Book 1 - Key files and hot issues: minister's transition book 2023, AAFC

Table of Contents

• Setting a forward agenda: The first 90 days

  Purpose

  • Provide an overview of potential priorities for setting a forward agenda
  • Identify key decisions and meetings within the first 90 days

  Setting a forward agenda

  The Government has an ambitious agenda to move Canada forward for everyone, based on a vision of inclusive growth and a cleaner, greener future.

  The Government has made significant progress on commitments related to the agriculture and agri-food sector:

  • On April 1, 2023, launched the Sustainable Canadian Agricultural Partnership (Sustainable CAP), a new federal-provincial-territorial (FPT) framework with a five-year, $3.5 billion investment for the sector.
  • Provided full and fair compensation to the supply-managed agricultural sectors for the impacts of recent trade agreements. The implementation of the Dairy Innovation and Investment Fund, expected this fall, is the final step in fulfilling this Government commitment.
  • Worked with provinces and territories to update Business Risk Management (BRM) programs, including to integrate climate risk management, environmental practices, and climate readiness.

  Going further, making progress on outstanding commitments will depend on:

  • An ambitious plan to advance initiatives in a manner that reflects the realities of the agriculture sector, in collaboration with ministerial colleagues;
  • Strong relationships and consultations with sector stakeholders, including under-represented groups and agri-climate champions;
  • Finding common ground with provincial and territorial (PTs) counterparts in order to reach agreement in areas of shared jurisdiction; and
  • Leveraging strengths, such as science capacity and nimble programming, to strategically position Agriculture and Agri-Food Canada (AAFC) to respond quickly to urgent issues as they arise and to support long-term sustainable growth in the sector.

  Key commitments for agriculture and agri-food

  Priority items for this fall, including outstanding mandate commitments:

  • Develop a green agricultural plan for Canada (Sustainable Agriculture Strategy)
  • Prevent and prepare for the introduction of African Swine Fever (ASF) in Canada
  • Create a No-Waste Food Fund
  • Support food producers who choose alternative pest management approaches
  • Explore next steps to modernize the Canada Grain Act
  • Develop an Agricultural Labour Strategy
  • Ban the live export of horses for slaughter

  Successful implementation will require adaptability

  Ambition and scale of initiatives will depend on Cabinet and Budget agendas and decisions.
  Urgent issues and events could lead to calls for an immediate policy response, such as:

  • The detection of plant or animal disease, such as ASF in Canada and/or in the continental United States;
  • The effects of inflation, leading to rising input costs and higher food prices;
  • Climate risks and severe weather events, such as wildfires, droughts, and floods;
  • Developments on ongoing international trade issues, including rulings from dispute panels;
  • Shocks or other events that lead to a worsening of ongoing problems in supply chains, such as Russia’s war against Ukraine, and labour action in Canada.

  Technology and big data are transforming agriculture and the way governments deliver services around the world. For Canada to remain at the forefront of this transformation, the Department will need to drive partnerships and collaboration and increase investment in these areas.

  Misinformation continues to drive some important issues in the public environment, and it is important to proactively counter false narratives, using a fact-based approach that is rooted in transparency.

  Priorities for the first 30 days

  Introductory meetings

  • Provincial and territorial counterparts
  • Key industry stakeholders
  • International counterparts
  • Heads of agricultural portfolio agencies
  • Other federal ministers with whom you share key files

  Early decisions

  • Urgent off-cycle funding requests
  • Funding requests for the Fall Economic Statement
  • Regular government and departmental business (for example, appointments, funding approvals, next steps on policy and programs)

  Briefings

  • The Department and our work;
  • The state of the agriculture and agri-food sector
  • Ministerial and departmental responsibilities
  • Key files and priorities, including:
    • Hot issues
    • Sustainable CAP and FPT relationship
    • Business risk management
    • Environment
    • Labour
    • African swine fever
    • Canada Grain Act modernization
    • International trade and the Indo-Pacific
    • Budget 2023 spending reductions

  Events/trips

  • Regional outreach (for example, provinces with wildfires, droughts)
  • August 3: Asia Pacific Economic Cooperation (APEC) Food Security Ministerial Meeting, Seattle, Washington, chaired by United States’ Secretary Vilsack, who has invited the Minister for a bilateral meeting.

  Priorities for Days 30 to 60

  Introductory meetings

  • Key industry stakeholders

  Key decisions

  • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  • ████████████████████████████████████████████████████████████████████████████████
  • ███████████████████████████████████████████████████████████████████████████████████████████████
  • Regular government and departmental business (for example, appointments, funding approvals, next steps on policy and programs)
  • Approval of AAFC’s approach to implement government spending reductions announced in the 2023 federal budget ██████████████████████████████████████████████████
  • Supplementary Estimates B

  Briefings

  • Key files and priorities, including:
    • Cybersecurity
    • Digitizing traceability in the agri-food sector
    • Various programming
  • Emerging challenges and opportunities

  Events/trips

  • September 12-14: North American European Union Agricultural Conference, Charlottetown, Prince Edward Island
  • September 19-20: Animal Health Canada Forum, Ottawa, Ontario
  • September 26-28: Pulse and Special Crops Convention, Banff, Alberta

  Priorities for Days 60 to 90+

  Introductory meetings

  • Key industry stakeholders

  Key decisions

  • ████████████████████████████████████████████
  • ████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  • Regular government and departmental business (for example, appointments, funding approvals, next steps on policy and programs)

  Briefings

  • Key files and priorities
    • Potential Budget 2024 proposals
  • Emerging challenges and opportunities

  Events/trips

  • October 4: Opening Remarks at Adaptation Futures Conference and International Forum on Agroecosystem Living Labs, Palais des congrès de Montréal, Quebec (October 2-6). AAFC and France’s Institut national de recherche pour l’agriculture, l’alimentation et l’environnement (INRAE) are co-hosting. 
  • October 9-13 (TBC): Team Canada Trade Mission to India, led by the Minister of International Trade, Export Promotion, Small Business and Economic Development.
  • October 17-19: Global Forum for Rural Advisory Services (GFRAS) hosted by the NAAAN (North American Agriculture Advisory Network), Denver, Colorado.
  • November 14: Arrell Food Summit 2023, Toronto, Ontario

  Week 1

  Introductory meetings – within the Department

  • Bilateral meeting: the Minister and the Deputy Ministers
  • Briefings on overview of the sector and the department

  Potential briefings – subject matter specific (order and prioritization to be confirmed with the Minister)

  • First 90 days and hot issues (for example, fires, drought, port strike, inflation/grocery prices, etc.)
  • African swine fever
  • Sustainable CAP and FPT relationship
  • Business risk management
  • Environment / Sustainable Agriculture Strategy
  • Supply chain challenges
  • Canada Grain Act modernization
  • Immigration, Agricultural Labour Strategy, and temporary foreign workers
  • Pesticides and Pest Management Regulatory Agency
  • Horse exports
  • International trade, market access and diversification

  Potential introductory calls/external meetings

  • PT Co-Chair – Yukon Minister of Agriculture, followed by other PTs (may want to prioritize British Columbia, Alberta, and Saskatchewan who are dealing with fires/droughts, and Quebec who is dealing with heavy rain events)
  • Canadian Federation of Agriculture and regional stakeholders as needed, such as Union des Producteurs Agricoles
  • Other key stakeholders, such as Canada Grains Council, Canola Council of Canada, Dairy Farmers of Canada, National Poultry and Egg Associations, and Canadian Pork Council
  • International counterparts, such as the United States’ Secretary Vilsack

  Events/trips

  • August 3: Asia Pacific Economic Cooperation (APEC) Food Security Ministerial Meeting, Seattle, Washington, chaired by United States’ Secretary Vilsack, who has invited the Minister for a bilateral meeting.

• Key messages

  • I’m honoured to have been asked by the Prime Minister to serve Canada’s dynamic agriculture and food industry.
  • Our hard-working producers and processors play a vital role in growing our economy, protecting the environment, and producing quality food for Canadians and a growing global population.
  • They are at the front lines of climate change, contending with the droughts, floods, and fires happening across the country.
  • I am eager to meet with stakeholders and my provincial and territorial counterparts to discuss the challenges and opportunities facing the sector.
  • I look forward to getting briefed by the team at Agriculture and Agri-Food Canada (AAFC) and working with them and all our partners to support this important industry.

  Hot issues – key messages (as of July 25, 2023)

  Labour disruptions – British Columbia port

  • The Government of Canada respects the collective bargaining process and we will continue to monitor the situation closely and keep in close contact with partners to assess any impacts.

  Extreme weather

  • I know Canadian farmers are on the front lines of climate change and when extreme weather strikes – such as droughts and flooding -- it hits their bottom lines directly.
  • I look forward to working with my provincial and territorial counterparts to ensure producers have access to our suite of business risk management (BRM) programs.

  Support to farmers

  • I’m happy to hear that federal-provincial-territorial (FPT) Ministers of Agriculture recently discussed the successful launch of the Sustainable Canadian Agricultural Partnership on April 1.
  • This 5-year agreement will strengthen the competitiveness, innovation, and resiliency of the agriculture, agri‐food and agri‐based products sector.
  • The agreement includes $1 billion in federal programs and activities and $2.5 billion in cost-shared programs and activities funded by FPT governments.

  Fertilizer emissions reduction

  • I look forward to working with farmers – including the newly created Fertilizer Emissions Reduction Working Group – to identify opportunities to reduce emissions from fertilizer application without compromising yields.

  Sustainable Agriculture Strategy

  • I look forward to working with the sector to develop a Sustainable Agriculture Strategy. This strategy will set direction to improve environmental performance in the sector over the long term, while supporting farmers’ livelihoods and the long-term business vitality of the sector.

  Clean Fuel Regulations

  • The Clean Fuel Regulations, led by Environment and Climate Change Canada, will spur demand for Canadian-grown grains, oilseeds, and animal by-products that can be turned into a low-carbon fuel used to power the Canadian economy. This is good news for our hard-working farmers.

  Crop protection and the Pest Management Regulatory Agency

  • The Government of Canada supports our farmers and recognizes that pesticides and a science-based regulatory system play an important role in making sure there is enough food for everyone, by protecting crops from pests like insects, weeds, and fungal diseases.

  Target 7 of Global Biodiversity Framework

  • The Kunming-Montreal Global Biodiversity Framework (GBF) will support the excellent work that Canadian farmers are already doing to protect nature and biodiversity.
  • The commitment (Target 7) aimed at reducing pollution risks associated with excess nutrients, pesticides, highly hazardous chemicals, and plastics does not represent a mandatory reduction in pesticide use.

  African swine fever

  • We understand the toll that a detection of African swine fever will take on farm families. We will continue to work with industry and provincial and territorial governments to do whatever it takes to minimize the spread and support the future of our hog industry.

  National Agricultural Labour Strategy

  • We know finding workers has been difficult for many in the sector. We are working on a National Agricultural Labour Strategy to ensure our entire supply chain has access to a skilled and reliable workforce so that we can continue to feed Canada and the world.

  Grocery Code of Conduct

  • We recognize that industry leaders have made considerable progress developing the first-ever Grocery Code of Conduct in Canada. It will help strengthen our supply chain and I look forward to its implementation.

  Trade, market access and market development

  • Exports of agriculture and agri-food products continue to grow, worth nearly $93 billion in 2022 compared to $82 billion in 2021.
  • I look forward to continuing to work with colleagues and the sector to leverage our 14 Free Trade Agreements to maximize market opportunities for Canadian agriculture and agri-food products.
  • We are also working with provinces and territories to continue to explore innovative ways to improve internal trade in the food sector.

  Foot and mouth disease / livestock traceability / animal disease

  • Canada is recognized as an international leader when it comes to preventing and controlling the spread of foreign animal diseases into and within the country.
  • The Canadian Food Inspection Agency is dedicated to protecting animal health and preventing the introduction and spread of animal diseases. I look forward to getting briefed by the Agency further on these matters.

  Bee sector sustainability

  • The sustainability of the beekeeping industry is important to the federal government and we are working with provinces and stakeholders on the topic of honey bee health.
  • To help assist in these sustainability goals, AAFC has convened an Industry-Government Working Group on bee sustainability that has been meeting since May 2022.

  Supply management

  • The Government is fully behind our supply management sector, which supports our family farms and the vitality of our rural areas.

• African Swine Fever

  Overview and Agriculture and Agri-Food Canada response

  Canadian hog sector

  The Canadian hog sector contributes an estimated $28 billion to the economy and supports roughly 100,000 jobs (Source: Canadian Pork Council). 

  There are 7,330 hog farms and 26 federally inspected processing facilities. In 2022, 28 million hogs were produced. Inventories are concentrated in Quebec (31%), Ontario (26%) and Manitoba (23%). 

  Slaughter capacity also resides primarily in Quebec (38%), Ontario (19%) and Manitoba (28%).

  Currently, 13 million hogs are in the production pipeline.

  The Canadian hog sector is highly integrated with the United States sector.

  In 2022, over 1.39 million tonnes of pork, valued at $4.8 billion, were exported to 77 countries.

  The top 3 markets for Canadian pork are the United States, Japan and China.

  About African Swine Fever

  African Swine Fever (ASF) is a contagious and fatal disease for pigs that has spread from Africa to Asia, parts of Europe and, most recently, the Dominican Republic and Haiti.

  While the virus cannot be transmitted to humans, it has a high mortality rate in infected pigs and can survive for prolonged periods of time in animal products.

  A single positive case of ASF in Canada would require that all pork and live-hog exports (70% of domestic production) halt immediately. This would have significant financial consequences for producers and processors as they grapple with lost markets and price declines driven by an oversupply of pork relative to domestic demand.

  Initial impact

  Disease management and eradication: The Canadian Food Inspection Agency (CFIA) is responsible for containing and eradicating the disease as quickly as possible.

  Trade: Immediate loss of all export markets (70% of domestic production).

  Surplus hogs: Given the border closure, millions of surplus animals would need to be culled, generating extraordinary costs for industry as well as concerns around animal welfare, farmer mental health and the environment.

  Pork producers: Hogs with no market would back up the pork production cycle, and depopulation decisions would need to be made quickly. Live hogs destined for the United States would be an urgent priority for euthanization.

  • It is estimated that at least 50% of the hog herd (7 million hogs) would need to be culled.

  Pork processors: Processors would lose the majority of their market overnight. Export-oriented processors or smaller-sized establishments might eventually cease operations.

  • Processors would not be able to take on the extra work of depopulating and disposing of producers' surplus hogs without assistance to cover extraordinary costs.

  Current prevention and preparedness efforts

  CFIA and Agriculture and Agri-Food Canada (AAFC) have played an active role in developing and executing an ASF Pan-Canadian Action Plan, a federal-provincial-territorial (FPT) industry effort to coordinate and prioritize ASF-related prevention and preparedness work across the country.

  In December 2021, the Minister was mandated to, "take every necessary precaution to prevent the introduction of African swine fever within our borders, and continue to work with provinces and territories and industry stakeholders on prevention and preparedness measures, including a cost-shared response plan."

  Work remains ongoing with provincial and industry partners.

  In August 2022, the Government of Canada announced an investment of up to $45.3 million to enhance efforts to prevent ASF from entering Canada and prepare for a potential outbreak. This includes:

  • $23.4 million to AAFC to support industry's prevention and mitigation efforts. Program launched November 16, 2022.
  • $19.8 million toward CFIA's surveillance and international activities
  • $2.1 million to enhance Canada Border Services Agency's (CBSA) border control activities

  Pan-Canadian ASF Action Plan

  To date, there has been significant coordination with the provinces and industry groups to advance the Pan-Canadian ASF Action Plan.

  Action Plan pillars

  • Pillar 1: Prevention and enhanced biosecurity
  • Pillar 2: Preparedness planning
  • Pillar 3: Ensuring business continuity
  • Pillar 4: Coordinated risk communications

  Pillar 1: Prevention and enhanced biosecurity

  First line of defence to protect the Canadian swine population from ASF by limiting the potential sources of virus introduction.

  To prevent entry into Canada and reduce spread if it does enter:

  • Import controls led by CBSA and CFIA
  • Biosecurity led by CFIA and industry
  • International engagement led by CFIA
  • Authorities for wild pigs led by multiple departments (AAFC, Environment and Climate Change Canada, etc.), as well as industry associations and United States counterparts (United States Department of Agriculture, Animal and Plant Health Inspection Service).

  Pillar 2: Preparedness planning

  An early and rapid disease response will be critical to stop the spread of the virus and mitigate the impacts of an outbreak.

  • Diagnostic and surveillance, led by CFIA
  • Response plan and procedures, led by provinces and territories, CFIA and industry
  • Training and exercise, led by CFIA, provincial governments and industry

  Pillar 3: Ensuring business continuity

  Impacts of an ASF outbreak may be mitigated through proactive engagement with trading partners and by providing support to help the sector adapt to market changes.

  Zoning, led by CFIA and industry

  Zoning is an internationally recognized approach to disease control that also manages trade risks. A zone can be established around a defined area, on a geographical basis.

  Canada confirmed and is working to develop zoning arrangements with some trading partners.

  Compartmentalization, led by CFIA and industry

  Compartments are a voluntary and separate population control established prior to the introduction of ASF based on management and biosecurity practices rather than geography.

  Compartment acceptance requires negotiation with trading partners.

  Market interruption response, led by AAFC, provincial governments and industry

  Immediate: Develop a national coordinated approach for surplus hog management, with flexibility for regional needs - includes assessing and investing in infrastructure for depopulation. AAFC has established an incident management system.

  Longer-term: Industry adaptation and sector transition planning.

  ASF could arrive in Canada any day

  Current ASF zoning arrangements: United States, European Union, Singapore, Vietnam, and Hong Kong.

  African Swine Fever

  

  Source: The World Organisation for Animal Health (WOAH).

  [Description of the above image]

  A map of the world showing the areas affected by ASF in Summer 2023, including the Dominican Republic and Haiti in the Americas, as well as parts of Africa, Asia and Europe. ASF continues to spread globally, increasing the risk of entry into Canada.

  Pillar 4: Coordinated risk communications

  Work is underway to develop risk-communications plans to address prevention, preparedness, response and recovery actions related to ASF.

  Industry, CFIA, AAFC, provincial governments

  Prevention

  • Awareness campaigns
  • Travel and domestic

  Preparedness

  • Planned messaging
  • Public trust
  • Coordinate communication amongst players

  Phase-based emergency response approach

  FPT governments are taking a step-wise approach to planning.

  Phase 0: Prevention and preparedness

  Work is underway to have programs and resources in place before an ASF incursion, to reduce the risk of ASF entry into Canada and help prepare industry and governments to respond.

  • Government of Canada’s African Swine Fever Industry Preparedness Program (ASFIPP) ($23.4 million over 3 years)
  • CFIA work on zoning and disease response

  Phase 1: Immediate response

  This phase is triggered immediately upon ASF detection in Canada or the United States. This is the emergency response phase focused on the management of healthy surplus hogs.

  Phase 2: Sector crisis and transition support

  Further herd adjustment and sector restructuring support may be required to help the hog/pork industry transition to meet new market realities created by ASF.

  Phase 3: Sector recovery support

  At the tail end of an outbreak, as borders begin to reopen, the sector will need to restart operations and adapt to expanding market.

  Recent progress

  • At the request of FPT Ministers, targeted industry engagement on immediate response requirements took place throughout Spring 2023 via two main pathways:
    • FPT Deputy Minister-Industry Tabletop Exercise
    • ASF Hog Supply Response Sub Working Group
  • Ongoing engagement with provinces and industry via existing working groups to discuss ASF response and preparedness.
  • FPT Ministers Meeting in March / April 2023.
  • Discussion held at annual FPT Ministerial in July 2023.

  Annex: Roles and responsibilities

  CBSA

  • Enforce import controls to prevent entry of ASF into Canada

  CFIA

  • Lead disease control and eradication activities.
  • Handle compensation for animals destroyed, where appropriate.
  • Secure international acceptance of zoning and compartmentalization approaches.
  • Lead strategy to regain disease-free status and international acceptance.

  AAFC

  • Help provincial governments develop cost-shared programs for depopulation and disposal efforts (including maintaining animals awaiting welfare depopulation).
  • Coordinate discussions in multi-jurisdictional areas, such as welfare culls at processing plants, to facilitate a consistent, national approach.

  • Develop and deliver federal support programs, where appropriate, that meet national needs.
  • Lead the public communications response to the market interruption and hog surplus challenge in conjunction with PT and industry partners.

  Industry

  • Proactively manage business risks by leveraging existing programming and private risk-management tools and making business decisions based on market conditions.
  • Implement on-farm biosecurity standards to help mitigate against disease introduction.
  • Lead on surplus hog depopulation and disposal activities on the ground, as well as developing and implementing biosecurity measures, supported by FPT governments, as necessary.

  Provincial–territorial governments

  • Coordinate surplus hog depopulation and disposal efforts on the ground, with the assistance of AAFC (for example, funding transfer, coordination, oversight, wellness/mental health support).
  • Coordinate the development of a strategy to manage healthy surplus hogs across provinces.
  • Facilitate implementation of mass carcass-disposal options, and work with municipalities to establish capacity.
  • Develop and deliver support programs that meet regional/sector needs, in co-operation with municipalities and industry.

• The Sustainable Canadian Agricultural Partnership

  Background – Agricultural Frameworks

  The five-year Framework agreements are a cornerstone of how federal, provincial, and territorial (FPT) governments support the agriculture and agri-food sector.

  Since 2003, Agricultural and Agri-Food Canada (AAFC) has worked in partnership with provinces and territories on the following five frameworks:

  • Agricultural Policy Framework (2003-2008)
  • Growing Forward (2008-2013)
  • Growing Forward 2 (2013-2018)
  • The Canadian Agricultural Partnership (CAP; 2018-2023)
  • The Sustainable Canadian Agricultural Partnership (Sustainable CAP; 2023-2028)

  CAP and the previous frameworks have allowed FPT governments to work together to develop and implement policies and programs to assist the sector in addressing challenges and seizing opportunities by encouraging investment, adaptation, and sustainable growth.

  While each new Framework represents an opportunity to advance a renewed approach to support the sector, it also builds on lessons learned throughout the Frameworks to ensure continuity, and make modifications to meet changing priorities and needs.

  Overview of the Canadian Agricultural Partnership

  The Canadian Agricultural Partnership (CAP) aimed to strengthen and grow Canada's agriculture and agri-food sector. This FPT partnership included a $3 billion five-year (2018-2023) investment in strategic initiatives and funding for business risk management (BRM) programs (average of $1.7 billion per year).

  Strategic initiatives

  • More than $1 billion in federal programs and activities that were national in scope and were funded and delivered by AAFC
  • $2 billion in cost-shared programs that were funded 60:40 (F:PT) and delivered by provincial and territorial governments (PTs)

  Business Risk Management programs

  An average of $1.7 billion annually (combined federal and provincial/territorial) for demand-driven BRM programs to assist producers in managing significant risks that threaten the viability of their farm and were beyond their capacity to manage.  

  Key shifts from CAP to the Sustainable CAP

  The Sustainable CAP builds off of the 5 priority areas from CAP, with greater emphasis on achieving environmental, economic and social objectives.

  • Bolster climate change and environment action across the framework
  • Update the suite of BRM programs to be simpler, more timely and predictable and explore options to integrate climate risk and readiness
  • Strengthened approach to performance measurement and results with shared targets complemented by proportionate spending requirements
  • Enhanced focus to encourage the participation of underrepresented groups in the sector
  • Continued enhancements to science and innovation, market development and trade and increased emphasis in other focus areas (for example, labour; Indigenous participation; mental health)
  • Reflecting the sustainable development approach and competitiveness throughout the framework

  Overview of the Annual Ministerial Conference — July 2022

  On July 22, 2022, FPT Ministers of Agriculture announced the Sustainable Canadian Agricultural Partnership, which set an ambitious path forward to advance the five priorities agreed to in the Guelph Statement.

  This new five-year agreement injects $500 million in new funds, representing a 25% increase in the cost-shared portion of the Partnership over what was provided under CAP.

  Ministers also agreed on the need for a more robust results strategy for the Sustainable CAP, including: improved data sharing; results reporting; and a commitment to contribute to common, measurable outcomes, over the lifespan of the Framework, in particular contributing to:

  • 3-5 MT reduction in greenhouse gas (GHG) emissions
  • $250 billion in sector revenues and $95 billion in sector export revenues by 2028
  • Increase in proportion of funded recipients that are Indigenous peoples, women and youth over the five years of the partnership

  Ministers agreed to a new Resilient Agricultural Landscapes Program, a $250 million investment by FPT governments which supports ecological goods and services provided by the agriculture sector.

  Ministers agreed that 12.5% of cost-shared spending ("proportionate spending") would go to activities that reduce GHG emissions or increase carbon sequestration.

  Changes to BRM programs, in particular:

  • Raising the AgriStability compensation rate from 70% to 80% bringing up to an additional $72 million per year to better support farmers in times of need
  • Starting in 2025, participants in the AgriInvest program with allowable net sales (ANS) of more than $1 million will be required to have an agri-environmental risk assessment (for example, Environmental Farm Plan) to be eligible for the matching government contribution
  • PTs and AAFC will conduct a one-year review on how to reflect farmers' production-risk-reducing environmental practices with AgriInsurance premiums. Following the review, each PT will launch an AgriInsurance premium pilot.
  • AAFC, in consultation with PTs, will undertake a comprehensive review on integrating climate risk with BRM programs.

  Key milestones towards implementation of the Sustainable CAP

  The Guelph Statement

  The Guelph Statement, announced by FPT Ministers on November 17, 2021, set out the vision, priorities and guiding principles for the successor Framework to CAP.

  Multilateral Framework Agreement

  The Multilateral Framework Agreement (MFA) outlines the roles and responsibilities of FPT governments and a commitment to implement policies and programs that reflect the vision and priorities articulated through the Guelph Statement.

  FPT negotiations on the MFA commenced in the fall of 2021.

  The MFA was finalized on January 31, 2023.

  AAFC received Order-in-Council authority to sign the MFA on February 13, 2023.

  In March 2023, PTs provided sufficient signatures for the MFA to meet entry-into-force requirements.

  Bilateral agreements

  AAFC engaged in negotiations with PTs on bilateral agreements (BAs), which outline the specific program details, activities, and planned spending for the $2.5 billion in the Framework's cost-shared envelope.

  Sustainable CAP came into force on April 1, 2023.

  Successful negotiations concluded for almost all BAs. AAFC expects to finalize and sign the final BA with PEI in the coming weeks.

  Lessons learned

  As with past frameworks, AAFC will produce a ‘Lessons Learned’ Report on the development of the Sustainable CAP that will document the process and provide guidance to inform future frameworks.

  The content of the Report will include:

  • A review of the policy development process, including internal engagement on federal priorities, evaluating the current Framework, and drafting policy papers

  • Managing the FPT process – building consensus with provinces and territories on the vision, priorities and outcomes, and negotiations on the multilateral framework and bilateral agreements
  • Engagement with stakeholders and interactions within the department and with central agencies
  • Identifying outstanding/unresolved issues for consideration in future frameworks (for example, amending the allocation formula, inclusion of aquaculture/aquaponics, etc.)

  Feedback from key Framework contributors, both internal to AAFC (for example, policy leads, subject matter experts, program delivery and results) and external (for example, PT working group members, and central agencies), will inform the assessment and analysis outlined in the Report.

  The timeline for the Report’s completion is early Fall.

• Business Risk Management programs

  Why Business Risk Management?

  The Canadian agricultural sector is faced with risks that can have significant impacts on farm viability:

  • Short growing season, extreme weather events, disease, and pests
  • Small, export dependent sector vulnerable to market volatilities, exchange rate fluctuations, and foreign governments’ trade policies

  Business Risk Management (BRM) programs are positioned to provide support to farmers and help them manage these risks:

  • The BRM programs are in place to help producers manage the impact of risks such as drought, flooding, low prices, and increased input costs
  • The varying individual needs of producers mean that different combinations of programs work best

  BRM programs are governed by Farm Income Protection Act (FIPA) and the federal-provincial/territorial (FPT) Multilateral Framework Agreements (MFAs).

  • These instruments include agreed-upon overarching principles, such as respecting Canada’s trade obligations, maintaining equitable programming nationwide, and minimizing distortion of production and marketing decisions

  Business Risk Management program evolution

  Over time, the focus of BRM programs has shifted from safety nets to income stabilization, to assisting with severe market volatilities, severe losses and disasters.

  1980s and 1990s

  Tripartite/Growing Together

  • Tripartite were commodity specific based on regional needs
  • Safety Nets introduced Gross Revenue Insurance Plan revenue based support and Net Income Stabilization Account subsidised savings
  • Agricultural Income Disaster Assistance was first to introduce “disaster income support“ using whole-farm margins

  2003 to 2008

  Agricultural Policy Framework (APF)

  • Focused on BRM and income stabilization, as well as introduced non-BRM programs
  • Major BRM programs were Canadian Agricultural Income Stabilization (CAIS; 100% margin coverage) and Production Insurance
  • Non-BRM themes: environment, food safety and quality, innovation, renewal, and international
  • Programs were cost-shared 60:40 federal–provincial with national focus

  2008 to 2013

  Growing Forward (GF)

  • The creation of two new programs – AgriInvest, and AgriRecovery – address concerns raised about CAIS timeliness and predictability
  • BRM suite was seen as too comprehensive, covering normal risks that should be managed by producers
  • Provincial flexibility introduced to non-BRM programs
  • Non-BRM themes: competitiveness, innovation, society’s priorities, and proactive in managing risks

  2013 to 2018

  Growing Forward 2 (GF2)

  • BRM amended to encourage producers to manage normal risks and governments to focus on severe market volatility and disasters
  • Investments to encourage development of private sector risk management tools, including insurance (AgriRisk)
  • Some BRM savings were redirected to Strategic (non-BRM) Initiatives
  • Strategic Initiatives focus on innovation, competitiveness and market development

  2018 to 2023

  Canadian Agricultural Partnership (CAP)

  • CAP (2018 to 2023) maintains the policy direction of GF2, and responds to industry concerns around eligible coverage under AgriStability, ensuring a more equitable level of support for all producers.

  2023 to 2028

  Sustainable Canadian Agricultural Partnership (Sustainable CAP)

  • Aligning with the resiliency and sustainability priorities of the Sustainable CAP, the BRM program suite is evolving by integrating program elements related to climate readiness and launching a review pertaining to assessing how the suite can make positive contributions to reducing agriculture’s climate change footprint and encourage farmers to adapt to climate change.

  Current suite of Business Risk Management programs

  Producers are expected to proactively manage their risks and many use a combination of on-farm practices (for example, diversifying crops) and BRM programs to protect against both shallow and severe losses.

  The current suite of FPT cost-shared BRM programs includes:

  • AgriInvest to help address small income declines
  • AgriStability to help address large margin declines
  • AgriInsurance to help address production losses
  • AgriRecovery to help cover extraordinary costs to recover from natural disasters

  AgriInvest

  Government-matched savings account to address income declines or make investments to manage on-farm risks.

  • A producer savings account, to which governments contribute:
    • Contributions are based on a producer’s allowable net sales (ANS) – sales minus purchases of allowable commodities (for example, flower or tree sales less seed or seedling purchases).
  • Producers can deposit up to 100% of their ANS annually, of which the first 1% is matched dollar-by-dollar by governments (up to $10,000).
  • Government contributions must be withdrawn first, and are taxable upon withdrawal.
  • There is no trigger for withdrawal – producers manage their accounts as they see fit.
  • There is over $2.6 billion in AgriInvest accounts, with a balance of about $29,600 on average per account (as of July 2023).

  Program cost-share

  • Federal, 60%
  • Provincial, 40%

  Program delivery

  • Federal: Manitoba, British Columbia, Saskatchewan, Newfoundland and Labrador, Nova Scotia, New Brunswick, Ontario, Alberta, Prince Edward Island
  • Provincial: Quebec

  FPT payments to date, as of January 2023 ($)

  Growing Forward 2 (2013-2018)	1,391,273,064
  Canadian Agricultural Partnership (2018-2023)	995,142,525

  Targeted areas of coverage

  	AgriInvest support
  Market price fluctuations	Yes
  Farm operating cash flow	Yes
  Increased expenses	Yes
  Production/quality losses	Yes
  Investment in risk management tools	Yes
  Investment in farm operations	Yes

  AgriStability

  Individual margin-based program that assists with large margin declines caused by severe market volatilities and disasters.

  • Provides support to producers who experience large margin declines (more than 30%) in a given year compared to their historical margins.
  • Starting in 2023, payment represents 80% of margin losses.
  • Covers all major income-related risks of a farm in one program (that is, income loss due to production problems, decreases in commodity prices or increases in input costs).
  • Coverage is available for most agricultural commodities and is tailored to individual circumstances.
  • AgriStability has paid out over $3 billion to producers since 2013.

  Program cost-share

  • Federal, 60%
  • Provincial, 40%

  Program delivery

  • Federal: Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador

  • Provincial: British Columbia, Alberta, Prince Edward Island, Quebec, Saskatchewan, Ontario

  FPT payments to date, as of January 2023 ($)

  Growing Forward 2 (2013-2018)	1,607,553,449
  Canadian Agricultural Partnership (2018-2023)	1,445,909,066

  Targeted areas of coverage

  	AgriStability support
  Market price fluctuations	Yes
  Farm operating cash flow	No
  Increased expenses	Yes
  Production/quality losses	Yes
  Investment in risk management tools	No
  Investment in farm operations	No

  AgriInsurance

  Insurance protection against natural hazards (that is, drought, flood, wind, frost, excessive rain or heat, snow, losses from uncontrollable disease, insect infestations and wildlife).

  • Addresses production declines caused by natural hazards (for example, wind, frost, excessive rain or heat, snow, disease and pests, etc.).
  • Insurance plans are tailored by provincial administrations to respond to regional needs:
    • Provinces monitor the industry (for example, new crops, new production techniques) and respond to the needs of producers by developing or adjusting insurance plans to address gaps in coverage.
  • Producers choose the commodities to insure, the type of plan, and the coverage level, and governments share in the cost of premiums with producers:
    • Generally 60% of premiums are paid by governments, and governments cover the full cost of program administration.
  • Indemnities are paid when production volume or quality falls below the insured level of production.

  Program cost-share

  • Federal, 36%
  • Provincial, 24%
  • Producer, 40%

  Program delivery

  • Provincial: All 10 provinces

  FPT payments to date, as of January 2023 ($)

  Growing Forward 2 (2013-2018)	5,171,822,278
  Canadian Agricultural Partnership (2018-2023)	5,485,309,238

  Targeted areas of coverage

  	AgriInsurance support
  Market price fluctuations	No
  Farm operating cash flow	No
  Increased expenses	No
  Production/quality losses	Yes
  Investment in risk management tools	No
  Investment in farm operations	No

  AgriRecovery

  An FPT framework that facilitates the implementation of federal/provincial responses to natural disasters and disease/pest outbreaks.

  • Acts as a mechanism for FPT governments to develop individual initiatives to address specific disaster events within predefined criteria.
  • The framework provides:
    • A protocol for FPT interaction;
    • A definition of disaster to guide when intervention is warranted; and
    • Guidelines on the type of assistance to be provided.
  • Focuses on assisting with the extraordinary costs required to recover following a disaster, not meant to replace available coverage under AgriInsurance, AgriStability, and AgriInvest.
  • Not intended to provide responses to recurring disaster events, as a recurring disaster might indicate that there is a need to look for longer-term options.

  Program cost-share

  • Federal, 60%
  • Provincial, 40%

  Program delivery

  • Federal: On a case-by-case basis
  • Provincial: All 10 provinces

  FPT payments to date, as of July 2023 ($)

  Growing Forward 2 (2013-2018)	38,508,993
  Canadian Agricultural Partnership (2018-2023)	861,275,334

  Targeted areas of coverage

  	AgriRecovery support
  Market price fluctuations	No
  Farm operating cash flow	No
  Increased expenses	Yes
  Production/quality losses	No
  Investment in risk management tools	No
  Investment in farm operations	No

  Additional Business Risk Management programs

  Federal-only risk management programs include:

  • Livestock Price Insurance (LPI; Western Canada) allows cattle and hog producers to purchase insurance coverage against unanticipated price declines, offering protection against volatility in the marketplace. Producers pay 100% of premiums while governments (FPT) pay administration costs and insurance deficit financing covered by Canada. Total LPI premiums collected in 2021-22 were $11.8 million; $15.6 million in 2022-23; and $8.1 million in 2023-24 as of June 2023 (program year ends March 2024).
  • The Advance Payments Program is a loan guarantee program which provides producers with easy access to low-interest cash advances against their future production to provide cash flow and to support marketing flexibility (an annual loan average of $2.8 billion); and
  • The Canadian Agricultural Loans Act provides a loan guarantee program designed to increase the availability of loans to farmers to help establish, improve and develop farms (averaging $75 million in loans annually).

  Business Risk Management enhancements under Sustainable Canadian Agricultural Partnership

  FPT governments continue to work towards enhancements to BRM programs and agreed to the following:

  1. Undertaking a review to assess how BRM programs can make positive contributions to reducing agriculture’s climate change footprint and encourage farmers to adapt to climate change. The review will also consider the financial implications of climate change on BRM programs.
  2. Increasing AgriStability compensation rate from 70% to 80% to better support farmers in times of need.
  3. Requiring large farms (allowable net sales of $1 million or greater) to have an agri-environmental risk assessment (for example, Environmental Farm Plan) by 2025 to participate in AgriInvest.
  4. Exploring the possibility of a more streamlined and timely AgriStability model.
  5. Adding option under AgriInsurance for provinces to offer Whole Farm Cost Share as an alternative coverage to producers that would encourage diversification and lower producer premiums.
  6. Offering premium rebates under AgriInsurance for producers who adopt environmentally beneficial management practices that also reduce production risk. Provinces agreed to implement a rebate for a minimum of one beneficial management practice over the course of the Framework.
  7. Continuing the exploration of a whole-farm revenue insurance program.

• Natural disasters – Drought and wildfires

  AgriRecovery

  AgriRecovery is a federal-provincial-territorial (FPT) framework that facilitates the implementation of federal/provincial responses to natural disasters and disease/pest outbreaks.

  • Acts as a mechanism for FPT governments to develop individual initiatives to address specific disaster events within predefined criteria.
  • The framework provides:
    • A protocol for FPT interaction;
    • A definition of disaster to guide when intervention is warranted; and
    • Guidelines on the type of assistance to be provided.
  • Focuses on assisting with the extraordinary costs required to recover following a disaster, not meant to replace available coverage under AgriInsurance, AgriStability, and AgriInvest, also referred to as the Business Risk Management (BRM) suite of programs.
  • Not intended to provide responses to recurring disaster events, as a recurring disaster might indicate that there is a need to look for longer-term options.

  Program cost-share

  • Federal, 60%
  • Provincial, 40%

  Program delivery

  • Federal: On a case-by-case basis
  • Provincial: All 10 provinces

  FPT payments to date, as of July 2023 ($)

  Growing Forward 2 (2013-2018	38,508,993
  Canadian Agricultural Partnership (2018-2023)	861,275,334

  Targeted areas of coverage

  	AgriRecovery support
  Market price fluctuations	No
  Farm operating cash flow	No
  Increased expenses	Yes
  Production/quality losses	No
  Investment in risk management tools	No
  Investment in farm operations	No

  AgriRecovery Framework

  AgriRecovery provides a process to enable FPT governments to implement, under certain prescribed circumstances, individual initiatives to assist producers impacted by a natural disaster or disease/pest outbreak.

  The objective of the AgriRecovery Framework is to help producers with the extraordinary costs of activities necessary to resume business operations as quickly as possible after a disaster.

  Other BRM programs are available to assist producers with production and income/revenue losses.

  AgriRecovery responses generally assume full participation in available BRM programs.

  AgriRecovery initiatives are determined from joint assessments based on information provided by the requesting jurisdiction.

  AgriRecovery is part of an overall Government of Canada response to disasters. Finalization of AgriRecovery responses often depends on finalization of any other, non-agriculture-specific government responses, such as through federal Disaster Financial Assistance Arrangements (DFAA) delivery by Public Safety Canada.

  AgriRecovery – Drought and wildfires in 2023

  With extreme weather events in recent years, AgriRecovery has been an important tool.

  Agriculture and Agri-Food Canada (AAFC) has recently received formal requests to initiate AgriRecovery assessments of the impact of the current drought conditions from British Columbia, Alberta and Saskatchewan, as well as from Alberta related to wildfires.

  • For wildfires, Alberta intends to wait for the season to close before providing the information required for an assessment. British Columbia’s assessment will combine the impacts of both the wildfires and the drought.
  • For drought, AAFC officials are currently working with their provincial counterparts on the joint assessments to determine if the event meets the AgriRecovery Framework criteria.
  • The assessments will determine if AgriRecovery initiatives are warranted and the nature of the support needed to assist producers with their extraordinary costs to resume operations.
  • The AgriRecovery response to the 2021 drought, which included support to the Western provinces and Ontario, cost close to $440 million (60% federal contribution).
  • AgriRecovery responses to the current drought would require a request for additional policy and funding authorities beyond the standard $118 million annual budget.

• Food Policy for Canada

  What is Food Policy?

  Framework

  Broad vision, guiding principles and long-term outcomes that advance a “food systems” approach that considers the interconnected relationships of people, processes and products involved in all aspects of food provision and its social, health, environmental and economic impacts.

  Collaboration

  Governance structures and inclusive engagement that advance an “Everyone at the Table” approach to collaborating across federal departments and with diverse food system stakeholders and partners, including industry, civil society, academia, and Indigenous peoples.

  Initiatives

  Coordinated investments in near-term action areas across several departments and agencies that seek to address emerging food system issues and key gaps in federal food-related programming.

  Food Policy for Canada

  Vision

  All people in Canada are able to access a sufficient amount of safe, nutritious, and culturally diverse food. Canada’s food system is resilient and innovative, sustains our environment and supports our economy.

  Long-term outcomes

  • Improved food-related health outcomes
  • Inclusive economic growth
  • Vibrant communities
  • Increased connections within food systems
  • Sustainable food practices
  • Strong Indigenous food systems

  Guiding principles

  • Inclusion and diversity
  • Reconciliation
  • Collaboration
  • Innovation
  • Sustainability
  • Evidence and accountability

  Near-term action areas

  • Help Canadian communities access healthy food
  • Make Canadian food the top choice at home and abroad
  • Support food security in Northern and Indigenous communities
  • Reduce food waste

  Food Policy governance

  Canadian Food Policy Advisory Council

  • External advisory body that reflects diverse and representative views from across the food system, including health, social, academic and industry actors.
  • Provides the Minister with advice to improve Canada’s food systems.
  • Launched with 24 members in February 2021; currently 19 members.
  • Work underway for membership renewal; application process opened on July 6.
  • The Minister put forward a new direction for the Council that was implemented at the first in-person meeting in November 2022.

  Interdepartmental Committee on Food Policy

  Assistant Deputy Minister-level (ADM) forum for discussion on improved policy coherence across federal policies related to food, as well as a point of convergence among committees that impact or are impacted by food.

  Includes representation from:

  • Canadian Food Inspection Agency
  • Health Canada
  • Public Health Agency of Canada
  • Fisheries and Oceans Canada
  • Environment and Climate Change Canada
  • Crown-Indigenous Relations and Northern Affairs Canada
  • Indigenous Services Canada
  • Statistics Canada
  • Innovation, Science and Economic Development Canada
  • Employment and Social Development Canada
  • Treasury Board Secretariat
  • Global Affairs Canada

  Food Policy initiatives

  Help Canadian communities access healthy food (on track)

  • Local Food Infrastructure Fund ($70 million over 5 years) (AAFC)
  • Tackling Food Fraud Program ($24.4 million over 5 years) (CFIA)
  • COVID-19 response: Emergency Food Security Fund ($330 million) (AAFC)

  Make Canadian food the top choice at home and abroad (on track)

  • AgriCommunication Initiative ($25 million over 5 years) (AAFC)
    • Stream 1: Promote sustainable agriculture
      • AgriCommunication program ($8 million over 3 years)
      • Taste the Commitment Campaign / Revitalized Canada Brand Program
    • Stream 2: Increase sector’s understanding of changes in consumer demand

  Support food security in Northern and Indigenous communities (on track)

  • Northern Isolated Community Initiatives Fund ($15 million over 5 years) (Canadian Northern Economic Development Agency)

  Reduce food waste (on track)

  • Food Waste Reduction Challenge ($20 million over 4 years) (AAFC)
  • Federal leadership on food waste reduction ($6.3 million over 5 years in existing authorities) (AAFC)
  • COVID-19 response: Surplus Food Rescue Program ($50 million) (AAFC)

  Key milestones

  2015

  • Minister Mandate Letter commitment to develop Food Policy

  2017

  • Extensive stakeholder roundtables, Indigenous-led sessions and online engagement with 45,000 Canadians

  2018

  • What We Heard Report published

  2019

  • Budget 2019 and ministerial launch of Food Policy for Canada: Everyone at the Table
  • Local Food Infrastructure Fund ($70 million, including top-ups in 2021 and 2023)

  • Northern Isolated Community Initiatives Fund ($15 million)

  2020

  • Food Waste Reduction Challenge ($20 million)
  • Tackling Food Fraud Program ($24.4 million)
  • COVID-19 response
    • Emergency Food Security Fund ($330 million)
    • Surplus Food Rescue Program ($50 million)

  2021

  • Canadian Food Policy Advisory Council and AgriCommunication Program ($8 million)
  • United Nations Food Systems Summit 2021

  2023

  • Canada Brand and Taste the Commitment Campaign

  Taking stock – Food Policy 2019-2024

  Successes

  • Positioned Canada as a global leader in advancing food-systems approach and aligning with international efforts (United Nations, Organisation for Economic Co-operation and Development, G7/G20)
  • Remains aligned with Government’s priorities, as per commitments in 2019, 2021 Minister mandate letters
  • Helped broaden department’s mandate to consider food systems issues and stakeholders beyond the agriculture and food sector
  • Provided platform to quickly convene diverse stakeholders and pivot to emergency support for food systems during COVID-19
  • Investments in local food infrastructure to support food security addressed a key gap in federal programming
  • Food Waste Reduction Challenge introduced new funding model to AAFC, very successful at accelerating early-stage innovations

  Opportunities

  • Improve coherence among policies that impact or are impacted by food and align actions across Canada’s food systems
  • Establishing a monitoring framework with pan-Canadian food systems indicators, and an annual report on the shared results and coherence among Government of Canada food-related policies
  • Increase direct and meaningful engagement with Indigenous partners to advance self-determined priorities
  • Additional support for the participation of equity-deserving groups
  • Improve coordination of federal investments supporting community-led solutions to address multiple dimensions of food security
  • Develop a strategy to reduce food loss and waste across the food system through building on investments to date and fostering partnerships across supply chains

  Context for Food Policy renewal

  Stakeholder recommendations

  • Advisory Council
  • UN Food Systems Summit Dialogues
  • National Indigenous Organizations
  • Ad-hoc engagement

  Ongoing and emerging challenges

  • Food affordability for low-income people
  • Supply chain disruptions
  • Self-determined Indigenous food systems
  • Opportunity cost of food loss and waste

  New commitments

  • No-Waste Food Fund (2021 Mandate Letter)
  • Food Loss and Waste Reduction Action Plan (2023 North American Leaders Summit)
  • National Pathways Document
  • Government Response to Office of the Auditor General and Standing Committee on Public Accounts (PACP) reports on Protecting Canada’s Food System

  Looking ahead to Food Policy 2024-2029

  Program funding will sunset in 2024 and we are undertaking policy work to inform a renewed Food Policy

  • Other government department engagement at the working level & ADM Interdepartmental Committee on Food Policy
  • Canadian Food Policy Advisory Council provided advice on policy and program implementation to date, identifying opportunities to improve policy and program coherence.

  There are four key areas where federal interventions would build on progress to date, fulfill government commitments, respond to stakeholder feedback and address important food systems challenges.

  • Resilient community food systems
  • Food loss and waste reduction
  • Strengthen Indigenous food systems
  • Promoting nutritious Canadian foods

  There are also opportunities to improve the supporting mechanisms for Food Policy

  • Placing a greater emphasis on means of implementation in the policy framework
  • Removing financial barriers to participation for equity-deserving groups, and establishing mechanisms to support department-wide long-term co-development with Indigenous partners
  • Strengthening a whole-of-government approach through better coordination, coherence and collaboration, including data and monitoring

• Inflation, rising input costs and food prices

  Inflation

  Since late 2021, monthly consumer price inflation (CPI) began to accelerate in Canada. After the Russian invasion of Ukraine, the headline monthly CPI in Canada peaked at 8.1% in June 2022.

  Food price inflation

  Since the winter of 2021-22, the pace of retail food price inflation accelerated and remained higher than overall price inflation in Canada. After the Russian invasion of Ukraine, retail food prices continued to remain higher.

  After the Bank of Canada’s aggressive interest rate hikes, Canada’s headline monthly price inflation substantially moderated and declined to 2.8% in June 2023. However, retail food price inflation in Canada continues to remain higher than 9% as of June 2023.

  Higher food prices negatively impact the food security of low-income Canadians, especially of single-parent households; Indigenous peoples; people living in remote and rural areas; and new immigrants.

  Several reasons have been cited as drivers behind higher price inflation in Canada and around the world, including: lingering effects of COVID-19 pandemic-related supply chain disruptions; labour shortages; higher energy prices; higher U.S. dollar; and Russia’s invasion of Ukraine.

  Figure 1: 12-month increases in monthly consumer price indexes in Canada, from January 2021 to June 2023.

  

  Source: Statistics Canada.

  [Description of the above image]

  A chart showing the 12-month increases in monthly consumer price indexes in Canada, from January 2021 to June 2023. The chart compares the year-over-year price increase of all items (that is, overall price inflation) relative to food purchased from stores (that is, retail food price inflation). It also notes the important date of when Russia invaded Ukraine (February 24, 2022) to show how prices continued to remain high following that event.

  Since the winter of 2021-22, the pace of retail food price inflation accelerated and remained higher than overall price inflation in Canada. After the Russian invasion of Ukraine, retail food prices continued to remain higher.

  After the Bank of Canada’s aggressive interest rate hikes, Canada’s overall price inflation substantially moderated and declined to 2.8% in June 2023. However, retail food price inflation in Canada continues to remain higher than 9% as of June 2023.

  12-month increases in monthly consumer price indexes in Canada, from January 2021 to December 2021.

  	Jan-21	Feb-21	Mar-21	Apr-21	May-21	Jun-21	Jul-21	Aug-21	Sep-21	Oct-21	Nov-21	Dec-21
  All-items	1.0%	1.1%	2.2%	3.4%	3.6%	3.1%	3.7%	4.1%	4.4%	4.7%	4.7%	4.8%
  Food purchased from stores	0.1%	1.3%	1.3%	0.1%	0.9%	0.7%	1.0%	2.6%	4.2%	3.9%	4.7%	5.7%

  12-month increases in monthly consumer price indexes in Canada, from January 2022 to December 2022.

  	Jan-22	Feb-22	Mar-22	Apr-22	May-22	Jun-22	Jul-22	Aug-22	Sep-22	Oct-22	Nov-22	Dec-22
  All-items	5.1%	5.7%	6.7%	6.8%	7.7%	8.1%	7.6%	7.0%	6.9%	6.9%	6.8%	6.3%
  Food purchased from stores	6.5%	7.4%	8.7%	9.7%	9.7%	9.4%	9.9%	10.8%	11.4%	11.0%	11.4%	11.0%

  6-month increases in monthly consumer price indexes in Canada, from January 2023 to June 2023. 

  	Jan-23	Feb-23	Mar-23	Apr-23	May-23	Jun-23
  All-items	5.9%	5.2%	4.3%	4.4%	3.4%	2.8%
  Food purchased from stores	11.4%	10.6%	9.7%	9.1%	9.0%	9.1%

  Farm input cost

  • Total farm operating expenses in Canada increased by 3.7%, on average, over the 2016-2020 period. However, expenses increased significantly, by 9.6% to $59.8 billion in 2021, due to higher prices for fertilizer, feed and fuel. Additionally, input prices were also affected by changes in general inflation, which increased globally, beginning in 2021 due to the post-pandemic rebounding of demand, and supply-chain disruptions.
  • In 2022, farm expenses increased even further by 21.2% to $72.5 billion. This was the largest increase since 1974 (+22.0%), as prices continued to rise for fertilizer, feed and fuel. Input prices were also higher as general inflation substantially increased in 2022, with the Russian war against Ukraine resulting in further increases in energy and food prices.

  • Expenses are expected to increase in 2023, but at a much more modest pace. Several expense categories, including interest, livestock and labour expenses are expected to continue to increase in 2023, following considerable increases in 2022. However, fuel and fertilizer expenses are expected to decline with expected lower crop prices and falling natural gas prices.
  • While higher prices of agricultural commodities led to record-high farm cash receipts ($95 billion) in 2022, increases in prices of key inputs outpaced the gain in farm commodity prices, leading to a modest decline in net cash income (NCI) to $22.5 billion in 2022 (from $22.9 billion in 2021).

• Environment and climate change / Sustainable Agriculture Strategy

  Positioning the sector for success – perspectives on climate change and environment

  Context

  • Canadians and our sector are facing the triple threat of climate change, pollution and biodiversity loss.
    • Federal-provincial-territorial (FPT) governments share long-term environmental goals – need to work together.
    • Work and investments are needed to get there – but landscape of policies and programs to address those issues is becoming complex and difficult to navigate.
  • Environment and sustainability issues in agriculture are also rising on the international agenda.
  • Demonstrating environmental sustainability is becoming increasingly important to obtain/maintain market access and respond to regulatory requirements and consumer demands.
    • The sector needs support, beyond programming, to demonstrate its sustainability.

  Sustainability is a key driver of the future

  • Consumers are looking for and expecting sustainably grown and produced food.
  • Global markets are increasingly emphasizing sustainability and environmental stewardship.
  • Major trade competitors are developing their own sustainability approaches.
  • Future of the sector requires a healthy environment.

  Food production and the environment

  (Source: 2020 Buy Canadian Promotion Campaign Baseline Survey)

  Half of consumers see farmers as environmentally responsible, but many are concerned about the impacts of agricultural activities.

  Farmers

  • 73% trust farmers and ranchers to take care of the environment.
  • 53% agree Canadian farmers are environmentally responsible.

  Farming

  • 38% are concerned about environmental sustainability in farming.
  • 38% are concerned about the impact of agricultural activities on the environment.

  Trust in the process

  • 53% think implementing sustainable and environmentally friendly practices in food production is very important in building or maintaining trust.
  • 43% believe sustainable food has a positive impact on the environment.
  • 44% of those who rarely or never purchase items produced using environmentally sustainable practices do not buy these items because they are not confident they were produced sustainably.

  Sustainability of Canadian agriculture – efforts to date

  • Emissions from the agriculture sector have remained relatively stable since 2005, with emissions decreasing in some areas and increasing in others.
    • Agricultural soils in Canada have been a significant carbon sink since 2000.
    • In Saskatchewan, 95% uptake of zero- or minimal-till – led to increase in soil organic matter.
    • Canada has reduced methane emissions intensity per production unit.
  • Canada has performed fairly well in global comparisons, but defining and benchmarking sustainability is a difficult endeavor that requires substantial data – and other countries are improving as well.
  • Improving the sustainability measures and benchmarking change over time is also a priority for the sector.
    • A public-private coalition of 129 partners have supported the first sustainability index for Canada’s agriculture and agri-food sector, the National Index of Agri-food Performance (2023).
  • Being better able to measure and demonstrate Canada’s environmental sustainability is needed to help position Canada as a leader in global markets.

  Additional sustainability efforts in the sector

  Canadian agriculture and agri-food sector has made long term sustainability commitments to reduce emissions, protect biodiversity, and enhance the resilience of the sector.

  • Dairy Farmers of Canada – net zero by 2050
  • Grain Growers of Canada – net zero by 2050
  • Egg Farmers of Canada – net zero by 2050
  • Nestle – net zero by 2050
  • Canadian Roundtable for Sustainable Beef – Certified Sustainable Beef Framework
  • McCain Foods – McCain Regenerative Agriculture Framework
  • Canadian Federation of Agriculture – Canadian Agri-food Sustainability Initiative
  • Fertilizer Canada – 4R Nutrient Stewardship
  • Egg Farmers of Canada, Chicken Farmers of Canada, Dairy Farmers of Canada, Pulse Canada – lifecycle assessments
  • Maple Leaf Foods – reduce environmental footprint by 50% by 2025

  These initiatives all contribute to the Canadian agricultural sustainability story.

  Sustainable Agriculture Strategy overview

  The Sustainable Agriculture Strategy (SAS) will provide a forward-looking shared vision for taking action on environment and climate in the agriculture sector, while also taking into account competitiveness and the economic viability of implementing new actions, as well as social sustainability and the long-term vitality of the sector.

  SAS will focus on the environment pillar, but will be developed using an economic and social lens, ensuring that actions will also have a positive benefit on producers' livelihoods and the competitiveness of the sector.
  Purpose:

  • Focus resources and action for an environmentally and economically sustainable agriculture sector.
  • Proactively manage climate change impacts.
  • Leverage opportunities associated with markets for sustainable food.
  • Contribute to Canada’s greenhouse gas (GHG) emissions reduction targets.

  The SAS will build off the good work that has been, and continues, to be done.

  Sustainable Agriculture Strategy priority themes

  

  [Description of the above image]

  Sustainable Agriculture Strategy priority themes

  A Venn diagram showing the interlinkages of all five themes in the Sustainable Agriculture Strategy: climate change mitigation, soil health, biodiversity, adaptation and resilience, and water.

  Building on a strong foundation to support sustainability efforts in the sector: Federal initiatives

  Incentivizing adoption of agri-environmental practices on farm:

  • Natural Climate Solutions Fund (2021-2031)
    • Agricultural Climate Solutions: On-Farm Climate Action Fund (2021-2024; 2024-2028)
    • Nature Smart Climate Solutions Fund (Environment and Climate Change Canada [ECCC]) (2021-22 to 2030-31)
    • 2 Billion Trees Program (Natural Resources Canada) (2021-22 to 2030-31)
  • Agricultural Clean Technology Program (2022-2028)

  Science, research, and innovation:

  • Agricultural Climate Solutions – Living Labs
  • Agricultural Clean Technology Program (2022-2028)
  • Agriculture and Agri-Food Canada (AAFC) internal science and technology activities

  Building on a strong foundation to support sustainability efforts in the sector: Sustainable Canadian Agricultural Partnership

  Incentivizing adoption of agri-environmental practices on farm:

  • Climate change and environment cost-shared programming (all provinces and territories)
    • Resilient Agricultural Landscape Program

  Science, research, and innovation:

  • Science, research and innovation cost-shared programming (all provinces and territories)
  • AgriScience - Sustainable Canadian Agricultural Partnership(Sustainable CAP) (federal only)
  • AgriInnovate - Sustainable CAP (federal only)

  Building on a strong foundation to support sustainability efforts in the sector: Provinces and territories (examples)

  • Alberta - Emissions Reduction and Energy Development Plan
  • British Columbia - Regenerative Agriculture and Agritech Minister’s Advisory Group final report; Extreme Weather Preparedness/Food Security Funding
  • Manitoba - Made in Manitoba Climate and Green Plan; Manitoba Water Management Strategy; Manitoba Sustainable Protein Strategy
  • New Brunswick - Agriculture Climate Change Strategy; Climate Change Fund
  • Newfoundland - Provincial Agriculture Crown Land Program
  • Northwest Territories - 2030 NWT Climate Change Strategic Framework
  • Nova Scotia - Climate Adaptation Leadership Program; Agriculture Energy Partnership
  • Ontario - Ontario’s Soil Resource Inventory and Agricultural Soil Information System; Ontario’s Agri-Food Energy Cost Savings Initiative
  • Prince Edward Island - 2040 Net Zero Framework; Climate Adaptation Plan (Agriculture)
  • Quebec – agreement between Quebec’s department of agriculture (Ministère de l'Agriculture, des Pêcheries et de l'Alimentation) and les Producteurs de lait du Québec (PLQ), concerning the implementation of a project to reduce enteric methane emissions from dairy herds
  • Saskatchewan - Global Institute for Food Security: research on carbon footprints; measured improvements in environmental indicators
  • Yukon - Our Clean Future: A Yukon strategy for climate change, energy and a green economy; Cultivating Our Future: 2020 Yukon Agriculture Policy

  Sustainable Agriculture Strategy engagement

  Broad sector engagement

  • With producers:
    • Producer workshops
  • With sector stakeholders:
    • Stakeholder workshops
    • Existing advisory councils/tables
    • SAS roundtables
  • With provinces and territories:
    • AAFC's established Federal-Provincial/Territorial Working Groups
  • With Indigenous peoples:
    • Engagement with First Nations, Inuit, and Métis partners
  • All target audiences:
    • Web-based survey
    • Written submissions

  Advisory Committee

  • Diverse representation of sector stakeholders.
  • To facilitate open, informal and constructive discussion between AAFC, the agriculture sector, and other key stakeholders.
  • Will provide input, recommendations and advice into the development of shared outcomes, potential milestones, and measures to support those milestones.
  • Important role in facilitating collaboration, transparency, and information sharing.

  Sustainable Agriculture Strategy – Key themes emerging from feedback

  Realities experienced by producers

  • Producers are business owners first – economic considerations
  • Aging farmers are exiting the sector more rapidly than pace of new entrants' ability to become viable
  • It takes time to see change from implementation of new environmental practices
  • Lack of extension services across the country to help producers make informed decisions

  Regionality should be a key principle of the SAS

  • A one-size approach will not work
  • Extent and available solutions to environmental issues vary across regions
  • Small and medium sized farms require different supports and can offer different solutions

  An environmental, economic, and social lens to sustainability

  • SAS should include all three pillars of sustainability: social, economic and environmental
  • Biodiversity critical in addressing multifunctionality of agriculture
  • The SAS vision needs to go beyond the Guelph Statement

  Sustainable Agriculture Strategy – Key themes from provinces and territories

  Clear link between agricultural policy frameworks (5 years) and SAS (25 years) needed.
  Concerns

  • SAS should not displace the agricultural policy frameworks to pay for a new set of environmental goals
  • Confusion around federal and provincial sustainability programming - need to provide clarity in roles and responsibilities
  • SAS should not contradict what is happening in Sustainable CAP if provincial plans are moving on different timelines

  Way forward

  • Continuing engagement with provincial-territorial (PT) partners
  • Map of federal and provincial sustainability initiatives to see how they fit together
  • Learn from the successes of specific actions
  • As SAS develops, need to look at making it easier for producers to stack funding across PTs and federal programs

  Sustainable Agriculture Strategy next steps

  • Work with sector stakeholders
    • SAS Advisory Committee working groups – climate change mitigation, fertilizers, adaptation, biodiversity, soil health
    • Advisory committee will continue to meet twice a month
  • Provincial and territorial discussions
    • Bilateral meetings with provinces and territories – ongoing
    • FPT Assistant Deputy Ministers Session – Fall 2023
  • What we heard report – Fall 2023
  • Analysis and policy development leading to SAS launch in 2024

  Annex A: Other federal environment initiatives by environment priority

  Water

  Federal activities

  • ECCC lead: Budget 2023: $85.1 million over five years for creation of a new Canada Water Agency (Winnipeg HQ), and $650 million over 10 years for a strengthened Freshwater Action Plan.
    • ECCC continues to work internally on a proposed plan for delivering that funding envelope.

  AAFC role

  • Coordination and engagement with ECCC.

  Provincial–territorial participation (not every province or territory participates)

  • None

  Biodiversity

  Federal activities

  • ECCC-led development of a national biodiversity strategy and action plan (NBSAP) outlining Canada’s contributions to the Kunming-Montreal Global Biodiversity Framework (GBF).
  • Agriculture Sector Conservation Action Plan for Species at Risk (AgSAR) (Planning Team co-led by ECCC and the Canadian Roundtable for Sustainable Beef).

  AAFC role

  • AAFC supporting ECCC in development of NBSAP and Canada’s contributions – co-lead on targets 7, 10.
  • Engagement with agriculture ministries.
  • Facilitate information sharing for AgSAR.

  Provincial–territorial participation (not every province or territory participates)

  • GBF: PTs invited to attend agriculture engagement session alongside stakeholders and engage with PT environment departments.
  • AgSAR: PT agriculture ministries encouraged to engage their environment counterparts to provide input.

  Adaptation

  Federal activities

  • ECCC released the final National Adaptation Strategy in June 2023 along with an updated Government of Canada Adaptation Action Plan.

  AAFC role

  • Coordination and engagement with ECCC and stakeholders; facilitating engagement with agriculture ministries.

  Provincial–territorial participation (not every province or territory participates)

  • ECCC is leading development of bilateral action plans with PTs.

  Climate change

  Federal activities

  • The Government of Canada is committed to reducing greenhouse gas emissions by 40- 45% below 2005 levels by 2030, and to reaching net-zero emissions by 2050.
  • Canada’s agriculture sector is contributing to these objectives through its contributions to initiatives such as the Global Methane Pledge, and through the establishment of a national target to reduce emissions from the application of fertilizers by 30% from 2020 levels by 2030.

  AAFC role

  • Programming and associated reporting.
  • Coordination of reporting for agriculture sector.
  • Engagement and coordination with ECCC and stakeholders.

  Provincial–territorial participation (not every province or territory participates)

  • Regular updates at FPT Agri-environmental policy working group meetings.

  International engagement

  Federal activities

  • Upcoming international events
    • UN Food Systems Summit (FSS) Stocktaking moment: July 2023
    • UN Climate Action Summit: September 2023
    • Adaptation Futures: October 2023
    • UN Framework Convention on Climate Change (FCCC) COP28: November 30 – December 12

  AAFC role

  • AAFC lead for Adaptation Futures; UN FSS; UNFCCC Agriculture negotiations.
  • Coordination and engagement with ECCC and stakeholders; facilitating engagement with agriculture ministries.

  Provincial–territorial participation (not every province or territory participates)

  • PTs will be invited to attend information sessions.
  • Regular updates at FPT Agri-environmental policy working group meetings.

  Annex B: Sustainable Agriculture Strategy and Agricultural Policy Frameworks

  • Sustainable CAP (2023-2028)
  • Sustainable Agriculture Strategy (2024-2050)
  • Agriculture Partnership Frameworks (2028-2033, 2033-2038, etc.)

  Tackling climate change and environmental protection to support GHG emission reductions and the long-term vitality of the sector while positioning producers and processors to seize economic opportunities from evolving consumer demands (environmental priority of the Sustainable CAP in the Guelph Statement).

  Other plans/strategies

  • 2030 Emissions Reduction Plan
  • Canada’s Methane Strategy
  • Canada’s National Adaptation Strategy
  • Agriculture Species at Risk Action Plan
  • 2030 National Biodiversity Strategy and Action Plan
  • Freshwater Action Plan

  Domestic Commitments

  • Fertilizer emissions reduction target of 30% from 2020 levels by 2030

  International Commitments

  • Protect 30% of Canada's land and marine areas by 2030, and other targets from the Kunming-Montreal Global Biodiversity Framework
  • Support global pledge to reduce methane emissions by 30% from 2020 levels by 2030
  • 40-45% below 2005 GHG emission levels by 2030
  • Net zero emissions by 2050

• Supply managed sectors and programming

  An overview of the supply management (SM) system for the Canadian dairy, poultry and egg sectors and compensation programming for trade agreements.

  What is supply management?

  SM is the production and marketing system under which dairy (cow’s milk), table eggs, broiler hatching eggs, chicken, and turkey are produced in Canada.

  SM aims to ensure a reasonable return to producers for their labour and investment, while consumers receive a predictable supply of products.

  The Canadian SM system is based on 3 pillars:

  • pricing mechanisms
  • production control
  • import control

  Supply management: How it works

  Production: designed to match domestic demand.

  • Production levels are set at the national level then allocated to provincial marketing boards, which then allocate maximum production levels to producers through quotas.

  Pricing: aimed at ensuring producers receive a fair return for their labour.

  • Provincial marketing boards establish the prices producers receive, reflecting factors such as the cost of production and inflation. Retail prices are not regulated.

  Import: managed and administered through the federal government.

  • Imports of SM products are controlled through Tariff Rate Quotas (TRQs) where limits are set on the volume of imports allowed to enter Canada at low or zero tariff rates, with much higher, over-quota rates for additional imports.

  Sector snapshot

  Dairy

  • 9,739 dairy farms in Canada, with majority (80%) located in Ontario and Quebec.
  • Farm cash receipts, 2022: $8.23 billion
  • Average net operating income, 2021: $228,609

  Poultry and eggs

  • 2,826 chicken producers, 513 turkey producers, 235 broiler hatching egg producers and 1,218 egg producers in Canada, with majority (62%) located in Ontario and Quebec.
  • Farm cash receipts, 2022: $5.9 billion
  • Average net operating income, 2021: $224,433

  Processing sector

  • Approximately 507 dairy processors and 460 poultry and egg processing plants in Canada, majority located in Ontario and Quebec.
  • Manufacturing shipments: $24.8 billion ($16.2 billion for dairy; $8.7 billion for poultry and egg)
  • Number of employees in SM processing, as reported by the industry: 24,500 in dairy; more than 28,000 in poultry and egg¹

  ¹Employment figures reported by industry. 

  Recent trade agreements

  CETA – 2017

  • Comprehensive Economic and Trade Agreement — dairy (cheese) only

  CPTPP – 2019

  • Comprehensive and Progressive Agreement for Trans-Pacific Partnership — all SM sectors

  CUSMA – 2020

  • Canada-United States-Mexico Agreement — all SM sectors

  Recent trade agreements provide Canada’s key trading partners with additional access to the domestic dairy, poultry and egg market, while keeping the SM system and its pillars intact.

  Access provided through TRQs, which allow imports of set amount of specific products at a low or zero rate of duty.

  New imports under these agreements replace products that would have otherwise been supplied by Canadian producers.

  Imports under CETA, CPTPP and CUSMA to date have been high for specific commodities, while certain CUSMA and CPTPP TRQ fill rates have been lower than expected due to various reasons.

  Compensation for CETA/CPTPP

  Overall compensation for impacts of CETA and CPTPP: $3.083 billion

  In 2016, the Government of Canada announced $350 million in compensation for the impacts of CETA.
  Dairy producers

  • Dairy Farm Investment Program ($250 million over 6 years; program concluded March 31, 2023)

  Dairy processors

  • Dairy Processing Investment Fund ($100 million over 5 years; program ended March 31, 2022)

  CPTPP: Through Budgets 2019 and 2021, the Government of Canada announced additional $2.733 billion in support to supply-managed sectors.

  SM producers

  • Dairy Direct Payment Program ($1.75 billion over 4 years)
  • Poultry and Egg On-Farm Investment Program ($647 million over 10 years)
  • Market Development Program for Turkey and Chicken ($44 million over 10 years)

  Dairy, poultry and egg processors

  • Supply Management Processing Investment Fund ($292.5 million over 6 years)

  Compensation for CUSMA

  Through the 2022 Fall Economic Statement, the Government announced $1.75 billion for the impacts of CUSMA. Majority of funding will be delivered through existing compensation programs:
  Dairy producers

  • Dairy Direct Payment Program ($1.2 billion over 4 years)

  Poultry and egg producers

  • Poultry and Egg On-Farm Investment Program ($112 million over 8 years)

  Dairy, poultry and egg processors

  • Supply Management Processing Investment Fund ($105 million over 5 years)

  Current status

  • ████████████████████████████████████████████████

  CUSMA compensation also includes up to $333 million for a new program to support dairy processors’ efforts to manage the surplus of solids non-fat (SNF; a by-product of milk processing), the Dairy Innovation and Investment Fund.

  • The Government of Canada announced its intention to invest in this new program for the dairy sector following the 2022 Fall Economic Statement
  • Consultations with key dairy industry stakeholders and associations took place in January and February 2023
  • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████

  Next steps

  █████████████████████████████████████████████████

  Supply management sector: Key priorities and issues

  • Inflation (for example, rising input costs)
  • Public trust (for example, environmental sustainability, animal welfare)
  • Labour shortages

  Dairy

  • Trade disputes (CUSMA and CPTPP dairy TRQs)
  • Consumer concerns over increasing dairy prices
  • Milk disposal and surplus of SNF (for example, skim milk powder, whey powder)
  • Dairy Vision exercise to chart a path forward for the dairy sector

  Poultry and egg

  • Avian influenza
  • Ukraine Goods Remission Order – temporary tariff removal on all products originating from Ukraine (expired in June 2023)

  Annex A - Key dairy industry players

  Dairy Farmers of Canada

  • National producer-led policy, lobbying and promotional organization:
    • Plays coordinating role amongst producers
    • Administers producer programs and pursues industry policies, such as ProAction
    • Advocates for producers domestically and internationally and lobbies government
    • Conducts advertising, events and other promotional activities on behalf of producers
  • President: David Wiens; Executive Director: Jacques Lefebvre
  • Funded via producer levies

  Provincial marketing boards

  • Responsible for implementing the system on a provincial basis:
    • Market milk to the processing industry
    • Set prices for each milk class
    • Administer provincial quota policies; and allocate quota on a producer basis

  Dairy Processors Association of Canada

  • National industry association representing Canadian dairy processors:
    • A non-voting member of the Canadian Milk Supply Management Committee

  Canadian Dairy Commission

  • Responsible for providing federal oversight of the supply management system
  • Reports to Parliament through the Minister of Agriculture and Agri-Food and responsible for:
    • Estimating Canadian quota requirement;
    • Establishing support prices for butter;
    • Administering the Special Milk Class Permit, Pooling, and a number of dairy programs (the Dairy Innovation Program, Dairy Direct Payment Program, Milk Access for Growth, and Domestic Seasonality Programs)
  • 3 members and 60 employees; CEO: Benoit Basillais; Chairperson: Jennifer Hayes
  • Funding: 50% appropriations, 50% industry and marketplace

  Canadian Milk Supply Management Committee

  • Oversees the administration of the National Milk Marketing Plan
    • Takes quota allocation and pricing decisions, along with decisions related to the milk classification system
    • Addresses policy issues affecting the dairy SM system
  • Chaired by the Canadian Dairy Commission and consists of provincial milk marketing boards and provincial governments; Dairy Farmers of Canada, Dairy Processors Association of Canada and Consumers’ Association of Canada are non-voting members/observers

  Annex B - Key poultry and egg industry players

  Farm Products Council of Canada (federal agency)

  • Approves national production allocations and levies
  • Supervises the activities of the national marketing agencies under the Farm Products Agencies Act, reports to the Minister of Agriculture and Agri-Food
  • Reviews stakeholder complaints related to national marketing agency decisions

  National Marketing Agencies (producer-based)

  Chicken Farmers of Canada; Turkey Farmers of Canada; Egg Farmers of Canada; and the Canadian Hatching Egg Producers are responsible for:

  • estimating national production requirements
  • playing a central coordinating role for industry
  • administering producer programs and pursuing industry policies
  • conducting advertising, events and other promotional activities
  • advocating for the industry and lobbying government

  Funded by producers and through consumer levies.

  Provincial Commodity Boards (producer-based)

  Take their portion of the national quota and allocate it to producers and approve prices determined by the price supervisory board in each province.

  Canadian Poultry and Egg Processors Council

  Industry association representing processors and further processors of chicken and turkey meat, graders and further processors of eggs, and hatcheries in Canada.

• Supply chain challenges

  Agriculture and agri-food supply chains during the pandemic

  Overall, during the COVID-19 pandemic, the food supply chain continued to provide Canadians with reliable access to food and maintained healthy economic growth.

  However, the pandemic did disrupt the food supply chain in a variety of ways:

  • Labour and travel restrictions highlighted the essential nature of food workers
  • Challenges delivering exports and imports
  • Production back-ups
  • Food surplus in some areas and shortage in others
  • Existing food supply challenges were amplified in rural and remote Indigenous communities
  • Increase in food prices put pressure on many households

  The pandemic underscored pre-existing vulnerabilities and shone a spotlight on the need for more resiliency in Canada's food system. These issues were further magnified by natural disasters, border blockades, Russia’s war against Ukraine, and significant labour actions.

  Canada's Food Supply Chain

  

  [Description of the above image]

  Canada's supply chain is a connected system beginning with

  • input and service providers, followed by
  • primary producers;
  • wholesale distributors;
  • food and beverage processing
  • food retailers and the foodservice, and ending with
  • the final end consumer.

  The food supply chain functions in the same fashion whether goods are being imported into Canada or whether goods are moving to export.

  National Transportation Supply Chain Strategy

  Supply chains are referenced in 10 mandate letters.

  Budget 2022 commitment to develop a National Supply Chain Strategy (led by Transport Canada) — $603.2 million for supply chain investments.

  Supply Chain Task Force tabled their final report in October 2022.

  Existing National Trade Corridors Fund (NTCF) funding of $4.6 billion over 11 years (2017-2028) to invest in critical transportation assets

  • Pacific Gateway - $550 million worth of cargo each day
  • Total west coast container traffic has grown by approximately 4.7% annually since 2010 – without expansion, congestion will continue to mount

  Supply Chain Regulatory Review launched — led Treasury Board Secretariat

  • Announced in 2022 Fall Economic Statement
  • Planning underway for consultation on key areas – timeline TBD

  Budget 2023 commitments to improve Canada’s supply chains:

  • Provide $27.2 million to Transport Canada over 5 years to establish a Supply Chain Office
  • Provide $25 million to Transport Canada over 5 years to develop transportation supply chain data
  • 18-month pilot of extended interswitching for rail in the prairies (Annex A)

  Agriculture and Agri-Food Canada transportation mandate historically focused on grain

  Grain sector and rail

  With an annual value of $47 billion, grain production accounts for just over 55% of Canadian farm cash receipts, and of the nearly 90 million metric tonnes of grain produced in Canada annually, approximately 50% is exported.

  Canadian grain must move across greater distances to port than any of our international competitors.

  • 94% of all export grain traffic uses rail transportation either for movement to port or directly to final destination in the United States or Mexico.

  Pulse and special crops exports, which typically travel in containers, have grown considerably in recent years, driving demand for empty containers.

  Given the critical importance of rail, challenges and concerns about predictability and quality of rail service are consistently identified as top supply chain issues for grain stakeholders.

  Agriculture and Agri-Food Canada engagement with and support to the sector

  The Minister of Agriculture and Agri-Food provides the Crop Logistics Working Group with a mandate to identify and address key issues for grain transportation (recently renewed for 2022-24, Annex C).

  Agriculture and Agri-Food Canada (AAFC) and Transport Canada share a contract for Canada’s Grain Monitoring Program to provide high quality data and analysis on the performance of Canada’s grain transportation network.

  Grain sector reliance on transportation by rail

  Producers and grain companies contend that the railways' market power causes rail service and capacity issues that hurt the grain sector.

  • Two main railways (Canadian National and Canadian Pacific Kansas City) transport grain to North American customers and to marine ports for export.
  • Unpredictable rail service and disruptions can have negative impacts on shippers — including contract penalties, demurrage and lost sales — which have repercussions across the supply chain.
  • The 2021-22 crop year experienced poor rail performance despite low crop volume due to a drought. The 2022-23 crop year saw stronger rail performance with a much higher crop output.
  • Forecasts show increased export growth in agriculture, forestry, mining and petroleum, which will likely increase pressure on railway capacity and exacerbate service problems if strategic investments are not made.
  • Pressure is greatest at the Port of Vancouver, particularly impacted by the labour action at British Columbia ports in July 2023.

  Concentration of market power: Although technically a duopoly, the rail system often operates as a spatial monopoly, as about 99% of grain elevators are served by only one railway.

  "Unreliable rail service, ineffective dispute resolution mechanisms and lack of confidence that rail service providers will be able to meet shipper needs (and rail's overall ability to scale up its capacity to meet demand, seasonal or otherwise) are significant challenges raised by shippers. Industry also expressed concerns about the significant shortage of rail workers and crews, which affects suppliers' ability to rely on rail for timely delivery of products." — Final Report of The National Supply Chain Task Force 2022.

  Key National Supply Chain Task Force recommendations for agriculture

  Addressing port congestion

  Changes to port governance and improved port infrastructure.

  Expand Canadian Food Inspection Agency and other services related to commercial processing.

  Extended interswitching

  Expand the interswitch distance beyond the current 30 km to give shippers more rail options and to address shipper–railway power balance issues (Annex A).

  Canadian Transportation Agency revisions

  Revise the Canadian Transportation Agency's mandate and provide it independence, authority and funding to deliver that mandate.

  Improve 'own-motion' investigations and data collection.

  Supply chain visibility and digitalization

  Digitize and create end-to-end supply chain visibility for efficiency, accountability, planning, investment and security.

  Supply chain labour shortages

  Develop a supply chain labour strategy.

  Supply Chain Office

  Establish a supply chain office to unify the federal government's responsibility and authority over transportation supply chain management.

  Other key supply chain and transportation issues impacting the agriculture sector

  Ongoing concerns about railway competition, reliability and resilience, and the functionality of the existing legislative tools and recourse mechanisms.

  • ███████████████████████████████████████████████████████████████████████████
  • ██████████████████████████████████████████████████████████████████████████████████████████████████████

  Actions to address port congestion (Transport Canada and Vancouver Fraser Port Authority).

  • Active Vessel Traffic Management Implementation (intended to strengthen marine safety, ease the flow of goods, and manage environmental and social impacts).
  • Efforts to develop solutions to permit loading grain in inclement weather.

  Stakeholder concerns about Vancouver Fraser Port Authority, notably the perceived conflict of interest in being a developer and regulator, and changes to port infrastructure fees.

  Concerns about labour reliability and stability, including calls for essential service rules to avoid further strikes and other disruptions following a strike by British Columbia port workers in July 2023, which had significant impacts on port operations (Annex B).

  Next steps

  • Monitor recovery of supply chain following the British Columbia labour strike and continue to engage agriculture sector stakeholders through existing fora.
  • Support Transport Canada on rail policy review, including engagement with agriculture sector stakeholders.
    • Key issues for agriculture include remedies; rail competition; and rate setting for rail.
  • Explore a data strategy for monitoring supply chain movements of agricultural commodities, including collecting data on the use and impact of Transport Canada’s extended interswitching pilot.
  • Continue to support Transport Canada with the development of the Transportation Supply Chain Office.

  Annex A – Interswitching

  Definition

  • The transfer of traffic between two railway companies. One railway takes the shipper's freight part of the way and then transfers the freight to a competing railway which hauls the remaining distance to destination. The transfer takes place at an interchange – where the lines of two railways meet.

  Previous extended interswitching measure (2014-2017)

  • In 2014, Bill C-30, the Canada Transportation Act was amended to increase the interchange distance to 160 km (from 30 km) with the intent to improve competition, with a sunset timeframe of 3 years.
  • Following sunsetting, the measure was replaced by the current long-haul interswitching measure, which has seen very low uptake and is viewed by most shippers as ineffective and unworkable. Expanded interswitching continues to be the preferred measure for agriculture sector shippers.

  Budget 2023

  • Announced an amendment to the Canada Transportation Act for a new pilot, which will temporarily extend the interswitching distance to 160 km (identical to the previous pilot), from 30 km.
  • Though AAFC advocated for a lengthy or flexible test period, this pilot will sunset automatically 18 months after coming into force.

  Ongoing monitoring

  • Continuing to monitor stakeholder reactions
  • Preparing data strategy to analyze the pilot’s impact on the grain handling transportation system

  Annex B – British Columbia port strike 2023

  Situation:

  • 7,400 International Longshore and Warehouse Union (ILWU) members walked off the job in British Columbia including the Port of Vancouver and the Port of Prince Rupert on July 1, 2023. This original strike lasted 12 days and resulted in near-total stoppage of loading and unloading activities at port.
  • Work resumed on July 13 following a tentative agreement between the British Columbia Maritime Employers Association (BCMEA) and the ILWU based on terms recommended by an independent mediator at the request of the Minister of Labour. However, the union later rejected those terms, and initiated another walk out (later ruled illegal).
  • ILWU caucus recommended that their members ratify the tentative agreement during the membership vote on July 25.

  Recovery:

  • Removing the backlog of containers and other bulk goods is estimated to stretch into fall, which will coincide with the beginning of the 2023 crop year deliveries.
  • From an agricultural perspective, disruptions during the strike primarily impacted containerized shipments as the bulk grain terminals continued to operate as section 87.7 of the Canada Labour Code requires that longshore workers continue to service bulk grain ships.
  • Repercussions on Canada’s reputation in a competitive international marketplace

  Annex C – Monitoring the grain transportation system

  The Crop Logistics Working Group (CLWG) is a valuable tool, facilitating AAFC and Transport Canada’s collaboration with industry:

  • Co-chaired by AAFC (Assistant Deputy Minister Tom Rosser) and the Canadian Canola Growers Association (Rick White).
  • Includes representatives from grain industry stakeholders such as Pulse Canada, the Western Grain Elevator Association, the Prairie Oat Growers Association, and some provincial government members.
  • Provides a forum for stakeholders to discuss ongoing issues in the Grain Handling Transportation System supply chains, and the prevention of bottlenecks.

  AAFC and Transport Canada jointly contract with Quorum Corporation to act as Canada’s grain transportation monitor:

  • The contract is worth about $1.2 million per year, of which AAFC pays half.
  • The Grain Monitor provides weekly, monthly and annual updates on the state of the grain transportation system in Canada, as well as analysis on issues affecting rail lines and grain shippers throughout the year.

• Agricultural Labour Strategy and temporary foreign workers

  Issue

  Agriculture and Agri-Food Canada (AAFC) has been working with Employment and Social Development Canada (ESDC) and other key stakeholders to develop an Agricultural Labour Strategy (the Strategy) to address chronic and persistent labour shortages faced by the sector.

  Background

  • Canada’s agricultural sector faces complex and long-standing challenges that have led to chronic labour shortages predating the pandemic in both primary agriculture and food processing. Shortages are particularly severe in horticulture (for example, greenhouses, nurseries, fruit and vegetables farming) and have been increasing in food and beverage manufacturing (for example, frozen pizzas, prepared meals).
    • Job vacancy rates (2015-2021):
      • Primary agriculture industries ranged from 7.5% to 15.9%
      • Food processing industries ranged from 1.9% to 5.8%
      • Compares with 3.2% for broader Canadian economy

  • The future holds a challenging labour market for the sector with the overall labour participation rate expected to decrease because of an aging population. The Canadian Agricultural Human Resources Council (CAHRC) estimates that by 2029, the agriculture and agri-food sector will have 123,000 more jobs than the domestic labour force can fill.
  • The broader Canadian economy has also experienced a tight labour market in certain sectors such as healthcare (for example, nurses), transport (for example, truck drivers), and general trades (for example, electricians). However, while labour market tightness continued in the first quarter of 2023, there are signs of a gradual easing in its severity. The unemployment-to-job vacancy ratio was 1.3 unemployed persons for each job vacancy in Canada in the first quarter 2023, compared to 2.4 in the first quarter of 2020.
  • The Minister of Agriculture and Agri-Food’s 2021 Mandate Letter included the following commitment; “With the support of the Minister of Employment, Workforce Development and Disability Inclusion, and in partnership with provinces and territories, employers, unions and workers, develop a sector-specific Agricultural Labour Strategy to address persistent and chronic labour shortages in farming and food processing in the short and long term.”
  • The Temporary Foreign Worker Program (TFWP) assists Canadian employers with filling their labour requirements when qualified Canadians and permanent residents are not available and ensures that temporary foreign workers (TFW) are protected while in Canada. The TFWP is employer demand-driven and is an option for employers to address immediate skills and labour needs on a temporary basis.
  • The TFWP requires employers to obtain a positive or neutral Labour Market Impact Assessment (LMIA), which confirms that the employment of a TFW does not have a negative impact on the Canadian labour market. The two key components required for hiring through the TFWP are (1) LMIA issued to employers by ESDC and (2) eligibility to receive a work permit as determined by Immigration, Refugees and Citizenship Canada (IRCC).
  • Advanced economies across the world have turned to foreign labour to make up for the gap in domestic workers. Canada has become increasingly reliant on TFWs to fill labour shortages and TFWs are a growing segment of the agricultural labour force due to difficulty attracting domestic workers, making up approximately 20% of the workforce in seasonal industries.
  • Immigration is also key to Canada’s labour supply and recent estimates find it accounts for almost all of Canada’s labour force growth. Canada's workforce is the most educated of any of the G7 countries, with recent immigrants making up nearly half of the growth in the share of Canadians with a bachelor's degree or higher, but the sector requires more “unskilled” workers (that is, skills mainly learned with on-the-job training and not through post-secondary education).

  Current status

  • Public consultations on the Strategy were launched in Summer 2022 and stakeholders provided input through (1) online consultations via a questionnaire that was open from June 27 to September 28, 2022, (2) a generic e-mail inbox that was open until December 31, 2022, (3) targeted engagement with partners and stakeholders, and (4) direct discussions with provinces and territories via AAFC’s various federal-provincial-territorial fora. AAFC received written submissions from over 68 individuals and industry groups, reviewed 218 completed online questionnaires, and engaged fora such as the Canadian Agricultural Youth Council and the Canadian Food Policy Advisory Council.
  • A “What We Heard Report” summarizing the results of consultations was published on May 18, 2023. It can be found here: What We Heard Report - Agricultural Labour Strategy - agriculture.canada.ca.
  • Based on the themes that emerged through consultations, the Strategy will look to take targeted action in the following areas:
    • Supporting access to international workers;
    • Welcoming youth and new entrants while increasing representation;
    • Improving domestic workforce supports;
    • Creating the tools and skills of the future; and
    • Bolstering capacity: human resource and agricultural labour market information.
  • Of highest importance to the sector are the TFWP and immigration reform efforts underway by ESDC and IRCC. AAFC has been working closely with ESDC and IRCC on the parameters of forthcoming reforms, including a Trusted Employer Model, new foreign labour program for agriculture and fish processing, and a nationally consistent framework for TFW accommodations, to ensure the needs of the agricultural sector are considered.
  • Provincial-Territorial (PT) Ministries of Agriculture also have an important role to play. Some of the $2.5 billion in cost-shared funding made available through the Sustainable Canadian Agricultural Partnership can be used for labour and skills initiatives and agricultural labour strategies are being developed by some provinces. Provinces can also use the Provincial Nominee Program to fill labour shortages as they have the ability to create dedicated streams based on their economic needs and the credentials they accept for individuals nominated.
  • In addition to AAFC’s work, industry is taking leadership to address labour issues and the department is leveraging work being led by CAHRC, in partnership with Food & Beverage Canada and the Canadian Federation of Agriculture, to develop the National Workforce Strategic Framework (NWSF) to ensure the federal strategy is complementary. Through this sustained engagement, both strategies remain aligned on wanting to take collaborative action and outline short, medium and long-term solutions to address immediate labour shortages and systemic workforce challenges.

  Next steps

  • ███████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████

• Grocery Sector Code of Conduct

  Background — Grocery retail concentration and fees

  Market concentration gives large retailers a dominant position and significant market power

  • Top 5 retailers control approximately 80% of sector

  Retail fees on suppliers are not new

  • Retail fees are the total dollar spent by suppliers with retailers to get products on shelves (that is, trade spend)
  • Long standing issue for processors and producers
  • Some fees are mutually-beneficial and predictable
  • Increase in other fees seen as unilateral, retroactive or unpredictable in recent years

  Canadian Grocers' Market Share by Sales, 2021

  Grocer	Market share (%)
  Loblaw	28
  Sobeys	20
  Metro	11
  Costco	9
  Walmart	8
  The rest	24
  Source: Who's Who Report 2021, Canadian Grocer

  Retail fees placed on suppliers (Annex 1) generally range from mutually beneficial to contentious

  Mutually beneficial

  • Marketing fees; shelving and listing fees

  Contentious

  • Recovery of retailer costs and investments; retroactive and unilateral fines

  Calls for action

  The announcement of new retail fees in summer 2020, combined with challenges and costs associated with the COVID-19 pandemic, resulted in increased attention to the impact of retailer practices on the rest of the food supply chain.

  • Stakeholders, including producers, processors, and some retailers, called for action to ensure fair, transparent and predictable business practices for the agri-food industry.
  • Retail fees are related to commercial dealings between two businesses and primarily fall under provincial jurisdiction, making a mandatory, national approach less straightforward.

  Federal, provincial and territorial (FPT) Ministers created a working group, chaired by federal and Quebec Ministers of agriculture, to assess the impact of retail fees on the agri-food industry.

  • Key findings were published in July 2021 (Annex 2).
  • Ministers called on industry to lead a collaborative process to develop a proposal to improve transparency, predictability, and respect for the principles of fair dealing.

  Industry-led process

  Industry leaders responded, creating a collaborative supply chain engagement model to develop a Grocery Sector Code of Conduct.

  • Multiple working groups, comprised of businesses and industry associations, have fed into the industry-led process.
  • Leadership is provided by the Industry Steering Committee (Annex 3).
  • Progress updates have routinely been provided to FPT Ministers.

  The Grocery Sector Code of Conduct includes provisions/trading rules as well as a framework for dispute resolution and governance through a Grocery Code Adjudicator’s Office.

  • While the code is industry-led and voluntary, the expectation is that all major players will participate.
  • Includes the entire supply chain, with a focus on processors and retailers.

  A broad industry consultation was conducted in May 2023.

  Current status

  In July 2023, FPT Ministers reiterated support for the Code and implementation by year’s end.

  • Remained open to discussing short-term financial support for the creation of the office.

  The Industry Steering Committee continues to finalize the proposal following consultations.

  • Reviewing Code provisions.
  • Putting more detail on governance, dispute resolution and operational budget predictions.
  • Establishing a timeline for industry to identify their commitment to implement the code (Fall 2023).

  FPT governments continue to actively monitor and support industry-led progress.

  • Proposal met FPT Ministers’ objective to increase the transparency, predictability, and respect for the principles of fair dealing in supply chain relationships (Annex 4).

  Industry dynamics

  Level of participation is critical to realizing an effective Code of Conduct.

  • Widespread participation across the food supply chain in the voluntary model will be important to its success.
  • However, most important will be the active participation of the large retailers.

  Some stakeholders, including some large retailers, have identified areas that require additional discussion, and are waiting for the final proposal before making a commitment.

  • To address these concerns directly, dedicated industry efforts are underway.

  If some large retailers do not commit, the FPT working group could develop options for consideration.

  Broader context

  There is significant public attention on food supply chains.

  • Food inflation, grocery retail profits, supply chain challenges.

  Parliamentary committees continue to call for a Grocery Code of Conduct.

  • Standing Committee on Agriculture and Agri-Food (AGRI) (April 2021, June 2022, June 2023).

  There is a drive to improve competition in the grocery retail sector.

  • Publication of the Competition Bureau Market Study on Competition in Canada's Grocery Sector (June 2023).
  • The highest price-fixing fine ($50 million) imposed by a Canadian court to date on Canada Bread Company Ltd after pleading guilty for its role in a criminal price-fixing arrangement.
  • Review of the Competition Act.

  Path forward

  In concert with the work of industry, the FPT working group will continue to monitor the progress to develop the Code of Conduct, encourage the path towards implementation, and support efforts where appropriate (for example, potential funding, communications).

  Summer 2023

  • Finalize overall draft model
    • Provisions of the Code
    • Governance/legal construct
    • Adjudication model

  Fall 2023

  • Confirmation by industry to commit to implement the Code
  • Confirmation of FPT governments contributing funds to create the Grocery Code Adjudicator’s Office

  Winter 2023

  • Creation of the Grocery Code Adjudicator's Office
  • Appointment of the Grocery Code Adjudicator

  Annex 1: Examples of retail fees

  Advertisement Out-of-Stock Fees

  Penalties charged to suppliers should they short product while on promotion.

  Core/National Agreements

  In general, Core Agreements between retailers and suppliers establish national sales objectives and provide a bonus to the retailer for attaining the stated objective. These agreements may result in 'preferential treatment' since retailers are incentivized to provide more shelf space to suppliers with a Core Agreement, in order to achieve their sales targets. These agreements can make it difficult for new suppliers to compete.

  Electronic-Commerce Development Fee

  A percentage-based fee vendors are required to pay on all products sold by the retailer via its electronic-commerce platform. The purpose of this fee is to offset investments to accelerate expansion of online grocery distribution and electronic-commerce capabilities.

  Exclusivity Fees

  These typically do not exist on their own but are a negotiating 'chip' which can be swapped for slotting fees.

  Extended "Blackout"/"Price Freeze" Period

  Food retailers will unilaterally impose a price freeze (that is, mandatory 'black out' periods) during which suppliers are forbidden from requesting price increases. These usually coincide with holiday periods (for example, from September to January). If suppliers face a price increase on ingredients during that period, they have to postpone raising their price, and in some instances, they have to provide the retailer twelve weeks' advance notice. If the retailer accepts the new price, the increase is valid from date of acceptance and is not backdated to the date of initial notification.

  Extra Terms

  A 1% to 2% deduction, applied by some large retailers on its suppliers, to finance store renovations or recent acquisitions.

  Infrastructure Development Fee/ Strategic Acceleration Allowance

  This fee, typically expressed as a percentage of the cost of goods purchased by the retailer, is charged to vendors to offset the retailers' infrastructure costs, which could include remodeling of stores and logistics networks, building new distribution centres, and/or implementing new and upgraded systems to improve supply chain efficiencies.

  Late Delivery Fees

  Fees that are deducted off-invoice by the retailer as a penalty for deliveries being made later than indicated on the purchase order. These fees generally range between $500 and $1,000 per order, or $200 to $500 if the retailer is given advance notice of the delay.

  Over and Above (O&A) Fees

  These fees are a percentage of the suppliers' sales, typically from 1% to 15% that is deducted by the retailer for marketing support (for example, promotional flyers) and distribution. O&A fees are a common practice in the industry but vary from one company to another. They are applied to all suppliers, including established players and newcomers.

  Payment Terms

  Generally, suppliers in the industry will offer a 2% reduction on payments made within 10 days, or charge no interest for payments within 30 days. However, some large retailers mandate other standard payment terms (for example, no interest for payments made within 90 days). In addition, some retailers take a 2% deduction from the wholesale invoice, even if payment occurs outside the 10-day window. While this practice is not necessarily a barrier to entry for suppliers, it is a major cost constraint because there is no guarantee of when, or how much, payment will be received.

  Shelf Listing Fees/Slotting Fees/Listing fees

  A 'shelf listing/slotting fee' is charged by the retailer to allot shelf space for each food item. These are lump-sum payments due upon approval with no guarantee of minimum sales duration. While it is generally understood that space will be reserved for 12 months, the retailer is not obliged to respect this timeframe. The assessment of Shelf Listing/Slotting Fees is viewed by many suppliers as the most controversial retailer practice because there is no set fee table. These fees are established through negotiations between the retailer and supplier.

  Unloading (Lumper) Fees

  Drivers are forbidden from participating in the offloading of their trucks in almost all retailer Distribution Centres. As a result, every center employs an on-site third-party company (known as 'lumpers') to handle this service. These fees cost $50 to $500 depending on the number of pallets and time it takes to unload.

  Unsalable Merchandise Fees

  In the past decade, the liability for product damaged either in-transit or in-store has been transferred from retailer to manufacturer. This fee is charged to the supplier as a percentage of annual sales (for example, 1% to 1.5% for shelf-stable goods) and is usually accounted for in the suppliers' pricing of most products.

  Source: List developed with information from various sources, including Simon Dessureault (University of Guelph) and Sean Lippay (Strategic Food Solutions).

  Annex 2: FPT working group key findings

  Concentration in the retail sector enables retailers to use their bargaining power to levy a range of fees on suppliers to supply and market their products in store. Recently, retail fees have increased in their form and scale, and they have changed in the manner in which they are imposed.

  The unpredictability and lack of transparency in how some fees are levied, along with limited and often complex recourse for dispute resolution, has led to an overall straining of supply chain relationships from retailers down to primary producers. This has also cultivated the perception of Canada's investment environment as less attractive to some food manufacturing companies.

  There are other secondary impacts of this dynamic, including preventing small processors and producers from accessing the market, impeding innovation, and creating particular supply and price challenges for independent retailers and the local producers they purchase from.

  Annex 3: Industry Steering Committee members

  • Denise Allen - Food Producers of Canada
  • Diane J. Brisebois - Retail Council of Canada – Co-Chair
  • Sylvie Cloutier - Conseil de la transformation alimentaire du Québec
  • Mathieu Frigon - Dairy Processors Association of Canada
  • Michael Graydon - Food Health & Consumer Products – Co-Chair
  • Rebecca Lee - Fruit and Vegetable Growers of Canada
  • Ron Lemaire - Canadian Produce Marketing Association
  • Stéphanie Levasseur - Union des producteurs agricoles du Québec
  • Scott Ross - Canadian Federation of Agriculture
  • Gary Sands - Canadian Federation of Independent Grocers

  Annex 4: Strong alignment of proposed Code of Conduct with FPT Ministers’ policy objectives

  Promotes transparency, predictability, and respect for the principles of fair dealing by:

  • Encouraging mutual agreement for changes to supply agreements to minimize fluctuations that negatively impact the supply chain
  • Allowing for intellectual property protection, which supports a positive and innovative business environment and may encourage more investment in the food processing sector
  • Promoting collaborative forecasting for predictable cash-flow
  • Limiting unilateral and retroactive payment practices, enhancing business predictability
  • Promoting education to prevent disputes and strengthening supply chain relationships, leading to potentially positive outcomes for small and medium sized enterprises
  • Minimizes cost and time for members to resolve disputes
  • Provides opportunities for informal dispute resolution, which can be less confrontational
  • Recognizes that services must be available to all members

• Pesticides and Pest Management Regulatory Agency transformation

  An introduction to the use and regulation of agricultural pesticides in Canada

  Purpose

  The purpose of this document is to provide a brief overview of:

  • The role of pesticides in agriculture
  • How pest control products are regulated in Canada
  • Agriculture and Agri-Food Canada's (AAFC) role in pesticides and pest management
  • Maximum Residue Limits (MRLs)
  • Pest Management Regulatory Agency (PMRA) Transformation
  • Key issues related to pesticides
  • Stakeholder perspectives

  The role of pesticides in agriculture

  Pesticides are an important tool to support stability and growth in the agriculture sector.

  Worldwide, an average of 35% of potential crop yield is lost annually due to weeds, pests and diseases.

  Without the use of any pesticides, farmers in Canada could lose three-quarters of fruit production, half of vegetable production, and a third of cereal production – this would have a drastic impact on food supply and prices, and global food security.

  A total of 130 million kilograms of pesticide active ingredients are sold in Canada annually at an estimated direct market value of over $3 billion.

  Pesticides support Canadian growers in adapting to the proliferation and migration north of pests caused by climate change.

  Pesticides also enable no till farming, allowing for carbon sequestration/climate change mitigation.

  "Pesticides play a significant role in food production. They protect or increase yields and the number of times per year a crop can be grown on the same land." (World Health Organization, 2020)

  The regulation of pesticides in Canada

  Strict regulatory oversight is required since pesticides can present risks to the environment and human health if conditions of use are not followed.

  The Pest Management Regulatory Agency (PMRA) is a branch of Health Canada that regulates pesticides in accordance with the Pest Control Products Act.

  PMRA's work covers pesticides used in agriculture to control weeds, plant diseases, and insect damage to crops and livestock.

  PMRA is required to conduct pre-market risk assessments of new products, conduct re-evaluations (15 year cycle) and special reviews of registered products, and specify Maximum Residue limits (MRLs) for pesticides that may remain on food.

  Maximum residue limits

  MRLs are established as legally enforceable limits that represent the maximum amount of pesticide residues that are expected to remain in or on food commodities when a pesticide is used according to its labelled directions.

  Large margins of safety are applied when establishing MRLs. For example, a person would need to consume one and a half shopping carts full of apples every day for a lifetime before the pesticide residues might reach a level of health concern.

  MRLs are enforced nationally on both domestic and imported food. Misaligned or missing MRLs amongst countries can result in disruptions to trade. Canada supports the use of international, science-based, food standards where possible to protect consumers and facilitate trade.

  Agriculture and Agri-Food Canada’s role in pesticides and pest management

  AAFC works with growers to identify priority pest issues affecting Canadian agriculture.

  The Pest Management Centre generates data to support the regulation of pesticides for lower acreage crops (for example, strawberries or asparagus) or less common pests. The Department collaborates internationally to support growers where the smaller market size in Canada limits access to products and uses.

  The Alternative Pest Management Solutions program conducts research and development into safer ways to control pests and promotes reduced-risk solutions for priority pest issues (for example, cultivation of natural predators to control insect pests and biopesticides).

  The Department also seeks to facilitate the alignment of MRLs internationally to support Canadian agriculture and agri-food exports and minimize trade disruption.

  Pest Management Regulatory Agency transformation

  On August 4, 2021, following several articles in the French media critical of PMRA decisions, the Ministers of Health, Agriculture and Agri-Food, and Environment and Climate Change announced a pause on increases to MRLs. The announcement also included $50 million in new funding over 3 years to:

  • undertake a targeted review of the Pest Control Products Act;
  • increase the availability of independent advice and independent data to support pesticide review decisions; and
  • improve transparency.

  This announcement included $7 million for AAFC to support research into alternatives to the use of chemical pesticides.

  On June 20, 2023, the government announced the next steps in the ongoing pesticide regulatory transformation agenda, including:

  • Lifting of the pause on increases to MRLs for pesticides in Canada;
  • An upcoming consultation on proposed regulatory amendments to the Pest Control Products Regulations; and
  • Alignment with the United Nations’ Global Biodiversity Framework, including:
    • Amend the Greening Government Strategy to eliminate the cosmetic use of pesticides on federal lands
    • Develop concrete strategies and actions to reduce the risk of pesticides in Canada

  Key issues

  Lifting the pause on MRL increases

  • Health Canada announced the pause is being lifted in a staggered manner, beginning with less complex proposals, and citing new measures to improve the transparency and availability of independent pesticide data and advice.
  • The announcement was well received by grower groups, particularly in the West that felt the pause was not science-based. French media coverage continues to raise concerns with the public in Quebec.
  • AAFC continues to advocate for international alignment of science-based MRLs consistent with World Trade Organization (WTO) commitments.

  Resignation of the co-chair of PMRA’s Science Advisory Committee

  Dr. Bruce Lanphear, professor of Health and the Environment at Simon Fraser University, publicly resigned his role on a newly formed committee designed to provide independent science advice to PMRA citing too many restrictions on the work of the committee and an “obsolete regulatory system that protects the pesticide industry more than it protects Canadians”.

  • News releases by public interest groups and media attention reflect negatively on the regulator.
  • AAFC supports efforts to increase public confidence in PMRA’s science-based regulatory system.

  Kunming-Montreal Global Biodiversity Framework (COP-15) – Target 7

  During the meeting in December 2022, all parties agreed to “Reduce pollution risks and the negative impact of pollution from all sources, by 2030, to levels that are not harmful to biodiversity and ecosystem functions and services… reducing the overall risk from pesticides and highly hazardous chemicals by at least half including through integrated pest management, based on science, taking into account food security and livelihoods...”

  • Growers support the idea of reducing the risks associated with pesticide use and are supportive of new technologies like precision agriculture. However, they are concerned that target 7 may result in pesticide use reduction targets that do not adequately consider producers’ pest management needs.
  • AAFC is working closely with Environment and Climate Change Canada, provinces and territories, as well as other partners in the development of an approach to achieve target 7 that is in alignment with the Sustainable Agriculture Strategy and to support meaningful consultation with the sector.

  Glyphosate

  Glyphosate is the most used pesticide in the world, making up more than half of all agricultural pesticides sold in Canada every year. Its use in the production of genetically modified crops, along with claims that it can cause cancer, has placed glyphosate at the center of the very polarized debate on pesticides.

  • Regulators continue to support the safety of glyphosate, a key tool for no-till agriculture. Most media attention is negative, focusing on court rulings in the United States and the reputation of Monsanto – original manufacturer of glyphosate.
  • AAFC continues to support sustainable agriculture while recognizing the current importance of chemical pesticides in achieving food security and environmental protection goals.

  Re-evaluation decision on lambda-cyhalothrin

  Lambda-cyhalothrin is a synthetic insecticide used to control a broad range of insect pests, including grasshoppers, and is used on a wide variety of crops. PMRA’s cancellation of several previously permitted uses due to human health concerns in children, and last-minute removal from the market, has caused concern and confusion amongst grain producers. Furthermore, there are concerns regarding the dependance on animal feed imports from the United States, where lambda-cyhalothrin is still widely used.

  • Western growers are frustrated at the loss of a cost-effective pest management tool that is still widely used in the United States. Federal, provincial and territorial (FPT) Ministers are striking a working group to examine this and other pesticide management issues.
  • AAFC has worked with pesticide manufacturers to ensure adequate supply of alternative pesticides to address the significant grasshopper problem this year and is working with United States counterparts regarding the misalignment of MRLs that will take effect in 2024.

  Stakeholder perspectives

  Conventional agricultural producers

  For 97% of the crops grown in Canada, pesticides continue to be a vital tool upon which producers rely. While they support sustainable approaches that reduce pesticide input costs, they fear yield reductions that could make them uncompetitive. Consequently, they want a level playing field with United States competitors (that is, aligned MRLs, access to the same products, etc.)

  Organic producers

  With only 3% of Canadian agricultural production being organic, producers have even greater concerns regarding the lack of access to registered pesticides suitable for organic production. They also have concerns regarding synthetic pesticide contamination in their crops that could threaten organic certification and access to international markets.

  The public

  Influenced by publicly available messaging from a variety of sources, most people in urban centers tend to oppose pesticide use in general but become more accepting when presented with specific pest-management scenarios. People in rural locations tend to have more experience with pesticides and tend to be more accepting of their use. Note: Pesticides garner more attention in Quebec-based French media and face stronger opposition in Quebec.

• Export of live horses for slaughter

  Purpose

  To provide information on the mandate letter direction to ban the live export of horses for
  slaughter, including:

  • Background on industry makeup and trends
  • Stakeholder positions and public opinion
  • Recent developments

  Background: Industry makeup

  • Most exports leave from airports in Alberta.
  • Japan is the primary destination of live horse exports for slaughter.
  • Canada slaughters horses for human consumption.
    • In 2022, it is estimated about half the horsemeat (52%) was exported, with domestic consumption primarily in Quebec.
    • A portion of horses are purpose-bred for human consumption.
    • Canadian horsemeat market has been slowly declining (Annex A).
  • In 2022, the export value of horsemeat was higher than the export value of live horses for slaughter.

  2022 exports of horses for slaughter and horsemeat

  Horse exports for slaughter:

  • 2,579 horses valued at $18.9 million

  Key live horse for slaughter export destinations:

  • Japan (100%)

  Province of export:

  • Alberta - $14.7 million (78%)
  • Ontario - $2.7 million (14%)
  • Manitoba - $1.4 million (8%)

  Exported horsemeat

  • 2,300 tonnes valued at $24.3 million

  Key horsemeat export destinations

  • Japan - $17.5 million (72%)
  • United States - $3.2 million (13%)
  • Switzerland - $2.6 million (11%)

  Production cycle and animal welfare rules

  Acquisition of horses (primarily provincial jurisdiction)

  • Typical producer breeds horses for multiple purposes, with some foals going to the export of horses for slaughter
  • Governed by provincial animal welfare regulations

  Land transportation to feedlot (primarily federal jurisdiction)

  • Health of Animals Act and Health of Animals Regulations on transportation apply
  • Often includes interprovincial transport
  • Canadian Food Inspection Agency (CFIA) enforcement

  Feedlot (primarily provincial jurisdiction)

  • Horses raised on Canadian feedlots for several months
  • Industry codes of practice apply
  • Provincial animal welfare regulations also apply

  Land transportation to airport (primarily federal jurisdiction)

  • Health of Animals Act and regulations on transportation apply
  • Loading occurs from trailers into specialized transport crates

  Air transport to foreign country (primarily federal jurisdiction)

  • CFIA signoff prior to takeoff
  • Health of Animals Act and Health of Animals Regulations on transportation apply
  • Approximately 2 monthly shipments of 100 to 125 horses
  • Travel time of 20-22 hours from feedlot to Japanese quarantine

  Fattening at feedlot in foreign country (no Canadian jurisdiction)

  • In Japan, some horses are further fattened for 6 months to 4 years
  • Canada has no jurisdiction

  Slaughter in foreign country (no Canadian jurisdiction)

  • Canada has no jurisdiction

  Domestic landscape

  • The issue of horse slaughter has raised strong and varied opinions for decades in Canada.
  • Several petitions have been submitted to ban the live export of horses for slaughter.
    • Most recent petition (February 2023, petition E-4190; 36,000 signatures) argues that “Transport from Canada to Japan causes horses to experience significant stress and puts them at risk of injury, illness, and even death during transport” and calls for the mandate letter commitment to be acted upon.
  • Several Private Members’ Bills associated with horse slaughter or transport of horses have been introduced in parliament (Annex B). These focused on:
    • Animal welfare, such as restricting the time spent in transit; or,
    • Food safety, such as further strengthening reporting requirements on prohibited substances for horses slaughtered for human consumption.
  • In 2019, the lawsuit the Canadian Horse Defence Coalition (CHDC) filed against the CFIA was dismissed by a Federal judge (Annex C).
    • The CHDC appealed the ruling; the appeal is currently in abeyance as requested by the CHDC.

  Stakeholder positions and public opinion

  • Industry stakeholders involved in the production and export of live horses have expressed their concerns with a potential ban, including:
    • Economic impacts and livelihoods of producers, including Indigenous communities.
    • Unintended consequences of a ban, such as impacts on end-of-life choices.
    • Concern this would set a precedent and put at risk the practice of domestic slaughter of horses, as well as slaughter and export of other livestock species.
  • Horse slaughter for human consumption and the export of live horses for slaughter, particularly the air transport conditions, has garnered significant media and social media attention.
    • In February 2021, W5 (CTV) aired an episode titled “Investigation of Canada’s Controversial Horse Meat Industry”, which increased awareness of the issues.
  • A public opinion poll of 1,000 Canadians showed a majority had issues with export or slaughter of horses for human consumption (Annex D).

  The issue – public concern

  Animal rights advocacy groups have raised concerns with export of live horses for slaughter.

  • Sentiment that air travel conditions are inhumane and unnecessary when meat export is an option:
    • Horses are unique (panic easily, strong fight or flight instincts, sensitive hearing) and require additional care and handling during transport.
    • Airport conditions are stressful (unfamiliar/loud noises, exposure to extreme weather, long wait periods, loading and handling).
    • Distinct differences in horses raised for slaughter vs other purposes (better conditioned for air transportation).

  However, Canada’s current approach:

  • Is based on science:
    • Animal welfare requirements are supported by evidence (Annex E).
  • Has a strong history of compliance:
    • No evidence in reports/statistics to support an animal welfare concern (only 5 horse deaths related to air shipments to Japan since 2013).
    • Absence of non-compliance in inspection reports.
  • Is supported by law: The Federal Court has ruled that the CFIA’s enforcement approach is lawful (Annex C).

  Recent developments

  • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
    • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
    • ██████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  • ███████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
    • ███████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  • █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████

  Next steps

  █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  █████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████
  ████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████

  Annex A: Horsemeat industry trends

  Number of horses exported by purpose, non-United States

  

  [Description of the above image]

  A chart showing the number of horses exported by purpose (slaughter, pure-bred breeding, and other) to non-United States destinations, from 2013 to 2022. The number of horses exported for slaughter declined from 7,000 in 2014 to 2,600 in 2022. The number of horses exported for pure-bred breeding remained at 120 or less over the course of the decade. The number exported for other reasons remained less than 1000, declining over time.
  Number of horses exported by purpose, non-United States

  Year	Slaughter	Pure-bred breeding	Other than pure-bred or for slaughter
  2013	6,635	33	963
  2014	7,111	26	735
  2015	5,782	34	765
  2016	5,839	90	542
  2017	2,326	80	456
  2018	3,396	37	611
  2019	2,800	120	483
  2020	1,708	87	385
  2021	2,100	8	489
  2022	2,579	0	309

  • The number of horses exported for slaughter has been declining:
    • 7,000 in 2014 to 2,600 in 2022.

  • For non-United States destinations, export of horses for slaughter remains the main export purpose.
  • No horses are exported to the United States for slaughter.
  • Most are purpose-bred for slaughter as horsemeat.

  Export value ($ millions) of live horses for slaughter versus horsemeat

  

  [Description of the above image]

  A chart showing the export value, in millions of dollars, of live horses for slaughter versus horsemeat, from 2013 to 2022. Export value of horses for slaughter has fluctuated between $10 million to $20 million per year from 2013 to 2022. Export value of horsemeat has been declining over the last decade, from $80 million in exports in 2013 to $24 million in exports in 2022.

  • Export value of horses for slaughter has fluctuated between $10 million to $20 million per year.
  • Export value of horsemeat has been declining over the last decade, with $24 million of exports in 2022.

  • 72% of export value of horsemeat is to Japan.
  • Domestic slaughter of horses for horsemeat has decreased from 82,200 in 2012 to 14,100 in 2022.

  Annex B: Private Members’ and Senate Bills

  • In the past, several private members’ bills associated with horse slaughter or transport of horses have been introduced to Parliament. These focused on:
    • Animal welfare, such as restricting the time spent in transit; or,
    • Food safety, such as further strengthening reporting requirements on prohibited substances.
  • Only one Private Member’s Bill (C-571) reached a vote and was defeated (May 2014).
    • Other bills died on the Order Paper due to the dissolution or prorogation of Parliament.
  • On June 20, 2023, MP Tim Louis (Kitchener-Conestoga) announced his intention to introduce a Private Member’s Bill to ban the export of live horses for slaughter, once the House resumes in Fall 2023.
  • On June 21, 2023, Senator Pierre J. Dalphond introduced Bill S-270 in the Senate on June 21, 2023, which seeks to:
    • Amend the Health of Animals Act to prohibit the export from Canada of live horses and other equines for slaughter. A person is considered to have exported a horse for slaughter if the person knows or should reasonably know that the horse or other equine is being exported for the purpose of being slaughtered or fattened for slaughter.
    • Amend the Agriculture and Agri-Food Administrative Monetary Penalties Regulations to make the administrative monetary penalty regime set out in those regulations applicable to a violation of the prohibition on the export of live horses or other equines for slaughter.

  Annex C: Federal court case

  • In 2018, the CHDC filed a Federal Court lawsuit against the CFIA.
    • CHDC claimed the CFIA has been allowing large horses to be shipped that violates provisions of the Health of Animals Regulations.
    • In December 2019, the lawsuit was dismissed by a Federal judge.
      • The judge deemed that the CFIA is engaged in the protection of animal welfare during export and is reasonably exercising its discretion in the enforcement of the Health of Animals Act and Health of Animals Regulations.
    • An appeal was subsequently filed; it is expected the appellant will request the appeal be put into abeyance for one year, given the mandate letter.
    • In February 2020, new transport regulations came into effect. New outcome-based regulations replaced those under scrutiny in the court case.

  Annex D: Public opinion poll (Research Co, 2021)

  • An online survey of 1,000 adults in Canada was conducted by Research Co.
  • Results of the survey on the export of horses for slaughter and human consumption included:
    • Two thirds of polled Canadians (67%) oppose this practice, while 22% support it and 12% are undecided.
    • Only 16% knew that Canadian horses have been exported for slaughter and human consumption in Japan and South Korea.
  • Only 27% of polled Canadians consider it appropriate for humans to consume horses, while 65% deem this as inappropriate and 8% are undecided.
    • In contrast, at least three-in-four Canadians think chickens (88%), pigs (79%), turkeys (75%) and cattle (75%) are suitable food sources for humans.
    • Majorities of Canadians also think that the consumption of six other animals is appropriate: ducks (71%), sheep (69%), fish (68%), goats (64%), rabbits (58%) and geese (58%).

  Annex E: Canada’s animal welfare regime

  • Humane treatment and handling of livestock protected by combination of provincial and federal laws and regulations.
    • Animal care on farms falls under provincial jurisdiction
    • Animal welfare during transport is federal jurisdiction (Health of Animals Act and Health of Animals Regulations)
  • Under the Health of Animals Regulations, updated and strengthened requirements related to the humane transport of animals came into effect in February 2020.
    • Result of many years of consultation with veterinarians, farmers, transporters, associations, scientists, governments, members of the public and interested stakeholder groups
  • CFIA inspects all live horse shipments by air to verify horses are fit to travel, transported in accordance with the Health of Animals Regulations, and meet Health of Animals Regulations export requirements.
    • Transport of horses by air is the most closely monitored animal transport in Canada.
  • No export ban on any livestock species exists, including a ban based on purpose/end-use.
    • Horses exported for slaughter are subject to the same regulations as horses exported for other uses (for example, horse racing).

• International trade

  State of Canada’s agri-food trade

  Despite initial disruptions from COVID-19 on agriculture and food supply chains and the war in Ukraine, trade continued to flow and saw gains – exceeding $92 billion in exports in 2022, a 12.6% increase from 2021.

  With half of the value of Canada’s total production exported, sector growth relies on predictable trade. Yet, we face strong competition from the European Union, the United States, Brazil, China and others.

  The bulk of Canada’s agriculture and food exports was shipped to the United States (59.0%).

  • Canada and the United States have a strong, interconnected agricultural partnership exceeding $91 billion in two-way agriculture and food trade in 2022.

  China has been Canada’s second leading agriculture and food export market since 2012 – our exports have increased by 5.8% since last year.

  Canada’s Agriculture and Food Trade

  

  [Description of the above image]

  Agriculture and food exports and imports in billions of dollars from 2012 to 2022. The chart shows exports and imports have steadily been increasing since 2010, with exports consistently higher than imports.

  	Exports	Imports
  2012	$47.7 billion	$35.9 billion
  2014	$56.5 billion	$42.9 billion
  2016	$62.6 billion	$48.4 billion
  2018	$66.3 billion	$50.3 billion
  2020	$74.1 billion	$53.7 billion
  2022	$92.7 billion	$67.3 billion

  Canada’s Agriculture and Food Exports Breakdown by Top Five Markets in 2022

  

  Data source: Global Trade Tracker, supplied by Statistics Canada

  [Description of the above image]

  A pie chart showing the percentage of agriculture and food exports going to various countries. United States is the largest at 59%; followed by Other, 17%; China, 10.3%; Japan, 5.8%; European Union (excluding the United Kingdom), 4.8%; and Mexico, 3.2%.

  Global trade environment

  • Global shift away from science and risk-based decision making and adherence to the international rules-based trading system for protectionist purposes creating unjustified barriers for Canadian exports.

  • Trade disputes; proliferation of non-tariff barriers and new wave of protectionist policies threatening the multilateral trading system.
  • Emergence of digital technologies combined with evolving consumer demands for transparency, traceability and sustainability assurances, including pressure for re-shoring and increased domestic production.
  • Agri-environmental priorities, incentives and regulations provide challenges and opportunities for Canada’s competitiveness.
  • Animal and plant diseases (avian influenza, African Swine Fever (ASF) and pests)
  • Impacts of global supply chain disruptions, inflationary pressures and geopolitical situations (namely Russia’s invasion of Ukraine)

  Agriculture and Agri-Food Canada (AAFC) chairs a number of working groups with industry to advance the resolution of market access and trade challenges.

  Agriculture and Agri-Food Canada’s trade toolbox

  AAFC uses several tools to advance Canada’s objectives to support the rules-based trading system, gain preferential access, overcome trade barriers, and reach buyers in key markets.

  Trade agreements and negotiations

  • Establishing Canada as a preferred global supplier and establishing regulatory partnerships
  • World Trade Organization (WTO) agreements and negotiations
  • Implementing existing Free Trade Agreements (FTAs) and negotiating new regional/bilateral FTAs
  • Dispute settlement

  Collaboration with partners and institutions

  • Bilateral engagement with long-standing partners to address trade issues and collaborate in areas of common interests (namely science, environment)
  • Engagement in multilateral fora
  • Technical cooperation and capacity building functions with partners to contribute to enhanced regulatory systems and long-term and reliable trading relationships

  Market access and advocacy

  • Policy and technical work to advance and resolve market access issues
  • Advocacy to communicate the rigour and strength of Canada's best practices, systems and policies with respect to food safety, quality and agricultural sustainability.

  Market development

  • Targeted initiatives to support Canadian small-to-medium-sized enterprises (SMEs) in seizing global opportunities
  • Canada Brand tools and resources to promote Canada as a supplier of choice

  Supporting the multilateral rules-based trading system

  AAFC engages with trading partners to support rules-based trade:

  • WTO agriculture negotiations
    • Ongoing negotiations to continue trade reform in agriculture to reduce distorting subsidies.
  • WTO and FTA agreements – protecting commitments
    • AAFC chairs bilateral FTA Committees on Agriculture.
  • Trade disputes
    • AAFC engages with Global Affairs Canada (GAC) to defend and advance Canada’s agricultural interests in trade disputes.

  AAFC works with the Canadian Food Inspection Agency (CFIA) to advocate for science and risk-based measures that enable trade:

  • Monitor for trends and market access issues
  • Engage multilaterally and bilaterally on the importance of trade for food security, economic growth, environmental sustainability, and open, science-based trade
  • Leverage FTA implementation mechanisms to advance ambitious commitments that seek to prevent the implementation of unjustified and/or unnecessary measures
  • CFIA is engaged in international standard setting bodies to influence the development of policy and promote the adoption of science-based standards, guidelines and recommendations to facilitate trade.

  Critical to success: Canada’s free trade agreements provide preferential access to key growth markets

  Canada has 15 bilateral and regional FTAs covering 51 countries, giving Canadian exporters a competitive edge in 2/3 of the global economy.
  In 2022, 79.5% of Canada's agri-food and seafood exports were destined to FTA countries.
  Leveraging FTAs can be an important part of Canada’s post COVID-19 economic recovery plan. FTAs help Canada preserve and secure:

  • Open rules-based trade
  • Diversified supply chains; and,
  • Preferential market access for Canadian agricultural goods.

  

  [Description of the above image]

  A world map showing where existing free trade agreements are established with Canada as well as where negotiations are ongoing.

  Nations with which we have a FTA in force: Australia, Brunei, Chile, Columbia, Costa Rica, the European Union, Honduras, Iceland, Israel, Japan, Jordan, Liechtenstein, Korea, Malaysia, Mexico, New Zealand, Norway, Panama, Peru, Singapore, Switzerland, United Kingdom, Ukraine, United States, Vietnam.

  Nations or trading blocs with which we have ongoing FTA negotiations: United Kingdom, Mercosur (Brazil, Argentina, Uruguay and Paraguay), India, Indonesia and Association of South East Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam).

  Active FTA negotiations

  India, Indonesia, and the Association of South East Asian Nations (ASEAN).

  Market diversification: Leveraging export opportunities and navigating increased risk

  Canada’s agriculture, agri-food and seafood exports are concentrated by market and product. Market diversification efforts aim to diversify where Canada exports to, who exports and what is exported.
  Increase market share

  • Diversify range of exports and increase market share in established markets.
  • Target markets: United States, European Union, Japan.

  Seek new opportunities

  • Pursue high growth, emerging markets.
  • Target market: Indo-Pacific.

  Defend interests and manage risk

  • ██████████████████████████████████████████████████████████████████████████
  • █████████████████████

  The Indo-Pacific Strategy spans five key overarching priorities, implicating all sectors

  • Promote peace, resilience and security
  • Canada as an active and engaged partner to the Indo-Pacific
  • Expand trade, investment and supply chain resilience
  • Build a sustainable and green future
  • Investing in and connecting people

  Objectives

  • Support sustainable economic development in the region, and build a stronger and more resilient economy at home.
  • Position Canada for long-term growth and prosperity by enhancing and diversifying our economic relationships with key Indo-Pacific economies.

  Intended outcomes

  • Expand Canada’s trade network
  • Enhance rules-based trade
  • Ensure the resilience of supply chains

  Example investments

  • Canadian Trade Gateway in Southeast Asia ($24.1 million)
  • Modern Team Canada 3.0 Trade Missions ($45.0 million)
  • CanExport program enhancements ($37.7 million)
  • Indo-Pacific Agriculture and Agri-Food Office (IPAAO) ($31.8 million)

  The Indo-Pacific Agriculture and Agri-food office will strengthen Canada’s footprint

  In the Indo-Pacific Strategy, Canada will be establishing its first regional Indo-Pacific Agriculture and Agri-food office in Manila. Intended goals include:

  • Strengthening partnerships with key partners
  • Advancing technical cooperation and sharing of expertise
  • Supporting Canadian businesses in finding new business opportunities and diversifying their exports
  • Helping position Canada as a preferred supplier in the region

  Market development

  With a shared federal, provincial and territorial (FPT) mandate, market development leverages gains from market access and FTA negotiations to support Canadian companies in seizing global opportunities. It includes the following initiatives:

  • Market information and intelligence resources (namely reports on export market opportunities)
  • Promote the advantages of Canadian agriculture and food products to both buyers and consumers
  • Targeted in-market activities (namely retail and foodservice promotions; virtual and in-person Business-to-Business (B2B) programs, etc.)
  • Canada Pavilion trade shows
  • In-market expertise through the Trade Commissioner Service
  • Canada Brand promotional tools and resources
  • Support exporter preparedness activities and materials

  Federal-Provincial-Territorial market development activities increase the sector’s presence and impact in key markets

  In-Market Partnership Fund

  In 2022-23, over 50 FPT market development initiatives supported: 39 B2B, non-flagship tradeshow and e-commerce projects, 15 food service/retail promotions.

  Canada Pavilion trade shows

  Six Flagship trade shows supported 205 Canadian companies and resulted in qualifying 8,405 total leads, $207 million in onsite sales and $1.59 billion in anticipated sales over the next 12 months as a direct result of participation.

  Canada Brand refresh

  Launched the refreshed Canada Brand program to industry with over 130 organizations registered to-date, and year-long e-commerce and digital marketing consumer campaigns underway in Japan and Vietnam.

  Global analysis

  Provides support to industry and provinces and territories with access to market data and analysis.

  Working with federal partners

  Global Affairs Canada

  AAFC has 40 Full Time Equivalents (FTEs) and CFIA has 11 Technical Specialists Abroad (TSAs) embedded into GAC’s Trade Commissioner Service, collaborating on:

  • Market intelligence and information
  • Trade promotion
  • Market access and trade policy
  • Investment, science and innovation

  Canadian Food Inspection Agency

  • Canadian regulatory authority responsible for food safety (with Health Canada), animal and plant health
  • Its regulatory activities provide confidence regarding the safety of Canadian food, plant, and animals products
  • Helps advance the export growth agenda through its market access-related activities. For example, negotiates and resolves technical market access issues with foreign regulatory counterpart, certifies commodities for export, etc.

  Other key government departments include:

  • Department of Fisheries and Oceans
  • Department of Finance
  • Canadian Grain Commission
  • Regional Development Agencies (Atlantic Canada Opportunities Agency, Prairies Economic Development Canada, etc.)
  • Canadian Border Services Agency
  • Health Canada

  Annex A: Canada is working to address market access issues and trade policy challenges in key markets

  United States

  • CUSMA dairy TRQ dispute
  • Voluntary Product of USA (pUSA)
  • California Proposition 12, Farm Animal Confinement
  • Potato Wart on Prince Edward Island

  European Union

  • European Union Green Deal / Farm to Fork Strategy (F2F), and the European Union focus on sustainable production and environment.
  • Non-tariff barriers to trade (for example, regulations on pesticides, veterinary medicines, labelling, meat, and deforestation-free supply chains, among others).

  China

  • Atypical bovine spongiform encephalopathy
  • Decrees 248/249 (China Import Food Enterprise Registration)
  • Highly pathogenic avian influenza pet food
  • Ongoing delays for approval of establishments and products
  • ██████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████████