AGRI Committee Report
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GROWING FORWARD 2: (INCLUDES A SUMMARY
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Source: Agriculture and Agri-Food Canada
Notes: The data for 2009-2010 and 2010-2011 are based on actual expenditures (public accounts), for 2011-2012 on forecasts, and for 2012-2013 on the Main Estimates.
The provincial, territorial and federal ministers[1] signed the Saint Andrews Statement at their annual meeting in July 2011. The statement is a roadmap for the development of Growing Forward 2. It identifies two policy objectives — competitiveness in domestic and international markets; and adaptability and sustainability for the sector. More specific goals, such as “being cost competitive;” “meeting consumer requirements for attributes;” “taking advantage of new market opportunities;” and “gaining and maintaining market access” are also identified.
Witnesses acknowledged that in the current economic and fiscal climate, there should be no expectation that Growing Forward 2 will have a significantly bigger budget, subject to statutory obligations under the BRM programs. Some, however, believe that now is the time for a discussion on the way funds are distributed among the various initiatives, more specifically between BRM and strategic initiatives. For many, the framework’s budget, the bulk of which currently goes to income support through BRM programs, should also focus on supporting the sector competitiveness through innovation and market access. What is important is that agriculture should be sustained by market revenue, not government aid.
I think we need to ask ourselves if we want to put all of our money, or most of our money, into BRM programs. I think we should shift some of it into investing more in innovation, into improving productivity at all levels, and into research and development. […] We need to invest in new market development and also in food industrial processing.[2]
Growing Forward 2 has to be a business strategy that focuses on the issues that keep our industry competitive in the international marketplace.[3]
In discussion surrounding the priorities of Growing Forward 2, the issue of a national food strategy was raised several times. A number of initiatives to develop a food strategy are currently under way. Witnesses mentioned three being carried out by the Canadian Agri-Food Policy Institute, the Canadian Federation of Agriculture and the Conference Board of Canada. According to the witnesses involved in these initiatives, common themes include the ability of Canadian agriculture to compete internationally, the link between food and health, and the concept of sustainability. However, some witnesses question the undue emphasis on Canadian agriculture exports and would like to see a national food strategy that focuses on the development of local agri-food systems, that is, production and processing based on proximity to consumers. This approach is illustrated by the People’s Food Policy developed by Food Secure Canada.[4]
Canada can be a global leader in seizing this moment of change and meeting the needs of consumers while also building a stronger society, greater health for the population, and a stronger economy. This approach would be based on the number one priority that came out of the people's food policy, a process that involved thousands of Canadians from coast to coast to coast. Its number one priority is this: Canadians want a sustainable local food system approach.
Others believe that Canada needs to take advantage of the links that exist between agriculture and other sectors of the economy so that the agriculture and agri-food sector can create more opportunities.
I'm going to suggest not only that we should help Canadian ag producers directly but also that we should create new rural and urban jobs by combining agriculture with other sectors of the economy that could employ many more people, a strategy that I will call “ag plus”. Examples could be ag plus natural gas, ag plus mining, ag plus manufacturing, etc.[5]
Establishing a food strategy would spark a broader discussion with the public of the role agriculture plays in the Canadian economy and Canadian society and would facilitate the development of public policy. Witnesses made the point that a food strategy must provide an overall vision of what the sector should be. They also stated that existing national food strategies include targets that are simple and specific but very high-level, such as increased exports, a certain percentage of organic output, and a certain proportion of national products on the domestic market. These targets make it possible for governments to develop appropriate policies for meeting them.
A number of initiatives are currently under way, but the Committee believes there can be only one strategy and agrees with the witnesses who suggested that the government’s role is to facilitate the development of a strategy by bringing the stakeholders together. The government could also spearhead a discussion on the link between the strategy and the Growing Forward 2 framework agreement. Witnesses said that Growing Forward 2 could be the operational arm of a food strategy. It is not certain, however, whether food strategy initiatives can be completed early enough to influence Growing Forward 2, although some elements of a possible strategy, such as innovation and new markets, were clearly identified by witnesses as being among the priorities of the strategic framework.
Recommendation 1
The Committee recommends that Growing Forward 2 recognize that the prosperity of the agriculture and agri-food sector depends on the sector’s ability to take advantage of international and domestic market trends; and that the strategic framework focus on programs that improve competitiveness, such as innovation and trade.
SCIENCE AND INNOVATION
The entire agriculture and agri-food sector agrees that research, science and innovation are essential to meeting the global challenges of food security and climate change. They are also essential to meeting growing consumer demand for healthy, affordable products and making farms more profitable by reducing production costs and fostering access to markets. It is also recognized that every dollar invested in research brings multiple returns in operations.
In general, research provides a six-to-one return on investment. This is even higher when producer investments are considered.[6]
It is therefore not surprising that witnesses voiced support for the federal government’s research initiatives. Growing Forward programs, and the research centres operated by Agriculture and Agri-Food Canada and the National Research Council Canada (NRC) have made the federal government one of the lead players in agricultural and agri-food research in Canada.
The science and innovation support programs currently operating under Growing Forward are only part of the government assistance provided for agricultural and agri-food research. During the meetings, witnesses spoke about a number of issues that are addressed by the strategic framework, as well as some that are not. This section presents those issues in general terms and suggests broad policy directions that could be incorporated into programs. The following section takes a closer look at programs that fall under Growing Forward.
A. Effective research in Canada
1. Foster partnerships
Agricultural and agri-food research in Canada is conducted by many stakeholders, including producers, universities, governments, input suppliers and processors. Consequently, witnesses all underscored the importance of linking these players for obvious reasons of efficiency: the rapid pace of change in markets and agricultural production demands a coordinated approach. Every industry in the agriculture and agri‑food sector has its own issues that require investment in research, such as disease, the need to improve nutritional quality and the industry’s environmental record. The Committee’s discussions showed that these research priorities have to be identified by the industry itself and that the industry then has to go seek support from the research community and governments. Industry knows best where research and innovation investments will be most effective and therefore should take the lead in identifying where funds are directed.
Collaborative initiatives are already being taken, and witnesses made reference to many partnerships that have been created regionally or in specific sectors for the purpose of fostering research, such as the Manitoba Forage Council Initiative, the Vineland Research and Innovation Centre and the industry consortium that funds research on canola diseases. Praised by many witnesses, the Agri-food clusters, which are discussed in the section on Growing Forward programs, have also provided a great deal of impetus for the formation of partnerships within the sector. However, witnesses mentioned problems that prevent some organizations from working together.
Scientists say that it is sometimes easier to form partnerships with a private-sector company than with a laboratory that is part of their own organization. Insurance or administrative considerations can make it impossible to share machinery and other resources or to access government research facilities. In other cases, AAFC and NRC laboratories do not qualify for research grants. One witness stated that it is hard to strike agreements between public bodies to pool and use intellectual property for joint projects. Consequently,
Recommendation 2
The Committee recommends that Agriculture and Agri-Food Canada conduct an analysis of its practices and administrative policies in order to determine whether any has the potential to impede collaboration among the various research bodies, and that it propose ways of removing those impediments.
2. Improve commercialization and transfer
As one witness explained, research can be considered a continuum that ranges from basic or conceptual research to applied research, innovation and application. Each step in the research process is based on the results of the previous step. If one link in the chain becomes weak or breaks, the other links are adversely affected, causing the return on investment in research to plummet.
It was clear during the hearings that commercialization and technology transfer are viewed as the weak link in the research continuum in Canada. Efforts have been made on that front, and the witnesses stressed the fact that a research strategy must include a commercialization or technology transfer component right from the start. Many industries have put in place structures that enable these elements to be considered, but the fact remains that some industries are farther ahead than others.
The dairy industry, for example, has created the Canadian Dairy Research Portal, a Website that offers information on all dairy researchers, all research facilities and all research projects carried out since 1996. The cattle industry has drawn on models used in Australia, and Israel to develop technology transfer initiatives involving suppliers, processors, pharmaceutical companies and outreach services, most of them provincial, which makes it possible to use a variety of approaches and provide target groups with all the research findings. The canola and pulse industries are also recognized as being leaders in forming partnerships with all players in the value chain in order to put forward innovations that correspond very closely to demand. In contrast, there are very few outreach support programs for organic agriculture. Some provinces, Quebec and British Columbia among them, have hired outreach specialists, and the Natural Sciences and Engineering Research Council (NSERC) supported the creation of an organic agriculture outreach officer position in Atlantic Canada; however, examples such as these are few and far between.
Witnesses also emphasized the need to include consumers in research and innovation strategies, for example by involving fields like the social sciences in research projects. Some witnesses believe the industry is in tune with the market and therefore already includes consumers in the process of setting research and innovation priorities. However, other witnesses stated that there are some tensions between what urban dwellers expect in terms of the ability of Canadian agriculture to supply them with food and the reality of Canadian farmers, who have to compete on price and quality on a global level. The strain is evident in the debate over genetically modified organisms. There is unanimous agreement that a better understanding between consumers and the agriculture and agri-food sector must be developed in order to reduce misconceptions. Several witnesses suggested that agriculture does not have an image problem, but an issue of trust that it has to stay on top of all the time.
The lack of venture capital for marketing innovations is another limiting factor in the innovation chain in Canada. A new cultivar or pesticide costs between $100 million and $250 million, and it can take as long as 10 years to get it to market. Caution is therefore the order of the day when investments have to be made. One witness pointed out that most new ventures have a triple B credit rating at best, but banks do not deal with businesses that have a rating lower than double B. A mechanism must be put in place to help these businesses finance the first stage of set-up so that they can raise their credit rating and deal with banks. Bioenterprise, in particular, is trying to establish a venture capital fund for agriculture. According to another witness, angel investor’s networks do exist, but there is little communication among them. The government could become a broker for these investors by establishing a mechanism for creating partnerships between governments, the industry and angel investors.
One potential tool in which some witnesses expressed interest is flow-through shares, which could benefit the life sciences sector as much as they do the oil and gas sector. Other witnesses suggested that the government provide commercialization grants for researchers, who find industry partners to get a product to market. Government-backed loans are another option. The Committee was also told that American organic chemical companies have no trouble getting loans guaranteed by the federal government or accessing public funds.
A final means of reducing risk and improving the marketing phase is regulation of new products. According to industry representatives, regulations have to establish scientific principles and make it possible to bring new products, technologies and innovations to market quickly and following a standard approach.
Recommendation 3
The Committee recommends that Growing Forward 2 include support for the commercialization and adaptation of innovation, similar to the current Agricultural Innovation Program, or other fiscally responsible incentives.
3. Support research capacity
Research and innovation change very quickly, and fear of not being able to attract the necessary expertise in new areas of research is a major concern for the sector. The industry sometimes cannot undertake projects in key areas because no one in universities or government has yet developed the required expertise. In addition, the loss of expertise in more conventional areas like plant diseases and entomology raises questions about Canada’s future ability to properly support research and innovation in certain fields.
The witnesses made it clear that private, university and government research institutions can complement one another in order to provide the necessary research capacity. All of the witnesses agreed that the private sector is good at conducting research at stages very close to marketing, but some highlighted the fact that AAFC plays an important role in long-term basic research projects, because neither the private sector nor universities can do the job as effectively.
For some crops, only government research is able to track the entire innovation chain, either because there is no product to market in the end (a farming practice, for instance) or because there is little economic incentive for the private sector. For example, the volumes of forage seed sold in Canada do not motivate the private sector to invest in the plant breeding of forage crops as opposed to crops like canola and corn. Industry representatives believe the federal and provincial governments must undertake to assume that responsibility and fill the void. Witnesses representing the horticultural industry added that federal research stations are important for research on diseases and the creation of new varieties adapted to Canadian growing conditions. They called on AAFC to fill positions left empty as researchers retire.
Some witnesses suggested that Canada can take advantage of the research being done in other parts of the world and capture and apply that research in order to create value. For example, the Vineland Research and Innovation Centre has a technology officer on staff whose job is to identify technological tools from around the globe that would be improved if developed on a regional or local level. The officer brings those tools to the attention of Vineland and other organizations. This is a way of taking advantage of technological tools that may have been studied elsewhere and refining or adapting them. Other witnesses, however, cautioned that Canada is unique in many ways and cannot abandon certain areas of research completely without taking a major risk.
The witnesses proposed a number of solutions for strengthening private- and public-sector research capacity, such as increasing AAFC’s involvement in training researchers and technicians, creating incentives for universities to hire people who can provide the industry with expertise, and improving information on career opportunities in agricultural research. For many witnesses, however, the problem is rooted in a lack of continuity and fragmentation of research funding. They observed that government funding has tended to shorten timelines for research projects and favour projects that can be completed relatively quickly.
However, all innovations do not take the same time to see the light of day. For example, a short-term project could entail registering a specific herbicide for a new crop, and a few years might be enough to show that the product is safe and effective. On the other hand, developing a new herbicide or a new plant variety requires more than 10 years of research. Genetics and pathogen banks that have to be maintained are examples that show it is hard to limit programs to five years. Some witnesses proposed that the government maintain a combination of funding and time options for research programs.
Stable funding is key to attracting researchers to Canada and keeping them here. A number of witnesses cautioned that scaling back the federal government’s basic scientific research and preliminary applied research, shortening planning horizons and concentrating projects near the downstream end of the research continuum could result in Canada losing important strategic stakeholders.
B. Growing Forward programs
1. Canadian Agri-Science Clusters
The Canadian Agri-Science Clusters Initiative allocates funding to 10 science clusters organized along commodity lines as follows: beef cattle, dairy, swine/pork, poultry, canola/flax, pulse, wheat breeding, edible horticulture, ornamental horticulture and organic agriculture. The clusters are managed by stakeholders in the agriculture and agri-food sector. They identify research projects and receive financial contributions to carry out those projects with universities and other research and development organizations. Industry contributions range from 15% to 30% of project costs.
Aside from a few problems that are common when a new program is being established — the program was shortened, and some of the criteria were changed at the last minute — all of the witnesses agreed that the initiative is an effective research model and must be renewed. It enables the industry to set its own priorities and coordinate research at the national level, mainly by preventing duplication of projects. It also provides the means to consolidate national scientific and technical resources, which are often scattered throughout the country, and facilitate partnerships. The approach, which involves the entire value chain, ensures effective dissemination of results. Generally, the initiative addresses some of the issues identified in the previous section of this report, such as the need to link the players in a product’s value chain.
Some witnesses stated that they would like to see an increase in total funding for the initiative, and most said they are happy with the funding ratio, which is around 25% industry/75% federal government. They were also adamant that the program should run a minimum of five years and be put in place immediately on April 1, 2013 so that research projects get started as soon as possible. The current program, originally intended to run for five years, has been able to operate for only three years because of delays in implementation. One witness also suggested improving interaction between the various clusters so that they do not become isolated groups of projects.
However, witnesses said that greater flexibility is the most significant program improvement that could be made. Flexibility is crucial because of the uncertainty that surrounds research, particularly for multi-year projects. The current rules allow funds to be moved from one project to another, but not from one period to another. According to the witnesses, it is hard to set timelines for research, particularly research on living organisms. Allowing at least some funds to be transferred from one fiscal year to another would be a way to address that uncertainty. It is not unusual for a researcher to change course dramatically once the initial results come in, and the Clusters Initiative should be able to take that into account.
Recommendation 4
The Committee recommends that the Agri-Science Clusters Initiative be renewed and that the rules be amended so that the direction of a given project can be changed and funds can be reallocated from one period to another.
2. Other programs
The Developing Innovative Agri-Products Initiative is the second-biggest science and innovation incentive program in the Growing Forward framework. It provides financial support for industry-led science and technology projects that bridge the gap between ideas and discoveries and products in the marketplace. Funding can be used to target strategies for developing new market opportunities or to implement applied science projects, technology development projects or pilot projects in order to transform ideas into new products. The Initiative played a role in getting to market new varieties of apple created at the AAFC research station in Summerland, British Columbia, by funding tests in other apple-growing provinces to determine the production potential of the new varieties in other regions. The initiative also provided support for the University of Guelph’s dry bean breeding program, which is considered a vital tool in helping bring new products to market.
Other programs that are not part of Growing Forward, such as the Agricultural Flexibility Fund, are also used extensively by researchers. The programs are alternate sources of funding for one-time or longer-term projects that may be complex and/or involve more than one commodity. According to one witness, programs that run for five years can end up requiring a great deal of resources, making some researchers “orphans” of the system. This suggests that Growing Forward 2 should include both short- and long-term funding programs in addition to the current programs. These programs would make it possible to develop research projects for emerging problems that would not be restricted by the five-year timeline.
Recommendation 5
The Committee recommends that the Developing Innovative Agri-Products Initiative be renewed and that a program like the Agricultural Flexibility Fund be included in Growing Forward 2 as an alternate and flexible source of funding to facilitate short- and long-term research on emerging issues that may involve one or more commodities.
3. Program administration
The witnesses stated that they would like to see administrative and accountability improvements in all research support programs. They recognize the importance of accountability but observed that administrative procedures are relatively cumbersome and can be very time consuming. Some of the rules can even stand in the way of optimal program operation.
According to some of the witnesses, preparing a project and having it reviewed by a peer committee can take an entire year. If the grant is for two years, there is a window of only six months or so to report on the use of the funds, and that report is on top of the progress reports that have to be submitted, in many cases quarterly. Research fellows with multiple grants need someone to handle administrative matters. Otherwise, they would spend their time filling out applications instead of doing the work they were hired to do.
The organizations that manage the clusters stated that it took some time to get used to the Treasury Board rules which, like types of funding, are not necessarily in line with the practices used by other research institutions. The result was that many projects were delayed, forcing universities to use technicians rather than students to carry out the projects, which had an impact on students’ training.
Other witnesses said it is unfortunate that some expenses are eligible for university researchers but not for federal government researchers. This gap between what goes to AAFC researchers and what goes to universities creates a management issue, because funds cannot be transferred from one column to the other, even where it would be logical to do so. The grants have to be managed separately, which creates problems that the organizations managing the funds have to solve. For example, one witness stated that even though clusters funds can be used to get researchers from all over the country working with other researchers, they cannot meet in person because of the caps on travel and related costs imposed by the Treasury Board guidelines.
One way suggested by witnesses to reduce the administrative burden would be to carry out audits or other checks instead of asking for proof at regular intervals.
Recommendation 6
The Committee recommends that Agriculture and Agri-Food Canada simplify the administrative and accountability procedures of its research and innovation support programs by implementing a system of appropriate audits and ensuring that the rules are applied consistently to all research institutions.
MARKETING AND TRADE
A. Export markets
Canada is the world’s fourth-biggest exporter of agricultural and food products: the value of annual shipments is in the order of $40 billion. These exports represent half of Canada’s entire agri-food output, but the proportion hides the fact that some crops are grown primarily for export. For example, 60% of the swine and pork, 85% of the canola and 80% of the pulse we produce is exported. Needless to say, without foreign markets, the structure and size of primary production and the processing sector in Canada would be seriously affected.
1. Agri-food trade policy
The aim of Canada’s agri-food trade policy is to grow export markets through the World Trade Organization (WTO) negotiations on agriculture, and regional and bilateral negotiations such as the Canada-European Union Comprehensive Economic and Trade Agreement, while at the same time ensuring the protection of the supply management system. The Growing Forward framework does not cover Canada’s agri-food trade policy. It does complement it, however, and almost all of the witnesses pointed out the need to pursue an active policy of opening up export markets.
Canada’s preferred method of trade liberalization has always been a multilateral approach through WTO negotiations. Multilateralism protects the interests of medium-size countries like Canada, keeps the bigger partners’ ambitions in check, and offers a broader range of options in terms of markets. WTO negotiations also provide a means to address export subsidies and domestic support programs that skew the balance of trade. The witnesses acknowledged that the current trade talks are at an impasse, but hope that the government will forge ahead and continue to work with the other WTO members in an effort to breathe new life into the negotiation process. In the meantime, the witnesses made it perfectly clear that Canada must continue to focus on bilateral trade agreements to solve trade problems in the agriculture and agri-food sector.
Canada’s action plan on trade is relatively ambitious, because the government is now considering the possibility of trade agreements with wealthy or expanding markets like the European Union, India, South Korea, Japan and countries in the Trans-Pacific Partnership. Together these agreements could boost agricultural exports significantly, but many representatives of commodity groups believe that Canada’s absence from the negotiation table could spell disaster for their sectors.
For example, when Canada signed a bilateral agreement with Colombia, markets were immediately opened to Canadian pulse producers, who had previously had trouble breaking through because the United States had a preferred tariff. Bilateral agreements are therefore becoming extremely important as a means of avoiding or eliminating tariff advantages that American and other competing producers might have over Canadian producers. Canada is far along in the process with the European Union, but it has lost ground to competitors for free trade agreements with other countries, such as Morocco, South Korea and some members of the Trans-Pacific Partnership, and now has to play catch-up.
The interesting thing about the TPP, because it's regional, is that some of the founding members are hoping it will be the genesis for something much bigger. This is why Canada has to be there. I'll tell you right now, if you include Japan and Mexico, 65% of all of our agricultural exports go to TPP countries. If we are not in that deal, then within their little group they're going to start filling the space we're now filling with our exports. We will have a real problem if we're shut out of a trade deal that includes 65% of our exports.[7]
Some witnesses pointed out that agreements have to be ambitious so that the agriculture and agri-food sector will be successful. For others, it must be realized that it would be challenging to open markets completely, because some issues are still very sensitive; examples in Europe include genetically modified organisms and hormone-treated beef. The effect can therefore be limited. Moreover, the proliferation of regional trade agreements can make the trade environment considerably more complex and create a spaghetti bowl of regulations.
Beyond trade agreement issues, the witnesses have observed increasing use of technical barriers, such as sanitary and phytosanitary measures, to limit or ban imports. AAFC’s Market Access Secretariat, created in 2009, solved many access problems by offering a single window for the Canadian industry. The secretariat and the industry work as partners to set priorities and take advantage of the best technical expertise possible. The witnesses noted that much of the work is done through daily communication between government employees and industry people on both sides of the border.
The secretariat has a willingness to assist any industry or association in getting market access or in dealing with market access problems. That being said, we probably have 300 or 400 market access issues at the current time. Some are larger than others. We work with industry to prioritize which ones we should put our resources towards. I think the priority setting has been quite successful. The door is open to all firms and associations.[8]
The secretariat has reopened markets or prevented markets from being closed for sanitary reasons. For example, it negotiated export procedures to meet new Chinese standards on the presence of blackleg disease in its canola imports. It also helped negotiate equivalence agreements with the European Union, Japan, the United States and other trading partners so that organic products from Canada would be recognized in those markets. The consensus in the industry is that the Market Access Secretariat must get sufficient resources to carry out its work.
Recommendation 7
The Committee recommends that Agriculture and Agri-Food Canada increase the Market Access Secretariat’s budget in order to increase the secretariat’s capability to solve market access problems encountered by the Canadian agriculture and agri-food sector.
The witnesses also stated that the secretariat’s job would be easier if sanitary and phytosanitary standards were recognized internationally. For that reason, Canada must remain actively involved in establishing international rules and standards in such forums as the World Animal Health Organisation for Animal Health and the Codex Alimentarius Commission. Some suggested that Canada continue negotiations with other countries to develop a policy on low-level presence to prevent trade disruptions due to small levels of unapproved genetically modified traits.
2. Growing Forward initiatives
Growing Forward complements Canada’s agri-food trade policy by endeavouring to strengthen the sector’s ability to capture Canadian and international market shares. Among the primary initiatives are the Value Chain Round Tables, in which producers, processors, retailers, federal departments and provincial governments work to find opportunities and devise collaboration strategies. Growing Forward also supports a series of market development programs that help the sector identify and take advantage of opportunities that offer a competitive edge in terms of costs and attributes. These programs include the AgriMarketing Program (almost $90 million), the Canada Brand Program (almost $20 million), the Market Information Program (almost $9 million) and the Canadian Trade Commissioner Service (approximately $24.5 million).
For many, these programs represent investments that benefit the Canadian economy directly. Some, however, find it hard to gauge the effectiveness of the programs because it is difficult to determine what would be exported if those measures were not in place.
In our case, we spend $4 million a year and our members are telling us that it comes back at $300 million. I'm quite sure that for the $4 million you get it back in the federal coffers pretty quickly.[9]
Market information is probably the government initiative that draws the least attention, but for some witnesses, it is crucial. The mandate of AAFC’s Agri-Food Trade Service (ATS) is to analyze domestic and international demand, consumer trends and outlooks. The ATS conducts market analyses and provides trade statistics and other information on trade events and programs. Some witnesses, however, have indicated that much of that information is also available from other organizations, such as the United States Department of Agriculture’s Foreign Agricultural Service.[10]
The Government of Canada created the Canada Brand strategy in order to promote Canadian products. The objective of the brand is to help the Canadian agri-food sector stand out from competitors in national and international markets. Many witnesses stated that Canada’s image as a supplier of quality products is a valuable sales asset that sets Canadian products apart from those of competitors. Once a country becomes known as an exporter of quality goods, all products are likely taken up a level.
Our members who sell their products internationally often comment that one of the top selling assets they have over competitors is the maple leaf itself. The Canadian brand is one that is linked with quality. The Canadian brand that “quality is in our nature” could not be more fitting, in our opinion. It's a brand that our members are proud to represent at home and abroad.[11]
Officials from AAFC reported that the Canada Brand program currently has more than 400 members and the number continues to grow. It must be realized, however, that a business can change its strategy for a product brand, but a country is more limited in what it can change about the way it is perceived. Quality problems in any sector can quickly tarnish the country’s reputation.
I think we've sort of hung our wagon to the star of a Canada brand. I think we have to be a little bit careful about that. I think you need the flexibility to be able to respond to individual market situations. With a Canada brand, you are dealing with everything that's out there and you're expecting a very blunt instrument to deal with every contingency. […] I think I'd probably increase the funding that goes to the individual industries. You continue the types of partnerships you've had. Possibly you continue on with the Canada brand, but at the same time I think you need to study it a little bit. You face the risk that if something goes seriously wrong, where once you had a Canada brand that was positive, suddenly it's a Canada brand that is negative.[12]
To support the sector more directly, a program called AgriMarketing was created as part of Growing Forward. AgriMarketing has two components. The “generic” component primarily helps industry associations to carry out training on foreign markets and fact-finding and trade missions, and to ensure that Canada is represented at many international agri-food trade shows, such as the international food show better known as SIAL. Some associations also conduct generic promotional campaigns and make in-store presentations in key countries as a way of reaching consumers. The program has covered almost half the cost of activities carried out by the Canadian International Grains Institute (CIGI).
Basically we work with primarily the processors, people who are buying our crops, and help them understand what benefit they can achieve from using a Canadian product versus alternatives, or using alternative Canadian products for that matter. We have a flour mill, a pasta plant, a noodle line, a bakery, and an Asian noodle line, and all these things where we're working with the processors so the processors can then make the products that consumers want. Right now we do training for some companies that are buying Canadian wheat; they're turning it into flour and then their subsidiary company is turning it into noodles, and they're having some issues with quality. Their customers are not happy. Our technicians are able to work with them and say, this is what you need to do to achieve the kind of flour you need, and then within the noodle manufacturing process say, here are the steps you need to take to make sure that people are happy, and by using this product, this will get you to that end game. We do that in a number of ways. Another example of an area we work in for the consumer is looking for opportunities to get Canadian ingredients into their diet.[13]
According to AAFC officials, the demand for the program far exceeds the available resources. Some associations hope the program could be transformed into a multi‑year export support fund. Instead of having to submit applications for each activity, industry associations would be given a set amount for five years or the duration of Growing Forward 2 that would enable them to work over a longer term. Proponents of an export support fund argue that an international market cannot be developed in six months or a year; but that it takes years. The new fund could be modeled after the $17-million, four-year International Pork Marketing Fund, which is managed by Canada Pork International (CPI). The fund was created in 2009 to help the industry rebound from a slump caused in part by weak pork prices and the closure of some markets. According to the CPI representative, the stable funding has made it possible to develop and implement strategies for accessing priority markets. The exporters stated that the support provided through CPI activities funded by the federal government increased export sales between 5% and 30%.
Recommendation 8
The Committee recommends that Agriculture and Agri-Food Canada consider the feasibility of transforming the generic component of the AgriMarketing Program into a multi-year export support program modeled after the International Pork Marketing Fund.
The second component of the AgriMarketing Program covers part of the expenses incurred by small- and medium-sized enterprises for market expansion and marketing. Most of these activities are related to trade shows, advertising and export marketing, and in some cases to technical training on tariffs, customs procedures, labelling, etc. Analysis of application files appears to be a weak point in the program, as one witness observed:
People submit files and they are sent to Ottawa. It's very difficult to find out what happens from that moment on. It's a black hole. We don't know who makes the decisions or how things work.[14]
It apparently takes quite a long time for decisions to be made, and the funding criteria are unknown. Witnesses have suggested decentralizing the file analysis to regional AAFC offices, and setting up a government/industry working group as solutions to prevent misunderstandings and improve file analysis.
Recommendation 9
The Committee recommends that Agriculture and Agri-Food Canada and the industry jointly explore a more effective procedure for analyzing files submitted under the AgriMarketing Program for small and medium-sized businesses.
The Canadian Trade Commissioner Service is the last element of the market development programs. There are currently 33 trade commissioners assigned to 13 priority markets, where they provide front-line assistance to Canadian businesses and individuals operating in those markets. They work closely with businesses in order to introduce them to contacts and point them toward market opportunities. In other consulates, the Department of Foreign Affairs and International Trade (DFAIT) employs trade commissioners who meet with an AAFC official regularly on a regional level.
Industry witnesses underscored the importance of these services, which they use frequently. Collaboration varies from market to market. For example, in markets where an industry is well established, trade delegates can provide information on the government’s new policies and plans. In other, less familiar markets, commissioners help identify distributors or market players. This service is particularly important when a free trade agreement is signed. Commissioners analyze markets in order to identify opportunities, review statistics on imports and exports, and gather information in order to determine what the Canadian industry can offer. For example, commissioners establish whether a market is one in which Canadian businesses would have to compete through pricing or whether they could set themselves apart by offering a product that is Canadian or has a certain feature and perhaps charging a slightly higher price. Trade commissioners also assist businesses in validating markets and promoting their products.
B. Domestic market
1. Market status
Canada is a country that depends on agricultural trade, but the opening up of export markets is not one sided, because the Canadian market must in return be opened up to foreign products. Moreover, Canada is a preferred destination for exporters because of its economic situation and the high dollar. Canadian farmers therefore have to compete with trading partners that often have lower production costs. The result is an increase in imports to Canada: for example, the market share of Canadian wines decreased from 49% in 1987 to 32% in 2011. Even export-oriented sectors are affected: pork imports have increased to the point where 25% of the pork consumed in Canada now comes from other countries.
For some products, the Canadian market remains the primary opportunity and business is done mostly in Canada. The domestic market, which absorbs half of Canada’s agri-food output, is changing rapidly and poses challenges for the sector. Witnesses made reference to the concentration in the retail sector, where 80% of the market is controlled by four companies — this may lead to an imbalance in bargaining power and may create difficulties to obtain shelves space; consolidation of the processing sector; and the lower productivity in that sector compared with its American competitor. Others spoke about the difficulty identifying the origin of products or differentiating the attributes of the Canadian product from those of the imported product.
2. Initiatives
The marketing and trade initiatives included in Growing Forward are not traditionally oriented toward the domestic market. The industry turns more to provincial initiatives like Foodland Ontario and Aliments du Québec to promote local products. That does not mean Growing Forward 2 has no role to play in helping the sector regain market shares on a national level. The strategic framework can be an opportunity to manage the growing competition in the domestic market, and the departmental representatives recognized the possibility of extending Growing Forward programs to the domestic market by carefully defining the provincial and federal governments’ mandates. For example, Canadian businesses can already use the Canada brand on their products sold in Canada. According to the department, this program has made it possible to show that the participants could increase their sales and profitability by affixing the Canada brand to their products.
The federal government can play a role in helping the industry provide information and differentiate its products from imported foods. Some witnesses said they would like the AgriMarketing Program to be broadened to include national marketing initiatives that would enable producer groups to promote consumer awareness and encourage consumers to buy local products. Discussions within the Value Chain Round Tables are an ideal place to establish marketing strategies. For example, the pork industry is trying to base its strategy for the Canadian market on product differentiation. It is going to try to offer Canadian businesses a platform enabling them to define the attributes of Canadian pork. Businesses will then be able to differentiate themselves on their own, both locally and internationally.
Recommendation 10
The Committee recommends that Growing Forward 2 include a support program for the development and implementation of national marketing strategies developed, for example, by the Value Chain Round Tables.
With respect to labelling, the pork industry representatives lament the fact that it is not as easy to determine the origin of meat as it is the origin of imported fruits and vegetables. Country-of-origin labelling is a sensitive issue because the industry wants to give the information to consumers but does not want to make the mistake of adopting mandatory country-of-origin labelling (COOL), which has been put in place in the United States and deemed by the WTO to be in violation of international trade rules. Others hope that the criteria that must be met in order to use “Product of Canada” on labels will be revised, because in their opinion, they do not lend themselves to processed products. There is, however, consensus on the fact that Growing Forward 2 may stimulate the domestic market by making Canadian consumers aware of the reasons why they should buy Canadian.
CONSUMER DEMANDS AND PRIORITIES OF SOCIETY
A. Health
Canadian consumers have essentially the same demands as consumers in other parts of the world. What they seek primarily is food that is safe, nutritious, healthy and tasty. Many studies highlight the importance of these factors that shape consumers’ decisions. The link between agriculture, food and health is what has driven the development of the natural products and functional food sectors in Canada i.e., foods that possess health-related attributes.
The global functional food market is growing at a rate that is outpacing the traditional processed food market. This has become a multi-billion-dollar industry, and estimates within Canada suggest that the Canadian functional food industry has the potential to grow to $50 billion U.S.[15]
Needless to say, consumers expect products to be safe, and safety is not something that can be marketed. Studies have shown that Canadians are confident that the food sold in Canada is safe.
In particular, over 50% of surveyed Canadians reported that they were completely confident or very confident in the safety of Canada's food. A further 35% said they were somewhat confident. I am of the opinion that such confidence stems from an expectation held by the broad citizenry that food safety control systems managed by both the public and the private sector are effective. As an example of this, I'd like to remind the committee of the speed with which industry and various federal and provincial departments acted when BSE-infected cattle were discovered in Canada in May of 2003.[16]
This does not mean that there is no need for vigilance. The Consumers’ Association of Canada has said that consumers want the standards applied to food consumed and produced in Canada to be applied to food that is imported as well. It must be made clear that the safety requirements for imported products and Canadian products are the same, but inspection methods are different. Products imported to Canada are inspected by authorities in the exporting country, just as the Canadian Food Inspection Agency (CFIA) inspects food being exported from Canada. CFIA conducts audits to ensure that the inspection system in exporting countries is equivalent to Canada’s system. CFIA can then inspect imported products once they arrive in Canada and determine whether, for example, any shipping requirements were not met and whether the products comply with standards regarding the presence of certain chemical products.
The Committee was told, however, that CFIA inspects on average 2% of agricultural products shipped to Canada and that some of those inspections are not directly related to food safety; they are conducted, for example, to ensure that diseases which can damage Canadian agricultural resources do not enter the country. It bears noting that the frequency of inspection for each type of product is determined by a risk assessment. What this means is that imported products that are considered to be a risk are inspected more often than products that pose a lower risk. The government has provided funds to hire more than 700 new inspectors since 2006, but the Agriculture Union, which represents CFIA employees, wonders whether there are enough resources to meet the frequency that risk assessment shows is necessary.
The industry does its part when it comes to food safety. With support from Growing Forward, farmers have put in place on their farms food safety systems that are often required by retailers or processors. Retailers have also developed their own safety standards, many of which exceed CFIA standards, but the lack of consistency among them translates into extra costs for processors: a manufacturer that supplies two or three customers has to adapt its production line to each customer, whether or not that increases sales. The Committee is of the opinion that the players in the chain have to talk to one another and endeavour to make these private standards the same across the board.
In terms of nutritional information, labels showing the nutritional value of processed foods have been mandatory since 2005, and beginning in August 2012, consumers will also see information on allergens. The industry is also working with the government on awareness initiatives like the Nutrition Facts Education Campaign, a multimedia awareness campaign based on a partnership of 34 member businesses and Health Canada; the aim is to give Canadians the tools they need to make smart food choices. A follow-up to that campaign is under way.
Innovation in food safety is another way of meeting consumers’ health expectations. Bioniche Life Sciences Inc. has developed a cattle vaccine that reduces the excretion of E. coli O157 and should prevent disease in humans. A national vaccination campaign would help boost Canadians’ confidence in food safety and considerably reduce the annual cost of primary and secondary health care related to bacteria.
B. Food prices
Food prices rank closely behind nutrition and health among the factors that influence consumers’ decisions. Canadians spend 10% to 12% of their disposable income on food, and it is known that the proportion of income spent on food is much smaller in Canada than in other parts of the world.
The supply management system remains an irritant for some witnesses, mainly because it keeps prices high relative to prices in the United States.
Price also comes into what consumers want. That was the second biggest issue. We all know there's something wrong when you can buy a gallon of milk in the United States for half the price of what you can buy it for in Canada. You can buy chicken for half the price. This is particularly exacerbated when the dollar reaches parity, which it has. We've been fighting that one for five years, but the reality is that you can still buy these products for half the price across the border. We'd like to see something done on that issue.[17]
Dairy Farmers of Canada pointed out that over the past decade, prices in Canada have been as much as 40% lower than prices in the United States. Furthermore, supply management maintains price stability, which helps the entire supply chain deal with the volatility of world markets. Whereas other governments have to provide subsidies ($5 billion in the United States), a direct transfer from taxpayers to farmers to counter that volatility, the supply management system costs the public virtually nothing, and Canadian consumers pay only once for the true value of their products.
The Canadian Restaurant and Foodservices Association (CRFA) identified some of the effects of supply management on its members’ operations. For example, under the current tariff rules, producers of frozen pizzas in Canada are able to buy their Canadian mozzarella at a deep discount so that they can compete with frozen American pizzas that enter Canada duty free. Restaurants do not get that discount, yet they are competing against those frozen pizzas. The CRFA added that it is hard to find chicken with the attributes restaurant owners are looking for. Further, the quota allocation system prevents provinces with strong population growth from raising more chickens to meet the demand.
The Committee is of the opinion that the problems identified here can be solved within the supply management system without calling the entire system into question. The Committee therefore urges the industry to engage in discussion and come up with quota formulas that would make it possible to respond more easily to user demand and accommodate areas in which the population is growing at a faster rate.
C. Origin of foods and production methods
1. Origin of foods
Where food comes from was a frequent topic of discussion during the Committee’s meetings. For the most part, the witnesses agreed that consumers tend to prefer Canadian products.
The Canada brand group out of Agriculture Canada have done some study. They did a beautiful virtual store study. […] It indicates clearly that Canadians prefer Canadian product as long as it's priced competitively with other products from around the world, and that horizon is at about the 10% level, so we have a problem with “Product of Canada” in this country, and I'll talk about that in a few more minutes.[18]
More specifically, many witnesses said that there is growing demand for local products, as illustrated by the slow food movement and the 100-mile diet. While there is no single definition of “local” (country, province, 100 miles, etc.), local is an attribute that some consumers want to see. Opinion is divided as to whether the shift toward local food will remain a niche market or indicates a more substantial change in demand.
For some witnesses, the difficulty supplying local products stems from the lack of appropriate processing infrastructures and distribution channels for getting products to consumers. Nationally, the high exchange rates have made the Canadian processing industry less competitive. According to some of the studies cited before the Committee, our processing industry is on average 40% less productive than its counterpart in the United States. Regional processing capability has gradually disappeared. The industry representatives made reference to the difficulty obtaining capital to improve productivity, automate and modernize facilities, and deal with competition. Problems accessing capital are sometimes related to the risk associated with certain markets that are less stable. Supporting the processing sector by creating opportunities for investment in small- and medium-sized processing facilities or assisting with the modernization of existing facilities is seen as a way of helping local farmers access markets in which the demand for their products is growing rapidly.
With respect to marketing, some witnesses stated that existing distribution channels may not be the best way of getting regional products into major national grocery store chains. However, producers working together on a regional level can succeed in approaching large-scale distributors. Regional food hubs[19] are another way of linking producers and large customers, such as public institutions. The Committee was also made aware of FoodShare, a Toronto group that gets fruits and vegetables from local producers and resells them at an affordable price to some 100 schools in the city. Farmers’ markets are another outlet for farmers.
In British Columbia the number of farmers' markets has risen annually, and now the BCAFM represents over 100 such markets. Along with restaurants, wholesale. and direct farm market sales, farmers' markets are one of several marketing channels used by small and medium-scale farmers. Farmers selling directly to consumers are able to realize retail prices at farmers' markets that can often be double what they would receive selling wholesale.[20]
The increase in the number of farmers’ markets and the creation of regional food hubs attest to the sector’s determination to supply the local food market. The witnesses’ comments on these initiatives also show that a portion of the agriculture and agri-food sector would like to see government policies give more recognition to agriculture that focuses on meeting the demand closer to home.
2. Food production methods
Consumers are increasingly interested in the way food is produced. More and more, they are looking for foods produced using methods that are more respectful of the environment and animals, such as organic products.
The Canadian organic sector is growing rapidly, and the domestic market is now worth an estimated $2.6 billion per year, an increase of 160% in four years' time.[21]
[S]ales of cage eggs fell by almost 4%, whereas cage-free and certified organic sales increased by 7% and 14% respectively. Importantly, the signage did not have a negative impact on total egg sales, which increased by 1.2%.[22]
The industry is adapting to these new trends, as the witnesses illustrated many times: the processing industry is working to promote and enhance achievements in the area of environmental sustainability; Growing Forward has funded a number of farm-based initiatives to implement environmental plans; many retailers have their own organic lines of products; and major restaurant chains, food suppliers and supermarkets have taken measures to improve animal well-being by using and selling more free-range pork and more eggs from free-range operations.
There are challenges to meet these demands. The bulk of the demand for organic products in Canada is being met by imports. The cost of moving to organic agriculture is often cited as an impediment to the development of that sector, because during the transition years, producers cannot sell their products as organic and do not get a higher price. In other cases, the transition to more environmentally friendly practices or practices that are more respectful of animals’ well-being does not always mean a higher market price, and the question remains: who in the production chain must bear the cost.
3. Meeting demands
Consumer demand varies, and for that reason, the market is increasingly fragmented. One witness illustrated that point by talking about a shift in the market from a commodities world to a products world directed at an infinite number of consumer groups. Every household has its own tastes and preferences, which makes it harder for the food industry to meet the growing demand.
The witnesses suggested a number of ways of supporting the Canadian agriculture and agri-food sector’s efforts to adapt. Some proposed a loan system for modernizing processing companies, for example by increasing the budget of the AgriProcessing Initiative to a level more or less on par with the ecoAgriculture Biofuels Capital Initiative. Others proposed a program that would support the creation of regional food hubs or permanent markets and the creation of funds to cover the transition to organic farming or breeding methods that are more respectful of animals.
The Saint Andrews Statement clearly states that “meeting customer requirements for attributes” is one of the framework’s objectives. Growing Forward 2 should include specific tools in order to support the sector in meeting that objective. The Agricultural Flexibility Fund and the Canadian Agricultural Adaptation Program are initiatives already in place that make it easier for the sector to adapt and help it seize opportunities and meet emerging demand. These two programs allow the sector to set its priorities by putting forward its own initiatives. For example, the AgriProcessing Initiative, which is designed to modernize processing facilities, is funded by the Agricultural Flexibility Fund. Both of those programs end in March 2014, one year after Growing Forward is renewed.
Recommendation 11
The Committee recommends that programs be incorporated into Growing Forward 2 that would help the Canadian agriculture and agri-food sector adapt to and meet consumer demands.
COMPETITIVE ENTERPRISES
Officials from Agriculture and Agri-Food Canada defined a competitive sector as one that is adaptable and sustainable because it has a bigger market share both nationally and internationally. To ensure that Canada’s agriculture sector is able to compete in national and international markets, a number of measures have been put in place under Growing Forward. These measures were designed to strengthen farmers’ skills and business strategies and tackle problems that undermine their competitiveness, such as regulatory barriers. As the agriculture sector is geared primarily toward export markets, it also needs a reliable rail freight service that enables it to bolster its competitive position.
A. Harmonization of regulations
International regulations threaten Canada’s competitive position in world markets. The witnesses commented that Canadian exports are heavily regulated, unlike goods imported into Canada. They find this situation unfair. In addition, these regulations complicate trade and affect Canada’s ability to compete.
One of the things you have to remember is that a lot of countries around the world have regulations similar to ours about chemical and pesticide use, but they don't enforce them. Here we do. If you're growing produce in any Canadian province, you've got the Pest Control Products Act to deal with, administered by PMRA, and you've got the provincial applicators and provincial pesticide legislation to deal with as well. And they're all enforced, maybe not to the extent everyone would like, but they are enforced, and there's an expectation among both producers and consumers in Canada that this happens.[23]
The agriculture sector has to comply not only with the many Canadian regulations, but also with international standards if it wants to access foreign markets. Because of the differences in international regulations — for example, the caps on pesticide residue vary from country to country — the witnesses suggested that a worldwide approach to the approval of pesticides be adopted.
Regarding the food sector, some witnesses questioned the validity and effectiveness of Canadian regulations on grounds that they have not been updated in decades. The witnesses urged the federal government to quickly modernize food regulations. They stated that the approval of new food products in Canada is 5 to 10 years behind other industrialized countries, such as the United States, the European Union, Australia and New Zealand. The approval process for new veterinary drugs and pesticides is similarly behind. The long wait sharply reduces the competitiveness of the agriculture and agri-food industry as a whole. Several witnesses expressed the view that harmonization of regulatory processes between foreign governments and the Government of Canada would give the Canadian agriculture sector a bigger competitive edge both nationally and internationally.
Many farms find it very hard to stay competitive because of all the strict regulations they have to meet. Some witnesses indicated that a cautious approach that looks at the competitiveness of the agriculture sector must be taken in implementing new regulations.
Regulations are one aspect of our industry that are necessary to ensure the safety and marketability of our product, but they need to be implemented with great care and consideration. In the past we have seen how creating and implementing regulations that are more onerous than those in other countries and jurisdictions limit our competitiveness. To compete in both domestic and world markets, we must be careful not to put ourselves in a position through regulations that limit our competitiveness. It is easier to create a regulation than to change or eliminate it, and therefore science and common sense must dictate any implementation.[24]
Some witnesses stated that small slaughterhouses have ceased to be efficient and competitive because they were not meeting the standards. Others contend that it is more the regulatory burden that hurts small slaughterhouses. Small slaughterhouses have to manage provincial and federal regulations at the same time, which is often not appropriate given the small scale of their operations. According to those witnesses, not all of the regulatory measures that have been put in place for big plants need to be applied in small slaughterhouses.
[R]egulatory burdens imposed in a one-size-fits-all manner often discriminate against smaller processors. Regulations must be appropriate to the scale of the operation. An example of regulatory excess resulting in the disappearance of processing capacity is the local abattoir situation across Canada. An example of the successful encouragement of small-scale processing is the artisan cheese industry in Quebec. Government should learn from these examples.[25]
The CFIA is trying to improve that aspect of regulation, specifically through the development of results-based regulations on food safety. The new regulations would state expected outcomes, such as the absence of pathogenic bacteria in meat, rather than the means that must be put in place to reach those outcomes. This would allow an enterprise to tailor its practices to its size and resources without compromising the objective of the regulations.
We have been working in the meat sector, for example, looking at shifting the currently very prescriptive model, which serves as a barrier for some small enterprises, towards a more outcome-based model that might be better tailored, therefore, to the unique characteristics of a small enterprise, in order to promote their capacity to enter into, for example, interprovincial trade as a first step, and, if they wish, on to international trade as well through federal registration.[26]
Recommendation 12
The Committee recommends that the government seek to achieve food safety regulation equivalency with trading partners, develop processes to increase regulatory compatibility, and recognize scientific evidence from other countries where appropriate and meeting Canadian standards.
B. Skills and business strategies
Canadian agriculture is facing a decline in the number of farms and an aging farming population. On average, farmers are in their late fifties. Recruiting young and beginning farmers is a real challenge for the sector. Several witnesses stated that the high capital cost of farming and difficulty accessing farm financing are major obstacles to the creation of a new generation of farmers.
For example, the new aspiring farmers, whether they're new Canadians or not, as you rightly note, often don't have access to financial resources. Even if they've got a good business plan, it's hard for them to qualify for government programs and it's hard for them to qualify for business loans. Also, often these relationships that are forged between exiting farmers and entering farmers are quite informal. The aspiring farmer doesn't have what would be considered the required level of farm assets to qualify for government programs. This sort of issue represents a peculiar regulatory loophole that a potentially large number of people are actually falling into. A re-evaluation of what a farm asset is and some sort of pump-priming money to help establish new farms and build up the capital while they embark on new enterprises represents a serious bottleneck.[27]
Governments and agricultural organizations have put in place a number of programs to help attract young and beginning farmers. Financial institutions have developed transition loans and other products that help farmers pass their farms down to the next generation, and financial products designed for new farmers.[28] In addition, the Canadian Agricultural Loans Act enables young and beginning farmers to raise capital to invest in their farms. A number of tax benefits are available to new farmers, such as a $750,000 capital gains exemption in cases where a farm is handed down to the next generation. The supply management sector, meanwhile, facilitates the establishment of new farmers by giving them a quota loan for a specified period. The witnesses stated that despite these initiatives, attracting new and beginning farmers remains a problem.
According to some witnesses, organic farming is drawing many new farmers. Most new organic farmers start out small, because a small farm is affordable and does not require a huge investment. However, the exorbitant price of land in some regions is a major obstacle to the establishment of beginning farmers. Beginning farmers often develop a solid business plan to help them get their farms off the ground, but some witnesses said that the number of farmers with a business plan is very small.
The witnesses from the Fédération des groupes conseils agricoles du Québec and the Canadian Federation of Independent Business observed that fewer than 20% of farmers have a business plan and official succession plan. Among producers who do have a business plan, 71% used it to obtain a loan from a financial institution. This is a concern for some witnesses, who feel there may be an impact on the long-term competitiveness of the agricultural sector. The witnesses lamented not only the small number of farmers who have a business plan, but also the small number of producers who seek help from consultants. Many of those who do contact a consultant are in serious financial difficulty. Quebec farms that are in deep trouble have access to subsidized farm management services under the Farm Operation Adaptation Support Strategy, which promotes a multidisciplinary approach intended to increase farm profitability.
Another management consulting support program is the Farm Business Development Support Program, which is associated with Growing Forward. The aim of the program is to help farmers meet the challenge of sustainable, competitive agriculture. The program offers an array of activities, including business development support, assistance with the implementation of best management practices and development of expertise.
There was strong agreement among the witnesses regarding the importance of training in developing farm managers’ skills. According to witnesses, training helps make the agriculture sector more competitive. A number of training and learning initiatives have been taken to strengthen farmers’ skills and strategies. The Organic Farming Institute has developed organic farming courses and an on-farm mentoring program that fosters the transfer of knowledge. Many small non-governmental organizations (Farmstart, for example) help farmers acquire agronomy and marketing skills so that they can start their own business. However, some witnesses made the point that continuous training is not always available to farmers because it is hard for farmers to take time away from the farm. Some organizations have tailored their services to meet the specific needs of farmers. They offer online tools that enable farmers to participate in seminars or take courses when it is convenient for them.
We partner with an online university, and we actually offer our members a number of online business courses that they can take on business management, succession planning, farm safety —those various business issues. Basically, a lot of business issues apply to our farm members, and they certainly can take advantage of our member programs that we have in online training. Most of our members are very technology savvy so they can take advantage of those things. We also offer a network of business resource counsellors across the country who help our members through some of these things and provide them the succession guide and some advice on moving forward. Certainly we don't provide accounting advice or anything, but we provide the tools to get them started on some of these difficult discussions, as you've mentioned.[29]
Recommendation 13
The Committee recommends that Growing Forward 2 include specific support programs for new entrants in agriculture, for continuous training and learning and for organizations that promote and deliver farm management consulting services.
C. Rail transportation
The rail freight system is crucial to the competitiveness of Canadian agriculture, which focuses on exports. Given that it ships most of its output by train, the grain industry has to have a reliable, efficient rail service to ensure its competitive position. However, several witnesses observed that freight trains do not offer farmers any guarantee that their products will reach their destination on time, unlike passenger trains, which stick to a schedule. This delay seriously undermines the competitiveness of the Canadian grain industry.
[O]ur buyers expect a product to show up on their doorstep at a certain time. Then we're given that timeframe and we try to meet it. The whole chain of action comes into play, and the railway is part of that chain of action. So we order the cars. We order the shipment. They tell us when they can get it there and then we try to meet that and coordinate the ships with that. The problem is when the railways throw a hiccup into the system. Either they don't show up on time or don't pick up the cars on time. There's no recourse to the railways, but there's a recourse to everybody else in the system, and then the cost gets borne all the way back to the farmer. We've never had an opportunity to dictate to the railways. It's always been the railways dictating their schedule to us.[30]
Trains are not the only source of woe for grain farmers; ships can create problems, too. Containers are sometimes refused when they reach the terminal because shipping companies overbook by 40%. Further, foreign-bound grain sitting in Canadian ports has to be inspected by the Canadian Grain Commission, whereas grain shipped directly to American buyers does not have to be inspected. The witnesses are of the opinion that this inspection process puts the grain industry in an unfavourable competitive position. If farmers do not honour their commitment to deliver the product by a certain date, customers may turn to competitors. Finally, delivery delays result in penalties that lower the price farmers get for their grain.
A study by foreign buyers reports that Canadian soybeans intended for human consumption cost more than American soybeans. At first glance, the price difference seems attributable to the exchange rate. However, closer analysis shows that the primary cause is the cost of shipping by rail.
The informal study of the containerized ocean freight rates comparing Toronto, Chicago, and Columbus, Ohio, reveal that Canadian firms are paying as much as $530 over published freight rates from Chicago or Columbus, and they go to the same destination globally. In discussion with various freight forwarders and oceans carriers, there are sometimes very clear indications that the differential between U.S. freight rates based on Chicago/Columbus versus Toronto is the result of rail rates. The situation has a serious impact on our competitiveness overseas.[31]
Some witnesses recommended that the Committee look at container freight rates in eastern Canada that could have an adverse impact on farmers’ income and cause grain companies, processors and shippers to lose revenue. Some witnesses think that Canada has a good rail system, but it is simply not being used effectively. However, several witnesses suggested that the inefficiency of shipping by rail is the reason why Canada’s agricultural sector is less competitive. They believe the rail system needs to be made more efficient so that the Canadian agricultural sector is competitive and has access to world markets. Others suggested that existing cars should be replaced.
The most effective way to enhance the competitive position of Canada's grain farmers is to replace the existing Canadian grain car fleet, as it is past its useful life — obsolete and inefficient, from a variety of standpoints. The design is outdated. It provides a lower carrying capacity. There are inefficiencies in the loading and unloading. The dimensional envelope is outdated. As a result of the age of the cars, there's a high cost of maintenance and repairs because of obsolete parts.[32]
New cars are lighter and have a much greater carrying capacity than old cars, which makes them more efficient and reduces the carbon footprint. The Canadian agricultural sector needs to be able to rely on modern, more efficient cars. However, that efficiency must extend to the entire rail system so that farmers can honour their commitment to deliver their products to their customers at a specific time.
The final report on the rail freight service review was released in January 2011. The report, commissioned by the Minister of Transport, looked at service issues and problems related to the rail-based logistics system in Canada and made recommendations for improving the efficiency, effectiveness and reliability of service within the system. Many of the issues raised by the witnesses during the Committee’s study are addressed in that report.
Recommendation 14
The Committee recommends that the government report to the Committee on the actions it has taken subsequent to the report on the rail freight services review.
Recommendation 15
The Committee recommends that the government investigate the current condition of the existing fleet of Canadian grain rail cars, and begin to plan for updating the current fleet with a more modern rail car that will increase the efficiency and productivity of the government’s rail car fleet while decreasing the overall environmental footprint.
BUSINESS RISK MANAGEMENT
Risk management is one of the most important aspects for any business, especially in the agricultural sector where the risks are enormous and can affect the profitability and viability of farms. To reduce the loss of income due to unpredictable events such as natural hazards, diseases, market fluctuations, etc., the Canadian government offers various risk management tools to farmers. These tools include supply management and BRM programs. Available to farmers since 2007, BRM programs are an important component of Canada’s agricultural policy and include four main programs: AgriStability, AgriInvest, AgriInsurance and AgriRecovery. The Advance Payments Program (APP) complements the BRM programs.
A. Supply management
Growing Forward recognizes the supply management system for regulated products (milk, poultry, eggs) as a BRM program although no funding is offered.
Currently, the supply management system does not cost the community or the state much of anything. There are some small supply management programs, but they are minor and do not represent any significant amount.[33]
Among the BRM programs, farmers under supply management are covered only by AgriStability in the event of major disaster, that is, when their production margin drops by more than 30%. Supply management producers are compensated to the same degree as non-regulated products. However, few supply management producers participate in the AgriStability program.
Since its introduction in the 1970s, supply management has provided income stability for dairy, poultry and egg producers. The mechanism of supply management is built on three pillars: production planning, producer pricing and import controls. Although supply management has appeared in the news because of trade negotiations, several witnesses believe that the Canadian government will continue to strongly support supply management.
Chicken Farmers of Canada appreciates the strong
support of the Government of Canada and the opposition parties for supply
management. Our farmers have confidence in the government’s ability to preserve
our system of supply management in trade negotiations such as the Canada–EU
trade agreement and the upcoming
trans-Pacific partnership.
Canada has already successfully negotiated nine trade agreements to open up markets, and each one of these has preserved supply management.[34]
Recommendation 16
The Committee recommends that the government continue to support the supply management system by defending it in trade negotiations.
B. The programs
Under Growing Forward, the federal government has worked with provinces to design a series of cost-shared BRM programs between the FTP governments. Since inception of the 2007 program year, the government has provided over $8.5 billion through the BRM suite. Annual federal expenditures for AgriStability have been between $400 million and $600 million, and Agriculture and Agri-Food Canada grants on average $160 to $200 million to AgriInvest per year. Moreover, the government injects funding of $450 to $550 million annually into AgriInsurance. As to AgriRecovery, the government has budgeted $125 million this year, but paid out approximately $450 million last year. The amount allocated under AgriRecovery varies from year to year because it is an event-driven program. Table 2 reflects current numbers provided by AAFC officials.
Table 2 – Annual Federal, Provincial and Territorial Contributions
to
Business Risk Management Programs as of February 29, 2012 (millions of dollars)
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Source: Agriculture and Agri-Food Canada
Note: Processing not complete for the 2012 and 2011 program years under the AgriInvest and AgriStability programs. Also the federal government provided over $563 million as a one-time payment to kick-start AgriInvest accounts.
Many witnesses stressed the importance of BRM programs as an essential tool in protecting against declines in farm income. Moreover, the Canadian Bankers Association strongly encourages farmers to participate in BRM programs in order to manage their risks because they provide a safety net for both the producer and the banker. A banker evaluates the farm taking into account certain criteria, including the BRM programs subscribed to by the farmer, the financial health of the company, the sector’s future prospects and the economic outlook in general. Several witnesses argued that the BRM programs must be renewed. However, some improvements should be made to existing programs to more effectively support the agricultural sector.
In summary, I feel that the existing programs have worked fairly well in attempting to manage business risk in our sector. Efforts to improve the delivery of all BRM programs must continue, with particular emphasis on more regional administration and improved processing times. Maintaining reasonable reference margins in AgriStability and insurance production levels in AgriInsurance is imperative if we are to adequately manage our risk.[35]
Although BRM programs are welcomed by many farmers, the fact remains that they have limitations. Several witnesses criticized the red tape of some programs as well as the slow compensation. Moreover, it is often difficult to estimate payment amounts. Several witnesses suggested that the calculation of the reference margin, negative margins and program caps penalize farmers.
Under AgriStability, farmers receive payments that are based on the reference margin, or Olympic average, which is calculated by taking the last five years of the farmer’s margin from the program year, removing the highest and lowest margins, and averaging the remaining three years. When the production margin falls below a certain threshold, the government provides financial assistance to farmers. However, some witnesses believe that the current reference margin does not fully reflect the actual performance of the operation. They suggest calculating a reference margin over a longer period to take account of the production cycle, for example. Moreover, the negative margin limits the participation of struggling producers unless their margin is positive for two of the three years used to calculate the reference margin. In this situation, farmers can receive compensation of up to 60% of their negative margin. Some people think the government should increase the negative margin coverage to 70% to better protect farmers. In addition, farmers who suffer losses over several consecutive years should be able to receive compensation if the government changed the rules by eliminating the negative margin and assigning a margin of zero in the margin calculation. This would provide enhanced assistance to farmers who have no other options. However, in a time of budget cuts, the witnesses agree that the government would be hard-pressed to inject additional funds into the BRM programs.
As to program caps, large operations argue that BRM program caps discriminate against them because they restrict their participation.
It’s a philosophy of ours that regardless of size you should have the same access to government programming. The caps in AgriStability, AgriInvest, and our APP program limit access. So if you’re a certain size, you’re penalized, because you’re too big for the programs. Our philosophy has always been that farmers should be treated equally regardless of their location or their size.[36]
The Committee believes that, in general, BRM programs must be transparent and predictable in order to be bankable, simple, fast and equally available to all Canadian farmers. Moreover, they should not mask market signals[37] or create regional disparities.
Recommendation 17
The Committee recommends that the business risk management suite of programs of Growing Forward 2 respect the principles of transparency, simplicity, timely payments, market neutrality and nationwide equality, and better reflect the needs of farmers.
1. AgriStability
AgriStability is a farm income program that covers margin declines of more than 15% relative to the reference margin. It is delivered by the provinces and the territories with the exception of Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Yukon, where the program is run by the federal government.
The witnesses agree that AgriStability does not work for all types of production. Indeed, livestock producers, such as pig and cattle farms, are better served by this program than crop producers, who have more difficulty accessing it. Moreover, diversified farms rarely benefit from payments under this program, as evidenced by an Ontario farmer.
With Ontario’s diversified farmers, fewer dollars are coming to Ontario than to other regions through programs such as AgriStability, AgriInvest, and AgriRecovery. My farm, for example, did not receive any AgriStability money even though my beef feedlot suffered the same losses as feedlot-only farms did, but my other enterprises kept me above my threshold. This put me at an economic disadvantage compared to other farmers in my province.[38]
Several witnesses also criticized the complexity and administrative burden of AgriStability. Farmers often use experts to fill out application forms, entailing additional costs. Criticism was also levelled at the program’s lack of predictability and transparency. Department officials also recognize the complexity and lack of transparency.
It’s a very common complaint about programs. AgriStability in particular is I’m sure what they’re referring to. It’s complex, it’s not transparent, and it’s not as timely as it should be.[39]
The complexity of the program often leads to delays of up to two years before producers receive payment, which makes it difficult for farmers to take business decisions with normal business cycles. This slow compensation calls into question the efficiency of AgriStability. Despite some improvements in the program, the efficiency problem persists.
While the provincial administration has improved delivery over the federal administration, there are still problems of communication with those portions of the program that remain administered by the federal government, for example, access to income data. Why is there not a practical solution offered by the federal government, like a check box on the income tax form authorizing the income tax department to expedite the delivery of my information to the provincial AgriStability administration? When I need help due to an unexpected downturn, it hurts more that the administration is not working well.[40]
Despite the shortcomings of AgriStability, several witnesses agree that the program has helped support producers’ incomes. To ensure effective assistance to the agricultural sector without masking market signals, witnesses believe that greater transparency is still necessary in the calculation of payments that correspond to producers’ realities.
Recommendation 18
The Committee recommends that AgriStability be reviewed with the provinces and territories following the principles enunciated in recommendation 16.
2. AgriInvest
AgriInvest is a savings account for producers to manage small income declines when their production margin falls by less than 15%. Producers can deposit up to 1.5% of their net sales of eligible products that are subject to a cap of $1.5 million. In return, farmers receive a matching government contribution up to a maximum of $22,500.
Many producers, particularly crop producers, consider that AgriInvest is very advantageous. Indeed, it is economical to administer and easy to understand. In addition, the program gives farmers easy access to funds. It is predictable and bankable. Some witnesses were of the opinion that it is unnecessary to have several programs because AgriInvest is enough to provide major benefits.
I would summarize by saying that as a grains and oilseeds producer, the two best complementary BRM programs for our farm business currently are the AgriInvest and AgriInsurance programs. AgriInsurance allows us to make sure that any risk in production is mitigated. AgriInvest allows us to build a security fund so we can save through good income years and have immediate access through times of cyclical downturns. To me, this allows us to be responsible in micro-managing our own farm financial business needs. I often use this tag line: AgriInvest and forget the rest.[41]
Some witnesses proposed increasing the maximum deposit from 1.5% to 3% of eligible net sales. Other witnesses want to ensure equal access to the program for all businesses without discriminating based on size, and review the concept of eligible net sales. However, in a time of budget cuts, the government would be hard-pressed to inject additional funds.
While some witnesses commend AgriInvest, others find it of little benefit because of its cap. Others, like the Canadian Cattlemen’s Association, think that AgriInvest discriminates against large operations with high production output but low profit margins.[42] This program has therefore proven to be of little use for the feedlot operators. In addition, producers whose net sales are negative are not eligible. Some witnesses suggest the program be eliminated altogether.
I’m saying get rid of AgriInvest and redirect those funds toward other programs within agriculture, whether it be market access, innovation, or research. Right now it’s like peanut butter spread really thin. You’re trying to get the largest number of producers as opposed to the largest number of production. Redirect the funds, is what I’m suggesting.[43]
3. AgriInsurance
AgriInsurance is formerly known as Production and Crop Insurance. This insurance program covers crop losses, although there is also coverage for loss resulting from the death of certain farm animals. The program is delivered by the provinces by a Crown corporation or a branch of the provincial agriculture department. The federal government pays 36% of the premium, the province 24% and the farmer 40%.
This program is very popular with field crop producers because it is transparent and bankable. Indeed, farmers have timely access to payments that are paid in full. Although the program is offered in all provinces, witnesses complained about the different levels of protection from region to region. Moreover, this disparity results in a participation rate that varies by province.
In B.C., we have had several drought years in the last 10 years. In addition, many areas of B.C. face severe wildlife damage to their crops, which can drastically reduce their crop yield. The probable crop yield offered to a producer on his or her crops through AgriInsurance is based on a producer’s 10-year average production. With drought and wildlife damage, a producer’s average production is seriously affected. In B.C., this program is not very well subscribed to, with only 15% of the producers who are raising crops accessing it. A lot of our producers are saying it’s just not worth it any more, that their production yields on AgriInsurance have been reduced so much.[44]
Several witnesses suggested the need to maintain and improve AgriInsurance by providing adequate protection with reasonable premiums. In addition, the program should extend to the livestock sector, including beef and pork. Unlike witnesses who support a fair program for the whole country, some witnesses call for regional flexibility by having a program that is tailored to regional specificities and differences.
4. AgriRecovery
The AgriRecovery framework supports farmers in the event of disaster. Under this program, affected producers receive assistance that is not covered by other government programs.
AgriRecovery is the least predictable of all the BRM programs. Because the programs under the framework are event-driven, funding fluctuates from year to year. The estimated budget for AgriRecovery is $125 million. Last year, this amount was around $450 million. In addition to being the least predictable program it is also the least bankable. Affected farmers have to wait to find out what is covered and the level of support. Among the most criticized aspects of AgriRecovery, witnesses complained that it does not seem to be consistently delivered across the provinces or for different products in similar situations. That is why the witnesses called for a clear definition of what constitutes a “disaster.”
SARM’s major concern with the current AgriRecovery program is how a disaster is defined. The definition of a disaster must be clarified and parameters outlined so that producers know what kinds of disasters will be covered. The current program provided disaster assistance for floods in 2010 and 2011, but southwest Saskatchewan experienced drought for four consecutive years around 2006 and received no assistance from the federal government. AgriRecovery should clearly convey to producers the definition of a disaster and outline the parameters defining what will and what will not be covered.[45]
Recommendation 19
The Committee recommends that AgriRecovery’s disaster relief framework include a clear and meaningful definition of “disaster” with specific criteria so that relief can be delivered consistently across the country.
5. Other programs: Price insurance programs
In addition to the existing BRM programs, some witnesses spoke of price-based insurance programs. Ontario, for example, recently implemented the Risk Management Program (RMP). Yet some witnesses were concerned that the RMP masks market signals and distorts prices because the program would be based on production costs. However, it is too early to pass judgment on its operation as it is just in its infancy. In Alberta, the cattle industry has adopted a similar program, but based on the futures market. However, the participation rate is still low, as noted by the Canadian Cattleman’s Association.
Alberta has moved forward in the last couple of years with the development and implementation of price-insurance-based programming for cattle producers, from cow-calf through to finished cattle. Through this program, if producers identify that risk of market downturn is something they would like to protect themselves against, they would have a tool to conveniently lay that risk off. As you know, there are methods available in the marketplace today to protect against some of the price risk. However, the complexity of these methods, along with, in some cases, the lack of complete correlation with the Canadian market, has resulted in very low participation by producers, and participation by smaller and mid-sized operations is extremely rare.[46]
The Cattle Price Insurance Program established in Alberta is a model that ensures a minimum price to producers. This price is set according to an index calculated from market, or futures, prices on the Chicago Mercantile Exchange. Witnesses emphasized that such programs do not distort market signals since the index depends only on the market, not production costs. There is a great deal of interest in the price insurance model, which may prove to be an extremely beneficial risk management tool for producers.
Recommendation 20
The Committee recommends that Agriculture and Agri-Food Canada study the possibility of establishing price insurance programs across the country.
C. The Advance Payments Program
The APP is not part of Growing Forward per se, but it is a key financial tool for farmers. Funded exclusively by the federal government under the Agricultural Marketing Programs Act, the APP is a loan guarantee program that gives producers easier access to cash advances. The maximum cash advance available to each producer is $400,000; the first $100,000 is interest-free. Producer organizations are responsible for delivering the program on behalf of Agriculture and Agri-Food Canada.
Many crop and livestock producers find the APP to be a very useful financial tool to provide liquidity. The program allows farmers to market their products in a timely manner. Although the government has shown flexibility by extending the repayment period at various times for struggling sectors, farmers fear that the next repayment schedule will affect their credit worthiness. Cattle producers had until March 31, 2012 to repay their cash advances and hog producers have until March 31, 2013.
The Advance Payments Program and emergency advances have worked well for the hog sector. However, producers are anxious about the pending repayment schedules, and we are closely monitoring the situation as the deadline for producer plans to be submitted arrives.[47]
Many farmers want the payment date extended. Also, several producers pointed out that the APP could be improved if the advance and the interest-free portion were increased.
Recommendation 21
The Committee recommends that Agriculture and Agri-Food Canada review the Advance Payments Program to consider the possibility of providing more flexible repayment options.
CONCLUSION
The renewal of Growing Forward comes at a time of relative prosperity for the Canadian agriculture and agri-food sector. High prices contrast with those of the early 2000s, and demand in international markets is increasing. This does not mean, however, that there are not obstacles to overcome — achieving global food security, climate change, the emergence of low-cost producing countries like Brazil, the attraction of the Canadian market to other exporting countries, and always increasing consumer demand make the task more difficult for Canadian producers.
The Committee’s study shows the need for FTP governments to direct Growing Forward 2 toward a business strategy that would allow Canadian agriculture to differentiate. By focusing on risk management programs that do not mask market signals, Growing Forward 2 will enable the industry to better plan and seize opportunities when they arise. By focusing on innovation, promoting market access, allowing industry to meet consumer expectations, whether international or domestic, Growing Forward 2 has the potential to have a real impact on the industry and strengthen its competitiveness. The Committee believes that its recommendations will make it possible to achieve this potential and make the agriculture and agri-food industry a leader in the Canadian economy.
[1] With the exception of Ontario.
[2] Professor David Sparling, Richard Ivey School of Business, University of Western Ontario, Evidence, Meeting No. 15, 1st Session, 41st Parliament, Ottawa, November 29, 2011, 1555.
[3] Mrs. Gordon Bacon, Chief Executive Officer, Pulse Canada, Evidence, Meeting No. 23, 1st Session, 41st Parliament, Ottawa, February 8, 2012, 1605.
[4] Ms. Anna Paskal, Senior Policy Advisor, Food Secure Canada, Evidence, Meeting No. 27, 1st Session, 41st Parliament, Ottawa, February 29, 2012, 1550.
[5] Dr. Manish N. Raizada, Associate Professor, International Relations Officer, Department of Plant Agriculture, University of Guelph, Evidence, Meeting No. 22, 1st Session, 41st Parliament, Ottawa, February 6, 2012, 1535.
[6] Mr. Travis Toews, President, Canadian Cattlemen's Association, Evidence, Meeting No. 10, 1st Session, 41st Parliament, Ottawa, November 3, 2011, 1535.
[7] Ms. Kathleen Sullivan, Executive Director, Canadian Agri-Food Trade Alliance, Evidence, Meeting No. 24, 1st Session, 41st Parliament, Ottawa, February 13, 2012, 1710.
[8] Mr. Steve Tierney, Assistant Deputy Minister, Market and Industry Services, Department of Agriculture and Agri-Food, Evidence, Meeting No. 24, 1st Session, 41st Parliament, Ottawa, February 13, 2012, 1540.
[9] Mr. Jacques Pomerleau, President, Canada Pork International, Evidence, Meeting No. 21, 1st Session, 41st Parliament, Ottawa, February 1, 2012, 1700.
[10] This USDA information is written in the context of fostering the development of US agriculture exports and resolving market access issues that US producers may encounter, and, as such, may be of limited use to Canadian producers.
[11] Ms. Stefanie Nagelschmitz, Member, Canadian Agri-Marketing Association, Evidence, Meeting No. 21, 1st Session, 41st Parliament, Ottawa, February 1, 2012, 1550.
[12] Dr. James Rude, Professor, Department of Resource Economics and Environmental Sociology, University of Alberta, Evidence, Meeting No. 22, 1st Session, 41st Parliament, Ottawa, February 6, 2012, 1710.
[13] Dr. Rex Newkirk, Director, Research and Business Development, Canadian International Grains Institute, Evidence, Meeting No. 26, 1st Session, 41st Parliament, Ottawa, February 27, 2012, 1645.
[14] Mr. André Coutu, Chief Executive Officer, Agri-Food Export Group Quebec-Canada, Evidence, Meeting No. 21, 1st Session, 41st Parliament, Ottawa, February 1, 2012, 1605.
[15] Ms. Carla Ventin, Vice-President, Federal Government Affairs, Food and Consumer Products of Canada, Evidence, Meeting No. 25, 1st Session, 41st Parliament, Ottawa, February 15, 2012, 1605.
[16] Mr. John Cranfield, Member, Management Team, Consumer and Market Demand Network, Evidence, Meeting No. 25, 1st Session, 41st Parliament, Ottawa, February 15, 2012, 1540.
[17] Mr. Bruce Cran, President, Consumers’ Association of Canada, Evidence, Meeting No. 26, 1st Session, 41st Parliament, Ottawa, February 27, 2012, 1605.
[18] Mr. Ted Johnston, President and Chief Executive Officer, Alberta Food Processors Association, Evidence, Meeting No. 27, 1st Session, 41st Parliament, Ottawa, February 29, 2012, 1530.
[19] The United States Department of Agriculture defines a food hub as a business or organization that actively coordinates the aggregation, distribution and marking of locally produced food products, most from small and midsize producers.
[20] Mr. Jon Bell, President, BC Association of Farmers' Markets, Evidence, Meeting No. 9, 1st Session, 41st Parliament, Ottawa, November 1, 2011, 1540.
[21] Mr. Matthew Holmes, Executive Director, Canada Organic Trade Association, Evidence, Meeting No. 7, 1st Session, 41st Parliament, Ottawa, October 25, 2011, 1635.
[22] Ms. Sayara Thurston, Campaigner, Humane Society International/Canada, Evidence, Meeting No. 26, 1st Session, 41st Parliament, Ottawa, February 27, 2012, 1530.
[23] Mr. Bob Kingston, National President, Agriculture Union, Evidence, Meeting No. 25, 1st Session, 41st Parliament, Ottawa, February 15, 2012, 1650.
[24] Mr. Kevin Boon, General Manager, British Columbia Cattlemen’s Association, Evidence, Meeting No. 6, 1st Session, 41st Parliament, Ottawa, October 20, 2011,1640.
[25] Mr. Ted Zettel, General Manager, Organic Meadow Co-operative, Evidence, Meeting No. 12, 1st Session, 41st Parliament, Ottawa, November 17, 2011, 1545.
[26] Mr. Paul Mayers, Associate Vice-President, Programs, Canadian Food Inspection Agency, Evidence, Meeting No. 24, 1st Session, 41st Parliament, Ottawa, February 13, 2012,1605.
[27] Dr. Evan Fraser, Associate Professor, University of Guelph, Evidence, Meeting No. 25, 1st Session, 41st Parliament, Ottawa, February 15, 2012, 1705.
[28] For example, Farm Credit Canada announced a new Young Farmer Loan on April 12, 2012. This new loan offers qualified producers who are under 40 years of age loans of up to $500,000 to purchase or improve farmland and buildings.
[29] Ms. Virginia Labbie, Senior Policy Analyst, Canadian Federation of Independent Business, Evidence, Meeting No. 14, 1st Session, 41st Parliament, Ottawa, November 24, 2011,1650.
[30] Mr. Mike Bast, Director, Western Canadian Wheat Growers Association, Evidence, Meeting No. 21, 1st Session, 41st Parliament, Ottawa, February 1, 2012,1650.
[31] Mr. Martin Harry, Chair, Canadian Soybean Exporters Association, Evidence, Meeting No. 23, 1st Session, 41st Parliament, Ottawa, February 8, 2012,1600.
[32] Mr. Michael Hugh Nicholson, Executive Vice-President, National Steel Car Limited, Evidence, Meeting No. 16, 1st Session, 41st Parliament, Ottawa, December 1, 2011, 1530.
[33] Mr. Nil Béland, Member, Board of Directors, Éleveurs de volailles du Québec, Evidence, Meeting 17, 1st Session, 41st Parliament, Ottawa, December 6, 2011, 1630.
[34] Mr. David Fuller, Chair, Chicken Farmers of Canada, Evidence, Meeting 18, 1st Session, 41st Parliament, Ottawa, December 8, 2011, 1555.
[35] Mr. Joe Brennan, Chair, Potatoes New Brunswick, Evidence, Meeting 17, 1st Session, 41st Parliament, Ottawa, December 6, 2011, 1545.
[36] Ms. Catherine Scovil, Associate Executive Director, Canadian Pork Council, Evidence, Meeting No. 18, 1st Session, 41st Parliament, Ottawa, December 8, 2011, 1640.
[37] The Risk Management Program (RMP) is an example of a program that masks market signals and offers no incentives to increase efficiency or expand markets. The recent Drummond Report in Ontario describes RMP as a stabilization incentive, rather than an industry transformation program, calling it “an example of a business support program in which incentives are not aligned with productivity growth and market principles.”
[38] Mr. Arden Schneckenburger, Farmer, Evidence, Meeting 19, 1st Session, 41st Parliament, Ottawa, December 13, 2011, 1550.
[39] Mr. Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch, Department of Agriculture and Agri-Food, Evidence, Meeting 11, 1st Session, 41st Parliament, Ottawa, November 15, 2011, 1610.
[40] Mr. Nirmal Dhaliwal, Director, Okanagan Tree Fruit Cooperative, Evidence, Meeting 19, 1st Session, 41st Parliament, Ottawa, December 13, 2011, 1535.
[41] Mr. Jim Gowland, Farmer, Evidence, Meeting 19, 1st Session, 41st Parliament, Ottawa, December 13, 2011, 1545.
[42] Mr. Travis Toews, President, Canadian Cattlemen's Association, Evidence, Meeting No. 20, 1st Session, 41st Parliament, Ottawa, December 15, 2011, 1630.
[43] Ms. Terri Holowath, Partner, Assurance and Accounting, Catalyst, Evidence, Meeting No. 18, 1st Session, 41st Parliament, Ottawa, December 8, 2011, 1720.
[44] Ms. Connie Patterson, Regional Administrator, BC Breeder and Feeder Association, Evidence, Meeting No. 17, 1st Session, 41st Parliament, Ottawa, December 6, 2011, 1600.
[45] Mr. Ray Orb, Vice-President, Saskatchewan Association of Rural Municipalities, Evidence, Meeting No. 17, 1st Session, 41st Parliament, Ottawa, December 6, 2011, 1550.
[46] Mr. Travis Toews, President, Canadian Cattleman’s Association, Evidence, Meeting No. 20, 1st Session, 41st Parliament, Ottawa, December 15, 2011, 1545.
[47] Mr. Jean-Guy Vincent, Vice-President, Board of Directors, Canadian Pork Council, Evidence, Meeting No. 18, 1st Session, 41st Parliament, Ottawa, December 8, 2011, 1540.