CALGARY — Canada must strengthen its public and private funding for research and development of innovation in the agri-food industry if the sector is to remain competitive with rival exporting nations, warned an expert.
Public funding for such innovation in Canada has fallen to seventh in the world at 0.046 percent of gross domestic product, down from 0.1 percent, said Jared Carlberg, professor of agribusiness and agricultural economics at the University of Manitoba.
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The decline reflects increasing pressure on government and university budgets, he said. The trend was outlined in recent reports by the Agriculture Institute of Canada and the Organization for Economic Cooperation and Development.
Private investment in innovation in the agri-food industry has also declined, with Canada ranking 25th in the world as of 2014, down from 18th in 2008. Canada is particularly vulnerable to such decreases because it is heavily dependent on agricultural exports and the strength of its agri-food industry, said Carlberg.
“So, money spent on innovation tends to produce many times its value in the benefits of innovation in terms of economic activity, and so it’s critical that we not ignore this important budgetary component.”
Carlberg is the author of a briefing paper titled Sustainable Innovation in the Canadian Agri-food Sector: Past, Present and Future. It was recently released by the University of Calgary’s Simpson Centre for Food and Agricultural Policy at the School of Public Policy.
“As a world leader in building a sustainable, profitable and safe agri-food system, Canada can be a pre-eminent hub for innovation,” said the paper. “However, senior levels of government must commit to developing Canada’s potential and to creating an environment that encourages private investment.”
One of the biggest hurdles is that “so many of our elected officials do not understand agriculture,” said Lenore Newman, director of the Food and Agriculture Institute at the University of the Fraser Valley in British Columbia.
She told the recent CrossRoads Crop Conference in Calgary that many politicians think of farming “as an annoying sunset industry that their great-grandfather did, and someone’s on a tractor by a red barn somewhere and there’s four chickens in the yard.”
Carlberg said the European Union by contrast understands the importance of food policies and agriculture because the continent starved through two world wars.
“Nothing could be more important to the general benefit of society than having a well fed and nourished populace to create economic activity, and to drive all parts of the economy forward.”
The paper said agricultural innovations have brought tremendous benefits to Canadian producers, processors and consumers in the past 50 years.
“Successful innovations include genetically modified crops, large-scale cattle feeding operations and the adoption of no-till farming, which has reduced the traditional practice of summerfallowing fields,” it said.
“Still, with the demand for a secure global food supply and growing concerns about the environmental impacts of large-scale farming, the need for sustainable innovation in the agri-food sector is pressing.”
The paper contained three recommendations, including that Canada make a commitment to boost public funding for agriculture research and development to at least 0.1 percent of GDP.
“Next, the private sector needs more favourable conditions to foster investment in the agri-food industry.”
One of the more obvious ways is to strengthen intellectual property rights, said the paper. Other researchers have suggested increasing the use of royalties collected at the point of first sale or commercial use, which have been put into place for about 250 grain and pulse varieties in Australia, it said.
Although Agriculture Canada has studied the feasibility of royalty payments for farm-saved seed, there has been no significant increase in the practice in this country, said the paper.
“Thus it is more important than ever to strengthen (intellectual property rights) across a host of agricultural innovation targets to spur greater levels of investment in these areas.”
Such rights were the focus of a prolonged legal battle in the 1990s involving the late Saskatchewan farmer Percy Schmeiser, who was sued by Monsanto over the use of its patented Roundup Ready canola seeds. The company claimed he had planted its seeds without permission.
Schmeiser argued he did not intentionally use the company’s technology or acquire it illegally, instead suggesting the seeds were dispersed onto his farm by the wind or by neighbours’ grain trucks as they were passing. The Supreme Court of Canada ruled against Schmeiser in 2004.
His story was later turned into a Hollywood movie, Percy, which was released in 2020 and starred actor Christopher Walken. Carlberg said the purpose of intellectual property rights isn’t about giving more money or power to companies compared to producers.
It is instead about encouraging investors to fund agricultural innovation by ensuring they can earn an appropriate share of the economic benefits over the medium to long term.
Monsanto, which was later acquired by Bayer, spent “an awful lot of money, billions upon billions of dollars, developing Roundup Ready canola,” said Carlberg.
Such innovations do more than simply provide “incredible rates of return” to companies and investors, he said.
“If we look at some of the work that’s been done on the adoption rate for these genetically modified crops, whether they’re insect or pest or herbicide resistant, there are great, great, great benefits. There are sustainability benefits, there are economic benefits, and those benefits flow not only to the holders of those intellectual property rights, but also to producers and to society more broadly.”
Other measures to boost private investment include reducing red tape, as well as ensuring federal and provincial agencies “are efficient and entrepreneurial in their approach to dealing with private sector partners,” said the paper.
It added that Canada needs to implement a system of financial incentives that subsidizes the direct cost of investments while providing relief through tax credits and/or reduced tax rates.
Visit simpsoncentre.ca/publications/ to read the briefing paper.
