[Recorded by Electronic Apparatus]
Tuesday, May 9, 1995
.0907 
[English]
The Vice-Chairman (Mr. Assad): Gentlemen, welcome this morning.
Dr. Morrissey, would you like to present your two colleagues who are assisting you today?
[Translation]
Dr. J.B. Morrissey (Assistant Deputy Minister, Research Branch, Department of Agriculture and Agri-food): I have some opening comments, but I would first like to introduce to you my two colleagues who are assisting me today. They are Dr. Gordon Dorrell, Director General of our research centres in Western Canada and Acting Director General of Ottawa's Experimental Farm, and Dr. Yvon Martel, Director General of Eastern Canada research centres.
[English]
As you'll have noticed from the main estimates, the objective set out for the research branch is to improve the long-term competitiveness of the Canadian agri-food sector through the development and transfer of innovative technologies. In a sense, the department's marketing staff open the doors to foreign markets for us by negotiating agreements such as the General Agreement on Tariffs and Trade.
Inspection staff gain entry for this country's products to those markets by ensuring that we meet the safety and quality standards established as conditions of entry to all markets. The research group we represent here this morning works to ensure that when we enter those markets we can beat the competition on price and on product. Helping to improve the sector's competitiveness is in my opinion a link that binds us to the rest of the department in a common purpose.
The department's research group, from a budgeting point of view, accounts for just under 16% of the department's expenditures. Of this, about 80% is for operating costs and about 20% is for capital expenditures. This reflects the fact that research is a labour-intensive activity, since each study is in effect a one-of-a-kind effort.
The recent changes to the budget are, I believe, best illustrated on page 24 of the main estimates. They indicate that between financial years 1994 and 1997 the base budget will decline from $268 million to $214 million. However, for the same timeframe a new matching investment fund has been created to fund joint projects with other partners. This fund will rise from $0.5 million in 1994 to $24 million by 1997 and to around $36 million by the year 2000.
.0910
Thus, taking into account both the cuts to the budget and the new moneys made available through the matching investment fund, the research budget will decline from $269 million in 1994 to $239 million in 1997. This is a reduction of approximately 11%.
During the same time period, the number of full-time equivalent staff will decline from 3,231 to 2,314.
These budget changes reflect both the effect of the final three years of budget cuts introduced by the previous government and the budget cuts imposed in the 1995 budget.
You'll notice that the budget rises between financial years 1994 and 1995. This simply reflects the fact that major capital or construction budget flows money to branches on an annual basis. The flow depends on which branch is undertaking construction in any given year. The rise in our budget in financial year 1995 simply indicates that we'll be drawing a little more than in previous years from the major capital budget.
We're often asked how we differentiate between the kind of work we, as a government agency, should undertake and the kind of work the private sector should do. The guiding principle we've used is very similar to one of the guiding principles set out by Minister Massé in his criteria for program review. It's also almost identical to the type of R and D this committee recommended in its statement of December 8, 1994 on agricultural R and D, entitled ``Priorities for Tomorrow''.
It is to undertake work that is of benefit to the nation, but that the private sector working alone could not conduct profitably. Thus we do not compete with the private sector, but attempt to fill those gaps that the private sector alone could not fill. In doing this, we attempt to collaborate with the private sector in joint projects wherever possible.
Once we've screened in a piece of work as being something a government agency, rather than the private sector, might undertake, we evaluate the project using three basic criteria. These are the probability of success of the project, the long-term payback to the nation and the cost to the Crown of the project. While it's difficult to predict the future success of a project, this framework does provide us with a common language and a common set of principles when reviewing proposals.
For the coming years we hope to focus on two areas of activity. The first is to conduct health and safety work in relation to our soil base, our crops, our animals and our food, which is a necessary prerequisite to gaining entry to markets. This work involves the sustainability aspect of environmental health. It also involves identification and control of crop diseases and pests and work related to the safety of food.
The second area on which we would hope to focus is value-added work. We feel producers and processors must have crops, animals and food that are safe or that have value before we add value to them. If a product is unsafe, it may be valueless. Said another way, it's pointless to add value to a valueless product. In consequence, we've worked on the assumption that the first priority is to ensure that our products are healthful and safe.
On the subject of adding value, we would hope to add value not just at the near-market end of the food chain, but at every step in the food chain. Thus we would hope to add value to land by developing new crops, such as canola-quality mustard, which could not previously be grown. The assumption here is that the value of land is a function of the value of the crops and wealth that can be produced on it.
Similarly, we would hope to add value to the crops themselves by developing new crops that have been designed to meet new and differentiated market needs.
.0915
For example, at the Harrow research centre in Southern Ontario we have developed a variety of soya that is tailored to meet the needs of the Japanese for specific food products. In this way, we have added value to this crop by producing a differentiated variety that can lay claim to a premium price. In a similar manner, Mr. Chairman, we would hope to add value to animal products and to food.
On the subject of jointly funded projects with other partners, which this committee raised in New Realities and Tough Choices: From Agriculture to Agri-Food, the hope was twofold. First, we hoped to validate the relevance of the work being done within government by having the private sector co-fund it.
Second, it was felt that such jointly funded projects would overcome the difficulty of transferring technology from a laboratory setting to a commercial one. It was felt that this transfer of technology would be easily accomplished since the technology is, in effect, presold. The source of funds for the matching investment initiative is a reallocation of funds from within our own resources. Simply put, we are saying to our research teams that getting a dollar of inside money will be facilitated by raising a dollar of outside money.
In conducting the program review, we have tried to follow the advice we've consistently received from the research centre advisory bodies. They have told us to build a critical mass of expertise in those regions of the country that have a competitive advantage in a certain commodity. We have tried to do this by taking cuts and moving staff as part of the program review in a manner that will not dilute our effort but that will hopefully concentrate it in certain functions. In the process of downsizing, the proportions of senior staff to other staff affected is about the same. Similarly, the proportions of scientists to technicians to operational staff and to other staff affected is about proportional to their population in the branch as a whole.
In the past, we've described ourselves as having a ``hub and spoke'' system for performing R and D. This reflected the fact that to do R and D we needed a critical mass in scientific teams at the hub locations. As part of the review exercise, we have begun to use the term ``centre of excellence'' for these hub centres for research. While the term has changed, it simply reflects a trend that has been under way for some time.
In addition, we have, over a period of time, been searching for appropriate names for the research centres across the country. Traditionally, we have taken the name of the city in which the centre was located. However, this provided no information to client groups on the purpose of the R and D being performed in the centre. Some time ago, we started to change the names of the research centres to reflect the work being done in them. We hope to continue this purpose over the next period of time.
Perhaps the most obvious change resulting from the program review and the budget of 1995 has been the impact on the Central Experimental Farm. The farm had a staff of approximately 855. As a result of program review, 245 positions will be eliminated. This is in about the same proportion as in the rest of the country. However, a further 295 positions will be transferred from the books of the Central Experimental Farm to other laboratories across the country. This is an effort to place the expertise closer to the industry and to maintain critical mass in the regional laboratories.
In closing, if I were to attempt to sum up the changes that have taken place in the past few months, I would have described them as an effort to maintain a critical mass of scientific expertise at locations across the country that are close to industry. What has been avoided is a prorated dilution of each program and each laboratory in the country.
[Translation]
Mr. Chairman, ladies, gentlemen, thank you.
[English]
The Vice-Chairman (Mr. Assad): Thank you, Dr. Morrissey. I'm sure this will certainly generate a lot of questions. There's a great interest in agricultural research.
[Translation]
Mr. Lefebvre (Champlain): The department has carried out significant cuts in research and development and many decisions surprised us, particularly in outlying areas. Decisions such as the closing, in my area, of the La Pocatière and L'Assomption research centres.
.0920
I would like the document concerning the performance evaluation of the research centres to be closed and the evaluation of the industry's ability to take on these research centres to be tabled before the committee.
[English]
The Vice-Chairman (Mr. Assad): You've all heard the request made by our colleague here.
[Translation]
Agreed?
Carried
The Vice-Chairman (Mr. Assad): Continue, Mr. Lefebvre.
Mr. Lefebvre: We'd also like the following information to be made available to the committee: the proportion of spending for research in the primary sector versus the processing sector over the last ten years, and the forecasts for the next three years; spending for research by sector: milk, grain, horticulture, red meat, etc., over the last ten years, and the forecast for the next three years.
[English]
The Vice-Chairman (Mr. Assad): Gentlemen, you've heard the request from our colleague. Do you think this kind of information could be made available within a timeframe of a week or a few weeks?
[Translation]
Dr. Morrissey: Would it be possible to repeat the second request? There was primary research versus the processing sector and... I was writing that down and I missed the second.
Mr. Lefebvre: It's spending on research by sector: milk, grain, horticulture, red meat, etc., over the last ten years, and the forecasts for the next three years.
[English]
The Vice-Chairman (Mr. Assad): Dr. Morrissey, would you or one of your colleagues want to comment on the availability and the time it would take to get it?
[Translation]
Mr. Morrissey: I don't know if we can go as far back as ten yars, but we can try to go back as far as possible, and provide forecasts to the extent possible for the next three years. I think it is possible to meet those two requests. However, can we go back ten years? That is the question.
Mr. Lefebvre: If it isn't possible, go back at least five years. It should be possible to get information for the last five years.
Dr. Morrissey: I think it's possible.
Mr. Lefebvre: We would prefer ten years, but we'll take, at the least, the last five years.
Dr. Morrissey: Is this only for Quebec or for the whole country?
Mr. Lefebvre: We'd like it to be for the whole country.
The Vice-Chairman (Mr. Assad): Dr. Morrissey, do you have any idea how much time this might take?
Mr. Morrisson: I'd say three weeks.
Mr. Lefebvre: Perfect.
[English]
The Vice-Chairman (Mr. Assad): Are there any other colleagues who would be interested in this documentation that Mr. Lefebvre asked for?
Mr. Vanclief.
Mr. Vanclief (Prince Edward - Hastings): I assume what the member from the Bloc Québécois wants to find out is the distribution of research and development spending in reference to the province of Quebec. I would assume or hope that when Dr. Morrissey's team puts this together, they will put it together not only in reference to one province but will include all provinces across Canada, all sectors, etc.
I'd also make the comment that we note the request is for forecasts into the future. Forecasting into the future in the industry of agriculture is like trying to forecast what the weather will be like in the second week in July. Out of necessity, I think we should note what's gone on in the past will be relatively easy to put together, but the future will be a forecast.
[Translation]
Dr. Morrisey: I'd like some clarification. There are two requests on the table. One has to do with research on basic commodities and market products, and the other has to do with horticulture as opposed to the others, sector by sector. It's a two part request, for each of the provinces and for Canada, for a period going back five to ten years and for a period in the future of three years.
.0925
The files are under four headings, which is to say resources such as soil, crops, animals, and food and non-food. Would it be acceptable to present the commodities under those headings? For example, «crops» would indicate data for horticulture and crops in the fields. That's the first request and I have a second one later, depending on clarification.
Mr. Lefebvre: That suits me.
Dr. Morrisey: Nationally, there's a complete overview concerning soil, crops, animals and food. Provincially, we see that some provinces don't carry out research in these four areas. It is carried out at national and regional levels, which is to say in the Maritimes, Ontario, Quebec and the Prairies. So provincially, it will be less clear than nationally.
Mr. Lefebvre: You say that not all provinces issue reports in this sector. That means we could have a separate report for Quebec. For the rest of Canada, there would be an overall report.
Dr. Morrisey: That's what I meant. Let's take the two extremes. In Quebec, there is research on resources, which is to say soil, crops, animals and food. In Newfoundland, there's no research carried out at all. It's possible that when we present the results for Newfoundland, there will be nothing on food or that another sector is missing. It won't be because of carelessness or an omission. It's just that everything is not carried out in every province.
Mr. Lefebvre: The idea is to provide the reports as they are currently available.
Dr. Morrisey: Okay. Thank you.
[English]
Mr. Easter.
Mr. Easter (Malpeque): Thank you, Mr. Chairman.
This is not directly related to your department, Dr. Morrisey, but on page 102 of the estimates, as you've probably already heard, it says: ``Dairy policy is expected to be a focus of analysis in 1995-96 and will cover the impact of the introduction of...rBST in Canada.''
You're certainly chairing a committee looking into that. Because nobody has been able to answer my question to date, I'm wondering if you might know who within the department wrote that particular line and who approved it. To be quite honest with you, I, as a member of Parliament, am absolutely insulted to find that statement in these estimates when this committee has recommended a one-year moratorium. We've asked that a task force be set up - you're it - and we find the department planning as though rBST is going to be introduced.
I think this is inexcusable. I'm wondering if you know who wrote it or who approved it, and then I'll move to my other questions.
Dr. Morrissey: I can tell you who didn't write it, Mr. Chairman.
Mr. Easter: That's a start.
Dr. Morrissey: I didn't write it. I can tell you who perhaps should have seen it and should have changed the wording on it, and that's probably me. For example, I did read it and I must admit that the wording of it, which I spotted after it had gone to print, would have been changed if I had spotted it earlier. I think the wording should read something like ``will cover the impact of the possible introduction or non-introduction of rBST''.
So in a word, I didn't write it but I should have spotted it. I offer my apologies for that, Mr. Chairman.
Mr. Easter: Thank you, Dr. Morrisey. We're not done with that one yet, but we'll come back to it at another time.
Rather than get into the technicalities in terms of the total dollars, I have a number of specific questions. Before I get to them, though, I think it's a known fact that research and development is where the future is. There's a considerable amount of concern within the country, within the farm community, and within the agricultural industry in terms of the cutbacks. The vice-chair of the Canadian Agri-Food Research Council, for instance, said that he was doubtful that private sector companies will ``pick up the slack left by the government cuts here''.
.0930
I'm wondering if you have any information on where we stand as a country when compared to our competitors - the United States, the European Community or Japan - in terms of research and development in agricultural areas. We're talking exports; we're talking competitiveness. So how do we stack up against our competitors in terms of our commitment to R and D?
Dr. Morrissey: The data I have in the published literature indicate that the proportion of agricultural gross domestic product ploughed back into agriculture as R and D falls into about three groups. The lesser developed countries spend between 1% and 2% of agricultural production on R and D; the middle developed countries spend around 2%; and countries such as the United States spend closer to 3%.
In terms of Canada's expenditures, it's hard to get good data. If I were to try to bracket what we're spending in this country based on the data that I've seen, on the different estimates, we're positioned at somewhere around 2% to maybe 2.3% I would put in the footnote, Mr. Chairman, that you'll see different figures quoted, but for Canada they do seem to be somewhere on the better side of 2%.
Mr. Easter: I wonder if you might be able to come up with some of those figures. This is not a criticism of the department as such - I know the pressure the department's under in terms of deficit cutting - but I'm increasingly concerned that in this country we are being penny wise and pound foolish in terms of some of the cuts we're undertaking. If we don't have good research and development within the agricultural sector, we're going to fall further behind rather than move further ahead, especially at a time when we're talking about competing with other countries that may be spending far more on R and D.
The other question I have is related to the non-technical side. How does the way research funding is handled in Canada comply or not comply with GATT and CUSTA?
Just so you understand where I'm coming from, we're always giving the argument, on the WGTA, for instance, that we have to cut back as a result of the GATT. To a certain extent, that is so much malarkey in that we didn't have to cut back to the full extent that we have. I find that international trade agreements are being used as an excuse for enforcing cuts. Where does research and development fall? Is it GATT green?
Dr. Morrissey: My understanding, Mr. Chairman, is that research is GATT green. I've never heard the matter raised in any other context.
I have just a quick comment on the last question, Mr. Easter. If I may, the data I gave you are extracted from a book by Pardey, from Cambridge University Press. I'll try to get you the exact quotes from it, as you'd requested, on the proportion of agriculture production invested in research.
The Acting Chairman (Mrs. Cowling): You have two minutes, Mr. Easter.
Mr. Easter: What I want to get to in the final analysis is just specifically where the Americans stand on agriculture research. Where do we stand? Where do the Europeans stand? This is what we need to know if we're really going to compete with them in the future. So we're doing some looking into that as well, but if you have any information we'd appreciate it.
I am concerned in terms of some of the overall cuts in research and research centres that apply to the domestic scene. I think one such case is in the research centre in Quebec, La Pocatière, where they've been doing an explorer series in terms of the hardiness of roses and so on. It is not a big market, but in essence it is a market, and possibly the rose end will be picked up by the private sector.
.0935
What we've seen throughout our history in Canada is that typically the government or the public sector does basic research into areas that may not be a mass market for the private sector, and then the private sector eventually picks it up. Who is going to do this basic research in the future in these smaller and mainly domestic markets?
Another case in point is that in my neck of the woods in Atlantic Canada nobody is doing real cereal research any more. The cereal research in Ontario and western Canada is not being done on the kinds of varieties I need in Atlantic Canada.
On the one hand, feed freight assistance is being cut back and more expensive cereal grains are being brought in. Research and development is being cut back to the point where maybe we won't be in a position to grow our own grains competitively in order to feed our livestock and compete. So we're seeing a cut-back there in cereal grains. How are we going to come around that problem in terms of the different regions of the country and the different needs? Our climate is different. Who is going to do that basic research?
Dr. Morrissey: If it's acceptable, Madam Chairman, I'd like to ask Dr. Dorrell to comment on the rose work that will be continued in Morden, and then ask Dr. Martel to comment on the cereal work being done in the Central Experimental Farm.
Dr. Gordon Dorrell (Director General, Western Region and Acting Director General for the Central Experimental Farm, Agriculture and Agri-Food Canada): Mr. Easter, the Morden program, which concentrates on hardy roses, is going to continue. It's working in cooperation with the micro-propagation industry, so not only are we continuing to produce the roses, we're moving them over to industries that propagate them very quickly, rather than through traditional rootings or cuttings.
Dr. Yves Martel (Director General, Eastern Region, Agriculture and Agri-Food Canada): In the past we were doing research on cereals in many different places. We felt it would be better for the future to consolidate the science where we needed the breeders, the pathologists, the disease control and even the agronomists together in one scientific group as a critical mass of expertise.
We also wanted to maintain sites of evaluation at different places in eastern Canada and the Maritimes, where we could test these new varieties or new technologies coming out of the centre. The relationship between Ottawa and P.E.I., for example, or the other provinces in the Maritimes has been successful in the past and we believe it will continue in the future.
Mr. Kerpan (Moose Jaw - Lake Centre): I think we all agree that from day one funding and resources put into R and D have always been worthwhile and there has always been a tremendous pay-back, so I most certainly do not support any cuts to R and D. However, given the wisdom of the government, we are looking at some cuts to R and D, and I guess we'll have to live with them.
My concern is really looking at the overlap between federal and provincial governments and the industry. I'll use the example of things the PFRA is doing in my home province of Saskatchewan, things Ag Canada might be doing, and things I know the industry is doing. They are all working on the same type of research.
Given that we're talking about estimates today, can you tell me if you know of any areas where we could make some cuts in federal department spending? Conversely, are there areas where we should be looking at increasing either financial or human resources in areas that aren't being touched by provincial governments or the industry? There is a shift in resources, if you will, and I'd really like to know what your thoughts are there.
.0940
I'd also like to know, given that the WGTA will be gone after August 1 of this year.... I think you are on the right track on page 4 when you talk about your focus on two areas. I'm talking about value-added products and value-added work. I think that's the key in western Canada. I'd just like to get your thoughts on where you are there and what you might need.
Dr. Morrissey: I have a few quick comments and then I'll ask Dr. Dorrell and Dr. Martel if they would comment on where they might see money being invested by us, the provinces or industry, if money were available.
On the coordination of efforts among ourselves, the provinces and industry, at the international level we asked our scientists to identify the six countries they would most like to interact with and whose brains they would most like to pick. They identified about half a dozen countries based on a survey. It turned out that we had memoranda of understanding with most of those countries. We didn't with one or two of them so we've gone out to get them. We've systematically worked to have exchanges between our scientists and those countries.
At the provincial and university levels, we have similar memoranda of understanding that either have been signed or are in the process of being signed so we can move staff back and forth, do joint projects and not cut the same thing if we're both facing cuts. For example, Yvon and his opposite numbers, Norris Hoag in Ontario and Louis Bernard in Quebec, are on the phone almost immediately if there's any news of pending cuts to make sure they don't cut the same things.
In terms of industry and the matching investment initiative, we've been doing joint projects with industry for a long time, but this is formalized in a way that didn't exist before. It is really using the market for each of us to put a dollar on the table and decide what we should or shouldn't be doing. So you'll see us doing a lot of the same work as industry, but it's not duplication, it's simply a joint project.
Maybe I'll stop there and ask if Gordon or Yvon have comments they'd like to make on where we might do more if money were available.
Dr. Dorrell: Mr. Kerpan, I understand your comment about overlap. There are so few dollars, we don't want to waste them. Both Dr. Martel and I sit on several provincial boards so we can exchange information back and forth for long-term planning processes.
In terms of the west, I guess the areas we're emphasizing and would like to expand upon are those things that would allow us to make better use of the so-called raw commodities we've been handling in the past. We consider that an important part of our diversification, value-added process. We're going into some of these commodities to see if there are alternate uses for them, different markets and new emerging markets for different qualities, even to the point where we're stripping the material apart and looking for the components inside.
You're probably familiar in Saskatchewan with the work on oats at POS and our people there. I think there's a lot of future in that sort of thing. You're probably familiar with the growing separation of canola into a whole series of basically separate crops with different fatty acid compositions. That's the sort of thing we want to do. We want to try to take those crops that we know how to handle in our particular climate and make different uses of them.
I guess the other area we're putting more emphasis on, for lack of specificity, is systems approach. Can we make sure our rotations, our productions systems, and the varieties that are coming along match the climate, the pests and what not? It's easy to put a new crop in there, but if it doesn't fit into the system it can be a disaster.
So we're paying more attention to those types of interactions because at the present time producers want new opportunities. They want to change far more rapidly than they did in the past and we have to be prepared to move along with that.
Dr. Martel: I believe the east would like to expand collaboration with industry in particular on financial help for the animal science aspect, which includes dairy, swine and beef. There is some now, but I think there's room for more. In the Maritimes we're doing some on potatoes, and I think there's room for more there too.
.0945
Dr. Morrissey: Perhaps I could just add a footnote.
A moment ago Gordon mentioned taking a crop like canola and working on it so that you end up producing a large number of quite different end-products coming out of what looks like the same crop that has gone into the ground.
That may in fact be the diversification of the future. What you're looking for is a new end-product that earns money. But rather than bringing in a new temperate crop to a cold climate, you take a crop where you know the agronomics and the diseases. You change something internally and you in fact have a new and diversified product.
Mr. Kerpan: Again, I get back to my original question. Mr. Easter mentioned it as well. There is no cereal research being done in his part in the country. Is there an area where we can shift out of, for instance, western Canada and move something down to Atlantic Canada where there is a need? Conversely, is there an area that you see we are moving out of and can perhaps shift into western Canada?
Dr. Morrissey: Perhaps a comment, then I'll ask Gordon if he can speak about the applicability of moving things out of the west.
There will be cereal work in the east. There will be oilseeds in the form of soya work in the east, but we'll consolidate it on the Central Experimental Farm. There's always been work done there, but it will become the one centre doing work.
We'll do the variety testing all across the eastern part of Canada. That really isn't very different from companies such as Svalöf, which does breeding of crops for everything from northern agriculture to the tropics in, of all places, northern Sweden. But they do their variety testing of canola in western Canada and bananas in west Africa and so on. So we'll do our breeding of cereals and of soya here in eastern Canada, but variety testing will be done to meet the needs of all of eastern Canada.
Dr. Dorrell: Just to build on that, some technologies we can move. The Winnipeg research station basically does the rust pathology for the Central Experimental Farm and works to get those genes into, for example, oat varieties that are adapted for eastern Canada. So that's a matter of moving the technology around.
Likewise, something like swine behaviour work that's done at Lennoxville is transportable into the west.
So the challenge in some cases is to make sure we move the technology to the other region.
There are cases - in soils, for example - where you can't transport the information. You simply have to do it in the climatic conditions. Some of the transfers of staff from the Central Experimental Farm to the east and west are reflecting that we need to do the work in some specific areas. We try to move to realize those opportunities.
Dr. Morrissey: Perhaps an example of knowledge going the other way was that the earlier work in fusarium was done here in Ontario simply because we ran into the problem earliest here. When we had a problem in Manitoba a little while back, the knowledge that had accumulated, albeit under Ontario conditions, was transferred to the Winnipeg laboratory to try to kick-start a program there.
Mr. Reed (Halton - Peel): In the last session I was at, we entered into a discussion concerning the private sector versus the public sector in terms of research and development. I think it was pointed out at that time that there was a very definite need for public sector research to continue because the private sector really tends to dwell on what is the potential mass market.
There's a research farm in the riding I serve that is owned by Pioneer Grain. The total effort there is with canola. In fact, in terms of climate, canola growing at that latitude and in that particular climate is currently fairly marginal. You have to go a few miles north of where I live before you get into really solid cropping.
The effort, of course, is to push the latitude line south for canola. With the soya bean growers, I suppose the effort is still to push the latitude line north, so they both cross over.
.0950
A question that has been touched on around this table is whether you have prioritized where you would like research to be increased. We shouldn't be at 2.3% or 2.4%, as you explain. We should be well into the 3% or more because of the big paybacks. If we have the funds or if we change the priorities for spending, where do you want to go with research, understanding that research and development is absolutely paramount?
Dr. Morrissey: First of all, if I was to use a generic phrase to separate private research from public research, the rule of thumb we use internally is that we in a government agency should do the work that the country needs but that the private sector can't do at a profit.
Money is getting tighter. In asking ourselves what we really have to hang onto, we've said, as I mentioned in the opening remarks, we have to do things like safety of our soils, safety of our crops, safety of animals and safety of food. If they're unsafe, they're valueless; you can't even give them away. It's only once you have them safe you can add value to them and beat the competition on price and product.
So what we've tried to do is protect the core that does the safety of soils, safety of crops, safety of animals and safety of food. Where we have some money left over, we put it into the adding value. Quite often it's difficult to tease them apart. If you take fusarium and wheat, that's a safety issue from the point of view of the crops. But if you eliminate fusarium, it's also a competitive issue because the quality of your product looks better and the price at which you can produce it is reduced; you're not into creating costs while trying to control the disease.
So I would answer in two parts. One is to focus on doing the things that we really need but that the private sector can't or won't do. They may be some of those long-term safety projects that are too long or too risky for the private sector to invest in, or if the private sector did invest, they couldn't patent or copyright or brand the knowledge coming out to recapture their investment.
Just a moment ago, Gordon and Yvon commented on what would happen if new money were available. Gordon, you might just highlight the main points you made.
Dr. Dorrell: The areas that we would like to build on are some of the emerging and new technologies, whether they are biotechnology or some of the chemical extraction technologies, where we could take components out and add value to the existing products. We're trying to do this now. For example, the work at St. Hyacinthe and some of the work in Saskatoon and Summerland is aimed in that direction. We would like to proceed further down that trail.
Mr. Reed: I heard this comment about soil safety. We tend to overlook soil sometimes, and it is the most important component of all. The organic levels in soils in southern Ontario, for instance, have been declining over the last 15 or 20 years.
You mentioned soil safety. Are you working on, or is research being done on, what are safe levels for organic content, and so on, in soils?
Dr. Martel: Yes, the soil component is the basis for the agriculture. And the safety of the soil in the last 10 years has been looked at in two different ways.
First, the use of pesticides has been looked at. Technology and science have been working hard at trying to find alternatives to the use of pesticides or herbicides on the soils, and with some success. Now there are natural mechanisms to control diseases.
So that's one aspect.
The other aspect is the agricultural practices. It is correct that, with the way of doing agriculture today, in warmer parts of Canada the organic matter is decreasing. Now, the solution to this, and what we're looking at, is systems. When you have corn or soybeans, you have rotation and no-till cultivation, with return of organic matter to the soil. I think the approach of a system of cultures, rather than of the continuous one culture, is what is going to improve the soil quality in Ontario and elsewhere.
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Mr. Reed: Thank you.
Mr. Collins (Souris - Moose Mountain): Dr. Morrissey, with regard to the program, my friend opposite said he would not like to see research reduced. I remember seeing some proposals he had for agriculture over the next three years if he had had the opportunity to be minister. I found it interesting how we would get the budget down and what we would reduce.
I am concerned about losing 245 people in research and development. Where are they going to go? If we don't encourage these people to stay within some segment, in either the private sector or in the public sector, they are going somewhere else. I think we need them.
Can you give us some idea of what you would do if you were the agriculture minister? How would you grapple with this? I know it is a concern from Mr. Kerpan because, coming from Saskatchewan, he wants to ensure that research and development is maintained and improved.
I took a look at a couple of your proposals and I certainly commend you. You have two focus areas. One is health and safety and the other is value added. What percentage is directed towards health and safety and what percentage is directed to value added?
What time period are you talking about when you take a look at your probability of success, your long-term payback, and the cost of government? Are you looking at short-term or long-term projections? I've heard ten years.
My last point concerns the national soil conservation program. I see it so readily in Saskatchewan. What do you see for the PCP II program? Are we going to extend that? I notice you have identified 145,000 acres. I wonder if we don't need a larger figure. We can take this marginal land and we can put it into the permanent cover program, because I have seen many areas of the province where people have knocked back areas for the wrong reasons.
I would like to go back to my first point. How do we encourage people to go back into research and development when we know we've knocked 245 positions off that program?
Dr. Morrissey: Your first point, about how to place the people who have lost their positions in R and D, is really a tough one. My sense is that those who have choices, those people who have international reputations, are people who we would really like to hang on to. If any of those people lose their jobs, they can probably place themselves. The others will probably find it more difficult.
One of the reasons I suspect - I am reading between the lines, Mr. Collins - that the early retirement package has been designed in the way it has is to try to avoid job loss for people who are still in the middle of their careers. I simply don't have an easy answer to your question.
You asked me where I would cut and where I would not cut if I were the Minister of Agriculture. You put me in a tough position there because I would have to stop sitting on the fence and complaining. I would be made responsible and would have to behave in a responsible manner.
I probably wouldn't have done things much differently from the way they have been done. My sense is that until this budget cut, research had probably been a little more protected than some of the other programs. This time the cuts were simply so big I don't think anything within the department could have been really sheltered, but in a sense we have been sheltered a little more than the others have been.
If you look at the base budget, we have taken our cut just like everybody else. The department has taken a piece of the money that has been cut and has said the money is not being given back to spend on staff and buildings, as has been done in the past. The department is putting it in the window as a matching investment fund and you can only get your hands on some of that if the private sector puts up a dollar.
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So I think the minister and the deputy were trying to take your existing budget, Morrissey, Martel and Dorrell, and cut it like that of everybody else. But you were going to get back some of it. That is something that the other groups in agriculture haven't got. You will get back some of it provided you can prove that what you do with it is relevant to the private sector, because they have to put a dollar on the table, and your technology is instantly transferred because it is presold. I probably wouldn't have done that much differently.
In terms of health and safety versus value added, we looked at this a few times. The difficulty you run into is the point I made earlier. If you do the health and safety work well, you are in fact adding value.
Let me just take the example of fusarium. If we could resolve the fusarium issue by finding genetic resistance to fusarium and building it into small-grain crops in the west, we would have ensured the safety of that crop. It wouldn't threaten other crops in the next field by passing on disease.
But we would also have improved our competitiveness by reducing the price at which we could put wheat in the field. Your losses are down, your disease control costs are down, and we would have improved competitiveness by improving the product. It's much more acceptable if it doesn't have tombstone formation and doesn't carry disease. In a sense, you get into double counting.
If I could sum it up, I would say that we would put the emphasis first on health and safety and only add value after that because of the point I made about an unsafe product being valueless.
You also asked a question about payback in terms of whether we look at the long or the short term. Perhaps I will stop there, Madam Chairman, and ask Dr. Dorrell to comment on permanent cover in the west after that.
When we look at payback, we really are looking at the longest possible term. That's simply because, in the world we live in, the private sector tends to do a lot of the short-term research because the payback is more attractive. They get their money tomorrow rather than after ten years. So we have to look at it in the very long term.
When you get into discounting cashflows, anything over about ten years and into the future discounts back to nothing. But we still have to make the effort because, in many cases, a breeding program is ten years and it takes a whole sequence of breeding programs to really get something attractive.
For example, we have an ear of corn on the Central Experimental Farm that's about this big. In 1950, we got about 50 bushels an acre on the Central Experimental Farm, but we had little dinky ears about this big. If you look right now, we have ears of corn that are maybe this big. We can get up to 130 to 150 bushels of corn, which is close to what they are getting in the United States. Now that didn't happen over one year; it happened over about 50 years. So it really is the very long-term view.
Dr. Dorrell: Mr. Collins, as you probably know, the permanent cover program is administered by PFRA. Our role is to support some of the things they are doing through research. We have been working on selecting some native grasses that fit well into the environment. Groups like Ducks Unlimited are helping to fund this. Of course, we have been working on the benchmark locations to see what areas should be left in permanent cover and so forth.
I'm not sure how clearly the picture has unfolded. Yet, with the transportation issue, there is still some question as to what lands are going to be used for what purpose.
Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Thank you, Dr. Morrissey. I listened with a lot of interest to the idea of value added. I think that is where we have to head.
In fact, I will give a little scenario here. Better-paying crops relate to a better land value, better equity position for farmers and better base income. It leads into fewer off-farm jobs and less competition in urban centres by rural people trying to find work. And R and D is a major factor here.
This is what I want to know. We are here now with a proposal for how R and D is going to be funded. I want to know how we got here. What were the criteria that you used to get us to this point? Also, if we find out that the level of R and D funding we have right now is not enough, how do we change that? How do we become responsive if we find that we are falling behind?
What percentage of the R and D budget will be targeted for primary research? That is basically what we are talking about here again.
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Finally, on cereal research, every area in Canada is different. If we're going to be doing cereal research, should we not have research stations in each area, depending on the crops that we're going to be growing, such as canola? There are definitely climate factors in Ontario that are totally different from the climate factors out west.
Dr. Morrissey: Perhaps I'll comment on the first two questions and then ask Gordon or Yvon if they'd like to comment on the issue of cereals and where that work should be done.
Just as an opening comment, Mr. Chairman, I think Mr. Calder is right on with his comment about adding value at land, crops, animals and food, and every single step in the food chain. That way, the earlier you add value, the greater the multiplier effect you have further down the road. Most of the times I've heard people speak of value added, they're speaking only at near-market. I think you're missing two or three other opportunities early on.
On the proportion of research that's primary versus near-market, that's again a difficult question. If I could answer it another way, or perhaps in a slightly different way, I would have said that pretty well all of the research we're doing is research the private sector would not do. In that sense, you might consider it either basic, long-term, high-risk or, in some way, as a role of the state versus the role of the private sector.
The reason I say this is that quite often work may not be.... In fact, with most of the work we're doing, we don't set out to discover new knowledge. We set out to solve a specific problem or to explore a specific opportunity. Very often, however, we have to generate new knowledge. We'll publish and we may make a world breakthrough in that way. But unlike the universities or the granting councils, we don't set out purely in pursuit of knowledge. We're trying to fix fusarium, or we're trying to anticipate the next race of rust, and we may come up with some breakthrough in that process.
If you define ``primary'' in that context as ``work other people wouldn't do for some reason'', I'd say the vast majority, if not all, of what we're doing is primary or basic in some sort of way because of the risk involved, because of the long term involved, or because you couldn't capture the benefits.
Gordon or Yvon, any comments on the adaptation of cereals?
Dr. Dorrell: Could I respond to Mr. Calder?
You're absolutely right. Varieties respond to the environment. The best thing we can do is to tailor-make varieties for ecological zones, whether it's for a disease problem or a temperature problem. Having said that, though, with the types of issues that we're dealing with today we need fairly large and complete teams.
I think Dr. Martel talked about a system. That system must contain pathology, cereal quality, biotechnology, genetics - the whole thing. The days of putting an individual plant breeder in a location and asking him to select for those areas are probably gone because of the need to move more quickly and to bring a lot of factors to bear.
If we do it correctly, we can indeed do our basic research in one location and the on-site selection somewhere else, and I'll give you an example. Marquis wheat was crossed and tested here in Ottawa, and it became the dominant wheat in western Canada. That was a case in which we did the science here, a hundred and some odd years ago, and transferred it somewhere else.
In the west, we're doing virtually all our wheat breeding in Winnipeg, and to some extent in Swift Current, to cover the whole prairie. We can breed wheat in Winnipeg for the Peace River region a long way away.
The secret is - and I think it's what Dr. Martel is doing in his region - that you must, at an early stage of selection, put the material in the region where you want it to be grown so that you can still manipulate it and adjust the characteristics. That's expensive, but it's cheaper than breaking up your team and scattering it around the countryside.
Yvon.
Dr. Martel: I just want to add that we have the research centres in eastern Canada if we need to do the testing and the evaluation, be it in Charlottetown, in Fredericton, in Quebec or Ontario. So between directors and scientists, we do the sites in order to do what Gordon has said - the testing, the evaluation, following the science being done at one place because of the critical mass needed to be successful.
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Dr. Morrissey: Mr. Chairman, perhaps I could close the loop on that conversation by giving a general principle. In looking at biology outside this room, what you're really looking at are two variables. One is the genetics that you're dealing with. The other is the environment into which you place that genetics. This is genetics by environment or, as the medical community call it, nature by nurture.
If you look at the agricultural and food community, what's been happening is that we've been trying to control the environment. We put crops into greenhouses. We put pigs into houses. We put poultry into houses. When you can control the environment, it becomes very easy to move the genetics around the world. A hog bred in Denmark could be raised in South Africa, where it might have burned to a crisp thirty years ago. By moving them indoors, you can move the technology.
As Gordon said, when you're on an extensive farm and you're growing wheat in western Canada, for example, you can't grow wheat in a greenhouse. You can't move it indoors. You really have to go out there and breed it. So where you have different environments or different soil types in the environment, you really do have to do your variety testing on-site.
Mr. Vanclief: Dr. Morrissey, with the changes and adjustments being made in research and with the centres of excellence, etc., for all of the reasons you've talked about, questions are raised by specific commodity groups in specific areas that researchers may not be where they have been in the past.
For example, I've had concerns about soybean work done at Harrow, Ontario. The individual there may be retiring, so what's going to happen? I've had questions about alfalfa work that might be done here at the experimental farm. It may be close to fruition, so what's going to happen there? What is the best way for people to get clarifications of their concerns? What communication is taking place to explain that these projects may be continuing, as Gordon has said, but in a different place?
Dr. Morrissey: That's been a real issue as we have moved from doing a little of everything at about forty to fifty research centres across the country in the 1950s, and certainly up to 1968. The Glassco commission wrote about it, and it's a real issue for us in trying to determine how best to distribute knowledge across the country.
I don't pretend this issue has gone away, but there are a few things that we're trying to do. We've put together the pennysaver of R and D, a little magazine called Agvance that we send out to 3,000 or 4,000 people across the country. It tries to give you a photograph and, in very lay terms, a snippet about a piece of R and D that's close to being ready to use, and it asks if there's a partner out there who'd like to use it.
Another technique is the Canadian Agri-Food Research Council, which Mr. Easter and one of the other members mentioned this morning. At that table you have industry, federal government, provincial governments and universities, each sharing information on what we should be doing, on what we are doing, and on what's close to market.
A third way in which we're trying to get information out across the country is by recognizing that.... Remember the earlier comment that we do things the country needs and that the private sector can't do profitably? One of the things they seem to have done very well is distribution of knowledge. They seem to have set up businesses to distribute knowledge.
For example, we distributed millions of bags of seed on the farm. Gordon referred to Marquis wheat here at the Central Experimental Farm, and we were the seed distribution company for this country. Seed distribution companies then sprung up over the years, and we're now out of that business. They're distributing bags of science or bags of technology in the bags of seed.
If you recall, I believe one of the reasons why the minister wanted to support the matching initiative is that the technology was presold by companies that had a distribution system, in some cases across the country and in other cases around the world.
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For example, how did we distribute the folic acid work done in nutrition in animals at Yvon's laboratory down in Lennoxville, Quebec? Well, it was almost invisible.
The feed companies incorporated it in their feed mixes in a very short period of time, and again, it was ``science in a bag'' going out across the country. But hopefully by having the matching investment program we will build on the distribution systems the private sector has in place.
I have one last comment. We put three pilot projects in place about a year or eighteen months ago in dairy, in tree fruit, and in genetics, to get our staff across the country together so all the stations across the country could communicate internally and use those spokes to try to get knowledge to their communities.
I have one last comment. Each research centre puts out - I could use Lethbridge as an example - a one-page bulletin every so often describing what's new and different and of interest to their immediate community. It is a real issue, Mr. Chairman.
Mr. Vanclief: I appreciate your comment, but what's the best way for a specific group? The soybean growers in southwestern Ontario are concerned - and I think I've got this right - about the impending retirement of a researcher at Harrow. They're asking what's going to happen to soybean research in southern Ontario. How is that being handled?
I know you said here this morning that the lab work or the research or the breeding work may very well be done or be able to be done in Ottawa, with tests back there.
What's being done out in the community? We know - and I think you're aware of it - that's a problem. When that researcher - be it Mr. or Mrs. or Miss - leaves the community, the perception is that it's the end of that kind of research, because it's not there where they can see it being done and because they can't talk to the individual doing it. How is that being handled? That's only one example. I know it's happening coast to coast.
Dr. Martel: Yes. This is correct. We're trying to stay in contact with the clients at all times in different ways. Stations like Harrow and other research centres have advisory committee people coming in from the industry once a year or more to look at issues related to the industry and related to the centre.
There are many other systems of committees where scientists directly deal with and are close to the clients. On top of that, the soybean people in particular did request a meeting - and that's a good system - with the director or with people in Ottawa. We did bring in the acting director, Al Hamill, and we met with the soybean people about ten days ago just to discuss this.
It's part of the culture. They do that. They know where to phone. I believe we were able to reassure them that the scientists who retire will be replaced. I believe they returned home reassured. Staying in touch by phone is a good system and most of the groups do that successfully.
Mr. Vanclief: Thank you.
The Vice-Chairman (Mr. Assad): Before we proceed with Mr. Easter, followed by Mrs. Cowling, we have a 25-minute bell, so we have 20 minutes left.
Mr. Easter.
Mr. Easter: Thank you, Mr. Chairman.
In the broad picture, Dr. Morrissey, what's the dollar return for each dollar spent on research? I know it varies widely, but do we have any kind of broad average?
Dr. Morrissey: I'm looking at a table of numbers here, Mr. Easter, on returns on investment for studies done by people like Harvey Furtan, who's now the deputy out in Saskatchewan, or by George Brinkman in Ontario. Most of the studies I've seen indicate a return on investment of somewhere between about 30% to 60% for money invested in agricultural R and D.
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For example, if you get 10% back by putting your money in the bank, the Treasury Board would get 30% to 60% back by putting it into agricultural research - meaning that the nation would get it back. A private company might not be able to capture it, because if it was a new method of soil conservation, I could see it by looking over the fence into your pasture.
Looking at those numbers, if you look at Australia, the United States, and Canada, where they have done the same sort of analysis but using different techniques and different settings, they come up with the same orders of magnitude. So my sense is that the figures are probably fairly robust.
Mr. Easter: Why ask the question? Your own paper states that we've reduced by close to 900 full-time equivalents in terms of people. We've reduced in terms of spending. In terms of some earlier answers you've given, you've said you probably would come up with the same decision as the minister.
Every organization that came before us looking at the future of agriculture said that, if anything, we should be increasing our spending on research and development. It doesn't apply only to agriculture. Canada is behind in its spending on research and development in many things, agriculture being one.
I certainly don't mind saying to the Minister of Finance or anybody else that maybe we've made a mistake in just having blanket cuts. If we're getting a better return on investment, in terms of research and development, in terms of spending in agriculture dollars, then maybe we should have cut some staff people out of the Department of Finance. I don't know, but I'm sure there are other areas. That's why I asked the question.
I want to remind you again that I need the figures on what our competing nations are spending. Also, I would like to have an overall summary of what the dollar returns are.
In terms of animal research and where we seem to be going in Atlantic Canada, we have a fairly serious problem in terms of consumer willingness to buy Atlantic beef based on the consumer shelf, based on market surveys that I know people have done. Part of it is that a lot of it is cull potato-fed beef. If we're going to be competitive in Atlantic Canada, then we need to find the right feeding ration. Maybe it's 10% potatoes instead of 40%.
I think we can be competitive in our area, but it will require different combinations of feeding: potatoes, forage.... We've got better forage than you have in the west, but we've got grains of different quality. So what's the right combination? Maybe there's a hang time that needs to be extended or shortened in order to come up with equivalent quality.
Is any research being thought about in that area? Given the changes in the budget, there's no question that we are under extreme pressure in Atlantic Canada in terms of our livestock industries. We're going to require an effort on research and development in our livestock industries, as well, in that neck of the woods.
Dr. Morrissey: I'll comment on the first questions and then ask Dr. Martel if he'd comment on hull-less oat Cavina as a potential feed and on the work to move soya into, for example, Prince Edward Island.
Just to recap, I'll try to get you the data, the different studies to which I have access, just a table of the numbers, on return on investment.
On increasing spending in research, my sense is that if you were to ask any of us in any of our programs if we would like increased spending, the answer would be that, yes, we would. However, if I were to try to take the position I was given earlier of being put in the minister's shoes, my sense is that there just is less money to go around, so some tough decisions had to be made.
I think one of the questions was, could we spend the money we had in a better way? While the matching investment is tough on us internally - we can't get our hands on the money in the way we could in the past, it is sort of our own budget that has been taken away, and we've been told that if we want to get this, we must prove to them that the private sector is interested in it. My sense is that, while that's a loss of control for us, it probably is a better way of spending the money for the country.
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Say you were to ask the leading or rhetorical question: should this government have cut some people down in the Department of Finance or in the research branch? I'll take a rain check on that one, but I think you know where my sympathies might lie.
Take the question of Atlantic beef. If I were prime minister, I probably would have taken the cut somewhere else rather than in the research branch.
Yvon, do you have any comment on Atlantic beef?
Dr. Martel: Yes, perhaps I could add simply that Dr. Nicholson, who's now retired, spent several years in Fredericton looking exactly at what you were describing on beef. Also, Dr. Paul Burgess, who's at Fredericton and Nappan, has done some work. This work is being continued now at Nappan with Dr. Roy Bush and a team of scientists at Nappan and Fredericton.
The priority still is to do exactly what you're describing. It's to use locally produced feed, whether it's grass, alfalfa, surplus organic fish or surplus organic potatoes, to try to put the best combination that would produce good quality beef at a good price. This is being done now as part of the research in Nappan for the Atlantic region.
The other issue we're looking at as well is the cow calf. We have to have the calves to produce the beef. We need the right breed of calves that would do well. We're doing that as well as part of the research on beef. It's mostly done at Nappan now.
Dr. Morrissey: I have two quick comments on that. One is on Cavina, which is hull-less oats. Breeding work on that was done by Vern Burrows here at the Central Experimental Farm.
I think a lot of the application of that may well be in eastern Canada, where that crop could be very useful in the future. Industry is taking the next step on it and doing the feeding trials on livestock in the maritime provinces.
On soya, we probably have 20 years of work under our belt with the work of Harvey Voldeng here on the Central Experimental Farm. We're trying to have Harvey move that crop not just down to Mirabel International Airport, where you can see it now, but all the way down to Prince Edward Island, where you'll see soya, which is a high-protein crop, now being grown.
These are early days for both of those crops, but they both look good.
Mrs. Cowling (Dauphin - Swan River): My question is around canola, which we call a ``Cinderella'' crop in the west. It has the value-added component of being the best health food in the world. We're noted for that in this country.
My question is with respect to sclerotinia which is a disease factor in canola. When you're developing the various canola seeds, are you taking a look at the sclerotinia factor? How are we addressing that?
Dr. Dorrell: Mrs. Cowling, you've put your finger on probably the worst and most difficult disease when dealing with canola. There is not genetic resistance identified at the present time. There are chemical sprays, as you're probably aware, that can be applied, but they're a little expensive. We are continuing to work on it but it is a very difficult problem. Blackleg resistance has been put in. It was a difficult problem, but it's been almost solved now.
We think there are some biological control organisms we've identified that we're going to be trying out this year in cooperation with Cominco. That may have some potential. We know it has potential in beans. We're hoping that it will work in canola.
Our ultimate objective is to try to get genetic resistance in so that you won't have to add anything. It's a problem throughout the world. It's one of the most ubiquitous diseases, and it attacks a broad range of things throughout the world. It's a big problem.
Mr. Calder: I have two questions. The system being proposed right now for R and D is a dollar from the government and a dollar from industry, for a total of $70 million. The first question is, what commitment do we have from industry that they're going to put their dollar in? The second question is, is $70 million enough for R and D?
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Dr. Morrissey: As for the commitment from industry, my sense is that only the future will tell us how much industry put on the table. What we do know so far is that we've been doing joint projects with industry for years and years, so there is significant money coming in.
Since we started the matching investment program formally, we did a pilot project last year just to iron the bugs out. We put half a million of our own money in there, which was snapped up in almost no time. We borrowed $1.5 million against this year, and that was snapped up very quickly. This year we have a further $10 million, and it looks like that will be gone quite quickly. So I don't know where it will plateau, but we certainly haven't reached that point yet.
Is it enough? Again, that's a similar answer. I really don't know where the plateau will come. My sense is that it will come somewhere, but I don't know where. If I were to ask what the limiting factor would be, I doubt if it will be the money; it may be our ability to come up with staff to do the work. At some stage, we would be contracting most of our staff, or a lot of our available staff, and that may become a limiting factor.
The Vice-Chairman (Mr. Assad): Thank you, gentlemen.
We stand adjourned until Thursday morning at 9 a.m.