Canadian farmers are great at growing canola and grain companies are skilled at selling canola seed to the world. However, Canada’s canola sector isn’t succeeding at innovation. Few, if any, Canadian-owned companies are designing new canola traits, developing new uses for canola and selling their canola innovations domestically or around the globe. The lack of innovation doesn’t make a lot of sense, seeing how Canada is the home of canola and spends millions on canola research. In this Western Producer special report, Robert Arnason looks at the country’s most important crop and why Canada isn’t leading the world in canola innovation.
Canola is a Canadian innovation — not an invention but an innovation. There is a difference.
An invention is a novel product, technology or idea, but it may go nowhere. The concept, for example an amphibious car, might not generate any jobs or any wealth.
Canola, on the other hand, was an improvement upon rapeseed that transformed Canadian agriculture.
Related stories in this special report:
In 1974, when University of Manitoba plant scientist Baldur Stefansson released the first variety of canola, rapeseed was a tiny crop in Western Canada.
Now, thanks to continuous canola innovation (hybrids, herbicide-tolerant canola and high-oleic canola oil) there are 20 million acres and it has become an economic engine on the Prairies.
It has created tens of thousands of jobs and an immense amount of wealth. As a Manitoba producer once said: canola has turned thousands of Saskatchewan farmers into millionaires.
In 2017, the Canola Council of Canada estimated that canola contributed $26.7 billion annually to the country’s economy.
Canola innovation has been a success story, but some leaders in Canada’s ag sector are worried. Research and development usually moves forward in spurts, with periods of nothing and then a shatter-resistant canola comes along.
But lately, innovation has stalled.
“It’s been kind of stuck for a while,” said Steve Webb, chief executive officer with the Global Institute for Food Security (GIFS) in Saskatoon.
The global firms, like Bayer, Corteva and BASF, continue to spend millions on canola breeding programs and trait development to advance the crop in Canada.
But Canada’s ag sector lacks the small and nimble companies that should be driving the advancements in canola and other crops. Today, some of the novel and game-changing science for traits and new uses of canola is happening outside of Canada:
Cibus, a plant science firm in California, announced in January that it used gene editing to make a canola trait that’s resistant to sclerotinia — a major disease for canola growers.
Danimer Scientific, a Georgia company, is using canola oil to make bioplastics and has built a manufacturing plant in Kentucky to supply booming demand for biodegradable plastic.
There are other examples, but Canada is the largest canola producer in the world and has hundreds of scientists who study the crop.
Why aren’t Canadian companies developing sclerotinia-resistant canola, making bioplastics from canola, or developing canola with bigger seed size?
“We have real good science base in Canada, but we don’t have much of an entrepreneur class… in agriculture,” said Dave Dzisiak, chief operating officer with Botaneco, a natural ingredient and product manufacturer in Calgary.
“It’s the usual Canadian story, where we can develop things and invent things but seem to lack the ability to scale that into larger companies…. Really, there should have been Canadian seed companies that were leaders, around the world, for canola genetics. That never developed.”
Botaneco and other groups, including the federal government, are trying to push canola forward. The feds created the protein industries supercluster to increase the value of canola, pulses and other crops by capturing opportunities in the rapidly growing market for plant protein.
If it’s successful and canola protein becomes a major ingredient in the human food market, Canada’s canola industry could grow to $40 billion per year.
The supercluster is a positive step, but canola isn’t reaching its potential.
“Canola, from an opportunity perspective, we should be much further along in developing quality and driving other attributes than we are today,” Dzisiak said from his home in Calgary. “It’s a crop that’s not getting the investment and the imagination.”
Why is innovation slowing?
Webb and Dzisiak know something about agriculture innovation. Dzisiak spent 38 years at Dow AgroSciences and Corteva, before joining Botaneco.
Webb was also with Dow and Corteva, for 23 years. He started with the company in 1996, in Saskatoon, where he was involved with the development of Nexera canola. The majority of his career was at the Dow headquarters in Indianapolis.
One of his roles was on the research and development team, where he was responsible for external technology, intellectual property development and early stage commercial assessment.
He returned to Saskatoon in 2019, to take the position with GIFS.
“This topic about innovation and the innovation gap is near and dear to my heart…. (But) it’s not just a canola problem. It’s a Canada problem.”
Webb pointed to data showing that Canada is a global laggard for innovation.
The World Intellectual Property Organization ranks countries on innovation performance. In 2019:
Canada ranked ninth for input (spending) on scientific research.
Canada ranked 22nd on the innovation output from that investment, between Malta and Cyprus.
Those numbers may be flattering.
“We spend a lot and we don’t get a lot,” Webb said. “Our efficiency in innovation is 60th in the world.”
Industry leaders told The Western Producer that four main factors are holding back canola innovation. In no particular order: regulatory uncertainty, shortage of venture capital, a failure to push discoveries to market and a lack of ag tech entrepreneurs.
The last few years have been an exciting time in ag tech and plant science. Researchers are using new technologies, like gene editing and RNA interference, to develop crop traits and crop protection products for canola.
Canadian scientists, at the University of Manitoba, McMaster, Queens, Guelph and elsewhere, are using these tools in their research.
But their inventions, like flea beetle control, sclerotinia control and new uses for canola proteins, aren’t becoming innovations.
“They have great technologies (but) they don’t know how to take them (from) the lab bench to field testing,” a canola industry rep said.
The scientists don’t know how to proceed, partly because the federal government doesn’t have a clear regulatory stance on technologies like gene editing.
The Canadian Food Inspection Agency and Health Canada follow a policy called Plants with Novel Traits (PNT). The feds must assess the safety of any novel plant, feed or food before it can be used in Canada. The PNT system has functioned well but has become dated.
The uncertainty around which traits are “novel” and which are not is problematic when it comes to new plant-breeding techniques.
“Plant breeders are always breeding for novelty. That’s what they do. They want the next variety to be different from the last one. So hence the confusion,” said Ian Affleck, vice-president of plant biotechnology with CropLife Canada.
In March 2018, United States agriculture secretary Sonny Perdue provided clarity to U.S. innovators. He said gene-edited crops will be treated similarly to conventional plant breeding and will be largely exempt from regulation.
CropLife wants the Canadian government to adopt a similar policy, so Canada can catch up to countries like the U.S., Japan, Argentina and Australia, which have modernized their plant science regulations.
Growers in competing exporting regions will have an advantage over their Canadian counterparts if Canada decides that crops made through gene-editing techniques are going to require lengthy regulatory reviews.
This winter, the federal government is expected to publish a guidance document, which will clarify its position on gene-edited crops.
If the government doesn’t get the details right, seed technology companies could move their money out of Canada.
“Our concern is that they are going to be more inclined to make those investments in other countries where they operate, where the regulation is far more clear,” said Erin Gowriluk, executive director of Grain Growers of Canada.
So, canola growers could miss out on innovations happening in other countries, in other crops.
As an example, a Minnesota firm has used gene editing to design a soybean that produces high-oleic oil. The company produced four million bushels of the crop in the U.S. last year.
If Canada’s plant science regulations are burdensome or vague, a venture capital fund isn’t going to invest in a small, Canadian firm that’s designed a canola plant with a healthier oil.
But Canada could have a larger problem when it comes to venture capital and agriculture.
For the last decade, ag tech has attracted a massive amount of money. Ag tech entrepreneurs in Canada may not be getting their share of the windfall.
Scott Day, a farmer from Deloraine, Man., and former Manitoba Agriculture employee, is the director of agronomy for Fall Line Capital, a company near San Francisco that invests in farmland and ag tech.
In the last eight years, there’s been a 10-fold increase in ag tech investing, Day said.
In 2019, food tech and ag-tech companies raised nearly $20 billion in venture capital, based on estimates from AgFunder.
The amount of money flowing into bio-pesticides, sustainable crop production and new uses for plant proteins could increase another 10 times during the 2020s.
“We’re going to start another two (venture capital) funds… because of incredible interest in this space,” Day said from his home in San Mateo, California.
“From the investment side of things, it (agriculture and ag tech) is becoming much more desirable than it’s ever been… because you look at how the rest of the world has been disrupted.”
Day, though, isn’t aware of what’s happening with venture capital in Canada.
“There could be this ag tech pool of funds in Canada. There should be. But I don’t know if there is.”
Data from the Canadian Venture Capital and Private Equity Association indicates that agriculture and agri-food are attracting venture capital investment. However, the amount is tiny compared to the investment for information technology, such as smartphone apps.
In 2019, the total venture capital investment in Canada reached $6.2 billion.
Information and communication technology: $4.1 billion (66 percent)
Life sciences (health): $1.1 billion (17 percent)
Clean tech (renewables): $407 million (seven percent)
Agribusiness: $186 million (three percent)
Other venture capital investments: $400 million (seven percent)
Nearly $190 million for agri-food and ag tech is something, but a portion of the venture capital may be going to entrepreneurs that have a novel granola bar or food product, rather than agricultural innovations.
However, the biggest venture capital deal for Canadian ag in 2019 came from American funds. Ospraie Ag Science and Seed2Growth Ventures, of New York and Chicago, invested $59 million in Terramera, a Vancouver company with technology that improves the performance of synthetic pesticides and bio-pesticides.
Outside investment is encouraging, but it would be helpful if venture capital firms in Canada specialized in ag tech.
“If you’re in Bay Street, Toronto, you should be looking at ag tech,” Day said. “Ag technology, food production and farmland, those are guaranteed consumption things… forever.”
There’s also the issue of government investment.
Federal funding for ag and agri-food gets spread around like “peanut butter on bread,” Dzisiak said.
For instance, on Jan. 7, the federal and Manitoba governments invested $149,215 in 11 different food companies in Manitoba — including a business called Wolseley Kombucha and the Little Red Barn, a fruit and vegetable stand on the Trans-Canada Highway near Portage la Prairie.
By giving out funds to every agricultural scientist and every agri-food company across the nation, nobody gets enough money to make a difference.
Instead, Canada should be picking economic winners and “not be ashamed of it,” Dzisiak said.
Failing to push tech ahead
When Webb began working for Dow in 1996, Saskatoon was a hotbed of agricultural innovation.
Dow had moved its canola-breeding program from Wisconsin to Saskatoon and there was an infrastructure of groups to support the company, Webb said.
The University of Saskatchewan, Ag-West Bio, the National Research Council and other institutions worked together to assist ag innovators.
“Literally, within a week we had labs, greenhouses… and people that could start our breeding program,” Webb said. “You’d be hard pressed to repeat that (experience)… five years ago.”
Dow AgroSciences (now Corteva) is a huge company with deep pockets, but even it needed support to get Nexera canola down the technology pipeline and into the market.
A grad student with a novel bio-pesticide would need much more support to commercialize the technology.
Part of the problem is that groups and scientists seldom collaborate like they did in the past, Webb said.
“It operates more in silos and each group works semi-independently,” he said. “(And) some of the public research institutions became much more interested in publications versus outcomes.”
Webb is convinced that the canola and ag sector needs a catalyst to drive the path to commercialization.
GIFS and AGWestBio have been developing a concept of an agricultural Advancement Centre in Saskatoon to bridge the gap between invention and innovation.
“Ag tech is a huge opportunity for us in Canada — new companies, new tools and technologies for our producers… economic growth, jobs, diversification,” Webb said.
Canada needs entrepreneurial culture
Most Canadians, including farmers, focus on problems that are in their face. A producer in Esterhazy, Sask., may be worried about sclerotinia and how the disease is reducing canola yields on his farm. That farmer would probably be willing to pay for a canola hybrid with resistance to sclerotinia and may not care if the technology was developed in California or Israel.
Such thinking is a problem.
“Do we even understand, at a basic grassroots level, what (gross domestic product) is and what innovation that stays in Canada (means for the economy)?” a canola industry representative said.
“If a (company’s) R&D and some of the manufacturing… is in Canada, that really accrues to us. I’m not sure that rank and file Canadians really understand that. We’re not taught it in school…. It’s not really part of our ethos.”
It’s difficult to change what the public values, but it’s obvious to canola industry leaders that Canada lacks entrepreneurs who can take a scientific discovery and turn it into an agri-tech business.
“It’s a gap in the Canadian agricultural eco-system that we never developed that aggressive, entrepreneur class, (which) kept a lot of our innovation here and developed it here,” Dzisiak said.
Shifting the culture, so Canadians value enterprise and industry, won’t be easy.
But Canada’s canola and ag sector needs a new cohort of innovators, who will push the industry beyond its current focus — growing canola and shipping raw canola seed around the world.
Canada still has an opportunity to become a world beater in canola innovation and ag tech. But action is needed. Now.
“To maintain our quality of life in Canada, we need to grow our economy much faster than we’re growing it today. Auto manufacturing isn’t coming back. Mining and forestry, the oil and gas industry isn’t coming back to where it was,” Dzisiak said.
“Ag is a place where we’ve got great advantages and a place where we can really win.”