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Agricultural support in Canada, at 16% of total farm income, is below the OECD average and has reduced significantly since 1986-88, but has been stable in recent years as federal-provincial program frameworks became established. Support is focussed on payments based on farm income targeted to risk management.
The share of support that most distorts production and trade, the NPC, and the share of SCT transfers in the PSE are largely determined by market price support, delivered through longstanding supply-management systems for milk, poultry and eggs.
- Overall, producer support has significantly decreased since 1986-88 and the majority of agricultural markets are competitive. However, approaches to support policies have become firmly established, and most reforms in the past decade have involved fine-tuning existing programmes.
- The dairy poultry and egg sectors continue to receive high price support, distorting production and trade and establishing high rents capitalised in the quotas required to produce under the supply-management system. Increasing the amount of quota available would improve market orientation and reduce these rents, which currently act as a barrier to entry into supply-managed sectors.
- Budgetary policies have become tightly focused on risk management for farm operations, resulting in several programmes with overlapping mandates and impacts. Despite this, it is not clear that the variability of farm income is greatly reduced by these programmes, and moreover in terms of risk management objectives, farmers appear to be less interested in income stabilisation than in building resiliency.
- Programmes responding to disasters on an ad hoc basis have become institutionalized in the current framework. These can be an effective way to manage events that the main policy instruments are not well-placed to handle. However, their implementation should be governed by a clear set of ex-ante principles that mitigate pressure for their use in situations that could better be handled by existing programmes.
Canada: OECD Producer Support Estimates (PSE)
Level and composition by support categories, 1986-2010