Agricultural Policy Monitoring and Evaluation 2021

6. Canada

Support to agriculture

Canada significantly reduced support to agriculture since the late 1980s. Producer support as a share of gross farm receipts was halved between 1986-88 and 2000-02, in large part because market price support (MPS) to the grains industry was discontinued in 1995. Producer support was halved again between 2000‑02 and 2018-20, and now accounts for about 9% of gross farm receipts – about half of the OECD average.

Despite past reductions, MPS dominates support to producers – even though it is limited to the dairy, poultry and egg sectors, which remain under supply management – with custom tariffs, production quotas and price-setting putting domestic prices above world prices. Milk in particular receives high single commodity transfers at 34% of its commodity gross farm receipts. On average, prices received by farmers in 2018-20 were 5% higher than world markets, while prices for commodities not under supply management aligned with world levels.

Payments based on unconstrained use of variable inputs, notably fuel, also are potentially most-distorting. Together with MPS, these represented 60% of cumulated gross producer transfers in 2018-20, or 5% of gross farm receipts. Other budgetary support to individual producers focused on risk management.

Support to general services (GSSE) declined relative to the size of the sector, indicating that rising expenditures have not kept pace with the sector’s growth. These amounted to 5.1% of agricultural value-added during 2018-20, down from 7.6% at the beginning of the century. In terms of composition, the top two priorities for Canada are consistently expenditures on agricultural knowledge and innovation, and inspection and control systems, each accounting for about 40% of GSSE expenditures in recent years. However, while agricultural knowledge and innovation held a relatively stable share of the GSSE since the late 1980s, the share of expenditures devoted to inspection and control systems increased by 17 percentage points over the same period.

Overall, the cost of total support to the agricultural sector fell. The total support estimate represented 0.3% of Canada’s GDP in 2018-20, down from 1.6% in 1986-88 and 0.7% in 2000-02, well below the OECD average. Of this total support, 72% went to individual farmers in the past three years, with almost all the remainder to general services.

Recent policy changes

The government of Canada released its A Healthy Environment and a Healthy Economy plan on 11 December 2020. Within this framework, the government plans to support the agricultural sector by the following actions: (1) invest to support the development of transformative clean technologies and the adoption of commercially available clean technology over seven years; (2) set a national target for emissions from fertilisers reduced to 30% below 2020 levels; and (3) boost climate-smart agriculture under the current Canadian Agricultural Partnership.

New requirements related to licensing, preventive controls and traceability under the Safe Food for Canadians Regulations applied to relevant food manufacturing businesses on 15 July 2020. However, due to the COVID-19 pandemic, the Canadian Food Inspection Agency did not prioritise compliance related to these new requirements.

The Canada-United States-Mexico Agreement entered into force on 1 July 2020, replacing the North American Free Trade Agreement (NAFTA). The agreement continues tariff-free access for most agricultural commodities, expands market access for some additional commodities, and provides new rules for governing agricultural biotechnology, and sanitary and phytosanitary measures. Canada and the United Kingdom signed the Canada–UK Trade Continuity Agreement on 9 December 2020 to ensure trade continuity between the parties after the Brexit transition period.

Much of Canada’s policy efforts in 2020 focused on the impacts of the COVID-19 crisis on agricultural production, the food chain and consumers. In the international arena, Canada advocated for open and predictable trade in agriculture and agro-food1 products.2 Domestically, Canada’s federal and provincial governments implemented multiple measures to support the sector in various areas:

• To alleviate financial pressure on farmers and food producers, both federal and provincial governments adjusted and enhanced targeted programmes, including loan deferrals for eligible farmers through Farm Credit Canada and under the Advance Payments Program, and changes to a number of the Business Risk Management programme parameters and deadlines.

• To address the insufficient supply of labour in the agro-food sector, the government of Canada designated workers in the food supply chain as essential; allowed temporary foreign workers to travel to Canada, with the expectation that workers and employers comply with public health and safety requirements (including 14-day mandatory quarantine upon arrival during which wages are paid); and reduced the administrative burden for employers. Furthermore, the government of Canada created the Temporary Foreign Worker Program and the Mandatory Isolation Support for Temporary Foreign Workers Program, and provided additional funds for the AAFC’s Youth Employment and Skills Program.

• To boost agro-food businesses’ capacity to adapt and recover after the crisis, the federal government invested in the Emergency Processing Fund to help companies implement changes to safeguard the health and safety of workers and to improve, automate and modernise their facilities.

• To support critical food inspection, funding went to the Canadian Food Inspection Agency (CFIA). CFIA temporarily suspended certain low-risk inspection activities to reassign existing employees to higher priority activities.

• To provide food assistance to vulnerable populations, the government of Canada funded food banks and other national food rescue organisations through the Emergency Food Security Fund and launched the Surplus Food Rescue Program.

Assessment and recommendations

• The Canadian Agricultural Partnership Framework Agreement for 2018-23 continues to emphasise general services support to the sector through programmes that target industry-led research and development, adoption of innovation, and inspection and control systems. This policy focus should remain, aiming to improve the sector's long-term competitiveness and sustainability.

• Although producer support relative to gross farm receipts was well below the OECD average in recent years, potentially most‑distorting transfers remain the main component of transfers to producers – particularly market price transfers to the dairy sector. For most commodities, domestic market prices fully align with world prices, but the dairy, poultry and egg sectors continue to be protected from international competition and receive market price support, which distorts production and trade. As a step towards phasing out supply management for these commodities, the available quotas should increase, and price support for the dairy, poultry and egg sectors should be reduced. This would encourage greater market responsiveness, stimulate innovation (to increase efficiency and diversify towards higher value products), and reduce quota rents.

• The Canadian agro-food system performed reasonably well during the COVID‑19 pandemic. However, the crisis brought to light vulnerabilities, such as issues around labour supply and food insecurity, which should be addressed in a coherent way (Arrell Food Institute and Canadian Agri-Food Institute, 2021[1]). The crisis presents an opportunity to build on this experience to achieve a more resilient and sustainable food system.

• The 2018-23 agricultural policy framework provides farmers with an array of risk management tools. The Canadian approach to risk management evolved over time, aiming to reduce reliance on ad hoc policy responses and shifting towards a more proactive policy framework. Nonetheless, holistic evaluation of the performance of the risk management policy toolkit and additional resilience-building programmes could enable adoption on a larger scale of the most successful programmes, stimulate the development of market-based tools, and encourage farmers to find better ways of managing risks at farm level. Furthermore, long-term resilience of the sector could benefit from exploring linkages and trade-offs between business risk management programmes and environmental outcomes (OECD, 2020[2]).

• The Healthy Environment and a Healthy Economy plan is a promising step in reducing negative environmental externalities from agriculture and boosting the sector’s sustainability. However, monitoring and impact assessment will be crucial to achieve the policy’s ambitions.

Figure 6.1. Canada: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

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Figure 6.2. Canada: Drivers of the change in PSE, 2019 to 2020

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

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Figure 6.3. Canada: Transfer to specific commodities (SCT), 2018-20

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

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Table 6.1. Canada: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2018-20	2018	2019	2020p
Total value of production (at farm gate)	14 083	20 696	47 040	46 416	46 409	48 295
of which: share of MPS commodities (%)	85.6	82.0	81.4	83.2	81.0	80.1
Total value of consumption (at farm gate)	11 833	15 015	31 426	29 867	30 446	33 965
Producer Support Estimate (PSE)	5 855	3 891	4 224	3 629	4 219	4 825
Support based on commodity output	3 214	1 622	2 148	1 804	1 934	2 707
Market Price Support1	2 851	1 602	2 148	1 804	1 934	2 707
Positive Market Price Support	2 997	1 602	2 183	1 908	1 934	2 707
Negative Market Price Support	-146	0	-35	-104	0	0
Payments based on output	364	20	0	0	0	0
Payments based on input use	1 091	368	478	434	493	508
Based on variable input use	622	242	344	299	342	392
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	448	108	127	125	141	114
with input constraints	0	0	0	0	0	0
Based on on-farm services	20	18	7	9	10	2
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	1 336	1 307	1 457	1 318	1 492	1 560
Based on Receipts / Income	467	586	615	622	608	615
Based on Area planted / Animal numbers	869	721	841	695	884	945
with input constraints	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	9	23	0	4
Payments based on non-current A/An/R/I, production not required	0	553	85	0	255	0
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	553	85	0	255	0
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	8	0	0	0	0	0
Based on long-term resource retirement	8	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	206	41	47	51	44	47
Percentage PSE (%)	34.4	16.9	8.6	7.5	8.7	9.6
Producer NPC (coeff.)	1.34	1.08	1.05	1.04	1.04	1.06
Producer NAC (coeff.)	1.53	1.20	1.09	1.08	1.09	1.11
General Services Support Estimate (GSSE)	1 153	1 260	1 594	1 697	1 622	1 462
Agricultural knowledge and innovation system	483	536	623	635	605	629
Inspection and control	283	348	671	752	714	545
Development and maintenance of infrastructure	268	182	139	131	138	149
Marketing and promotion	85	179	132	154	129	113
Cost of public stockholding	0	0	0	0	0	0
Miscellaneous	34	15	29	25	36	26
Percentage GSSE (% of TSE)	16.3	24.5	27.2	31.7	27.7	23.0
Consumer Support Estimate (CSE)	-2 533	-1 712	-2 349	-1 997	-1 958	-3 093
Transfers to producers from consumers	-2 766	-1 596	-2 146	-1 800	-1 931	-2 707
Other transfers from consumers	-31	-117	-240	-222	-51	-448
Transfers to consumers from taxpayers	31	0	37	24	24	62
Excess feed cost	234	0	0	0	0	0
Percentage CSE (%)	-21.5	-11.4	-7.5	-6.7	-6.4	-9.1
Consumer NPC (coeff.)	1.31	1.13	1.08	1.07	1.07	1.10
Consumer NAC (coeff.)	1.27	1.13	1.08	1.07	1.07	1.10
Total Support Estimate (TSE)	7 039	5 151	5 855	5 350	5 865	6 349
Transfers from consumers	2 798	1 713	2 386	2 021	1 982	3 155
Transfers from taxpayers	4 273	3 555	3 709	3 551	3 934	3 642
Budget revenues	-31	-117	-240	-222	-51	-448
Percentage TSE (% of GDP)	1.6	0.7	0.3	0.3	0.3	0.4
Total Budgetary Support Estimate (TBSE)	4 188	3 549	3 706	3 546	3 931	3 642
Percentage TBSE (% of GDP)	1.0	0.5	0.2	0.2	0.2	0.2
GDP deflator (1986-88=100)	100	138	194	192	196	195
Exchange rate (national currency per USD)	1.32	1.53	1.32	1.30	1.33	1.34

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Canada are: wheat, maize, barley, oats, soybean, rapeseed, flax, potatoes, lentils, dried beans, dried peas, milk, beef and veal, pig meat, poultry and eggs.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Description of policy developments

Overview of policy trends

Prior to the mid-1980s, Canada heavily supported the agricultural sector through measures such as import tariffs, export and production subsidies, and price and production controls. The dominant features of agricultural policy were supply management measures in the dairy and poultry sectors, collective marketing in grains and oilseeds (notably by the Canadian Wheat Board, or CWB), and income stabilisation programmes (Barichello, 1995[3]). Support varied between eastern and western provinces, largely due to Canada’s decentralised political system, and the independence of provincial governments in policies such as marketing legislation (Anderson, 2009[4]).

In the mid-1980s, Canada began agricultural policy reform, particularly in the grain sector. In 1990, the Western Grains Stabilization Program, which was intended to stabilise net margins for major grains and oilseeds from Western Canada, was terminated (Anderson, 2009[4]). The Farm Income Protection Act of 1991 changed Canada’s approach to supporting crop producers by moving from policies aimed at particular commodities towards programmes supporting farm incomes generally. This established two safety-net programmes: (1) the Gross Revenue Insurance Plan (GRIP, 1991-1996/2002) to protect against reductions in revenues and yields; and (2) the Net Income Stabilization Account (NISA, 1991-2009) to subsidise savings accounts for individual producers (Anderson, 2009[4]; Klein and Storey, 1998[5]). Furthermore, compliance with the General Agreement on Tariffs and Trade and free trade agreements of the early 1990s (NAFTA) accelerated the reform process, eliminating most commodity-based policies except those targeting supply-managed commodities (Antón, Kimura and Martini, 2011[6]). In 1995, transport subsidies to feed grains were abolished (Anderson, 2009[4]), ending the period of high market price support to these commodities (Figure 6.4).

The Agricultural Income Disaster Assistance (AIDA) programme introduced in 1998 was the first to comply with criteria for income insurance and safety-net programmes under the World Trade Organization Agreement on Agriculture. AIDA was established to serve as a core income stabilisation policy, reducing the need for ad hoc programmes. The “disaster” component was integrated into subsequent programmes: the Canadian Farm Income Program (CFIP, 2001-03); the Canadian Agricultural Income Stabilization (CAIS, 2004-08); and AgriStability (Anderson, 2009[4]; Statistics Canada, 2021[7]; Antón, Kimura and Martini, 2011[6]). Since 2003, agricultural policy objectives and approaches are set out in longer-term Agricultural Policy Frameworks developed through co‑operation by federal, provincial and territorial (FPT) governments. The first Framework covered five areas: (1) business risk management, (2) food safety and quality, (3) environment, (4) science and innovation, and (5) renewal (extension services) (Agriculture and Agri-Food Canada, 2005[8]). Initially, the federal government delivered programmes directly. However, the Growing Forward framework (2008-13) transferred programme implementation to the provinces and territories, allowing for more flexibility and better adaptability to local needs (OECD, 2015[9]). During this time, the AgriStability and AgriInvest programmes replaced CAIS and NISA, respectively, continuing to provide farmers with income stabilisation products and subsidised saving accounts. The Growing Forward 2 framework (2013-18) strengthened the role of these programmes and incorporated additional initiatives, such as AgriInsurance (previously referred to as the Crop Insurance) and the AgriRecovery disaster programme framework (Anderson, 2009[4]; Statistics Canada, 2021[7]; Antón, Kimura and Martini, 2011[6]). Risk management programmes continue under the current Canadian Agricultural Partnership (2018-23) (see next section).

Table 6.2. Canada: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1985	Import barriers for import-competing products and support for traded products; domestic market control	Agricultural tariffs for import-competing products Import quotas/tariff-rate quotas Export subsidies for agricultural products Transportation subsidies for agricultural products Supply management for grains, dairy and poultry products Price controls for agricultural products using marketing boards such as the collective marketing of wheat and barley (CWB)
1985-2000	Gradual reforms and trade liberalisation Increasing emphasis on income and revenue support	Reduction of agricultural tariffs and quotas Diminishing reliance on marketing boards, supply management, price controls General Agreement on Tariffs and Trade, free trade agreements Dismantling of Western Grains Stabilization Program Gradual dismantling of payments coupled to production Introduction of farmer subsidies (income stabilisation) Introduction of insurance subsidies
2000-present	Income stabilisation emphasis implemented through federal, provincial and territorial (FPT) co-operation	Continued supply management of dairy, poultry and eggs sectors: price-setting mechanisms and tariffs Privatisation of the CWB Agricultural policy frameworks developed through the cooperation of FPT governments Subsidies for farm income stabilisation Subsidies for farm savings Insurance subsidies

Support to agricultural producers in Canada decreased over the last three decades, with government support declining from over 35% of farmers’ revenues in the mid-1980s to around 8% in recent years (Figure 6.4). This resulted from the discontinuation of market price support to grains and oilseeds in the mid-1990s, and the reduction or phase-out of several programmes offering payments based on output (e.g. support to dairy farmers under the Agriculture Stabilization Act) and input use (e.g. Property Tax Exemption) between the late 1980s and the early 2000s. Market price support to supply-managed commodities, particularly to the dairy sector, remains the largest share of transfers to producers. Payments based on current production, including multiple risk management programmes (e.g. AgriStability), are the second largest contributor, while other categories of payments play a relatively minor role in Canadian farm revenues.

Figure 6.4. Canada: Level and PSE composition by support categories, 1986 to 2020

As a percentage of gross farm receipts

Note: A/An/R/I: Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2021), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

Canada’s agricultural support policies differentiate between supply-managed sectors (dairy, poultry and eggs) protected and oriented towards the domestic market, and other commodity sectors, which operate within an open market environment and are export-oriented.

A supply management system provides market price support to the dairy, poultry and eggs sectors through customs tariffs (import control) and production quotas (production control), tradable within provinces, combined with domestic price-setting according to production costs (pricing mechanism). Successive agriculture policy frameworks regard this system as a risk management instrument (Parliament of Canada, 2017[10]; Parliament of Canada, 2012[11]).

The Canadian Agricultural Partnership (CAP) 2018-23 frames general policies and programmes established to support Canada’s agriculture and agro-food sector (AAFC, 2018[12]). Under the Constitution of Canada, the general agricultural policy framework is governed by joint FPT agreements. The principle of shared responsibility provides provinces and territories flexibility to design and deliver programmes that respond to regional needs while remaining aligned with national priorities. Provinces and territories can also develop and fund agriculture programmes outside of this framework.

The current policy framework comprises a suite of business risk management (BRM) programmes to help farmers manage market volatility and disaster risks, and strategic initiatives to increase competitiveness, productivity and profitability in the sector, increase its environmental sustainability, expand domestic and international markets, and improve the anticipation and mitigation of and response to risks.

The suite of BRM programmes, built on the backbone of those delivered during the previous multilateral policy framework agreement, support producers in managing risks that threaten the viability of their farm or are beyond their capacity to control. It also attempts to balance ex ante and ex post measures while limiting ad hoc forms of assistance. Under the CAP 2018-23, FPT governments jointly provide approximately CAD 1.5 billion (USD 1.1 billion) per year to finance five BRM programmes:

• AgriStability, an income stabilisation programme to support producers in years of significant whole-farm margin declines.

• AgriInvest, a savings tool matching contributions to producers who make annual deposits to an AgriInvest account, to help them manage moderate income declines, make investments in farming operations to mitigate risk or improve market income.

• AgriInsurance, a cost-shared insurance programme to reduce the financial impact of production or asset losses due to natural hazards.

• AgriRecovery, a disaster relief framework to help producers with the cost of activities necessary to recover from natural disasters.

• AgriRisk, a programme to support the development of new risk management tools by the private sector.

Strategic initiatives aim to foster the long-term prosperity of Canada’s agriculture and agro-food sector under the CAP 2018-23 by providing an investment of CAD 3 billion (USD 2.3 billion), including CAD 1 billion (USD 0.8 billion) in federal programmes and activities and CAD 2 billion (USD 1.5 billion) in cost-shared programmes and activities.

Federally funded strategic initiatives comprise large, national programmes to support the sector in areas of federal jurisdiction and focus on three pillars:

• Growing trade and expanding markets through the AgriMarketing programme, which supports industry-led market development activities by helping the sector identify and seize domestic and international opportunities; and the AgriCompetitiveness programme, which helps the sector adapt to changing commercial and regulatory environments, share best practices, and provide mentorship opportunities.

• Fostering innovative and sustainable growth in the sector through the AgriScience programme, which supports innovation driven by industry research priorities, including pre-commercialisation activities and investments in cutting-edge research to benefit the agricultural and agro-food sector; and the AgriInnovate programme, which supports projects that accelerate the demonstration, commercialisation or adoption of innovative products, technologies, processes or services that increase the sector’s competitiveness and sustainability.

• Supporting diversity and a dynamic, evolving sector through the AgriAssurance programme, which aims to foster public trust by helping industry develop and adopt systems, standards and tools to measure food safety and traceability; and the AgriDiversity programme, which aims to increase the capacity of youth, women, Indigenous Peoples and persons with disabilities to better participate in the agricultural sector. It supports skills, leadership, and entrepreneurial development; and facilitates knowledge sharing and best management practices.

Cost-shared strategic initiatives are funded 60% by the federal government and 40% by the provincial/territorial governments, and delivered by the latter to ensure that programmes meet their needs. These initiatives focus on six priority areas:

• Science, research and innovation to help farmers, food processors and agro-businesses adopt innovative products and practices in order to improve resiliency and productivity through research, innovation and knowledge transfer.

• Markets and trade to facilitate the maintenance and expansion of domestic and international markets, and help farmers and food processors improve their competitiveness through skills development and improved export capacity, underpinned by a strong and efficient regulatory system.

• Value-added agriculture and agro-food processing to foster continued growth by supporting targeted actions aiming to increase productivity and competitiveness.

• Public trust to build a firm foundation for the sector through improved assurance systems in food safety and plant and animal health, stronger traceability and effective regulation.

• Risk management to enable proactive and effective risk mitigation and adaptation, and strengthen the resilience of the sector by ensuring comprehensive, responsive and accessible programmes.

• Environmental sustainability and climate change to build the sector’s capacity to protect natural resources, mitigate agricultural greenhouse gas emissions and adapt to the anticipated impacts of climate change by enhancing sustainable growth.

Provincial/territorial governments design and administer most farm-level environmental programmes. For instance, the Environmental Farm Plans (EFP) programmes and the Environmental Stewardship Incentive programmes, financed jointly by FPT governments, strive to advance environmentally sustainable agriculture. The EFP consists of an assessment of on-farm environmental risks and the development of an action plan to mitigate them. The Environmental Stewardship Incentive programmes provide financial assistance to farms with an EFP to adopt specific beneficial practices, such as nutrient management, manure storage and soil erosion controls (OECD, 2015[9]). They are implemented on the basis of specific regional partnership programmes, such as the 2018 Canada-Ontario Lake Erie action plan to reduce phosphorus pollution (Gruère and Le Boëdec, 2019[13]). The government of Quebec has its own agro-environmental programme, the Prime-Vert, and consulting services that aim to increase and facilitate the adoption of agri-environmental practices by agricultural producers.

The 2018-23 CAP programmes are to help the Canadian agriculture and agro-food sectors contribute to the Pan-Canadian Framework (PCF) on Clean Growth and Climate Change. The PCF was adopted following Canada’s ratification of the Paris Agreement in 2016, with the goal to reduce greenhouse gas (GHG) emissions across all sectors in Canada, including agriculture. It identifies three agriculture-related actions: (1) increasing stored carbon in agricultural soils to partially offset emissions from the sector; (2) generating bioenergy and bio-based products to displace emissions in other economic sectors; and (3) advancing innovation in GHG-efficient management practices to reduce agricultural emissions and emission intensity.

In 2019, the government of Canada established the first Food Policy for Canada aiming to create a co-ordinated and food-systems-based approach to taking action on food-related opportunities and challenges. The initial funding of CAD 134.4 million (USD 101.3 million) was allocated for short-term actions in 2019-24 in the areas of: (1) helping Canadian communities access healthy food; (2) making Canadian food the top choice at home and abroad; (3) supporting food security in northern and indigenous communities; and (4) reducing food waste.

Domestic policy developments in 2020-21

On agri-environment, in the 2020 Fall Economic Statement, the government of Canada proposed to provide Agriculture and Agri-Food Canada (AAFC) with CAD 98.4 million (USD 73.2 million) over ten years, starting in the 2021-22 fiscal year, and CAD 1.6 million (USD 1.2 million) in remaining amortisation, to establish a new Natural Climate Solutions for Agriculture Fund. The fund would also leverage CAD 85 million (USD 63.2 million) through existing programmes and would support the agricultural sector’s actions on climate change by accelerating the adoption of carbon sequestering beneficial management practices, such as cover crops or shelterbelts, through development, testing, peer-to-peer learning and solution sharing with farmers. The expenditure from the fund is to be guided by a new Canadian Agri-Environmental Strategy to be developed in collaboration with provinces and territories, industry representatives, and non-governmental organisations to support the sector’s actions on climate change and other environmental priorities towards 2030 and 2050. This strategy is expected to revolve around core themes such as greenhouse gas emissions reductions; soil health and carbon sequestration; biodiversity; adaptation, resilience and disaster mitigation; water and clean technology.

On 11 December 2020, the government of Canada released its A Healthy Environment and a Healthy Economy plan. The plan builds on the Pan-Canadian Framework on Clean Growth and Climate Change from 2016 and contains a mix of new and strengthened federal policies, programmes and investments to cut pollution and build a stronger and cleaner economy, including initiatives supporting climate-smart agriculture in Canada. Within this frame, the government plans to take the following actions: (1) invest CAD 165.7 million (USD 123.3 million) over seven years to support the agricultural sector in developing transformative clean technologies and help farmers adopt commercially available clean technology; (2) set a national target for emissions from fertilisers reduced to 30% below 2020 levels, and work with fertiliser manufacturers, farmers, provinces and territories to develop an approach to meet the target; and (3) work with provinces and territories to boost climate-smart agriculture under the current CAP. The government also proposed to invest CAD 1.5 billion (USD 1.1 billion) in a Low-carbon and Zero-emissions Fuels Fund to increase the production and use of low-carbon fuels. This initiative will help farmers diversify by producing feedstocks for biofuels.

On 18 December 2020, the government of Canada published the proposed regulations for the Clean Fuel Standard (CFS). The proposed regulations would reduce the lifecycle carbon intensity3 of liquid fossil fuels used in Canada, as well as support the domestic production of cleaner fuels such as lower carbon intensity biofuels. A credit market would be established with each credit representing a lifecycle emission reduction of one tonne of carbon dioxide equivalent (tCO₂eq.). The CFS regulations would contribute to the goal of reducing GHG emissions by more than 20 million tonnes per year by 2030. They would also create economic opportunities for voluntary parties like biofuel and other lower-carbon fuel producers to create and sell their credits, which in turn would generate favourable conditions for feedstock providers, such as farmers, supporting lower-carbon fuel production. The final version of the regulations is expected in late 2021, with the CFS reduction requirements coming into force on 1 December 2022.

A Sustainability Sector Engagement Table was launched on 10 December 2020 under the lead of the AAFC, to provide a forum for ongoing dialogue between industry, governments, academia and other stakeholders on approaches to address environmental issues facing the sector such as climate change and biodiversity. The table is scheduled to engage in a strategic planning exercise in early 2021 to identify and direct its specific work activities and desired outcomes.

At the provincial level, the government of Quebec launched the 2020-2030 Sustainable Agriculture Plan (Plan d’agriculture durable) in October 2020 to complement and reinforce the action deployed following the implementation of the 2018-2025 Biofood Policy (Politique bioalimentaire 2018-2025). The Plan, developed in consultation with stakeholders in the agricultural sector, proposes interventions adapted to regional particularities and to different production models. The five key objectives of the Plan are: reducing pesticide use and associated risks; improving soil health and conservation, improving fertiliser management, optimising water management and improving biodiversity. According to this Plan, a budget of CAD 125 million (USD 93 million) spread over five years will be provided to accelerate the adoption of efficient agri-environmental practices by 2030. This total includes CAD 70 million (USD 52.1 million) devoted to incentivise agricultural producers whose efforts and favourable agri-environmental practices go beyond regulatory requirements and generate significant environmental gains. In addition, CAD 30 million (USD 22.3 million) are earmarked to be invested in research and knowledge development, and CAD 25 million (USD 18.6 million) are budgeted to facilitate knowledge transfer, training and support for agricultural producers.

A new Efficient Grain Dryer Program was implemented in Alberta to assist grain producers to improve energy efficiency within their operations. The programme helps to cover costs for eligible energy efficient grain drying equipment.

The government of Manitoba provided over CAD 5 million (USD 3.7 million) to the GRowing Outcomes in Watersheds (GROW) initiative for the delivery of ecological goods and services (EG&S) on agricultural landscapes. GROW promotes conservation of natural areas or changes to land uses that provide EG&S by helping farmers develop projects that maintain or improve local watershed health. Through the GROW Trust, watershed districts in Manitoba delivered 16 projects that improve resilience to the effects of climate change in 2020-21.

On risk management, a new approach to the Organic Option of the AgriInsurance programme was implemented in Saskatchewan in 2020 to ensure that this option remains relevant to local producers. Premiums and coverage are updated to better reflect the production experience of organic producers. With this change, organic insured prices are higher and premium rates are lower. Average coverage is also lower, realigning to reflect current risks to the organic sector.

In Manitoba, the Contract Price Option has been introduced on canola and field peas. This option allows producers to blend the price from their contracted production with the base AgriInsurance value to better reflect expected market price. Also, fall rye has been introduced as an eligible crop for organic insurance.

The government of Manitoba supported beef producers affected by dry conditions by providing a one-time, 20% rent credit to producers who held a forage lease or renewable permit on agricultural Crown lands in 2019 and who continue to hold it in 2021.

The government of Quebec provided financial support to cervid producers – particularly for red deer – ordered to slaughter and dispose of animals or to implement new sanitary measures in order to eradicate the Chronic Wasting Disease. Both measures are required under the Animal Health Protection Act.

It also provided an exceptional financial support to grain corn producers to reduce the impact of the rising price of propane used to dry grain corn. This assistance measure is targeted to producers who harvested after 19 November 2019, when Canadian National Railways employees went on strike.

On supply-managed commodities, the government of Canada continues to provide support to producers of supply-managed commodities who incurred income losses resulting from implementation of the Canada–European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The federal government approved the financing of the remaining compensation to dairy farmers, amounting to CAD 1.4 billion (USD 1 billion), to be provided over a three-year period, from fiscal year 2020-21 to 2022-23. Payments to producers are to be delivered through the Dairy Direct Payment Program based on individual milk quota as of 31 October each year.

In its 2020 Fall Economic Statement, the government of Canada also announced CAD 691 million (USD 514.2 million) over ten years for programmes specific to supply-managed chicken, egg, broiler hatching egg and turkey farmers. These programmes include support for farmers to make productivity-increasing investments, and for marketing activities.

On infrastructure development, in July 2020, the government of Saskatchewan announced an irrigation project valued at CAD 4 billion (USD 3 billion). The vision of this project is to irrigate up to 500 000 acres of land (202 343 hectares), more than doubling the irrigable area in Saskatchewan. The project is beginning with a CAD 22.5 million (USD 16.7 million) investment in preliminary engineering and initial construction and is expected to be developed in three phases over a period of ten years.

On inclusiveness, in August 2020, the government of New Brunswick implemented a new Indigenous Agriculture Development Program under the CAP to support First Nations interested in participating in the agriculture and agro-food industry. This programme is to help indigenous farmers develop viable business plans, manage finances and production costs, and build capacity required for their farming operations.

On interprovincial partnership, in 2020, the government of Manitoba officially adopted New West Partnership Trade Agreement, which commits each of the four western provinces (British Columbia, Alberta, Saskatchewan and Manitoba) to enhance trade, investment and labour mobility, and to remove barriers to the movement of goods, services, investment and people within and between the jurisdictions. This agreement also streamlines the regulatory requirements to start and operate a business and eliminated the need to file multiple registrations and reports between the four provinces.

On food safety, on 15 July 2020, new requirements related to licensing, preventive controls and traceability under the Safe Food for Canadians Regulations applied to businesses in the manufactured food sector, including confectionary, snack foods, beverages, oils, dried herbs and spices, nuts and seeds, coffee and tea, processed grain-based foods such as baked goods, cereals and pasta. However, due to the COVID‑19 pandemic, the Canadian Food Inspection Agency (CFIA) will not prioritise compliance activities related to these new requirements until announced with adequate lead time.

On food policy, within the framework of the Food Policy for Canada, the federal government has allocated funds to several initiatives planned for the period of 2019-24. Among others, it implemented the Local Food Infrastructure Fund, which is a five-year programme of CAD 50 million (USD 37.7 million) aiming to strengthen food support organisations and help improve access to safe and nutritious food for Canadians at risk.

The government of Canada has been also encouraging the development of solutions to food waste by investing CAD 20 million (USD 14.9 million) to establish the Food Waste Reduction Challenge. In November 2020, the first two streams of this challenge were launched with awards totalling up to CAD 10.8 million (USD 8 million) dedicated to innovative business models that can prevent or divert food waste at any segment of the food supply chain. The launch of two additional challenge streams focused on technological solutions to food waste is planned for spring 2021. These challenge streams will focus on technologies that can extend the life of food or transform food that would otherwise be lost or wasted.

The federal government has been addressing food fraud in order to protect consumers from deception and companies from unfair competition. As a part of this initiative, the CFIA published the Enhanced Honey Authenticity Surveillance Report (2019 to 2020) raising awareness about honey adulterated with sugars.

Domestic policy responses to the COVID-19 pandemic

Federal and provincial governments in Canada have been implementing various measures to address impacts of the COVID-19 crisis on agricultural production, the food chain and consumers. Support is being provided through both sector specific and overall economic measures.

A number of general measures were introduced to support individual or corporate firms affected by the COVID-19 crisis, to which agriculture and agro-food firms have access. Business support includes tax deferrals, wage subsidies, minimum income to those who had to stop their activity because of COVID-19, and additional funding for existing programmes. The main programmes benefiting agro-food sector include:

• The Business Credit Availability Program, allowing the Business Development Bank of Canada and Export Development Canada to enable access to capital for small and medium-sized business.

• Canada Emergency Wage Subsidy providing up to a 75% wage subsidy to eligible employers.

• Regional Relief and Recovery Fund, providing, through regional development agencies, liquidity assistance for businesses affected by the COVID-19 pandemic that have been unable to access existing support measures.

• Canada Emergency Rent Subsidy, providing rent and mortgage support for qualifying businesses.

• New measures under the CanExport SMEs programme to help small business owners to market their products through e-commerce and virtual trade shows, and help them manage the costs of new COVID-19 related trade barriers.

Federal and provincial governments in Canada adjusted and enhanced targeted programmes to alleviate financial pressure on food producers and help them deal with challenges surrounding COVID-19 (Government of Canada, 2021[14]).

Farm Credit Canada (FCC) increased its lending capacity by an additional CAD 5 billion (USD 3.7 billion) and put in place deferrals of principal and interest payments for existing loans and new credit lines to help farmers, agribusinesses and food processors who face cash flow issues. To support the sector, the FCC invested CAD 100 million (USD 74.4 million) in the Agriculture and Food Business Solutions Fund, which primarily offers convertible debt investments, as well as other flexible financing solutions.

Eligible grain, cattle and flower producers with outstanding loans under the Advance Payments Program (APP) benefited from debt restructuring to repay APP advances totalling CAD 173 million (USD 128.7 million). Over the extension period, the federal government continued to pay the interest on the interest-free portion of these advances.

The government of Canada also amended the Canadian Dairy Commission (CDC) Act to increase the CDC’s borrowing limit by CAD 200 million (USD 148.8 million) to a total of CAD 500 million (USD 372 million) to allow cheese and butter to be temporarily stored and avoid waste. Those amendments complement existing CDC programmes helping the sector to manage surplus milk.

Under the CAP, producers continue to have access to a comprehensive suite of Business Risk Management programmes to help them manage significant financial impacts and risks beyond their control. In that vein, in May 2020, the government of Canada launched national AgriRecovery initiatives of up to CAD 125 million (USD 93 million) in funding to help livestock producers facing additional costs incurred by COVID-19. Initiatives have been designed and implemented jointly by the federal and provincial governments to ensure that they meet the specific needs of the provinces. They include set-asides for cattle and hog management programmes to manage livestock back-up on farms due to the temporary closure of food processing plants.

Aside from direct aid, a number of the BRM programme parameters and deadlines have been modified or extended in multiple provinces. For instance:

• The federal government and governments of Manitoba, New Brunswick, Nova Scotia, Quebec and Saskatchewan agreed to increase the interim payment rate from 50% to 75% of estimated final 2020 AgriStability benefits for the 2020 programme year.

• The government of Prince Edward Island provided to its producers an AgriStability top-up and an AgriInsurance discount for the 2020 and 2021 programme years. The provincial government is paying the provincial portion of removing the reference margin limit and increasing the trigger from 70% to 85% in AgriStability. The government is also providing a 10% discount on the farmer share of AgriInsurance premiums.

• In May 2020, the government of Saskatchewan announced an additional CAD 10 million (USD 7.4 million) assistance package to help livestock producers in the province manage the effects of COVID-19 related to market interruptions. The funds consist of CAD 5 million (USD 3.7 million) for Saskatchewan’s share of the costs associated with participation in the national AgriRecovery set-aside programme, and CAD 5 million (USD 3.7 million) to partially offset higher premium costs under the Western Livestock Price Insurance Program.

The Ontario Government has expanded the cap for the Risk Management Program and the Self-Directed Risk Management programme from CAD 100 million (USD 74.4 million) to CAD 150 million (USD 111.6 million) annually. The initially planned implementation date of the funding increase was brought forward from 2021 to 2020 in the context of COVID-19. However, the scope of the programmes remains unchanged, supporting producers and helping them to manage risks.

The government of Canada and the government of Alberta have been expanding and extending the Alberta Beekeepers Stock Replacement Program to help Alberta beekeepers address the impact of COVID-19 on their beekeeping operations.

Business support also includes the expansion of financial and advisory services to the agriculture and agro-food sector. FCC put in place customer support programmes, which invite customers to contact their offices to discuss their finances and options. At the provincial level, Alberta’s Agricultural and Finance Services Corporation has been also encouraging its customers to contact their relationship manager for enhanced loan arrangements. Support could include personalised solutions such as, loan payment relief through interest-only payment, payment re-amortisation or payment deferral options. The Government of Saskatchewan launched the Business Response Team, which works with businesses to identify programme supports available to them both provincially and federally.

Agriculture and Agri-Food Canada (AAFC) holds Industry-Government COVID‑19 information sharing calls with stakeholders every second week to share information and discuss issues facing the industry, including potential impacts on trade. This allows both government and private-sector stakeholders to identify any developing issues and take mitigating actions to avert more serious consequences.

The government of Canada designated workers in the food supply chain as essential and introduced labour-related measures to facilitate the movement of agro-food products and inputs, both at home and abroad. Truck drivers, plane crews and others who are transporting goods are exempted from travel bans, as long as they are not showing symptoms. Temporary foreign workers (TFW) in agriculture, agro-food, seafood processing and other key industries are being allowed to travel to Canada. However, these workers and their employers are expected to follow the latest public health and safety requirements to help prevent the introduction and spread of COVID-19. TFWs entering Canada are subject to an Emergency Order under the Quarantine Act, which requires a 14‑day mandatory quarantine upon arrival. The employers of TFWs are compelled, under the Amendments to the Immigration and Refugee Protection Regulations, to meet additional requirements such as paying workers for the initial quarantine period upon entry into Canada.

To ease the burden on Canadian employers, the government of Canada put in place the Mandatory Isolation Support for Temporary Foreign Workers Program with initial funding of CAD 50 million (USD 37.2 million) that, following the Quarantine Act, was extended until 31 March 2021 with an additional CAD 34.4 million (USD 25.6 million). The programme intends to help with the impacts of the COVID-19 pandemic on food supply in Canada by assisting the farming, fish harvesting, and food production and processing sectors with some of the incremental costs associated with the mandatory 14‑day isolation period imposed on TFWs. Eligible costs could include wages, food, benefits, transportation, housing, and other protocol compliance requirements under the Quarantine Act.

The government of Canada invested CAD 58.6 million (USD 43.6 million) in the Temporary Foreign Worker Program to safeguard the health and safety of Canadian and temporary foreign workers from COVID‑19: CAD 7.4 million (USD 5.5 million) to increase support to temporary foreign workers; CAD 16.2 million (USD 12.1 million) to strengthen the employer inspections regime, particularly on farms; and, CAD 35 million (USD 26 million) through the Emergency On-Farm Support Fund to improve health and safety on farms and in employee living quarters to prevent and respond to the spread of COVID-19. The latter going toward direct infrastructure improvements to living quarters, temporary or emergency housing, as well as personal protective equipment, sanitary stations, and any other health and safety measures. As part of these measures, the government of Canada committed to developing mandatory requirements to improve employer-provided accommodations for the TFW Program, with a focus on ensuring better living conditions for workers.

Provincial governments have also implemented programmes to assist employers in meeting the new requirements for temporary foreign and domestic farm workers. In British Columbia, TFWs are required to self-quarantine in government-managed accommodations for 14 days before being transported to their farm. The province funds hotel, food service and worker support costs during this period, while the employers are responsible for paying these workers for a minimum of 30 hours per week. The government of British Columbia launched a programme that reimburses up to 70% of costs for personal protective equipment to support farmers housing domestic temporary farm workers on-farm in temporary structures. The government of Quebec invested CAD 45 million (USD 33.5 million) to support recruiting farm workers. The measures included a pay premium of CAD 100 (USD 74.4) to seasonal agricultural workers, including TFWs, who work a minimum of 25 hours per week; creation of a new worker travel programme that takes distancing rules into consideration; establishment of field squads to support producers in training new workers; and financial support to the agricultural employment centres to facilitate the matching of farm businesses and workers.

Furthermore, since March 2020, the government of Canada has also taken measures to reduce the administrative burden for employers, including increasing the maximum duration of employment under Labour Market Impact Assessment for employers of workers in the low-wage stream of the Temporary Foreign Worker Program from one to two years as part of a three-year pilot.

The AAFC’s Youth Employment and Skills Program (YESP), which offers a wage subsidy to employers who hire youth for agricultural jobs, received an additional CAD 9.2 million (USD 6.8 million) in funding in response to the COVID-19 pandemic. The 2020 Fall Economic Statement further increased funding for YESP of up to CAD 21.4 million (USD 15.9 million) for 2021-22. The programme provides support for 50% of wages to a maximum of CAD 14 000 (USD 10 400), with a focus on youth facing barriers.

On Business Support and Development, the federal and provincial governments have been supporting agro-food businesses in implementing changes to safeguard the health and safety of workers due to the impacts of the COVID-19 pandemic, as well as boost their capacity to adapt and recover after the crisis. For instance, the Emergency Processing Fund (EPF), a one-time federal investment of up to CAD 77.5 million (USD 57.5 million), aims to support projects that help companies respond to the urgent health and safety needs of workers in agro-food sectors impacted by COVID-19, and improve, automate and modernise facilities needed to increase Canada’s food supply capacity. The EPF provides up to CAD 5 million (USD 3.7 million) per recipient in non-repayable funding for emergency response activities and/or repayable funding for strategic investments.

A raft of business support measures were introduced at the provincial level as well. These include:

• In British Columbia, the B.C. Agri-Business Planning Program offers business planning services and coaching to develop an immediate and long-term recovery plan for agriculture, seafood and agro-food producers/processors who have seen a drastic loss in sales due to COVID-19.

• The government of Manitoba provided CAD 3 million (USD 2.2 million), as part of the Special COVID-19 Response Initiative, to agro-processors, industry organisations and industry service providers to adapt production processes and implement new strategies and technologies to mitigate the impact of the pandemic, ensure the security of the food supply and improve the competitiveness of the agricultural sector.

• The government of Alberta created the Agriculture Training Support Program of up to CAD 5 million (USD 3.7 million) in support to farmers, agro-businesses and food processors to offset costs for COVID-19 safety and training, including the costs for personal protective equipment.

• The government of Prince Edward Island implemented the Strategic Fund for Agriculture Project to support the local agriculture industry in mitigating impacts from the pandemic. Eligible expenses include costs associated with activities designed to assist with the marketing, movement and distribution of product, and assistance to address marketing challenges by implementing solutions using technology.

• The government of New Brunswick enhanced some existing programmes under the CAP to help producers deal with pandemic-related shocks and build resilience. Programming changes for 2020‑21 include higher per project maximums, as well as an increased maximum cost-share levels.

• The government of Newfoundland and Labrador announced funding to create jobs in the agricultural sector and assist farmers. The funding is part of a plan to support employment in rural communities and help open new markets and products for renewable resource-based businesses during the COVID-19 pandemic. This funding will help increase beef production and large-scale potato production, and support the development of local secondary beef facilities and regional vegetable cold storage facilities, as well as regional equipment banks for new farming entrants.

Provincial governments also supported the sector to adapt their market operations during the COVID-19 pandemic by taking advantage of digital technologies. The government of Manitoba launched a project, as part of the CAP, to create a centralised online platform for Manitoban producers to allow local food producers and farmers’ markets to sell their products online. The government of British Columbia (BC) provided funding to the BC Association of Farmers’ Markets to cover fees for individual farmers’ markets to join the online platform and set up their digital market store presence. It also supported the Buy BC e-commerce initiative to allow more local products to be advertised online and sold digitally. The government of Newfoundland and Labrador also provided funding to support agricultural virtual market opportunities.

On food safety compliance, the CFIA has temporarily suspended certain low-risk inspection activities to reassign existing employees to higher priority activities to better support Canadians and industry during the pandemic. The government of Canada invested CAD 20 million (USD 14.9 million) to support critical food inspection and ensure that Canadians have continued access to safe, high-quality food. This investment is allowing the CFIA to hire, train and equip additional staff to conduct critical inspection activities, as well as to support the training of provincial food inspectors so that they can provide assistance to the CFIA as needed. The funding is also supporting the CFIA in developing new means of carrying out inspections, including through the expanded use of electronic tools such as tablets and via access to the CFIA’s remote service delivery network.

The CFIA is also working closely with industry and trading partners to minimise supply disruptions during this crisis. Among other activities, it has provided guidance to industry in cases of a positive COVID-19 case in a meat slaughter/processing plant, as well as an escalation protocol to follow; and created flexibility in the standard food packaging and labelling requirements to help redirect packaged food intended for use in restaurants and hotels to retail outlets and grocery stores.

To provide food assistance to food vulnerable populations during the pandemic, CAD 200 million (USD 148.8 million) in funding is being provided to food banks and other national food rescue organisations through the Emergency Food Security Fund. Funding is being used to purchase food and other basic necessities; buy or rent equipment and materials; transport and distribute food; access new distribution centres; hire temporary help to fill volunteer shortages; and implement biosecurity measures.

The government of Canada also launched the Surplus Food Rescue Program to help manage and redirect existing food surpluses to organisations addressing food insecurity. This one-time limited programme of up to CAD 50 million (USD 37.2 million) aims to provide assistance to acquire and process surplus commodities and food that would otherwise be lost or destroyed and distribute them to populations in need; assist producers and processors to dispose of such surpluses; and connect surplus commodities to food vulnerable populations to avoid food waste.

The Nutrition North Canada subsidy programme has been enhanced during the COVID-19 pandemic. New items have been added to the subsidy list and the medium and high subsidy rates have been increased to help the most vulnerable populations buy healthy food and other essentials.

Trade policy developments in 2020-21

The Canada-United States-Mexico Agreement (CUSMA) entered into force on 1 July 2020. The agreement preserves the existing agricultural commitments under the North American Free Trade Agreement (NAFTA), including duty-free access for a wide range of Canadian agricultural products such as meats, grains, oilseeds, fruits and vegetables, pulses, maple syrup, wines and spirits, and processed foods. Additionally, it will eliminate tariffs for margarine and whey between Canada and the United States. The CUSMA establishes US tariff rate quotas (TRQs) for Canadian exports of refined sugar and sugar-containing products, as well as certain dairy products (including cheese, cream, milk beverages and butter). As part of the overall agreement, Canada agreed to provide new market access to the United States in the form of tariff rate quotas for dairy, poultry, and egg products. The agreement also requires Canada to eliminate milk classes 6 and 7; establishes a mechanism to monitor exports of skim milk powder, milk protein concentrate, and infant formula; and allows US-grown wheat of varieties registered in Canada to receive an official Canadian grain grade. Furthermore, the agreement includes a new chapter on Sanitary and Phytosanitary Measures (SPS), which reinforces and builds on provisions contained in the original NAFTA and the World Trade Organization (WTO) SPS Agreement, and reflects the strong trade and regulatory relationship between the Parties. The agriculture chapter in the agreement includes new obligations for agricultural biotechnology, aiming to provide further transparency and predictability in the trade of products derived from current and future technologies.

Canada and the United Kingdom signed the Canada–UK Trade Continuity Agreement (TCA) on 9 December 2020. The TCA substantively replicates the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), ensuring continuity in Canada’s trade with the United Kingdom after 31 December 2020 (the end of the Brexit transition period). The TCA maintains tariff elimination commitments for most agricultural exports, including products still subject to tariff phase-outs. The agreement continues Canada’s duty-free quota access for beef, pork, bison, wheat, and processed sweetcorn, while not providing any additional market access for cheese or any other supply-managed products (dairy, poultry and eggs). The TCA is a transitional measure and includes a commitment by both Parties to negotiate a new comprehensive bilateral trade agreement that can best reflect the Canada–United Kingdom bilateral relationship.

Trade policy responses to the COVID-19 pandemic

On 22 April 2020, Canada and a diverse group of WTO Members, representing two-thirds of global agriculture exports, signed onto a joint statement called “Responding to the COVID-19 pandemic with open and predictable trade in agricultural and food products” in order to reinforce international co-operation on trade in agricultural and agro-food products. The statement articulates a set of principles whereby Members committed to not impose agriculture export restrictions; to keep supply chains open to avoid food shortages; that emergency measures related to agriculture and agro-food products designed to tackle COVID-19 are targeted, proportional, transparent and temporary; and to support international efforts on making information available on production, stocks, and prices.

On 15 June 2020, the Ottawa Group4 Ministers endorsed an Action Plan on COVID-19, which includes specific actions on agriculture. The agreed action items on agriculture trade are consistent with and build on the principles included in the joint statement on open and predictable trade in agriculture and agro-food products led by Canada and initially circulated on 22 April 2020. The action items on agriculture are:

• to engage in ongoing discussions on the fulfilment of joint declarations on maintaining predictable and open agriculture trade

• to lead by example, and withdraw or end any emergency measures that may adversely affect trade in agriculture as quickly as possible

• to advance analysis and consideration on what steps WTO Members could take to continue improving agriculture trade based on the lessons learned from COVID-19 to ensure that future crises will not undermine trade, food security, and the stability of agricultural markets in the long-term.

Contextual information

Canada is a large, wealthy country with a small population relative to its land area, and relatively abundant land and water available to the agricultural sector. Primary agriculture accounts for only 2% of GDP and 1.8% of employment (Table 6.3), but accounts for a larger share of economic output in some of the country’s regions. Crop production is concentrated in the western prairies, where the typical farm is twice as large as the national average, highly productive, and produces largely for export. Most milk production is located in eastern Canada, which has relatively smaller farms and a larger variety of crops. Red meat industries are present across Canada, with beef cattle production being especially prominent in western Canada, and hog production concentrated in Quebec, Ontario and Manitoba.

Table 6.3. Canada: Contextual indicators

	Canada		International comparison
	2000*	2019*	2000*	2019*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	901	1 930	2.3%	1.7%
Population (million)	31	38	0.7%	0.7%
Land area (thousand km2)	8 966	8 966	10.7%	10.6%
Agricultural area (AA) (thousand ha)	61 287	58 199	2.0%	1.9%
			All countries1
Population density (inhabitants/km2)	3	4	53	63
GDP per capita (USD in PPPs)	29 364	51 342	9 265	21 975
Trade as % of GDP	33	25	12.3	14.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	2.3	2.0	2.9	3.5
Agriculture share in employment (%)	3.3	1.8	-	-
Agro-food exports (% of total exports)	6.0	10.9	6.2	7.3
Agro-food imports (% of total imports)	5.0	8.0	5.5	6.7
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	43	58	-	-
Livestock in total agricultural production (%)	57	42	-	-
Share of arable land in AA (%)	67	66	32	34

Notes: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Over the past two decades, Canada has enjoyed a stable macroeconomic environment characterised by relatively low inflation rates fluctuating around its 2% target, and positive economic growth supporting steady declines in unemployment rates. However, the economy has been heavily affected by the COVID‑19 pandemic and related restrictions, which caused a recession: Canada’s GDP declined by more than 5% between 2019 and 2020, while the unemployment rate grew to almost 10% (Figure 6.5).

Figure 6.5. Canada: Main economic indicators, 2000 to 2020

Sources: OECD statistical databases; World Bank, WDI; ILO estimates and projections; and Statistics Canada.

Canada’s economy is well integrated in international markets – as measured by the ratio of trade to GDP at 25% in 2019 (Table 6.3). Agro-food products represent 11% of total Canadian exports and 8% of imports. Canada is a large net exporter of agro-food products and access to export markets is a significant issue for the sector. More than half of Canada’s agro-food exports are destined for the United States. Most of Canada’s agro-food exports are either processed products intended for direct consumption (39%), or primary products for processing (33%). Canadian households’ final consumption absorbs 75% of agriculture and food imports, of which two thirds are processed goods (Figure 6.6).

Figure 6.6. Canada: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

At 1.1%, Canada’s agricultural output growth over the decade 2007-16 was below the global average. Total factor productivity (TFP) growth has become much less dynamic than in the 1990s and intermediate input growth, in particular the use of fertilisers, has come to be the primary driver of agriculture output growth (Figure 6.7). Nevertheless, agriculture output growth has been achieved with either reduced or minimally increased pressure on natural resources, as shown in various environmental indicators. Average nutrient surplus intensities have been stable since 2000 for nitrogen and decreasing for phosphorous. Both nutrient surpluses are below the average for OECD countries, as is the share of agriculture in Canada’s GHG emissions, although the latter has increased since 2000 (Table 6.4).

Figure 6.7. Canada: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 6.4. Canada: Productivity and environmental indicators

	Canada		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	2.4%	0.5%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2019*	2000*	2019*
Nitrogen balance, kg/ha	24.0	23.7	33.2	28.9
Phosphorus balance, kg/ha	1.5	0.6	3.4	2.6
Agriculture share of total energy use (%)	2.2	3.5	1.7	2.0
Agriculture share of GHG emissions (%)	7.8	8.1	8.4	9.5
Share of irrigated land in AA (%)	1.2	1.0	-	-
Share of agriculture in water abstractions (%)	9.7	8.6	46.0	43.4
Water stress indicator	1.2	0.9	9.3	8.5

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

References

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[9] OECD (2015), Innovation, Agricultural Productivity and Sustainability in Canada, OECD Food and Agricultural Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264238541-en.

[10] Parliament of Canada (2017), Next Agricultural Policy Framework, Report of the Standing Committee on Agriculture and Agri-food, House of Commons, 42nd Parliament, 1st Session, https://www.ourcommons.ca/DocumentViewer/en/42-1/AGRI/report-5/.

[11] Parliament of Canada (2012), Growing Forward 2, (Includes a Summary of the Study of the Biotechnology Industry), Report of the Standing Committee on Agriculture and Agri-food, House of Commons, 41st Parliament, 1st Session, https://www.ourcommons.ca/DocumentViewer/en/41-1/AGRI/report-3/.

[7] Statistics Canada (2021), Data quality, concepts and methodology: Explanatory notes on direct program payments to agriculture producers, https://www.statcan.gc.ca/eng/statistical-programs/document/5229_D1_V4 (accessed on 15 January 2021).

Notes

← 1.  In Canada, the term “agri-food” is more common and generally includes upstream industries in addition to agriculture and the downstream value-chain. In this chapter, policy measures related to the “agro-food” sector reflect this notion.

← 2.  Canada was the initiator of a joint statement with a group of WTO Members called “Responding to the COVID‑19 pandemic with open and predictable trade in agricultural and food products” (https://trade.ec.europa.eu/doclib/docs/2020/april/tradoc_158718.pdf)

← 3.  The amount of greenhouse gas (GHG) emissions associated with all stages of fuel production and use per unit of energy.

← 4.  A group of 13 WTO Members: Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, South Korea, Mexico, New Zealand, Norway, Singapore and Switzerland.