Transcript Conference on the Food Economy .(English)

Canadian Agriculture
and Agri-food Policy
Conference on the Food Economy
October 17-18, 2007
The Netherlands
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Objective: To describe Canada’s experience in developing Agriculture
and Agri-food policy that responds to current challenges
• The Canadian Agriculture and Agri-food Sector
• Current Challenges and Opportunities Facing the Sector
• Agricultural Policy Framework

Evolution of Canadian Agriculture and Agri-food Policies and Lessons Learned

APF-FSQ

APF-Environment

APF-Science and Innovation

APF-Renewal

APF-BRM
• Growing Forward: Canada’s Future Agricultural Policy Framework
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The Canadian agriculture and agri-food system is a dynamic chain of
industries that is increasingly integrated and contributes significantly
to the Canadian economy
Context
• Players in the food supply chain
have become increasingly
integrated
• The sector has become
increasingly export-oriented,
with the growth in exports mostly
driven by value-added products,
which account for 65% of the total
Agriculture and Agri-food System's
Contribution to Employment and GDP, 2004
% of Canadian total
• In 2006, the food system
accounted for 8% of total GDP
and 1 in 8 jobs
14
12
10
8
6
4
2
0
2.1 million persons
(12.8%)
$84.7 billion 1997
(8.1%)
Foodservice
5.1
Food retail/wholesale
1.5
2.4
3.6
0.5
1.7
0.2
1.7
1.3
0.7
1.8
0.4
GDP
Empl.
Beverage and tobacco manuf.
Food manuf.
Primary agriculture
Input and service suppliers
Agriculture and Agri-Food
export sales
(1990-2005)
30
• As a small open economy,
remaining competitive is key to
future performance of the industry
Billions $
25
20
15
10
Intermediate
5
0
1990
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Consumer-oriented
Bulk
1993
1996
1999
Source: Statistics Canada and AAFC calculations.
2002
2005
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The industry is facing various challenges, which continue to shape the
structure and performance of the sector
Challenges
Challenges to the Sector
• Technological change
• Emerging low cost competitors
• Changing consumer and market demands
• Increased use of non-tariff barriers
• Exchange rate appreciation
All players in the sector have been adjusting through structural change
While food processors managed to keep profits stable, primary producers
experienced decline in real income
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Canadian agriculture and agri-food policies have also been evolving
in response to these challenges
Evolution of Canadian Food Policy
Pre-1990s
• This was the pre-WTO (GATT) period
• Commodity-based programs focused on price and income stabilization
• Policies responded to the challenges of the time
Oil crisis of the early 1970s
 Uncertainty of supplies
 Large fluctuations in prices and high variability of producer and processor revenues

• Policies have created strong entitlements
Transportation subsidy for Western grains and oilseeds
 Legacy of 1890’s when objective was to protect national interest and encourage
immigration
 Encouraged monoculture (wheat) and exports on Prairies and discouraged valueadded production

• In Canada, and elsewhere, support payments were production-distorting
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The 1990s brought
about significant
changes:
• Negotiated free trade
agreement with U.S. in
1989; the WTO Agreement
on Agriculture and NAFTA
in early 1990s
• Programs in general shifted
to decoupled payments and
to a whole farm approach
• Canada eliminated transportation subsidies in 1995
Percentage Change Between 1990-95 and
2000-01
248
Percent
Evolution of Canadian Food Policy
Canadian agriculture and agri-food policies have evolved in response
to these challenges
87
57
41
51
25
Special
Feed
crop
barley
prod. exports
Flour
prod.
Pork
Beef
Canola
output* output* crushing
Percent difference between the average of 2000 to 2001 relative to the 1990 to 1995 average.
*Farm level output.
Source: AAFC.
• All these resulted in:

Further restructuring, particularly in food processing to meet NA product mandates

Increased diversification and value added production
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Canadian agriculture and agri-food policies have been evolving in
response to these challenges
Evolution of Canadian Food Policy
2002 marked the beginning of a new policy era
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The APF Vision:
Securing the long-term prosperity and success of the agriculture and agri-food
sector by being the world leader in food safety, innovation and environmentallyresponsible production
• The APF aimed at facilitating the agriculture and agri-food industry to:
• Better manage market risks
• Improve FSQ standards and help producers communicate quality in domestic
and international markets
• Encourage environmentally sound production practices
• Adapt to new market opportunities and face challenges through innovation and
science
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Agricultural Policy Framework (APF)
Five policy pillars were identified under the APF
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• Food Safety and Quality: to make Canada the world leader in production,
processing and distributing safe and reliable food
• Environment: to help producers as resource stewards, and to respond to
consumer demands regarding environmental performance
• Renewal: to help farm families develop skills to succeed in the knowledge-based
economy
• Science and Innovation: to support sustainable development, and innovation
that generates profit, and to instill confidence in food safety and quality
• Business Risk Management: to encourage producers to be proactive to reduce
business risks
Policy pillars were linked to the goal to improve Canada’s international
competitiveness and trade, and to remain compliant with international agreements
Steady industry input was secured through a Value Chain Round Table process
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The Food Safety and Quality program aimed to facilitate industry
develop and implement government-recognized food safety, quality
and traceability systems from “field to fork”
APF – Food Safety and Quality
Program elements focused on:
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• System development throughout the entire food chain, including on-farm
HACCP, for

Food safety

Food quality, and

Traceability
• On-farm implementation of these systems
• Outreach and training for industry players to facilitate the uptake of these FSQ
initiatives
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Industry has been an active participant in FSQ program development
at the national level
APF – Food Safety and Quality
Two outcomes in particular are worth mentioning:
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• The Canadian Cattle Identification Program

Industry-led

95% of cattle were registered

Put Canada ahead of most other countries.
• Mandatory National Organic Standards introduced in July 2007

Standards were developed by Canadian General Standards Board with industry
participation

Initially were implemented as voluntary standards

In order to resolve some of the market access issues and to protect consumers and
organic producers from fraudulent claims, standards were made mandatory

Enforcement of the standards stays with CFIA
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The Environment program aimed to achieve environmental
sustainability and to monitor progress
The Program provided:
APF – Environment
• Research for the development of beneficial management practices (BMP)
• Science-based standards to identify environmental targets and monitor
sustainable practices
• Environmental information for better land use planning and management

A suite of programs were introduced to inform the industry about improved land-use
management, assess the current situation and adopt environmentally sound practices

Programs such as Environmental Farm Plans (EFP) and Greencover were introduced to
encourage sustainable practices
Significant progress was made on many fronts, such as:
• High levels of provincial participation in helping farmers develop EFP and learn
about BMP
• Greencover encouraged the conversion of marginal farm land to permanent
cover and had achieved 44.4% of target by March 2006
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The Renewal program was aimed at providing producers with access
to information, skills, knowledge and advisory services to improve
farm business management
Program elements included:
• Specialized Business Planning Services
APF – Renewal

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Farmers were given advice in developing plans for their farm operation, including
succession, marketing, business or other specialized plans and help with Farm Debt
Mediation
• Feasibility studies for on-farm value-added opportunities
• Access to financial resources to pursue further education
Surveys indicate that users of these programs were satisfied with them
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The Science and Innovation program aimed to improve the
competitiveness of the industry through technological advancement
and innovation
APF – Science and Innovation
The Science and Innovation pillar included two components:
• The realignment of public sector R&D resources in science including the
development of:

An Intellectual Property Rights strategy

Bio-based R&D platforms with external partners
• Programs to strengthen market chain linkages and encourage the adoption of
new innovations (commercialization) including:

The Broker Program, aimed at bringing people and organizations together to foster
innovation opportunities and facilitate coordination through the value chain with a
shared vision of developing new products

The Agri-Innovation Program, aimed to provide financial support to advance initiatives
including the ones identified through the Broker Program
Accomplishments:
• Programs helped accelerate the development of a wide range of new industrial,
health and nutritional products obtained from plants, animals and microorganisms, including Flax 2015 and Soy 20/20
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Further investments have been made since the Science and
Innovation programs were designed
APF – Science and Innovation
Further investments have been made to promote R&D and
commercialization of bio-products and bio-fuels
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• Agricultural Bioproducts Innovation Program, aimed to promote research,
development, technological transfer and commercialization activity in
agricultural bio-products through research networks

Agri-Opportunities Program which supports commercialization of new products
• Bio-fuels Opportunity for Producers Initiative, which was designed to provide
farmers and rural communities with opportunities to participate in and benefit
from increased Canadian bio-fuel production

eco Agricultural Bio-fuels Capital Initiative provides capital for constructing or
expanding bio-fuel production facilities
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The Business Risk Management (BRM) program was aimed at helping
farmers better manage the risks and profitability of their operations
APF – Business Risk Management
Main Program elements included:
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• The Canadian Agricultural Income Stabilization (CAIS) Program integrates
stabilization and disaster protection into a single program, helping producers
protect their farming operations from income variability

Shared with the provinces on a 60-40 basis

A whole-farm program available to eligible farmers regardless of the commodities they
produce

Farmers have discretion in choosing the level of protection under CAIS
• Production Insurance, which is administered by the provinces, provides
coverage against variability in yields
• Several unanticipated events affecting agriculture markets over this period led
to higher than expected BRM expenditures
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The APF: Lessons Learned
The APF: Lessons Learned
• Better links are required to balance across various policy pillars
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• Implementation of the non-BRM elements of APF has been slow
• Involvement of and cooperation across all levels of government and industry
have been, and continue to be, crucial in the development of the policy
The APF helped the sector and governments focus on meeting consumer and
market demands, through innovation, food safety and quality systems and
environmentally responsible production practices, while managing economic
performance
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Based on the experience from APF, the new policy framework,
“Growing Forward” tries to better link and balance its three policy
goals
Growing Forward
Vision:
A profitable and innovative agriculture, agri-food and agri-based
products industry that seizes opportunities in responding to market
demands and contributes to the health and well-being of Canadian
The three policy goals are:
• Competitive and Innovative Sector
• A Sector that Responds to Society’s
Priorities
• A Sector Proactive in Managing Risks
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Competitive
and Innovative
Sector
Sector that
Responds to
Society’s Priorities
Sector
Proactive
in Managing Risks
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A Competitive and Innovative Sector
Growing Forward
• Canada will have an agriculture, agri-food and agri-based industry equipped to
compete successfully in domestic and international markets, innovate, adapt to
change and seize new opportunities, thereby achieving sustained growth and
profitability
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• The policies will focus on:

Fostering a better business climate

Improving market access

Encouraging innovation

Streamlining regulations

Investing in public infrastructure
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A Sector that Responds to Society’s Priorities
• Canada will have an agriculture, agri-food and agri-based products industry
that generates benefits for the sector and all Canadians, ranging from food
safety to environmental sustainability to health and wellness.
Growing Forward
• The policies will focus on:
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
Enabling the sector to meet society’s priorities on FSQ and environmentally responsible
production while securing the performance of the industry

Modernizing and implementing appropriate regulations and standards

Strengthening capacity of FSQ systems

Enabling the sector to respond to increasing consumer demand in the area of health
and wellness products

Facilitating full chain tracking and tracing capabilities
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A Sector Proactive in Managing Risks
• Canada will have an agriculture, agri-food and agri-based products industry
that is well equipped to manage and mitigate risks that impinge on the
profitability of enterprises and sector prosperity
Growing Forward
• Policies will focus on:
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
Safeguarding the safety and security of animals and plants

Safeguarding the future sustainability of land and water resources

Creating incentives for industry to invest in risk mitigation

Tools to mitigate financial risks
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In conclusion
• Both external and internal factors have played a significant role in the evolution of
agriculture and food policy in Canada as well as on the structural adjustments of the
sector
• The result has been a sector that continuously adjusts, has become increasingly
export-oriented and productive and interdependent on other players in the supply
chain
• The sector will continue to face new challenges requiring a continuous need for
revisiting and revising policies
• Two major lessons from Canada’s recent experience include:

Policy changes, to be effective and successful, need to be undertaken in consultation with all
players in the sector

It is crucial to have the regulatory and institutional structures in place that are conducive to
achieve the desired outcomes of new policies.
• The new Policy Framework puts a lot of emphasis on these two issues
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For an Overview of the Canadian Agriculture and Agri-food System
go to: http://www.agr.gc.ca/