Agriculture and Agri-Food Canada IICA Videoconference on Agricultural Policies

Transcription

1 Agriculture and Agri-Food Canada IICA Videoconference on Agricultural Policies

2 Overview A. The Canadian agriculture and agri-food sector B. Federal, provincial, and territorial roles and the Growing Forward 2 policy framework C. The key challenges that are transforming the agricultural sector 2

3 A. THE CANADIAN AGRICULTURE AND AGRI-FOOD SECTOR 3

4 Agriculture plays a significant role in the Canadian economy 205,730 farms (2011) Generates $103.5 billion of GDP (2012) Provides one in eight jobs in Canada, employing over 2.1 million people (2012) $43.6 billion in export sales (2012) World s fifth-largest exporter $32.3 billion of imports (2012) World s sixth-largest importer 4

5 The Canadian context for agriculture is diverse Across the provinces there is significant variation in commodity mix, while the primary agriculture and food processing industries account for varying shares of the provincial GDP Regional Market Receipts by Commodity, 2012 Of the GDP generated by the Canadian primary agriculture and food processing industries in 2012, more than three quarters (80%) could be attributed to the four provinces of Ontario, Quebec, Alberta and Saskatchewan. 5

6 Exports are critical to the profitability of most of the sector Canada s large production base and small population make exports essential Export markets are very important to the 80% of primary production that isn t supply managed For key commodities like grains, oilseeds, pork and beef, over half of primary production is exported Production of export-oriented commodities has grown significantly faster than domestically-focused commodities But growth in trade, driven by processed products United States and Mexico the most important destinations and emerging markets will provide major growth opportunities in the future 6

7 B. Federal, provincial, and territorial roles and the Growing Forward 2 policy framework 7

8 Governments in Canada have traditionally played a supporting role in the sector The role of government has included: Stabilization of Income Science Strategic investments Inspection and quality assurance Trade advocacy, promotion, and negotiation Structural underpinnings (supply management) Legislation and regulatory environment Agriculture and Agri-Food Canada and the portfolio are structured to promote the development, adaptation and competitiveness of the agri-food sector In 1994, the department s name was changed to include agri-food, expanding its role to include processing, food manufacturing and food service industries, in addition to the traditional domain of primary agriculture 8

9 Federal, provincial and territorial governments share jurisdiction On the farm (primary agriculture) Concurrent jurisdiction of federal and provincial governments (S. 95 of the Constitution Act) S. 92 (13) provides provinces with jurisdiction over issues such as environmental regulation, land use and tenure Beyond the farm A mix of federal and provincial shared jurisdiction Processing is shared jurisdiction Property and contract issues are provincial Interprovincial and international trade are federal Transport, depending on mode and location, can be federal or provincial 9

10 FPT relationships centred on multilateral policy frameworks Agricultural Policy Framework ( ) and Growing Forward ( ) provided strong policy directions APF: food safety, environment, renewal, innovation, environment, business risk management (pillars) GF: competitive and innovative sector, a sector that contributes to society s priorities, a sector proactive in managing risks Growing Forward 2 (GF2, ) represents an evolution of these frameworks towards creating an innovative, competitive, adaptable and profitable sector Producers being encouraged to manage normal risks while governments focus assistance on disasters Adapting to global environment Food and non-food uses of commodities Increased PT flexibility to address regional needs 50 percent increase in funding for cost-shared strategic initiatives (non-brm) Reduced BRM, but still effective coverage 10

11 Key highlights of the Growing Forward 2 framework GF2 intent is to achieve a profitable, sustainable, competitive and innovative sector that is market-responsive, adapts to changing circumstances and contributes to the well-being of Canadians $3 billion investment over five years for green-box Strategic initiatives in priority areas $1 billion in federal-only programs $2 billion in cost-shared strategic initiatives ($1.2 billion federal; $0.8 billion PT), representing a 50 percent increase compared to GF Funding for research and piloting of new private-sector insurance products Complete and effective suite of Business Risk Management (BRM) programs to protect against severe market volatility and disasters Ensuring programs do not impede adaptation and innovation 11

12 GF2 Strategic Initiatives (non-brm) Three priorities: Innovation, Competitiveness and Market Development, and Adaptability and Industry Capacity $2 billion in FPT cost-shared strategic initiatives delivered by PTs Programs are cost-shared between the federal (60%) and provincial/territorial (40%) governments PTs have the flexibility to design and deliver GF2 programs that respond to the specific needs of their sector, while aligning with GF2 objectives E.g., environmental initiatives and on-farm water infrastructure Some activities ineligible: e.g., income support, provincial or local branding $1 billion in national programming delivered by the federal government: AgriInnovation AgriMarketing AgriCompetitiveness 12

13 GF2 Business Risk Management AgriStability: assists in cases of large margin declines caused by circumstances such as low prices and rising input costs Reforms: 70% margin coverage, limited reference margins, and harmonized compensation rates AgriInvest: helps cover small margin declines Producers can contribute up to 400% of Allowable Net Sales (ANS) and receive a matching government contribution of up to 1.0% of ANS to a maximum of $15,000 each year AgriInsurance: offers protection for specified production losses caused by hail, drought, flooding, disease and other natural hazards Will seek ways to incent private sector offerings, especially for livestock AgriRecovery: a disaster relief framework which provides a coordinated process for FPT governments to assess and respond to disasters The AgriRecovery Framework has been refined to better target assistance to focus on extraordinary costs to recover from a disaster 13

14 Growing Forward 2: Canada s Agricultural Policy Framework Strategic Initiatives $3 billion Business Risk Management Demand-Driven Funding* AgriStability AgriInsurance AgriInvest AgriRecovery Federal-Only Programs $1 billion AgriInnovation AgriCompetitiveness AgriMarketing What s new in GF2: Greater focus on innovation Streamlined programs FPT Cost-Shared Initiatives $2 billion* PT-specific initiatives Delivered by PTs 60:40 (F:PT) costshared What s new in GF2: Greater PT flexiblity 50 percent increase in cost-shared funding over GF1 What s new in GF2: AgriStability: Reduce coverage from 85% to 70% of producer s reference margin Limit producer s reference margin to historical allowable expenses Harmonize compensation rates at 70% of producer s margin loss AgriInvest: Government matching contributions reduced from 1.5% of a producer s Allowable Net Sales (ANS) to 1% ANS Limits on account size effectively removed All figures are five-year totals *Cost-shared 60:40 (F:PT) 14

15 C. The key challenges that are transforming the agricultural sector 15

16 Market demand is changing with population and income growth in emerging economies Middle class growing along with GDP in many developing countries High proportion of each new dollar spent on food As income increases, diets shift towards higher-value products Rising demand for oilseeds and protein 16

17 These same emerging markets are also competitors Middle income countries like China, Brazil and India are increasing their R&D investment China s public research spending tripled between 1991 and 2007 from $473 million to $1.5 billion USD (OECD) 17

18 Additional challenges Consumer preferences are fluid and fickle Value for money continues to be a top concern, followed by nutritional value and food quality Brand reputation also important 58% of consumers base decisions on brand trust Food buying decisions on social values or ethics-based attributes (e.g. environmental concerns, animal welfare, fair trade, etc.) growing in importance Resource constraints demand greater efficiency Competition for water Increase in extreme weather events High energy and nutrient prices 18

19 Agricultural innovations poised to answer the call Recent McKinsey Report on Disruptive technologies identified 12 technologies that will transform life, business, and the global economy Almost all of these have the potential to have impacts on agriculture Most important technology streams for agriculture include: Genomics Advanced Robotics Big data/data processing 19

20 The role of governments in innovation Research Germplasm R&D historically through public research (AAFC and NRC) Still true in many crops, most notably cereals Strong role in addressing public good and precompetitive research for which private interests are not well suited Honest Broker for Collaboration Encouraging and facilitating dialogue Public-private partnerships (e.g. Canadian Wheat Alliance) Provincial governments also have an important role to play (e.g. SK leadership in Wheat Summits) Creating an enabling environment Agricultural Growth Act will bring updates to Plant Breeders Rights Continuing Red Tape Reduction Initiative New variety registration policy will streamline process, speed uptake $468 million in funding for industry-led projects through AAFC s AgriInnovation program 20

21 Conclusion The agriculture and agri-food sector is diverse across the country and contributes to a strong Canadian economy GF2 represents a significant investment by FPT governments towards a more profitable, sustainable, competitive and innovative sector Innovation is key to addressing the challenges and seizing the opportunities facing the sector and governments have an important supporting role to play 21