Agricultural Policy Monitoring and Evaluation 2019

Chapter 6. Canada

Support to agriculture

Canada has significantly reduced its agricultural support since the late 1980s. Producer support as a share of gross farm receipts (%PSE) was halved between 1986-88 and 2000‑02, in large part because market price support (MPS) to the grains industry was discontinued in 1995. The decline in the level of support since then has been more gradual because the dairy, poultry, and egg sectors continue to be under supply management. Given the importance of business risk management programmes, payment levels vary annually. Lower levels of disaster payments in recent years and a shift of budgetary expenditures towards general service support to the sector have resulted in lower farm income support.

Canada’s PSE accounted for 9% of gross farm receipts in 2016‑18, compared to 36% in 1986-88 and 18% in 2000-02. Canada’s %PSE has been consistently below the OECD average over the period. However, the share of potentially most distorting support (based on output and variable input use – without input constraints) was 52% in 2016-18, above the OECD average, but lower than in 1986-88. MPS for milk accounts for the largest share of potentially most distorting support. On average, prices received by farmers were 6% higher in 2016-18 than those observed in world markets. The share of the General Services Support Estimate (GSSE) in the Total Support Estimate to agriculture (TSE) has almost doubled since 1986-88 and reached 28% in 2016-18. Support to the agricultural innovation system and the inspection system each account for about 40% of the GSSE.

Main policy changes

In Canada, a new five-year policy framework, the Canadian Agricultural Partnership (the Partnership) 2018-23 replaced on 1 April 2018 the previous framework Growing Forward 2 (GF2), which framed the main agricultural programmes and services for the period 2013-18 (AAFC, 2018a). The Partnership continues to cover cost-shared Business Risk Management (BRM) programmes; federally-delivered Strategic Initiatives; and cost-shared programmes delivered by Provinces and Territories. BRM programmes and strategic initiatives introduced with GF2 continue, with some changes. Support to research and innovation is split between into AgriScience and AgriInnovate, which support different elements of the innovation chain; and two new programmes are introduced. AgriAssurance aims to prevent and control risk to the animal and plant resource base, provide safe food and meet new market demands for assurance. AgriDiversity aims at increasing the capacity of youth, women, Indigenous Peoples and persons with disabilities to better participate in the agricultural sector. Provinces have started implementing new programmes within this framework.

On 30 November 2018, Canada, the United States and Mexico signed a new trade agreement, the Canada-United States-Mexico Agreement (called CUSMA in Canada), which will replace the North American Free Trade Agreement (NAFTA) once ratified by all three countries.

Assessment and recommendations

• Over time, there has been an increasing emphasis on general service support to the sector through programmes that target industry-led research and development, adoption of innovation in food and agriculture, and marketing initiatives. The new framework agreement for 2018-22 continues this trend.

• Support to producers, which is mainly to help farmers manage risk, has been well below the OECD average in recent years.

• For most commodities, domestic market prices are fully aligned with world prices, but the dairy, poultry and egg sectors continue to be protected from international competition and to receive market price support, which distorts production and trade. In recent years, the price distortion has been particularly high for dairy products. Market price support also acts as a barrier to entry into those supply-managed sectors, because high rents are capitalised in the value of quotas required to produce under the supply-management system.

• As a step towards phasing out the supply management, the available quotas should be increased in size 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 2018-22 Partnership renews programmes that provide budgetary support to mitigate farm income fluctuations, and adds a new element to facilitate safety management along the food chain, thus accompanying market demand. Stricter protocols and disciplines should be in place to reduce potential pressure for additional support in situations where existing programmes suffice, stimulate the development of market-based tools, and encourage farmers to find better ways to manage risk at farm level.

• The agreement also fosters inclusiveness, by helping youth, women, Indigenous Peoples and persons with disabilities to better participate in the agricultural sector. This also contributes to attracting and renewing labour much needed in the sector.

• The Pan-Canadian Framework (PCF) on Clean Growth and Climate Change covers the food and agriculture sector. Funding is available through the Partnership, and from economy-wide sources such as the Low Carbon Economy Leadership Fund, which has supported a number of agriculture and agri-food related projects with a focus on energy efficiency, soil health and carbon sequestration, manure management, and waste treatment and processing.

• In the future, the policy focus should continue to shift towards facilitating the adoption of innovation by targeting industry-led research and development, and marketing initiatives. This would contribute to the long-term objectives of improving the competitiveness and sustainability of the sector.

Figure 6.1. Canada: Development of support to agriculture

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

Source: OECD (2019[1]), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

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Support to producers (%PSE) has declined gradually since the late 1980s, accounting for less than 10% of gross farm receipts in the period 2016-18, about half the OECD average. The potentially most distorting support remains the largest share of producer support, due to market price support (MPS) to the dairy, poultry and egg sectors (Figure 6.1). The level of support hardly changed between 2017 and 2018, as the decline in MPS offset the increase in budgetary payments. The decrease in MPS results from a smaller price gap as domestic prices remained stable while world prices increased (Figure 6.2). Prices received by farmers, on average, were about 6% higher than world prices, but large differences between commodities persist. While most commodity prices are aligned with world levels, the domestic price for milk is 40% higher. MPS is the main component of Single Commodity Transfers (SCT): milk has the highest share of SCT in commodity gross farm receipts (Figure 6.3). Overall, SCT represent three-quarters of the total PSE. The expenditures for general services (GSSE) measured relative to agriculture value added were above the OECD average. Total support to agriculture as a share of GDP has declined significantly over time and is lower than the OECD average. More than 70% of the total support is provided to individual farmers (PSE).

Figure 6.2. Canada: Drivers of the change in PSE, 2017 to 2018

Source: OECD (2019[1]), “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), 2016-18

Source: OECD (2019[1]), “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

Contextual information

Canada is a large, wealthy country with a small population relative to its land area. Primary agriculture accounts for l.5% of GDP, but is important in some of its regions. Canada is a large net exporter of agro-food products, which account for about 12% of total exports, and access to export markets is a significant issue for the sector. More than half of Canada’s agro-food exports are destined to the United States. 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 (hogs and beef cattle) are present across Canada, especially in Western Canada.

Table 6.2. Canada: Contextual indicators

	Canada		International comparison
	1995*	2017*	1995*	2017*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	686	1 707	2.3%	1.7%
Population (million)	29	37	0.8%	0.8%
Land area (thousand km2)	9 094	9 094	11.4%	11.2%
Agricultural area (AA) (thousand ha)	67 994	62 671	2.3%	2.1%
			All countries1
Population density (inhabitants/km2)	3	4	48	60
GDP per capita (USD in PPPs)	23 395	46 705	7 642	21 231
Trade as % of GDP	29	25	9.9	14.7
Agriculture in the economy			All countries1
Agriculture in GDP (%)	2.9	1.5	3.3	3.5
Agriculture share in employment (%)	4.1	1.9	-	-
Agro-food exports (% of total exports)	6.8	11.5	8.1	7.5
Agro-food imports (% of total imports)	5.5	8.1	7.4	6.6
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	51	58	-	-
Livestock in total agricultural production (%)	49	42	-	-
Share of arable land in AA (%)	67	70	33	34

Note: *or closest available year. 1. Average of all countries covered in this report. EU treated as one.

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

Canada enjoys a stable macroeconomic environment, with rapid recovery from the 2007-08 economic crisis and steady GDP growth since. Inflation rates have been below 2% between 2012 and 2017, but rose to 2.3% in 2018. Unemployment rates have been declining regularly since the peak of 2009, to less than 6% in 2018. Exports of agro-food products are well above imports, with recent changes in values mainly reflecting commodity price fluctuations. Most of Canada’s agro-food exports are primary products for processing (around 37%), forming part of other country’s production system, and processed products for consumption (about 35%). Agro-food imports are largely processed products for consumption.

Figure 6.4. Canada: Main economic indicators, 1995 to 2018

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

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Figure 6.5. Canada: Agro-food trade

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

Source: UN Comtrade Database.

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Total factor productivity (TFP) growth is driving agricultural output growth in Canada. TFP growth averaged 0.9% per year between 2006 and 2015, below the world average. At 1.1% per year, output growth was also below the world average, achieved with declining use of primary production factors, notably labour, but higher use of intermediate inputs.

Canadian agriculture benefits from relatively abundant resources (e.g. land and water), and agricultural output growth has been achieved with reduced or minimal increased pressure on natural resources in most cases. Nitrogen surplus intensities have, however, risen significantly at the national level and are now close to the average for OECD countries, as are greenhouse gas (GHG) emissions, but the national phosphorus surplus intensity is well below the average for OECD countries.

Figure 6.6. Canada: Composition of agricultural output growth, 2006-15

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

Source: USDA Economic Research Service Agricultural Productivity database.

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Table 6.3. Canada: Productivity and environmental indicators

	Canada		International comparison
	1991-2000	2006-15	1991-2000	2006-15
			World
TFP annual growth rate (%)	2.7%	0.9%	1.6%	1.5%
			OECD average
Environmental indicators	1995*	2017*	1995*	2017*
Nitrogen balance, kg/ha	18.0	28.0	33.2	30.0
Phosphorus balance, kg/ha	2.0	1.3	3.7	2.3
Agriculture share of total energy use (%)	2.2	3.6	1.9	2.0
Agriculture share of GHG emissions (%)	8.3	8.5	8.5	8.9
Share of irrigated land in AA (%)	1.2	1.2	-	-
Share of agriculture in water abstractions (%)	8.7	5.6	45.4	42.5
Water stress indicator	1.3	1.0	9.7	9.7

Note: * or closest available year.

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

Description of policy developments

Main policy instruments

Canada’s agricultural policy framework prioritises risk management and investments to enhance the sector’s sustainable growth, competitiveness, marketing and trade, food safety, and research and innovation capacity. Under the Canadian Constitution, federal and provincial governments share the responsibility for agriculture. Since 2003, joint five-year funding agreements between federal, provincial, and territorial (FPT) governments frame the main programmes and services. The FPT framework agreements provide flexibility for provinces and territories to design and deliver programmes that respond to their regional priorities. In addition, provinces and territories can develop and fund their own agriculture programmes outside of this framework.

The current framework is the Canadian Agricultural Partnership (the Partnership) covering 2018-23 (AAFC, 2018[2]). On 1 April 2018, it replaced the previous FPT multilateral policy framework called Growing Forward 2 (GF2), which had been in place since 2013.

As the previous one, the current framework has three elements: 1) a suite of cost-shared Business Risk Management (BRM) programmes, which help farmers manage risks related to severe market volatility and disaster situations; 2) federally-delivered Strategic Initiatives; and 3) cost-shared programmes delivered by Provinces and Territories. Government spending for BRM programmes is around CAD 1.5 billion (USD 1.2 billion) per year, comprising about 70% of total spending under the Partnership.

There are five BRM programmes, cost-shared between the federal and provincial governments. AgriStability is a whole-farm margin programme providing support in years of significant income declines. AgriInvest provides matching contributions to producers, who make annual deposits to a savings account, to help manage moderate declines in income or make investments in farming operations to mitigate risk. AgriInsurance provides cost-shared insurance to reduce the financial impact of production or assets losses due to natural perils. AgriRecovery is a FPT co-ordinated disaster relief framework. These four programmes provide protection against different types of losses, as well as cash flow options. The fifth programme introduced in GF2, AgriRisk Initiatives, supports the industry to investigate risk, develop and implement new tools, as well as to engage the support and participation of the private sector.

Canada’s agricultural support policies differentiate between the supply-managed sectors, which are protected by high custom tariffs and are 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 tariffs and production quotas that are tradable only within provinces, combined with a system of domestic price-setting according to production costs. The successive frameworks recognise supply management as a risk management instrument.

Strategic Initiatives that are federally-funded focus on three key areas. Under the growing trade and expanding markets area, AgriMarketing supports industry-led market development activities aimed at assisting the sector in identifying and seizing domestic and international opportunities; and AgriCompetitiveness helps the sector adapt to changing commercial and regulatory environments, share best practices, and provide mentorship opportunities. Under the innovative and sustainable growth areas, AgriScience supports innovation driven by industry research priorities, including pre-commercialisation activities and investments in cutting-edge research to benefit the agricultural and agri-food sector; and AgriInnovate supports projects that aim to accelerate the demonstration, commercialisation or adoption of innovative products, technologies, processes or services that increase sector’s competitiveness and sustainability. They replace GF2 AgriInnovation. The area supporting the diversity and a dynamic sector includes two new programmes. AgriAssurance aims to prevent and control risk to the animal and plant resource base, provide safe food and meet new market demands for assurance. In addition, AgriDiversity is a new programme that aims at increasing the capacity of youth, women, Indigenous Peoples and persons with disabilities to better participate in the agricultural sector.

Strategic initiatives that are cost-shared prioritise investment in six areas: 1) science, research and innovation; 2) markets and trade; 3) environmental sustainability and climate change; 4) value-added agriculture and agro-food processing; 5) risk management; and 6) public trust.

Provincial governments design and administer most farm-level environmental programmes. Two programmes (cost-shared between federal and provincial governments) aim to advance environmentally sustainable agriculture: the Environmental Farm Plans (EFP) programmes and the Environmental Stewardship Incentive programmes. The EFP consists of an assessment of on-farm environmental risks, and the development of an action plan to mitigate those risks. The Environmental Stewardship Incentive programmes provide cost-shared financial assistance to farms with an EFP to adopt specific Beneficial Management Practices (BMP), such as nutrient management, manure storage and soil erosion controls.

Over the period 2018-23, the Canadian agriculture and agri-food sector’s contribution to the Pan-Canadian Framework (PCF) on Clean Growth and Climate Change will be primarily delivered through the Partnership. Federal-only programmes will support actions that help support resiliency and sustainability of the sector through science, research and adoption of innovative practices and technologies (e.g. AgriInnovate and AgriScience). The PCF has been adopted, following Canada's ratification of the Paris Agreement in 2016, to reduce GHG emissions across all sectors in Canada, including agriculture. It identifies three agriculture-related actions: increasing stored carbon in agricultural soils to partially offset emissions from the sector; generating bioenergy and bioproducts to displace emissions in other economic sectors; and, advancing innovation in GHG-efficient management practices to reduce agricultural emissions and emission intensity.

Domestic policy developments in 2018-19

Risk management

As part of provincial implementation of BRM programmes, Saskatchewan enhanced its crop insurance programme in 2018 by including insurance for pasture and fires, more crops to be insured under the Contract Price Option, and increased compensation rates for cattle lost due to predators. The Hazelnut Renewal Program in British Columbia provides funding to remove infected trees to mitigate the spread of Eastern Filbert Blight and to incentivise the planting of new disease-resistant hazelnut trees.

Alberta introduced three new risk management programmes. 1) The Emergency Preparedness Program aims to improve the capacity and readiness of industry to prepare for and respond effectively to an emergency that has the potential to negatively impact the livestock and crop sectors. 2) The Risk Mitigation Program is designed to protect animal and plant resources, farm families and workers, food supply, and irrigation conveyance work. 3) The Surveillance Program aims to increase the early detection of existing and emerging livestock diseases, crop pests, bee pests, foodborne hazards, and other risks affecting plant, animal, and public health.

In the hog industry, Manitoba implemented the High Traffic Facility Swine Disease Surveillance to monitor cleaning and disinfection of common contact points to ensure biocontainment. Audits and assessments also ensure industry biosecurity standards are met. Specific programmes targeted the bee sector in British Columbia (Bee BC Program) and Nova Scotia (Bee Biosecurity Program) and Manitoba (Ag Action Manitoba Assurance) to maintain and improve bee health.

Business and market development

In addition to supporting business and market development through the Partnership AgriCompetitiveness and AgriMarketing programmes, in November 2018 Canada’s federal government announced a number of new measures in support of the agricultural sector in its Fall Economic Statement. For example, under a new Accelerated Investment Incentive, manufacturers, food processors and farmers will be able to deduct a larger portion of the depreciation in the year an investment is made. Moreover, additional funding was made available to implement an Export Diversification Strategy, and to improve transportation data, which will support the movement of all goods, including agricultural products.

At the provincial level, the Land Matching Program in British Columbia provides land matching and business support services to new farmers looking for land to farm as well as landowners interested in finding someone to farm their land. The Small Farm Accelerator Program in Nova Scotia is open to new farming entrants and provides financial assistance for completing a farm business plan, a loan interest rebate, funding to address a barrier to growth, and assistance for contracting professional advisors. The Market Expansion and Export Readiness programme in Nova Scotia provides assistance to farmers willing to expand their market penetration.

Inclusiveness

The Partnership includes new activities targeting inclusive growth by reducing barriers for people with disabilities, women, Indigenous Peoples, youth and young farmers. The new AgriDiversity Programme is a five-year, CAD 5 million (USD 3.9 million) initiative developed to support diverse groups — Indigenous peoples, marketing boards, non-profit organisations and associations, including co-operatives — to respond to new and emerging issues and opportunities in the agricultural and agro-food sector. It supports skills, leadership, and entrepreneurial development; facilitates knowledge sharing and best management practices.

The Indigenous Agriculture and Food Systems Initiative (2018-23) aims to increase economic development opportunities for Indigenous peoples and communities in Canada by supporting Indigenous participation in the Canadian agriculture and agri-food sector, and encouraging partnerships between federal, provincial/territorial governments, and non-government collaborators. The initiative supports Indigenous communities and entrepreneurs who are ready to launch agriculture and food systems projects and others who want to build their capacity to participate in the agriculture and agri-food sector. The Indigenous Agriculture Development Program in British Columbia provides support for the development of agriculture and agro-food opportunities within Indigenous communities.

Environment and climate change

Additional programmes and initiatives outside of the Partnership will contribute to progress on agriculture-related actions identified under the PCF. The 2018-21 Agricultural Clean Technology programme supports investments made by provincial and territorial governments in research, development and adoption of clean technologies for the agriculture, agri-food and agri-based products sector, specifically precision agriculture and agri-based bioproducts. The new Living Laboratories Initiative will facilitate knowledge transfer on sustainable farming practices using an integrated approach to agricultural research that brings farmers, scientists and other stakeholders together to co-develop, test and monitor new practices and technologies on farms.

The Low Carbon Economy Leadership Fund has supported a number of agriculture and agri-food related projects being implemented in several provincial jurisdictions with a focus on energy efficiency, soil health and carbon sequestration, manure management, and waste treatment and processing. The Clean Fuel Standard (CFS) aims to achieve reductions of 30 mega-tonnes (Mt) CO₂-eq. per year of GHG emissions by 2030. The CFS presents potential opportunities for the agriculture sector as providers of agricultural biomass for use in the manufacture of low-carbon fuels. The CFS will provide opportunities for agricultural feedstocks for fuels, and for the fuels themselves, including ethanol, renewable natural gas, or solid agricultural biomass.

At the provincial level, the Manitoba Climate and Green Plan Implementation Act supports the reduction of greenhouse gas emissions and adaptation to climate change. Through the newly established Conservation Trust, Manitoba will provide financial support to meet the Made in Manitoba Climate and Green Plan objectives, which include conserving and enhancing grasslands, wetlands and woodlands. Manitoba is building on the past success of the Environmental Farm Planning (EFP) initiative. Further EFP development includes additional modules (e.g. on-farm climate change assessment). Two new programmes have implementation criteria requiring an EFP Statement of Completion — Ag Action Manitoba Watershed Ecological Goods and Services, and Ag Action Manitoba Beneficial Management Practices.

The Farm Adaptation Innovator Program in British Columbia and the Environmental Sustainability and Climate Change Program in Alberta support demonstration and knowledge sharing to improve producer understanding of key environmental practices and to enable farm-level adaptation to climate change. The Environmental Sustainability and Climate Change programme in Alberta also supports producers in reducing negative impacts on the environment by providing financial assistance for activities such as watering systems, riparian fencing, livestock facility management, improved manure storage facilities, manure application and shelterbelts.

In Alberta, the Farm Water Supply Program provides support to producers to enhance their water supply security, and the Irrigation Efficiency Program aims to increase water savings and reduce energy use in irrigated agriculture by assisting producers with the purchase of more efficient irrigation equipment and systems. The Soil and Water Sustainability Program in Nova Scotia assists farms in mitigating on-farm environmental risks for soil and water.

Public trust and animal welfare

The Partnership is the first framework to highlight that maintaining public confidence and trust is critical to the sustainable growth of the sector. Since 1 April 2018, Agriculture and Agri-food Canada (AAFC) has helped build public trust in the sector by facilitating the development of industry led assurance systems to respond to a variety of issues, including biosecurity and animal welfare.

Across Canada, animal welfare and public trust issues have become more important and have led some provinces to develop new programmes. The Ag Action Manitoba Assurance programme supports the ethically sound treatment of animals by providing assistance for the adoption of monitoring, training, equipment and facility upgrades that support improved animal care. New Brunswick promotes agriculture awareness at trade shows, seminars and school events through the Agriculture Awareness programme.

Alberta supports trust-building initiatives through three specific programmes. The Agriculture and Food Sustainability Assurance Initiatives Literacy Program provides support to develop and enhance sustainability certification or assurance systems to demonstrate to the public the quality, safety and sustainability of agricultural and food products. The Public Agriculture Literacy Program supports initiatives that build industry communication capacity to increase public and consumers’ awareness and understanding of agriculture and the food production system. The Youth Agriculture Education Program helps students to engage in meaningful and informed conversations about issues that affect public trust in agriculture.

Plant and animal health

In 2018, plant and animal health partners across Canada established separate coordinating councils to implement priority activities identified in the Plant and Animal Health Strategy for Canada launched in 2017. The Canadian Plant Health Council began developing its work plan and reached consensus on priority activities, with biosecurity, surveillance and emergency response management as focus areas.

Food safety

Under the Partnership, a new programme, AgriAssurance, aims to prevent and control risk to the animal and plant resource base, provide safe food and meet new market demands for assurance.

The Canadian Food Inspection Agency has developed the new Safe Food for Canadians Regulations (SFCR), which came into force on 15 January 2019. The SFCR focuses on prevention and allows for faster removal of unsafe food from the marketplace. The SFCR is based on international standards and will reduce unnecessary administrative burden on businesses by replacing 14 sets of regulations with one.

At the provincial level, food safety is being enhanced by the introduction of new programmes to promote traceability practices and the monitoring, detection and elimination of food borne pathogens. In British Columbia, the Livestock Tag Reader Rebate Program supports livestock operators who implement approved livestock tag readers, and the Traceability Value Chain Program provides funding to implement sector-wide or value-chain traceability practices, systems, infrastructure and technologies. Ag Action Manitoba Assurance supports the development of food safety plans, programmes and training, as well as the purchase of identified food safety equipment and instruments, both for detection and testing.

Food policy

The Government of Canada is currently developing a food strategy “A Food Policy for Canada”. It is expected to be a federal, whole-of-government initiative that should address issues such as increasing access to safe, nutritious and culturally appropriate food; supporting food’s contribution to human health; promoting environmental sustainability, resilience and conservation; and building a strong agriculture and food sector. AAFC (2018[3]) published the results of a consultation of stakeholders supporting the development of the food strategy.

In the meantime, Quebec launched its “Politique bioalimentaire 2018-2015 — Alimenter notre monde” in April 2018. This policy, based on a shared responsibility between governments and partners of the food value-chain, aims to better meet consumer needs with more viable, sustainable, responsible and innovative firms in dynamic regions for the development of biofood.

Innovation and knowledge transfer

The GF2 AgriInnovation programme addressed all the stages of the innovation continuum using three streams of innovation initiatives: 1) Research Acceleration Innovation; 2) Research and Development (R&D); and 3) Commercialisation and Adaption (Box 6.1 in OECD (2015[4])). In the Partnership, two programmes supporting two different segments of research and innovation replace AgriInnovation. AgriScience invests in leading-edge R&D and support pre-commercialisation activities (as AgriInnovation streams 2 and 1, respectively) and AgriInnovate supports adoption (as AgriInnovation stream 3).

The Canadian Agricultural Strategic Priorities Program (CASPP) is a CAD 50.3 million (USD 38.8 million), five-year investment that was introduced in February 2019. Replacing the Canadian Agricultural Adaptation Programme (CAAP), it focuses on four priority areas: adoption of new technology; environmental sustainability; strategic development and capacity building; and, emerging issues. The programme also builds on other Government of Canada initiatives to support competitiveness and sustainability in the agricultural sector.

Innovation and knowledge transfer remains a priority for provincial governments. For example, Nova Scotia supports research and innovation through the Industry Driven Research and Innovation programme, which supports industry-led research and development projects; the Advancing Innovative Technologies programme, which supports the adoption of new technologies, processes or specialised equipment within the agriculture sector. The Technologies for Value-Added Agriculture programme supports agricultural producers and processors who seek to advance their operations through innovation, efficiency and quality improvements; and the Wild Blueberry Harvest Efficiency Program supports the adoption of efficient harvester technology in order to increase crop yield.

Alberta supports agricultural innovation through various activities. Some demonstrate the feasibility and potential for real world application of innovations that are new to Alberta or new to the agriculture sector (Accelerating the Advancement of Agricultural Innovation); others adapt to the Alberta agriculture sector innovations that have proven to work outside of Alberta or in non-agriculture industries.

Manitoba has created the Manitoba Agriculture Research and Innovation Committee, which is responsible for advising on research and innovation projects, which are eligible to Partnership funding.

New product

The Cannabis Act, which came into force on 17 October 2018, provides a strict legal framework for the production, distribution, sale, and possession of cannabis in Canada. Producers of cannabis need to be federally licensed to operate. The cannabis industry is eligible to apply for federal programmes under the Partnership. However, provinces and territories have the discretion to determine eligibility of cannabis for cost-shared strategic initiative programmes.

For BRM programmes, income from cannabis (including both medicinal and recreational) is not eligible for support under AgriStability and AgriInvest. Federal and provincial/territorial governments will monitor this once the cannabis industry matures and stabilises.

Trade policy developments in 2018-19

On 30 November 2018, Canada, Mexico and the United States signed a new trade agreement (called CUSMA in Canada), which will replace the North American Free Trade Agreement (NAFTA) once it is ratified by all three countries and enters into force. The new agreement will preserve the existing agriculture commitments from NAFTA, and will eliminate tariffs for certain additional products between Canada and the United States (e.g. margarine, whey). It will provide new market access opportunities for Canada’s exports of refined sugar and sugar-containing products, as well as certain dairy products (including cheese, cream, milk beverages, butter) in the form of US tariff rate quotas. It will also create new market access opportunities for US exports of dairy, poultry, and eggs to Canada, by establishing new Canadian tariff rate quotas.

The agriculture chapter in the new 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. The new agreement also requires Canada to eliminate milk classes 6 and 7; establish 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.

On 20 July 2018, the United States requested the establishment of a panel to examine Canadian measures governing the sale of wine in grocery stores. On 30 November 2018, the United States and Canada signed a side letter as part of the new agreement to modify the measures identified in the US panel request by 1 November 2019. The United States agreed to pause the WTO dispute until 1 November 2019 (WTO, 2019[5]).

The Comprehensive and Progressive Agreement for a Trans-Pacific Partnership (CPTPP) came into force. Negotiations began with MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay) to establish a free trade agreement. Israel and Canada signed an agreement modernising the existing Canada-Israel Free Trade Agreement. Negotiations for Canada to become an Associated State of the Pacific Alliance (Chile, Colombia, Mexico, and Peru) continued, and ASEAN member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam) and Canada advanced exploratory discussions and agreed to move to technical level discussions.

References

[2] AAFC (2018), Canadian Agricultural Partnership, http://www.agr.gc.ca/eng/about-us/key-departmental-initiatives/canadian-agricultural-partnership/?id=1461767369849.

[3] AAFC (2018), What We Heard Report - Consultations on a Food Policy for Canada, https://www.canada.ca/content/dam/aafc-aac/documents/20181025-en.pdf.

[1] OECD (2019), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

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

[5] WTO (2019), “DS531: Canada — Measures Governing the Sale of Wine in Grocery Stores”, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds427_e.htm (accessed on  14 March).