Agricultural Policy Monitoring and Evaluation 2020

6. Canada

Support to agriculture

Canada has significantly reduced its agricultural support since the late 1980s. Producer support as a share of gross farm receipts (%PSE) was halved between 1986-88 and 2000-02, in large part because market price support (MPS) to the grains industry was discontinued in 1995. As a result, most commodity prices are aligned with world levels except in the dairy, poultry and egg sectors, which continue to be under supply management. Producer support was halved again between 2000-02 and 2017-19, but given the importance of business risk management programmes, payment levels vary annually.

Canada’s PSE accounted for 8% of gross farm receipts in 2017-19, compared to 35% in 1986-88 and 17% in 2000-02. Canada’s %PSE has been consistently below the OECD average over the period. However, the share of potentially most distorting support (based on output and variable input use – without input constraints) was 61% in 2017-19, above the OECD average, but lower than in 1986-88. MPS for milk accounts for the largest share of potentially most distorting support. On average, prices received by farmers were 5% higher in 2017-19 than those observed in world markets. The share of the General Services Support Estimate (GSSE) in the Total Support Estimate to agriculture (TSE) has almost doubled since 1986-88 and reached 42% in 2017-19. Support to the agricultural innovation system and the inspection system each accounted for about 40% of the GSSE in recent years.

Main policy changes

The government launched its first-ever Food Policy for Canada, which aims to create a more co-ordinated and food systems-based approach to food policy and regulations. Short-terms actions will focus on improving access to healthy food, promoting Canadian food, supporting food security in northern and indigenous communities, and reducing food waste. Moreover, the new Safe Food for Canadian regulations were implemented at the beginning of 2019.

The loan limit under the Advance Payments Program (APP), which provides agricultural producers with easy access to credit through cash advances, was raised for the first time since 2007. This was done to reflect changes in farm operating costs over time.

During the fiscal year April 2019 to March 2020, the Dairy Direct Payment Program (DDPP) provided one-off payments based on quota holding to dairy producers affected by market access commitments made under the recent international trade agreements.

The governments and industry took steps to prevent and prepare for African Swine Fever (ASF). The government also took a few initiatives to attract workers in the agricultural sector and rural areas. For example, AAFC provided financial assistance to a project designed to clarify best practices for recruiting and retaining international workers.

Assessment and recommendations

• The Canadian Agriculture Partnership (The Partnership) Framework Agreement for 2018-22 continues the positive trend towards greater emphasis on general service support to the sector through programmes that target industry-led research and development, adoption of innovation, and marketing initiatives.

• Support to producers continues to be well below the OECD average in recent years. While the share of potentially most distorting transfers in producer transfers is higher than the OECD average, it remains well below the OECD average as a percentage of gross farm receipts.

• For most commodities, domestic market prices are fully aligned with world prices, but the dairy, poultry and egg sectors continue to be protected from international competition and to receive market price support, which distorts production and trade.

• The Dairy Direct Payment Program (DDPP), created to support cow’s milk producers affected by recent international trade agreements, provides payments based on quota holding. It is thus expected to maintain production and farms in place, although some adjustment should occur if compensation was partial.

• As a step towards phasing out the supply management, the available quotas should be increased in size and price support for the dairy, poultry and egg sectors should be reduced. This would encourage greater market responsiveness, stimulate innovation (to increase efficiency and diversify towards higher value products), and reduce quota rents.

• The 2018-22 framework agreement renews programmes that provide budgetary support to mitigate farm income fluctuations. Strict protocols and disciplines should be in place to reduce potential pressure for additional support in situations where existing programmes suffice, stimulate the development of market-based tools, and encourage farmers to find better ways to manage risk at farm level.

• Steps were taken to prevent and prepare for African Swine Fever (ASF). The measures implemented should improve the sector’s preparedness to this disease risk.

• The Pan-Canadian Framework (PCF) on Clean Growth and Climate Change is a useful step in reducing GHG emissions in agriculture, but it is important to evaluate its effectiveness and efficiency.

• The new carbon tax on fossil fuel users can potentially reduce the reliance on fossil fuels and the pollution of the environment. However, the exemption for gasoline and light fuel oil delivered to farms for use in farming activities in all provinces is a missed opportunity for reducing the environmental footprint of the sector.

• The various initiatives taken to attract workers in the agricultural sector and rural areas are important steps to ensure the longer-term competitiveness of the sector.

Policy responses in relation to the COVID-19 outbreak

Agricultural policies

A number of general measures were introduced to support individual or corporate firms affected by the COVID-19 crisis, to which agriculture and agri-food firms have access. Business support includes tax deferrals, wage subsidies, minimum income to those who had to stop their activity because of COVID-19; and additional funding for existing programmes. For example, the Business Credit Availability Program will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than CAD 10 billion of additional support, largely targeted to small and medium-sized businesses. Through the Canada Emergency Wage Subsidy the Government of Canada provides a 75% wage subsidy to eligible employers for up to 12 weeks. Temporary changes to the Canada Summer Jobs programme will now provide employers with a 100% wage subsidy to hire temporary staff for up to 70 000 seasonal jobs. In addition, there are specific resources and measures that have been announced and implemented for the agriculture and agri-food sector:

• The government of Canada announced CAD 50 million to help the sector to put in place measures to follow the mandatory 14-day isolation period required for temporary foreign workers. The government of Quebec announced CAD 45 million to attract Quebec workers to the fields, which includes a CAD 100 bonus for seasonal agricultural workers who work a minimum of 25 hours per week.

• Farm Credit Canada (FCC) increased its lending capacity by an additional CAD 5 billion. This new credit allows FCC to help farmers, agribusinesses and food processors who face cash flow issues from deferral to the principal or interest portions of their loans to accessing additional credit.

• Producers with loans under the Advance Payments Program who have a reimbursement deadline in March or April 2020, and whose marketing options were reduced for their commodities, were granted an additional six months to reimburse their outstanding loan balance.

• Under the Canadian Agricultural Partnership (CAP), producers continue to have access to a comprehensive suite of Business Risk Management (BRM) programmes to help them manage significant financial impacts and risks beyond their control. A number of these programme parameters and deadlines have been modified or extended in multiple provinces. The government of Prince-Edward-Island announced a new CAD 750 000 COVID-19 Strategic Fund for Agriculture to help commodities and small processors adapt to the pandemic. The government of New Brunswick is reviewing all programmes within CAP and will be adjusting and enhancing targeted programmes to help producers deal with relevant challenges and issues surrounding COVID-19.

• Business support includes the expansion of financial and advisory services to the agriculture and agri-food sector. The government of Saskatchewan launched the Business ResponseTeam, which works with business to identify programme supports available to them both provincially and federally. FCC initiated customer support programmes, which invite customers to contact their offices to discuss their finances and options. The Alberta’s Agricultural and Finance Services Corporations is also encouraging its customers to contact their relationship manager for enhanced loan arrangements. Support could include personalised solutions such as, loan payment relief through interest-only payment, payment re-amortisation or payment deferral options.

Agro-food supply chain policies

On 16 March, the government established an Industry-Government COVID-19 working group made up of national sector organisations, who meet by phone three times a week to share information and discuss issues facing industry, including potential impacts on trade.

To facilitate the movement of agri-food products and inputs, both at home and abroad, labour-related measures were introduced. Truck drivers, plane crews and others who are transporting goods are exempted from travel bans, as long as they are not showing symptoms. Temporary foreign workers in agriculture, agri-food, seafood processing and other key industries will be allowed to travel to Canada. The government of Canada is also increasing the maximum allowable employment duration for workers in the low-wage stream of the Temporary Foreign Worker Program from one to two years.

Consumer policies

The food system continues to provide enough supplies for consumers at the retail level. The government of Canada is working with established national and regional networks to help improve access to food for people experiencing food insecurity. Up to CAD 100 million in funding is going to food banks and other local food organisations.

Food safety and security policies

The Canadian Food Inspection Agency (CFIA) has temporarily suspended certain low-risk inspection activities to reassign existing employees to higher priority activities to better support Canadians and industry during this pandemic. Under these unprecedented circumstances, the government of Canada has invested CAD 20 million to continue important work to safeguard Canada’s food system and better support the production demands of Canada’s food industry.

This investment will help to ensure that Canadians will have continued access to safe, high-quality food to feed their families by allowing the CFIA to hire, train and equip additional staff to conduct critical inspection activities, and work closer with industry and trading partners to minimize supply disruptions during this crisis. The CFIA and the provinces and territories are working closely together to safeguard the Canadian food supply during the COVID-19 pandemic. This funding will also support the training of provincial food inspectors so they can provide assistance to the CFIA as needed.

The funding will also support the CFIA in developing flexible ways to carry out inspections, including through the expanded use of electronic tools such as tablets and access to the CFIA’s remote service delivery network. While the CFIA works to keep food safe and protect the health of animals and plants during this pandemic, it is introducing flexibility where possible. For example, the CFIA is making packaged food intended for use by restaurants and hotels more easily available for sale at retail outlets and grocery stores. This will help to make more food products available to Canadians while reducing food waste and supporting businesses without compromising food safety. In addition the CFIA is drafting agreements with provinces and territories on sharing of inspector resources and has developed standard operating procedures for inspector overtime coverage and extra shift requests. The CFIA has provided guidance to industry in respect of a positive COVID-19 case in a meat slaughter/processing plant as well as contact information and an escalation protocol to follow should issues arise in plants.

Figure 6.1. Canada: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Support to producers (%PSE) has declined gradually since the late 1980s, accounting for about 8% of gross farm receipts in the period 2017-19, about half the OECD average. The potentially most distorting support remains the largest share of producer support, due to market price support (MPS) to the dairy, poultry and egg sectors (Figure 6.1). The level of support increased by 23% between 2018 and 2019, due to both higher MPS and budgetary payments. The increase in MPS results from wider price gaps for milk, poultry and eggs as domestic prices rose more than border prices, mainly because of the exchange rate movement (Figure 6.2). Prices received by farmers, on average, were about 5% higher than world prices, but large differences between commodities persist. While most commodity prices are aligned with world levels, the domestic price for milk was 55% higher in 2017-19. MPS is the main component of Single Commodity Transfers (SCT): milk has the highest share of SCT in commodity gross farm receipts (36%) (Figure 6.3). Overall, SCTs represent over 70% of the total PSE. The expenditures for general services (GSSE) measured relative to agriculture value added were above the OECD average. Total support to agriculture as a share of GDP has declined significantly over time and was half the OECD average in 2017-19. About 70% of the total support was provided to individual farmers (PSE) in 2017-19.

Figure 6.2. Canada: Drivers of the change in PSE, 2018 to 2019

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 6.3. Canada: Transfer to specific commodities (SCT), 2017-19

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 6.1. Canada: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2017-19	2017	2018	2019p
Total value of production (at farm gate)	14 083	20 696	46 308	46 040	46 445	46 439
of which: share of MPS commodities (%)	85.6	82.0	82.8	84.0	83.2	81.0
Total value of consumption (at farm gate)	12 688	15 538	30 455	29 672	30 933	30 759
Producer Support Estimate (PSE)	5 862	3 891	3 823	3 605	3 575	4 289
Support based on commodity output	3 214	1 622	2 035	2 172	1 732	2 200
Market Price Support1	2 851	1 602	2 035	2 172	1 732	2 200
Positive Market Price Support	2 997	1 602	2 069	2 172	1 835	2 200
Negative Market Price Support	-146	0	-35	0	-104	0
Payments based on output	364	20	0	0	0	0
Payments based on input use	1 098	368	392	391	425	359
Based on variable input use	629	242	270	299	274	237
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	448	108	115	83	142	120
with input constraints	0	0	0	0	0	0
Based on on-farm services	20	18	7	10	9	2
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	1 336	1 307	1 295	1 029	1 356	1 500
Based on Receipts / Income	467	586	579	486	659	593
Based on Area planted / Animal numbers	869	721	716	543	697	908
with input constraints	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	8	0	23	0
Payments based on non-current A/An/R/I, production not required	0	553	74	0	0	221
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	553	74	0	0	221
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	8	0	0	0	0	0
Based on long-term resource retirement	8	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	206	41	20	12	39	9
Percentage PSE (%)	34.5	16.9	8.0	7.6	7.4	8.8
Producer NPC (coeff.)	1.34	1.08	1.05	1.05	1.04	1.05
Producer NAC (coeff.)	1.53	1.20	1.09	1.08	1.08	1.10
General Services Support Estimate (GSSE)	1 153	1 260	1 598	1 681	1 689	1 424
Agricultural knowledge and innovation system	483	536	616	640	627	581
Inspection and control	283	348	674	716	753	554
Development and maintenance of infrastructure	268	182	142	146	130	151
Marketing and promotion	85	179	140	154	157	109
Cost of public stockholding	0	0	0	0	0	0
Miscellaneous	34	15	26	27	22	28
Percentage GSSE (% of TSE)	16.3	24.5	29.3	31.8	31.9	24.8
Consumer Support Estimate (CSE)	-2 533	-1 712	-2 248	-2 425	-1 916	-2 401
Transfers to producers from consumers	-2 766	-1 596	-2 032	-2 172	-1 727	-2 196
Other transfers from consumers	-31	-117	-235	-262	-213	-229
Transfers to consumers from taxpayers	31	0	19	9	24	24
Excess feed cost	234	0	0	0	0	0
Percentage CSE (%)	-20.1	-11.0	-7.4	-8.2	-6.2	-7.8
Consumer NPC (coeff.)	1.28	1.12	1.08	1.09	1.07	1.09
Consumer NAC (coeff.)	1.25	1.12	1.08	1.09	1.07	1.08
Total Support Estimate (TSE)	7 046	5 151	5 440	5 295	5 288	5 737
Transfers from consumers	2 798	1 713	2 267	2 434	1 941	2 425
Transfers from taxpayers	4 279	3 555	3 408	3 123	3 561	3 541
Budget revenues	-31	-117	-235	-262	-213	-229
Percentage TSE (% of GDP)	1.6	0.7	0.3	0.3	0.3	0.3
Total Budgetary Support Estimate (TBSE)	4 195	3 549	3 405	3 123	3 557	3 537
Percentage TBSE (% of GDP)	1.0	0.5	0.2	0.2	0.2	0.2
GDP deflator (1986-88=100)	100	138	192	189	192	196
Exchange rate (national currency per USD)	1.32	1.53	1.31	1.30	1.30	1.33

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income.

1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Canada are: wheat, maize, barley, oats, soybean, rapeseed, flax, potatoes, lentils, dried beans, dried peas, milk, beef and veal, pig meat, poultry and eggs.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Contextual information

Canada is a large, wealthy country with a small population relative to its land area. Primary agriculture accounts for l.8% of GDP, but is important in some of its regions. Canada is a large net exporter of agro-food products, which account for about 11% of total exports, and access to export markets is a significant issue for the sector. More than half of Canada’s agro-food exports are destined to the United States. Crop production is concentrated in the western prairies, where the typical farm is twice as large as the national average, highly productive, and produces largely for export. Most milk production is located in Eastern Canada, which has relatively smaller farms and a larger variety of crops. Red meat industries (hogs and beef cattle) are present across Canada, especially in western Canada.

Table 6.2. Canada: Contextual indicators

	Canada		International comparison
	2000*	2018*	2000*	2018*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	901	1 856	2.3%	1.6%
Population (million)	31	37	0.7%	0.7%
Land area (thousand km2)	8 966	8 966	11.0%	10.8%
Agricultural area (AA) (thousand ha)	61 287	57 694	2.0%	1.9%
			All countries¹
Population density (inhabitants/km2)	3	4	53	62
GDP per capita (USD in PPPs)	29 364	50 076	9 275	21 924
Trade as % of GDP	33	25	12.4	15.3
Agriculture in the economy			All countries¹
Agriculture in GDP (%)	2.3	1.8	3.1	3.6
Agriculture share in employment (%)	3.3	1.9	-	-
Agro-food exports (% of total exports)	6.0	11.0	6.2	7.3
Agro-food imports (% of total imports)	5.0	7.9	5.5	6.3
Characteristics of the agricultural sector			All countries¹
Crop in total agricultural production (%)	43	58	-	-
Livestock in total agricultural production (%)	57	42	-	-
Share of arable land in AA (%)	67	66	32	33

Notes: *or closest available year.

1. Average of all countries covered in this report. EU treated as one.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Canada enjoys a stable macroeconomic environment, although annual GDP growth continues to slow down since the 2017 peak of 3%. Inflation rates have been below 2% between 2012 and 2017, but rose to 2.3% in 2018. Unemployment rates have been declining regularly since the peak of 2009, to about 5.7% in 2019. Exports of agro-food products are well above imports, with recent changes in values mainly reflecting commodity price fluctuations. Most of Canada’s agro-food exports are either primary products for processing (37% in 2018), forming part of other country’s production system, or processed products for consumption (36% in 2018). Over half of agro-food imports are processed products for consumption.

Figure 6.4. Canada: Main economic indicators, 2000 to 2019

Sources: OECD statistical databases; World Bank, WDI and ILO estimates and projections.

Figure 6.5. Canada: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Intermediate input growth has become the first driver of agricultural output growth in Canada during the period 2007-16. This reflects the decline in TFP growth, which averaged 0.5% per year during this period, compared to 3% in the 1990s. Both TFP growth and output growth have been well below the world average during 2007-16.

Canadian agriculture benefits from relatively abundant resources (e.g. land and water), and agricultural output growth has been achieved with reduced or minimal increased pressure on natural resources in most cases. Surplus intensities have been stable since 2000 for nitrogen and decreasing for phosphorous. Both surplus are below the average for OECD countries, as are greenhouse gas (GHG) emissions, although these have increased since 2000.

Figure 6.6. Canada: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 6.3. Canada: Productivity and environmental indicators

	Canada		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	2.4%	0.5%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2018*	2000*	2018*
Nitrogen balance, kg/ha	24.0	23.7	33.3	29.1
Phosphorus balance, kg/ha	1.5	0.6	3.3	2.3
Agriculture share of total energy use (%)	2.2	3.5	1.7	2.0
Agriculture share of GHG emissions (%)	7.8	8.4	8.1	8.9
Share of irrigated land in AA (%)	1.2	1.0	-	-
Share of agriculture in water abstractions (%)	9.7	8.3	46.0	49.0
Water stress indicator	1.2	0.9	9.9	8.9

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Description of policy developments

Main policy instruments

Under the Canadian Constitution, federal and provincial governments share responsibility for agriculture. The current Canadian Agricultural Partnership (the Partnership) framework covering 2018-23 (AAFC, 2018[1]) provides flexibility for provinces and territories to design and deliver programmes that respond to their regional priorities. In addition, provinces and territories can develop and fund their own agriculture programmes outside of this framework.

The Partnership is a five-year agreement which provides CAD 3 billion (USD 2.3 billion) to fund strategic initiatives in the agriculture and agri-food sector that includes CAD 1 billion (USD 0.8 billion) in federal programmes and activities, and CAD 2 billion (USD 1.5 billion) in cost-shared programmes and activities by federal, provincial and territorial governments. In addition to these strategic initiatives, farmers have access to a suite of Business Risk Management (BRM) programmes, with a budget of CAD 1.5 billion (USD 1.1 Billion) per year.

There are five BRM programmes, cost-shared between the federal and provincial governments, which are built on the BRM programmes delivered during the previous multilateral policy framework agreement. AgriStability is a whole-farm margin programme providing support in years of significant income declines. AgriInvest provides matching contributions to producers, who make annual deposits to a savings account, to help manage moderate declines in income or make investments in farming operations to mitigate risk. AgriInsurance provides cost-shared insurance to reduce the financial impact of production or assets losses due to natural perils. AgriRecovery is a disaster relief framework to help producers with the cost of activities necessary for recovery following natural disaster events. The AgriRisk programme supports the development of new risk management tools by the private sector.1

Canada’s agricultural support policies differentiate between the supply-managed sectors, which are protected by high custom tariffs and are oriented towards the domestic market, and other commodity sectors, which operate within an open market environment and are export oriented. A supply management system provides market price support to the dairy, poultry and eggs sectors through tariffs and production quotas that are tradable only within provinces, combined with a system of domestic price-setting according to production costs.

Strategic Initiatives that are federally-funded focus on three key areas. Under the growing trade and expanding markets area, AgriMarketing supports industry-led market development activities aimed at assisting the sector in identifying and seizing domestic and international opportunities; and AgriCompetitiveness helps the sector adapt to changing commercial and regulatory environments, share best practices, and provide mentorship opportunities. Under the innovative and sustainable growth area, AgriScience supports innovation driven by industry research priorities, including pre-commercialisation activities and investments in cutting-edge research to benefit the agricultural and agri-food sector; and AgriInnovate supports projects that aim to accelerate the demonstration, commercialisation or adoption of innovative products, technologies, processes or services that increase sector’s competitiveness and sustainability. Under the supporting diversity and a dynamic, evolving sector area, AgriAssurance aims to prevent and control risk to the animal and plant resource base, and to provide safe food and meet new market demands for assurance, while AgriDiversity aims at increasing the capacity of youth, women, Indigenous Peoples and persons with disabilities to better participate in the agricultural sector. It supports skills, leadership, and entrepreneurial development; facilitates knowledge sharing and best management practices.

Strategic initiatives that are cost-shared by federal, provincial and territorial governments prioritise investment in six areas. The science, research and innovation priority area is to help industry adopt practices to improve resiliency and productivity through research and innovation. The markets and trade priority area is to open new markets and help farmers and food processors improve their competitiveness through skills development and improved export capacity, underpinned by a strong and efficient regulatory system. The environmental sustainability and climate change priority area is to build the sector capacity to mitigate agricultural greenhouse gas emissions, protect the environment and adapt to climate change by enhancing sustainable growth. The value-added agriculture and agro-food processing priority area is to support the continued growth of this sector. The risk management priority area is to enable proactive and effective risk management, mitigation and adaptation to facilitate a resilient sector by working to ensure programmes are comprehensive, responsive and accessible. This priority area includes initiatives such as Emergency preparedness, and Food/Animal/Plant Assurance Systems. The public trust priority area is to build a firm foundation for public trust in the sector through improved assurance systems in food safety and plant and animal health, stronger traceability and effective regulations.

Provincial governments design and administer most farm-level environmental programmes. Two programmes (cost-shared between federal and provincial governments) aim to advance environmentally sustainable agriculture: the Environmental Farm Plans (EFP) programmes and the Environmental Stewardship Incentive programmes. The EFP consists of an assessment of on-farm environmental risks, and the development of an action plan to mitigate those risks. The Environmental Stewardship Incentive programmes provide cost-shared financial assistance to farms with an EFP to adopt specific Beneficial Management Practices (BMP), such as nutrient management, manure storage and soil erosion controls. It is implemented on the basis of regional partnerships programmes, such as the 2018 Canada-Ontario Lake Erie action plan to reduce phosphorus pollution analysed in Gruère and Boëdec (2019).2

Over the period 2018-23, the Canadian agriculture and agri-food sector’s contribution to the Pan-Canadian Framework (PCF) on Clean Growth and Climate Change will be primarily delivered through the Partnership. Federal-only programmes will support actions that help support resiliency and sustainability of the sector through science, research and adoption of innovative practices and technologies (e.g. AgriInnovate and AgriScience). The PCF has been adopted, following Canada’s ratification of the Paris Agreement in 2016, to reduce GHG emissions across all sectors in Canada, including agriculture. It identifies three agriculture-related actions: increasing stored carbon in agricultural soils to partially offset emissions from the sector; generating bioenergy and bio-based products to displace emissions in other economic sectors; and, advancing innovation in GHG-efficient management practices to reduce agricultural emissions and emission intensity.

Domestic policy developments in 2019-20

Risk management

Since March 2019, federal, provincial, and industry partners have been working closely together on prevention of African Swine Fever (ASF) and preparedness activities, and to discuss potential response and recovery measures. The Canadian Food Inspection Agency (CFIA) has been leading activities to prevent and prepare for ASF including strengthening import control measures, developing a national ASF action plan, increasing testing capacity for ASF, and negotiating zoning arrangements with key trading partners. The federal ministry in charge of food and agriculture, Agriculture and Agri-Food Canada (AAFC), has established a government-industry working group to develop a better understanding of the implications of ASF on the pig industry. AAFC has also undertaken internal analysis on what response options could address the potential impact to industry and the level of support that AAFC’s existing suite of programmes would deliver.

In 2019, the government of Canada announced a Canada/United States zoning arrangement to safeguard the Canadian and American pork industries. Canada and the European Commission’s Department of Health and Food Safety (DG SANTE) also agreed to an ASF zoning arrangement to allow for safe trade of pig products from disease-free zones in the event of an ASF outbreak.

At the Provincial level, under the Animal Health Act, Prince Edward Island (PEI) modernised its Swine Importation Regulations to combat the spread of animal disease, and align with industry needs and technological advancements. The province also developed the Cattle Disease Emergency Response and the Small Ruminant and Camelid Disease Emergency Response Manuals. The manuals provide outlines of the necessary steps needed within the first 48 hours following suspicion of a disease to minimise and prevent the spread of disease within the herd and to other herds or susceptible species.

Quebec has offered a financial assistance to cervid producers affected by measures taken to eradicate the Chronic Wasting Disease. These measures are: 1) the slaughter and disposal of animals, and 2) the implementation of sanitary measures. Both measures are required under the Animal Health Protection Act.

In November 2019, Saskatchewan replaced the existing Disease of Animal Act with a new Animal Health Act. The new Act sets out veterinary inspectors’ authorities and responsibilities with regard to entering and inspecting a premises, establishing quarantines, disease surveillance and control zones, and euthanising animals to prevent suffering or spread of disease.

Business and market development

In addition to supporting business and market development through the Partnership AgriCompetitiveness and AgriMarketing programmes, Canada’s federal government provides agricultural producers with easy access to credit through cash advances through the Advance Payments Program (APP). The programme is administered on behalf of AAFC by 34 producer organisations across Canada. On average, approximately CAD 2.2 billion (USD 1.7 billion) in APP advances are issued to 21 300 producers each programme year.

In 2019 the federal government amended the Agricultural Marketing Programs Regulations: for the first time since 2007, the overall APP loan limit was raised to better reflect farm operating costs and the interest-free limit was increased for canola (rape seed) advances only in the 2019 programme year to help farmers impacted by the trade restrictions imposed by the People’s Republic of China in 2019 on Canadian canola exports.

Under the Partnership, provinces and territories have the opportunity to stimulate growth and diversification in the agricultural sector through value added programmes. In 2019, Alberta developed the Canadian Agricultural Partnership Emerging Opportunity Program to enable growth and diversification of Alberta’s value-added industries. The programme is mainly for bio-industrial and food processors, agri-businesses, and industry organisations and provides a maximum grant of CAD 1 million (USD 0.8 million) per applicant per fiscal year, up to a maximum of CAD 2 million (USD 1.5 million) per project.

In Ontario, the Grassroots Growth Program provides project-based funding aiming to support the growth of the Ontario’s agri-food sector, ensuring the sustainability of agriculture and fostering vibrant rural economies. The projects must focus on at least one of the following objectives: 1) increase public engagement and support local food and rural development; 2) build youth leadership capacity and increase youth involvement in the agri-food sector; 3) enhance safety and risk management practices in the agri-food sector; 4) strengthen public trust and knowledge about Ontario’s agri-food system and, 5) encourage agri-food and rural development outcomes.

In October 2019, Manitoba implemented modernisation of the Agricultural Crown Land leasing programme with amendment to the provincial Agricultural Crown Lands Leases and Permits Regulation. Key changes for new leases include the use of an auction process to allocate forage and cropping land leases, shorter forage lease terms with transfers limited to the immediate family members, an updated forage lease rental rate based on beef market prices, simplification of eligibility to acquire a lease, and a focus on ensuring the land is used productively in a sustainable manner.

Environment and climate change

Additional programmes and initiatives outside of the Partnership contribute to progress on agriculture-related actions identified under the PCF. In August 2019, the government of the Northwest Territories released a Sustainable Livelihoods Action Plan (Action Plan) for 2019-23, which focuses on food programmes and research in the context of climate change. Sustainable livelihoods, in the context of the Action Plan, are considered to be a way of life connected to the land. This plan approaches the land in a holistic way, considering the processes and connections that exist between plants, animals, water, air, and people. Specific actions will focus on “on-the-land” activities and traditional foods and will align well with work underway through the Northwest Territories Agriculture Strategy to promote and address food security.

Another initiative outside of the Partnership includes the 2018-21 Agricultural Clean Technology programme, which supports investments made by provincial and territorial governments and industry stakeholders in research, development and adoption of clean technologies for the agriculture, agro-food and agriculture-based products sector, specifically precision agriculture and bio-based products from agriculture.

On 1 April 2019, the government of Canada through the Greenhouse Gas Pollution Pricing Act (GGPPA) began implementing the federal fuel surcharge (also known as “carbon tax”). Users of fossil fuels pay an extra CAD 0.0442 (USD 0.0333) per litre for gasoline and CAD 0.0537 (USD 0.0405) per litre for light fuel oil (includes diesel). This fuel surcharge is imposed to the provinces that did not have a carbon pricing system already in place. However, gasoline and light fuel oil delivered to farms for use in farming activities are eligible for an exemption. This exemption applies to fuel used in farm trucks or tractors, vehicles not licensed for public roads, and industrial machines or engines.

At the provincial level, In October 2019, the Manitoba government unveiled the first three projects under the CAD 52 million (USD 39 million) Growing Outcomes in Watersheds (GROW) Trust to support the protection of wetlands and watershed management. The GROW Trust has been established to help producers and ranchers with projects such as restoring wetlands, planting windbreaks and balancing drainage with water retention to improve resiliency to a changing climate. The first intake of applications to the GROW Trust was held in January 2020. This will allow watershed districts, with local GROW committees to apply for project funding that will encourage and support the delivery of ecological goods and services in Manitoba.

The province also launched a new approach to drainage under the Water Rights Act that will streamline the approval process for producers and landowners, while protecting Manitoba’s wetlands by implementing the commitment to “no-net-loss” of wetland benefits. The regulation for drainage and water control works registration and licensing will provide consistent regulatory regimes for these works. It will also include a new streamlined registration process for applications and approvals to reduce red tape and provide timely approvals for lower-risk and lower-impact projects, while increasing focus on reviewing higher-risk and higher-impact projects.

Food safety

The Canadian Food Inspection Agency has developed the new Safe Food for Canadians Regulations (SFCR), which came into force on 15 January 2019. The SFCR focuses on prevention and allows for faster removal of unsafe food from the marketplace. The SFCR is based on international standards and will reduce unnecessary administrative burden on businesses by replacing 14 sets of regulations with one.

Food policy

In June 2019, the government of Canada launched its first-ever Food Policy for Canada, with funding of over CAD 134 million (USD 101 million) in investments to support this food policy budgeted for 2019. While the government has policies, regulations and investments across a number of departments and agencies that directly or indirectly address food-related issues, the Food Policy aims to create a more co-ordinated and food systems-based approach to taking action on food-related opportunities and challenges. The Food Policy establishes four areas for near-term action, including: 1) help Canadian communities access healthy food; 2) make Canadian food the top choice at home and abroad; 3) support food security in northern and indigenous communities; and 4) reduce food waste.

The new Canada’s Food Guide was released in early 2019. It is an integral part of Canada’s Healthy Eating Strategy, which aims to make the healthier choice the easier choice for all Canadians. The revised Canada’s Food Guide moved away from the all-in-one format that acted as both a policy and educational tool. It was informed by research and aimed to promote healthy eating habits. The guide placed emphasis on plant-based eating and protein sources and made water the drink of choice. It reduced emphasis on meats and dairy products favouring low-fat dairy and non-dairy alternatives where possible. It eliminated the traditional “four food groups”, replacing them with three: vegetables and fruits, whole grains, and proteins.

The government of Quebec has put in place programmes to support the production and consumption of local products. The “Programme proximité” supports individual and collective projects promoting and consolidating local marketing initiatives that meet consumer needs. The “Programme Jardins de solidarité” aims to increase the production of fresh local fruits and vegetables with the aim of distributing them to people experiencing poverty or social exclusion. At least 75% of the market garden production must be delivered to a food bank.

Supply managed commodities

In the Budget Plan 2019, the government of Canada had proposed introducing up to CAD 3.9 billion (USD 2.9 billion) in support for supply-managed agricultural producers. Within that envelop, CAD 1.5 billion (USD 1.1 billion) have been earmarked to fund a Quota Value Guarantee Program, which will offer support to producers, who incurred losses due to a reduction of their quota values when sold. In addition, up to CAD 2.4 billion (USD 1.8 billion) will be available for milk, poultry and egg producers, of which CAD 250 million (USD 188 million) have already been spent to support dairy producers under the Dairy Farm Investment Program.3 The remaining CAD 2.15 billion (USD 1.6 billion) are available over the coming years to support producers of supply-managed commodities, who incurred income losses resulting from implementation of the Canada–European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In August 2019, the government announced that it will make available CAD 1.75 billion (USD 1.3 billion) over eight years to supply-managed cow’s milk producers. Some of these funds were delivered through the Dairy Direct Payment Program (DDPP), which made available up to CAD 345 million (USD 260 million) for the 2019/20 fiscal year to eligible supply-managed milk producers. The Canadian Dairy Commission (CDC) was responsible for calculating payments to producers based on the percentage of their provincial quota holding as of 31 August 2019.

For the other supply-managed sectors and processors, the government of Canada continues to work in partnership with stakeholders to determine the potential compensation package.

New products

The Cannabis Act, which came into force in 2018, has provided a strict legal framework for the production, distribution, sale, and possession of cannabis in Canada. Producers of cannabis are required to be federally-licensed to operate. On 17 October 2019, the production and sale of edible cannabis, cannabis extracts and cannabis topicals became legal in Canada under the Cannabis Act.

Starting from mid-December 2019, a limited selection of edible cannabis products became available in physical and online stores. These products are subjected to strict regulations, to address their unique public health and safety risks. Edible cannabis products are regulated under the Cannabis Act and Regulations which are separate from the Food and Drugs Act; Health Canada considers it a controlled substance rather than a food. However, edible cannabis products must comply with certain labelling and safety requirements similar to conventional foods.

Cannabis growers and processors are eligible to apply for federal programmes under the Partnership such as cost-shared non-BRM programmes. The project applications will be assessed on a case-by-case basis according to the programme’s funding criteria. Provinces and territories have the discretion to determine eligibility of cannabis for cost-shared strategic initiative programmes. For BRM programmes, income from cannabis (including both medicinal and recreational) is not eligible for support under AgriStability and AgriInvest. Federal and provincial/territorial governments will monitor this once the cannabis industry matures and stabilises.

Innovation and knowledge transfer

The Partnership AgriScience Program aims to accelerate the pace of innovation by providing funding and support for pre-commercial science activities and cutting-edge research that benefits the agriculture and agri-food sector and Canadians. AAFC is supporting two AgriScience Clusters related to the bioeconomy.

The Biomass Cluster will focus on three key areas of research including: advanced technologies to boost biomass production; using biomass heat and energy to extend the greenhouse growing season in northern Canada; and reducing production costs and expanding export markets for biomass. The Bioproducts Cluster will support cutting-edge research to develop new applications for farm crops and residues, from energy, to chemicals, to industrial products. These new research clusters will drive innovation and help improve technologies to support the development and adoption of renewable bioproducts based upon agricultural biomass.

A partnership of industry organisations across the agriculture and forestry sectors released an industry-led strategy entitled “Bio-Design: Canada’s Bioeconomy Strategy in May 2019.4 It advances a vision for the acceleration of large-scale deployment of the bioeconomy in Canada, leveraging Canada’s natural advantages. This is not a government-led or endorsed strategy, however it is an important complement to government of Canada investments in the bioeconomy, and clearly outlines industry priorities to support industry-government collaboration to further the development of the bioeconomy in Canada.

The Canadian Agricultural Strategic Priorities Program (CASPP) is a CAD 50.3 million (USD 37.9 million), five-year investment that was introduced in February 2019. Replacing the Canadian Agricultural Adaptation Programme (CAAP), it focuses on four priority areas: adoption of new technology; environmental sustainability; strategic development and capacity building; and, emerging issues. The programme also builds on other government of Canada initiatives to support competitiveness and sustainability in the agricultural sector.

Innovation and knowledge transfer remains a priority for provincial governments. Through the strategic initiatives envelope under the Partnership, an investment of CAD 191.5 million (USD 144.3 million) was committed to build on Saskatchewan’s competitive advantages through scientific advancement and improved research capacity. As part of this initiative, the provincial government has announced CAD 6.8 million (USD 5.1 million) funding for 24 livestock and forage related research projects. The new projects include new vaccine strategies, integrating DNA paternity and genomic programme information to enable producers to make better breeding decisions, and studying the physiology behind forage-efficient beef cows.

Quebec offered financial assistance to crop producers to help them increase productivity through the acquisition or adaptation of production, harvesting or conditioning equipment or the acquisition of precision farming equipment.

Agricultural labour and rural viability

Labour shortage has been a recurrent issue in Canadian agriculture. Data from the Canadian Agricultural Human Resource Council (CAHRC) shows that farmer’s across Canadian agriculture industry lost CAD 2.9 billion (USD 2.2 billion) in sales due to unfilled vacancies. In 2019, the government announced a few initiatives to address some of these issues.

AAFC provided financial assistance to the Canadian Agricultural Human Resource Council (CAHRC) to lead the International Phase of the Quality AgriWorkforce Management Program. This project was designed to clarify best practices for recruiting and retaining international workers. It involved developing and delivering communications and training products for employers, including guides and workshop training materials.

Immigration, Refugees and Citizenship Canada (IRCC) has developed the Agri-Food Immigration Pilot to test a new, industry-specific approach to help address the labour needs of the Canadian agri-food sector. While immigration in the agricultural sector is largely based on seasonal workers, this pilot aims to enhance the benefits of economic immigration to the agri-food sector by testing a new pathway to permanent residence. The pilot will seek to attract experienced, non-seasonal workers who can economically establish in Canada, and who support the ongoing labour needs of the agri-food sector. In particular, the pilot will focus on attracting retail butchers, industrial butchers, food processing, harvesting and general farm workers, farm supervisors and specialised livestock workers.

The government of Quebec has implemented two programmes in order to contribute to the occupation and vitality of the regions. The “Programme Territoires – Priorités bioalimentaires” aims to increase the development and enhancement of the bio-based food sector according to the established territorial priorities. Through the “Programme Territoires : relève, entrepreneuriat et entreprises de petite taille”, Quebec wants to ensure the attractiveness and dynamism of the bio-food sector in all regions by consolidating small agricultural businesses and supporting agricultural entrepreneurship.

Trade policy developments in 2019-20

Canada, Mexico and the United States signed a new trade agreement (called CUSMA in Canada) on 30 November 2018. Canada, on 2 April 2020, and Mexico, on 4 April 2020, notified their partners that they have completed internal procedures required for the agreement to take effect. Once ratified by all parties, the agreement would enter into force “on the first day of the third month following the last notification”. Once applied, the new agreement will preserve the existing agricultural commitments under the North American Free Trade Agreement (NAFTA) and will eliminate tariffs for certain additional products between Canada and the United States (e.g. margarine and whey). It establishes US tariff-rate quotas (TRQs) for Canadian exports of refined sugar and sugar-containing products, as well as certain dairy products (including cheese, cream, milk beverages, butter). It also establishes Canadian TRQs for US exports of dairy, poultry, and eggs. The new agreement also includes a new chapter on Sanitary and Phytosanitary Measures (SPS), which reinforces and builds on provisions contained in the original NAFTA and the World Trade Organization (WTO) SPS Agreement, and reflects the strong trade and regulatory relationship between the Parties. The agriculture chapter in the new agreement includes new obligations for agricultural biotechnology, aiming to provide further transparency and predictability in the trade of products derived from current and future technologies. The new agreement also requires Canada to eliminate milk classes 6 and 7; establishes a mechanism to monitor exports of skim milk powder, milk protein concentrate, and infant formula; and allows US grown wheat of varieties registered in Canada to receive an official Canadian grain grade.

The revised Canada-Israel Free Trade Agreement (CIFTA) entered into force on 1 September 2019. New market access opportunities under the modernised CIFTA largely pertain to the agriculture and agri-food sector. The agreement also includes new chapters on SPS Measures and Technical Barriers to Trade.

The modernised Canada-Chile Free Trade Agreement (CCFTA) entered into force on 5 February 2019. CCFTA is a comprehensive FTA that covers trade in goods, services and investment, with parallel agreements on environment and labour co-operation. The modernised CCFTA includes new chapters on SPS measures and Technical Barriers to Trade that are expected to benefit the trade of agriculture and agri-food products.

The conclusion of exploratory discussions for a possible Canada-ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam) free trade agreement (FTA) was announced on 10 September 2019. The discussions served as an opportunity for Canada and ASEAN to exchange information about each other’s typical approach to FTA negotiations and respective domestic regulatory regimes, and to explore the elements of a possible Canada-ASEAN FTA. Together, ASEAN member states represent the fifth largest economy in the world, and Canada’s sixth largest trading partner.

References

[1] AAFC (2018), Canadian Agricultural Partnership, http://www.agr.gc.ca/eng/about-us/key-departmental-initiatives/canadian-agricultural-partnership/?id=1461767369849.

[2] Gruère, G. and H. Le Boëdec (2019), “Navigating pathways to reform water policies in agriculture”, OECD Food, Agriculture and Fisheries Papers, No. 128, OECD Publishing, Paris, https://dx.doi.org/10.1787/906cea2b-en.

Notes

← 1.  See Canadian case study on “Strengthening agricultural resilience in the face of multiple risks” [TAD/CA/APM/WP(2019)26/FINAL] for an analysis of Canadian BRM programmes.

← 2.  For example the 2018 Canada-Ontario Lake Erie action plan to reduce phosphorus pollution (see Box 6 in Gruère and Le Boëdec (2019[2]).

← 3.  The Dairy Farm Investment Program is a five-year (beginning 2017/18) programme to help Canadian producers of cow’s milk to improve productivity through upgrades to their equipment.

← 4.  See Canada’s National Bioeconomy Strategy web site at: https://bionb.org/canadas-national-bioeconomy-strategy/.