07-076-dp 1 canadian agriculture and agri-food policy conference on the food economy october 17-18,...
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07-076-dp 1
Canadian Agricultureand Agri-food Policy
Conference on the Food EconomyOctober 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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• 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
The Canadian agriculture and agri-food system is a dynamic chain of industries that is increasingly integrated and contributes significantly to the Canadian economy
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Agriculture and Agri-Foodexport sales(1990-2005)
0
5
10
15
20
25
30
1990 1993 1996 1999 2002 2005
Billions
$
Agriculture and Agri-Foodexport sales(1990-2005)
0
5
10
15
20
25
30
1990 1993 1996 1999 2002 2005
Billions
$
Consumer-oriented
Bulk
Intermediate
Source: Statistics Canada and AAFC calculations.
Agriculture and Agri-food System's Contribution to Employment and GDP, 2004
0.7 0.41.3 1.8
1.7 1.70.5 0.2
2.4 3.6
1.5
5.1
02468
101214
GDP Empl.
% o
f Canadia
n t
ota
l
Foodservice
Food retail/ wholesale
Beverage and tobacco manuf.
Food manuf.
Primary agriculture
Input and service suppliers
Agriculture and Agri-food System's Contribution to Employment and GDP, 2004
0.7 0.41.3 1.8
1.7 1.70.5 0.2
2.4 3.6
1.5
5.1
02468
101214
GDP Empl.
% o
f Canadia
n t
ota
l
Foodservice
Food retail/ wholesale
Beverage and tobacco manuf.
Food manuf.
Primary agriculture
Input and service suppliers
$84.7 billion 1997(8.1%)
2.1 million persons(12.8%)
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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
Ch
allen
ges t
o t
he S
ecto
rC
hallen
ges t
o t
he S
ecto
r
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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
Evolu
tion
of
Can
ad
ian
Food
Policy
Evolu
tion
of
Can
ad
ian
Food
Policy
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Canadian agriculture and agri-food policies have evolved in response to these challenges
The 1990s broughtabout significantchanges:
• 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
Percent difference between the average of 2000 to 2001 relative to the 1990 to 1995 average.*Farm level output.Source: AAFC.
Percentage Change Between 1990-95 and 2000-01
87
25
57
4151
248
Perc
ent
Percentage Change Between 1990-95 and 2000-01
87
25
57
4151
248
Perc
ent
Specialcropprod.
Feedbarley
exports
Flourprod.
Porkoutput*
Beefoutput*
Canolacrushing
Evolu
tion
of
Can
ad
ian
Food
Policy
Evolu
tion
of
Can
ad
ian
Food
Policy
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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-
foodsector 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
Evolu
tion
of
Can
ad
ian
Food
Policy
Evolu
tion
of
Can
ad
ian
Food
Policy
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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 internationalcompetitiveness and trade, and to remain compliant with international
agreements
Steady industry input was secured through a Value Chain Round Table process
Ag
ricu
ltu
ral P
olicy F
ram
ew
ork
A
gri
cu
ltu
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olicy F
ram
ew
ork
(A
PF)
(AP
F)
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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”
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
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Food
Safe
ty a
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Qu
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AP
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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 CFIAAP
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Food
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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
AP
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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
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 themAP
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Ren
ew
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Ren
ew
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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
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Further investments have been made since the Science and Innovation programs were designed
Further investments have been made to promote R&D andcommercialization 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
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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
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• 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 LearnedTh
e A
PF:
Lesson
s L
earn
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Th
e A
PF:
Lesson
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earn
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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
Vision:A profitable and innovative agriculture, agri-food and agri-
basedproducts industry that seizes opportunities in responding to
marketdemands 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
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Competitiveand Innovative
Sector
Competitiveand Innovative
Sector
SectorProactive
in Managing Risks
SectorProactive
in Managing Risks
Sector thatResponds to
Society’s Priorities
Sector thatResponds to
Society’s Priorities
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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
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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.
• 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
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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
• 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
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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