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Canadian Agriculture and Agri-food Policy

Canadian Agriculture and Agri-food Policy. Conference on the Food Economy October 17-18, 2007 The Netherlands. 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

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Canadian Agriculture and Agri-food Policy

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  1. Canadian Agricultureand Agri-food Policy Conference on the Food EconomyOctober 17-18, 2007The Netherlands

  2. 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

  3. Consumer-oriented Intermediate Bulk Source: Statistics Canada and AAFC calculations. 2.1 million persons(12.8%) $84.7 billion 1997(8.1%) The Canadian agriculture and agri-food system is a dynamic chain of industries that is increasingly integrated and contributes significantly to the Canadian economy • In 2006, the food systemaccounted for 8% of total GDPand 1 in 8 jobs • 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 • As a small open economy,remaining competitive is key tofuture performance of the industry Context

  4. The industry is facing various challenges, which continue to shape the structure and performance of the sector Challenges • 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 Challenges to the Sector

  5. Canadian agriculture and agri-food policies have also been evolving in response to these challenges 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 value-added production • In Canada, and elsewhere, support payments were production-distorting Evolution of Canadian Food Policy

  6. Specialcropprod. Feedbarley exports Flourprod. Porkoutput* Beefoutput* Canolacrushing Percent difference between the average of 2000 to 2001 relative to the 1990 to 1995 average. *Farm level output. Source: AAFC. Canadian agriculture and agri-food policies have evolved in response to these challenges The 1990s brought about significant changes: • Negotiated free trade agreement with U.S. in1989; the WTO Agreementon Agriculture and NAFTA in early 1990s • Programs in general shiftedto decoupled payments andto a whole farm approach • Canada eliminated trans-portation subsidies in 1995 • All these resulted in: • Further restructuring, particularly in food processing to meet NA product mandates • Increased diversification and value added production Evolution of Canadian Food Policy

  7. Canadian agriculture and agri-food policies have been evolving in response to these challenges 2002 marked the beginning of a new policy era 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 environmentally- responsible 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 Evolution of Canadian Food Policy

  8. Five policy pillars were identified under the APF • 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 Agricultural Policy Framework (APF)

  9. 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” Program elements focused on: • 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 APF – Food Safety and Quality

  10. Industry has been an active participant in FSQ program development at the national level Two outcomes in particular are worth mentioning: • 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 APF – Food Safety and Quality

  11. The Environment program aimed to achieve environmental sustainability and to monitor progress The Program provided: • 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 APF – Environment

  12. 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 • 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 APF – Renewal

  13. The Science and Innovation program aimed to improve the competitiveness of the industry through technological advancement 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 micro-organisms, including Flax 2015 and Soy 20/20 APF – Science and Innovation

  14. Further investments have been made since the Science and Innovation programs were designed Further investments have been made to promote R&D and commercialization of bio-products and bio-fuels • 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 APF – Science and Innovation

  15. The Business Risk Management (BRM) program was aimed at helping farmers better manage the risks and profitability of their operations Main Program elements included: • 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 APF – Business Risk Management

  16. The APF: Lessons Learned • Better links are required to balance across various policy pillars • 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 The APF: Lessons Learned

  17. Competitiveand Innovative Sector Sector thatResponds to Society’s Priorities SectorProactivein Managing Risks Based on the experience from APF, the new policy framework, “Growing Forward” tries to better link and balance its three policy goals 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’sPriorities • A Sector Proactive in Managing Risks Growing Forward

  18. A Competitive and Innovative Sector • 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 • The policies will focus on: • Fostering a better business climate • Improving market access • Encouraging innovation • Streamlining regulations • Investing in public infrastructure Growing Forward

  19. Growing Forward 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. • The policies will focus on: • 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

  20. 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 • Policies will focus on: • 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 Growing Forward

  21. 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

  22. For an Overview of the Canadian Agriculture and Agri-food Systemgo to: http://www.agr.gc.ca/

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