It's my pleasure to appear before this committee as you study potential ways to improve competitiveness in the Canadian manufacturing industry.
Today, I would like to provide you with some context on the Canadian food processing industry, including the importance of food processing as a manufacturing sector to Canada's economy, the challenges and opportunities facing the Canadian food processing sector, the state of innovation in this sector, and potential solutions to help improve the sector's global competitiveness.
First, I'd like to point out a few facts with respect to the economic importance of the food processing industry. With about 2% of Canada's GDP in 2015, it is the largest manufacturing industry in Canada in terms of GDP.
The industry employs close to 256,000 Canadians and is the largest manufacturing employer in the country. Employment in the food processing industry has been stable. In fact, it grew about 1% between 2008 and 2015, and it is the second-largest manufacturing industry in terms of revenue with about $106 billion in sales. As the largest purchaser of Canadian agricultural products and the largest manufacturing employer of rural areas, food processing is a key economic driver for rural Canada.
In looking at the industry's performance, industry sales continued to grow throughout the recession and grew by 3% last year. Exports for the industry totalled $31 billion in 2015, which is an 11.7% increase when compared to the previous year.
Canada's top five export markets for processed food and beverages, including seafood, were the United States with 74%, China with 6%, Japan with 5%, Mexico with 2% and South Korea with 1%.
The food processing industry has a high level of economic spinoff to the rest of the economy. For every additional $1 million in output generated by the food and beverage manufacturing industry, an additional $1.23 million in output is generated.
However, the food processing industry in Canada is also facing a number of challenges. As an example, the growth in the country's sales in exports of processed foods and beverages has not kept pace with the growth in imports, and as a result, Canada went from a trade surplus of $5 billion in 2004 to a $750 million deficit last year for processed foods.
Investment in processing plants and advanced technologies in Canada has not kept pace with that of its competitors, and therefore Canada's productivity is lagging behind other countries such as the United States. According to a study by the Ivey School of Business, there have been about 140 plant closures between 2006 and 2014.
With respect to innovation, Agriculture and Agri-Food Canada's engagement with the industry suggests that industry sees a key role for innovation in terms of supporting industry competitiveness.
Last year alone industry invested $139 million in research and development, a little under 0.2% of total sales. However, when compared to Canada's global competitors, this level of R and D investment is relatively low. For instance, in the Netherlands where the food processing industry is of equivalent size to the Canadian industry, food processors spend about double the amount on R and D as a percentage of sales as Canadian processors do, namely 0.4%. In the U.S., the industry also spends about 0.4% of sales on R and D.
Agriculture and Agri-Food Canada is working with other federal departments such as Innovation, Science and Economic Development Canada, as well as with provincial and territorial governments to better understand challenges facing the industry with respect to innovation and potential ways to address them.
Canada has a strong foundation in science within industry, academia, technology centres, and other research partners, but the level of collaboration between these stakeholders on innovation projects for the benefit of industry is relatively low, particularly if we compare it to global innovation leaders like the Dutch.
We also understand that the Canadian industry needs to have a greater capacity at a strategic level to identify key priorities or themes for precompetitive innovation that will procure a competitive advantage to Canada globally, or at least to the same extent that our competitors do.
With a growing demand for processed foods globally, there is a tremendous opportunity to grow the industry in the years to come. Agriculture and Agri-Food Canada has been working with the food processing industry to address these challenges through the food processing industry round table, which is a forum bringing together leaders from the Canadian food processing industry and governments to improve the industry's competitiveness. Through the round table, the industry has identified a vision for Canada as a food basket to the world, with the goal to grow industry sales to $135 billion, to increase the level of processing of Canadian agriculture products from 39% to 45% in total output, and to grow exports from 27% to 35% of sales.
Industry strategy includes investing in capital to improve productivity. The industry has asked for a government program to support capital investment, increasing innovation and differentiation to meet consumer demands, improving access to competitive ingredients, growing global exports, increasing access to labour and developing a globally competitive work force, and maintaining competitive and business-friendly regulations.
Through Growing Forward 2, which is the current federal, provincial and territorial policy framework for Canada's agriculture and agrifood sectors, federal and provincial governments have been supporting the food processing sector through a broad range of policies and programs. These include investment in machinery and equipment, innovation through supports to Canadian food innovators' food processing cluster, and market development in foreign markets.
Outside of Growing Forward 2, Agriculture Canada is also working with Employment and Social Development Canada on industries' access to labour. Going forward, supporting a vibrant and competitive food processing industry will require a clear focus on addressing the competitiveness challenges facing the industry. We need to help the industry improve its productivity by increasing its level of capital investment and by targeting support to specific strategic investments for broad economic benefits to Canada, such as production mandates or investment in leading-edge technologies.
We need to build the industry's innovation capacity by helping the sector to articulate an innovation strategy; enhancing the role of science and generating innovation products within the industry; increasing collaboration between industry, academics, and other innovation partners; and encouraging firms to engage in more scientific R and D with innovation partners.
We need to better understand the challenges that industry faces in expanding to offshore markets. We need to focus on initiatives to encourage companies to explore these new markets, including countries with which we sign new trade agreements in emerging markets where most of the growth will occur in the coming years.
Last, governments need to continue working collaboratively on improving industry's access to labour, including looking at potential options for the temporary foreign worker program in food processing subsectors and regions facing acute labour shortages.
In conclusion, while the Canadian food processing industry has been stable, it has been losing ground compared to its global competitors. There are three main strategic areas to focus on to support the industry's competitiveness: strategic investments to grow the industry and address productivity issues, Canada's innovation system and private sector R and D, and market development efforts and increased market share in offshore markets.
Co-ordination with other federal departments and with provincial and territorial governments in the next policy framework is crucial to support the industry. Agriculture and Agri-Food Canada is engaged with provincial and territorial governments in addressing the industry's competitiveness issues. Agriculture and Agri-Food Canada also continues to support in delivering on the commitments outlined in his mandate letter, such as the value-added agrifood investment fund.
Thank you again for this opportunity, Mr. Chair.
I appreciate the opportunity to participate, and I would like to explain what the CFIA is doing to support harmonizing regulations for the food production sector.
The CFIA is a science-based regulatory agency dedicated to safeguarding plants, animals, and food. It reports to the Minister of Health. Our first priority is the health and safety of Canadians.
The CFIA also supports the Minister of Agriculture and Agri-Food in his responsibilities.
CFIA's approach to supporting harmonization with other countries has several dimensions. Perhaps the most important and foundational element we are working towards today is the implementation of the Safe Food for Canadians Act through new regulations. That act received royal assent on November 22, 2012, with support from all federal parties. The act establishes a modern legislative framework for food safety that shifts the focus from responding to food safety hazards and incidents to prevention. It also enables a new regulatory framework that is being developed and has so far been the subject of extensive consultation.
The proposed regulatory framework is modern and would allow for more efficient inspections based on risk and greater flexibility for industry innovation. Of particular relevance to today's discussion is that the new regulations will replace 13 existing inconsistent and prescriptive regulations with a single outcome-based regulation that applies to all food that is imported, exported, and traded between provinces.
What we mean by outcome-based is that as long as the food achieves the safety outcomes that are required, they can be achieved in multiple ways. This will significantly improve the ability of the food sector to innovate and the ability of Canadian exporters to meet not only Canadian but foreign requirements, while further strengthening the food safety system in Canada.
Finally, the Safe Food for Canadians Act and the regulations will instill even greater confidence that all food produced in Canada is safe and subject to the same requirements—requirements based on international standards established by Codex Alimentarius. That confidence is extremely important when it comes to exports. Perhaps the most important factors in maintaining and expanding access to foreign markets are the efficacy of the food safety system in Canada and the credibility of the competent authority, which is the CFIA.
The other element I want to talk about is specific to the U.S., the Canada-U.S. Regulatory Cooperation Council, or RCC. Canada and the U.S. have highly successful world-class regulatory systems that have evolved independently while their economies have grown closer. The RCC provides a structured and accountable process for Canada to work continuously with the U.S. to improve trade opportunities and enhance regulatory alignment. The RCC focuses on joint initiatives—both countries agree what they are going to work on—that seek to align regulatory systems and reduce unnecessary requirements.
For example, under the RCC, the CFIA and the United States Food and Drug Administration, the U.S. FDA, evaluated each other's food safety control systems and determined that they provide a similar level of health protection. A food safety systems recognition arrangement was subsequently signed this past April by the CFIA, Health Canada, and the FDA. The arrangement applies to fish, fresh fruit and vegetables, processed foods, and certain milk products. The recognition of an exporting country's food safety system as being comparable allows an importing country to focus its inspection resources on higher-risk foods and potentially higher-risk countries. Importers can be confident that the food source from the other country meets domestic requirements.
While the U.S. FDA covers most food, meat and poultry are the responsibility of the U.S. Department of Agriculture, the USDA. Canada and the U.S. routinely audit each other's meat inspection systems, which have been determined to be equivalent. However, in both countries, the regulatory frameworks for these products are much more prescriptive and entrenched than for other foods, making harmonization extremely difficult. The CFIA has a unique work plan with the USDA for meat and poultry. Both countries are committed to seeking greater harmonization and facilitating trade, and there has been some success. For example, in 2015, CFIA harmonized with the U.S. on meat nomenclature, essentially using the same terminology for beef products on both sides of the border.
I trust this sheds light on how the CFIA is working to support harmonizing regulations for the food production sector.
I look forward to any questions you may have.
Thank you to our witnesses for being here today.
I've had an opportunity as a farmer and someone involved in the industry to see a lot of innovative ideas that are taking place. I had the opportunity yesterday to sit in with the Senate agriculture committee when they were speaking about honey imports and some of the issues that have happened there, primarily at the border. Those are CBSA issues as well as CFIA. The concern is with adulterated honey coming in from other countries. Again, that puts pressure on the products we have.
There are some ideas about some new testing procedures that perhaps we could do. Otherwise, we end up sending samples to Germany to have them tested for the adulteration. If we could do some of that closer to home, it would be certainly much better.
The other thing I've been engaged with the Senate agriculture committee, SCAF, on is the interprovincial barriers especially with meat production. That has more to do with the border issues we have across this country versus border issues with other countries. I think that's where we should also be focusing some of our thoughts.
Another point I want to make, before I specifically ask you a question on this, has to do with investments and the dollars we put in. I had the opportunity a couple of weeks ago to be with the science minister in Germany. When you take a look at the actual investments that our governments have been putting in over the last number of years, it is equivalent to what you would see going into German scientific research.
The point is that we are not getting the buy-in from business. They were saying that there are three specific reasons. Geography is one of them. It takes us six hours to fly from one end of our country to the other. That's part of it. Another one is a jurisdictional issue as far as provinces are concerned. The third is market access. They are the place that people want to go because they are one of the bigger centres. When we look at this, people really don't want to spend the money here. They'd sooner spend it in the United States.
I'm curious if, in your discussions, you found some ways to mitigate some of the issues I've just presented.
For purposes of the translation, I'm going to be jumping past a couple of paragraphs, just so you're aware.
We thank you on behalf of the Canadian Agri-Food Policy Institute for this opportunity to present our views on the status of the manufacturing sector in Canada.
We represent an independent and impartial think tank dedicated to advancing research, ideas and dialogue on the long-term competitiveness of the Canadian agri-food sector.
We're going to address three questions with you today. How is the idea of competitiveness changing? What does this emerging shift mean for Canada and Canadian food manufacturers? What can Canada do to take advantage of this change?
In short, I think Canada could aim to become not simply competitive or more competitive, but how we can become sustainably competitive. I'm going to go through each of the three questions very quickly.
Turning to the first, how is the idea of competitiveness changing? What's the single most important determinant of success in food manufacturing? Is it labour, price of ingredients, good road infrastructure, a low Canadian dollar, lower hydro costs? These are all important for sure, but the scarcest and most precious ingredient or resource is trust.
Germany's Volkswagen showed what happened when it lost consumer trust. It misled consumers and regulators on its car emission tests, costing the company billions of dollars and seriously denting its corporate reputation.
Global trust in food production is taking a beating as well, if we look at algae blooms threatening oceans and lakes, fostered by the overuse of fertilizer, and the runoff of phosphorus and nitrates from towns and cities. In Europe and elsewhere, pesticide levels and nitrates in groundwater are a concern. In China, people have come to mistrust their food so much that they seek food online from Canada and other countries in order to source products.
Consumers have an abundance of food to choose from, and very safe food, but consumers are growing increasingly uneasy about the food they eat. It's no wonder that food manufacturers and their supply chains are working to develop sustainable sourcing for a whole variety of products, including sustainable seafood, sustainable beef more recently, and sustainable palm oil. This also helps to explain the rise of organic food.
Despite this, the stress on global natural capital, that is, water, soil, and the biodiversity of living organisms is growing.
The Global Footprint Network, an international NGO, has calculated that most countries are in what they described as ecological deficits. It's calculated that more than 80% of the world's population lives in countries that use more resources than what is renewably available within their own borders, and climate change is going to make this worse.
The Bank of England's Mark Carney has said that climate change will threaten financial resilience and longer-term prosperity. International financial institutions will soon require borrowers to submit climate risk disclosure statements. Norway's $900-billion government pension fund has dropped 11 companies because of their deforestation practices. Moody's, the ratings agency, now assesses the water risk of mining companies in the developing world. So, managing natural capital, the building blocks of how we produce food and everything else, is becoming a financial systems and an access to capital risk. This is going to impact all manufacturers. Fortunately, Canada is in an ecological surplus. This is a strategic opportunity if we can diligently preserve that surplus.
What does this emerging shift mean for Canada and Canadian food manufacturers?
Canada produces safe, high-quality foods, but so do a lot of other countries. To compete, we must differentiate. This is important given that food manufacturing is a national economic engine, and you heard some statistics and data just before us about the size of the sector.
We examined 13 food companies and why they were so successful, from Bonduelle and PepsiCo, large multinationals, to Lassonde and other mid-size companies in Canada, to small companies in P.E.I., such as Island Abbey Foods.
We tried to identify what was common to explain their success. For the start-up and small business in every province and territory, success often depends on having a niche product, a terroir, an intellectual property that they can become regionally or locally dominant in, and build an export market for.
What does the larger Canadian mid-size company need for success and how does that drive it? Those companies need, ultimately, to build resilience to American firms. The U.S. firms often have the advantage of scale, and to counter this, Canadian firms need to offer several points of differentiation, which is also a way to attract capital.
For multinational firms operating in Canada, outperforming the NAFTA option is what they must do to stay here. They also compete for capital within the global corporation, and that means they need to secure a reliable supply of high-quality competitive ingredients and have a mandate that often includes exporting from Canada, as well as serving the domestic market.
Common to all these types of companies is differentiation. Going forward, we believe that companies will increasingly try to differentiate themselves based on how they manage natural capital. This is Canada's huge opportunity, and we are among the few in the world that can attract the companies that want to develop innovative products and processes here in this country because of it. We have adequate fresh water. Our winters act as a natural pesticide. We use less pesticides and other chemicals than our key competitors do. Our ratio of animal density and human population to arable land is among the lowest in the world. I should also add that we have a reputation for good governance.
The third question is what we can do to take advantage of this emerging and shifting marketplace. We need to better leverage the opportunity that I just outlined, but we face some barriers, and we need to be proactive. Our long-term game should focus on how we raise the bar on our competitors. This means taking action on global subsidies and quality standards. Global agricultural subsidies are huge. They allow global food manufacturers to access relatively inexpensive food ingredients, giving many of our competitors the ability to achieve global scale. As well, such subsidies incent production without really factoring in the ecological impact. This actually prevents us, here in Canada, from leveraging those natural capital strengths.
Here's an example. We often look to the Netherlands as a food manufacturing model, and rightly so. They have many large food companies, and the Netherlands is the second-largest food exporter, after the United States. However, this has come at a cost. Its agricultural practices are highly intensive, unduly impacting soil, water, and carbon through pollutants and greenhouse gases. The sector contributes an average of 10 billion euros annually to the Dutch economy by GDP, but its ecological net impact is 1.6 billion euros. The EU subsidies support this form of agriculture.
Canada can shine a light on what's happening here with global subsidies as part of a concerted global campaign, but we need to be cautious in imposing new requirements and regulations on the Canadian food system, such as new environmental protections, as we don't want to give our competitors a cost advantage in the meantime. Instead, we should be trying to raise the bar on global standards internationally. Over time we believe this will be harder for our competitors to meet as these rising expectations and standards go up.
Domestically, we also need to continue to focus on having an inviting business climate. How we enable investment and innovation to help us differentiate is really the strategic task. Clearly, many consumers and investors are expecting more transparency from food companies and the agrifood supply chains on a whole host of matters from nutrition, animal care, sustainability, antibiotic use, and ethics, and the list really goes on. We see this as a catalyst to build a better Canadian brand. To help us, we need data and credible metrics and measures to track our progress and reassure consumers and markets at every stage and step in food production and supply, from field to fork.
These steps will actually help to deepen trust. Governments and industry need to work more closely together to make such traceability a reality. We need to be able to demonstrate that food production does not undermine water and ecosystems, add to greenhouse gases or use unhealthy ingredients, and so on. Better transparency of such practices on our part will make this a race to the top and not a race to the bottom. As well, we can better align our innovation and science organizations on priorities that will help enable this transformation. This needs to include deeper collaboration with industry.
We believe that Canada can define a very powerful food brand around trust and use this to differentiate our food products and beverages. Sustainable competitiveness is our big possibility because of our natural resource base, if managed right.
Thank you for your time.
On behalf of Food and Consumer Products of Canada, FCPC, and the member companies we represent, I would like to thank the Standing Committee on Industry, Science and Technology for undertaking a study on Canadian manufacturing. I would like to take this opportunity to highlight the important role of the food and consumer products industry to Canada's manufacturing sector and its future.
I'd also like to say how pleased I am to have the Canadian Agri-Food Policy Institute testifying with me today. We collaborate closely, and they do excellent work.
FCPC is Canada's largest industry association representing companies that manufacture and distribute the majority of food, beverage, and consumer goods found on store shelves, in restaurants, and in people's homes. Our membership is truly national, providing high-quality jobs to both urban and rural Canadians in more than 170 federal ridings across the country.
Food manufacturers, as we heard earlier, are in fact the largest employer in the manufacturing sector in Canada. We were pleased that budget 2016 recognized food manufacturing as the largest employer in Canada and an important contributor to the economy. For the first time, food manufacturing was also identified as a priority in July at the federal, provincial, and territorial agriculture and agrifood ministers' annual meeting. We are hopeful that this recognition will be reflected in future government research, policy, and programs.
We also heard earlier that there's enormous growth potential for this industry. It's estimated that the world's population will grow to 9.6 billion by 2050. This will require a 70% increase in global food production. According to the chair of the government's advisory council on economic growth, Mr. Dominic Barton, food will be one of the biggest businesses in the world. Mr. Barton believes Canada has the potential to be a leading global food player, but we're not there yet.
Canada is well positioned to play a vital role in feeding the world with its high-quality and made-in-Canada products. Our reputation in food safety, ranked as number one in the world by the Conference Board of Canada in 2014, can help propel Canada into this leading role. Despite the growing global demand for food and trust in Canadian products, however, Canada is actually importing more value-added processed food than it is exporting. Most recent figures show that we have a trade deficit of $7.55 billion in further processed food products.
According to CAPI, which studied the issue extensively, the reason for the trade deficit is the steady decline in net capital investment in machinery, equipment, and buildings. Certainly we are seeing those challenges presented by aging manufacturing facilities across the country. More incentives are required to urge food and consumer product manufacturers to reinvest in their Canadian plants, open new and modern facilities, and integrate new technology like automation robotics. Other countries are fiercely competing for these investment dollars. We need to be in the game if we want to keep value-added manufacturing jobs here in Canada.
Now, another hurdle is our backward-looking regulations that have not kept pace with advanced technologies, global practices, or new product innovations. A modern regulatory framework would encourage companies to manufacture in Canada, grow their operations, and introduce innovative processes and products. Canada's innovation and growth agenda depends on Health Canada's ability to modernize its food and consumer product regulations.
We also need to carefully consider the impact of new regulations on our industry's ability to innovate and grow. There is currently a lot on the table in terms of Health Canada's potential intervention in our sector: how we make our products, how we package our products, and how we market our products. We recommend that the government take a balanced and holistic view of existing and potential regulatory initiatives as a whole in terms of the efficacy of the measures and their economic consequences.
Overall, I think we need a new way of looking at the food processing sector in Canada and a recognition of its current economic contribution and potential. I like the way CAPI summed this up in a recent report, “Canada is often viewed as satisfied with remaining largely a commodity supplier, rather than doing more to add value to what it produces or enhance its processing potential.”
We need to process for the sake of processing, and figure out how to add value beyond the farm gate. Food manufacturers, however, remain currently under-represented in the federal government. In our home, which is Agriculture and Agri-Food Canada, only about 5% of the entire departmental budget is allocated to the food manufacturing sector. This means that only about 5% of the department's funds in areas like research and programs, which are critical for our sector, are focused on food manufacturing.
If we want to retain and grow food manufacturing jobs here in Canada, we need more balance and equity in the department. We need to take a step back and map out these challenges and opportunities presented by the fourth industrial revolution on a global scale and figure out how to equip Canadian manufacturers with the tools that they need to compete. I highlighted a few steps needed along the way, including more incentives for capital investments, a modern regulatory framework, and more focus on food manufacturing research and programs.
We're taking a deeper dive on these critical issues in partnership with Canadian Manufacturers & Exporters. As explained by CME at this committee on May 31, they're spearheading Industrie 2030, and we are pleased to be working with them in partnership on this project. The objective of Industrie 2030 is to outline an action plan for growth to double manufacturing activity in Canada by 2030. Industrie 2030 will be launched on October 18 and 19 in Ottawa, and we encourage the committee to review the findings as you prepare your report on manufacturing.
Canada has the potential to be a global leader in manufacturing and the work of this committee is extremely important. We share the government's focus on growth, innovation, and competitiveness and look forward to working closely with members in this committee to make manufacturing a priority.
Mr. Chair, it's great to have the witnesses here.
One of the things you spoke about earlier, Mr. McInnes, is developing our food brand around trust. I think that's so critical, but by the same token, we have so many different fads that are coming about. I mean I think you can go to the Calgary Stampede and you can buy lard on a stick, but you're going to have gluten-free buns that are being advertised at the same kiosk. We see these types of things happening, like the issue with A&W as far as hormones are concerned. If you do any research on it, you realize that you could probably eat 50,000 burgers to get as much estrogen as a male is going to produce during a day. Yet these are things that we see become marketing ploys.
I understand the significance of that, the types of things that are associated with it, but then you start to fear where this is going. We also hear in the beef industry that people are saying there should be restrictions because of the methane gas coming from beef animals. Those become some of the things producers are looking at and they are nervous about them. We may end up with the same situation if we have all of these groups that come in, because as Canadians, we apologize for everything we do, and therefore Brazil will take up the beef production in the world. It will be the same as bringing in oil and gas from the Middle East because we don't want our oil and gas moved. These are the kinds of issues that people are so concerned about, when all your hear is media turning things around. Farmers are concerned about that.
I mean the issue with Earls on the humane treatment of animals, again, was a marketing ploy. There are people who will say, “Well, I can do that because that's how I run my operation anyway, so if somebody wants to sign me up, go ahead.” These are the concerns that people in agriculture have, and they are going to affect our industry and our manufacturing industry as well. What can we do to try to make sure we can stay on top of this, as it is so important for every one of us?
That was a great question. There were a lot of pieces to that.
On the one hand, we're not talking about trying to get in the way of day-to-day marketing and ask what trend is the right trend to brand Canada around. That's just not what we're looking at.
On the other hand, there is this issue of social licence. A lot of work is being done across the country by a lot of people in industry and government on how we can counter bad information, misinformation, or the lack of scientific information, so we can better communicate the care and responsibility that the agrifood sector takes to produce and supply food.
Actually, we're going beyond that. That's a communication, education, and information imperative. We're also moving into the space of thinking about our Canadian brand not necessarily in terms of what we put on a website and how we market with the Canadian flag but more in terms of what stands behind the food that we produce here. We're looking at brand in a much deeper way. For example, when you mentioned the beef sector, when we initially started looking at traceability, we wanted to trace where an animal was raised, what feed protocol it was given, and what drugs it may have had from a health standpoint. If there is a food incident, we want to understand and to be able to identify and isolate very, very quickly a problem that occurs. That's driven by food safety, and that's very important to the Canadian beef brand. However, there's another aspect, which is that information shared through traceability can also be used to improve the calibre, quality, and cuts of meat that different consumer demographics might desire, whether in China, in Japan, or here at home.
The sophistication of using traceability is not necessarily about putting the Canadian flag on the package. There are a lot of good people trying to promote Canadian food. We're looking at the protocols that stand behind it. That is what we're getting at in terms of trust. What we're seeing are global supply chains quite rightly trying to ensure safety, quality, and sustainability themselves. We're asking ourselves, if global supply chains are doing this, how then are we going to differentiate ourselves if we're merely going to subscribe to these often very good standards? Otherwise we're still playing on the same playing field as our competitors.
The caution, quite rightly pointed out or implied, is that there's a marketing piece here, and we want to make sure we're careful that we don't adopt a cost structure that puts us off base. This is a very complex issue that requires industry, government, and scientists to actually work far more collaboratively. I think that is what we're trying to emphasize around this issue of trust.