committees. Their function is to assess merit, agronomics, and in the case of wheat, it would be an agronomic assessment. Also, of course, milling quality and things like that would be important.

So it's a question of comparing like to like. The marketability clause that was put in there was outside the authority of their mandate, and the CFIA let them know that this was outside of the authority of their mandate.

Mr. Dick Proctor: So that was the rationale for removing it, then, that it was outside of the authority. Is that what you're saying?

Mr. Phil Macdonald: Yes, it was outside the authority of the mandate.

Mr. Dick Proctor: We've heard talk again here this morning about science-based, and yet when the Royal Society of Canada reported a couple of years back, they said--and I'm quoting directly; this is the Expert Panel on the Future of Food Biotechnology--of the government's assessment process, “The analysis is based solely on data and information provided for the petitioner”, and they went on to say, “In the view of the expert panel, this situation does not meet the expectations of either stakeholder group for a full, rigorous and transparent evaluation of GM crops and foods”.

The royal panel is saying in effect that the government relies on data provided by the applicant. In this case we're talking about Monsanto and Roundup Ready wheat. How do you respond to the concerns that the Royal Society has made here?

Mr. Phil Macdonald: That's an excellent question, Mr. Chair. Consistent with the way the rest of the world does reviews of these products, we have developed criteria that are consistent with international standards. This is through the OECD, through the WHO, and some of the criteria that have been developed in the international arena.

As I alluded to before, we work really closely with our colleagues at the USDA. We've harmonized our technical assessment criteria. As such, we have a rigorous review process. We do have access to outside expertise and often do use it. Certainly through my office, we fund independent scientific research into risk assessment issues for some of the baseline data related to agricultural production to continue to enhance our scientific knowledge base.

Mr. Simon Kennedy: Mr. Chair, I could also add, I guess, in response to the question, that the Government of Canada has issued--I'm sure the members have seen them--a series of progress reports on the responses of the departments and agencies that were implicated in the Royal Society report. We expect the fourth progress report to be issued in the near future. It spells out the specifics.

Mr. Dick Proctor: I guess my supplementary question there would be, has there been any changes, as a result of the concerns expressed by the Royal Society in its report, to the way you do business?

Mr. Phil Macdonald: Our scientific oversight continues to evolve. Science is not a static thing. Scientific knowledge continues to evolve and we continue to evolve our assessment process in response to changing science. We have recently--and again this was one of the promises we made to the Royal Society--posted revised guidelines for our environmental assessment of plants with novel traits and also our livestock feed assessment for plants with novel traits in Canada's livestock feed. In Health Canada, actually, we're synchronizing our guidelines for oversight of food. Again, this is in response to evolving science, some of the changes in the biotechnology industry and changes in oversight.

Á (1150)

Mr. John Culley: Perhaps I just might add to that. The government's science labs themselves have started to do a lot more work in this whole area in support of the regulatory science initiatives. We have a number of studies going on in agronomic aspects of wheat and other trials as a result of concerns that have been expressed by the public about these products. Under the Canadian biotechnology strategy, we have a series of studies from which we could provide more information to you on building the science base for this decision-making.

Mr. Dick Proctor: The last question is to Mr. Kennedy.

You indicated in your presentation that there were two principles--science-based paramount, and you also indicated that any innovation in agriculture must lead to economic benefits. Correct?

Mr. Simon Kennedy: That's right.

Mr. Dick Proctor: It seems to me you could make the argument that one is relatively objective and the second one is relatively subjective. I just wondered if you share that, and if you do, could you elaborate on it?

Mr. Simon Kennedy: I think that in terms of the way we want to develop the framework, Mr. Chair, what the honourable member has indicated has some resonance. Certainly the science-based assessment is a very objective rules-based process. We want to preserve that.

There is a lot of debate, if you look at some of these new products that are coming on to the market, as to what their potential value is and what the economic benefits could be versus what the cost may be to the existing varieties, and so on. I think the interest of the government is not to get directly involved in making the choice about what the cost and benefit are, but to help the industry sort out on its own what the most appropriate course of action would be. The concern is that for a wide variety of potential new products, it's very difficult for industry to do that on its own. We have a very wide number of growers, potentially, a very divergent range of interests, and it may be difficult in an ad hoc manner to come up with what you might consider to be an optimal outcome.

There's no interest in getting involved in prohibiting products that, through all of the rules-based science system, have been determined to be safe and acceptable under our regulatory framework. The interest is in ensuring that those products are introduced in a way that preserves choice so that those who wish to have access to those new products, those products of innovation, can have them, and those who maybe wish to have access to more traditional products can have those as well.

Again, the framework that the government is looking at and really the direction--for example, under the agriculture policy framework--that has been discussed at this committee before is assisting the industry in being able to meet the stringent demands of the market, regardless of what those demands are. It's about assisting the industry, not about telling the industry what kinds of products to provide.

The Chair: Thank you, Mr. Kennedy.

We'll move to Mr. Hilstrom, for five minutes.

Mr. Howard Hilstrom: Thank you.

Mr. Culley, what other contracts do you have? Are there a large number of other contracts in regard to GM crops, alfalfa, flax? Are there any other contracts or is wheat the only one you're dealing with right now?

Mr. John Culley: In terms of development of new crops genetically modified, as I said, that's the only one, I believe. I'd have to check, but I don't believe we're pursuing any more at this time.

Mr. Howard Hilstrom: So really this is a pretty limited field. We're really not talking about any big advancements happening quickly in this area.

Mr. John Culley: There is still a lot of research going on, but in terms of product development of a variety of a new materials that will be brought forward, activity has slowed in recent years.

Mr. Howard Hilstrom: What about this so-called terminator gene that people talk about? Is there any research into that? The idea is that it's going to stop plants from reproducing.

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Mr. John Culley: There is a lot of research going on in that whole area. In fact, some of our scientists recently published a paper of a strategy to control outcrossing and the dispersal in the environment.

I think probably more areas of more interest are gene therapy treatments. There seems to be a lot of public concern about the introduction of genes sourced in one species into another species. So I think the scientific community has picked up on that and understands those issues and is looking for alternatives and newer ways of doing things that will be more acceptable.

Mr. Howard Hilstrom: Mr. Kennedy, you were talking about livestock feed in relation to GM grains. For instance, canola that's of low quality, that can't be used for human consumption, often goes into livestock feed of various kinds. Is there some movement to have that changed? Is that what you were getting at, or what were you getting at?

Mr. Simon Kennedy: Mr. Chair, I guess Phil Macdonald could speak to that.

Mr. Phil Macdonald: Mr. Chair, the agency has responsibility for the oversight of the regulation of plants with novel traits used in livestock feed. There are, I think, at this time almost 50 different novel plants that are authorized for livestock feed use. That includes the usual commodity crops--canola, canola meal, corn, and in addition, some of the things that we don't grow in Canada, like cottonseed meal and rice.

Mr. Howard Hilstrom: That is not going to change, though, is it? You're not thinking of changing that. Are there any studies to change that?

Mr. Phil Macdonald: What the agency has done, Mr. Chair, is revise the guidelines on the nutritional evaluation of livestock feeds. Again, these represent some of the changes in the science, and again, this is about the technical requirements, the science-based assessment of these things as novel feeds.

Mr. Howard Hilstrom: What does Japan do with their canola crushings after they have taken the oil out? What is done with the hulls and so on? Where do they go? It is fed, probably, isn't it?

Mr. John Culley: A lot of it is spread as fertilizer.

Mr. Howard Hilstrom: It is spread as fertilizer. Okay, I guess that wouldn't be on a pasture or anywhere an animal could get it. What are you saying there?

I don't see what the concern is. If animals eat a GM plant, there is no transfer of genes from the plant to the animal. It's so ridiculous as to be outrageous.

Mr. John Culley: I can't comment further on what is done in Japan, Mr. Chair.

Mr. Howard Hilstrom: I'll defer. I think my honourable friend here would like a question.

The Chair: Mr. Bigras, you have about two minutes. We want to try to remain on time, if we can.

[Translation]

Mr. Bernard Bigras: Thank you, Mr. Chairman.

Still on the topic of Roundup Ready wheat, I would like to know whether there are any employees from the Canadian Food Inspection Agency who worked directly or indirectly on this and who are now working for Monsanto. I am asking you the question without necessarily knowing the answer. It is not a trick question, but I am expecting a real answer.

[English]

Mr. Phil Macdonald: Thank you, Mr. Chair.

I work with a multidisciplinary team of highly qualified scientists, and although they certainly are quite attractive to the industry, at this point there is no one who has worked on the GM wheat file who is working for Monsanto.

[Translation]

Mr. Bernard Bigras: From a totally independent, objective and transparent perspective of the scientific assessment of RR wheat, and given everything we learned today about financial partnerships and scientific agreements that exist between the agency and Monsanto, do you think you have the scientific objectivity required to conduct a truly independent assessment? That is what worries me. I have the feeling that behind all these stories, not only from a financial perspective but also in terms of research, you are both judge and jury. Do you think you have the scientific objectivity required to make a decision on this matter?

Â (1200)

[English]

Mr. Phil Macdonald: Again, let me stress that the CFIA is an independent, stand-alone regulatory agency. We are separate, Mr. Chair, from the agricultural development and promotion activities of Agriculture and Agri-Food Canada. I work with a highly skilled group of professionals who bring a lot of scientific expertise to the table. We do work independently. The authorizations are delegated from the ministerial level to the people at the agency for this. It will be an independent review.

[Translation]

Mr. Bernard Bigras: But are the studies independent?

[English]

The Chair: Mr. Bigras, we have to cut the debate.

I'm going to defer to the government side because there are apparently two short questions to be asked of this panel before we leave.

Mr. Duplain first, and then Mrs. Ur for a short question.

[Translation]

Mr. Claude Duplain (Portneuf, Lib.): The question I wanted to ask has been partially answered. Because of my position, I have had the chance to work a little more closely with the minister and I know that nearly every day he is in contact with your department, Mr. Richardson, in order to ask the right questions. I know how he looks after matters in his department.

However, I can also understand why people are concerned about this type of research. What concerns me most is in relation to the questions Mr. Bigras just asked. People are uncertain about what the government is doing. I can give you the example of another meeting during which it was implied that Monsanto had managed to infiltrate the government. Through your answers to the committee, you have proven to us that you work very conscientiously and very professionally. I would like you to expand on that for a minute and tell us whether the government is independent in its research activities and its procedures.

[English]

Mr. John Culley: In terms of the independence, in terms of the series of crops that we're talking about, GM wheat and all the crops that have been approved up until now, on the basis of science, many of the scientific organizations around the world have passed sort of a judgment on this, and all of them say that, yes, there's a great need to be very careful and scrutinize and to apply the latest scientific results as they become available, but all the scientific organizations world wide pretty much have come on side and said that the products that have been approved are safe. I think at the end of the day that's the level of security we need to have. We need to keep doing the work and constantly peeling the layers of onion off this, and when we do that we gain.

Today the scientific consensus is that these products are safe. There is a need for independent research, and government and university labs exist to provide that base.

The Chair: I defer now to Mrs. Ur for a question, one question.

Mrs. Rose-Marie Ur: Just one?

The Chair: In the second round you'll have some more questions.

Mrs. Rose-Marie Ur: I guess my question may be to just continue on Mr. Duplain's question. Is Monsanto the only private sector company doing research on GM wheat?

Mr. John Culley: No. There are other companies as well that have an active interest in wheat, and there are significant issues--fusarium, for example--that need to be resolved, and companies and public sector institutions are actively pursuing solutions.

The Chair: A supplementary.

Mrs. Rose-Marie Ur: The percentage of private sector researcher, Monsanto versus the rest of the research people, what percentage...? If you don't have that information today at your fingertips, perhaps you could bring it back to the committee.

Mr. John Culley: I checked on that this morning and--

Mrs. Rose-Marie Ur: Good. We'll have updated information.

Mr. John Culley: Yes. And as I say, these numbers change daily. As of this morning, we had 368 active collaborative research projects going and about half of them are with producer groups and associations of producers and cooperatives. Historically, about 10% of our projects are with what would be commonly thought of as multinational corporations. The number of projects with Monsanto is less than 2%.

Â (1205)

The Chair: Thank you very much.

I apologize for having to terminate very lively discussion this morning. I thank you very much for your forthrightness. Mr. Macdonald, Mr. Richardson, Mr. Kennedy, and Dr. Culley, thank you for appearing this morning. We look forward again, at some point in the future, to meeting with you.

Mr. Tom Richardson: Mr. Chair, I think we would like to come back in the fall after we've been through some of the informal consultations.

Thank you.

The Chair: I appreciate that.

We will now call the other two groups to the table. We're going to ask the people from Monsanto and the people from CFA to come to the table at this time.

You'll get another chance in this round here. It's just that we have to stay with the clock a little bit. It's a very interesting subject.

Â (1206)

Â (1210)

The Chair: I call the meeting back to order. We want to continue our discussions and welcome our panel.

We have with us this afternoon people who represent the Monsanto group. We have Curtis Rempel, Roundup Ready wheat lead. I believe we also have Mr. Kerry Preete, vice-president of Monsanto, and John Dossetor, vice-president, government affairs.

We have with us, from the Canadian Federation of Agriculture, Weldon Newton, president of Keystone Agricultural Producers, and Jennifer Higginson, trade policy analyst.

We welcome you to the meeting here this afternoon. We anticipate that you have some presentations to give, after which we will begin the questioning. If we can keep the comments succinct, we may run a little past 1 p.m., if that's okay with you people. Thank you very much.

Who begins? Mr. Rempel, are you the first, or who is first here?

Mr. Kerry Preete (Vice-President, Monsanto Canada Inc.): Monsieur le président, members of the standing committee, thank you for the opportunity for Monsanto Canada to appear before you.

My name is Kerry Preete and I am the vice-president of our U.S. agricultural business for Monsanto. I appreciate the opportunity to speak to you today about our vision for the introduction of biotech wheat.

I grew up on a diversified grain and livestock farm near Melfort, Saskatchewan, and I remain involved in the family farm. In fact, I've always been directly involved in the farm sector in Canada.

There are three areas that I would like to outline to clarify our plans for the introduction of Roundup Ready wheat: first, our support for the current regulatory system in Canada; second, informing you about the public commitments Monsanto has made regarding this product; third, updating you on the progress we have made against these commitments.

In our view, the discussion about Roundup Ready wheat goes beyond the introduction of one product. It is about how we can work cooperatively with the industry and the government to continue to invest in wheat research to bring forward innovative products that will benefit Canadian wheat farmers.

As you all know, wheat is a major crop for farmers in western Canada. Wheat is also a crop that has had limited private investment, as well as shrinking public investments in research and development, in recent years. At the same time, Canadian farmers have faced new challenges in growing this crop. Insect pressure from the wheat midge, diseases such as fusarium, and limited wheat control options, along with severe drought conditions in the last two years have significantly reduced yields.

At Monsanto, we believe wheat is a promising crop for technology that can address many of these challenges to increase the profitability of wheat for Canadian farmers. We are committed to developing new innovations like drought-tolerant crops because countries like Canada have a science-based regulatory system. It is this system that facilitates investment and trade.

I want to applaud the recent efforts of the Government of Canada toward defending the principle of science-based regulation by joining the United States, Argentina, and nine other third-party supporters in a World Trade Organization case against the European Union over its moratorium on biotech product approvals. As Minister Pettigrew noted at the time, the moratorium is based on “absolutely no scientific evidence, is inconsistent with the EU's WTO obligations and is not based on scientific risk assessments and thus creates an unjustified barrier to trade”.

Canada remains a world leader in biotechnology research and innovation because of a regulatory framework that is soundly grounded in science. This system has held up as a model for other world areas and has driven a $1.3 billion annual industry-wide research investment in Canada.

Let me explain why we are asking for a regulatory review of Roundup Ready wheat. We believe it is important to have regulatory agencies in Canada, the U.S., and Japan review the food, feed, and environmental safety of this product. Successfully completing that regulatory review process will send an important message to wheat buyers and consumers around the world that this product has been comprehensively reviewed and is deemed safe. This review will help address questions and concerns raised during market acceptance discussions.

There is precedent to show that market issues related to the introduction of biotech crops have been effectively addressed by the industry. A good example of this can be found in the introduction of biotech canola in Canada. Working together, farmers in the industry were able to capitalize on the benefits of biotechnology and maintain key trading relationships with buyers throughout the world.

A study by the Canola Council of Canada found that an incremental cumulative value of up to $464 million was created for farmers in the industry from 1997 to 2000 by the introduction of biotech canola in western Canada. We believe a similar positive outcome can be found for biotech wheat without adding non-scientific factors to the Canadian regulatory system.

What are our plans for the eventual introduction of Roundup Ready wheat? In early 2001 we identified and communicated several commitments that must be met before we can move forward with the commercial introduction of Roundup Ready wheat. All of these commitments must be met before we will move forward with commercial introduction. These commitments are as follows.

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First, the food, feed, and environmental safety of Roundup Ready wheat is demonstrated, resulting in regulatory approvals in the United States, Canada, and Japan.

Second, appropriate regulatory trade approvals, thresholds, or marketing agreements are in place in major export markets. This allows wheat to be traded based on buyer preferences and specifications.

Third, we will work with the Canadian grain handling industry to establish an effective segregation system. This will include the development and implementation of appropriate grain handling protocols and standardized sampling and detection methods to meet agreed-to international standards and thresholds. This system also must maintain choice for buyers who want and those who do not want Roundup Ready wheat.

Fourth, we will develop comprehensive agronomic stewardship programs and best management recommendations for this technology prior to commercial introduction.

Fifth, we will have buyers who procure and use wheat ingredients with biotech trades and consumer acceptance where the technology is demonstrated.

Since early 2001 when we announced this pledge, we have made steady progress in each of these areas. Time does not permit me to talk about our progress on each commitment, but let me touch on a few areas.

In December 2002 we completed our full regulatory submissions to the regulatory agencies in Canada and the U.S. and we plan to complete our regulatory submission to Japan later this year. We will also submit regulatory packages to the E.U., Australia, New Zealand, and South Africa by the end of 2003.

We have established an industry advisory committee on grain handling in both Canada and the U.S. to complete the due diligence around what an appropriate and successful grain handling system will look like.

We have also submitted a comprehensive agronomic stewardship document as part of our regulatory package to the CFIA. This document outlines how the technology should be managed for the benefit of farmers and the industry.

Finally, in the area of market acceptance, we have identified key domestic and international bakers, millers, and food companies and are asking them to identify their preferred wheat quality attributes. For example, some bakers have expressed interest in the product consistency that a Roundup Ready production system can supply. We have taken the information and feedback and now are tailoring our breeding programs for Roundup Ready wheat to address their needs.

While much progress has been made in each of these commitment areas, there is still a significant amount of work remaining. Monsanto is working with the Canadian wheat industry to guide our decision-making process. I believe Roundup Ready wheat will offer farmers a compelling value proposition, including yield improvement, fewer herbicides, enhanced conservation tillage opportunity, and cleaner grain.

Monsanto recognizes that neither agronomic nor economic benefits alone will make this product successful. To accommodate that fact, we pledge that even with Canadian regulatory approval, we will not commercialize Roundup Ready wheat until we have met all the commitments that I outlined earlier.

Just to be clear, the introduction of this technology will not be driven by a calendar but will be dictated by the achievement of our commitments. Our goal is the responsible and positive introduction of a Roundup Ready wheat product that adds value to the Canadian wheat industry and farmers. We have been encouraged to continue our progress in meeting these commitments. We remain fully committed to working with the industry and government to find effective solutions to allow the benefits of biotechnology to be shared with farmers, industry, and consumers.

Thank you, merci, Mr. Chair.

Â (1220)

The Chair: Thank you very much, Mr. Preete.

Now we'll move to the CFA. Mr. Newton, are you first? If you can, be fairly succinct. I know it's difficult when you have a presentation to make. We'll allow you to make it, but it just means we have fewer questions.

Mr. Weldon Newton (President, Keystone Agricultural Producers, Canadian Federation of Agriculture): Thank you very much. We appreciate the opportunity, on behalf of the Canadian Federation of Agriculture, to discuss with you today the issues around genetically modified wheat.

The willingness to use the benefits of technology has helped Canadian agriculture grow and remain competitive. The Canadian Federation of Agriculture strongly believes that sound science should provide the basis for determining the safety and acceptability of new technology and products. However, it is also important to recognize that the success of Canadian agriculture is highly dependent on export markets and to make sure our technology and practices are adapted to market requirements.

In the past, the Canadian wheat handling system and breeding system have been built on what is called the KVD system, kernel visual distinguishability, for all our varieties. That certainly cannot accommodate the concerns that Roundup Ready wheat will bring forward. We are also looking at a new system currently called variety eligibilitydeclarations to allow us some other opportunities. It also will not be able to deal totally with the issue of genetically modified wheat.

As I mentioned, marketing consequences are certainly a big issue for our producers because, ultimately, in order for us to survive we have to be able to market our products.

When we look at registration issues, we have human and animal health assessments, and we do have a science-based system for that. The CFA has no concerns in this regard about that science-based system. We want to see it proceed and find the answers that come from it.

On the environmental safety aspect, CFIA has access to the technical and scientific expertise to do the environmental assessment. However, the question that's being raised by our members relates to the potential impact on zero till practices for the release of Roundup Ready wheat. This raises many agronomic issues and contamination of other products, and the sustainability of our cropping system, which, in western Canada especially, has been built on minimum till and zero till for the last 25 years. The concern on this is so great that one of the organizations that has promoted zero till in western Canada and in the northern United States.... The zero till associations never get involved in policy, or almost never, but this is one of the issues they have brought forward, as they are very concerned that it in fact could destroy zero till in both Canada and the United States. We have to be able to address that.

On the market acceptance of segregation issues, at this time we have some countries that won't accept imports of GMO agricultural products. In the case of wheat, the Wheat Board tells us that it's 80% of its market. So that's a concern. Other countries will require labelling for GMO products, so there is some there, but our system can't accommodate a zero tolerance. We need to have some tolerances that are reasonable to work in the commercial marketplace.

I have appended to my presentation a presentation by a gentleman from the United States that was made in North Dakota on this issue. I won't go through it, but it relates to the issues being the same in the United States as they are on the Prairies and in Canada for the release of this product.

If we look at the Cartagenaprotocol on biosafety, it adds further uncertainty. Although the protocol is intended to ensure the safe transboundary movement of living modified organisms and gives countries the right to know if they are coming in and to prevent them from coming into their countries, it does raise a lot of issues for us. This protocol is new. Not all the provisions are properly defined, so commercial trade does not know the rules under which they are going to be operating at this time.

On the risk and threat, the WTO agreement on sanitary and phytosanitary measures requires the use of sound scientific information. As has been mentioned previously, Canada, along with other partners, has launched a WTO challenge against the European Union for its perceived violation of this agreement, so that is also down the road.

However, we also have the precautionary principle, which is being used internationally, and the ability then to basically go around commercial agreements and scientific evidence by the use of this principle. That certainly concerns us. As a result of this, this whole protocol provision and the WTO rules, in reality, is about as clear as mud, and business, whether it's export business or farmers, cannot operate in a environment like that.

Â (1225)

If we look at thresholds or dockage allowances, at this point no decisions have been made on what minimum levels are and how our segregation systems can in fact work. I think producers have agreed that a zero tolerance is in fact impossible to maintain. On our farms, and certainly within the grain handling system in western Canada, a zero tolerance is impossible to maintain in the commercial grain handling system. Minimum levels will have to be achieved, but to do this we need international agreement to establish these thresholds, and that is not there at this point.

What it comes down to is timing, and that is the big issue. These are processes and questions that need to be dealt with. The safety for human and animal consumption has already started, and the environmental assessment. Our concerns relate to what happens if the variety passes these hurdles. This is where the agronomic concerns come in.

Market acceptance may improve as consumers have more experience with GMO wheat, but we're not there at this point. Will WTO challenges eliminate some of the unjustified barriers to imports? We're waiting for answers there.

Can we develop new ways of segregating varieties with molecular markers or develop a new segregation system? That's a question, but hundreds of millions of dollars have been spent in the last 10 years to develop a new grain handling system in western Canada. Can it handle something like this at this point? I think we have some great concerns there.

The essential point is that we have to be confident that GMO wheat will be compatible with our marketing system and marketing goals before the variety is registered and released.

At this point, as has been mentioned, in the regulatory capacity there are no provisions in the current regulations that would allow the refusal or the delay of the registration because of market acceptance problems. Our concern is that if we can't come to an agreement on how this will work, there is nothing in regulation that will deal with the issue. At this point some decisive action is required. We believe there is a clear need to ensure that Canada has the ability, if necessary, to delay the registration of a new variety until serious market acceptance and segregation issues are resolved.

In conclusion, I would like to reiterate that we have two recommendations that we would ask your committee to consider and support.

The first is that genetically modified wheat not be registered and/or released until market acceptance and segregation problems are resolved.

Second is that the Canadian government give high priority to ensuring that there are regulatory provisions that give the government the authority to delay the registration and release of a new plant variety until any serious market acceptance and/or segregation problems are resolved.

So with that, thank you very much.

The Chair: Thank you, Mr. Newton. We appreciate both your presentations.

I will start with Mr. Proctor, who I believe is our next questioner.

Â (1230)

Mr. Dick Proctor: I'm intrigued, just off the top. We just heard from the government folks, and it seems to me that they basically said it was not up to them, that their only concern was whether it was scientifically approved. I hear Monsanto, which is the major company that is the issue of the concern on Roundup Ready wheat, saying they were going to make sure they were the good guys by making sure this would not be introduced until it had met the various criteria.

It seems to me that this is kind of an odd way to go. It's certainly an unusual way to go. Maybe odd is the wrong word, but normally you have governments there looking at a whole variety of things before anything is brought to market or allowed on shelves and whatnot. Here we seem to be in an inverse relationship, where it's the company that's saying it will not introduce it and the government saying that as long as it's approved it will be okay.

Do you see the anomaly in this as I do, Mr. Preete?

Mr. Kerry Preete: We believe that the regulatory system in Canada is one of the finest in the world. If you look at new technology bringing it forward, one of the principles that Canada is known for around the world is their science-based regulatory system, and we believe it is the role of the government to do that.

We also believe the role of the marketplace is to sort out and move forward the appropriate marketing practices that serve the Canadian farmer. We've had good examples of that, as I mentioned, with biotech canola, where the industry worked together with growers to introduce biotech canola in Canada in a way that farmers saw the benefits.

The bottom line for us, as a company, is that we exist to serve farmers. If farmers make money, we have a business. If they don't, we don't have a successful business. So our premise is that we'll introduce the product when all those other commitments are made.

Mr. Dick Proctor: We had a group here, Mr. Chair, you'll recall--I think it was a week ago today--dealing with this from another aspect. I think the term one of them used was that farmers were “ignorant” , which was the word chosen, on the impact of canola in the sense that, yes, it had benefited, I'll concede you that, but at whose expense and at what expense? There's absolutely, as I understand it, no possibility of growing organic canola anywhere on the Prairies now because of the pervasive influence of the fact that everything else is GM canola. And so organic farmers are virtually out of that business. There's simply no way for them to have an entry point into the market because of contamination.

Mr. Kerry Preete: First of all, we believe in farmer choice, and the farmers should be able to choose--

Mr. Dick Proctor: Farmers don't have a choice--that is the point that was being made--on growing organic canola. They can certainly grow GM canola.

Mr. Kerry Preete: We are still aware that there's a growing demand, and our understanding is that farmers are able to do that. The bottom line is, as farmers choose whatever process or whichever growing conditions and markets they want to pursue, they certainly have the right to do that.

We feel our obligation with respect to Roundup Ready wheat, that part of the agronomic stewardship practice, as an example, is to ensure that we define this for growers who choose not to grow lab-tech wheat and clearly provide them the information. Then, as has been the case with any farmers who grow a unique crop, they take that information and they are responsible for the stewardship to grow that crop.

Mr. Dick Proctor: To come at it another way, as for the commitments you are making to us today about the introduction of Roundup Ready wheat and what those conditions would be, it would be fair to say that there were no such commitments made around the introduction of GM canola.

Mr. Kerry Preete: Led by the Canola Council of Canada, we worked cooperatively at that time with grower groups and others for the introduction of biotech canola. So we did work cooperatively with the industry in terms of markets and which markets we needed to make sure they had regulatory approvals in and market acceptance.

Mr. Dick Proctor: In the previous go-round with the Agriculture and CFIA officials, they indicated that it was up to the company to release any of the contractual information between Ag Canada and, in this case, Monsanto. Is that something you could make available to this committee, even on a restricted basis?

Â (1235)

Mr. Kerry Preete: We do have agreements with the research branch of Ag Canada. Certain pieces of that are confidential. We will endeavour to have conversations with the Ag Canada research branch and see what we can do on this.

The Chair: Mr. Dossetor.

Mr. John Dossetor (Vice-President, Government Affairs, Monsanto Canada Inc.): Mr. Chair, if I could just add to that, we would be more than happy not only to review the terms of the contract to make sure there isn't a mutual consent clause but to disclose to the committee what we can, if indeed the committee is prepared to keep business confidential information as confidential.

So we'll endeavour to provide that information.

The Chair: Thank you very much.

We're going to keep these at five-minute intervals. Mr. Hilstrom.

Mr. Howard Hilstrom: Thank you.

Mr. Chair, my friends in Greenpeace don't have a seat at the table here, so I'm going to have to ask some questions on their behalf.

I'd like to start off by saying to Mr. Preete, can you give me one single trait of this GMO wheat that you want to bring onto the market that is going to make a customer, a consumer, the person who's going to eat that food, say, yes, I want to buy that. Can you tell me what that trait is that is different from the wheat we currently have?

Mr. Kerry Preete: We're working in a number of areas in a number of crops that do have food quality benefits. As it does relate to Roundup Ready wheat, we do believe there are consumer benefits, such as cleaner grain, which will provide a better sample. There are other products and technologies coming that are being worked on by us and others.

Mr. Howard Hilstrom: What I'm getting at, now that you've worded it that way, is that really the reason this wheat has come forward for registration is to ensure that the protocol, the rules, and the licensing process are established hard and fast so that, as other products come along, I suppose there's a surety in the system. Is that more the reason, or what is the real reason this is coming forward now?

Mr. Kerry Preete: We think this technology will offer Canadian farmers significant benefits, and we've mentioned some of them. We think it's just one of several products that will come in the future that will offer significant benefits.

Mr. Howard Hilstrom: I have another question now, and we don't have time to fool around so we have to be down to brass tacks pretty quickly here. You mentioned food, feed, and environmental safety. GMO is hung up on environmental safety. Can you tell me how you define environmental safety, or how the government does, so there's a hard and fast criterion that can be met to everyone's satisfaction? Environmental safety--the fact that it can cross-pollinate means it's not safe. That's one of your criteria, environmental safety. How is anybody going to know when that environmental safety criterion has been met? Can you describe that to us?

Mr. Kerry Preete: I don't know the details of what's required in terms of CFIA guidelines. I will say that we are committed to meeting all of them and any other questions that they would deem, from a science standpoint, are appropriate. So I'd have to defer to one of my colleagues.

Mr. Howard Hilstrom: They haven't told you yet?

Mr. Kerry Preete: They have, but I'm just not familiar with the specifics of them.

Mr. Curtis Rempel (Roundup Ready Wheat Lead, Monsanto Canada Inc.): We're looking at things like seed bank recruitment and outcrossing to weedy species. I think the CFIA did a fairly good job of addressing some of those issues that they're examining.

Mr. Howard Hilstrom: I'm a big supporter of biotechnology and I think the canola was great, and different things have been great. But it's awful nice if there's an overriding reason as to why something is being brought forward, and it just doesn't seem that this wheat has a big overriding reason to be brought forward right now.

Let's talk about it from a farmer's point of view. What is the big overriding reason that a farmer will want to grow this? Bearing in mind that in western Canada--Manitoba, Saskatchewan, Alberta, and a little bit of B.C.--if the Canadian Wheat Board says they're not going to market your wheat, it isn't going to get sold, no matter what. I don't know why the Wheat Board is even worrying about trying to get regulations in place, because they can just say they're not going to sell GMO wheat, and that's it.

So what is it to the farmer, Mr. Preete, that is so great about this wheat?

Â (1240)

Mr. Kerry Preete: We have research that believes we can see a 9% to 10% yield improvement. We believe we'll see reduced pesticide use and reduced herbicide use. I can speak to this as a farmer; it gives you a lot of flexibility in controlling weeds.

We're seeing some herbicides becoming resistant to wild oats now, and so we're seeing more limited options in certain parts. So those are just some of the benefits we think this technology will bring to Canadian farmers.

Mr. Howard Hilstrom: Is that going to enable the farmer to sell that wheat more cheaply in the market to feed people who can't afford to pay a high price for organic food?

Mr. Kerry Preete: There are three ways we hope we can help farmers make money: reduce their costs, with more yield; down the road, improving the quality of their crop; and opening up markets. That's how they're going to make money. We think Roundup Ready wheat certainly does reduce costs and increase yields.

The Chair: Thank you, Mr. Preete.

We'll move to Mrs. Ur.

I should say that at any time the other party wants to move in, if anyone wants to move in any time in responding, you may want to do that.

Mrs. Ur.

Mrs. Rose-Marie Ur: I have had information given to me that there is speculation out there that actually, by using GMO wheat, indeed more chemicals will have to be used. In your presentation this morning you said the opposite. What do you base your information on, then?

Mr. Kerry Preete: It is on some preliminary work that we have done from our research. Here is the other thing we'll see. Because Roundup is a broad-spectrum product, in the case of many different weeds in the field, it is a product that can manage all those weeds. That is one of the drivers for that.

The other fact that we've heard expressed is that it will increase the use of Roundup. We're actually seeing more that it's going to provide a shift in timing when the Roundup will be used. Oftentimes today, as somebody mentioned earlier, in no-till situations it's being used prior to planting the crop, because obviously today you can't spread Roundup over the top of wheat. But now we see a lot of the time where farmers with this technology would likely move the timing of that application to when the crops emerge.

Mrs. Rose-Marie Ur: Do you do your work in the United States or in Canada?

Mr. Kerry Preete: Our research work?

Mrs. Rose-Marie Ur: Yes.

Mr. Kerry Preete: We do work both in the United States and in Canada.

Mrs. Rose-Marie Ur: Are many of the criteria in your research equivalent on both sides of the border?

Mr. Kerry Preete: Yes.

Mrs. Rose-Marie Ur: Do you share that information?

Mr. Kerry Preete: Yes.

Mrs. Rose-Marie Ur: Also, how much information do you gather from the Grain Growers of Canada?

Mr. Kerry Preete: We talk to the Grain Growers of Canada and numerous other stakeholders involved in the wheat industry.

Mr. Weldon Newton: I guess part of our concern is around the agronomic aspect involved. While I agree we can use Roundup for the burn-off, at this point it's the total chemical package that we will need to deal with regarding the volunteers. A lot of us use pre-harvest Roundup. Now if we have Roundup Ready volunteers in our cereal crops, how do we deal with that issue? That is part of the agronomic package. There is no other chemical out there that is as cheap and efficient to do it as Roundup, so some of it is producer management.

I think, as the result of the management practices that weren't in place when Roundup Ready canola came into place, that's why there is a lot of apprehension at this point about Roundup Ready wheat. We need that total agronomic package, and it has to be as cheap or cheaper than what we have now, or producers simply aren't going to benefit.

Mrs. Rose-Marie Ur: Mr. Preete, are you prepared to label your product as GMO wheat?

Mr. Kerry Preete: Our position on labelling is that consumers should have choice and that labelling, if it's done, should be on a voluntary basis between the buyer and the consumer, but it needs to be based on science so that consumers have facts and are not misinformed with any labelling that would go on it.

Mrs. Rose-Marie Ur: Do you agree that GMO wheat should be segregated from non-GMO wheat?

Mr. Kerry Preete: With respect to the markets--and this gets back to several points today--there will be buyers who want to buy Roundup Ready wheat and those who don't. We have to have a system in place, prior to launching this product, that allows buyers of our wheat to have choice.

Â (1245)

Mrs. Rose-Marie Ur: This may be beyond your consideration, but who would pick up that cost, then?

Mr. Kerry Preete: We're still working through even what the cost would be. I think it was mentioned earlier this morning that those details were being worked out, and that is one of the things and one of the commitments that we have to have complete before we would launch Roundup Ready wheat.

The bottom line for us is that the farmer has to make money with this technology or it doesn't make a lot of sense for us as a business to introduce it.

Mrs. Rose-Marie Ur: Am I finished?

The Chair: You still have one question.

Mrs. Rose-Marie Ur: I don't want to sound argumentative on this, but when Ag Canada was here earlier, I asked about the percentage of contracts they had in the private sector research, and you were about 2% of the contracts in the research fields. But when you hear the word “Monsanto”, it seems to have a red ring around it. Do you know the explanation for that? Has there been past experiences that you can share? I just wondered why there is a little bit of hesitation when the word “Monsanto” seems to come to a research project.

Mr. Kerry Preete: I couldn't speak to that. I would say, though, that we believe the more research the better. We invite and actually we attempt to get a lot of third-party research on all of our technologies. We think good science-based research is very good for the industry.

Mrs. Rose-Marie Ur: For a person working on both sides of the border, where is it easier to do research?

Mr. Kerry Preete: We would look at both to be very good. One of the things I have seen, having lived here, grown up here and then moved, is that Canada is looked upon by other countries as having one of the best science-based systems of research, and I think the investment that is being made in this country today is a result of that.

Mrs. Rose-Marie Ur: I hope that will hit the press.

The Chair: Mr. Newton, just a short comment, please.

Mr. Weldon Newton: The concern for a lot of producers, I think, is the element of trust. Can we in fact make an agreement with Monsanto to deal with this issue? That's where the issue is. We have been successful in the past in one other incident, with what was called Triffid flax, a GMO flax brought forward by Agriculture Canada and in the end held off the market because we knew there wasn't a market for it.

If we can make an agreement with Monsanto, that's great, but the concern is that a lot of people feel we will not be able to make an agreement with Monsanto about this particular product, and what do we do then?

The Chair: Mr. Bigras, five minutes.

[Translation]

Mr. Bernard Bigras: Thank you, Mr. Chairman.

A few minutes ago, Mr. Newton broached the topic of the Cartagena Protocol on biosafety. It is an interesting protocol. In fact, we would like Canada to ratify it as quickly as possible, since the protocol could come into effect in the coming weeks, if not the coming months, because the 50th country is on the point of ratifying it.

One of the important facets of this protocol is that environmental damage or harmful effects on health are the responsibility of the promoters. I am convinced that given the fact that Monsanto can guarantee the safety of RR wheat, Monsanto is a good corporate citizen.

In light of the guarantees Monsanto seems to be able to provide on the safety of its wheat and given the fact that Monsanto is a good corporate citizen, is that company willing to make a public and legal commitment to meet its possible environmental responsibilities, in the event of damage to the ecosystems or agricultural sites?

In view of the guarantees you provide—and nothing makes me question them— are you willing to go further and take financial responsibility for environmental damage?

[English]

Mr. Kerry Preete: Mr. Chair, we face liability every day in our business. What I would say is that we are very committed to meeting the guidelines set out by the CFIA and other regulatory bodies to concur with the protocols and the science that has to be put in place. We are very committed to following and meeting those obligations.

The Chair: Mr. Newton, do you wish to respond?

Mr. Weldon Newton: I think our concern around the Cartagena protocol is that there are still so many unanswered questions. We don't have answers for producers or for commercial business and we can't operate when these questions aren't answered. Until there are some answers and some definite protocols to follow that are in fact commercially viable, the Cartagena protocol doesn't serve us very well.

[Translation]

Mr. Bernard Bigras: So, to answer clearly...

[English]

The Chair: Excuse me, Mr. Bigras.

If I may interject, you're insinuating that there are unanswered questions. Are you prepared to ask the questions here? Give us the questions that have been asked and which there have been no responses to, or an unwillingness to respond to. I think you've triggered some thinking around this table, at least by the chair. Could you respond to that?

Â (1250)

Mr. Weldon Newton: I'll refer that to Jennifer.

Ms. Jennifer Higginson (Trade Policy Analyst, Canadian Federation of Agriculture): Certainly in relation to the biosafety protocol, there are no levels for dockage or tolerance levels. If you're shipping a non-genetically engineered commodity but there's some amount of dockage, so you have weed seeds or you might have some genetically engineered product in that shipment, there's no tolerance level, so potentially you may have 1% GE product contained in that shipment. Therefore, are you bound by the obligations under that protocol or not?

Wanting to get some agreement on dockage and tolerance levels is key, because we don't know, and that certainly increases if you're looking at GE wheat because you're commingling, and other issues increase. They become even larger issues. We'd like some international agreement on what those tolerance levels would be so that we can better judge whether or not we're bound by the obligations for our non-GE shipments.

The Chair: Mr. Bigras, I'm not taking away from your time. I just wanted further explanation.

[Translation]

Mr. Bernard Bigras: Let me get back to my question. It seems to me it was very clear. I understand you are willing to follow the guidelines, but are you willing to make a public and legal commitment to assume responsibility for possible damages? Are you ready to make that commitment as a good corporate citizen should do?

Have you already earmarked a compensation fund in the event of environmental damage?

We are not questioning your statements. We are asking you whether you are ready to make that commitment. You are convinced, and we do not doubt that. If you are as convinced as you say you are, make a public and legal commitment to provide compensation. That seems clear to me.

[English]

Mr. Kerry Preete: As I said, first of all, we are looking toward CFIA with respect to environmental and we are looking to the international trade requirements, as we agree with the comments a moment ago on having international thresholds to standard. What we are very committed to is abiding by those guidelines as set out. The issues of liability are extremely complex and would be dealt with, as other issues of liability are, in the courts. I just want to be clear that we are committed to following the guidelines that are established. We do believe there needs to be a sorting out of international thresholds and standards before we launch this product, because of the issues before launch.

The Chair: Mr. Newton wants to respond.

Mr. Weldon Newton: As I mentioned, that's a key part of it. There's also another aspect, and in fact that is having agreement even on a testing protocol. How you test for these is a very important factor. We don't want a ship loaded in Vancouver or Thunder Bay that is designated zero and gets to Tokyo, where all of a sudden they use a different testing protocol and come up with it. This all has to be part of the agreement as well.

The Chair: One more question, Mr. Bigras.

[Translation]

Mr. Bernard Bigras: Wheat is recognized worldwide for its quality and safety. We know that two thirds of the wheat sold abroad is sold to markets where there are regulatory standards and where there is some aversion to genetically-modified products.

Mr. Newton, do you not agree with the Canadian Wheat Board, who says there is a major risk of losing markets because we may no longer be able to guarantee the safety of the wheat to our future clients? That is my first question.

Here is my second one. Since your clients must be important to you, how can you not be aware of that situation that could lead to market losses? Why have you not listened to the Canadian Wheat Board and withdrawn the application for certification for your genetically-modified wheat?

[English]

The Chair: Mr. Newton.

Mr. Weldon Newton: Our concern with this, which we've already stated, is that we want the complete safety evaluation to be done by Health Canada, Environment Canada, and CFIA. We're prepared to live with those results, but that hasn't been done yet. We haven't seen the results, and that's what we're waiting for.

The Chair: Mr. Preete.

Â (1255)

Mr. Kerry Preete: We believe there are several steps. Our first and foremost interest is Canadian farmers and making sure that Roundup Ready wheat is a profitable product for them. Part of it is that there are markets that will buy their product and will continue to buy their product. That is one of the commitments we have: that there are international buyers identified for this product and we have thresholds in place to do that.

The Chair: I apologize. We're almost out of time and Mr. Proctor is on for a few minutes. If there are any urgent questions at the end and you people are prepared, we're prepared to stay here for five or ten minutes just to accommodate them.

Mr. Proctor.

Mr. Dick Proctor: Thank you.

Mr. Newton, would you explain for me the concern about minimum till and what the impact would be with Roundup Ready wheat?

Mr. Weldon Newton: At this point, I guess, most of us have converted to at least minimum till and many to zero tillage. In doing that, obviously the weed control is an important factor before we seed. Using a burn-off at that point, which is generally Roundup, is what will kill the grassy weeds, the volunteer grains and grass. For controlling the GMO canolas out there, we have to add, but we have a lot of choice in broadleaf weed control. We don't have much choice for grassy weed control, and that's the issue that is a big concern to producers out there, because we don't have much choice to move to if we have Roundup Ready wheat to take out.

Mr. Dick Proctor: Any response or addition from Monsanto?

Mr. Kerry Preete: Yes, sir. Having this product fit well in no-till is an utmost need of ours. We really support conservation tillage. I would say as follows: where we've introduced Roundup Ready in other crops, we have actually seen no-till grow as a result, because of the flexibility we control. We need to have, and will have before we introduce this technology, other products that we can put with Roundup to address the issue of volunteer wheat, because it is critical, as was mentioned, for no-till to work and to continue to work. We are committed to finding a solution to this and we do have solutions identified at this point that are currently underway in testing.

Mr. Dick Proctor: Do you think it's possible, Mr. Newton, that you could see a growth in no-till, based on what you know as a day-to-day farmer and based on Mr. Preete's comments?

Mr. Weldon Newton: Well, certainly, depending on what they come up with and the cost of it, but we have the two different seasons we have to be very conscious of here. One is the pre-seed, which is one set of circumstances. We have a completely different set of circumstances on the pre-harvest end of it. I'm not sure we have anything else at this point that is competitive with Roundup for pre-harvest. We have to be able to deal with all of that package, and with the volunteers in the following crops. That's the big concern.

Mr. Dick Proctor: Let me just move to one other area.

Mr. Preete, your justification for voluntary labelling was consumer choice, yet that hard red spring wheat we export from both here and the northern plains of the United States goes to countries that overwhelmingly now demand mandatory labelling for durum and hard red spring, such as North Africa, for example, and the European Union and others. I fail to understand the rationale of saying that consumer choice is your rationale for having voluntary labelling.

Mr. Kerry Preete: Yes, on our position on labelling, I apologize that I wasn't clear. Our position is that first of all consumers need to have choice and, second, that if labelling is done it needs to be not misleading but factual for the consumer. If there is a significant difference in the end-use food product, obviously then it requires the labelling. The third piece is the relationship that really exists between a seller of the food products and the consumer: what do they want? We'll support that position if that arrangement between the consumer and the buyer is agreed on.

Mr. Dick Proctor: I think the farmers or the folks who were here last week representing the Saskatchewan Association of Rural Municipalities and other groups feel that it's virtually impossible on the segregation side to avoid the commingling of GM wheat and non-GM wheat. You've said that's one of the things that definitely will be addressed and you have a group looking at it. Could you go into some explanation about what you're looking at there?

Mr. Kerry Preete: I'll describe it and then Mr. Rempel can add to it.

Number one, we think international thresholds and standards need to be established. That's number one because, as mentioned earlier, we're still working through what they need to be. It's preliminary as to what it should be.

Curtis, you may have a comment on that at this point.

· (1300)

Mr. Curtis Rempel: Yes. I'd still say it's preliminary. It's too early to tell. Typically, grain trade deals at somewhere between 1% and 5%. That's sort of the international norm. Whether that'll be the case, we're not sure. We're waiting to see how it evolves, and of course we hope to be included in the discussions because they impact us.

Mr. Kerry Preete: I will just add what else we're doing. We have to establish what the standards should be in terms of what's possible. We must have a standardized and agreed-to testing method, so we're working with the Canadian grain inspection agency to come up with methods so that there can be an accurate, standardized, and accepted test for Roundup Ready wheat. That has to be put in place cost-effectively at appropriate delivery points, whether that be at the elevator or at the terminal when the ships are loaded. That's the other key piece being put in place right today that is critical to building that system.

The Chair: Quickly, Mr. Newton wants to respond, and that's the end of the questions.

Mr. Newton, please.

Mr. Weldon Newton: Yes. Our concern is, can you in fact design a system that is going to handle that? Certainly the current grain-handling system can't handle it on the segregation basis. Again, this tolerance is very key. In the end, where does the cost go? Certainly producers can't continue to absorb more cost in the grain handling system; we're all facing enough now. We need answers to these questions before we can endorse a product. That's where we're in the difficult spot: we don't have answers yet.

The Chair: Thank you, Mr. Newton.

We'll move to Mr. Duplain for a question.

[Translation]

Mr. Claude Duplain: Thank you, Mr. Chairman.

Mr. Newton, I do not want to ask you a question, but to reiterate our chairman's request. I was very interested to hear you talk about Cartegena earlier. You mentioned that several questions remained unanswered. I would insist that you tell us the questions so that we can compare them to our own.

There is indeed some pressure concerning the Cartegena Protocol, which is certainly a good protocol. Our friend Mr. Bigras, opposite, is asking us questions. You represent agriculture in Canada as well as the farmers, and we are here to represent you. So it would be good to ask the right questions before making decisions. I would like to insist on that.

My next question is for Monsanto. I am trying to make sense of everything I hear. This week, we met with people who told us about the problems with wheat : there are genes that could be transferred to a bacteria that would stay in the soil. We talked about that. We also heard that Monsanto would not push environmental research because it is too expensive.

Earlier, Mr. Kennedy or someone else said that the assessment that was made was based on the assessment provided by Monsanto. I would like to know whether there is a grey area between the research being done and what the government checks on the environmental front. Is it true that you do not conduct any environmental research? Is there a grey area in the entire process, an area that is not checked very well because the government does not do it and Monsanto does not provide the information? Do you understand my question?

[English]

The Chair: Mr. Preete first, and then Mr. Newton.

Mr. Kerry Preete: With respect to soil safety, in the development of Roundup Ready crops and Bt crops, we have conducted extensive soil safety research as part of Monsanto's development of biotech crops.

As a company, we support research. Science-driven research, good science, is good. So there have been soil safety environmental studies done by Monsanto as part of the development of this product.

Mr. Weldon Newton: Going back to your original question, some of our concerns with Cartegena protocol are certainly the issue of liability costs, where they go, how you approve them, the sampling methods, and the documentation. We need to standardize dockage and tolerance levels. Also, what relationship does it in fact have with the WTO? What will be the dispute mechanism in various aspects as you go through the marketing system and how will that be dealt with? What will be the impact of the precautionary principle? How does that impact that protocol as well as the WTO?

Those are just a few of the questions on which we need to have some answers. We can provide you with a detailed list of questions afterward, if you wish.

· (1305)

The Chair: Rather than doing it at the end of the meeting, I would ask you now to provide, in the near future, those questions to our clerk here.

Mr. Weldon Newton: Yes, Mr. Chairman, we will undertake to provide you with those questions.

The Chair: Please.

[Translation]

Mr. Claude Duplain: I have finished.

[English]

The Chair: Mr. Bigras, a very short question.

[Translation]

Mr. Bernard Bigras: Do you think the genetically-modified products industry is a viable one? That is my first question.

[English]

Mr. Kerry Preete: Mr. Chair, perhaps I could have the member explain his definition of industry.

The Chair: For the agricultural community or for Monsanto, I guess, is the question.

Mr. Bigras.

[Translation]

Mr. Bernard Bigras: Well, among other things, I read part of your financial report for 2002, which says you incurred considerable losses of approximately $1.7 billion, if I am not mistaken. Several analysts said you should not only change the corporate heads, but also your approach, which is not viable or productive and may perpetuate your losses.

Doesn't past experience show that your approach was wrong? Not only are there environmental risks, but there are also financial risks. What made you continue despite the fact that your 2002 report indicates, among other things, losses of $1.7 billion? I would like to know the rationale you used because I personally do not understand it.

[English]

Mr. Kerry Preete: Biotechnology, we believe, holds tremendous promise, not only for agriculture but for human health and environmental safety. With respect to the adoption of biotechnology, over 130 million acres of crops are grown around the world with biotechnology today. I think that's a good testament that farmers are benefiting from this technology and implementing it. A lot of studies have been done around pesticide reduction, a third-party study that talks about the amount of pesticide reduction due to biotechnology, as well as the economic benefits that are accrued to customers.

From our perspective, yes, investment in research to bring forward these products does take money. We are committed long term to agriculture. We are an agriculture-based company. We are in the business to serve Canadian farmers. It takes time and money to do that, but we believe the promise is great to all stakeholders in agriculture and we will see a return in making those investments.

[Translation]

Mr. Bernard Bigras: Tell me what you think of this statement by an international firm, which said on April 16, 2003 : “If Monsanto does nothing to reduce its huge exposure to risks, investors will probably incur further losses. The risk of huge financial losses because of genetic pollution or some other technological flaw combined with the persistent aversion to genetically-modified products on the market mean that Monsanto has made a poor investment.”

How can you claim that your market share is growing when you have those types of financial results? That is not what some international firms are saying.

[English]

The Chair: Okay. Answers.

Mr. Kerry Preete: I don't know about the particular announcement. I can say that we do have a very strong investor base, an investor base that is committed to what we're doing and believes in our strategy. If you look at some of the other financial indicators, we are a company that has been able to generate enough profits to continue to reinvest half a billion dollars a year that we're putting back into agriculture research.

We believe in agriculture, in making farmers more profitable in what they're doing. We believe we will have and do have a very viable business going forward.

· (1310)

The Chair: Thank you, Mr. Preete.

Mr. Newton wants to respond.

Mr. Weldon Newton: At this point I want to make it clear that we support the biotechnology. We think there are great potentials down there. We are already large users of it. I guess if I use my own farm, I grow nothing but GMO canola right now, but it's these other questions.

I guess the big concern is that the market is not ready for Roundup Ready wheat at this time. We need to have the market ready before we can move forward with it, and that's the producers' underlying concern. We need these answers to get there.

The Chair: Mrs. Ur, for the last question or question and a half.

Mrs. Rose-Marie Ur: Mr. Preete, in your research, have you questioned whether GM crops are passing their genes to the natural underground microbes that make the soil productive and for breaking down dead plants and helping the live plants absorb the vital nutrients? How much have you looked into the possibility of that occurring?

Mr. Kerry Preete: We have done extensive research on soil safety around the issues that you just mentioned in the development of Roundup Ready crops over the past several years. So we have looked into that. In fact, without getting too technical, because I'm not a technical person--

Mrs. Rose-Marie Ur: Nor am I.

Mr. Kerry Preete: --the actual genes that are of Roundup Ready tolerance and insect resistance actually come from the soil. So our science and several other third-party sciences say there's no concern.

The Chair: Thank you very much.

This is an inexhaustive subject. We're not going to exhaust the questioning. The purpose of the committee, of course, is to get to both sides, and ultimately.... We've had dealings with Monsanto. Going back a few years, we had an incident with rBST and, of course, Monsanto's involvement there, and the positions that the government took, which weren't very complimentary to Monsanto. But we're not here to put Monsanto down. We're here to hear your side of it and the science side of it, and of course we're here to hear the rural community, the farmer and primary producer side of it as well.

Ultimately, somewhere down the road we will have to write a report that reflects what we heard about the science and the safety of food. I think many of us would agree there is an unquestionable safety system in the world today that guards against insecure products entering the marketplace. However, if there is a non-market acceptability of a product, there isn't much use in producing it. So we need all those things and we need the ducks lined up or we will be in trouble.

Thank you very much for presenting this morning. I appreciate your responses, and we'll await your line of questioning that we've asked you for. If you can provide us with any further information, perhaps on questions that were asked this morning and that weren't fully answered, we would ask you to do so, please, through the clerk.

Thank you very much.

The meeting stands adjourned.