Abstract
From there, I was asked to lead an Environmental Farm Plan initiative that had 33,000 farm families complete the plan. This was successful because I could talk tough to farmers behind closed doors but also talk with government about making positive change. The trust factor is key, and one of the quotes I live by is: “No one cares how much you know until they know that you care.” I managed to gain a lot of trust from both the farmers and government officials. One thing I learned early in life was to always remember who your customer is and who you're working for.
I eventually became the director of plant research at University of Guelph. Farmers began coming to me and saying we needed to get into this “new world” of biotechnology. We saw what AgWest Biotech was doing in Saskatchewan, and even though we were going through major budget cuts I told the government, “Put your money where your mouth is guys.” And they did, to a considerable extent. And that money created Ontario AgriFood Technologies, which aimed to defend new technology—specifically biotechnology, which we thought had great opportunity for agriculture, not just from a production standpoint, but also from a new market opportunity standpoint. We believed that as long as the regulatory situation was correct, it was a very solid technology with huge potential in public health, industrial areas, and primary agriculture—and we needed to defend it when justified by science.
We already had data from one of our big ethanol plants in terms of what it meant for municipal taxes, federal taxes, and employment. The bottom line was: They have a return on investment of about three years on a 25-year plant. Changing that mindset from a subsidy to an investment in your tax revenue sounds simple, but you've got to have your data to back it up. That point helped create the Ethanol Growth Fund and we had some great entrepreneurs.
Coproduct streams are also very important. You make ethanol, but what are you going to do with the distillers' grains, what are you going to do with the carbon dioxide, what are we going to do with the distillation heat? How do you create partnerships? I often called myself a glorified dating service. I would identify people who needed to meet and talk about working together. Right now, one of our big ethanol plants in Chatham ships all of its carbon dioxide by pipe to a massive greenhouse to grow tomatoes. That carbon dioxide increased tomato production by 20% and our coproduct stream for that is oxygen. I haven't heard anyone complain about oxygen going into the environment!
These things evolve. Today, the output of that first big ethanol plant in the province—Greenfield Global—is only sending about 20% of its product to fuel. Most is going into industrial alcohols. They're distilling their product up to 14 times in some cases. They're in the handwash business, and they're in the hospital sterilization business, where you need absolute purity. They're getting better margins but with much more stringent regulations and oversight.
Getting that first plant was also very important. A big ethanol plant can be an anchor tenant for an industrial biotechnology cluster. The zoning is already in place; in Canada that can take as long as 18 months, a couple of years even. You've already got your citizenry on board. You're not going to get a bunch of complaints as you add units. You've got your natural gas, your rail, in some cases your port, and you've got your electricity and your weigh scales. So you add on to optimize the plants and their coproduct streams.
I've always felt that biotechnology was such a great technology because it's size neutral. Many technologies that you work on today, you need a certain size of capital operation to make them work. Nothing against a big, $600,000 John Deere combine but you need 1,000 to 2,000 acres to make that viable. That's not going to help the small land owners and farmers around the world. But if you think of the biotechnology embedded in a seed, the big guy might have some volume discounts but ultimately the little guy can afford that for his 2–3 acre plot. But for that combine, he would never have 1,000–2,000-acres so the combine technology will never do him any good.
One partnership we developed was with the auto sector. We created a “Biocar” program to look at how we could put biology into a car. And I'm proud to say that some of the first biobased parts in a car—the Ford Lincoln—came out of our work. Whenever you're trying to put together a partnership, you have to put yourself in the other person's shoes. You've got to answer the question: What's in it for them? How do we create the trust that will enable us to work together. So we worked to get the auto sector, the chemical sector, the agricultural sector, all working together.
Value is also important. For example, if you mold a bioplastic to make a car part, you're using an industrial process but it's compostable, you are catering to consumer interest in greener products, etc. But once we got it out of the lab and into practice, we found that using the bioplastic reduced molding cycle times by 10%. That's 10% less labor and 10% less capital. It wasn't the product itself, it was how much it saved the customer, and then we could price that value. Only by determining the value you provide can you determine the price point. You always have to keep in mind how you're going to get a discovery to the market. How something works in the lab versus how it works in the real world are two different things. Sometimes the breakthrough comes about while working on the shop floor.
I think new technologies like CRISPR will really advance the use of the soil microbiome. But I do believe in strong regulatory oversight, particularly of new products. If we have one thing that goes bad, a really bad event, it will set the entire industry back very far. People get frustrated by regulations but I would much prefer good regulations with defined timelines than catastrophic issues down the road.
Again, you have to answer the question, “What's in it for me?” And you have to get out of the scientific “box” when you explain something. Ultimately, pest resistance is very probably going to happen, but if we used that logic for everything, we would never use antibiotics.
We've had the fastest uptake of a technology ever with Monsanto's Roundup Ready with millions and millions of acres being planted, and farmers year after year are buying it. Are you telling me all those individuals are stupid? But how you formulate your answer is very critical. Rather than going into the science, point to what farmers have been buying for 15 years. Obviously it provides value.
We've got the first genetically modified salmon hitting the market, and again, I think the question needs to be, what's in it for the consumer? I know all of the advantages in terms of feed efficiency and time to market. And I know the company—AquaBounty Technologies—has spent many, many millions of dollars to get product on the market. But ultimately, they have to get their return on investment and pass some savings through to consumers. The dollar often talks. But also think of all the fish that would have been needed to be taken out of the ocean to fill this need. At the end of the day it's a very efficient way to generate high-quality salmon without overfishing.
Another key to policy success is retaining companies. Are your labor rates, tax rates, electric rates, etc. competitive? From a funding perspective, Canada has a great system where we triage grants. If you need one to two million dollars, that will take six to eight months for the due diligence and decision processes. But if you need $300,000, that's a big difference in terms of risk. So the government in Canada will maybe take six weeks to make that decision. We also have programs for “rapid response” where we will make a decision within 48 hours and can provide small amounts, like $10,000, quickly. A lot of small-to-medium enterprises have great ideas but don't have the cash flow. Instead of waiting three months for a government check we can it to them in two business days.
The government says it can't pick winners and losers, and I totally agree, but if you're going to talk innovation there will be losers. That's the nature of the business and the way it should be. The key is to look at the program to see if you're winning more than you're losing. Innovation can't happen if you don't tolerate some risk.
Another benefit in Canada is our size. In the United States, I've seen very often that is the fossil fuel industry versus the ethanol industry. We are small enough country that we can never be fighting amongst ourselves because we would never be able to compete. We've even had labor unions take pay cuts to help get biobased industries off the ground.
Editor's Note: The following text is excerpted from remarks delivered by Gord Surgeoner on receiving the BIO Leadership and Legacy award from the Biotechnology Innovation Organization (BIO) at the BIO World Congress, July 25, 2017, in Montreal, Canada.
I would like to, first of all, say that receiving this award was a very pleasant surprise. I had no idea until I got an email about three weeks ago that this was going to happen, and I want to thank Stephanie [Batchelor, Director, State and International Policy at BIO] and Brent [Erickson, Executive Vice President, Industrial & Environmental], whom I have known for many years, and anyone who was involved in the process.
Knowing that I had five minutes, I thought I would start by saying, “How did I get here?” My professional career was as a medical entomologist—that's a bug guy. And I know how I got started! I got a 50 out of 50 on my bug project in grade 8! I thought I was going to go around the world and collect butterflies like Jacques Cousteau, but what really changed me was my first sabbatical. Rather than going to another university, I went out and worked on farms. I didn't come from a farm family, and I worked on a pig farm, a dairy farm, all the various livestock farms. I had no understanding of the day-to-day needs of those individuals. The reason was I wanted my work to be applied, so that as I did the science we could solve problems that were affecting the day-to-day lives of our customers, which in my case was science but it was also the farmers.
And I really want to emphasize one key thing: Having worked with the farm community basically ever since then, farmers are businesspeople, managing multimillion business enterprises. This may sound cruel but it's not: They don't produce food to feed the world. They produce food to get a fair return for labor and investment so that they can send their kids to university, so that they can have a vacation. They understand that simply giving food to other nations—except in extreme emergencies—is destroying the markets of those farmers, of that country. What we are really challenged with in agriculture in the North American context is a challenge of abundance. Our ability to produce food has increased faster than our population growth. Part of that has been through science and part of that has been through better and better management by our producers.
So biotechnology came along and has provided some great opportunities for agriculture, namely increasing productivity. We've had a faster pickup of biotechnology in agriculture than we did mechanization. If you think about the first tractor, we picked up biotechnology even faster. It's allowed us better weed control, insect control, and disease control. More and more we see that breeding tools—not necessarily the GMOs—are increasing the resiliency of crops to drought, frost, insects, and heat, and creating new products with higher levels of nutrition.
But importantly, one of the things that I focused on was: Where are the new markets to take this increased capacity? Biotechnology has produced a solution for that as well. If you look at it, in our province, we've had a major production increase in biofuels. We have some great entrepreneurs, like Ken Field of Greenfield Global, Jim Grey of Integrated Grain Processors, and, in biodiesel, people like Tim Haig. But we went beyond just the fuels. Our auto sector, we got involved with our auto groups. Biocomposites, lubricants, paints, foams, and I think of people like Hamdy Khalil of Woodbridge Foam Corp., Peter Fries of Auto 21. We've worked with a lot of people in the auto sector and you get to understand the customer. What is it they are looking for?
And indeed one of the things we've been able to do is work very closely with our chemical industry. It was never: That's the fossil fuel industry and we're better; it was, How do we work together? How do we create products that help humankind and how do we do it economically? And let's not throw rocks at each other.
When I think of what's happened in Sarnia—it was our oil and natural gas refining center for the province. That whole community has gone into the biotech space and we've now got BioAmber, we've got a major Suncor ethanol plant, there's other companies that are beginning to set up shop there. And I knew it was a community event when our unions, all of our steamfitters in that town said, “We will take a five-year break on a salary raise and no strike guarantees.”
This also took great policy. Very often we put down government. We've had some great government leaders. To start a big biofuels programs, we had an ethanol growth fund. We de-risked the massive capitalization to put up large ethanol plants. We had biofuel mandates put in during my career, and that created a sense of business surety for investment. We had a regulatory system in Ottawa that said, “We will not regulate biotechnology per se, we will regulate the product, not the process.” It was the novelty that was critical, not the process that got us there. And I give a lot of credit to our Minister of Agriculture who took a lot of heat back in the days to keep this a science-based regulatory system. We've had great researchers. Our Premier created a chair in the bioeconomy. At any one time there are 18 graduate students from all around the world. Our bureaucracy has also been great for the industry. We have had great people running our government on a day-to-day basis.
But ultimately from my perspective, we got huge support from our farmers that this is a great technology. They want to improve the environment. Integrated Grain Processors put a large ethanol plant in Ontario, and today, they're doubling it. How did they justify it? They said, “This is our program against low corn prices.” And they have invested in that.
We have other great people, like Mike Tiessen, a greenhouse tomato grower in Ontario. He works with Competitive Green Technologies and the University of Guelph. He has 17 full-time employees. We have materials in compostable cups to replace K-Cups, we have parts in the Ford Lincoln—all kinds of things happening because people were willing to take a risk. And our farm communities said, “We need new markets.”
I'm going to finish with a couple of quotes that have kept me going for a long time. One is Kevin Lynch, he was the head of the Privy Council in Canada. And he had a simple statement: “Research is best defined as taking money and creating knowledge. Innovation is defined as taking that knowledge to create more money, jobs, and importantly, tax revenue.” Dr. Greg Penner, who has a medical company doing very well today, said, “Research is global. Implementation is local.” And that comes back to Sarnia—the community, the mayor, the Chamber of Commerce. But you need infrastructure. What's your rail system, what's your boat system, what are your electrical costs? All those things are critical. Another quote I have always lived by is, “The people will tell me if I will invest. The business plan will tell me how much.” I'm a people person. I love working with people. I have had a great time doing what I do. It's wonderful to get an award for something you love doing!
My five minutes are just about up, so in summary, I want to say that I have been blessed to work with great people and many of them are still friends today. Biotechnology is a tool that has been a game changer in agriculture, not only in how we produce but also in the market opportunities for what we produce. It has also been a major game-changer in health care, manufacturing, and environmental remediation. I have been fortunate to live in the best of times, to meet the best of people, and I am blessed to have been able to participate.