AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 28, 1998

• 0900

[English]

The Co-Chairman (Mr. Joe McGuire (Egmont, Lib.)): Order, please.

Good morning, everyone. Pursuant to Standing Order 108(2), today we're meeting with World Bank officials. We have some people from the World Bank and from the Consultative Group on International Agriculture Research. Ismail Serageldin is vice-president for special programs and Alex F. McCalla is director of rural development.

Welcome, gentlemen. We only have one hour, as both committees have another meeting at 10 o'clock. We'll take your statement of maybe 10 minutes and go directly then to questions.

Mr. Ismail Serageldin (Vice-President for Special Programs, World Bank): Thank you, Mr. Chairman. It's an honour to be with you here. I will present very briefly the global dimension and I'll ask my colleague, Mr. McCalla, to follow up. So we'll share the 10 minutes between us, with your permission.

Sir, it is my understanding that the Canadian government is presently preparing its action plan to follow up on its commitments to the World Food Summit in terms of trying to reduce hunger in the world by half over the next 20 years.

• 0905

At the time when you're doing this preparation, it is essential that the Government of Canada resume its leadership role in the area of assistance to agriculture and rural development. I'm convinced it's not just a matter of the necessary aspect of reducing the prevalence and incidence of hunger, which touches over 840 million people worldwide today. It is also in Canada's self-interest. It is also in the interest of the coming generation.

Why do I say this? Because there is no future for this planet without the transformation of the rural world and agriculture in the developing countries. The reason I say this is we're going to have, certainly within the next 30 years, 2.5 billion more people on the planet. That is given in the dynamics. Those people will put an enormous pressure on expanded food supply in the developing world, and although exports will grow or double during this period, the production of food in those countries is also going to double.

Unless there is a transformation that reduces poverty and increases effectiveness and efficiency in the agricultural and rural development sectors of these countries, the forests will be chopped down, the hillsides will be colonized, the soils will be eroded, and the waters will be parched. The enormous interface between agriculture and the environment is a necessary trade-off that we have to think about.

Just to show you, the past green revolution in the last generation not only doubled food production in countries such as India but also significantly reduced the need for new land brought under cultivation. The amount of land saved was not insignificant; it was 300 million hectares of land. That is equivalent to more than the total arable land of Canada, the United States, and Brazil combined. So you can imagine how many more forests would have been chopped down and how much more impact on the global environment, how much more loss of biodiversity, and how much more loss of soil fertility would have occurred.

So that transformation is in the interest of the industrialized countries; it is in the interest of Canada; it is in the interest of future generations. We believe we know how to do it. We believe that now we have learned the lessons of the past with Canadian officials as well as at the World Bank and other colleagues around the world. We know we need sound micro-policies and sectoral policies, but we also know we have to integrate the rural development action at the community level.

The concern of the World Bank is it seems to have slipped from the attention of the world and gone to the back burner. We believe that even though populations in urban centres are going to triple and urban poor are going to be very prevalent in the developing world, the best way to help the urban poor is through cheap food prices, and the way to do that is through the transformation of the rural sector. The urban poor, by definition, purchase their food because they can't grow it. It's a large part of their discretionary income, and therefore when you lower the price of food, without government, without special bureaucratic programs, you significantly improve their well-being in the urban areas as well as improving the question of the rural areas.

So as a matter of achieving the objectives you've set for yourselves in following up on the Rome summit, as a matter of dealing with food security and poverty reduction, as a matter of protecting the environment, we are convinced that an increased support from Canada for rural development through its official development assistance and an increased support from Canada for international agricultural research, which made the last transformation possible, is badly needed and would be in the interests of Canada.

Let me stop here and ask Mr. McCalla to say a few words.

The Co-Chairman (Mr. Joe McGuire): Mr. McCalla.

Mr. Alex F. McCalla (Director, Rural Development, World Bank): Thank you, Mr. Chairman. It's a great pleasure to be here and to be in a hearing in this building. It has some historic and roots connections for me.

There's not much I can add to what Mr. Serageldin has said in terms of the crucial importance of developing rural areas to the issue of dealing with global food security and poverty reduction. I think we sometimes forget that still 70% of the poor people in the world live in rural areas and that the majority of that 70% depend upon agriculture for some or all of their income. Therefore solutions to the problems of poverty and food security in the developing countries crucially depend upon improving the productivity and the profitability of agriculture. Central to that mission is agricultural research.

• 0910

I think Ismail played down a little bit his critical role as chairman of the Consultative Group on International Agricultural Research, a system of 16 agricultural research institutes around the world, to which Canada has been a consistent, steady, and important donor, though of declining importance in recent years, to the support of research specifically devoted to the issue of food crops of importance to the poor in developing countries.

Also, I think we forget sometimes that when we benefit people in developing countries through research and through development activities, we also benefit ourselves.

In addition to the direct research benefits that might come from investments in research activities such as CIMMYT, the wheat and maize institute in Mexico, which does deal with wheat, there are other indirect benefits that come to a country such as Canada, a trading nation.

It's clear from information and data that I've seen developed by the foreign agricultural service in the United States that countries that adequately and effectively invested in agriculture in early stages of development become very good trading partners as they grow richer.

One simply has to look at the role of agricultural exports to countries such as Japan, Korea, Taiwan, and now Indonesia with a slight break, to identify the fact that countries that paid early and significant attention to improving agricultural development turn out to be very good customers for countries such as Canada in the overall development and global environment.

Beyond this, I think there is of course the foreign policy issue that I think Canada has a long-standing tradition as being a leader in issues with respect to the question of overall development, poverty reduction and improved tranquillity in a global economy.

So I think that I want to say, Mr. Chairman, simply that it's not only in the interests of our commitments, both us at the bank and you as a country, to the betterment of those who are less well off than ourselves, but there is a very substantial potential benefit directly through research benefits and indirectly through trade expansion and other activities that suggest we should be paying much greater attention to the issue of rural development, which I recognize within the bank, as Ismail has said, declined in importance over the last decade.

We are now committed strongly through a strategy of rural development to revitalize our interests with the support and commitment of our president, Mr. Wolfensohn, to do a much stronger effort in rural development, and we invite you to join us.

Thank you.

The Co-Chairman (Mr. Joe McGuire): Thank you very much, Mr. McCalla.

I'd like to welcome the chairman of the foreign affairs committee, Bill Graham.

As you know, this is a combined committee here this morning. In the interests of efficiency, we only have an hour, so if we could hold our questions to five minutes per member we'll go directly to questions and we'll try to refrain from making any great statements or speeches. We just ask you to have a direct question and answer.

Mr. Mills, would you start off, please.

Mr. Bob Mills (Red Deer, Ref.): I'd like to welcome both our guests. I have several questions around your area of expertise.

In China we have a huge change, a dramatic change undergoing. They talk of how there are now going to be within the next two to five years 500 million new consumers, many of them of course moving from the rural to the urban. I wonder how the world is going to provide food for the increased demands of numbers of consumers like that.

Secondly, with a crop like canola, for example, which I'm personally familiar with, we have now through genetic engineering been able to change our yields from what five years ago were 30 bushels to the acre in our area now to as much as 60 bushels to the acre. I wonder if that kind of genetic engineering is available to third world countries, if they're able to show those kinds of increased production levels, as we can.

Thirdly, and finally, and this might be out of your area, but you might be able to help me a bit. In 1994 the World Bank made a statement that public pension plans and so on for people, particularly poor people, should be privatized. I wonder what the World Bank has done with that, or what the movements ahead are or if you have any knowledge of that.

Thank you.

• 0915

Mr. Alex McCalla: Thank you very much. Let me start a comment on the first two questions. Questions such as privatization of pension plans I always leave to my vice-president to answer.

China is an issue that has most significance for the fact that it has 1.2 billion people and therefore a quarter of the world's population. But it also is a country that if it changes it's interfaced with international markets, so it has significant international impacts. So we have concerns as an institution both with China as a member and the concern with whether or not China has invested sufficiently in long-term agricultural research to continue to generate the rate of output increases that are necessary to feed a growing, still growing slowly, and rising-income population. And this, as you well know, has been a major issue of debate in the international community over the last several years.

The initial position was that China had plenty of capacity to produce, so it was not a serious issue. I think now with a lot more analysis and discussion there is a serious addressing of the long-term food security issue within China.

We are involved through a focus country program in helping China develop a long-term food strategy. I think there is good evidence that there is scientific capacity in China, and that there are substantial possibilities of expanding output. I have no doubt that they will become an increasing trader in international markets over the next 20 to 25 years. That in itself, it seems to me, makes it a global issue as well as a national issue.

The second question you raise is one of crucial importance. I'll begin the comment and then I'll let Mr. Serageldin comment on it beyond.

This is the question of whether modern molecular biology as translated into biotechnology. The sort of thing you're talking about as far as canola is concerned is going to be a set of techniques that's available to developing countries to address improving yield capacity in commodities of importance to them. I think this is a major issue where it's still not clear how that is going to happen, because as you well know, much of the research that has been done in developing biotechnology techniques has been done in the private sector and is subject to proprietary control.

So the question is, how can one get techniques that were useful in corn or in wheat or in rice available to people for yams and sweet potatoes, cassava and beans? I think that remains a continuing issue that's central to the debate in the CGIAR. So I'll let Ismail comment on that.

Mr. Ismail Serageldin: Thank you.

The key question, as Alex McCalla said, is really the nature of the science that is being developed in this area, that it's proprietary science for the first time. In other words, for the first time there is patenting both of product and of process. In the past we could take the process and apply it to the kinds of crops and conditions that concern the poor around the world and protect the environment in that part of the world. Today it is less clear. And that is one of the reasons we are very hopeful that Canada would join with the World Bank and with others in the context of the CGIAR, the international agricultural research system, to address this issue and ensure that the open access system that has worked well in the past is made available to the poor of the world.

This issue needs to be put in context, and some of my friends in the private sector say to me, “What's wrong with that? Look at informatics and computers. It's all proprietary and everybody benefits, so what if the development countries use a three- or five-year-old computer?” And my counter answer is: what if it turns out to be like pharmaceuticals, where despite the billions of dollars spent on pharmaceutical research almost nothing is being spent on malaria, even though malaria touches 200 to 400 million human beings, debilitates 20 million, and kills 1 to 2 million every year? WHO was begging for $5 million of research money for a malaria vaccine.

The problem there is that these people are not of interest to the private sector, and this is a public good research. The parallel therefore, in terms of applying that, needs to come from the international system, and we hope Canada will support it.

The Co-Chairman (Mr. Joe McGuire): Mr. Sauvageau, would you like to go next?

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): Good morning, gentlemen. I am very happy to meet you here this morning.

Since we only have five minutes each, I will just ask three short questions. I am not as knowledgeable in agriculture as my colleague, Ms. Alarie, who will pursue on farming issues, but I have read a book, which you all surely heard about, La fin du travail, and about which I would like to have your comments.

First, the author refers to three countries, The Comoros, Madagascar et Réunion concerning the growing, making and exporting of vanilla pods. Apparently, the price of vanilla, which contributes to a large part of the GNP in those countries, would be now as high as $2,600 per kilo on the international markets.

• 0920

But it is well known that in the United States now, a multinational company can, through genetic engineering, produce vanilla for $55 per kilogram of pods, which could lead around 100,000 people to lose their jobs in those three small countries. That's just one among various examples of ways in which genetic engineering can already be used throughout the world. I would first like to have your opinion about that.

Secondly, still on a world without farmers or on farming issues, there is mention of a program or robot which is called the romper and which would permit, without any intervention of manpower, to grow, pick and transplant any round fruit such as melons, pumpkins, cabbage or lettuce. Here again, there is question of perhaps 100,000 Palestinians who could lose their jobs. When those techniques are well-established throughout the world, a lot more people might find themselves unemployed for that reason.

You were talking earlier, Mr. McCalla, of the use of computers or computer products or programs in the area of agriculture.

According to statistics, there would now be somewhere between 15 and 20 percent of farm producers who would use computers or computer programs. It is foreseen that, 20 years from now, that number will have tripled, so that even fewer people will then be engaged in farm production. In view of all those data which are quite frightening for the future, could you make any comments on the impact that those major technological pressures may have in the years ahead?

Mr. Ismail Serageldin: The issue of vanilla processing is well known. It is not so much a question of protecting the production of vanilla in Madagascar, but of knowing how to transform agriculture in Madagascar so as to increase the revenues of those farmers and to give them more opportunities to carry on with that crop.

On the issue of robotics, I believe it is going to have some significant impact only in more developed countries, with not much influence on the situation of areas like Bengladesh, Africa or South East Asia. Finally, the use of computers will likely remain, for a long period of time, limited to the producers of advanced countries, though we think that technological means of transformation could be made available to the poorest as long as they are suitable and well-adapted. That's where the Consulting Group on International Agricultural Research plays an important role.

Mr. Benoît Sauvageau: Thank you. If I have a second opportunity, I will come back.

[English]

The Co-Chairman (Mr. Joe McGuire): Mr. Harvard.

[Translation]

Mr. Benoît Sauvageau: That is not as alarmist as what can be found in here. Thank you very much.

[English]

Mr. John Harvard (Charleswood—Assiniboine, Lib.): Thank you, Mr. Chairman.

Perhaps I'll ask my first two questions—I hope I'll have time for three—to Mr. McCalla, since, Mr. McCalla, you are a Canadian citizen and maybe can give us a review of our own country's policies vis-à-vis these important issues you're talking about this morning.

One, would you suggest that we, through foreign aid, through our CIDA programs and so on, should be increasing our budgets?

Number two, Dr. McCalla, both of you have mentioned the importance of research and the importance of Canada playing a leadership role. As a country, are we doing enough in the area of research? Perhaps tied in with that is that our research is going in the direction of more partnerships with private industry and universities. Do you think that's effective?

If I have time, I have a third question for Mr. Serageldin.

Mr. Alex McCalla: I think the answer to the first question is very easy. From my perspective, the answer should be yes. I think Canadian foreign assistance in general has been declining, and I think particularly to agriculture and rural issues over the last decade.

• 0925

My own view is that the challenge ahead, from a scientific and developmental point of view and as far as global food security, is enormous, and is something that's going to need—on your point of partnerships—the involvement of everyone in collaborative ways of addressing this very crucial, important issue.

On the research question, I would say that Canada has done a lot. Canada has played a very significant and continuing role in the CGIAR, both as a donor and also with the involvement of Canadian scientists and Canadian individuals in leadership. I would have to say also, though, that Canada's position as a donor to the CGIAR has fallen from being the number three donor, I believe, to being the number seven donor. Certainly I would say there is room for the expression of leadership both through additional resources and through additional involvement of Canadian institutions and Canadian individuals.

Mr. John Harvard: My final question is to Mr. Serageldin. You spoke about the importance of building up the food supplies around the world. You spoke about the importance of rural development. In this particular era, in globalization, we see more trade liberalization and more, freer, and open markets. Do you think that is a good mix—that going towards this kind of open market system around the world will necessarily address some of those important issues you talk about?

Mr. Ismail Serageldin: The short answer is yes. I do believe that moving towards an open market system is going to be beneficial to everybody. It's one of those cases where it's not some win and some lose, but one where everybody can improve.

No country in the world has gone for complete food self-sufficiency—not the United States, not Canada, not anybody. But food security will require still a substantial production to both increase the incomes of the people, reduce the pressure on the environment, reduce poverty, and improve food security and availability locally.

Mr. John Harvard: And keep food prices down? You mentioned the necessity of cheap food prices.

Mr. Ismail Serageldin: Yes. I think it will keep food prices down, remembering that the part that is traded of the total food supply is between 10% and 12%, so roughly 90% of the world food is produced locally and consumed locally. Therefore reducing that price has a major contribution to make in terms of the prices for 90% of the consumers in a country. Individual countries' situations will vary, but in the aggregate, these orders of magnitude are still there.

Mr. John Harvard: Thank you.

The Chairman: Mr. Hoeppner and then Mr. McCormick.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): Thank you, Mr. Chairman.

Welcome, gentlemen.

The World Bank put out the statement, or it was out of their stats, that Canada, since 1990, has dropped from third to twelfth as far as income per capita is concerned. Can you enlighten us as to why this would have happened? I'm also kind of surprised to hear your statement that free trade is going to be beneficial and that we have to have lower food prices.

In Manitoba we have the situation where the average income per farmer in 1996 was $8,400 before depreciation. Input costs have escalated to a point that nobody can survive, farming.

How are you going to regulate input costs? Because they seem to be monopolistic in the freer trade that you suggest. There's a big debate about the Wheat Board in this area right now—that if it weren't for the free enterprise grains like canola, we'd be all starving and on the welfare rolls. How are you going to control this to keep low food prices and high input costs and keep farmers farming? Because I agree with you—if agriculture is sick in a country, the whole country is sick.

Mr. Alex McCalla: Let me start on that one. I'll leave the question of the fallen Canadian per capita income, because I don't know the answer to that question. Perhaps Ismail does.

The argument for a freer international market, it seems to me, is based on the presumption that if you have that, you have greater opportunities both to have access to food supplies at a fair price, if you're an importer, and access to export opportunities.

I think the reality is that when you look at the question of prices in international markets, part of the reason prices in international markets in the eyes of Canadian exporters have been low has been because of intervention in world markets, not free world markets. It's been intervention on behalf of countries like the United States and on behalf of countries and units like the European Union, which have included domestic food price subsidies that have depressed international prices. If you have trade liberalization, presumably we move in the direction of lessening those, which should bring prices more in line with the costs of production.

• 0930

I know it sounds like a bit of an anomaly to say that we want low food prices and greater agricultural output, but the great miracle, it seems to me, of agricultural technology is it allows you to be more efficient in producing output per unit of input. If you can do that on a consistent basis, you can do it at lower cost and therefore you contribute to lower prices for consumers. So in that sense it's a very important thing to link the question of technology, efficiency, lower prices and still to be profitable to farmers and good for consumers.

I'll stay out of the Wheat Board question, okay?

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, gentlemen, for being here.

I've been talking to some people across Canada, the public, as I would say, and they haven't heard as much about the starving in North Korea and the fact that close to a million people have starved to death in the last year. Other people are saying that we haven't heard much about it because they're a communist country.

Taking this to the Asian flu epidemic, which is in part of that area, I'm wondering whether you see that it will make a difference in the investment by international companies into Asia. Do you see whether this difference in their investment approach, even though it's short term...? Because the Asian flu will make a great difference in the recovery of some of these countries that are having the food problem.

The other thing I would like to hear you share is the number of days of food supply that's ahead in the world. It's always been alarmingly short, the number of days. We have the northern hemisphere and the southern hemisphere, and we've made it. Now we have El Niño and we blame it all on that little person.

I was wondering if you have any comments on that.

Mr. Ismail Serageldin: The first part is that the starvation in North Korea is of course associated with the disastrous policies in the management of that economy and the management of that agriculture, plus climatological conditions—so the combination of the two together. Other countries that have suffered climatological conditions have shown greater resilience if their policies were better.

There's very little investment going into North Korea anyway, because of the nature of the regime. Therefore, I do not believe this will significantly affect the investments of the private sector into that part of the world, nor do I believe the Asian flu is going to have a major impact on their decisions. They're more likely to be governed by whether the IMF rescue package in Indonesia is going to be credible and whether the stabilization of Indonesia and the other markets would work better. So this is where we stand on that one.

On El Niño, there's a little bit of an effect and we have now a much better understanding of how it works. It brings droughts in certain areas and floods in others, and greater formal aid should give us a greater ability to anticipate it in the future.

On the question of the reserve stocks, I believe the reserve stocks have gone down dramatically and this contributes to a spike in prices when it happens. We're trying to build them up again from the spike of two years ago, but we're nowhere near where we should be to anticipate potential needs.

I think Alex McCalla knows more about the numbers.

Mr. Alex McCalla: Typically, the reserve stocks run somewhere in the neighbourhood of 20% to 22% of annual consumption. At the peak of the price rise in 1996 they were down to below 14%. They're now back up to about 16%, or 16.5%, and they're not much more than pipeline stocks. They're simply the stocks that are necessary to keep commodities flowing from the time they leave Prince Rupert until they get to Beijing, or wherever they're going.

So it is an issue and it does contribute to the stability of international prices. On the other hand, I'm not sure that holding large-scale government stocks is necessarily the solution to that. So it's a very difficult issue.

Mr. Larry McCormick: Mr. Chair, I have a short question here and I don't need to load it with a political question against the United States, Japan, or whatever.

Canada has given quite a bit of aid and food to North Korea, and their enemy, South Korea, has given more than $100 million worth of food and aid. This is important, because it's individuals there. What do we see on the horizon? Are the United States and Japan about to at least forward some food to help these people?

• 0935

Mr. Alex McCalla: My recollection is that there have been some U.S. PL-480 shipments to North Korea. Don't hold me to that, but I believe that's true.

The Co-Chairman (Mr. Joe McGuire): Mr. Turp.

[Translation]

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): Mr. McCalla just referred to the move towards free-trade which is making progress and which may have an impact on food security. I would like to ask you a question, Mr. McCalla, and to you as well, Mr. Serageldin.

Particularly given the way Mr. Chrétien, the prime minister of Canada, insists on promoting free-trade throughout the Americas, what is or what will be the impact of such a liberalization on food security, and which role can the Bank, the FAO and other international agencies play in the negotiations concerning agriculture in that area of free-trade?

Mr. Ismail Serageldin: Mr. Turp, I guess we are quite convinced, for the reasons Mr. McCalla just explained, that free-trade will be highly beneficial for everyone, including for developing countries. One must not forget that some of those farm producing countries have currently no access to the common European market, where they would normally have opportunities to get major export contracts. Exports to those countries would not come only from northern countries. Be it in terms of bananas or other food products, there would be benefits to everybody.

Second, concerning the Bank's involvement in that sector, we took on a commitment to each of our member countries to explain the international experience in that area so they can select among a series of macroeconomic and sectorial policies which could be beneficial to their farm producers, thus improving the rate of productivity and well-being of their populations.

We make those interventions by approaching each one of our member countries, but we don't get directly involved in the negotiations which take place between our member countries regarding free-trade agreements.

Mr. Daniel Turp: Is the resistance from some European Union member countries and also from the United States to the liberalization of farm products trade not beneficial in terms of food security?

Mr. Ismail Serageldin: The resistance concerns mostly the subsidies to the European farm production which has a major impact. It represents between 50 and 100 billion additional dollars to European consumers and it generates surpluses in production. We do not believe that food aid can improve farm productivity in developing countries. It might be necessary in some humanitarian situations, or at certain times, but it's not a good way to foster the development of those countries. It is much more useful to enhance local capacities and to encourage local farmers to increase their production.

[English]

The Co-Chairman (Mr. Joe McGuire): Gentlemen, it's interesting to note that your organization controls one third of the entire stock of plant genetic materials stored in gene banks around the world. I understand most of these materials were collected from third world countries. What is the payback for those countries from where the material is collected? I imagine most of the research is done by first world countries, so called. What is the payback for them to give up their plant genetic material to you?

Mr. Ismail Serageldin: The gene banks of the CGIAR, as you rightly point out, are the largest in the world, but they were also the first and largely still the only ones that are put under intergovernmental overseeing. We hold them in trusteeship for all of humanity—600,000 accessions.

Yes, the bulk of them come from developing countries, but of course most of the research that has been done in the CGIAR has benefited developing countries. The green revolution, the long stream of outputs of the CGIAR has benefited enormously the developing countries. We believe the open access system and the free exchange system have been beneficial to everybody.

Canada alone, to my knowledge, has also benefited from 4,500 of these accessions, for its own work in Canada. That is a system we would like to see continue. That is part of the reason why we are somewhat concerned about the patenting and biotechnology that moves towards proprietary science, because we would have to find other ways in which to make available this free exchange of information, science and materials. Otherwise we risk having barriers come up everywhere, lessening benefits to the developing countries and to the industrialized countries.

• 0940

The Co-Chairman (Mr. Joe McGuire) Thank you.

Mr. Calder and then Mr. Proctor.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you, Mr. Chairman.

In your rural development piece here, I'm very interested in the puzzle piece at the bottom called training. I think education should be in brackets underneath it, because the rest of the puzzle pieces there are redundant without that one puzzle piece. I say that because it's very difficult to take a person used to turning over the soil with a water buffalo pulling a sharp stick behind it and then put a Ford tractor in front of him and say do it with that. He's going to look at you in a funny way. But this is very important, because as the population grows to nine billion by the year 2030, agriculture is going to become much more intensive.

We have to teach people in third world countries not only how to feed themselves, but why you put a seed in the ground, why you till the land in a certain way, why you try to avoid erosion—all these things. How is the World Bank going to be involved in this? This is a key point.

Mr. Alex McCalla: A substantial amount of our investment activities over the years have been addressed to rural education, extension training and capacity building, and in a variety of ways. Through our economic development institute we are involved in training programs for our client country staff. We are heavily involved in extension activities, particularly in Africa, through training and visits and other kinds of activities, and we continue to invest in developing research capacity within countries.

To comment on your issue of intensification, I agree entirely that agricultural production systems have to be intensified. If it's true that we're going to have to produce 80% or 90% more food on the same land area we have now with less water than we use now, clearly that will require intensification. But I think it's absolutely crucial to understand what kind of intensification will that be. When you're thinking of circumstances in many developing countries of substantial underemployment of labour forces and of significant potential migration of rural poor to urban slums, I think we should be seeking forms of intensification that are labour using, not labour saving.

So we can think more in terms of biological technology, changing agronomic techniques and increasing the intensity of cropping within a system, but without having to think about the use of mechanical technology to replace labour. At a later stage in development that may become necessary, but at this point it seems to me the thrust of the bank's effort is to address the issue of employment-intensive rural development in agriculture.

Mr. Murray Calder: I agree with you 100%. I think it's very important that we embark on some sort of more intensive education program for third world countries, because they are members of and have a deposit in the world food bank—the land mass.

I often use an apple analogy. I can take an apple, cut a 32nd slice out of it and peel the skin off it, and that's class one and class two agricultural land currently feeding six billion people. And by the year 2030 it will be feeding nine billion people. We must educate these people in third world countries to not necessarily turn the clock back, but wind it up, stop erosion, and if possible turn it back, improve that land and bring it back into production.

Mr. Alex McCalla: I agree entirely. I just took slight issue with your replacing the oxen with the Ford tractor.

Mr. Dick Proctor (Palliser, NDP): I want to pick up on the question the chair asked about the storehouse of seeds. In Canada we recently transferred seeds that were here in Ottawa to Saskatoon—they are owned by the Canadian government. Does your organization have access to that storehouse of seeds?

Mr. Alex McCalla: Yes, I'm sure we do.

Ismail.

• 0945

Mr. Ismail Serageldin: I don't know the specifics of that.

Mr. Alex McCalla: If it's a public germ blend, then I'm sure we do have access to it.

Mr. Dick Proctor: You've indicated this morning that Canada has dropped from third place to seventh in terms of its financial assistance. Have other countries stepped up, or has Canada fallen faster than some and been replaced? What's the situation?

Mr. Ismail Serageldin: Yes, other members have come up much faster than almost anybody expected. It's surprising to know that Canada's contribution is on the order of $12 million a year, while the contribution of Switzerland is $20 million and Denmark $19.8 million. The contributions of Japan and the United States are on the order of $40 million, Germany is about $19 million, and the World Bank is about $45 million.

What is impressive is that smaller countries like Denmark and Switzerland, after very detailed studies, have concluded that the best investment they can make in terms of having maximum impact on dealing with the issues of environment, food security and poverty reduction is through the CGIAR system. That is why they are giving such a huge percentage of their relatively scarce resources to that support.

Mr. Dick Proctor: Does your organization have an ideal percentage of what a country should give of its GNP? Do you have a target that you would hope first world countries could reach?

Mr. Ismail Serageldin: We don't have a formal target. One of the magics of the CGIAR system is that it's a voluntary associative arrangement. There's no negotiated burden-sharing. Each country that shares in the overall vision of what needs to be done makes a contribution. All contributions are accepted.

I'm happy to note also that some of the poorest developing countries have been putting up contributions of $500,000 a year—Uganda, Côte-d'Ivoire, Egypt, South Africa, Bangladesh, Pakistan, and all the big countries like India, China, and so on. Colombia puts in $2 million a year. So the developing countries have shown their appreciation of this international program by becoming donors to it as well as beneficiaries. We're hopeful that this vote of confidence, with rates of return that run between 22% and 191% on all export evaluations, would convince Canada that it's also in the interest of maximum utilization of its dollars to increase.

The Co-Chairman (Mr. Bill Graham): Ms. Augustine.

Ms. Jean Augustine (Etobicoke—Lakeshore, Lib.): Thank you, Mr. Chairman.

I too want to add my words of welcome.

I think this discussion should not continue without addressing the issue of the role of women in the alleviation of malnutrition and the goal that was set to reduce the present level by the year 2015. I also think the action plan or whatever the World Bank and that consultative group have embarked upon must in some way involve ownership of land and women's role in terms of that. Can you briefly speak about the role of women in the general area?

Mr. Ismail Serageldin: I'm glad you highlighted that. We're very aware of the fact that in certain parts of the world—Africa, for example—women produce 80% of the food, yet get less than 10% of the wages and own less than 1% of the land. So the transformation, not just of agriculture but of well-being in developing countries, will pass through the transformation and empowerment of women.

To that end, the World Bank is the largest financier of education programs and primarily of the effort not only to educate them but to increase the enrolment of girls in primary school. In places like Niger and Mali, only one girl in four goes to school. You're talking about the future generation, 75% of whom will be illiterate unless we transform that. So we're putting about $2 billion a year in education at the World Bank. That is not what is reflected in the rural figures—that comes under the heading of education programs—but it is a central part of our strategy to support that transformation.

In addition, in the CGIAR we are very concerned about food crops, which tend to be the women's crops. The men in the households tend to work on the so-called cash crops, like cotton and so on, leaving the food production to the women. So in many ways the work of the CGIAR directly addresses the interests of women.

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In addition, I myself am involved with the CGAP, which is the Consultative Group to Assist the Poorest, which tries to promote micro-finance activities primarily for women among the poorest people in the world. Whether it's the Grameen Bank or other such examples, what we're trying to do is to make access to financial services also available to women.

So I'm delighted you've highlighted that point, but it's very much at the centre of a successful strategy.

Ms. Jean Augustine: Thank you, Mr. Chairman.

The Co-Chairman (Mr. Bill Graham): Mr. Grewal.

Mr. Gurmant Grewal (Surrey Central, Ref.): Thank you, Mr. Chairman, and I welcome the gentlemen.

In light of the reduction in the disbursement of CIDA in the last five years for agriculture, food and nutrition, Canadians want their tax dollars to be used efficiently and effectively to achieve the objectives of sustainable development, reduction in poverty, and global food security.

I think sending these shiploads of food bags to those countries is a band-aid solution. Would you recommend that revisiting the objectives and focusing on launching green revolution, for example, or self-sufficiency in food production, or diversification of agriculture, or introducing better varieties or making the agriculture inputs like fertilizers and chemicals available, should be given priority?

Do you think the objectives should focus on better coordination with NGOs, for example PLAN International in Africa, who are very active in rural developments?

Secondly, should the countries set realistic objectives or achievable objectives of ODA-to-GDP ratio, rather than just setting 0.7% and operating only one-third of that, practically, which has given false hope to those third world and developing countries?

Mr. Alex McCalla: Let me respond briefly to your first set of issues.

On the issue of food aid, I think our position would be quite clear that food aid's predominant role should be an emergency relief, that food aid as a developmental tool is less effective in terms of both food for work and it having a tendency to be distributed in ways that will depress domestic prices that we want to have encouraging domestic production.

I think what we're arguing as a general strategy is that we should be seeking to make agriculture and rural communities more able to earn better incomes. If that comes about by producing more food crops, it's good. If it comes about from producing more export crops, that's good.

I don't think we should have a model of self-sufficiency, because I don't know of a country in the world that is self-sufficient, and I don't think we should be encouraging developing countries to be self-sufficient. We should be encouraging them to do those things they are best able to do, and we should encourage them to do that without subsidies necessarily on inputs.

I think the task ahead in rural development in the global context is so big and so complex that it must be done in partnership with all those who are interested, and in particular in terms of interacting with NGOs, many of whom have substantially greater capacity in dealing with rural development at the community level than we do.

Mr. Gurmant Grewal: What about ODA and GDP ratio?

Mr. Ismail Serageldin: I would hope, sir, that we would be able to see a reversal of the decline of ODA levels in the OECD countries, but that committee had set ambitious objectives that all the members of the OECD have adopted, and to achieve that we will need to make a bigger effort.

I think when you point out the 0.7%, which is the figure that has been adopted several times in various fora, there are some countries that have successfully maintained these levels, even if there is a financial crisis. I cite the Netherlands, Sweden, Norway, Denmark, and so on, who have been able to maintain these levels. Ultimately, it is a decision for each sovereign state to make, but on balance, I think we will need both trade and aid, and some aid has to be targeted well.

In the final analysis, it's not just the amount of money; it's how it is used that is important. Here I hope the kinds of discussion we are having today on the focusing of aid, on the high returns that you get from international agricultural research and on focusing on some of these high-return activities, would enable you to get the maximum return for the investment you make.

The Co-Chairman (Mr. Bill Graham): Thank you.

We have only five minutes left. We have Mr. Bonwick and then Madame Alarie, so maybe you could be as brief as possible.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Absolutely.

Thank you, gentlemen.

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The availability of capital seems to be a key factor here in development and, as Mr. Calder mentioned, on educating third world countries in areas of research and development. You've cited some examples of Canada and how it has dropped back from third to seventh and cited other examples on how other countries have grown in investment. How does Canada compare with regard to percentage of GDP? You showed $12 million versus $20 million, for example, of Germany, but percentage of GDP might have an impact on that.

Secondly, I wonder if through a multilateral agreement there was any ability to assess levies based on the participation of those multilateral agreements with countries like Canada, Germany, and the U.S.

Mr. Ismail Serageldin: The beauty of the CGIAR system is that it's a voluntary associative structure and has no agreement or levy on it. It's whatever everybody wants to do that is put there on a shared purpose to maximize the impact.

In terms of the return to GNP, I think the figure for Switzerland and for Denmark would be much higher than Canada. Germany would probably be lower on a percentage term.

Mr. Paul Bonwick: Obviously, a multilateral agreement being voluntary as well... People have to sign on the dotted line in a voluntary manner before the assessment could be levied anyway. It was just a thought.

Mr. Ismail Serageldin: Yes.

The Co-Chairman (Mr. Bill Graham): Thank you.

Madame.

[Translation]

Ms. Hélène Alarie (Louis-Hébert, BQ): My question is on food security. There was the Quebec Summit in 1995, and the Rome Summit in 1996, where there was a commitment to reduce significantly the number of under-nourished people. In parallel to that, I read that CIDA's aid to those people is declining year after year. So I have some short questions to ask you, because I start being a little bit discouraged after so many years. Is there a lack of willingness or interest? Are they somehow missing the right target? Or are they aiming at the wrong target? Have aid measures been inappropriate over the last several years?

My last question is whether you have any report suggesting that we should fully integrate agriculture development activities within programming priorities. Have mistakes been made?

Mr. Ismail Serageldin: We, at the World Bank, are as responsible as CIDA for the decline of investments in the farming and rural development sectors, and we think that it is because the decision-makers in many countries, in the donor countries as well as in the receiving countries, didn't put enough emphasis on agriculture and on rural development. So, that's why we are here with you today holding a debate in order to try to reverse that direction.

We think we now have the good solutions. We hope that Canada will join us and increase it's financial contribution.

The Co-Chairman (Mr. Bill Graham): It's 10 o'clock and we must conclude our meeting right now. I am very sorry, but there's another group that's coming in.

I am glad that we have been able to hold this joint meeting with our colleagues from the Committee on agriculture.

Mr. Serageldin, I think it's the third time you appear before our committee, and I look forward to seeing you again next time.

[English]

We're adjourned until 10 a.m. for the foreign affairs committee. Agriculture will go about their business.