INTRODUCTION

Since 2003, a five-year federal-provincial-territorial (FPT) agreement has framed the policies and programs established to support Canada’s agricultural and agri-food industry. The current policy framework, Growing Forward 2 (GF2), expires on 31 March 2018, and the FPT ministers officially launched the agreement renewal process by signing the Calgary Statement in July 2016. The Statement sets out the key elements of the next policy framework that will be the successor to GF2.

As was the case when GF2 was being developed, the Standing Committee on Agriculture and Agri‑Food (hereinafter, the “Committee”) wanted to consult the agriculture and agri‑food sector on the next policy framework. On 2 May 2016, the Committee adopted the following motion:

That the Committee undertake a study on Canada’s next multi-year agricultural policy framework at its earliest convenience, including sections on Canada’s suite of farm income safety nets and the role of discovery science and innovation in the sector; that the Committee hear from government officials and a wide and diverse range of industry representatives and interest groups from every region of the country; and that the Committee report its findings to the House.[1]

The Committee held 11 public hearings between June and December 2016. It consulted representatives of various industries in the agriculture and agri-food sector, as well as representatives of Agriculture and Agri-Food Canada (AAFC). This report first provides background information on the next policy framework. Subsequent sections elaborate on the priority areas identified in the Calgary Statement and address various issues raised by the witnesses who appeared before the Committee.

AGRICULTURAL POLICY FRAMEWORK

The current policy framework, GF2, is the third version of the agricultural policy, succeeding the Agricultural Policy Framework (2003–2008) and Growing Forward (2008–2013). It provides $3 billion in FPT investment to the agriculture and agri-food sector. The three successive policy frameworks are structured in a similar manner and include a suite of business risk management (BRM) programs to help farmers manage the risks of market volatility and disaster situations. They offer non-BRM programs in two categories – federal programs and cost-shared programs delivered by the provincial and territorial governments. The latter are funded 60% by the federal government and 40% by the provincial and territorial governments. Although the framework aims to establish national objectives, the provinces and territories have the flexibility to implement programs adapted to the needs of their producers.[2]

A.  Priorities for the next policy framework

The content of the Calgary Statement builds on past policy frameworks and does not mark a major shift in the approach to program development. The general objectives, as well as the principles of the policy framework, such as the 60:40 federal and provincial/territorial cost-share ratio, are more or less those of GF2. However, the Calgary Statement sets out more priority areas than does the GF2. These priority areas are as follows:

• markets and trade;
• science, research and innovation;
• risk management;
• environmental sustainability and climate change;
• value-added agriculture and agri-food processing; and
• public trust.

Climate change, agri-food processing and public trust are explicitly defined in the policy framework as priority areas for the first time.

Some witnesses believe the new policy framework should set ambitious goals for the agriculture and agri‑food sector. The National Cattle Feeders’ Association believes that Canada is well positioned to become an agriculture superpower because of its resource base, know‑how and modern production technologies, suitable climate, and internationally recognized food safety system. The sector could double its current value to $200 billion and 15% of GDP, and increase its exports from $60 billion to $100 billion.[3] The world’s population is expected to grow to 9.6 billion by 2050. This will require a 70% increase in global food production. Canada is well positioned to play a vital role in feeding Canadians and the world with its safe, high-quality products.[4]

Witnesses pointed out that agriculture is an important sector in the Canadian economy and that sustainable growth, innovation and competitiveness must be fostered. However, some believe that the success of the next framework will require commitments that extend beyond the mandates of the Department of Agriculture and Agri-Food.[5]

On missing components, an agricultural policy framework confined to the mandates of the Minister of Agriculture and Agri-Food is not sufficient for a sector that is impacted broadly and deeply by other government departments and agencies. It is vitally important that there be a whole-of-government commitment to policy, programs, and decisions that support increased agriculture and agrifood production, value added, innovation, exports, investment, and jobs.[6]

Similarly, witnesses told the Committee that the agriculture and agri-food sector requires strategic support from the government to ensure its growth and prosperity. A whole-of-government approach is needed to achieve these objectives.

I believe that every department involved in food processing – agriculture, health, industry, transport – should have an open door for our business and not work in a silo. We need to have the departments involved in food processing talking to each other, and if possible have a committee. The departments need to work together and have an open mind on how we can develop a strategy that will involve everybody.[7]

Recommendation 1

The Committee recommends that the Government ensure that all other governmental departments and agencies integrate the new agricultural policy framework to ensure a whole-of-government approach to maximize the expected short- and long-term impacts.

Many witnesses also stressed the importance of adequately funding both current priorities and new priorities in the policy framework.

B.  Program administration

In addition to the whole-of-government approach, witnesses cited seamless transition from one framework to the next as a necessity for success. In fact, government representatives are hoping that the ministers will sign the multilateral agreement by July 2017 to ensure a timely transition for getting programming in place.

Then we’ll have time to either start soliciting applications and start sending signals to stakeholders that the existing programs are going to continue or, if there are new programs, we can start to advertise them and solicit applications into those programs so that when we get to April 1, 2018, we’re not starting from zero. We will already be in place so that we can have programming up and running, particularly on the innovation side of things, in those science clusters in particular.[8]

Although many programs are available, farmers deplore the administrative burden, the complexity of the application process and the slow approvals process. The Dairy Processors Association of Canada (DPAC) indicated that this complexity is reflected in the time spent looking at available programs and contacting different departments regarding eligibility criteria, forms and deadlines. Smaller industries and small businesses do not necessarily have the means to deal with complex administrative tasks.[9] Several witnesses suggested simplifying the application process and making it easier to understand.

[I]f the agriculture policy framework, the application process, the ability to understand, were better, and if it were more transparent for them to fill out the application and get the application through simply, that would be much easier for them. The big farms will potentially have a person who is in charge of filling out all of this paperwork, whereas the small farmers might not have that. It's making that simpler for them to do that.[10]

The DPAC recommends that the government create a “one-stop shop” to facilitate investment.[11]

Several witnesses also mentioned the need to maintain consistency in application documents and requirements for in-kind and cash contributions.[12] Moreover, effort must be made to ensure that the application process is more transparent. Some of the common complaints pertain to changes to the application criteria and timelines. To enhance the transparency of the decision‑making process, the Canadian Federation of Agriculture (CFA) recommends that the government establish a clearly defined application process and rules.[13]

Aside from greater transparency in the approval process, several witnesses suggested streamlining application processes. They also want programs to be more flexible in taking into account changes and natural cycles within agriculture. This would allow readjustments along the way.[14]

AAFC representatives acknowledge that there are problems with the program application process. That is why online applications, online payouts and online management of the interface with program officers and applicants were introduced. The federal and provincial governments are currently looking at options for standardizing applications so that information is collected only once.[15]

Recommendation 2

The Committee recommends that the Government ensure a seamless transition from one policy framework to the next and implement a simple and transparent mechanism for processing funding applications.

MARKETS AND TRADE

A.  Canada: A net exporter of food products

Canadian agriculture and agri‑food exports make a significant contribution to the Canadian economy, generating direct and indirect benefits of $30 billion for the agriculture sector and over $65 billion for the food manufacturing sector. Canada’s agriculture and agri‑food sector is dependent on trade; more than half of everything the country produces is exported: over 50% of our beef production, 65% of our soybeans, 70% of our pork, 75% of our wheat, 90% of our canola, 95% of our pulses and 40% of our processed food products.[16] In 2014, 52% of Canadian fruit and vegetable production was exported, representing a farm-gate value of over $2.1 billion.[17] Canada is one of the few countries that is a net exporter of food.[18] In 2015, Canada exported over $60 billion of agriculture and agri‑food products.[19]

International trade is crucial for Canadian agriculture and agrifood, as 58% of its total value is generated through exports. Over the last 10 years our exports have grown by 103%, from $30 billion to over $60 billion, boosting farm cash receipts by 61% over the same time period. To put this in perspective, 90% of farmers rely directly on exports. One in two jobs in crop production depends on exports, and one in four jobs in food manufacturing, so for our trade-dependent sectors, competitive access to global markets is simply not a choice but a requirement.[20]

Several witnesses stressed the importance of having access to markets to ensure Canada’s growth and prosperity. The growth potential of Canada’s agriculture and agri-food sector is very significant because of projected increases in world population combined with income growth and urbanization. Furthermore, AAFC representatives anticipate that a sharp increase in demand from China, India, Southeast Asia and Indonesia will create major export opportunities for Canada.[21]

B.  AgriMarketing Program

The AgriMarketing Program, a federal-only program, provides funding for market development and promotion activities, and for the development of national quality assurance systems and standards. Witnesses told the Committee they greatly appreciate this program and recommend its renewal in the next policy framework. They mentioned a number of areas in which this program could have a significant impact.

Several witnesses commented that, in order to access new markets and take advantage of trade opportunities, it is important to have a good understanding of the needs of both foreign and Canadian markets. To maintain and enhance the sector’s competitiveness, it is important not only to understand market needs but also to grow the right products to ship into these markets and to implement the right trade agreements to ensure free and open trade with those markets.[22] Products under the supply management system are essentially local products that respond to consumers’ demand for fresh, high‑quality products.[23] Although supply management offers trade opportunities to export products, Dairy Farmers of Canada (DFC) cautioned that these markets should not be developed at the expense of the domestic market.[24]

To set themselves apart from the competition, several industries have adopted brand strategies. Many companies are promoting their brand by focusing on environmentally friendly and sustainable practices because they know that consumers care about environmental sustainability.[25] Other industries, such as the pork industry, have worked hard to brand Canadian products internationally as premium products and as safe products.[26] The organic sector has been using the AgriMarketing Program to promote the Canadian brand abroad and to create export opportunities for more than 100 processors, traders and growers across the country.[27] Equivalency agreements with the United States (U.S.), Europe, Japan, Switzerland and Costa Rica to recognize foreign organic standards give Canada access to 90% of the global demand for organic products.[28] Nonetheless, the organic industry is concerned that its brand will collapse if the government decides not to fund the next review of the Canadian organic standards. These standards are reviewed every five years to keep them relevant and compliant with international equivalency agreements. The most recent review of the organic products standards cost the industry and government more than $1 million ($300,000 coming from the AgriMarketing Program).[29]

If our government chooses not to fund the next review of the Canadian organic standards in 2020, this would likely lead to a collapse of the Canada organic brand and would invalidate all our international equivalency agreements. I urge this committee to not let that happen, and secure support for the maintenance of Canada’s organic standards in perpetuity in the next agricultural policy framework.[30]

The AgriMarketing Program has also helped numerous industries penetrate new markets through promotional and branding activities on the international scene,[31] and has helped the sector resolve market-access issues at the international level.[32] For example, the canola industry has established a canola oil promotion program in China and Korea that has helped to increase exports to these markets by $850 million per year over the last five years. AgriMarketing funds have also allowed the creation of export opportunities for more than 100 organic processors, traders, and growers.

Nonetheless, DPAC suggested that the market development stream should allow companies with more than 250 employees and annual sales exceeding 50 million to be eligible.[33] In light of the recent revocation of TraceCanada’s funding, DFC recommended that AAFC provide stable funding for livestock traceability projects under the Assurance Systems stream of the AgriMarketing Program,[34] because Canada needs a functional traceability system.[35]

Witnesses also hope that the next policy framework will continue to support efforts to improve the performance of Canada’s transportation system, as it is a key element in the sector’s success.[36] In order to be able to take advantage of new trade opportunities, the agriculture and agri-food sector must be able to count on reliable transportation. AAFC representatives indicated that the issue of transportation falls outside the scope of the policy framework and that the department has limited responsibilities in that regard. Nonetheless, they assured the Committee that AAFC is working with colleagues from Transport Canada and other departments to make sure they understand the challenges that infrastructure creates for the agriculture sector.[37]

The last time we applied for funding under GF2 to address transportation, we did it as a coalition. We did it as an agriculture industry that had come together to support a long-term strategy, and one of the challenges we faced in the early goings-on was the fact that the policy framework was established to promote trade and didn't exactly acknowledge the role that transportation plays in facilitating trade, so the department had to work very hard to make necessary adaptations to allow for such an innovative proposal to come forward. […] There is a recognition now that the next policy framework must accommodate innovative work that needs to be undertaken with respect to transportation, and continue to support that going forward.[38]

Recommendation 3

The Committee recommends that the Government renew the AgriMarketing Program within the next policy framework.

C.  Strengthening the government’s international trade capacity

1.  Trade agreements

To ensure its growth, it is important for the sector to have significant access to international markets and for trade barriers to be removed. Many witnesses believe it is essential to have trade agreements in place, which is why they are encouraging implementation of trade agreements such as the Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP) Agreement.

In light of the current uncertainty surrounding the TPP, some witnesses believe that Canada should consider resuming trade discussions with Japan.[39] The Canadian Cattlemen’s Association (CCA) is pressing the government to enter into bilateral negotiations with Japan as soon as possible so that Canada’s cattle industry can reclaim Japanese consumers. Because of the free trade agreement between their two countries, Australian producers enjoy a preferential tariff in the Japanese market.[40]

Japan is our third export market and a high-value market. The EU is negotiating free trade agreements with Japan, Vietnam, and Malaysia. Some of the other TPP members – Australia is one of them – already have a bilateral agreement with Japan. The more we wait, the more we fall behind.[41]

While some industries are pleased with CETA and TPP, the supply management sector is concerned that implementing these agreements could result in significant losses. The dairy industry estimates that CETA could result in potential losses of $720 million annually and the loss of some 2,900 jobs if measures are not implemented to mitigate these losses. The dairy industry recognizes that it must find ways to adapt under the new environment created by CETA; however, it needs the support of government.[42] Although the government has assured the supply management sector that it will provide transition funding, the sector does not know what form it will take.[43]

2.  Trade barriers

While Canada is increasing its free trade agreements, thus eliminating more and more tariff barriers, the country continues to face barriers that prevent it from capitalizing on trade opportunities.[44] These are primarily non-tariff barriers pertaining to food safety and plant protection.[45] For example, the issue of maximum residue limits (MRLs) of pesticides complicates Canada’s exports. The problem lies in the fact that various organizations including the Codex Alimentarius at the international level, the European Food Safety Authority, the Pest Management Regulatory Agency in Canada and the Environmental Protection Agency in the U.S. cannot agree on the process or timing for establishing MRLs. Rather than strengthening harmonization at the international level, several countries are moving away from the Codex to establish their own standards.[46]

Pulse Canada and its partners across the agriculture sector strongly support an expansion of efforts under the next policy framework to identify and manage this specific category of trade vulnerabilities. There is a need to quantify and build data on the growing extent of misalignment of MRLs in order to more precisely identify and manage specific risks. Reliable data will assist in management of vulnerabilities and corrective action, as well as development of common positions within grower and community groups internationally on the need for predictable, science-based international standards and trade rules.[47]

Other trade barriers include the approval of biotechnology products, sanitary and phytosanitary measures,[48] technical barriers,[49] import quotas, export subsidies, countervailing duties, special licences, non-science-based decision‑making on the safety of food products, bureaucratic delays, and export restrictions.[50]

According to the CCA, these barriers often appear once the trade agreements are implemented.[51] At present, there are in excess of 300 foreign market access barriers on the priorities list maintained by the AAFC’s Market Access Secretariat (MAS).[52] Witnesses told the Committee that the service provided by the MAS is critical to resolving issues pertaining to trade barriers and improving market access. In their opinion, it is unlikely that all of the barriers identified by the MAS will be actioned. They deplore the lack of resources in organizations that support industries in their export activities.

We used to have a CFIA that had a meat division, and the whole division would get involved in trying to negotiate these access barriers in foreign countries. They reorganized and made an import and export division. We had one person in that division for a couple of years who had the whole meat sector. It was one person. Now she has a bit of help, but there just aren’t the resources there to do it.[53]

Several witnesses agreed that limited government resources are hampering the Canadian agriculture and agri‑food sector’s export capacity. They recommended increasing the resources of the various organizations that provide international trade support.[54] The witnesses also mentioned that international agreements that are science‑based and internationally recognized by everyone would help to improve market access. With respect to sanitary and phytosanitary standards, the establishment of a single, effective international organization that sets an MRL that all import countries respect would be an asset for many exporting countries.[55] Witnesses suggested more active and better-funded Canadian participation in international standard-setting bodies.[56]

3.  Market development support

Several witnesses stressed the need to continue to provide trade commissioners overseas to improve market access and facilitate trade relations. Trade missions and market research studies have also helped several industries build and retain markets.[57]

The policy framework should allocate proper resources to the network of Canadian representatives abroad, notably embassies and agriculture trade commissioners. Canada’s ability to build a competitive industry depends in large part on how well the country opens doors abroad and builds and leverages relationships with relevant government and industry influencers and decision-makers.[58]

Witnesses agreed that it is important to invest in market development in order to ensure the sector’s success and growth. Nonetheless, a number of them said that those investments should not focus solely on international markets, because there is enormous potential to capture domestic market share in sectors such as the sheep industry.[59]

Recommendation 4

The Committee recommends that the Government deploy the necessary resources in organizations that support international trade in order to increase the sector’s export capacity.

RESEARCH, SCIENCE AND INNOVATION

Canada’s agriculture and agri‑food sector is one of the most technologically advanced sectors.[60] Thanks to technological progress, like genomics and the use of GPS for precision agriculture, several agricultural sectors have increased their yields and productivity. Research, science and innovation are key elements in the current policy framework and are expected to continue to be such in the next framework.[61]

A.  Importance of research, science and innovation

The witnesses all agreed that research, science and innovation are critical to maintaining and enhancing the sector’s competitiveness, both internationally and domestically, and to enhancing its ability to respond to environmental challenges and changing consumer demands. Witnesses urged the government to renew funding for the next policy framework, as it is one of the key drivers of the sector’s success. A significant portion of the GF2 funds are already being used to support innovation.

In Growing Forward 2, at the federal level we’ve allocated almost $700 million over the five years towards science and innovation activities. That’s a combination of some of the work we do internally with our scientists and innovation activities led by the industry, whether it’s through our science clusters or individual projects. The provinces are supporting innovation through Growing Forward 2 in the range of about $700 million to $800 million on top of that. A significant portion of the Growing Forward 2 funds are being used to support innovation.[62]

Support for innovation not only means support for research and for the development of new technologies in Canada. It also means ensuring access to the latest technologies from outside the country. For example, Peak of the Market, a horticultural business in Winnipeg, invested in state‑of‑the‑art equipment that helped the company increase its productivity. While the majority of the new equipment was made in Canada, some pieces were sourced and customized in the Netherlands, Germany and the U.S.[63]

B.  Innovation programs

Witnesses told the Committee that, overall, they are very happy with the innovation programming. They like the fact that it brings a range of partners together to collaborate in certain sectors.[64] Nonetheless, measuring the impact of innovation is a real challenge; it is difficult to track the investments made in GF2 because the impacts happen over a long period of time. Various research and development (R&D) studies have shown that the rates of return of innovation in agriculture are quite high, and there are multiple impacts. The canola industry did not exist two decades ago. Today, it is a flourishing $19‑billion industry.[65]

Canola was developed in Canada from federally funded research in the 1970s. Since then, the private sector has picked up the ball in variety development and joint investment in research that has helped producers significantly improve their yields, increase their profitability, and reduce production risk from pests and other stressors, all while increasing the sustainability of the crop. Industry and government investment has also uncovered valuable properties of canola products that have increased market demand. Those properties are key to our market development programs globally.[66]

Investments in advanced technologies, and R&D in Canada has not kept pace with our competitors.[67] According to some witnesses, the regulatory environment is making Canada less attractive to investment and is more onerous compared to 2014.[68]

1.  AgriInnovation and agri‑science clusters

Various industries have had great success with the agri‑science clusters funded under the AgriInnovation Program. For example, the Canadian Field Crop Research Alliance’s cluster, which supports research to genetically enhance field crops, has released 63 new soybean varieties in the last six years.[69]

Several witnesses told the Committee that agri‑science clusters have been a very positive force in the industry and have encouraged collaboration among various industry stakeholders, including the private sector, universities and the public sector to ensure greater efficiency in research.[70] Witnesses believe that the collaborative approach and the existence of good research networks have been vital to ensuring the competitiveness of Canada’s agriculture and agri-food industry.[71] However, a successful model of collaboration such as that of the Netherlands must not be limited to farming activities. A successful partnership requires the participation of all stakeholders throughout the value chain, including stores, restaurants and households.[72]

In addition to encouraging collaboration among the various stakeholders in the sector, the cluster approach stimulates significant investment in research projects since it ensures that funding is targeted to areas that matter most to the industry. Indeed, government support encourages the industry to invest in research that can benefit the entire industry.[73] The beef science cluster, for example, has made significant investments in areas such as animal health and care, environmental sustainability and antimicrobial resistance.[74] The industry needs these investments to increase productivity, maximize production, enhance environmental stewardship, and improve feed quality and animal health.[75] Furthermore, clusters have made it possible to conduct costly, long-term research such as clinical trials on human nutrition and health research.[76]

In addition to conducting valuable research, the cluster program has allowed the industry to communicate information in a way that is easily understood. This sharing of research results enables the industry to make better decisions.[77] However, a number of witnesses feel that AgriInnovation is not putting enough emphasis on knowledge dissemination. They want the next policy framework to ensure effective and timely dissemination of research findings and new knowledge, and want technology transfer to be well funded.[78]

2.  Administration and funding

Although the witnesses greatly appreciate the AgriInnovation Program, the funding period does not necessarily coincide with the duration of the research. Witnesses also said that they do not want the funding period to be limited to five years; they would like it to be spread out over several years. The poultry industry, which, unlike the pork and beef industries, has no federal research facility, would like the funding period to be extended to allow for a more flexible approach to ongoing research that can address needs as they emerge.[79] Greater flexibility would also allow the industry to access funding when issues arise midway through the program.[80] A number of witnesses reminded the Committee that having an excessively rigid framework or set of criteria would make it difficult to pursue the sector’s goals.[81] Several witnesses also stressed the importance of stable funding to ensuring the effectiveness of research projects.

Research funding, however, must not end with the conclusion of research projects. Research that can’t be implemented in real time is of very little benefit if it can’t be translated by stakeholders into profitability and productivity.[82]

The DPAC mentioned that red tape and the financial design of the AgriInnovation Program are two of the shortcomings that prevent the program from leveraging its full potential as part of Canada's economy.[83] Industry investment in R&D in Canadian food processing is low. Moreover, the public sector rarely includes the food processing industry in its research projects.[84] For example, the existing food processing science cluster excludes dairy processing. DPAC has recommended that a cluster be created specifically for dairy processing.[85] Food and Consumer Products of Canada recommended encouraging more R&D companies to invest in the food processing industry.[86]

It was also mentioned that the smaller industries do not necessarily have the funding or administrative capacity to support a cluster, yet their activities have a considerable impact on the entire agriculture and agri-food sector.[87] To enable small industries to participate in cluster programs, the CFA suggested creating a model with a second-tier funding match formula and coordinated or pooled administrative support.[88] The smaller industries would perhaps get up to 90% of the funding.[89]

Some witnesses support continuing with the current model of 75% federal government and 25% industry funding for research. Others, however, are concerned that reducing the government contribution might increase the industry’s financial burden[90] and decrease research capacity and efforts.[91]

We are concerned that reducing the leverage from its current three to one would penalize industry, discourage growth in industry investment, and negatively impact other planned research programming. This would be a perverse outcome for sectors that have undertaken great efforts to invest in themselves.[92]

Some industries indicated that the current 75:25 cost‑share ratio is too high. This is especially true for smaller industries, such as the sheep industry, which support multiple projects at the same time.[93] The organic sector is concerned that reducing the government’s cost share might lead the industry to focus its research funding on proprietary projects rather than on projects of general public interest, such as sustainability and pollution reduction.[94]

Recommendation 5

The Committee recommends that the Government maintain an appropriate cost‑share ratio for the agri-science cluster component of the AgriInnovation Program and provide appropriate financial and administrative support to smaller industry organizations to support their participation in innovation programs.

VALUE-ADDED AGRICULTURE AND AGRI-FOOD PROCESSING

A.  Importance of the food processing sector

The food processing sector is the largest employer in the Canadian manufacturing sector. It employs some 300,000 Canadians in over 6,000 facilities across the country, which is more than the automotive and aerospace industries combined.[95] In addition to being the country’s largest employer, the Canadian food processing sector is the main customer for agricultural producers. Processors purchase about 40% of the output of Canada’s primary agriculture sector.[96] In Quebec, this figure rises to over 70%.[97] The food processing sector makes a major contribution to society by adding value to agricultural products and creating jobs. The sector ships more than $90 billion in goods each year.[98]

Despite its substantial contribution to the Canadian economy, the food processing sector feels somewhat ignored by government policy. Only 5% of Agriculture and Agri-Food Canada’s total spending is allocated to the food processing sector. The sector claims to be underrepresented and underfunded relative to its importance and potential, as it received only a tiny amount of funding in the Growing Forward 2 framework.[99]

B.  Challenges facing the food processing sector

Attracting investment is a major challenge for the food processing sector. Processors need to invest in modern facilities and equipment to be productive, innovative and competitive in Canada and abroad. A 2014 KPMG report entitled Technology Readiness Assessment of Automation and Robotics in the Food and Beverage Processing Sector in Canada found that Canada’s food processing sector is lagging behind its European and American competitors in the areas of automation and robotics. Cost is the main barrier to adopting these technologies.[100] In the Netherlands, the government provides substantial funding to the food processing sector because it recognizes food processing as a strategic sector both for the economy and for food security.[101]

Some Canadian industries, such as the canola and soybean industries, have not hesitated to invest heavily in food processing. Thanks to these major investments, the canola industry has shown enormous growth in value-added processing.

Over the last decade, the industry has invested more than $1.3 billion in processing plants – either expansions or new builds – increasing the amount of canola processed in Canada by 150%.[102]

We are very hopeful that there can be some investment in western Canada in processing. There are three significantly sized processing facilities in eastern Canada. Two are in Ontario, and one is near Trois-Rivières, Quebec. […]  Their crush is up this year from previous years.[103]

In addition to their investment challenges, food processors are facing a labour shortage. Many processing plants operate at only 70% efficiency because they do not have enough workers. This lack of labour hurts the food processing sector’s competitiveness and prevents it from increasing its market share.[104]

A number of witnesses were delighted to see the food processing sector included among the priorities of the next agricultural policy framework. The sector expects the next policy framework to pay it more attention and provide it with the support it needs to grow.

According to Ms. Carla Ventin, Vice-President, Federal Government Affairs, Food and Consumer Products of Canada, this future support should focus on capital investment, the integration of new technology, innovation, research, and significant access to international markets, as Canada is currently running a trade deficit in processed food.[105] Several witnesses agreed that a greater emphasis on investments in value-added agriculture and agri-food processing is needed. Such investments could help the sector develop and keep the jobs and value added in Canada.[106]

The CFA supports the idea of greater investment in the food processing sector. However, the CFA believes the government must ensure the funding provided to processors will clearly benefit Canadian farmers. Furthermore, on-farm processing should be a priority for this investment.[107]

Recommendation 6

The Committee recommends that the Government increase attention to the food processing sector, including on-farm processing, by providing it with the support necessary to increase its productivity and improve its competitiveness to position Canada as a global food leader.

BUSINESS RISK MANAGEMENT

The agriculture sector is highly exposed to various risk factors, such as weather conditions, pests and market volatility that can lead to bad outcomes for farmers. These risks directly affect the profitability and viability of agricultural businesses. The federal government, together with its provincial and territorial counterparts, has established risk management tools to mitigate risk and protect farmers from drops in income that stem from natural disasters and market crashes.[108] These risk management tools include the BRM programs and supply management.

A.  Supply management

The poultry, egg and dairy sectors operate in a supply management system. The witnesses from supply managed sectors believe that this system is one of the best business risk management tools.[109] Moreover, this system provides income stability to farmers while supporting the vitality of rural communities.

It has an ability to contribute to the rural fabric of this country and to the small towns, which we know are under pressure and struggle now, especially with an economy that is basically a little flat over a few years.[110]

Recommendation 7

The Committee recommends that the Government continue to defend and protect supply management.

B.  Business risk management programs

The BRM programs of GF2 grew out of the farm income support programs developed in the late 1990s. Their current names date back to the launch of Growing Forward in 2008. However, some of the programs’ terms and conditions have changed with the introduction of GF2. The BRM programs include the AgriInvest, AgriStability, AgriInsurance, AgriRecovery and AgriRisk Initiatives programs, which protect farm income against various losses.[111]

The BRM programming is expected to be a significant component of the next policy framework, as governments will continue to support producers with a suite of programs that are comprehensive in scope and that assist in managing the impact of severe events that affect the profitability and income of farmers.[112]

Despite the changes made to some of the BRM programs’ terms and conditions since GF2 took effect in 2013, these programs remained useful and enabled farmers to receive nearly $4 billion.[113]

A number of witnesses recognized that the BRM programs are essential tools for protecting their incomes and that they must be renewed and improved in the next policy framework. The witnesses noted that some programs have been more successful than others. Participation rates for the AgriInsurance and AgriInvest programs have remained steady, while enrolment in the AgriStability program has fallen significantly.

Some stakeholders have expressed concerns about the slow payment process, predictability and coverage levels of the BRM programs.[114] Many witnesses proposed ways of improving the BRM programs such as making calculations more transparent, simplifying the application process, issuing payments more quickly and increasing predictability.

In order to be truly effective, any BRM program must be both predictable and responsive in a timely manner to ensure producers can make decisions to react to market conditions today with the confidence and the future protection provided to them through the existing suite of BRM programs.[115]

Some witnesses argued that the next policy framework should include a separate consultation mechanism for the BRM programs. Grain Growers of Canada recommended the creation of an advisory committee made up of representatives of national commodity associations and relevant provincial associations to assess the effectiveness of the current suite of programs and make recommendations to governments.[116]

Recommendation 8

The Committee recommends that the Government ensure that the business risk management programs in the next agricultural policy framework are transparent, quick to respond, simple and predictable and that they better meet the needs of farmers.

1.  AgriInvest

The AgriInvest program is a savings account for producers that is supplemented with matching contributions from the federal, provincial and territorial governments. The governments will match 1% of allowable net sales to a maximum of $15,000 per year. This program helps farmers manage small income declines and supports investments to mitigate risk.

In general, the witnesses are satisfied with the AgriInvest program, as it is simple and costs little to administer, and many producers use it.[117] Farmers appreciate the program because it enables them to accumulate funds and receive government contributions.

However, some witnesses believe the AgriInvest program could be improved. Because of the limits on government contributions, the funds provided by the program would likely not provide meaningful support during periods of severe income declines.[118] Some also argued that the program’s scope is limited.

The AgriInvest program has not been effective in helping hog producers manage the short-term drops that are no longer covered by AgriStability. It is not effective in helping producers make investments to manage risk or improve market income. Even small income drops in commercial-sized operations are not addressed by a maximum government contribution of $15,000 per year. This level does not reflect the economic realities and scale of production of current production practices in Canada.[119]

The witnesses suggested increasing the contribution rate to somewhere between 1.5% and 4.5%; most called for a return to the initial coverage of 1.5%. Increasing the contribution rate to 1.5% and greater flexibility to make use of their own contributions[120] would allow farmers to have more money to make strategic investments.[121] A contribution rate two or three times higher than the current rate could generate funds that producers could use to manage their own risk on their own terms, including by buying private insurance products that meet their needs.[122] The Canadian Horticultural Council argued that the contribution rate should be increased to 4.5% and the caps eliminated. It also called for more flexibility to enable farmers to remove their own funds first on pre-approved investments.[123]

2.  AgriStability

The AgriStability program offers protection against large declines in farm income. Producers receive a payment under the program when their current-year program margin falls below 70% of their reference margin, which is the average margin of previous years. The government covers 70% of the decline below 70% of a producer’s reference margin. The AgriStability program was designed to use historical margins.[124] Products under supply management are given the same level of protection as those that are not.

A large number of witnesses admitted that they no longer participate in the AgriStability program because it does not work as well as it once did. Indeed, the participation rate declined from 60% in 2007 to 36% in 2013 and continues to fall. The complexity of the application, the lack of predictability and delays in payment all played a role in damaging the program’s credibility. When they apply, farmers do not know when and how much they will be paid.[125]

Furthermore, a number of witnesses reported that, because of the changes made under GF2, AgriStability no longer provides adequate support.[126] These changes substantially reduced the level of coverage, making the program less attractive. For example, the threshold for receiving payments decreased from 85% of the reference margin under Growing Forward to the current level of 70%.[127] The grain industry noted that the program was not popular among grain farmers even before the changes,[128] but it acknowledged that the program may be useful in other agricultural sectors, such as livestock production.[129]

According to Grain Growers of Canada, the AgriStability program would not necessarily cover income declines in a diversified operation, as the program is based on a business’s total income.

For example, a farmer may have a hog and a grain operation. If the grain crops fail, the income from the hog operation might keep the farm over the threshold, while they still need the support of BRM programs, which have been already paid for, to overcome losses.[130]

For example, it would be useful to have an AgriStability program that encourages rather than discourages diversification of operations, because many growers, as you know, are involved in several elements of agriculture, but the AgriStability program as it currently stands is organized in such a way that diversified operations often do not meet the threshold for compensation when one element of their operation fails.[131]

Grain Growers of Canada would like to see the AgriStability program become more flexible to accommodate different sizes and types of farms and their locations. In light of AgriStability’s participation rate, Grain Growers of Canada believes that large agricultural businesses are likely the main users of the program. Smaller operations run by new farmers may not be able to use the program because of its administrative complexity and inflexibility.[132]

According to the CCA, the caps on payments under the AgriStability program and the other BRM programs discriminate against large businesses. To ensure all businesses are treated equally, the CCA suggested eliminating these caps.[133]

To restore producers’ trust and draw them into the program, AgriStability must provide a level of support that enables producers to manage their risk. That is why a large number of witnesses called for the restoration of the 85% protection level. However, others said that returning to the former eligibility and coverage criteria would probably not be enough.

Simply returning the program to previous levels may not be enough to address all these concerns. For that reason, CCGA recommends that a national safety net, a national committee of associations, be established to further explore the effectiveness of the current suite of programs and make recommendations on how to refine them in the next agricultural policy framework.[134]

Recommendation 9

The Committee recommends that the Government review the threshold for payments under the AgriStability program to ensure that it provides farmers with adequate protection and flexibility for greater participation.

3.  AgriInsurance

The AgriInsurance program insures against production losses and loss of product quality owing to natural hazards. AgriInsurance covers traditional crops such as wheat, corn, oats and barley, as well as horticultural crops such as lettuce, strawberries, carrots and eggplants. Some provinces also insure bee mortality and maple syrup production.

In general, the witnesses are satisfied with the AgriInsurance program, because it pays out quickly and it is predictable and transparent. The program is also easy to use and administer. Farmers can access the program easily, as it is administered by the provinces. AgriInsurance is one of the most popular and well-funded BRM programs.[135]

Of all the programs in business risk management, that's the one that governments spend the most money on. I would say for the most part it's the most popular program. It's deemed to be predictable in terms of what it would pay out, under what circumstances, and it's transparent in terms of what the farmer has to pay in premiums. Subscription is very high and payouts are quick.[136]

Grain farmers would like to see the AgriInsurance program remain as it is, because it works well and covers production risk. Although farmers pay sizable premiums, the program’s participation rate is steady and significant, as it offers reliable coverage.[137]

Despite the AgriInsurance program’s simple and predictable features, some witnesses, particularly in the livestock sector, believe the program should be more flexible and better tailored to farmers’ needs. The Canadian Pork Council stated that the AgriInsurance program is of limited value to its members in its current form.[138] The program’s coverage should be expanded to livestock and other products.[139]

Animal agriculture is excluded from the largest area of business risk management expenditure. There is $941 million allocated to AgriInsurance. Animal health and mortality risks are not adequately mitigated or managed through ad hoc disaster programs. Combined with the significant erosion of AgriStability, the absence of AgriInsurance severely exposes the livestock and meat industry sector to market and biological risks. Animal agriculture should be eligible for AgriInsurance.[140]

4.  AgriRecovery

The AgriRecovery program is a disaster relief framework. A provincial or territorial government can request an assessment of a disaster event, and an initiative can be launched to cover the extraordinary costs of recovery in the agriculture sector. AgriRecovery helps affected producers resume farming operations or mitigate the impacts of a disaster as quickly as possible.

To provide farmers with better protection, some witnesses proposed changing the program to cover the long-term consequences of a single disaster event or recurring events.[141]

One of the other key challenges that our producers identified was the frequency of disaster events due to climate change, and the need to ensure our programs, particularly AgriInsurance and AgriRecovery, are responsive. Both programs need to be more flexible to accommodate and provide support for the often multi-year impacts of disaster events.[142]

5.  AgriRisk Initiatives

The AgriRisk Initiatives program supports research and development, as well as the implementation and administration of new risk management tools. The program provides technical and financial support to the private sector for the development and implementation of risk management tools.

As part of the AgriRisk Initiatives, Western Canada developed a tool for managing price-related risk: the Western Livestock Price Insurance Program (WLPIP). The WLPIP is available in British Columbia, Alberta, Saskatchewan and Manitoba. It provides price protection for cattle and hog farmers by insuring against unexpected price drops; farmers are guaranteed a floor price. The federal government covers 60% of the program costs, the provinces covering the remaining 40%. The administration costs are split among the provinces based on industry size.

In the cattle industry, a large number of animals are sold on contract, which complicates price discovery. The WLPIP is an important tool that helps cattle feeders manage market risk.[143]

The western livestock price insurance program pilot is a forward-looking, market-based, insurance-style program that allows producers to manage price risk. The WLPIP pilot should be made permanent under the next APF. Expanding this price insurance program beyond the western provinces would positively contribute to a national plan that would allow Canadian producers to better manage price risk.[144]

Recommendation 10

The Committee recommends that the Government continue to support the Western Livestock Price Insurance Program and consider its extension to the entire country.

As for the crop sector, Grain Farmers of Ontario believes it would be an innovative idea to create a program similar to the WLPIP, but tailored to the grain industry. Implementing risk management pilot projects that are created using funding from the AgriRisk Initiatives could benefit this sector.[145] However, the pork industry noted that it is having trouble benefitting from this program.

Currently, many Canadian pork producers are unable to take advantage of this useful management tool due to the fact that they would be financially unable to provide the large cash injections that may be required through margin calls in the open market. Without a range of risk management tools and strategies, hog producers face a combination of production, market, and financial risk that can undermine the success of a farm. Pork producers need a program to mitigate the risk of margin calls so that hedging becomes a useful and used business risk management tool.[146]

Recommendation 11

The Committee recommends that the Government support the private sector in developing and implementing risk management pilot projects that better address the needs of the agriculture sector.

ENVIRONMENT AND CLIMATE CHANGE

1.  Meeting the environmental challenges

The agriculture and agri‑food sector has made significant progress in reducing its greenhouse gas (GHG) emissions and environmental footprint through the efficient use of inputs, the careful use of fuel and the incorporation of best management practices, such as minimum and zero tillage.[147]

Agricultural production has been working hard to reduce its environmental footprint. Growers of grains, oilseeds and pulses in the Prairies have significantly reduced their carbon emissions over the past 30 years and continue to do so year after year.[148] The Western Canadian Wheat Growers Association referred to a study conducted by CropLife Canada that shows the significant contributions farmers have made in reducing their environmental footprint.

Since 1990, the reduction in tillage owing to use of plant science innovations have resulted in a 3.8 fold increase in carbon sequestration in cultivated land, reducing greenhouse gases by about 4 million tonnes per year. Decreases in summer fallow add another 5.2 million tonnes of greenhouse gas reductions through carbon sequestration.[149]

Through biotechnology innovation in the canola industry, farmers have seen a significant reduction in soil erosion. Greenhouse gas emissions per tonne of canola have fallen 65% from 1986 to 2006. The industry’s carbon dioxide emissions have therefore been reduced by 1 billion kilograms, the equivalent of taking half a million cars off the road. Moreover, canola is the only Canadian crop certified under the international sustainability and carbon certification program.[150] Since 1981, the soy industry has reduced the net carbon footprint per unit of soybean output by 11% and increased land use efficiency by 16%, all while using 26% less energy.[151] These results were achieved because the industry properly managed its resources by, for example, making better use of inputs and reducing water use.[152]

Other industries have also made significant environmental gains. The meat sector has made major advances in feed conversion and the use of water.[153]

• Since 1981, the beef industry has reduced its GHG emissions by 15% through advancements in technology and management. In 1950, it took 11 pounds of feed and 44 gallons of water to produce one pound of beef. Today, it takes six pounds of feed and eight gallons of water. If beef were to be produced today as it was in 1950, farmers would need another45 million acres (approximately 18 million hectares) of land to do it.[154]
• GHG emissions from dairy farms were reduced by over 25% between 1981 and 2006 as a result of efficiency gains made on farms. This trend has continued to show a steady decline in GHG emissions from dairy farms of approximately 1% per year.[155]
• Over the past 50 years, egg farming has doubled production while cutting its environmental footprint in half. Alberta’s Brant Colony implemented a net-zero initiative. The company, whose goal is to make its production carbon neutral, received $250,000 from Growing Forward 2 for a feasibility assessment, capital equipment, monitoring and expansion. The egg industry believes that the next policy framework could fund similar initiatives in order to help it become more environmentally friendly.[156]
• The chicken industry has the smallest environmental footprint in the meat sector. It is currently conducting a life cycle assessment to better understand its situation and make any necessary improvements. The assessment should be complete in 2017.[157]

The organic industry’s farming practices also provide significant carbon sinks, and, according to Ashley St Hilaire, “promote biodiversity, enhance soil health, reduce pest outbreaks, reduce nutrient leaching, prevent contamination of water, and use energy efficiently.”[158]

In 2011, Food and Consumer Products of Canada conducted a member company survey on environmental sustainability. The survey showed that most of the members already have policies and practices in place to reduce waste and GHG emissions throughout their product’s life cycle. A similar study conducted in 2015 showed that 94% of respondents already had GHG reduction target plans in place.[159]

2.  Keeping the sector competitive

As mentioned earlier, the agriculture sector has carried out many environmental projects, and it wants to let Canadians know that it is working hard to protect the environment and contributing a lot to mitigate GHG emissions.[160] The Canadian Meat Council pointed out that these concrete achievements should be taken into account when future environmental policies and programs are developed.[161] That viewpoint was shared by many witnesses who believe that the industry’s efforts must be recognized when environmental policies are developed.

There is perhaps no industry that has made more efficiency and productivity gains than agriculture. When new policies such as carbon taxes are being discussed, it is important that this be recognized.[162]

Many witnesses are worried that the new carbon pricing initiative will affect farm profitability and the industry’s competitiveness. The witnesses think that a carbon tax would put Canadian producers at a competitive disadvantage compared to countries such as France and Australia that do not have this sort of tax.[163] Many witnesses believe that a carbon tax would significantly increase production costs.

Depending on the design and implementation of a carbon tax, it would increase the price of farmers’ largest inputs, such as fuel and fertilizer. It could also impact the cost of rail transportation and the cost structure of processing plants, both of which would result in additional costs being downloaded to farmers.[164]

The industry’s profitability is being negatively affected by the accumulation of environmental regulatory measures.[165] When testifying before the Committee, the Saskatchewan Association of Rural Municipalities (SARM) indicated that it was strongly opposed to the creation of a federal carbon tax. A carbon tax would affect the price of fuel and fertilizer. The SARM is worried about the negative effects a carbon tax would have on farmers, particularly since they cannot pass those costs on to consumers.[166]

Several witnesses were in favour of taking action on climate change as long as it does not undermine the industry’s competitiveness. The organic industry recommended that “a revenue-neutral system for carbon pricing be developed that reinvests revenues from agriculture into the industry.”[167]

The National Cattle Feeders’ Association proposed specific exemptions for those who use environmentally sustainable practices. The Province of Alberta has set up a program to improve energy efficiency and on-farm fuel efficiency. In Alberta, farm fuels are exempt from the carbon tax.[168] Funding the sector to adapt to a changing regulatory landscape would be an investment that leverages the considerable drive for efficiency that already exists within the sector.[169]

Canada’s agriculture and agri‑food sector has come a long way in recent decades. As a result of new advances in research and technology, agriculture is producing more per acre and farming activities are becoming more concentrated on bigger farms.

The consequences of this ecological loss are significant and can have long-term ramifications, not only for Canada’s finances and climate resiliency but also for our agricultural sector’s growth, competitiveness, and public trust.[170]

Environmental enhancement remains a key consideration for agricultural producers[171] and consumers.[172] According to the Canola Council of Canada, reducing its environmental footprint and using sustainable farming methods would help the sector promote and differentiate itself in the market.[173] In fact, many businesses are already branding themselves by using environmentally sustainable practices.[174] Witnesses recognized that the environment and climate change pose major challenges that may continue to have an impact on many areas of agricultural production, such as access to water, pest management and energy sources.[175] Environmental sustainability and climate change are priorities that are shared by many industry stakeholders.

3.  Programs under the next policy framework

According to Ducks Unlimited Canada, the next policy framework presents an opportunity to reverse the negative habitat loss trajectory while growing a viable and competitive agriculture and agri‑food sector.[176] For example, the Atlantic provinces have implemented stricter measures to protect wetlands.[177] According to Ducks Unlimited Canada, it is also important to quantify both the economic and environmental benefits of protecting and enhancing wetlands in order to better understand the situation. The organization is of the opinion that the Watershed Evaluation of Beneficial Management Practices carried out under the last policy framework was a good first step. However, a better understanding of the costs and benefits of the different stewardship practices would help inform not just this policy but future frameworks as well.[178]

Canadian Organic Growers recommends that the government perform a life cycle assessment and energy audit of the entire Canadian agriculture and agri‑food system. “The assessment would look at each sector in detail, with a focus on embedded energy use on farms, in transport, processing, retail, and in the kitchens of Canadians.”[179]

According to a number of witnesses, innovation will be a determining factor in improving environmental sustainability and adapting to climate change. The canola industry has been able to innovate to increase its production and profitability while reducing its environmental footprint.[180] Technological advances have made it possible for the horticultural industry to reduce its environmental impact. More specifically, drones and other innovations are being used to monitor fields, improve irrigation and reduce the use of pesticides. The agriculture sector will have to invest in innovation in order to further reduce its environmental footprint. While support for environmental sustainability is critical at the grower level, it should not be forgotten across the rest of the supply chain.[181]

One initiative that could help the industry reduce its GHG emissions involves the reclamation of farm waste. The CFA brought up the idea of continuing the advancement of generating renewable energy using agricultural waste, whether on livestock or grain farms. A number of livestock farms are putting in methane digesters. Bio-digesters help increase the farm’s revenue while helping combat climate change.[182]

Environmental farm plans are another measure that has been successful.[183] Environmental farm planning is a tool that can help make farmers more aware of environmental benefits and risks.[184] Some witnesses see environmental farm plans as a potential model for implementing sustainability indicators on animal care, and the use of water, pesticides and herbicides. These benchmarks would help address the concerns of consumers who are trying to learn more about how their food is produced.[185]

However, the witnesses indicated that improvements need to be made to environmental farm plans.

[N]ow is the time to invest in a renewal to develop a national baseline for the environmental farm plans and to launch an enhanced, strengthened program. Work for this is already under way. The national environmental farm plan [EFP] must remain industry led and government supported. It must improve environmental outcomes through being science-based and it must be sufficiently resourced.[186]

We fully support ongoing discussions on how the EFP can be used to help producers respond to domestic and international sustainability demands. To accomplish this, the EFP has to be strengthened by placing greater focus and support on areas of the farm that are not directly under production.[187]


Ducks Unlimited Canada identified a weakness in the current environmental farm plan program. The organization indicated that, while the program focuses on production management techniques, including issues related to fertilizer storage and tillage operation, issues related to the management of non-productive land should not be underestimated. Leaving non-productive land out of the environmental farm plan sends the wrong message that those lands do not have any value. A good environmental farm plan would demonstrate the real value of that land and how it contributes to environmental sustainability by helping capture carbon, improve water quality and maintain pollinators. The environmental farm plan would be a more effective management tool if it took into consideration agricultural lands that are not being used for direct production.[188]

In order to encourage best management practices, some witnesses proposed implementing incentive programs that respond to concerns regarding soil and water quality, biodiversity and climate change.[189] Others agreed and recommended the implementation of voluntary ecosystem or environmental programs that are incentive-based and community-delivered.[190]

Recommendation 12

The Committee recommends that the Government, in cooperation with the agriculture and agri‑food sector, analyze the environmental and economic costs and benefits of environmental practices at various stages of the agri‑food production chain.

Recommendation 13

The Committee recommends that the next policy framework include a component for implementing environmental practices at various stages of the agri‑food production chain, including measures to address climate change and deal with its effects and measures to help the sector adapt to the environmental regulations landscape in conjunction with the provinces and territories.

PUBLIC TRUST

Canadians enjoy a reliable access to safe and nutritious food. In a globalized world, consumers are becoming increasingly concerned about their food choices. They want more information about where their food comes from and how it is produced. Consumers are more interested in healthy food that is produced in conditions that take into account animal welfare and environmental concerns. They are therefore looking for high-quality food that is produced in a responsible, sustainable manner that addresses their concerns. Despite the increasing interest Canadians have in how food is produced, they do not always have a sound understanding of the realities of the modern agriculture sector.[191]

A.  Communication strategy

The CFA indicated that, with only 1% of the Canadian population involved in farming, it is going to be increasingly difficult for farmers to deal with public trust issues.[192] Many witnesses firmly believe that a better understanding of the sector would help solidify public trust. That is why they recommended that the next policy framework focus on public awareness so that Canadians can gain a better understanding of what farmers do and how food is produced.

Some witnesses were of the opinion that school programs on agriculture starting in the early grades would be a good way to raise awareness.[193] However, witnesses felt that educators may also need to be trained to ensure that accurate information from reliable sources was being presented.

You mentioned Agriculture in the Classroom, but that’s just part of it. We have to go back from that and look at the teachers who are being educated. I think teachers’ colleges have to understand what’s going on agriculture as well. I’ve heard some horror stories over what teachers are saying to some of their students, and it’s because they don’t understand. They’re picking up their information from the Internet.[194]

The witnesses believe that a credible framework needs to be put in place to strengthen public trust. The information provided must come from a reputable source and be disseminated by someone credible.

With that, one thing we’ve found with the science, which I think is important, is that scientists can do a lot. They have a lot of credibility. The ones who have the most credibility are our producers. We’re finding that you can give the science to your young producers especially and tell them to talk to consumers. Some of the programming we’ve done is in enabling producers to talk to consumers, because producers resonate far more than anybody else.[195]

Many witnesses contend that the various stakeholders in the agriculture sector have a shared responsibility to provide consumers with accurate information.

Despite the excellent track record that our industry has on stewardship and safety, we understand that the public is increasingly calling for more information and transparency. It’s important that the agriculture sector maintain the trust of consumers. It is up to our sector to explain and build awareness, and we share this responsibility with government.

The next program should assist in the development of vehicles to bring consumers, governments, and civil society together with the farm community. It should assist in developing certification systems and standards that demonstrate best practices being followed in the sector.[196]

Recommendation 14

The Committee recommends that the Government support public trust of the agriculture and agri-food sector through focused efforts to increase robustness and confidence in assurance systems and regulatory systems, and financial support for public awareness activities that are grounded in scientific information.

B.  Certification and assurance programs

In order to assure consumers at home and abroad of the quality of food and that it is produced with regard for the environment and animal welfare, many industries have certification and best practice assurance programs.

The organic industry is well known for its environmental advocacy. Through its certification process, the industry attempts to give consumers who buy certified organic products assurance of their products’ authenticity. In addition to looking for products that address their health, animal welfare and environmental protection concerns, consumers pay close attention to where their food comes from, and many consumers prefer to buy local.

In order to meet this type of demand, Chicken Farmers of Canada created a new program called Raised by a Canadian Farmer. This brand guarantees that the chicken was raised in Canada and meets the highest food safety and animal care standards.[197] Furthermore, Chicken Farmers of Canada has a federal, provincial and territorial on-farm food safety system that is recognized. All chicken farmers participate in the program and are subject to an annual audit. Farmers must also participate in a mandatory animal care program based on the code of practice, which was updated in 2016.[198]

Like chicken farmers, dairy producers also participate in an on-farm food safety program. The proAction program was created by DFC to reassure consumers of the quality and safety of their product while responding to consumers’ growing interest in best farming practices. The program consolidates on-farm best practices and is made up of several modules, including milk quality and animal care.[199]

The Verified Beef Production Plus program launched by the beef industry focuses on good practices in on-farm food safety, animal care, biosecurity and environmental stewardship. This assurance program guarantees consumers at home and abroad that Canadian beef farmers produce safe, high-quality food while using practices that are environmentally sustainable and mindful of animal welfare.[200]

In order to maintain and enhance public trust, witnesses recommended that support for national industry on-farm verification programs be maintained in the next policy framework and that funding be allocated to the development of such programs. However, Chicken Farmers of Canada noted that many production areas did not receive funding until after they began developing on-farm safety programs. Some of these programs fell by the wayside and did not receive final approval because they did not have stable funding. The witnesses would like a partnership with the government to implement sustainable, long-term, cost-shared programs.

Witnesses also indicated that they would like government support for projects to strengthen public trust, which use a value-chain approach.

[T]here is an initiative where industry is trying to build a consensus on how we approach public trust issues, using the existing value chains for that. Under the APF, if that could be identified as one of the types of project funding that would be prioritized, that would be important. With industry coming together, they’re going to put some coin in. If government puts some coin in, then I think we could start working on that.[201]

Many witnesses agreed that there is a need to provide the industry with proper funding so that it can manage the pressures related to public trust. In addition to financial support, the next policy framework needs to provide support to the sector as it works to strengthen public trust, particularly when it comes to validating and supporting scientifically sound production practices.[202] However, the National Farmers Union (NFU) wanted to warn against the government funding messages that are not always true. The information disseminated by groups that have been advocating for their particular version of social licence and best practices is not necessarily based on the science of agriculture.[203]

The NFU recommends that the Government of Canada be extremely cautious when interpreting these phrases, and even more cautious if considering spending taxpayers’ dollars in such efforts. The NFU’s position is that it is better to build confidence and public trust by requiring more independent and government testing of products in order to provide real transparency. Proper regulation is desirable and necessary.[204]

Recommendation 15

The Committee recommends that the next policy framework support the concerted efforts of the Canadian agriculture sector to strengthen public trust, such as the public trust initiatives established by the existing value chains, and fund public research to reinforce public trust.

LABOUR FORCE AND NEXT GENERATION OF FARMERS

At the Committee’s public hearings, the witnesses also spoke about other issues that do not necessarily fall under the priorities set out in the Calgary Statement, including labour force issues and the opportunities and challenges facing the next generation of farmers in the agriculture and agri‑food sector.

A.  The labour force

The labour force is very important for the agriculture and agri‑food sector since the profitability and viability of farms depends in large part on labour availability. However, the sector is dealing with a shortage of workers, particularly in labour-intensive production areas such as horticulture, and in processing plants.[205]

1.  Labour shortage on farms and in processing plants

According to the report issued by the Canadian Agricultural Human Resource Council (CAHRC) in cooperation with the Conference Board of Canada, the size of the sector’s labour gap has doubled over the past decade and is expected to double again by 2025. This report indicates that, 10 years ago, the primary sector was short 30,000 workers and that it is now short 59,000 workers. That number is expected to reach 114,000 in the next 10 years.

On-farm job vacancies are exceptionally high, at a 7% vacancy rate. The national average for other industries is only 1.8%, so this is a clear exception and a clear problem. It’s costing the farm industry $1.5 billion in lost sales revenue each year. That’s $1.5 billion on the primary agriculture side alone.[206]

The CAHRC indicated that, despite efforts by business owners to attract workers, there is a high vacancy rate in agriculture because many of the jobs are seasonal, many of the businesses are located in rural areas, people have negative perceptions of farm work and the workforce is aging.[207] In order to increase productivity and reduce the need for employees, some businesses have been using robotics.

Automation and robotics are used in planting, picking, and packing of produce, all helping to reduce the demand on labour while also reducing waste and improving productivity, but automation cannot replace all labour needs.[208]

Although the impact of the labour shortage is especially acute in the primary sector, it is also being felt by the rest of the supply chain.[209] Moreover, this problem affects both low- and high-skill jobs. There is also a significant shortage of technicians, supervisors and managers of operations.[210] Automation and robotics require people who are qualified to operate the technology.[211]

The labour shortage can be costly for the industry. For example, two years ago, in Quebec, $30‑million worth of apples did not make it to market because there were not enough workers to pick them.[212] Labour shortages in the meat‑processing sector have led to missed trade opportunities.

The problem with the shortage of labour is that in a lot of these markets we’re developing, we disassemble the product here and send certain parts of the animals to other places. If the plants don’t have people to disassemble and make the specialty cuts, that means they have to decide whether they are not going to kill as many cattle that day or whether they are going to put people on the line to kill more cattle. They can’t do both. The labour shortage is actually hurting our chances of taking advantage of some of these trade opportunities.[213]

Knowing that the labour shortage is having a huge negative impact on Canada’s agriculture and agri‑food sector, the CAHRC firmly believes that labour must be added to the next policy framework as a seventh priority area. In addition to hindering progress on the priorities proposed by Agriculture and Agri-Food Canada, the labour shortage poses a significant risk to the country’s capacity for value-added agriculture and agri‑food processing.[214]

2.  Temporary Foreign Worker Program

Canada’s agriculture and agri‑food sector wants to first give priority to hiring Canadian workers. However, producers are sometimes unable to fill vacancies. In order to help the sector resolve the problem of the shortage of agriculture workers, there are programs outside the scope of Growing Forward 2. The Temporary Foreign Worker Program (TFWP) allows producers to hire foreign nationals to fill temporary labour shortages. The witnesses from the produce sector emphasized the essential role that foreign workers play in their sector given “the increasing demand to meet production targets and avoid fruit and vegetable rot on farms.”[215]

Many of our producers have been using the programs for many years, often bringing the same people in year after year. We suggested that the government look at developing a NEXUS program or trusted employer program that would allow the timeline needed from when you need the worker to when the worker arrives.[216]

The federal government must continue to work with industry to ensure an accessible and reliable workforce. It is important to note that temporary foreign workers generally come for about six months. Most Canadians are looking for full-time employment. Also, our studies have shown that, for every foreign worker we bring in, two full-time Canadian jobs are created within the value chain.[217]

It is important to note that the manufacturing sectors are excluded from certain streams of the TFWP. For example, foreign workers who are hired under the TFWP to work on the production side cannot do any food processing. This particular situation has created a pronounced shortage on the food‑processing side.[218]

In addition to having difficulty filling vacancies in its plants, the meat‑processing industry is dealing with an employee turnover rate of about 50% on average. It is difficult to run an operation when new employees have to constantly be trained and educated because of this high rate of turnover. The meat industry has been trying to get around this problem by having employees work overtime, moving work elsewhere or not doing value-added activities. The meat industry has also been trying to recruit in Indigenous communities, but it is still unable to fill the vacancies.[219]

Recommendation 16

The Committee recommends that the Government improve the Temporary Foreign Worker Program to better accommodate the needs of the Canadian agriculture value chain.

3.  Job opportunities and careers in agriculture

As part of the agriculture and agri‑food sector’s efforts to address labour shortages, Food and Beverage Ontario launched an awareness campaign regarding jobs in the sector. The industry recognizes that there is a real problem if people are not trained or if they are not excited about the idea of working in the industry.[220]

Food and Beverage Ontario launched a program last year called Taste Your Future. We went out and did a lot of research. Unfortunately for our industry, I think we’ve neglected trying to at least make our industry a little sexy and attract new Canadians and young Canadians into our industry.[221]

According to the CAHRC, one of the best ways to encourage new Canadians to work in the agriculture sector is to allow the local community to sell itself to those families. The communities need help doing that because there are many other factors to consider, such as housing, schools and activities for spouses and children.[222]

The CAHRC made four recommendations to resolve the labour shortage. The first is to improve diversity, or in other words, to encourage under-represented groups such as youth, people with disabilities, Indigenous people and women to consider working in the sector.[223]

We support women's inclusion and participation in the workforce. Women currently make up 30% of the agriculture workforce, and outreach initiatives are needed for under-represented groups, including women. [224]

 According to Iris Meck from the Advancing Women in Agriculture Conference (AWAC), the contribution of women is not recognized.[225] In order to support women participation in the agriculture sector, AWAC organizes conferences that focus on the challenges faced by women working or wanting to work in this sector. AWAC also encourages these women to gather together to share and discuss the problems and challenges they are facing.[226] Some provincial governments cover the conference’s registration fees so that women can attend. AWAC would like the next policy framework to recognize its conferences as a training program and to provide funding so that women in the agriculture sector can participate in them. The NFU believes it is very important for women to participate in the agriculture sector and has positions reserved for women on its board.[227]

The CAHRC’s second recommendation calls for national employment initiatives, or making people aware of the fact that there are interesting and well‑paying careers in agriculture. Food and Beverage Ontario, which shares this opinion, believes it is important to get young people interested in the industry and to tell them about the wide variety of career choices in agriculture. Not all of the jobs in the industry involve working in processing plants. The industry is also looking for food scientists, tasters and product developers.[228]

The CAHRC’s third recommendation involves providing more accessible training, including online learning, to improve the knowledge and skills of workers.

The CAHRC’s fourth recommendation is that adequate funding be provided to implement the Canadian Agriculture and Agri-food Workforce Action Plan. The action plan is a strategic road map for jobs and growth in rural Canada that was developed in cooperation with many industry stakeholders.[229]

Recommendation 17

The Committee recommends that the Government support workforce development initiatives to improve agriculture career awareness amongst underrepresented groups, in order to reduce barriers and increase awareness of the job opportunities available in the agriculture and agri‑food sector.

B.  The next generation of farmers

In addition to labour shortages, Canada’s agriculture and agri‑food sector is dealing with a workforce where the average age of farmers is 55. Aspiring farmers face a major obstacle in reaching their goal: gaining access to land, which keeps going up in price.[230] The result is that many new farmers who do not come from farming backgrounds end up settling on inexpensive land.[231] The matter of farm transfers also comes with its share of challenges for the next generation of farmers.

1.  Barriers to entry

Many witnesses indicated that access to land and capital are the biggest obstacles facing young farmers. Running a farm requires significant investments because the sector is highly capitalized. Take, for example, the money required to buy land, buildings, quota, machinery, etc. It is not always easy for young farmers to borrow such a large amount of money from a financial institution, particularly if they do not have a credit history.

Other obstacles for new farmers include access to training[232] and labour.[233] According to some witnesses, the next policy framework should include initiatives and programs to help young farmers overcome those obstacles. For example, young farmers must be given easier access to credit in order to encourage them to enter the sector.[234]

2.  Programs and initiatives to help new farmers

There are currently a variety of federal initiatives to support young farmers, including loan programs and skills‑development and training programs. There are also similar programs available at the provincial level.[235]

In the supply management sector, where quota prices are extremely high, many provinces provide a support program for new farmers that offers free quota, financing or business planning.[236]

The Canadian Young Farmers’ Forum (CYFF) is an organization that advocates for young farmers between the ages of 18 and 40 across the country. The role of the CYFF falls between 4-H and the Outstanding Young Farmers Program. The purpose of the CYFF is to help young farmers develop their skills by providing them with education and leadership training, while the 4-H program gives youth their start in agriculture and the Outstanding Young Farmers Program celebrates their success.[237]

The CYFF relies on support from Agriculture and Agri-Food Canada and industry to carry out its activities. It receives support from AAFC under the AgriCompetitiveness fostering business development stream. Industry provides funding and in-kind contributions.[238] The CYFF is asking the government to recognize and include the value of in-kind contributions in the consideration of future funding under federal and provincial initiatives since such contributions are not currently considered.[239]

If in-kind contributions from the industry were considered, it would reduce matching requirements for the CYFF. Right now, the AgriCompetitiveness fostering business development stream limits the government’s maximum contribution to 50% of eligible costs. The CFA proposed that the government reduce the cost-shared funding requirement from 50:50 to 25:75 for the AgriCompetitiveness program since youth engagement, farm safety and business development are important priorities. If the industry’s share were reduced, organizations could focus their resources on projects and activities that benefit producers.[240]

Although young farmers have access to the same programs as other farmers, Mr. Paul Glenn, Chair of the Canadian Young Farmers’ Forum, noted that these programs are not designed specifically for young farmers. He believes that it is important to have measures that specifically target young farmers.[241]

3.  Farm transfers

The witnesses emphasized that, in order for farm transfers to be successful, they need to be planned well ahead of time. It is important to have a proper succession plan, prepared by accountants and lawyers, to ensure that the business is viable for the next generation and that there is retirement income for the person selling the farm.[242]

An improperly prepared succession plan can result in some nasty surprises, such as huge tax liabilities.[243] Grain Growers of Canada noted that the tax rules do not encourage family transfers. In fact, because of tax rules such as capital gains treatment, it is more advantageous for farmers to sell their farm to an outside interest than to pass it on to a family member.[244]

The CFA proposed a funding model that would promote the transfer of farms between farmers in cases where older farmers are offering financing to younger farmers taking over their farm. The CFA believes that, if the interest paid to those farmers could be tax exempt, it would encourage this practice. Farmers could lend at a lower interest rate and still get the retirement pension they need.[245]

The Canada Organic Trade Association presented another financing model. This plan would allow older farmers to slowly transition their land to younger farmers and would be based on the establishment of land trusts and the creation of a program that would allow older farmers to work with younger farmers on their land. According to the association, a model that seeks to eliminate economic and income tax hurdles needs to be explored further.[246]

Recommendation 18

The Committee recommends that the Government work with stakeholders to support the next generation of farmers by improving farm start-up conditions, succession planning and the transfer of knowledge to help young farmers and beginning farmers start their business.