EDMONTON – An organization that studies Canadian agricultural policy says progress in agriculture-based industry could be boosted if regulators could act more quickly to change.
Owen McAuley said the difficulty arises in trying to strike a balance among people who want more freedom, those who want to protect the status quo and those who want more regulations and accountability.
“Those needs can come in conflict with innovation. Regulations that provide confidence for yesterday’s demands may inhibit future progress.”
McAuley, who farms at McAuley, Man., said some rules hinder farmer progress. As a member of the Canadian Agri-Food Policy Institute, McAuley is looking at where the agriculture industry needs to be in 15 years, what is preventing it from getting there and what can be done to capture opportunities once it gets there.
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“Regulations are a big piece of what we’re looking at,” he told the audience at the recent FarmTech 2007 conference in Edmonton.
McAuley said new technologies could satisfy consumer demands for nutraceutical foods, fertilizer techniques and new chemicals and other products.
“We need new regulations to let new products in, and old regulations blur the ability to introduce these products. The regulatory system has to quickly adapt. But when you start dealing with bureaucracies and politicians, you soon find out that’s a difficult thing to do. There are thousands of items in front of government agencies today, waiting approval to be introduced into the market place.
“I’ve been told that there are now roughly 20,000 (functional food and nutraceutical) items on the shelf at Health Canada waiting for approval. You can imagine that if every one of those items requires three years of research done by Health Canada to be introduced, the amount of time that’s going to take.”
He said farmers have been asked to embrace value added and move to new concepts, yet they are forced to deal with regulations that could delay progress by four to six years.
“In the meantime, the opportunities have evaporated.”
McAuley cited a couple of examples on his farm. Glyphosate from Canadian sources was selling at $6.50 to $7.50 per litre in 2006. Across the border, the same product was available for $3.75 a litre.
“Ivomec is another example. A jug of Ivomec here was $250, but I could go to Minot, North Dakota, and buy it for $80. That’s a pretty big spread when you’re on tight margins in a competitive industry, to have those kinds of disadvantages simply because the regulations haven’t kept up.”
McAuley is specifically frustrated about grain variety licensing and KVD (kernel visual distinguishability) regulations.
“In the wheat market today, you have eight classes of wheat we can produce. They’re all high grade milling class wheats and if they don’t look (like the class) you can’t license them. They have to look the same all the time. This limits the ability to produce feedstocks for tomorrow’s industries.”
In Manitoba, this issue came to a head eight years ago when fusarium entered fields there and farmers couldn’t grow a new fusarium resistant wheat called HY644, which was designed as a livestock feed. The wheat was not licensed for use because it was not visually distinguishable from hard red spring wheat kernels.
At the same time, Manitoba’s hog industry was struggling to find enough feed, he said.
“Here’s an industry that Manitoba built over the years, was starving to death because we couldn’t produce a feedstock to feed it, and you’re not allowed to produce a wheat we need.”
McAuley said a similar problem exists with growing feedstocks for the biofuel industry.
“The guys producing the wheat are not going to make any money as long as we’re committed to producing 30 or 35 bushels per acre of hard red spring wheat that mills well in Japan. We need to have a product that feeds that market specifically.”
“That means we need something that yields 80 bushels to the acre, is high in starch, low in protein and fibre and with reduced bran. Then the ethanol plant will pay you a premium. Every time you increase the starch content one percent, it’s worth $6 a tonne more to the ethanol plant.”
McAuley said there are people now breeding for this and soft white wheat is one of the main classes they’re using.
“The problem I’ve been told is you’ll have zero tolerance for look-alike hard red spring wheat kernels. If you’re trying to use the germplasm to introduce some of the disease resistance, heat shock resistance and other qualities you want, you’ll probably end up with some look alike hard red spring kernels in it. Which means you can’t license it. And if you can’t license it, then you can’t incorporate it into a contract (for an ethanol manufacturer).”
“These are the kinds of regulations that are complicating our life in terms of being able to capture the opportunities that stand in front of us.”
McAuley said federal fisheries regulations have also created problems on the Prairies.
“You go to the Red River valley and there are a lot of drainage ditches. Drainage ditches (are needed) to drain some of the most fertile land in Manitoba. In lots of cases, those ditches are deemed fish habitat and they’re not allowed to clean them out anymore.”
McAuley said regulations to protect the environment can adversely target rural areas, especially where the political power is urban based. An example of that is the Manitoba moratorium on hog barns. Studies suggest only one percent of phosphorus pollution in Lake Winnipeg is caused by hog barns, yet it was the only source that had a moratorium applied to it.
“These are the kinds of regulations that impede confidence to invest.”
McAuley also commented on the Canadian Wheat Board.
“They handle about five percent of the feed barley produced in Canada, but they have a control over 100 percent of it. I’m not going to argue whether the price is too high or too low, but if five percent is having an impact on 100 percent, then we need to ask ourselves ‘is that right?'”
“I live right on the Manitoba Saskatchewan border. Interprovincial harmonization is a big thing to me. In Manitoba, I can haul a tandem with a pup with a Class 3 licence. Across the border I need a Class 1 licence. Those are the kinds of things that don’t make sense,” said McAuley.
“When I started farming, if I grew oats across the road on my land in Saskatchewan, I couldn’t legally haul them across the road to feed to my cows in Manitoba.
“These were regulations put in place for good reason at the time they were put in. But once they’re 20 years old, or sometimes five years old, maybe they’re not relevant anymore.
“We need an overhaul in regulatory design. We need to develop regulations that are adept and receptive to change, so we can adapt them to (new industries) like biofuels or functional foods.”
Integrating Canadian with U.S. and other country’s regulations may be a good first step.
Regarding the functional foods and nutraceuticals in front of Health Canada waiting to be approved: “Some of these have been approved in Europe for 15 years. Lots in the U.S. have been approved for 10 years. They’re sitting on the shelf waiting for Canadian research to be done on them, but they’ve been in place for 15 years in Europe.”
McAuley stressed there needs to be a process to review, compile and implement regulations in a timely fashion.
“Right now in Iowa, distillers dried grain is worth $63 per tonne. Food companies are moving in saying this is such a cheap product versus $170 per tonne barley. How can they use it?”
“In Canada, if you wanted to take that and use it as a functional food and it took you three or four years to get permission to put it on the market place, who’s going to do that? Even after you got it approved, then you’ve got to have three to five years of data to say it’s a health product.”
He said Canadian officials need to do a comprehensive review of regulations.
“If nothing else comes of it, the biofuels issue has demonstrated the need for the provinces and the federal government to sit down and come up with common regulations. Everybody is walking by opportunities and we probably have been for the past five years.”
