Agricultural & Food Policy

Evolution in Canada2011 and beyond

Al Loyns, Prairie Horizons LtdJames Rude, University of Alberta

Snapshot of Cdn ag RR Cdn/US policy framework Recent Cdn policy directions Prairie grain marketing reform: the CWB single desk is gone; some implications & questions

Only significant anticipated change

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Objectives & Scope

rule of thumb: divide US by 10 2011 Farm Cash Income $C47.9 b Lvsk $C19.9b -10.5m sl hogs; 2.6m sl cattle Crops $C25.2b Govt $C 2.8b Most crop income $C7.8b (SK) Most lvsk $C4.9b (Ont)

-AB and Que are close on lvsk

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Snapshot of Cdn Agriculture

CROPS production:- wheat 20mmt (735m bu)- durum 4mmt (240m bu)

- barley 7.5mmt (344m bu)- corn 11mmt (434m bu) - sb 4.2 (158m bu)- canola 16mmt (800m bu)- oats 3mmt (195m bu)

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Snapshot (Cont’d)

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Canada’s Constitution (the BNA) provides clear fed/prov’l division of powers in Ag:- Resources are provincial- T & C within provinces is prov’l - T & C across prov’l borders and offshore is

federal- Provinces can and do run their own ag

programs- Education inc. extension is provincialMuch of ag policy is cost and planning shared

Canadian Policy Environment

Fed authority; shared vs dominant Prov vs State; shared, active vs small Leg’n; instit’ns & permanency vs Farm Bills

[[changing in Canada]] Inst’l; mbs/crown agencies vs USDA

Cdn evolution since 2000, negotiated federal/provincial/territorial 5 year programs

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Cdn/US Policy Environment

Food Aid; none to little vs dom & AID R&D; small & ↓↓ vs Hatch Act et al Water; prov’l (little irr’n) vs USACE & irr’n Lands; mostly prov’l/small vs CRP & fed

Environment; more prov’l vs EPA Food Safety & Security; similar

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Cdn/US Policy Environment (cont’d)

Toward a “Farm Bill” model?? Stabil’n/Bus Risk Mgmt (post 2003) “Growing Forward” (2 stages to 2020) Marketing & Trade ( pre & post 2011) Please note Food Safety/Environment/Lands/Water/R&D/ Govt

support unlikely to change much. Supply management is a question. Fiscal constraints prevail.

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Cdn Policy (2003- 2020)

Politicial and CWB believers viewed CWB power, pools and payments as BRM

Still evolving: ASA/ Crop Ins/GRIP/ disasters, over expenditures to NOW:

Toward Whole Farm Accounting, stability of programs, min production incentive, avoid TRL attention and driven by fiscal constraints

[2011 and forward) AgriInvest savings account plus AgriStability margin based deficiency payments based on

measures of OVERALL farm income. Five year changes, (direct payments, targetting, cross-

compliance) unlikely.

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Business Risk Management

Cdn posture has been/is avoid TRL in Ag (Al Loyns position is CHANGE TRL)

CWB issue is gone

Cdn trade priority shift from south, to west Is the Keystone Pipeline important??

Trade agreements are popular

SS Mgmt is interesting: TPP dependent?? Japan (rice exemption ?) Canada (SS Mgmt exemption?)

Will Keystone be an issue? South or north

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Mkting /Trade (ex CWB)

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SEE: www.kis.usask.ca/GrainConference.html

Bill C-18 passed 12.11 effective 1.8.12 (outstanding legal challenges)

Majority producer BoD replaced BoD now 6 Fed appointees 5 yr transition to t.b.d. corp model Voluntary use/patronage Competes with private grain cos Privates forward contracting 2012 wht ICE (Wpg) wht futures trading 1/15/12

CWB Single Desk Gone

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Potential for price discovery, transparency Potential for futures options trading Potential for reduced price uncertainty Lower handling costs, higher prod returns

PROVIDEDCompetition in B&S is strong/effective ► Potential for on-prairie processing, new prod development, wheat derivatives ► Potential for more responsive crop mix and production

Mkting Reform: Implications

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Buying highly concentrated, “compet- itive fringe” of buyers essential► Info, data analysis & reporting essent’l► Will the new ‘CWB’ survive & evolve?► Will wheat flow SOUTH?? NORTH??► Are we in for more trade actions??► Harmoniz’n of seg’n, insp’n, cert’n etc end use certificates??

► Leads to more standardized varieties► Comparative elevator and terminal charges

Implications (cont’d)

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Many got what was asked for: CWB gone Significant change in NA grain market Some positive, some uncertain. There will be pressure on the border Can we be Free and Fair traders in wht?

Cdn policy evolution $$ constrained SS Mgmt uncertain Other policy direction more stable today

Conclusions

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AGRIWEEK FEB. 6, 2012

“Prospects for reform of the grading system improve greatly with removal of the Wheat Board monopoly. The Board has been the principal booster and defender of statutory grading to the extent that even mentioning the possibility of change was off limits. Times are changing, and it’s about time”

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East/ West vs North / South Trade areas

Winnipeg MB, the heart of the continent

Geographically it isVan. west/ Montreal east ► 90% Cdn pop’n

Distance from Wpg ►2300 km.

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Cdn Ag “mkts” in N. America

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Austin TX 2300 km due south Atlanta GA 2526 km Washington DC 2521 km New York City 2600 km Sacramento CA 2944 km Los Angeles CA 3200 km

What pop’n within those boundaries??

US Comparisons