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Thank you very much, Mr. Chairman and members of the committee, for a chance to present on Canada's food chain. I'll make a very quick comment on the George Morris Centre, for everyone's awareness, talk about the food chain very quickly and some of the challenges and opportunities, and the concept of the value chain as a way of trying to address this, which governments in Canada and the industry itself are starting to do. And we'll talk about some future directions.
The George Morris Centre, as some of you may recall from the presentation last fall, is a national, non-profit think tank for agrifood policy. One of the areas we do work on is the value chain, the concept of the food chain and how to make it more effective.
Canada's food chain, from the farm gate all the way to the dinner plate, as some people call it, is sophisticated, competitive, innovative, and adaptable. But it is not quite perfect. There are issues of scale, depending on where you are in the sector and inside the food chain, where you are getting the investments, who is investing, and whether they're capable of handling some new innovations. The regulation of the food chain varies, depending on where you are, what products you're in, and what history has occurred in those products, and there are issues of what the non-food sector has in terms of bringing either competition head to head or competing for that consumer dollar.
There's a good deal of evolution happening, both at the food retail and food service end, which most consumers see all the time. That's leading to changes down through the chain, back through the processing side, into the farm community, and into the input sector. The whole concept of traceability is one way of thinking about how people's attention to the food chain has changed over the years.
I should note that competition exists everywhere in the food chain to a greater or lesser extent, and in some cases it's very ruthless. In some cases it's dominated by several large players.
I have just a few quick stats, and I'm sure my colleagues will present a far greater amount of information. I should note that recently Agriculture and Agri-Food Canada released an overview for 2012 on this whole issue, and it's very good. I'll try not to replicate it, but $87 billion is an estimate of food retail sales in Canada, and the food service sales are about $48 billion to $49 billion. These are the large employers, when we add it all up, for the Canadian food system, and they have a dramatic impact across all regions of Canada.
On the other hand, for the food chain, the farm community, the food processing retailers, food service and others have very different historical developments, some smooth, some not very smooth. Many players that used to exist have ceased to exist. Consolidation has occurred across the entire food chain, as well as increasing scale for some and increasing innovation for others. There are very different attitudes up and down the chain, and some of that's been driven by some of the regulatory context in which the participants operate.
There are also differences between the chains, when I think of the food service and food retailing or the independents, and the links back in terms of how they link to the processors and the farm community. And there are also new competitors. I'm sure my colleagues will speak to this, like the issue of other stores, such as Target, coming into Canada, or to what Walmart has done to the food retailing system in terms of changes. There's the use of grocery stores and food service sales at gasoline stations. Shoppers Drug Mart is now getting into a certain amount of actual food retailing. These formats are shifting, and it shows the kind of continued evolution of the food chain and what it means up and down.
There's also been a tremendous shift in consumer demands for fresh product, for different types of packaged goods, for pricing, and goods from outside of Canada. There are also shifts in demographics, both in age and ethnicity, and a need for different approaches to meet these different types of consumers in terms of driving back some differences up and down the chain.
One thing that has changed in the last two or three decades, particularly in the public policy for agriculture and food, is the growing involvement of the entire food chain in all these discussions, whether it's on a specific issue or on the broadest context of agrifood policy. The challenge is that the capacities differ between the players. Their histories and institutional memories are not identical, and how the markets affect them are also not identical. Both work for the past efforts and where they're going in the future.
There are different ways of responding to environmental pressures, social pressures, community pressures, community issues, where a community wants to be with certain food products or what they don't want, and how you shift the roles and linkages between them. How the sector responds and how the entire food chain responds has not always been consistent. There have been some very diverse views out there in discussions between one part of the chain with the other, some of it driven by the regulatory context, which is part of the history of how these things have changed.
Over the last several years, spurred both by industry and by government, there has been a greater focus on what we call value chains, in which they try to find market opportunities at the enterprise level, not trying to solve all of it at the industry level, but building up from enterprises, special value chains within sectors and within subsectors.
There is a whole concept now of value chain management, which the Government of Canada, provincial governments, and industry groups have supported. They're trying to learn more about how this works and how other jurisdictions have worked the value chain to get greater profitability, better viability across all players, not just some players in the food chain, and how technology, different attitudes, and different awareness might affect it.
Again, there are some limits on capacity, limits on adaptability, who has the money to reinvest, and who has the time and effort to think differently about an issue in which they can all participate. Where in the past they would have been in conflict, maybe in the future there should be greater trust and responsiveness.
The George Morris Centre has a value chain management centre, and we've done this business for about four years. We've done some work with the Canadian Agri-Food Policy Institute, which David McInnes represents. A recent paper released recognized these challenges through both our workshop efforts and our analysis. Past adversarial attitudes, driven by conflicts in history about bargaining power, about attitudes, about differences in how to achieve the same goals, and a lack of trust in the sharing of information have been real challenges. However, that can be overcome, and there have been examples both in Canada and across the world where the food chain has been able to achieve better results for consumers and for themselves by better cooperation, better linkages, and better trust.
A key focus for value chains is how to improve that over time, step by step so that it can work, not only for just one small commodity but across commodities. Still, we have to realize that the sector is complex. One size won't fit all. There have to be different ways of looking at it and different measures of how you see this being successful. Then look at these results and try to find the ones that work the best, and try to keep replicating the successes and avoiding the failures.
My view, and the view of the centre, would be that there is a great opportunity here to improve the trust, the comfort, and the relationships between those up and down the chain. There is an opportunity for better information sharing, better awareness of what the consumer really wants, and a recognition of the complexity in trying to learn how to make these value chains real, not just conceptually or just by one little pilot, but how to make them real.
I will make one last plug. Mr. Chairman, early next week the Government of Ontario, aided by the Government of Canada, is sponsoring a value chain innovation forum here in Mississauga. We're part of that. It will bring in experts from across Canada, across the United Kingdom, and Australia to talk to people on how to make the system really work, how it was achieved in the past and how they can actually make it work here.
Thank you, Mr. Chairman.
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Thank you, Mr. Chairman.
[Translation]
Good afternoon.
I represent the Canadian Agri-Food Policy Institute, an independent, non-partisan forum. Our task is to create a dialogue on pertinent issues and present alternative solutions, so that Canada's agri-food sector can reach its full potential.
[English]
Mr. Chairman, this is about creating a more prosperous agrifood sector. What are those essential conditions to create jobs and profitability across the sector? Our consultations revealed that achieving a great food future requires three things: transforming how we collaborate; linking economic success, people's health, and environmental sustainability to create opportunities; and third, integrating policies and strategies to support these shifts. These ideas are based on a piece of work we did in 2011 entitled Canada's Agri-Food Destination. In short, our work is about supporting and nurturing food systems.
The food system includes supply chains and how they work better together. Moreover, it's about how supply chains depend or are impacted upon so many others who are essential to success every day. Three levels of government, financial services, information technology providers, nutritionists, educators, ports, transport, logistics, human and animal health sectors—the list does go on. Taking a food systems approach is about how these players work better together so that we can truly be at our best to serve the consumer interest.
The diagram that we've submitted to you, which is submitted for the record, offers a perspective.
Food links government and supply chains. On the right hand side of the diagram are likely policy priorities of government. On the left are suggested agrifood priorities. I'm going to quickly walk through this for you to bring it to life.
Let's start with health. For governments across the country, the major goal is reducing health care costs. We need to increase the focus on prevention. Some 40% of health care costs are driven by chronic disease, and diet is a key driver of reducing chronic disease—90% of type II diabetes, 80% of heart diseases, could be prevented through improved diets, among other lifestyle changes.
Satisfying the growing interest in nutrition and what we eat is the opportunity for the agrifood sector. Pulse Canada, for example, wants to create a market pull for pulses, beans, and lentils as an “ingredient”. By adding pulses to pasta, for example, they can double the fibre and increase the protein by 25%, as well as lowering the carbon footprint. Working with researchers, culinary schools, and health professionals, Pulse Canada is trying to nurture the demand for healthy pulses.
Vancouver has a food systems strategy. It's linking the viability of local farmers, of which there are 2,600 in metro Vancouver, to produce healthy foods like fruits and vegetables for its residents. We need to identify how Growing Forward 2 can be linked to health strategies to build on this potential.
With regard to trade, Canada is expanding market access for exporters. Access opens the door, but fostering demand is crucial to our commodities and value-added sectors. To compete against low-cost exporting countries and premium exporters, we need foreign consumers to want to buy Canadian even more. Distinguishing Canadian food is the imperative. Price, quality, safety, supply reliability—these are very important, but consumers, retailers, and processors are increasingly looking to how food is produced, from environmental footprints to hormone-free attributes. Export success will likely depend on delivering upon such attributes. Traceability, for example, is an effective tool that can demonstrate this value proposition.
The bio-economy is surely going to be the innovation engine of the future. Creating business opportunities is a priority, and this is the platform for generating new revenues, reducing inputs, and lowering the costs for farmers. Take a Manitoba potato processor. It now diverts its potato waste to a biotechnology company, and that's used to create biodegradable plastic resins used in packaging and mouldings. That's a win-win.
In the livestock sector, bio-digesters can generate gas and electricity from manure, reducing energy costs and generating new revenues by selling the electricity to the local grid.
The University of Saskatchewan has discovered a bio-pesticide originating from mustard seed.
We need to systemically look at every food compound for its potential bio-applications. Improving the viability of producers, in part by deploying bio-solutions, may also help to render certain producer-directed risk programs less necessary, such as AgriStability.
Along with some improvements to the efficiency of such programs, the savings might be directed to help expand innovation and R and D. We see this as a proactive investment. Under the environment heading, it's important, and managing water and carbon is the priority. With climate change, this is essential to our remaining a reliable food supplier.
Research is vital in ensuring that farmers can remain adaptive. For example, they can develop ways of growing heat- and drought-resistant crops. Retailers and processors are setting water and carbon reduction targets. They are reaching to the farm level throughout their chains to help producers in this effort. Water and carbon will continue to shape environmental and competitiveness strategies for years to come.
If being competitive is the goal, then fostering an attractive business climate is the priority, and regulations are a big part of this. Regulations have a life cycle. We should be asking, for example, whether regulation X is still keeping Canada safe and competitive. Constantly harmonizing, updating, or embracing best practices is the key. Change is possible, as we all know from the major step to improve the regulatory environment between Canada and the U.S.
Commercializing publicly funded research and development relies, in part, on well-functioning public-private partnerships. Doing this can mitigate innovation risk. Let's look at a healthier mushroom, for example. A large processor in Ontario worked with a mushroom grower and a publicly funded innovation centre, Vineland Research, to create a more nutritious mushroom for use in sauces and soups. The processor benefited because it delivered a desired product to the marketplace. The grower benefited because he had a processor with an eye to the customer. The innovation centre benefited because it now had the supply chain to deliver commercialization success. Collectively, they reduced each other's innovation risk.
Can flaxseed prevent heart disease? There is a clinical trial going on right now that is trying to find out. This effort involves Agriculture and Agri-Food Canada, St. Boniface Hospital, the University of Manitoba, and Health Canada. A processing company is keeping a close eye on this.
A research priority could be to systemically examine food compounds for such new product ideas.
Food connects common linkages. Turning to tourism, Canada's “Canadian food” can help brand Canada. There is no surprise, given the season, that harvesting maple syrup in Quebec is profiled on Tourism Canada's website. Promoting regionally grown food is good for tourism, local economies, farmers, processors, and restaurants. The strategic question here is, what's holding back local food from truly defining Canada as a food destination of choice? I would think that every region across the country would have an opinion on that.
To sum up, food spans many policy domains. The players are connected. We can create economic opportunities. We can address people's health. We can improve the sustainability of Canada. We need to make it happen to maximize this. This is about creating a food systems strategy. Developing targets and metrics will help to galvanize this. The Canola Council of Canada has done so.
We're not suggesting that government dictate what supply chains do; each supply chain should create its own targets. Government can inspire change by laying out a broad set of targets. It could also do so for its own domains of activity. This is not about crafting vision statements. We need a dialogue today about what should be our country's agrifood destination. This is about where we want to end up.
We believe we have a great food future. What do we want to achieve? Is it to double the value of our exports by a certain date? Should we be supplying a certain percentage of our own food? What would it take to do so? This is the conversation that is needed so that policy and practice can be even better aligned to drive performance.
Thank you very much.
Thank you for inviting me here today. For anyone who's unaware, the Conference Board is a non-profit, non-partisan think tank based here in Ottawa. We do research in a variety of areas, including public policy, organizational performance, and economic forecasting and analysis.
We were asked here today to talk about the food value chain. When we think of the food value chain, the four main segments we think of are essentially agricultural primary producers, food manufacturers, retailers, and restaurants. But it's also important to remember that there are the connectors between those main segments. We have the transportation network. We have wholesalers. It's important to look at the whole supply chain and how that relates in terms of the success of the agrifood sector here in Canada.
Now, when we talk about the agrifood sector, one of the things we always like to point out is that it's not a monolithic thing. There are very different market conditions in different segments of the industry, such as, for example, capital intensity. Farming is a very capital-intensive business. It becomes much less capital intensive as you move down the value chain. Retailing and restaurants are much less capital intensive. So the market conditions are different in that respect. Their need for capital is different.
With regard to the degree of competition and market power, Mr. Seguin already touched on this, but probably the most concentrated part would be the retail segment, where we have three grocery stores accounting for about 70% of the retail sales in Canada, but even there, there's a large amount of competition going on. There are literally thousands and thousands of small retailers. You have competition from other major chains outside the grocery store network, things like Walmart and Target. So there's a high degree of competition in that segment.
Other segments also face different types of competition. For example, manufacturing varies very much depending on what type of product you're talking about, but there is some ability for market power there through things like branding. In the case of restaurants, again, it's a very fractured market with many players, but players have some ability to create value through things like their menu offerings, their location, and the degree of service they're offering.
Finally, farming is often thought of as a commodity-driven industry. It is, broadly speaking, but there are many niches where farmers have been able to create value by not selling a commoditized product and starting, essentially, to create some brand power and some value associated with the products they're creating.
Finally, one other big difference across the value chain is the degree of volatility in output prices and input costs for the industry. At one end we have farmers' very volatile prices, and at the other end we have retail and restaurants where prices are much less volatile. There is much less need to control the volatility the industry is experiencing at that end.
One of the things we have had to work with, a challenge we have had to address when we've been doing research on the agrifood sector, is that it is a viable sector, and in Canada it is a growing sector. It is experiencing modest growth. Contrary to perceptions, it's not a sector that is shrinking or under significant threat. That said, there are obviously individual companies in the sector that have faced their challenges, and the number of players in the industry is shrinking. So what we're seeing is fewer players that are bigger. There's a consolidation process going on.
What's driving this growth, this success of the industry? There are a number of factors. First we have our natural endowments here in Canada, our water and our land. These provide us with the resources necessary to be major players on the global stage in terms of agrifood production. Just as an example, we are among the major exporters of major foodstuffs such as wheat and canola and soybeans, and we are the largest exporters for a number of specialty products such as oats, peas, and lentils. So we are already major players on the global stage, and there is certainly the opportunity to grow our presence.
Another big factor of support for the industry—and this is one reason the industry has had slow, stable growth over time—is that we have the domestic market to support the industry. Import penetration in the industry is relatively low. Much of the industry is really reliant on the domestic market. With the exception of a couple of key segments, such as crops, seafood, and some red meats, most of the industry is very domestically oriented. So there's that slow, stable growth, where you have, say, population growth, a reasonable level of wealth, and income growth. It means that the industry has a stable base from which to operate.
But where's the growth going to be going forward? Emerging markets certainly have a growing presence. They are some of the factors behind the global rise in food prices we've seen in the last few years. In big marketplaces like China, India, and Brazil, their populations are growing, wealth is growing. They're demanding more food, better-quality food, and a greater variety of food products. Canada has the potential to meet some of those demands, but how do we fully leverage these opportunities?
As Mr. Seguin touched on, we do a lot of industry analysis, but our success is determined at the firm level. What are individual companies here in Canada doing to succeed? As part of our research on the agrifood sector, we've done a number of case studies on different success stories in the Canadian agrifood sector.
There are a variety of things, and they are often combined together. One of the things we often see is successful vertical integration with their supply chain, either upwards or downwards. So they're dealing with their suppliers and they're dealing with their customers. This may be through direct ownership, where they own additional parts of the value chain, or through partnerships, joint ventures, those sorts of things.
This allows a variety of benefits. For example, it allows diversification of products and markets. If you're making one thing for one customer through vertical integration, you can hopefully smooth out some of the fluctuations in your own business cycle. Maybe one particular portion of the agrifood supply chain is experiencing difficulties at one time, but it's very unlikely that the entire chain will be experiencing difficulties. So you can get the benefits of diversification.
Branding is an important issue. Are you making just a beef product, or are you making something that customers can know, recognize, and value? Do they understand that this is a consistent quality product that they will be able to buy on a regular basis?
There's product development. Are products being developed in isolation, or are products being driven by what is desired by consumers? What's possible at the producer end of things? Can we get together to understand the characteristics of our products and see how we can adapt them to the needs of consumer markets?
These are all ways that value-chain integration can help to improve the value we're creating with our agrifood sector here in Canada.
To sum up, agrifood has been a consistent source of modest growth for the Canadian economy over the last 20 to 30 years. Our natural endowments allow us to experience this growth—our land, our water. We need to understand and leverage those endowments to see how we can take advantage of the opportunities going forward, particularly in emerging markets. Effective management of our food value chain is one of the ways in which we can take advantage of those opportunities.
Thank you.
:
Thank you for the question, Mr. Zimmer.
I think I'll posit two different questions, challenges, to the government, both the federal government and the provinces. One is a challenge of scale. To satisfy the market demands of a large retailer, a large food service—Tim Hortons, Boston Pizza, The Keg—on a cross-Canada basis, such that they have the quality needed, needs a certain amount of scale at the production end and at the processing end to manage that and meet the needs. It requires that the consumers at that retailer or food service are satisfied continually and that the quality is assured, and, if necessary, even traced back with confidence to meet the government's needs. You need that scale, that investment, and investment in technology and management. Are we sure we're doing enough to help that?
At the same time, you don't want to do it in a way that disturbs the innovation in the system, having regional entrepreneurs, local entrepreneurs, trying something in a local market, or a very niche market that they can sell on a national basis. Is the regulatory system able to adapt to handle something that was not there historically? I use the example of certain new vegetables. If the production practices are different enough, do we have the regulatory systems that are adaptive enough, and do we have the management systems that are adaptive enough?
So it's a case of local innovation, regional innovation, and the ability to have scale when you're dealing with a national, even a global, marketplace.
:
Thanks to all of you for appearing today.
David, I'm going to start with you. Our party quite agrees with your proposition of a compelling food plan: a food strategy from gate to plate. We have been proposing it for years. It hasn't been forthcoming.
The Canadian Federation of Agriculture tried to come up with one. There are all sorts of different groups.... I see it as the responsibility of the federal government to bring all of the stakeholders together and prepare such a plan, as they did in England, in Scotland, and, as you know, in New Zealand, but we have yet to have one here.
I first want you to comment on the need for that, and who should be the group for or the leader of this initiative. That's number one.
Number two, you made an interesting comment. You said that once the plan is prepared, we needn't necessarily have regulations or rules attached to it, and that it has to be a vision. I disagree with you somewhat, largely because there's nothing that compels the vision to come to fruition, if you know what I'm saying.
For instance, there has been a lot of talk about the unnecessary amount of salt in our diet and the need to reduce salt in a lot of the processed products out there. The government had an opportunity to do that and didn't. I spoke to some in government and they said, “Well, we want people to have their choices.” It's an ideological thing: let them have their choices, right?
On the other hand, with respect to the railways, that would fall in your chart under trade and industry, I suppose, under increasing exports and improving competitiveness. For two years, farmers have been coming here saying they are getting ripped off by the railways. Nothing is happening. If you don't complement the plan with regulations and rules, nothing happens. I'd like you to comment on that latter part of my comment as well.
:
Thank you very much for the questions.
I'll start with the latter. We acknowledge that targets can be difficult things to set and to enforce. We're all supposed to be eating five to ten fruits and vegetables a day. Sometimes that doesn't happen, so targets can be inspirational as opposed to mandated.
On the other hand, targets can be highly effective. The Canola Council of Canada, for its sector, set a target of increasing canola production by 65% by 2015. They'll hit it. What they've done with that target is they've galvanized their supply chain—crushers, processors, growers, and others—in order to create a catalyst for productivity and profitability.
Should government be setting targets? That's perhaps part of your question. I think that's a discussion we need to have. I think we need leadership on the government side to try to reveal where it would like to go.... On the other hand, this is not to absolve the supply chains of responsibility. The supply chains need to galvanize amongst themselves to decide what they're going to do together. So there's a shared leadership here.
Also, frankly, researchers have a role. They need to integrate into the supply chains even more than they have. This is not a top-down approach that is necessarily from government. It is a collective approach as to how everyone can figure out how we can best serve the consumer, how we can improve their health, and how we can create jobs and profitability in the areas you're responsible for. I think that's the way we should do it.
I think you started with a question about food strategies, if I may take that on.
I'm originally from Nova Scotia. A rising tide lifts all boats, and the more that people are talking about strategies, plans, and our future—and we actually talk about a destination, not necessarily a vision—I think that's good, because I think the calibre of the discussion is actually starting to change.
The Conference Board had an event not too long ago that was called a food summit. What was fascinating was the constant reference to the need to nurture food systems. We're starting to talk about food systems rather than just supplier value chains. I think the language is starting to change, which is reflecting an understanding of the complexity of what's out there.
I think ultimately it's probably important that we all try to get together and come up with some common principles. We can't micromanage every single supply chain. That would be impossible. But common principles with metrics and objectives to drive behaviour? That's what we're shooting for.
:
May I elaborate on that? The link between health and agrifood is highly complex. There's no question. In part, it's about how we produce our food. Sodium and trans fat might be in foods or other things. In part, it's about how eat, which is clearly diet. It's in part about how we inform ourselves or our children and families about our diet. That brings in labelling, education, promotion, advertising, and other things.
Another part of this is how we innovate. Perhaps this is the greatest opportunity for the agrifood sector, because there are other departments in government and agencies and associations that spend a lot of their effort on education and promotion. They do fairly good work. In our view, the question is how to create a catalyst for activity, how to leverage that health file. It's about prevention, and I think there are a lot of good examples around the country.
The Canadian International Grains Institute, CIGI, has been working to create barley as a more nutritious ingredient, very similar to the pulse story. They've engaged plant breeders, an R and D facility in Leduc, Alberta, processors who want to be part of this potential research, and producers. All this creates an opportunity if barley is used in various processed or other foods. Barley, of course, is a good source of fibre. They are bringing these diverse players together and trying to accelerate their work. Then we have greater access to foods in Canada.
There's another benefit. We can increase our export of healthy foods and become known as a producer of high-quality, safe, and healthy foods. That's the bonus. So the health-food link is complex, but our niche here, where the Venn diagram overlaps, lies in how we can create an innovation platform to deliver healthier foods and growth opportunities across the supply chains.
I'm very pleased that this committee is studying the value chain. I think there are two main groups: the farmers at the one end, who are producing the raw materials that feed into the chain, and the consumers at the far end. On what lies in between, although there is commonality, there are also differences, depending on what the consumer is purchasing and where. Just to give an example, the consumer is purchasing processed food in a grocery store or is going to a restaurant.
The chains can have different variations, but I think there are some commonalities. There's the fact that food moves from the producer to a processor, to a distributor, to a wholesaler, to retailers, to the consumers. I think that chain is fairly well understood, but I would like to understand better the different aspects associated with each step.
I'm interested in seeing how we can maximize revenue for the farmer who is producing the produce that enters into the chain, and how we can ensure good value for money for the consumer at the far end, because pricing is added at every point that the product is handled, processed, moved along, stored, and distributed. I think we want to minimize waste as well. Any time there's waste there's a cost hit to somebody. That's where I see our study being very interesting and important.
The report was a joint affair between the George Morris Centre, Mr. Seguin, and CAFPI, and it characterizes the determinants of successful value chains. In your first recommendation—you mentioned five different recommendations—you say that value chains really require the free-will participation of businesses that are involved in the value chain. In other words, it can't really be legislated. To get proper participation there has to be a voluntary aspect by the businesses themselves that are involved in the chain.
The second thing is that the value chains change. Science and innovation are going on. Consumer demands are changing. The chain must be very innovative, and companies must be very adaptable in order to survive, thrive, and prosper in this environment.
I'm wondering if you can comment on those two recommendations, and particularly on the government's role. I'm not convinced it's heavy legislation or regulation, but I think we do have value to add.
Mr. Seguin and Mr. McInnes, what do you see the role of government being, given these first two recommendations in your report?
Thank you for the question, Mr. Lemieux.
Our view is that it's an enterprise prospect, with willing sellers and willing buyers, not coerced or compelled by legislation or regulation but trying to find mutual benefit. There is mutual benefit, but sometimes it's not very easy to find. Sometimes even the regulatory system doesn't encourage it.
Past attitudes and battles in the marketplace have not encouraged people to come together. But if they can they will find they can drive value to the consumer, possibly reduce their costs and waste, find better ways of dealing with it, and be adaptable over time.
This isn't something that's replicated just through regulation or one management study. You have to keep working at it. It varies by commodity. The commodity outlook or the demand outlook for a dairy producer in Quebec and Ontario is very different from that of a potato producer in P.E.I. or New Brunswick. It's different again for a beef producer in Alberta or Saskatchewan. How do you find the right processing balance?
You also deal with a lot of history here. Past differences and views, past legislation, and past attitudes have not always encouraged people to come together. So there has to be a willing capacity. Governments can encourage that, enable that, help management capacities, and help the understanding of what's really happening in the marketplace. But people shouldn't be compelled or coerced into making this happen.
Thank you, Bob.
I think it should be organic; that is, it should naturally evolve where there are business opportunities to be had. Government absolutely plays a key role. They are regulators, they are funders, and they are trade promoters, so in their own right they can have an impact on the marketplace as a whole or on a specific value chain or supply chain.
Where we see an example of that—and I believe this is through the Ontario government—is that they are helping producers, retailers, chefs, and restaurants find each other in the marketplace. They've set up a website called Ontariofresh.ca. Through that they are trying to create new links, essentially new supply chains between growers, producers, and the markets in the populated areas around the green belt. So government can help in that regard, but government sometimes doesn't need to be part of this transaction.
We're familiar with, and have invited to one of our symposia, an entrepreneurial couple who have sourced product from 29 farmers and producers—beef producers and horticultural producers—in the Ontario region to feed healthy meals to thousands of school kids every day in the GTA, the greater Toronto area. They've actually shortened the supply chain, because they have developed a relationship together. They've developed trust. They see value, and now they're moving into the processed foods area, because they're trying to use the full carcass, for example, or they're trying to have a year-round supply of products, so they're getting into sauces and other things. I'm not sure if government was part of their story, but they've found a common desire to create a quality product that improves the quality of meals delivered to thousands of kids every day. We should celebrate that.
The question to them would be, what stands in their way of succeeding? I'm sure they would have a list. But I think we should embrace the fact that there's diversity out there and there are going to be large and small chains.
Thank you, folks, for coming.
It's interesting that you talked about feeding school kids. The Scottish national food plan actually talks about feeding kids until grade 6, regardless of income, just simply as a food strategy, period.
Also, I noted that there is a hospital in the GTA—and you wouldn't wish to be in a hospital, but if you've been a patient, you remember how bad the food can be—that is now actually preparing what one would call home-cooked meals. Even though they're actually more expensive to generate at the beginning, what you find is that you don't dump 70% in the garbage at the end, which is what happens with most patient food, because folks really don't like it, and that's understandable. For those of us who have been in a hospital lately, it isn't much fun. It isn't very good, actually. So it's interesting that you talked about that chain and about how institutions may play parts in chains to some degree. It would be interesting to see how that works itself through, because it's only one hospital at the moment in Toronto. We'll see what happens.
David, you talked about something—and Robert did as well—in your report, and that was the Vineland Research and Innovation Centre, which I know infinitely well because I live down there. I hate to admit that I used to take peaches from them when I was kid, but I did. They were pretty good peaches. I don't think they grow those ones that we took any more. I think those were the ones they didn't like.
In any case, are we seeing any models like that across the country? It's somewhat innovative, having gone from a place that almost died, actually—about eight years ago it was almost closed—to what it is today. I wonder if either one of you wanted to comment on that.
Then the second piece was to talk a little bit about what you call sustainability farm plans. Could you both touch on that? And I'll let you use up the rest of your time talking about those two pieces.
Whoever wants to start, please feel free to.
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Okay, then, Bob, you can think of a good answer.
Quickly, back to the hospital point, this is a really interesting area. It speaks to the idea that we tried to present here, which is whether we should be thinking about the health sector and the agrifood sector, and are there mutual opportunities, such as in the procurement of Canadian food, wherever it may be grown, to help serve hospital meals?
I know in the GTA—I hope the statistic is right. There are 115 million long-term care hospital meals served every year in the province. One has to wonder whether that's an opportunity, and I don't have the answer. What is the percentage of food that's drawn from Ontario or Canada? It's a question that we have to ask. Are we missing opportunities in our own backyard?
With respect to Vineland, I'm most familiar with them. I think there are efforts being undertaken across the country to try to bring people together. I mentioned CIGI. There's the Richardson Centre for Functional Foods in Winnipeg that's trying to reach out and engage the private sector, the supply chains, to create opportunities. There's FOODTECH Canada, if I have that right. They have R and D facilities across the country to bring in growers and entrepreneurs to co-develop foods, and test them, including market and consumer research. There's a whole lot of activity.
The question I would come back to is, are they business-led? Do they have a line of sight on the consumer, and are they leveraging the resources of the public and private research facilities in order to get product to market? And then is the regulatory structure in line with when a product comes out the door?
You need these pieces coming together at once I think in order to create that optimum environment for innovation.
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If I can, Mr. Chairman, that's a good question.
I'll say three things. I would like to know at what time any government, any minister of agriculture, ever said local food was not important, because it always has been. What has always been the challenge for many institutions as they looked at the food side is the cost factor. To the point raised by the question, a lot of the product ended up being thrown out, wasted.
It took a change in attitude. What do we really want when we feed institutions, whether schools, hospitals, or long-term care facilities? How do we want to use it, and are we getting the best value? That then turns around and changes what we are trying to feed consumers in these places.
I'll note that the College of Management and Economics here at the University of Guelph has completed, or is just completing, a study on local hospitals and what's driving their institutional behaviour with food. It isn't the lack of a government mandate or even a lack of innovation at the producer/processor level; it's how the institutions historically looked at how they handled food and how to minimize the cost burden. That's how they thought of it. Now they have a change of attitude, which should start changing things.
Finally, I think it's a case of how we help people think differently about where the real value is in the marketplace, versus trying to say that we definitely know where it is. There's far too much complexity in the food system to think that a mandate or a regulatory rule will satisfy both the people consuming the food and the people producing and processing the food. We have to have much more flexibility.
On the sustainable farm plan, our biggest challenge from the centre is that it's a great concept, but both governments and industry have stopped that, so how does this really affect the environment? Can we really measure these impacts to see what really works and what doesn't work? That's a real challenge, in our view, to take this one step further.
Thank you to the witnesses for attending here today.
I have a whole host of thoughts. I'm going to try to get through as much as I can in five minutes, and of course the first observation I'll make is that it's very clear what a complex issue this is, so it's a shame that we have to do it in five-minute segments. It's very difficult.
I'll also begin by thanking you, Mr. McInnes, for ending your response to Mr. Valeriote's question by pointing out that we cannot micromanage things.
I will pick up on a theme that Mr. Valeriote started when he said that he observes a bit of ideology about a Conservative's desire to give people the freedom to follow their own destiny. On this side of the room we often observe an ideological desire on the part of the Liberals to micromanage by government, so I think that correctly discerned the issue.
I have been listening carefully, and I haven't heard much said today about the question of the interaction of federal and provincial jurisdictions. Of course, I am new to this committee, so it could be that I have finally stumbled on a committee where the question of federal-provincial jurisdiction doesn't come into play. Maybe everything is running smoothly and there are no obstacles.
When we're talking about food chains, we do have complex activities, and they cut across all provinces. I wondered, since we're doing a kind of overview here, if I could start with Mr. McInnes and ask if it's the case that all federal-provincial issues have been ironed out in relation to food supply chains, or are there some that remain, and what do you think the federal government might do to move those issues or challenges along?
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Thanks to all of you for being here.
Mr. McInnes, I'd just like to follow up on what you were talking about with health care and diet. I'm going to just throw out my questions, and hopefully we'll have enough time so that all of you can respond.
We talked about health care and diet. What I found most certainly when I did my cross-Canada food strategy hearings was that there was a lot of feedback to the fact that the more we support a good diet, the fewer costs there are for our health care system.
Should government have a role in perhaps mandating or legislating local procurement policies, either at the provincial or federal level, such as a certain percentage of food, for example, for state and federal institutions? Should there be some kinds of programs in place to support farmers? I know the U.S. has coupons for seniors to go to farmers' markets. In B.C. we had a pilot project where low-income families got coupons to go to farmers' markets. Should we be encouraging such a policy? It's well known that the more fruit and vegetables folks eat, the better their health is. That's one area.
The other one is the whole area of GMOs. I know that my Conservative colleagues will be happy that there is some talk of GM labelling going on in the United States in regard to freedom of choice—in other words, the choice to be able to choose GM foods or not. I'm just wondering what effect it could have here on our supply chain. Something like one million people signed a petition asking the FDA to label genetically engineered foods. There were over 500 partner organizations who helped to galvanize this movement.
In the State of California, I just found out, they are calling to have a referendum in the November ballot. If approved, the California position would have a ripple effect. There would be mandatory labelling of GE foods in California. Obviously, because California has been a leader in many instances, this would have a ripple effect, and probably, then, there would be mandatory labelling throughout the States, and it would probably come here.
If this were to happen, what effect do all of you think that would have on the food chain? Do you have any comments? We know, for example, that Europe and many other countries have this labelling.
I'll just throw those two out, and hopefully you'll have enough time to respond. Maybe Mr. McInnes can start.
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Thank you for the question. This is a big question.
Clearly, academia and the scientists have a major role, of course, in research, and applied research is very important, but I think there's an increasing focus on how we commercialize it—or pure research, rather, that they're interested in. How do we apply the research to commercialize it?
I think canola—I'm glad you raised it—is an excellent point. Canola, of course, is one of Canada's major success stories, a major export success story. But it was born out of two Agriculture Canada scientists, if I'm not mistaken, who developed it and then worked with the University of Manitoba and the National Research Council and then with business and nutritionists to take it to where it is today.
What's the moral of the story? Sometimes an idea can start in pure research, but you need a full slate of players to bring it to success. I saw one statistic—from Cargill, actually—that said to fully commercialize a major project innovation can take ten years and $50 million to $100 million. So I think we have to see the complexity behind the question and understand all the more the reason why we need all the players to figure out how best to do it together.
On the other hand, if we really want to be nimble and beat our competitors and attract investment here, then business-led innovation is vital.