AGRI Committee Report

Dissenting Opinion: Growing Forward 2

Liberal Party of Canada

In July 2011 federal, provincial and territorial ministers of agriculture met in St Andrews, New Brunswick to establish a foundation for ongoing discussions respecting the development of Growing Forward 2. At the time, we expressed our concern about the insignificant attention directed  to a number of issues which I feel cannot go unaddressed in  what will amount to a framework for Canadian farmers and the rest of the agriculture and agri-food sector in Canada for the next 5 years. We wrote then and remain of the belief that the federal, provincial and territorial ministers must consider thoroughly the following issues: Business Risk Management; the commercialisation of innovation; the transition of farms and farm capital from one generation to the next; a responsive, reliable rail service and the absolute necessity for a comprehensive National Food Policy.

NATIONAL FOOD POLICY

Testimony throughout the study on Growing Forward 2 addressed the importance of a national food policy – whether from the perspective of food as a market commodity or as a necessity.  Emerging as common themes among most witnesses were the myriad connections between agriculture and agri-food and various other elements touched by the federal government: health, the continued sustainability of the agricultural sector, international trade, food safety and at the most basic, important level, food security in Canada.

I think we take food for granted; it appears on our plates, and we don't realize the economic and intellectual ramifications of agriculture in the Canadian landscape. So that's why...a public discourse on a food policy might help to remind some of the funding agencies of the crucial importance of agricultural research, writ large.[1]

Missing from the committee is a recommendation for the need of a national food policy. Developed countries Scotland, Wales, New Zealand, and Brazil each already have a national food policy. Witnesses argued that we do not have a national agricultural and food based vision in Canada due in large part to a chasm between farmers, processors, researchers, distributors and consumers along the food supply chain. Understanding the necessity of a national food strategy and incorporating all other parties into that strategy are entirely different things.

A national food policy would bring together diverse stakeholders including farmers and consumers, government, Aboriginal groups and other community activists toward a comprehensive set of measures which would ensure among other elements: nutrition education, affordable access to healthy foods and a strategy for food sovereignty and food safety all ultimately guaranteeing Canadian food security.

As it stands, a number of organizations have signalled their intent to create their own national food policy: the Canadian Federation of Agriculture, the Conference Board of Canada, Food Secure Canada the National Farmers Union and the Liberal Party of Canada. We wrote the Ministers of Agriculture of the federal, provincial and territorial governments in July 2011 about the importance of including a national food policy in Growing Forward 2 and maintain still, as negotiations continue, that it must be included.

Recommendation:

That Agriculture and Agri-food Canada engage the provinces, territories and all stakeholders to facilitate the development of a national food policy which includes specific objectives for the Canadian agriculture, and agri-food sector and that it initiate discussion of the links between strategy and Growing Forward 2.

SCIENCE AND INNOVATION

Similarly to witnesses who advocated a national food policy, most if not all witnesses who came before the committee agreed that innovation, research and development, and commercialisation are essential to meeting and maintaining a sustainable agriculture and agri-food sector.

It was agreed that multiple stakeholders are responsible for agricultural and agri-food research independently and that there is a necessity to link producers, processors, universities and governments. Witnesses spoke highly of clusters and about the need to form partnerships.

Our whole piece is really again to create this new system, to move from the old isolation model of science, where it’s an individual researcher and you have to work really hard to lever them together into groups who work on their own, to a new connection model...How we make our 60 people at Vineland into 6,000 – you do it with partnerships. Through the cluster program [...] you can reach all the way across the country...[2]

Missing from the committee report is a desire for agriculture to figure more prominently in the federal government’s science and innovation priorities commensurate to the need expressed by witnesses. In its Economic Action Plan 2012 the government signalled its intentions to centralise research in pursuit of economies. Meanwhile, witnesses were quite clear that public, university and private research can and must complement one another, but that stable funding is essential not only to attracting both researchers and investors, but it is vital to keeping them here.

The recent announcements about changes within the management structure and operating system within the National Research Council world are causing a lot of what I regard as the highest value-added and the most creative scientists to say, “You’re suggesting I go from a full-time permanent position to a world where I have to go out and raise my own capital to do my job, and it’s all going to be two- to five-year contracts rather than a career path.” Many of them are burnishing up their CVs right now and applying to the USDA and the European institutes, the ones that we think are doing better than us. Our people are wanting to leave there because they’re saying the direction in which we’re going right now will make them less creative. It will make them into the bureaucrats and managers and research design people that we were talking about in response to a previous question.[3]

Economic Action Plan 2012 made it clear that the government is interested only in science that will yield immediate results from research designed for products or processes that are immediately marketable. This ignores the need for basic research. Meanwhile, we believe that the solutions lie in stabilising funding and enhancing programs such as the Canadian Agricultural Adaptation Program (CAAP) – which is not part of Growing Forward – to allow for industry based, region specific research and innovation.

Commercialisation of innovation must be better supported. Many witnesses shared their concern with the lack of access to seed and venture capital and spoke of the need for a defined effort to link innovative minds with money, manufacturers and the market. Commitments have been made before and Canadians have yet to see any real action from governments that have a role to play in incentivizing the advancement of commercialisation, critical to a value added approach to farming and agricultural technology.

 At present Canada’s commercialisation efforts have failed to provide the incentives needed to effectively encourage innovation. Governments can incentivize commercialisation through new tax laws that would not forgo the receipt by governments of current tax revenues but rather provide government with a share of newly generated revenues in private industry. While success is the desired outcome of any new business, it is never guaranteed and investment in commercialisation through tax incentives will generate commercial activity in Canada’s economy whether the business is successful or not. We are on the cutting edge of discovery in a multitude of areas within the agricultural industry and need governments help to get these discoveries to market.

Recommendation:

That Agriculture and Agri-food Canada acknowledge the importance of research and innovation to the continued sustainability of Canada’s agricultural and agri-food sector by acknowledging agriculture as a science and innovation priority.

Recommendation:

That Agriculture and Agri-food Canada acknowledge the importance of research clusters, but more importantly provide stable and adequate funding to programs linking public and private research like the Canadian Agricultural Adaptation Program (CAAP) and other similar short- and long-term, cooperative, locally administered programs and include them in Growing Forward 2 to facilitate short- and long-term research on emerging issues that may involve one or more commodities.

Recommendation:

That Agriculture and Agri-Food Canada conduct a study of the effectiveness of flow through shares or other tax credit models to that may be used encourage investments in agricultural commercialisation.

RAIL SERVICE REVIEW

The committee heard from multiple witnesses that the rail freight system is crucial to our international trade and yet it continues to be plagued by a lack of consistency, reliability and responsiveness to producers and industry alike.

The comment made at the meeting was that the 15% tariff advantage was tempered somewhat by the fact that Canada does not have a reliable transportation system. He was citing his particular experience of having a vessel waiting in Vancouver for 50 days...The challenge we face is that this lack of consistency ultimately ends up costing us in invisible things like vessel demurrage; but also, a lot of things that are less visible, such as risk premiums, also get factored in.[4]

In order for our producers to be reliable suppliers, they require dependable rail transport infrastructure, service level agreements and a commercial dispute resolution process. Moreover, they require it in short order.  The Rail Service Review was concluded in March 2011 and industry has yet to see any real results on its recommendations.

Recommendation

That the government immediately report to the Committee on the actions it has taken subsequent to the rail freight services review and indicate how it will implement a service level agreement and a commercial dispute resolution process which properly address industry concerns and end the pattern of Canada as an unreliable shipper.

YOUNG FARMERS AND NEW FARMERS

In the face of higher debt burdens and significant demographic shifts, the number of farms is decreasing as the average age of Canadian farmers increases above 55.  A viable and sustainable agricultural sector requires young famers and cannot disadvantage new entrants. 

While there are certain tax benefits available to new farmers, one of the most significant obstacles to farm estate transitions is the definition of “family” within the Income Tax Act. Allowing farms to transition more widely to the next generation (i.e. nephews, cousins) would greatly assist a broader entry of new farmers into the industry.

Recommendation

That Agriculture and Agri-food Canada, in coordination with Finance Canada revisit the definition of “family” with respect to transition of farms from one generation to include a wider range of family and to ease entry for new and young farmers.

BUSINESS RISK MANAGEMENT

BRM programs must be enhanced as risk management is essential in a sector where risk is significant, unpredictable and can unilaterally affect the continued viability of a farm. Witnesses argued that not only should BRM programs be renewed, but that Growing Forward 2 must ensure that they are reliable in their delivery. Missing from the committee’s report is any recommendation respecting the need to maintain sustainable and effective BRM programs. Prior to the dissolution of the 40th Parliament, the Committee recommended the following and we resubmit:

Recommendation:

As AgriStability is the main farm income support program in Canada, we recommend that Agriculture and Agri-Food Canada conduct a comparative analysis of the application of the following calculation methods: calculation of reference margins over ten years rather than five; calculation of reference margins using the greater of the Olympic average or the average of the last three years; using the average of the last five years and seven years to determine the reference margin; and calculating support based on average production costs.

CONCLUSION

While the Liberal Party can support many of the recommendations and conclusions of the Committee’s report, it is compelled to address a number of the issues that witnesses brought forward, but were not included in the report  to ensure the Government reads and addresses them. These include the necessity for a national food policy, supporting science, research and development, innovation and commercialisation in an environment removed from centralisation and politics; and, that Canadian farmer’s risk is adequately managed through well-funded and stable Business Risk Management programs.