October 3, 2005
Agricultural Life Sciences – A Convergence
By Dr Murray McLaughlin
When I look at agriculture today it is in the position of many industries that are commoditized - it is under unrelenting pressure to come up with the next wave of innovation. Failure to innovate equals failure to differentiate which means lower margins and potential for market failure. There is a high interest in value-adding Canadian agriculture and agri-food through innovation – be it product, process, marketing or application innovation. The past solutions of government subsidization are not a long-term solution and are diminishing.
Last year a group of Canadians came together to develop a vision for agriculture for the year 2015 and beyond. I believe that a vision like this is what is needed to bring the right perspective to agriculture, part of a converging life science industry:
“In the year 2015, Canada is a world leader in the enhancement of human, animal and environmental health through the application of research, technology, and social innovations in agriculture and the bioscience industry. As a solution provider to society, we reduce the burgeoning health deficit, improve quality of life, and embrace environmental sustainability. We are the trusted standard against which others measure themselves.”
Can we stop the rapid growth of government health budgets by providing the food and food ingredients to prevent illness?
Flax could substantially reduce Type 2 diabetes, beta glucan from barley and omega products from plants and fish are beneficial to heart health, many compounds such as borage oil have arthritis-reducing benefits, tomatoes contain lycopene (can reduce prostrate cancer); blueberries contain antioxidants; and the list goes on. If we maximized use, the bottom line impact would be a healthier society and billions in savings.
FINANCING TO ADD VALUE
During the last Century agriculture grew and continued to increase production by science breakthroughs in fertilizer, crop varieties, pest management, and animal health technologies and breeding. The green revolution of the sixties was a tremendous success.
These breakthroughs were driven by universities, government labs and industry. Government, producers, and industry were the norm for financing during this period. Technology was generally licensed rather than used to create new companies or Canadian business opportunities.
As we moved into the late 90’s there was more research being focused on value-added bioproducts, alternate fuels, waste management, nutraceuticals/functional foods and bioprocessing. Human and animal wellness were becoming more prevalent in research. With this research and entrepreneurial movement happening in the agricultural sector, venture capital began to consider investments. Foragen Technologies was the first venture fund that was focused on early stage agriculture in Canada, being formed in 2000. Over five years Foragen invested in several start-up companies and is now managing those investments to exits and value.
The other venture fund specifically focused on agriculture is Farm Credit Corporation Ventures. Established in 2002, it is investing in later stage agriculture businesses and has several investments across Canada. There are also other funds that invest in specific agriculture and agri-food businesses, including Ventures West, GrowthWorks, Business Development Bank (BDC), and Golden Opportunities.
Unfortunately, we are not seeing new funds emerge to take these projects commercial. This is going to create serious impediment to Canada’s leadership in innovation. We need to do a better job of educating the investment community and the public about the agriculture and agri-food sector, and its strong benefit to the Canadian economy and consumer health.
Canada has a strong research base between our universities and federal labs, with a focus on convergence in the life science sector. Part of that convergence is between food and health. With imagination and creative thinking, we can move our industries to the next levels of value creation and establish new businesses.
We are seeing some good initiatives in the agriculture and food sector that are creating focus on research. The most significant is AFMNet, a new National Centre of Excellence focused on advanced food and materials. This network links more than 24 institutes across Canada and is generating some excellent research. Others include the National Research Council facility for nutraceuticals in Prince Edward Island, the Canadian Light Source synchrotron in Saskatoon and the Richardson Center at the University of Manitoba. These and other research-based initiatives will drive the research activity across Canada and create more potential for commercialization. We need to ensure we maximize the opportunities generated.
As Dr Arthur Carty, Canada’s national science advisor, said; “Without strong government/university research, we will certainly not succeed as a nation”.
Good support for innovative research will encourage our entrepreneurial scientists to move their developments towards commercialization. The challenge is to ensure that we have the support programs in place and operating effectively. Things like the commercialization initiative in the 2004 federal budget are critical, but is still not initiated. The early- and seed-stage fund initiated and provided to BDC to manage in 2004 is slowly beginning to show some activity but so far not in the agricultural and agri-food sectors. The National Bioproducts initiative seems to be stalled, due to lack of support by government, or lack of vision.
We need to see the Innovation Agenda of the federal and provincial governments get beyond words and promises. They need to take leadership, drive the agenda and become the catalyst.
The convergence of agriculture and agri-food with health can be a transforming phase for the struggling industry, driving value by creating new products, new business opportunities and increased value. We have a strong research base, but we need to see the venture funds and government programs converge to take technology forward to the venture opportunity stage and encourage our Canadian entrepreneurs.
Commitment to agriculture and agri-food as a life science industry can have a tremendous impact on the Canadian economy, life style and health.
Murray McLaughlin is president of McLaughlin Consultants.