The Final Mile, Ep 1: Why strategy matters as much or more than scale for Canadian ag's future

The Final mile podcast on RealAgriculture.com is brought to you by Results Driven Agriculture Research. Find out more by going to rdar CA. Ted Bellier is an agri food expert, former Maple Leaf Foods Executive, Distinguished Fellow at the Canadian Agri Food Policy Institute, and now also a Director at rdar. Ted joins us. Hey, Ted, how we doing? Good, John. Great to see you. Great to see you too, Ted. There is a lot happening in the world of agriculture, not only in Canada, but around the world, and it's hard to get a rope around some of it in terms of how it's all impacting many of us on, on a daily basis. Now. You've, you've spent decades shaping Canadian agricultural policy and strategy. How would you describe the current state of agriculture in, in Canada? And are you optimistic? Are you concerned? Or I guess, what's your outlook? It's such a difficult question, John, because, you know, we have so many things affecting agriculture today that from different angles, you know, people have referred to it as the poly scene. I don't know if you've heard that name, you know, before, but that's a sector essentially when you get all kinds of different things happening the same thing, technological change, environmental change, disease issues and geopolitical rapid transformations of all kinds of things that turn into crises that essentially poly crises. And I would put us kind of in that. But having said that, I look at Canada as rather a unique special case. So a good example of that if we talk about how things change overnight. For first, last week this time we had a significant competitive advantage on pork going into China. You know, we had a duty of 25%, the Europeans, on their frozen pork going there, their duties ranged anywhere from 15 to 60% because the Chinese had a temporary duty on it while they were sorting out what they were going to do with the Europeans. All of a sudden, late last week, that changed and the Europeans now have an advantage. Their, their duties run from about 6% to maximum 20 and ours is 25. So we flipped inside of two days from very competitive to less competitive. Hard to run it, hard to run a business on that basis. But if you, if you, if we, if we back up a bit further and say, okay, so why overall am I optimistic on Canada? That basically is because I, I think in, in a sense we're going to be the last man standing. And, and I'll give you an example of that. So this, this year, we're into what the International Grains Council looks at as perhaps the one of the largest crops in history. You know, 2.4 billion tonnes of grain maybe, and everybody's, you know, getting rattled about that. But the, and because Canada is part of that, we've had a great grain crop, mostly in Western Canada, not less so in the East. But the, but the reality of that is that if you look back at the last five years, using the same numbers, we've increased the global production of grain every year, but we've increased consumption just a little more than production every year. And why haven't we noticed that? Because we, we've taken it out of the stocks. So the, the, if you look at the stocks for the last five years, they actually declined slightly and that was, that's how we made the difference up. You know, that's, that, that's telling you something long term. And, and if you, if you add, add into that what the USDA has been saying, what the FAO and oecd and easiest read is the GAP report that Virginia Tech puts out. Recommend that to your listeners to have a look at that. It's, it tells you that productivity is not keeping up, you know, is not, is not high enough to be able to, to keep that demand and supply in cheque. Productivity is actually falling and, and particularly in the developed world, with our world. And to some degree that's because our research budgets have been, have not kept up with demand or we haven't focused on the right things one or the other. But having said that, the strange part about it is that despite the fact that we are not fully keeping up with demand in the productivity sense, we are seeing very strange pricing. If you look back at the last 50 years, our levels of where we are today in the, in the globally on grain, for example, or all, sorry, all foods. If you look at the FAO Food Index, which is produced every month, I'm sure your readers and listeners look at that. We're hovering around the same high levels that we did in the mid-70s when we had the Great Grain Robbery, you know, come in and followed by the oil, oil crisis. So we're at those two high points and yet we're not. You know, consumers are feeling that, they're feeling the pinch, but farmers are feeling that there's something wrong, you know, that the pricing isn't right. So it's very, very odd situation. You say, what, how do we get into that kind of a mess? And then you begin to look at, you know, where, what's been happening with trade and you're getting trade moving all over the world into very strange places. It's a very Inefficient trade flows today. Yeah, but largely because of these geopolitical masses that we just talked about in the beginning. And so it's, it's, it's a very screwed up world. But at the end of the day it all comes back to where are we going to be, you know, in 10 or 20 years from now with a continual population increase, at least for the next 20 years. Everybody's panicked but oh my God, we're going to lose all these people. You know, at some point birth rates are going to fall. That's not happening anytime soon. And but more importantly, even at the low growth rates we have today, Shaun, we're beginning to consume a lot more particularly protein and fats than we can produce. So I think the chances of us making the 41 million tonnes that we need to of protein in the next 10 years, that, you know, you, you can see that in the, at the osu, that's as meat protein, that's very unlikely. And you, I'm sure your, your listeners know full well why. So what's led us to the productivity issue, how to get out of it? Well, I'm not 100 sure we will. That's the first thing. And, and just so I understand this, Ted, Miners. It's not, this is not just a Canada issue. This is, this productivity issue is, it's global. Yeah. In Canada, the developed world, Shaun, as you, you know, it makes sense that we, we've layered in a lot of productivity over the last 50 years, you know, that's, that's for sure. And it's come through a lot of great research, you know, and, and genetic changes to plants and, and animals, all great stuff. But it has to keep growing at a pretty high rate. Your productivity has to increase about 2% a year and it's not anywhere near that right now. And funnily enough, the developed world is their productivity is increasing faster, but many, when you look at it, still not fast enough. And where their productivity is increasing the fastest is not necessarily through great research. It's through bringing more land into production and, and essentially depleting their groundwater resources. Well, you look at, you look at the increase in the arable acres in like a place like Brazil, you know, they, they, they continue to just find more farmland. Huge like 70 million acres appearing almost overnight. You know, I mean, so, but there's a limit to that. That's, that's, that's productivity that has a physical limit at some point. And as you bring that, particularly if you're bringing rainforest into production, which is happening in Brazil and Africa. There's, there are consequences of that. And, and the consequences of that are you're changing. There's a word, there's a reason we call a rainforest a rainforest. It rains a lot. It creates its own rain. Once you take the forest away, then you begin to have problems that they had two years ago in Brazil where you had a drought and in the northern part and you know, that can upset things mightily very quickly. Now for some of the audience, they may be listening to this and being like, okay, whoa, whoa, whoa, whoa, whoa, whoa, whoa, wait a minute here. Seems like we're highly productive in the grain sector. We've got an abundance because of where yields have been. We have an abundance of product right now. And prices are depressed. What are you talking about, Ted? What do you mean we're not, we're not as productive as we should be? Well, let's go back to. Again, prices are depressed, but I think the bigger problem that prices are depressed from the peak that we had after the invasion of Ukraine and, you know, and after Covid. But as I said to you, they're far from depressed. If you look at this on the, on a long term basis, they're higher than they were. What is a problem is that the input costs are very, very high and they have been going up. So what farmer can earn out of this is. That is a crisis and not one we should take lightly. But what I'm trying to lay for you is there is a foundation. Why, in a sense, many countries are beginning to look at Canada. Most of the world are net importers of food. Okay, Right. It's really important to understand that you name the crop or the animal, and I can tell you how many players it takes to control over 70% of the net exports of that product. So if you take virtually any of the grains, less than seven countries control more than 70% of the net exports globally. And Canada features in virtually all the categories that we produce, whether it's canola or wheat or, you know, or pork or you can name quite a few pulses for sure, in some cases less than 7 to produce 80% of the net exports. Well, that means most of the world are net importers of food. And the ones that are big net importers, like Japan and Korea, for example, are beginning to realise that, hey, you know, maybe we should be working something out with people where our food security is at stake, because this is a very unsettling world that we live in. So suddenly that becomes the base case for agriculture in Canada. But that's not where you stop, you know, and you, you then you need to add on to that. What kind of research are you going to do? What kind of things are you going to do that separate you from. From everybody else so that when you get big crops, it doesn't destroy you. And, and the, and the answer to that is differentiation in, in a huge way, you shift that productivity from I want to be the most efficient producer and the cheapest guy on the block, which will never be, to I want to be the, the supplier of something to a consumer or a customer that they can't get anywhere else. And we have a pretty good history of that. And much of that has. It could have come through research, but much of that has come more by accident almost. The pork industry exists today in Canada as a substantial industry because in two different occasions, we did things that were, I would say, initially hated and, and turned out to be absolutely perfect. And the first one was the introduction of the, of the. Back at, back the time before the Civil War when a chap came over from England and William Davies and introduced the British breeds into the Canadian hogs. You know, because those days all the hogs were lard hogs that the Americans produce, and you need lard. And its timing was perfect because after the Civil War, we got big duties on, on everything. Barley was going into the United States with free and suddenly it had a duty on it and tariffs. And as those tariffs got bigger, lo and behold, we found an export market for, for our, our pork in the, in the UK and in Europe in general. That was a huge market for us and it built packing houses across the country simply because we were different. And, and then we repeated the same thing again when essentially Canada packers and my team invented chilled pork and we, we. The day we did that, and we did it in an American plant because I couldn't do it in our own plants. That was. People. People were, you know, adamant about the fact that you're crazy. Why are you doing that? You know, you're spending money for needlessly. Frozen is just as good as chilled any day. So it was either fresh or frozen at that time. Yeah, there was no chill. And the, and I, and. But we. It happened because I was in a Hormel plant. They had, they were sending fresh pork to, to New York City because they, and they were getting huge complaints in the middle that it was very hot summer in the 80s and they couldn't handle the complaints. So they started cutting loins in half because they had nothing to put them in putting them in a cryovac bag that fit it and putting it in ice. And, And I was in the plant because we were exporting Hormel's frozen product to Japan along with our own. And I asked them, I said, you know, why are you destroying all the value in this loin? He said, it's the smelly pork claims. And I said, what do you, what's it doing? It's giving us another week of shelf life. We have one now, we get two weeks of shelf life. I spent the rest that summer with my Japanese technician in that plant, trying to see if we could get it to three weeks, because if we could add one more week, we could take it to Japan. And the only country in the world that was exporting to Japan chilled pork was Taiwan. All the only one. And lo and behold, by that fall, we had our first shipments. And Shaun, that's where we moved from what was the red ocean, you know, into the. Not just a blue ocean. We went right through it. We were in the white space. There was no competitors and we had two, at least two years of that. And, and we, and then unfortunately, that old Hormel plant shut down. And had it not been for Alberta in the Gainers situation, where Gainers went bankrupt and the Alberta government took it over and, and, and, and a discussion with their deputy minister at the time, I said, he was, he was saying, you know, we got this plant losing tonnes of money on our hands. I don't know what to do with it. I said, how would you like to build the first choke line? And he said, what's it going to cost? And so I gave him the. I said, we'll supply all the technology for it and their trading division. And sure enough, within six months, that plant was starting to make money and that was the first chilled pork exported. It really never worked well, because I could never convince our own people at the time because we were own. Our main shareholder was, was Europe, was a Brit at the time. But when Wallace McCain came along, it took him all of about five minutes to understand what I was talking about. And he said, I'll build you a plant. That was the start of Brandon and, and then I, I converted the one in Lethbridge, the beef plant and Lethbridge to a Japanese plant. That's about differentiation, eh? And then you had to go on and preserve it because the technology eventually spread. The rest, you know, other Canadians got it and Americans and climbed into the technology, you know, of how you get chilled, because we was pretty good. So then we had to continue to layer in many other things to keep the differentiation. And that's why you've got chilled pork. Canadian chilled pork is kind of the global standard. It's the best. And you know, we just won the Golden Apple Award in Shanghai Food Fair, which is huge. You know, and that's based on, you know, having having a consumer trust and essentially brand recognition in. Or not. Sorry, because I said consumer customer trust and brand recognition. Yeah. I think our next step is to see if we can move that to consumer. So are we. That's a great example. Look at it at a higher level across most commodities that we are producing. Are we far too addicted and just comfortable with commoditized sort of selling? We are, but we talk about value added all the time. But at the end of the day it just seems like selling commodities is way more comfortable. It unfortunately is. But you know, more and more of our commodity selling is moving into foreign hands. Right. Our grain business, I think the majority of over half the grain business is now handled by non Canadians out of Canada. I mean, if you think about it, big changes. Those differentiation things though are not unique to pork and we just need to keep going with them. And look at the potato business in Alberta. That's a business that Rdar has worked very hard at, particularly around the irrigation side. You know, you've got, you know, that's a business that. The first export of french fries out of, out of Alberta, it was York Farms in Lethbridge. And we, I used to send that stuff to Japan. All of a sudden people started saying these are good french fries. So Shaun, why were the french fries noticeably different in Japan by the Japanese customers than french fries coming from other, other places in the world? It was because we controlled the moisture perfectly. And so you, you, because you were on irrigated land and all the other conditions were wonderful too and we'd very low disease. So that, that was enough. That became another example of the, of the same thing. And you know, we, we, we, we shipped bagels when we took over Canada Bread started shipping bagels to the UK from our Calgary plant. And we totally changed the entire UK business within a year because that was dough Montreal bagel. And what the Brits were eating in their supermarkets was essentially bread with a hole in it. Right. And so not the same. Every time you do that, you begin to pull money you out of, you know, essentially you, you change the, the transaction and it's no longer commoditization. I mean I, I have a butcher store in my neighbourhood, you know, right. Near here. Well, guess what? You can, you can walk in that store and buy in a Canadian ribeyes, you know, for 59 a pound and with all kinds of special, you know, trace and everything to Ontario farms. But you can buy wagyu imported from Australia for over a hundred dollars a pound or you can buy wagyu from Japan for almost 200, $199 a pound. If people don't believe me, John, tell them to look up the Cumbri Meats website. They'll stun them, they'll be stunned and then they'll understand why. RDAR is thinking about, well, could we do things to beef the way we've done it to pork and change and much is going on there already. But could we begin to look at the actual product? Not just, you know, I want to produce more pounds quickly, but could I produce something that has real consumer benefit? And if you, if you hit that, you know, you're, you're in a different world. Yeah. You know, it's a lot of times like the, maybe this is maybe self reflection but the, the food technology space. Yeah. Is something that, you know, we see like a press release company rolls out and says, you know, hey, like, you know, your chilled pork example and the time like oh, that sounds kind of cool. But you don't, you don't really necessarily put full thought into what the person that had the idea like what got to that point. And we, a lot of times we talk about the successes. We don't necessarily. There's a lot of failures that come with. Absolutely. I share those. I tried chilled beef before there was such a thing as chilled beef from bridge. Those were the days we didn't have any packaging for it. This is in the 70s. Okay. Yeah. So the only way I knew you would move beef anywhere was on, in on rails. That you could rail it into a rail car and move beef from the western Canada to eastern Canada in a rail car and you railed it back out into a packing house all on hooks and rails. So what did I do? I, I put rails in a sealand container because I didn't do it any other and you know, shut the door and turn the chiller on and send it to Japan. Well, guess what? The beef arrived and you could eat it. It was well aged, you could eat it, but you couldn't make any money because you couldn't get enough carcasses in the, in the sea lion container to pay for itself 10 years later. You know, we invented chilled and we didn't invent it. We came to the Australians were first into it movement of chilled beef about the same time as I was working on the chilled pork. And so they don't all work, you know, but the problem is we don't work hard enough at it I think. And you know the storey of our wheat, I mean we get the highest priced wheat in the world. Why? Because actually you know the rest of the world uses our wheat to blend. They couldn't, they can't make bread in many of the places of the world if they don't blend gain wheat in because they don't get the falling numbers too low. Right. So you know we need to focus a lot I think on two things that would really help. One is make food. You know the old Hippocrates thing. Food is your medicine so you want to stay healthy, you eat good food. Canada comes really does really well in that area for sure. And I think the other part of it is you want to have something that not only supports health but is sustainable over the long run for all those net importers who are becoming more nervous about their supply. Yeah. And one of the things I think that makes them nervous is we're in an era here now. How long it lasts I don't think anybody really knows. But we're in an era where what we defined as post World War II rules based trade kind of being crumpled up and thrown out the window and it's, it's countries are trying to figure out where they fit in the landscape here. Canada, Canada being one of them. Yeah. So Shaun, I, I think that's a, another key point I didn't know if I'd have time to make. But we are, we are moving from free to. From free trade situation where we did extremely well to more a mixture of free and mercantilism. Right. In the same sense. And watching United States copy China's trade strategy day by day is, is re. Really should send a big message to us. And, and if we go down that road, Shaun, there's, there's one very controversial thing that I mean I, I suggest but people have to be careful with how they use it. But, but you know we, we want to continue to attract foreign capital into, into the, into the ag business in Canada. But we need to somehow do it in such a way that Canadian ownership remains very key to this, to this puzzle and we need to, we, we today we. The strange thing is we only have two companies that I think at best, and I'm being generous with the second one, two companies in Canada, Canadian companies that are actual global food giants. One, one would be McCain's. Yep. Operating in, I don't at least plants in many, many countries. And the other one potentially is Saputo. But the, the, the good news about that is that just because they become a multinational and operate in many of the countries, they continue to invest heavily in Canada. And you can see that in, particularly in, in what's going on in Western Canada with the, with those french fry plants. But having said that, the, the next thing we have to do is say, well you look at the next layer. We have got about 25 to 30. I don't know the exact number because I've never sat down and looked at it. Companies that are what I would call national to continental size. Heading up that list would be people like Maple Leaf Foods, Premier premium brands, you know, Richardson's, like Oppenheimer, like Oppie. In the produce sector. Yeah, you can, you can make a fairly decent list of ones that they basically operate in Canada and the United States and Mexico and to a large degree, but they don't tend to have plants offshore. And what we need to do is have a strategy to take these continental players and graduate them to the likes of McCain and Saputo. And doing so, you get two huge wins out of that. You keep your brain trust for food in Canada. You know, you don't become controlled by essentially foreign multinationals which, which is certainly the case in beef, certainly the case is growing rapidly in grains. And, and, and you can, you can begin to become, it's like a security to all, all the farms that supply these things. Your best. As you know, I've said this many times to many people, they throw things at me. But your best BRM is having a plant in your backyard that is competitive because it's different. And that's your best possible protection. And you only get that in reality if we can take some of these many companies. There's quite a long list actually when you put it together. Particularly, strangely enough, particularly in the bakery side, there's been a growing list of Canadian companies. And because you've seen, you know, you've seen our, our bakery business become actually big piece of the trade surplus that we have with the United States and in, in the consumer products. So we need to graduate those companies and do it in such a way that we are, we're not saying we don't like SMEs because we're full of SMEs, but the, but a lot of the research programmes need to be looking at how do these mid scale companies or Larger continental grade companies, how can they produce something that is really needed by the market? They're not competing on price. Well, and the reverse if that doesn't happen is you get Canadian subsidiaries of those larger foreign entities and the Canadian president is a commercial manager. You know, a lot of the decisions are not being made in, in country. They're, they're a, they're a liaison to the country. Right. I've seen that in my lifetime, John, in a big way. And what's the case? So, and some would say like, okay, that's just the reality of globalisation and consolidation in a, in a sector that requires a tonne of capital, there could be profits and say the ME packing industry. But the reality is it takes a lot of capital and, and to enable, to do that. So it's not set up for locals to just kind of make it happen. So what's, what's the consequences, Ted? I've heard that before, but you know, so the opposite to that is that if you go to Canada pension fund and you ask them why you're not investing more in Canadian multinationals and they're saying, well, I'm sorry but you know, we don't invest 50 million. We invest, I think, our minimum. And I, I, I, I don't want to take this out of context, so I'm just say, I'll guess our minimums is a half a billion. Well, suddenly then what can you put the money into? The money's there, the entities are not. And the, and so you need, you need size to size matters. So that, that would be the, the, the first, the first piece of that puzzle. And I think then the, the second piece of it is that, you know, once you get something that people really want, the biggest problem in Canada I've incurred is you can't scale fast enough, right? There's a gap from, from idea to whatever, you know, large entity. There's, there's, there's a gap once they. Like it, once the consumer really wants it. Actually that, that's, that was one of my biggest headaches. You know, in, in, in, in, in the pork game. We, we didn't have enough pork at, you know, when we, when we landed the largest, second largest supermarket in Japan. And, and, and the president said to me overnight one day, he said, I, I really, really like the fact that we've got your brand in our store. And we were the only branded pork. Everything else was US pork, Danish pork, Irish pork, etc. Canadian pork. We were maple leaf pork in the second largest supermarket. And he Said, you know, we're going to give you all of Japan, not just Tokyo. I, that was my night. That was a nightmare for me because it would have meant I'd have to take all the Canadian pork that we were, you know, you know, that was about equivalent to Toronto. It's just, okay, well, we just won't ship port to Toronto. I mean, so that's how difficult it becomes. You have to have some kind of a plan to scale. Okay, so why do we have a scale problem? Okay, so there's a, you got to have a plan. But it feels like there's more missing here when we talk about this because this comes up in a lot of different threads in agriculture and beyond it. When we talk about the country. I really think it gets down to can you, can you believe the market will still be there tomorrow morning to scale? Because you're not going to scale for Canada. Right? I mean, you know, 41 million people, hell, that's not as big as the base. It gets nobody's attention. Mexico City's 27 million. Well, the, the only reason we're even on the global map is because, you know, we're, it's not because we're a humongous producer of, of agriculture. That's nuts. We're not, you know, we, we don't, we don't even, you can hardly see us in total. But it's because we don't eat it. You know, we, so what we produce is all surplus. Like, which is where that lack of rules based trade it, that, that connects to this because that, that's a real, it's, it's a retarded for growth. It's, it's a huge issue. If you've got sustainability in that, perfect, you're in great shape. But you know, but the people, what people forget is the largest producer by region, large producer of food in the world is East Asia. The second largest producer of food in the world by quantity is South Asia. The third is South America and the fourth is North America. And yet East Asia is the largest net importer of food in the world. And so, you know, everything depends on what happens there. And Africa is suddenly moving into that category where it's becoming for the first time, you know, producing a lot more, but it's becoming a significant net importer. And so Canada's sitting there not because we're a global giant in food production, we're a global giant in net export. Yeah. Because we don't eat it. And so we rely on some stability and we have to, we've got to layer that in. I think, I think we're getting there. Not, not because we're doing necessarily the right things, but because the world is beginning to realise that they can't feed themselves. Right. But in a world of mercantilism, we have economic disadvantage if we can't export as much as we want or as freely as we want. But if you're Korea and Japan, in that kind of world, you don't eat. That's a fart. You have way less leverage. So, Shaun, I think what I saw for the first time in the last, I'd say three years is a little bit of change with the people in power. And then in the know, in Japan, when you say, you know, what would, what would give you security? And, and there's where the hard decisions come for Canada because what could we provide that they would trust? And, and you know, you could, you, you begin to think about things like national treatment. Do you know what that is? I mean, that's essentially really the only country we have that with is United States. And that is if we have a, if we have a crisis in Canada, where we have a really bad crop and you have to prorate everything you could offer them to say, I'll tell you what, you've bought on average this much from us for the last five years. Even though this is going to be a problem for Canada, we'll con, we, we will give you a prorated amount that you've been buying that's worth a lot. That's soft power shot. Right. And I think we're not there yet, but we're beginning to think about it. But in order to make that work, we've got to graduate more of those Canadian companies that I talked about from the Continentals. You know, we've got to graduate them more into that. And it's beginning to happen on its own a little bit. I'm seeing a lot more, there's a lot more interest in marketing than there used to be in, in particularly in the rich part of Asia. And that's where we should spend our efforts. Yeah. So it's starting. Okay, so we're kind of working our way backwards here. Let's. One, this all begins with research. Yeah. And the, you know, one of the, one of the issues I think a lot of people in Canada are calling for is we need to be better at this. We have now we, even when we do, we produce successful outputs. We're not. Commercialization is also a challenge in Canada. But I want to talk about just research overall and how, I guess, are we. Is there enough money going into research in Canada at the primary research level? I think the obvious answer to that is never enough, you know, not when you've got the base that I've laid out for you, which is, you know, look, this, is this business not going away anywhere. Yes, it's going to have ups and downs, but long term future is solid. So why aren't we applying more research to it? What, what kind of research would you do? I. Again, I can so R has been exceptionally good at dealing with what I would call the kind of, the crisis research issues around, you know, like disease in, in, in, in Canola and stuff like that. They're spending large amounts of money dealing with, you know, answers to that and disease in, in animals, for example, significant amounts of that. But some of this money needs to be spent in. I'm thinking through the, the other piece of the puzzle which I gave you is that we don't just want to, we don't just want to survive in this world, you know, but by being able to produce more on, you know, better yields on per acre or more pounds on an animal, we, we want to be able to make ourselves significantly different because there's plenty of the world that'll pay for it, you know, and so I, maybe it sounds very harsh, but I'm less interested in feeding the world than I am in making money from the people who can afford it. And so that tends to say how do you make that product, you know, indispensable to people? And the, and that's going to be around, you know, issues like health and taste and quality put together. And I think, I think that's kind of the next generation of at least some of the research has to go into that. One of the challenges here is that it's easy to justify the research when we're, in hindsight, right? It's like, oh, there, you know, there was this problem or somebody had the foresight and you know, after, you know, 5, 10, 20 years of this, you know, great research, look, look at the outcome that we got and the value that was created, that that's, that's easier because we focus on the wins. But in the moment, if we're thinking about the next 30 years at a time where governments are, you know, you know, we're hearing about austerity and cutbacks. Yeah man. It'S, it's a much harder, harder thing for leadership in the, in the country to say, doggone it, you know what, there's going to be some slippage here and we're not going to have a whole bunch of wins. And there's going to be some projects that totally fail and it's going to be hundreds of millions of dollars, but there's going to be that one idea, that one thing that created a tonne of value 20, 30 years from now that, that's, that's a, that's a much harder sell. Ted, you're looking for another Canola, basically? Well, there's, there's an example. Yeah, another Canola or essentially a repeat of the pork thing. And, and I think that it's easier for that to happen when you've got the, the link between the farmer and the processor. I mean, if you, if you're doing research, and this is, okay, I'm doing research because this is going to give you X number of pounds more on the ground, fine. But if you're doing the research that were, what you're developing on the farm becomes the, the, the, the thing that makes it impossible to copy what you're going to do in your processing plant. So you link technology in the processing of the product with technology in, in the, in the differentiation of the, of the item. That's why Canola worked. It wasn't just because we had a new, you know, a new type of rapeseed. Right. I, I recall and I was very young at the time starting out in Canada Packers. I recall that it was the Canada packers laboratories that figured out how to refine the bloody product. And, and when you put the. Because canola is essentially a seed oil. It's not like soybean, soybeans. A meal is a meal. Yeah, you know, thing the key was could we refine this product? And, and so the link between the refineries at the time and, and product was absolutely key. And we don't look at it that way anymore. We kind of look at it like, you know, individual projects. And, and I think you need to link together the processing and the growing to create a product. And then when you, when you create that product and it's different. You know what, Shaun? Suddenly the scale issue doesn't. It becomes your friend, not your enemy. Because anybody outside of that, the people who are always largest scale, they're not going to want to embed something that requires going back into the crop and changing the crop. That's beyond them. They don't want to break scale. Here's what you didn't say, Ted. You're talking about a commercial and the farmer and there's some intermediaries, of course, but what you didn't mention was government. That's right. And, and that tends to be when we have conversations about research funding and the amount of going into research. It's all in, in Canada, it is always centred around what is government doing in that area. And you know, I, I'd rather, I mean, at the end of the day, government research is important. It was important for Canola, for example, but at the same time, it's very important to stimulate research in Canadian companies that are going to link up with the farm and, and let them pay for those research. The reason why I was involved with Hormel was because Hormel did all of its research in Toronto, Canada packers was the research labs For Hormel and 21 PhDs working on, on, on meat and veg and oils and animal feed. You know, so what I'm trying to suggest is as you build these larger Canadian entities, make sure your tax, your tax system works so that you can get, you get more than just your investment in research. It'll be driven by the companies. They'll create products that are needed and they'll link them to the agriculture supply chain, which becomes unique in, in a sense to that, to that. A crazy example for you, which it didn't exactly occur with huge amount of research initially was, you know, we created. And again, your, your biggest problems is arguing sometimes with your own customers and then arguing with, with, with the farmers because nobody wants to do anything that's going to cost money. Yep. So in the, in by accident in the 1970s, because we were so busy developing Japan, one of our key guys that was our partner in Japan was this, was an expert on soybeans. And he was with me in Ontario. At one point we were down trying to develop some fish business, strangely enough, out of Homestead Foods in Lake Erie. And he said, oh, stop the car. I was driving him down there, he ran into the field. I didn't even know what the hell we were looking at. And he's starting to look at these things and he says, let's forget about the fish. We got to buy these things. I said, what are they? They're soybeans. I said, what do you want? We literally went up to the farmer's door, knocked on the door and he, and he said that you tell him we're buying those beans. I said, we'd like to buy your soybeans. The guy looked at us like we were two lunatics. Yeah, exactly. These two crazy people. And he said, I sell them to the, to St. Clair Grain and Feed down the road, go and see them. I went down there, knocked on the door. St. Clair, grand feed. We'd like to buy this farmer's soybeans. Oh, we can sell you soybeans from anywhere. I said, no, no, no, his soybeans, we can't separate them. And so I said, well, if we pay to separate them, will you do it? Yes. He thought we were crazy. So we did. Guess what those were. The, those were Harwood soybeans, which had been. This guy had figured out were bred from a Japanese variety in Ontario by the Arrow Research Station. They became the first exports of edible soybeans to Japan for tofu. Right. And so we, we started that business on this as a, as a side line and, and that became to tofu. And then we had beans for miso, and then we had beans for natto. And guess what? The, the farm community began to do their own research and they, and, and, and, and a whole research industry jumped up over edible soybeans in Ontario. Well, they're now 20% of the soybeans in Ontario. But my biggest enemy of that was my own company, who was the biggest crusher and refiner and they owned Canadian Vegetable Processing, said, what are you doing? We want to crush those things. No, we can give these guys. And we, we were producing premiums up to like 80, 90 cents a bushel, you know, for, for, for, for soybeans if you could IP them. So I mean, Shaun, I, I think a lot of the time our, we, we don't understand companies can do this work very well, but the incentive should come through the, you know, both the tax system for sure, and a lot of regulatory issues that kind of squash. Oh yeah. Development. I mean, your, your, your folks know that in spades. I mean, you can't even, you can't even do things that, that would protect the industry because the regulatory, the regulators have got all kinds of reasons that, you know, they don't want you doing stuff. So I, I would, I would use the tax system and, and regulatory development more so than worrying about whether the government's going to throw more money in itself. One of the, when we, we talk about research strategy and I, I sometimes get concerned, we talk about like national research strategy versus regional. Like, I don't want to have that debate. But when we, when we're thinking about where need to go from a research perspective, are we doing too much spreading of the peanut butter? Are we not, you know, do we need to be more focused? And you know, some people say like picking winners, it's again, Hard to pick winners without even knowing what the outcomes are. In many times it's easy to do in hindsight. But what does that research strategy need to look like and what do the KPIs need to be? Okay, boy, that's a big question. Well, first off, I think we absolutely have to do research and government should be deeply involved in it when there is a really significant threat on, on the horizon. And we've got plenty of those coming in, mostly in disease, animal disease and crop disease. So if they're not doing research in that, then they're, they're essentially putting our future in jeopardy. Could significantly and maybe even human health. So I don't think they get a buy on that one. I think they have to do it. But beyond that, I think it becomes really important that we create the situation where companies are going to want to invest in this research for their own. We're not picking the winners. The companies are picking the winners. And the companies with their partners in the agricultural farm community, together you become a winner or a loser. Independently, each one, they're going to be a loser. If they, if they work together, they can be a winner and that's that. Shaun, that's probably the psycho psychology that needs to really get in the industry. It's very difficult when everybody's so siloed in an industry to, to, to look beyond your immediate silo and your own media thing and saying, boy, I'll tell you, if I, if I had a partnership, you know, where I would, I was growing something that was valuable to this processor and this processor is going to stick with me because he's going to need this product. There's no if, ands or buts. Then you, then, then that's, that's where you begin to say, okay, what could, how could we spend more money to make this better? I, I really like that formula a lot better than worrying about whether the government's going to give me enough money to, that I can, that all the researchers at various universities and government labs can, can kind of do what they want to do. So government's not picking the winners. The winners are being, are coming forward because they've got the, they've got the guts to invest in something that's different. Yeah. So what is, what is success in research look like then? Is it, is it jobs created? Is it, you know, do we, how are we moving people in that pendulum of commercialization from local player to national player to, you know, global food giant? Okay, all of the above? I, I, I think it's Simply defined, if you've got, if, you know, if you can get into a place where competition is less relevant, maybe irrelevant as it was for me for two or three years. Right. It. Then, you know, you can do what you want, but that, that should be the goal. Not, you know, we, I think we measure the wrong things quite frequently. And, and, and I think the money is there to flow and maybe more than we think. I, I fear, I actually fear that if you opened the floodgates, you'd get plenty of money, you know, but it wouldn't be coming from where you wanted to come from. Yeah. That's what I'm learning here is that it's not a money, it's not a. There's a lot. There is money. Yeah. It's not a money problem. Shortage of guts and ideas. Shortage of, is it. Shortage of entrepreneur that. Shortage of entrepreneurial spirit or the people willing to take those risks. I think there's a bit of that. There's a bit of that. But, but again, that is that. That has become more so since we've seen. We've lost the free trade side of the thing. Okay. That become more so. So how do you get that back? Well, that's where your government comes into play. And you can do it in various ways. I, I strongly suggest you do it through tax incentives rather than just saying, here, here's a cheque, you know, go and do what you want to do, or trying to, you know, I won't get into the politics of it, but some of these great programmes which are designed more for political, you know, benefit than they are for actually. Do we really. Are we really going to see something out of it? I think it's a tough place for government to do the investing, but they've got to be there. As part of this new issue we've got with mercantilism, if we just ignore it, we're dead. So we got to come up with smart ways of being able to put that money into action. Yeah. Not easy solutions, Ted. But no, I, but no, no strategy. If you go into this thing as all tactics and no strategy, you're guaranteed to lose. Yeah. Also, if you were looking for the easiest option, that might not be the best option either. Right. That's the other part of it. Clearly not. Clearly not. I mean, much will depend, Shaun, and whether we still have a functioning USMCA in a year or so from now. And because you can, it's easier to build on to success in the United States than it is to re. To. To give up lose that success and have to, you know, regenerate it in Asia. We got to get there eventually and this has certainly been a hell of a stimulus to do it. And but if you're going to go into a market like Asia, you're never going to be the cheapest, you're never going to be the biggest. You, you got to be the best. And boy, there's enough people who will spend that money to do it. But if you can take something that's already successful in the U.S. that's why we have a trade surplus on processed foods with the U.S. we never did before. Yeah. Since 2014, we've had a trade surplus with the U.S. on processed food. And that's and if you look at what that is, it's all stuff that's different. Interesting. Ted, really do appreciate you being willing to have this conversation. These are important topics and we try to weave it all together and connect some dots for everybody. I really appreciate you joining us here today. Thanks, John. It's great to you again sometime. Absolutely. The Final mile podcast on RealAgriculture.com is brought to you by Results Driven Agriculture Research. Find out more by going to RDAR category.