Deputy Minister's briefing notes: Supplementary Estimates (B), November 28, 2024

Thank you, Mr. Chair.

I am joined by Deputy Minister Hanson, who came on board in June. I am also joined by Vice-President Ianiro, from the Canadian Food Inspection Agency.

I want to thank this committee for your hard work, which is so vital to a prosperous sector.

Like you — I've also had a busy few months since we last met.

A couple of weeks ago, I travelled to Beijing to highlight Canada as a reliable supplier of high-quality agriculture and food products to China.

Canada and China have a long history of trade and collaboration in agriculture - with enormous potential for the future - provided global trade rules are honoured and respected.

While in Beijing I took every available opportunity to express my deep concern over China's unfair actions against Canadian canola.

And I called for the full restoration of market access for Canadian beef.

At the same time, I stressed that Canada stands ready to work with China to grow our agricultural trade.

I met with Chinese industry leaders, importers, and key Canadian stakeholders to explore new opportunities for Canadian farmers, processors and exporters, and to advocate for a level playing field and open trade.

I was joined by folks from the Canadian meat and pork sectors.

And I certainly welcome the announcement of the new Canadian Meat Advocacy Office in Beijing, supported by a federal investment of over $220,000 through our AgriMarketing program.

In June, I travelled to the U.S. Midwest to strengthen our relationship with our largest trading partner.

We visited with producers at World Pork Expo in Des Moines.

And we toured a grain mill in Minnesota which relies on the quality and reliability of Canadian oats.

I'm eager to work with the new Administration in the U.S. and my counterpart to make sure our agricultural trade remains strong and integrated — for the good of both of our sectors.

In July, I enjoyed a great visit to Alberta. I was able to sit down with producers at a couple of cutting-edge farms in the Calgary area.

We also visited the Stampede — where I announced over $6 million under our AgriMarketing program to help Canadian beef producers grow their markets around the world.

[And just this week, we had a great trip to Agribition. I was able to meet with Minister Harrison, Saskatchewan's new minister of agriculture. I was also able to connect with some industry folks – and, of course, attend the 'Burning of the Brand'.]

Mr. Chair, the last six months have seen some major federal investments in this great sector.

That includes over $30 million for 5 research clusters in crops, barley, bioproducts, organics and poultry.

We also continue to work to make our food supply chain as fair and transparent as it can possibly be – for our farmers, our food processors and our consumers.

I'm delighted to report that the industry is moving forward on a grocery code of conduct, with the support of all five major grocery retailers.

This is a major milestone that has been welcomed by the entire sector – particularly our horticultural producers and food processors.

I want to thank the committee for your hard work in helping to get the code off the ground.

Mr. Chair, we know that farmers are among the first to feel the impacts of climate change.

While investing to help farmers adapt to climate change – we're also helping producers who have been hit by extreme weather.

For example, we have partnered with New Brunswick and Quebec to provide support of up to $47.2 million under AgriRecovery to assist horticulture producers in those provinces with the extraordinary costs due to serious water damage to their crops.

Finally, Mr. Chair, we continue to support and defend Canada's supply management system — and the farmers, processors, and communities it supports.

To give you just one example — the Supplementary Estimates before you total over $123 million.

And of that amount some $25 million goes to our dairy and poultry producers and processors — as part our total compensation package of $4.8 billion.

Mr. Chair, Canada's agriculture and food sector is an essential part of our economy.

And it plays a vital role in strengthening food security here at home, and around the world.

Once again, I want to thank this committee for your great work.

Together, we will continue to support the hardworking folks who put food on our tables each and every day.

I look forward to our discussion.

• Federal, provincial, and territorial governments are also investing $3.5 billion over the five-year Sustainable Canadian Agricultural Partnership.
• The BRM suite of programs has provided over $1.8 billion per year on average to producers over the last five years.

When pressed

How is the Government helping farmers struggling with inflation and the rising cost of inputs?

The interest-free limit for loans under the Advance Payments Program was temporarily set at $250,000 for the 2024 program year instead of returning to $100,000. This measure will support approximately 11,950 participating producers.

Budget 2023 allocated an additional $34.1 million to the established On-Farm Climate Action Fund to help Eastern Canadian farmers impacted by high fertilizer prices in their adoption of nitrogen management practices.

How is the Government supporting producers impacted by extreme weather situations, such as droughts and wildfires?

The 2023 drought and wildfires, by working with provinces to provide access to $219 million through AgriRecovery for the extraordinary costs incurred.

Producers also have access to AgriStability, which provides protection for income losses of more than 30%. Under the Sustainable Canadian Agricultural Partnership, the AgriStability compensation rate was raised from 70% to 80% to provide additional support in times of need.

What is the Government doing to enhance the environmental performance and resilience of the agriculture sector?

Since 2021, we pledged over $1.5 billion to ensure a successful, sustainable agriculture and agri-food sector.

As part of the Sustainable Canadian Agricultural Partnership, a $250 million Resilient Agricultural Landscape Program is supporting ecological goods and services.

The Government has invested $704.1 million into the On-Farm Climate Action Fund, $185 million into the Living Labs program, and $429.4 million into the Agricultural Clean Technology-Adoption and Research and Innovation Streams to support the development and adoption of clean technologies and beneficial management practices that reduce emissions.

In 2023, we launched the $12 million Agricultural Methane Reduction Challenge.

What action is the Government taking to promote trade and market access?

Canada has 15 bilateral and regional free trade agreements covering 51 countries, giving Canadian exporters a competitive edge in two thirds of the global economy.

Under the Sustainable Canadian Agricultural Partnership, the Government is investing up to $129.97 million over five years in the AgriMarketing Program, which aims to increase and diversify Canada's agricultural exports, including fish and seafood.

How is the Government addressing labour challenges in the sector?

The Government launched a three-year Recognized Employer Pilot.

Budget 2022 announced a $48.2 million commitment by the Government to implement a new foreign labour program for agriculture and fish processing, tailored to the unique needs of these employers and workers. Consultations with stakeholders on this commitment launched this spring.

How is the Government supporting preparation and prevention of disease outbreaks in Canadian livestock?

The Government has implemented the African Swine Fever Action Plan and is committing an investment of up to $45.3 million to enhance preparation and prevention efforts through Agriculture and Agri-Food Canada (AAFC), the Canadian Food Inspection Agency and the Canadian Border Services Agency. This includes up to $23.4 million to support AAFC's African Swine Fever Industry Preparedness Program.

Budget 2023 announced $57.5 million over five years and $5.6 million ongoing to establish a foot and mouth disease vaccine bank and to develop response plans.

What is the Government doing to protect and strengthen Canada's supply chains and to safeguard the supply chain against labour disruptions like we saw at the ports of Vancouver and Montréal and at CN and CPKC rail?

The Government of Canada respects the collective bargaining process and believes negotiated agreements are the best way forward. The labour disruptions at the ports and at CN/CPKC rail were significantly impacting farmers' businesses and Canada's reputation as a reliable trading partner. These exceptional circumstances led to the intervention by the Minister of Labour.

Background

Sustainable Canadian Agricultural Partnership (Sustainable CAP)

This $3.5 billion, five-year agreement (2023-2028) injects $500 million in new funds, representing a 25% increase in the cost-shared portion of the partnership. Under the cost-shared envelope, federal, provincial and territorial (FPT) governments agreed in principle and subsequently implemented the $250 million Resilient Agricultural Landscape Program to support ecological goods and services provided by the agriculture sector.

Inflation

To ensure that Canadian farmers have access to the cash flow needed to continue producing food and supporting national food security, the government increased the $100,000 interest-free limit on loans temporarily under the Advance Payments Program to $250,000 in 2022 and to $350,000 in 2023.

On March 25, 2024, as announced in Budget 2024, the interest-free limit for loans under the Advance Payments Program was temporarily set at $250,000 for the 2024 program year. This measure will save an additional $4,916 in interest costs on average as a result of the change. This represents a total interest savings of up to $58.7 million for the program year 2024, and a total savings of $188.2 million for producers over the three-year period (2022 to 2024).

Inputs — fertilizer

Due to prohibitive transportation costs, there is no movement of nitrogen fertilizer from Western to Eastern Canada. Eastern Canada usually imports 85% to 90% of its fertilizer from Russia.

Drought and wildfires – business risk management support

The FPT programs are cost-shared 60:40 and have provided over $1.8 billion per year on average to producers over the last 5 years.

Environment and climate change

Since 2021, the Government of Canada has announced over $1.5 billion in funding to advance climate change mitigation in the sector. This includes $185 million over 10 years for the Agricultural Climate Solutions: Living Labs Program; $704.1 million over 6 years for the Agricultural Climate Solutions: On-Farm Climate Action Fund; $429.4 million over 7 years for the Agricultural Clean Technology-Adoption and Research and Innovation Streams; $12 million over four years for the Agricultural Methane Reduction Challenge; and $150 million in federal contributions for a Resilient Agricultural Landscape Program under the Sustainable Canadian Agricultural Partnership.

Supply chains

Budget 2022 announced over $600 million to help build more efficient and resilient supply chains.

Successive labour disruptions in the supply chain (that is, the rail workers' strike at CN/CPKC in August 2024 and the recent work stoppage at the ports of Vancouver, Prince Rupert and Montréal in October–November 2024) have intensified calls from the agriculture sector to make ports, rail, and other supply chain systems essential services. In both the recent rail strike and the longshore strike at BC and Montréal ports, the Minister of Labour referred the matters to the Canadian Industrial Relations Board for final and binding arbitration and directed the resumption of all operations. In both cases, the unions intend to legally challenge the Government's intervention.

Trade and market access

In 2023, trade data showed record levels of agriculture and food exports, reaching nearly $99 billion, a 6.6% increase from 2022. Close to half of the value of Canadian agriculture and agri-food production was exported to international markets.

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) came into force on September 21, 2017, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force on December 30, 2018, and the Canada-United States-Mexico Agreement (CUSMA) entered into force on July 1, 2020. In total, the Government has announced $4.8 billion dollars in compensation to supply-managed sectors for the impacts of CETA, CPTPP and CUSMA.

The U.S. is an important trading partner for Canada, with exports valued at $59.5 billion and imports at $37.5 billion for the agriculture and seafood sector.

The Government of Canada released the Indo-Pacific Strategy in November 2022, covering five strategic objectives across various sectors. It is a comprehensive plan with an initial investment of approximately $2.3 billion over five years to strengthen relationships and advance Canada's commitment to a free, open and inclusive Indo-Pacific, with ASEAN at its core.

Priority markets include the Philippines, Indonesia, Vietnam, Malaysia, Singapore and Thailand to diversify Canada's agri-food trade portfolio.

Under the Sustainable Canadian Agricultural Partnership, the $129.97 million AgriMarketing Program promotes trade by increasing the visibility of Canadian agricultural products (including fish and seafood).

Labour

Following an announcement in Budget 2022, the Government of Canada launched a three-year Recognized Employer Pilot (REP) under the Temporary Foreign Worker Program to help address labour shortages and reduce the administrative burden for repeat employers who demonstrate a history of complying with program requirements. Under REP, eligible employers will gain access to Labour Market Impact Assessment (LMIA) validity periods of up to 36 months, and a simplified LMIA application should they need to hire additional workers from the same occupation during the Pilot.

African Swine Fever

Federal and provincial governments and industry have collaborated to create an ASF Action Plan, which outlines four areas of focus: prevention and enhanced biosecurity, preparedness planning, ensuring business continuity, and coordinated risk communications.

AAFC is working with provinces and industry on plans to support the sector should ASF arrive in Canada and announced up to $45.3 million to enhance efforts to prevent ASF from entering Canada and prepare for a potential outbreak. The funding will be critical in reducing the risk of introduction and spread of ASF in Canada. As part of this investment, AAFC's up to $23.4 million African Swine Fever Industry Preparedness Program aims to support the Canadian pork industry's ASF prevention and mitigation efforts to address gaps, and position Canada to anticipate the tools, partnerships, and activities required to ensure an early detection of ASF and implement an effective emergency response once detected. The remainder of the total investment includes $19.8 million to support CFIA prevention and preparedness efforts and up to $2.1 million to enhance CBSA border control activities.

Foot and Mouth Disease vaccine bank for Canada

A single case of FMD in Canada would result in a full and immediate border closure to exports from all livestock sectors. Without the vaccine bank, it would take at least 18 months for Canada to regain access to foreign markets and cost the Canadian economy between $19.4 billion and $65.2 billion.

While Canada has access to 312,000 doses of vaccine from the North American Foot and Mouth Disease Vaccine Bank, it falls well below the estimated 1.9 million to 2.7 million doses required to control a large outbreak. Funding provided through Budget 2023 will enable CFIA to secure a strategic reserve of 30 million doses of FMD vaccines to protect Canada's livestock industry against large and uncontrolled FMD outbreaks.

• Starting in 2023 the compensation rate under AgriStability was increased from 70 to 80% to provide more support to farmers in times of need.
• Beginning in the 2024 program year, Canada is offering a new AgriStability model that is faster, simpler, and more predictable, in provinces where Canada delivers AgriStability.

When pressed

How is the AgriRecovery framework responding to disaster events?

Support producers during the 2023 drought and wildfires, by working with provinces to provide a federal contribution of up to $219 million.

How is the government addressing climate change through business risk management?

We are conducting a BRM climate review that is looking at how climate change could impact future BRM payments as well as how BRM programs could encourage climate action.

Moreover, starting in 2025 the largest producers will need to have an agri-environmental risk assessment to receive the government contribution in AgriInvest. We are also working with provinces to pilot AgriInsurance premium rebates for producers who adopt practices that have environmental benefits and also reduce production risks.

How is the BRM suite supporting producers in British Columbia given multiple events impacting the province?

Canada has agreed to a request from British Columbia to initiate late participation and enhanced interim payments for the AgriStability program.

As a result, for the 2024 program year, producers can receive up to 75% of their estimated final payment by contacting their AgriStability administrators. In addition, producers that did not enroll in the program before the deadline earlier this year can still access support as long as they apply before April 30, 2025.

We are further aware of the request for a stay of default under the Advance Payments Program (APP) submitted to my Department by the Agricultural Credit Corporation (ACC), which is the program administrator for BC tree fruit producers. APP program officials are working closely with the ACC to obtain all required information in order to process this request as quickly as possible.

Background

The programs are cost-shared 60:40 (Federal: Provincial-Territorial) as outlined in the Sustainable Canadian Agricultural Partnership (Sustainable CAP) and have provided over $1.8 billion per year on average to producers over the last 5 years.

The AgriStability program is a whole-farm program designed to support producers who have experienced a net income decline of more than 30% for reasons such as production loss, increased costs and market conditions. Government spending for AgriStability has varied based on market conditions, averaging about $363 million per year.

The AgriInvest program allows producers to save a portion of the proceeds from their annual net sales, with a matching government contribution up to a maximum of $10,000 annually, to help manage smaller income declines. FPT governments contribute approximately $267 million annually to AgriInvest accounts.

Since Sustainable CAP came into effect in April 2023, several changes in the BRM suite are being implemented. The AgriStability compensation rate increased from 70% to 80% beginning in the 2023 program year, increasing support to farmers up to $72 million per year.

AgriInsurance: provides support largely to crop producers, averaging over $1 billion per year since 2013, which represents approximately two-thirds of all BRM contributions.

In 2022, the Advance Payments Program provided $3.5 billion in total advances to 18,800 producers across Canada. A total of 9,543 producers were able to benefit from the increase, and of these, 5,078 were able to maximize the $250,000 interest-free benefit.

For the 2023 program year, a total of 21,420 producers (value of $4.6 billion) received advances. A total of 7,484 producers received interest-free advances above $250,000, and of these, 4,927 received the maximum interest-free benefit of $350,000.

The 2024 program year started on April 1, 2024, and 17,013 producers (value of $2.9 billion) have received advances to date. A total of 9,211 producers have received interest-free advances above $100,000, and of these, 4,451 have been able to maximize the $250,000 interest-free benefit.

• The majority of greenhouse gas emissions from agriculture are currently not subject to federal carbon pricing.
• Eligible farm operations in federal backstop jurisdictions receive a portion of the proceeds from the price on pollution through a refundable tax credit and rebates.
• We continue to work with farmers to find win-win solutions for reducing GHG emissions, while at the same time enhancing farm productivity, including investing over $1.5 billion into supporting these common goals.

Background

Carbon pricing

About 97% of GHG emissions from Canadian farms are not subject to direct carbon pricing, including any emissions from livestock and crop production.

Commercial greenhouse operators are eligible for 80% relief from the federal fuel charge on marketable natural gas and propane.

Costs to farmers

Looking ahead to 2030, the APAS has estimated that a $170 per tonne carbon price in 2030 would cost an average Saskatchewan grain farmer $12.52 per acre. At that rate, the cost to a 5,000-acre farm would be, on average, $62,600. This estimate includes both the direct carbon price costs paid by farmers through fuel purchases, as well as indirect costs such as transportation costs, with the assumption that most of the increase in transportation costs associated with carbon pricing will be passed on to farmers. The transportation costs alone account for more than half of the APAS cost estimate. If only the direct costs of grain drying and farm heating are included, then the APAS estimates that a $170 per tonne carbon price in 2030 is expected to cost Saskatchewan grain farmers $5.74 per acre. At that rate, the cost to a 5,000-acre farm would be an average of $28,700.

Defining a farm family

There are about 190,000 farms in Canada, according to the 2021 Census of Agriculture, with 97% of these farms being "family farms", namely, farms that are owned by one or more individuals either as a sole proprietorship, a partnership, or family corporations (that is, they are closely held, as opposed to publicly owned). Farm families are families of farm owners or operators, and so there is at least one farm family associated with each family farm.

37% of family farms are incorporated, while 63% are unincorporated. While incorporated farms (both family and non-family corporations) make up a minority of farms in Canada (about 25% of farms), they tend to be the larger farms, and account for a disproportionate share of farm acreage and income (72% of farm revenues).

Impact of broader tax credits and rebates on farm families

There are 3 distinct payments to help farmers offset the cost of federal pollution pricing; the Return of Fuel Charge Proceeds to Farmers Tax Credit for eligible farm businesses, the Canada Carbon Rebate for Small Businesses for eligible farm businesses, and the Canada Carbon Rebate (CCR) for eligible residents, including farm families (farm families are families with one or more farm owners or operators).

• Budget 2024 earmarked 39 million over 2 years for "sustainable pesticide management".

When pressed

What is the Government doing to ensure that Canadian farmers have access to products that their American counterparts can use, such as lambda-cyhalothrin?

FPT working group to share information on Canada and the United States' approaches to pesticide regulation and propose solutions to overcome associated challenges. In July 2024, the FPT working group's action plan received unanimous support of FPT ministers and is currently being implemented.

When will maximum residue limits increases be considered for glyphosate?

MRL increases have been implemented in a staggered manner, beginning with less complicated proposals before addressing more complex ones such as glyphosate.

What is Agriculture and Agri-Food Canada (AAFC) doing to reach the COP15 pesticide-related risk reduction target?

AAFC supported the development of Canada's National Nature Strategy, which reflects Canada's contributions to meeting the agreed global target, including the pesticide- related risk reduction target.

Will AAFC shift its commitments to COP15 in light of the European President's withdrawal from its commitment (Sustainable Use Regulation) to Reduce Pesticide use by 50% by 2030?

Canada remains committed to implementing the 2022 Kunming-Montreal Global Biodiversity Framework. This includes a global commitment to reducing the overall risk from pesticides by at least half by 2030.

What does Canada think of the EU's approach to pesticides?

Canada has strongly pressed the EU to recognize there is no 'one-size-fits-all' model for sustainable production.

Canada has also strongly advocated for the EU to adopt a risk-based approach. This is especially important in the current context of global food security concerns.

Background

Pesticides and the Pest Management Regulatory Agency

Health Canada's Pest Management Regulatory Agency (PMRA) is responsible for registering pesticides for use in Canada. Registered pesticides are re-evaluated every 15 years.

Health Canada must determine that the consumption of the maximum amount of residues expected to remain on food products when a pesticide is used according to label directions will not be a concern to human health. This maximum amount is then legally established as a Maximum Residue Limit (MRL) under the Pest Control Products Act. Enforcement of these MRLs is conducted by the Canadian Food Inspection Agency under the Food and Drugs Act and associated regulations. MRLs are sometimes revised following the cyclical re-evaluation process for pesticides.

PMRA transformation

Ministers of Health, Environment and Climate Change, and Agriculture and Agri-Food, announced a pause on proposed increases to MRLs until spring 2022, as well as the transformation of the PMRA.

PMRA's Scientific Advisory Committee

On June 27, 2022, the PMRA announced the establishment of its Scientific Advisory Committee (SAC). The role of the SAC is circumscribed as PMRA will retain sole authority on regulatory pesticide decisions.

The last SAC meeting, which occurred in June 2024, focussed on glyphosate and the establishment of Maximum Residue Levels for this product.

The June 20, 2023, announcement

The next steps in the ongoing pesticide regulatory transformation agenda. This included the gradual lifting of the pause of increases to MRLs for pesticides in Canada and amendments to the Greening Government Strategy, which will eliminate the cosmetic use of pesticides on federal lands.

Although some MRLs have been increased, the pause has not yet been lifted for glyphosate. Glyphosate is the most used pesticide in the world and makes up for more than half of all agricultural pesticides sold in Canada every year. Due to its popularity, glyphosate is both the most produced and studied product, while being at the center of the very polarized debate on pesticides.

The agricultural sector has relayed its concerns with the non-scientific nature of the MRL pause and is eager to see MRL increases for glyphosate.

Budget 2024

2024 Budget, $39 million over 2 years (2024-25 & 2025-26) was earmarked for "sustainable pesticide management". The remaining funds will be allocated to AAFC to develop novel pest control solutions.

Lambda-cyhalothrin

Lambda-cyhalothrin (or simply, lambda) is a synthetic insecticide used to control a broad range of insect pests on a wide variety of crops in Western Canada. In 2018, PMRA completed its cyclical re-evaluation of lambda and proposed to cancel its use on commodities destined for animal feed due to human health concerns. In 2024, as per PMRA's decisions, MRLs will come into force and no lambda residues will be tolerated on most feed.

Limited alternatives which are as efficient and wide-ranging as lambda

PMRA is currently reviewing additional data provided through a US research program received in December 2023; the additional studies are specific to lambda-cyhalothrin. PMRA is also reviewing an application made by Syngenta to reinstate feed uses on lambda-cyhalothrin.

In July 2024, PMRA received another application from the registrant, this time to reinstate feed uses for certain crops. PMRA is currently evaluating this latest application.

FPT working group

The importance of lambda-cyhalothrin was raised during the conference. Ministers agreed to create an FPT working group to explore the challenges of pesticide management.

A summary of the working group's discussions and recommendations to improve regulatory outcomes were summarized in a public report. The working group's report was presented in February 2024 to FPT ministers, and its recommendations obtained unanimous support. The group was also asked to develop an action plan to implement its recommendations.

FPT ministers supported the plan and sought regular updates from the working group. Furthermore, ministers agreed to launch a ministerial working group on pesticides.

COP15

Parties at COP15 agreed on a historic global framework to safeguard nature and halt and reverse biodiversity loss, putting nature on a path to recovery by 2050.

The agreement includes a commitment to reduce the risk from pesticides on the environment but does not represent a mandatory reduction in pesticide use (target 7). Led by ECCC, the federal government worked closely with the sector, Provinces and Territories, and other partners to develop and release its 2030 Nature Strategy. AAFC is monitoring efforts led by the Food and Agriculture Organization (FAO) to develop a global indicator to measure progress on reducing risks to biodiversity from pesticides under Target 7. Industry has raised concerns over the FAO's proposed indicator which industry believes focuses on pesticide use, instead of risk.

Canada's 2030 Nature Strategy outlines that AAFC will provide guidance through the Sustainable Agriculture Strategy, which is currently under development, on pathways to improve environmental outcomes that further enhance the optimization of nutrient and pesticide application through beneficial management practices and precision agriculture technologies. AAFC will also explore opportunities to reduce data gaps related to on- farm use of pesticides and adoption of beneficial management practices.

The European President's withdrawal from the EU's commitment to reduce pesticide use by 50% by 2030

On February 6, 2024, the head of the European Commission, Ursula von der Leyen, announced plans to withdraw from the Sustainable Use Regulation, which sought to cut pesticide use in half by 2030.

Farmers across the EU have argued that reducing the amount of pesticide they are allowed to use would negatively impact their crops, and negatively impact food production.

• In December 2020, fertilizer emissions reduction target of 30% below 2020 levels by 2030.
• Significant funding to support the sector's efforts to reduce greenhouse gas emissions, including over $1.5 billion in new and expanded funding announced since 2021.

When pressed

How will the department ensure improved measurement of fertilizer emissions?

National Inventory Report, Canada's official inventory of annual greenhouse gas sources and sinks, does not account for some beneficial management practices that can reduce emissions from fertilizer application, such as enhanced efficiency fertilizers and split nitrogen application. Over the medium term, the Department plans to develop more accurate emission factors for these practices as research and activity data become increasingly available. This will not only ensure that farmers are appropriately recognized for their efforts to reduce emissions, it will also improve how progress against the target is measured.

Data and measurement is a key area that the Fertilizer Emissions Reduction Working Group explored over the course of discussions during its one-year term. The insights generated from these discussions will inform the Department's approach to improving data and measurement in relation to emissions from fertilizer application.

Budget 2022 committed $100 million to the federal granting councils to support sustainable agriculture to fight climate change. Nearly all of this funding is being delivered through the Sustainable Agriculture Research Initiative by Innovation, Science and Economic Development Canada in collaboration with Agriculture and Agri-Food Canada.

What are the key steps the department is taking to achieve the fertilizer emissions reduction target?

Since 2021, more than $1.5 billion in initiatives have been announced to help the sector in mitigating and adapting to the impacts of climate change, including the Agricultural Climate Solutions–On-Farm Climate Action Fund, Agricultural Climate Solutions–Living Labs, and Agricultural Clean Technology Program.

Under the 5-year, $3.5-billion Sustainable Canadian Agricultural Partnership, federal, provincial, and territorial cost-shared programs are available to assist farmers in adopting on-farm beneficial management practices, including those that can enhance nutrient use efficiency.

The department is also moving forward with science through AAFC's Strategic Plan for Science. Priority research areas include the development of technologies, tools, and beneficial management practices to enhance nutrient use efficiency and reduce nutrient losses in the Canadian crop production systems. Government has also recently become a founding member of the Efficient Fertilizer Consortium, a public-private partnership that will facilitate international collaboration to advance research on enhanced efficiency and novel fertilizer products and practices.

Sustainable Agriculture Strategy Advisory Committee, a multi-stakeholder, expert-driven Fertilizer Emissions Reduction Working Group was created to provide advice and guidance on the development of an approach to reach the target. In June 2024, the Working Group submitted its recommendations and advice to the Advisory Committee that will help inform the development of a collaborative approach for reducing emissions from fertilizer application in Canada's agriculture sector.

Why does the fertilizer emissions reduction target address absolute emissions rather than emissions intensity?

Fertilizer emissions reduction target was developed based on existing approaches that, when adopted to scale, could help significantly reduce nitrous oxide emissions from fertilizer use without compromising productivity. An emissions reduction target based on absolute levels rather than intensity ensures that emissions are reduced in a concrete way that can meaningfully contribute to Canada's overall emissions reduction commitments.

Background

On March 22, 2023, the Government of Canada released the Fertilizer Emissions Reduction Target "What We Heard Report," which summarizes input received throughout the engagement process and included the announcement of a Fertilizer Emissions Reduction Working Group to strengthen ongoing dialogue on the target.

Since 2021, over $1.5 billion in initiatives for the agriculture sector has been announced. These initiatives include the Agricultural Clean Technology Program, which focuses on the development and adoption of transformative clean technologies, and the Agricultural Climate Solutions—On-Farm Climate Action Fund, which supports practices that reduce emissions or store carbon, including nitrogen management.

In addition, the five-year Sustainable Canadian Agricultural Partnership will inject $3.5 billion in funds over 2023-28 to support the sustainability, competitiveness, and innovation of the agriculture and agri-food sector, ensuring it can continue to feed Canadians and the world. This includes federal, provincial, and territorial cost-shared programs to support the on-farm adoption of beneficial management practices, such as those that can improve nutrient management. Federally funded programs that contribute to the research and development of fertilizer-related innovations are also included.

In 2022, AAFC released a Strategic Plan for Science, which takes into consideration the environmental, social, and economic context in which all of our scientific activities are conducted. One of the priority research areas is to increase knowledge of nutrient cycling and to develop technology, tools, and beneficial management practices to enhance nutrient use efficiency and reduce nutrient losses, leading to a profitable and resilient Canadian agriculture and agri-food sector.

• Amended the Competition Act to create a level playing field and improve affordability and consumer choice.
• Strengthening our food systems under the Food Policy for Canada.
• Budget 2024 announced key investments to strengthen food security in communities throughout Canada, such as $62.9-million in renewed investments for the Local Food Infrastructure Fund and $1 billion for a National School Food Program.
• Launched the Food Price Data Hub to improve the availability and accessibility of data on food prices.

When pressed

What action is the government taking to stop the persistent rise in grocery prices?

On December 15, 2023, Bill C-56, the Affordable Housing and Groceries Act, received Royal Assent. This includes changes to the Competition Act to increase competition, and help stabilize prices for Canadians, particularly in the grocery sector. On June 20, 2024, Bill C-59, the Fall Economic Statement Implementation Act, 2023, received Royal Assent. It modernizes all aspects of the law to facilitate enforcement and increase competition in Canada to help make life more affordable for Canadians. Changes to the Competition Act have also allowed the Competition Bureau to advance its investigations into large retailers' use of anti-competitive restrictions, known as property controls, that impact competition in the retail sale of food products.

The Government of Canada launched a Food Price Data Hub to provide consumers with timely data on food prices in Canada in a central and easy-to-access location. This information is provided through a partnership between Statistics Canada, Innovation, Science and Economic Development Canada and Agriculture and Agri-Food Canada.

What is the Government doing to support Canadians who are struggling with affordability of food and turning to food banks?

The 2023 federal budget included a new, one-time Grocery Rebate to offer inflation relief to lower-income families. Budget 2024 also launched a National School Food Program, which is expected to provide meals for up to 400,000 kids each year and save the average participating family with two children as much as $800 per year in grocery costs.

Background

The Food Policy for Canada

Budget 2019 announced programming investments of $134.4 million over five years related to the Food Policy. This included two investments led by AAFC: the Local Food Infrastructure Fund ($50 million over five years with an additional $20 million in top-ups), and the Food Waste Reduction Challenge ($20 million over four years) These investments also included the Northern Isolated Community Initiatives Fund led by the Canadian Northern Economic Development Agency ($15 million over five years).

Budget 2024 included new investments to strengthen Canada's food systems and make progress toward the Food Policy for Canada's vision to ensure access to safe, nutritious, and culturally diverse food. These investments included $62.9 million over 3 years to strengthen local food security (Local Food Infrastructure Fund), $42.8 million to strengthen access to culturally important foods (Northern Isolated Community Initiatives Fund, Canadian Shellfish Sanitation Program and implementing the United Nations Declaration on the Rights of Indigenous Peoples Act).

Local Food Infrastructure Fund

Budget 2024 announced $62.9 million over three years, starting in 2024-25, to renew and expand the Local Food Infrastructure Fund (LFIF) to support community organizations across Canada to invest in local food infrastructure, with priority to be given to Indigenous and Black communities, along with other equity-deserving groups. Part of the expansion will support community organizations to improve infrastructure for school food programs as a complement to the National School Food Program.

When the Food Policy was introduced in 2019, the Government of Canada invested $50 million over five years in the LFIF with an additional $20 million in top-ups through Budget 2021 and Budget 2023. Since 2019, approximately 1,110 projects were funded through LFIF over five intake periods, representing $65 million in AAFC funding.

Projects ranged in funding size from $5,000 to $500,000 and spanned across all provinces and territories.

• 2022 Fall Economic Statement, the Government announced up to $1.75 billion in further compensation to supply-managed sectors for the impacts of the Canada-United States-Mexico Agreement (CUSMA).
• In total, up to $4.8 billion is being made available to support dairy, poultry, and egg producers, and processors for the impacts of the Canada-European Union Comprehensive Economic and Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and CUSMA.

When pressed

How much compensation is being provided to members of the sector?

A total of up to $4.8 billion is being made available to support dairy, poultry and egg producers, and processors for the impacts of recent trade agreements:

• Up to $3.2 billion for dairy farmers through the Dairy Farm Investment Program and the Dairy Direct Payment Program;
• Up to $803 million for poultry and egg producers through the Poultry and Egg On-Farm Investment Program and the Market Development Program for Turkey and Chicken;
• Up to $497.5 million for processors through the Dairy Processing Investment Fund and the Supply Management Processing Investment Fund; and
• Up to $333 million for the Dairy Innovation and Investment Fund.

What are the details of the CUSMA compensation?

2022 Fall Economic Statement, the Government announced $1.75 billion in compensation to supply-managed sectors for the impacts of CUSMA, as follows:

• Up to $1.2 billion to Canadian dairy producers under the Dairy Direct Payment Program.
• Up to $112 million to the Canadian poultry and egg producers under the Poultry and Egg On-Farm Investment Program.
• Up to $105 million to support investments in dairy, poultry and egg processing plants under the Supply Management Processing Investment Fund.

Budget 2023 proposed to invest up to $333 million for a new program, the Dairy Innovation and Investment Fund, to support industry efforts to manage the surplus of solids non-fat.

What are the details of the Dairy Innovation and Investment Fund?

The new Dairy Innovation and Investment Fund will provide non-repayable contributions to Canadian dairy processors to help the sector modernize, replace and increase solids non-fat processing capacity and minimize non-marketed skim milk.

The Canadian Dairy Commission will deliver the Dairy Innovation and Investment Fund on behalf of Agriculture and Agri-Food Canada.

The two-stage application process commenced on September 29, 2023. The program will also consider costs eligible for reimbursement retroactive to November 17, 2022.

Background

The Comprehensive Economic and Trade Agreement (CETA) came into force on September 21, 2017, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force on December 30, 2018, and the Canada-United States-Mexico Agreement (CUSMA) entered into force on July 1, 2020.

In June 2022, the Bloc Québécois introduced Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act. The bill would block any future governments from increasing the tariff rate quota for dairy, poultry or eggs, and would also prevent any subsequent governments from further opening the Canadian market to foreign producers as part of any future trade agreement negotiations. Bill C-282 has successfully passed through the House of Commons and passed its second reading in the Senate. Following its second reading, the Bill was sent to committee for further study.

Current status

The Government is delivering on its commitment to provide full and fair compensation for the impacts of CETA, CPTPP and CUSMA, which includes:

• Up to $3.2 billion for dairy farmers:
  • $250 million through the Dairy Farm Investment Program
  • $2.95 billion through the Dairy Direct Payment Program
• Up to $803 million for poultry and egg producers:
  • $759 million through the Poultry and Egg On-Farm Investment Program
  • $44 million through the Market Development Program for Turkey and Chicken
• Up to $497.5 million for processors of supply-managed commodities:
  • $100 million through the Dairy Processing Investment Fund
  • $397.5 million through the Supply Management Processing Investment Fund
• Up to $333 million for the Dairy Innovation and Investment Fund
  • Total funding includes $300 million provisioned through the 2022 Fall Economic Statement and up to $33 million in unclaimed Dairy Direct Payment Program funds for the last year of CETA/CPTPP programming and all years of CUSMA.

In total, the Government has announced just over $4.8 billion in compensation to supply-managed sectors for the impacts of the three trade agreements.

Dairy Farm Investment Program

$250 million program launched to help Canadian dairy farmers update farm technologies and systems and improve efficiencies and productivity through upgrades to their equipment to compensate for the impacts of CETA. The 6-year program began on 2017-18 and was extended to close on March 31, 2023, to accommodate producers impacted by COVID-19.

Dairy Direct Payment Program

Provides up to $2.95 billion over 10 years to cow milk producers to help them transition to new market realities due to recent international trade agreements. While there are no applications to complete under the program, producers must register by March 31 of each year for the program and indicate acceptance of the payment. These funds will give producers the flexibility to invest according to their individual needs. For example, from 2024 to 2029, an owner of a farm with 80 milking cows may receive a total direct payment of about $106,000 over six years. The program started in 2019 and ends March 31, 2029.

Poultry and Egg On-Farm Investment Program

Announced in 2021 provides close to $759 million to support poultry and egg farmers through on-farm investments that increase efficiency or productivity, respond to consumer preferences, or improve on- farm safety, biosecurity or environmental sustainability. The program opened for applications on May 31, 2021 and ends March 31, 2031.

Market Development Program for Turkey and Chicken

Announced in 2021, provides up to $19 million for the Turkey Farmers of Canada and up to $25 million for the Chicken Farmers of Canada over a 10-year period. Funding will help increase domestic demand and consumption of Canadian turkey and chicken through industry- led promotional activities such as advertising campaigns, market research or product development. The continuous intake period for applications was launched on April 13, 2021. The program ends March 31, 2031.

Dairy Processing Investment Fund

Was a $100-million program aimed to increase the efficiency, productivity, and competitiveness of Canadian dairy agri-food processors and mitigate the impacts of recent international trade agreements. The four-year program began in 2017-18 and was extended to close on March 31, 2022, to allow recipients impacted by COVID-19 to complete their projects.

Supply Management Processing Investment Fund

An up to $397.5 million program that supports investments in dairy, poultry, and egg processing facilities to improve productivity and/or efficiency through the purchase of new automated equipment and technology. The program ends March 31, 2028.

Dairy Innovation and Investment Fund

Will provide Canadian dairy processors with up to $333 million in non-repayable contributions over 10 years to help the dairy sector better manage the surplus of solids non-fat (SNF) in Canada. The program will support activities that help modernize, replace and/or increase processing capacity for SNF and minimize skim milk that is not marketed. The program opened for applications on September 29, 2023. Supported projects have not yet been initiated or announced. The program is set to end on March 31, 2033.

When pressed

What is the ruling of the CPTPP Panel?

In May, Canada published new CPTPP dairy TRQ allocation and administration policies, which include the removal of the pooling system and some administration changes.

Will New Zealand retaliate?

With these new policies, Canada has eliminated the non-conformities identified by the Panel.

If New Zealand indeed pursues this track, Canada will vigorously defend our implementation plan.

What is the ruling of the second CUSMA Panel?

The Panel ruled in Canada's favour on all claims made by the United States.

Based on the Panel's conclusion, Canada is not required to make any changes to its CUSMA dairy TRQ allocation measures.

What are the expected next steps from the United States on the issue of dairy?

The U.S. Administration, members of Congress and the dairy industry expressed disappointment with the second CUSMA dairy dispute findings.

For CUSMA disputes, there is no appeal process.

Canada is confident that our practices align with our obligations under CUSMA.

Background

CPTPP dairy TRQs dispute

The final Panel report in the dispute brought by New Zealand against Canada regarding the administration of Canadian dairy tariff rate quotas (TRQs) was made public on September 5, 2023.

Global Affairs Canada held public consultations from February 6 to March 7, 2024, and published new CPTPP dairy TRQ policies on May 1, 2024. The implementation of the new policies began on August 1, 2024, marking the start of the 2024-2025 dairy year. These new policies include the removal of the pooling system (as was done for implementation following the first CUSMA dairy TRQs dispute), and some administration changes.

New policies generated significant negative reactions from New Zealand's government and industry.

Detail on the Panel's findings

CPTPP Panel found against Canada on 2 of the 6 claims. The Panel ruled that Canada is in violation of its obligation to allow importers "the opportunity to utilize TRQ quantities fully", and that Canada's pools that reserve access to a%age of each TRQ for dairy processors violate Canada's obligation to ensure that it does not "limit access to an allocation to processors". The majority of the Panel (2 of the 3 panelists) found 2 claims in Canada's favour: that Canada's exclusion of retailers from TRQ eligibility falls within Canada's discretion; and that Canada's measures do not introduce a "new or additional condition, limit or eligibility requirement on the utilization of the TRQ for the importation of a good". The Panel deemed it unnecessary to make findings on the remaining 2 claims made by New Zealand on: whether Canada's procedures for administering TRQs are fair and equitable, and whether Canada ensures that each allocation is made, to the maximum extent possible, in the amount importers request.

CUSMA dairy TRQs disputes: First CUSMA dairy TRQ dispute

The Panel found that Canada's practice of reserving TRQ pools exclusively for the use of processors (including further processors) is inconsistent with CUSMA. The Panel made no findings on the three other claims brought by the U.S., as the Panel considered it was unnecessary to resolve the dispute.

Global Affairs Canada published new CUSMA dairy TRQ policies on May 16, 2022, following public consultations. The new policies ended the practice of reserving TRQ pools exclusively for processors and, instead, allocate to distributors, processors and/or further processors based on market share. These policies generated significant negative reaction from U.S. industry, U.S. Congress and U.S. Government, who expected more or different reforms to Canada's administration of its CUSMA dairy TRQs.

Second CUSMA dairy TRQ dispute

January 31, 2023, the U.S. requested the establishment of a second dispute settlement panel on Canada's dairy TRQ policies under CUSMA. The United States made 4 overarching claims of violation under several CUSMA provisions, including the ineligibility of retailers and food service operators under the TRQs, the 12- month activity requirement, Canada's methodology for calculating TRQ allocations through market share, and TRQ return and re-allocation policies.

Final Panel report was made public on November 24, 2023, and ruled in Canada's favour on all claims.

The U.S. Administration, members of Congress and the dairy industry expressed disappointment with the second CUSMA dairy dispute ruling.

• Launched a Recognized Employer Pilot project to be more responsive to labour market shortages and reduce the administrative burden for repeat employers who meet the highest standards of program compliance.
• Budget 2023 included an investment of $48 million to improve the employer compliance regime under the Temporary Foreign Worker Program, including more program inspectors and the maintenance of the worker protection tip line.

When pressed

What is the Government doing to protect temporary foreign workers?

Introduced open work permits for vulnerable workers for temporary foreign workers who are being abused or at risk of being abused in relation to their job in Canada. To better protect workers and address concerns of wage suppression, employers will be required as of January 1, 2024; to annually review temporary foreign workers' wages to ensure they reflect increases to prevailing wage rates.

How is the Government addressing labour shortages?

Implementing a three-year Recognized Employer Pilot, under the Temporary Foreign Worker Program, to test streamlined processes, be more responsive lo labour market shortages and to reduce the administrative burden for repeat employers who demonstrate a history of program compliance.

Agri-Food Immigration Pilot provides a pathway to permanent residence for experienced, non-seasonal workers in the agricultural and food processing sector. This Pilot was extended until May 2025.

Budget 2022 announced a $48.2 million commitment by the Government to implement a new foreign labour program for agriculture and fish processing, tailored to the unique needs of these employers and workers. Consultations with stakeholders on this commitment launched in spring 2024, and Phase 2 is currently underway.

What is the Government doing to facilitate transitions to permanent residency?

Increased allocations in Provincial Nominee Program immigration streams and introduced the Atlantic Immigration Program, Rural and Northern Immigration Pilot, Agri-Food Immigration Pilot and a new category-based selection stream under Express Entry. In 2022, more than 177,000 temporary residents became permanent residents and close to 172,000 temporary residents transitioned to permanent residence between January and September 2023.

What is the Government's response to the United Nations' Special Rapporteur on Contemporary Forms of Slavery preliminary findings?

Acknowledges the report from the United Nations' Special Rapporteur, and we are always open to recommendations to better protect workers, including temporary foreign workers.

What is the Government doing to ensure that visa and work permit applications are processed in a timely manner?

The report from the Strategic Immigration Review conducted by Immigration, Refugees and Citizenship Canada (IRCC) affirms the need to offer a more welcoming experience to newcomers, including by reducing processing times. The Government of Canada is working to deliver a pleasant and user-friendly experience that is modern and efficient, fair and transparent, predictable, and timely.

How is the Government reforming the Temporary Foreign Worker Program?

As of September 26, 2024, the Government will refuse to process Labour Market Impact Assessments in metropolitan areas with unemployment rates of 6% or higher. The cap on Temporary Foreign Workers will be further reduced to 10% and the maximum duration of work permits for workers in the low-wage stream of the Temporary Foreign Worker Program will be reduced from two years to one. Primary agriculture and food processing occupations will be exempt from the refusal to process and the cap reduction but will be subject to the reduced employment duration.

Budget 2022 announced a $48.2 million commitment by the Government to implement a new foreign labour program for agriculture and fish processing, tailored to the unique needs of these employers and workers. Consultations with stakeholders on this commitment launched in spring 2024, and phase 2 is currently underway.

Background

Addressing labour shortages

• The Government has committed to developing a sector-specific Agricultural Labour Strategy.
• ESDC launched the Workforce Solutions Road Map in April 2022, which temporarily increased the TFW hiring cap to 30% for low-wage employers in food manufacturing. However, on March 21, 2024, it was announced that the cap would be adjusted back to 20% as of May 1, 2024.
• The SAWP includes a process for the transfer of workers between employers.
• Minimum job advertising requirements for all positions in the primary agriculture sector were suspended until June 2024 and extended until June 2025.
• A Recognized Employer Pilot project launched in August 2023 will allow eligible employers to gain access to LMIAs that are valid for up to 36 months. Primary agriculture employers were able to apply starting in September 2023, all other employers became eligible on January 8, 2024.

Reforming the Temporary Foreign Worker Program

August 6, 2024, the Government noted its intention to reduce fraud, address compliance concerns, and help limit the number of temporary residents. On August 26, 2024, the Government announced further changes to the low-wage stream of the Temporary Foreign Worker Program. As of September 26, 2024, the Government will refuse to process Labour Market Impact Assessments in metropolitan areas with unemployment rates of 6% or higher. The cap will be further reduced to 10% and the maximum duration of work permits will be reduced from two years to one. Primary agriculture and food processing occupations will be exempt from the refusal to process and the cap reduction but will be subject to the reduced employment duration.

Permanent immigration

• Agri-Food Pilot – Launched in 2020 in response to identified, long-term labour shortages for some occupations in meat processing, greenhouse production, and livestock raising industries to allow employers with TFWs that return for year- round work (for example, at mushrooms farms or some processing facilities) to gain permanent residence. The Agri-Food Pilot was extended for an additional 2 years and will run until May 14, 2025.
• Category-Based Selection under Express Entry – In February 2024, new Express Entry rounds were announced to respond to changing economic and labour market needs within Canada. Agriculture and agri-food occupations remain a priority.
• Provincial Nominee Program (PNP) – Under PNPs, provinces and territories have the ability to create dedicated streams based on their economic needs.
• The Rural and Northern Immigration Pilot was launched in 2019 as a community-driven program designed to spread the benefits of economic immigration to smaller communities by creating a path to permanent residence for skilled foreign workers who want to work and live in one of the participating communities. The Pilot has been successful, and IRCC continues to work toward creating a permanent rural immigration program. The Rural Community Immigration Pilot will launch in the fall of 2024.
• The Atlantic Immigration Program was launched as an employer-driven program in January 2022 and aims to attract skilled immigrants to Atlantic Canada to address demographic and economic needs and continue to increase retention in the region.

Worker protections

• Budget 2023 provided $48 million in funding over 2 years for ESDC to improve the employer compliance.
• In 2022, regulatory amendments were made to the Immigration Refugee. Protection Regulations to ensure TFWs are aware of their rights while in Canada.
• In 2019, The Government also introduced open work permits for vulnerable workers.

The United Nations' Special Rapporteur on Contemporary Forms of Slavery

• United Nations' Special Rapporteur completed a tour of Canada in August 2023 and met with workers, Temporary Foreign Worker (TFW) Program officials at ESDC, and officials from IRCC.
• Special Rapporteur was critical of the TFW Program and likened it to a "breeding ground for contemporary forms of slavery." The Special Rapporteur's final report was published on July 22, 2024.
• He recommended that the Government ends the use of closed work permits to; ensure all migrant workers have a clear pathway to permanent residency; regularize workers who have lost status (undocumented workers); create an oversight body for migrant workers; ensure TFWs have access to health care upon arrival; strengthen the inspection regime; enforce unionization and housing for TFWs; and ensure TFWs are aware of their rights.

• The CPTPP, with the UK included, now accounts for roughly 15.6% of the global economy and nearly 580 million consumers.
• Including another G7 economy with a $3.6 trillion GDP makes the Agreement stronger and more attractive to other economies considering joining. This opens up more opportunities for Canadian agri-food exporters.

When pressed

What is being done to address non-tariff barriers for beef and pork in the UK market?

Beef and pork exporters continue to face important challenges in exporting to the UK market and are concerned with the current imbalance of trade for these products between Canada and the UK.

Canada is pressing for the UK to focus on science-based regulations and live up to its international trade obligations.

What are the market access gains for Canadian agriculture in the UK accession to the CPTPP?

98% of bilateral trade is duty-free under the Trade Continuity Agreement, Canada secured additional duty-free volumes into the UK for pork and beef, as well as unlimited access for sweetcorn, turkey, and eggs.

How does the accession affect market access for supply-managed products from the UK?

Not be providing additional market access for supply-managed products through this accession.

Continue to honour the clear commitment to not provide any additional market access in our supply-managed sectors in any future trade negotiations.

What is the status of bilateral negotiations with the UK?

On January 25, 2024, the UK paused negotiations with Canada. We are disappointed that the UK has paused bilateral negotiations with Canada.

Background

As of July 12, 2023, the CPTPP agreement has been ratified, implemented and is in force for all 11 original CPTPP signatories (Canada, Australia, Japan, Mexico, New Zealand, Singapore, Vietnam, Peru, Chile, Malaysia and Brunei).

On February 1, 2021, the UK was the first economy to formally submit its request to accede to the CPTPP. Subsequently, six other countries have formally requested accession to the CPTPP: China, Taiwan, Ecuador, Costa Rica, Uruguay and Ukraine. CPTPP Parties decide, by consensus, whether to approve accession requests and enter into negotiations with these aspiring economies.

Between March 12 and April 27, 2021, Canada held public consultations on a Canada-UK bilateral FTA and the UK's possible CPTPP accession. Agriculture stakeholders raised a number of concerns with respect to sanitary and phytosanitary market access issues with the UK including those impacting beef, pork, grains and oilseeds. In addition, Canada's dairy, poultry, and eggs stakeholders requested that Canada not expand TRQ volumes beyond existing levels or otherwise agree to additional market accession concessions, such as reducing over-quota tariffs.

CPTPP parties began negotiations with the UK on June 1, 2021, and announced substantial conclusion of those negotiations during a ministerial meeting on March 30, 2023.

While there was an aspirational target of completing the bilateral negotiations by April 2024, on January 25, 2024, the UK paused negotiations with Canada [REDACTED]. On July 4, 2024, the UK Labour Party defeated the incumbent Conservative Party in the general election. There is no clear indication that the UK is ready to re-engage in bilateral trade negotiations with Canada. However, Canada remains ready to return to the negotiating table.

Beef and pork stakeholders have publicly stated dissatisfaction with the results of the accession negotiations due to the UK's application of unjustified and unnecessary SPS measures which they have retained from the EU that prevent viable commercial access. Prior to the pause in bilateral negotiations, the sector had called on the Government of Canada to ensure the bilateral free trade agreement provides fair access for Canadian red meat exports. If that fails, these stakeholders are asking Parliament to provide fair compensation.

On July 16, 2023, CPTPP parties officially signed the accession protocol for the UK to join the agreement during a ministerial signing ceremony in Auckland, New Zealand.

The UK Accession Protocol will enter into force under a "universal" approach, 60 days after the UK and all CPTPP Parties have ratified. In the event that not all Parties and the UK have ratified within a period of 15 months (October 16, 2024), the approach pivots to "critical mass" approach and the Accession Protocol will enter into force 60 days after both the UK and at least six CPTPP Parties have ratified, for the UK and the Parties that have ratified the Accession Protocol. Given that the UK and six other CPTPP Parties have now ratified, the agreement will enter into force between those Parties and the UK by December 15 (60 days after the 15-month period), and subsequently with other members as they ratify.

• Government announced more than $889.1 million for the Agricultural Climate Solutions with its Living Labs and On-Farm Climate Action Fund streams that together, will increase carbon sequestration and reduce greenhouse gas emissions and offer other positive environmental benefits.
• Agricultural Climate Solutions supports farmers in adopting beneficial management practices that improve resiliency to climate change.
• On-Farm Climate Action Fund supports producers in the immediate implementation of beneficial management practices in nitrogen management, cover cropping, and rotational grazing.
• Eligible practices under the Fund were selected through published peer-reviewed Canadian studies that demonstrated the greatest potential to reduce GHG emissions or sequester carbon to reach the 2030 greenhouse gas reduction goals.

When pressed

What factors are considered when selecting eligible beneficial management practices (BMPs) in the On-Farm Climate Action Fund (OFCAF)?

AAFC applies key principles to scientific assessments to ensure selected practices offer the greatest potential to reduce GHG emissions or sequester carbon to reach the 2030 greenhouse gas reduction goals. AAFC also considers the potential for co-benefits to soil health, water and/or air quality and biodiversity; that there is no negative impact on yields, etc.; as well as the potential for impact across a variety of regions and landscapes.

Has the OFCAF program been responsive to the sector when considering new BMPs for inclusion?

The program has been open to sector requests for inclusion of additional BMPs since it began. Sector outreach was also conducted in late 2022 to solicit feedback on the current list of eligible practices and suggestions for new practices to be considered.

Does AAFC have a process in place for considering new BMP addition to the OFCAF?

AAFC has developed a transparent BMP review process for the OFCAF program. The evaluation criteria for new BMPs will remain grounded in science-based evidence and allow for input and feedback from the stakeholder community.

Background

First announced in Budget 2021, the originally $200-million On-Farm Climate Action Fund (OFCAF) is an initiative approach to help farmers tackle climate change. The Fund is part of the Government of Canada's Agricultural Climate Solutions initiative, which falls under the $4 billion Natural Climate Solutions Fund, a program managed by Natural Resources Canada, Environment and Climate Change Canada, and Agriculture and Agri-Food Canada.

Through the 2030 Emissions Reduction Plan and Budget 2022, a $470-million investment in OFCAF was announced to top-up funding for some current successful applicants, to consider broadening support for additional key climate mitigation practices, and extending the program past its current end date, while still supporting the adoption of practices that contribute to the fertilizer emissions target and the Global Methane Pledge.

The On-Farm Climate Action Fund is part of a broader Government of Canada strategy of climate action in the agricultural sector including measures under the Government of Canada’s Strengthened Climate Plan, through the 2030 Emissions Reduction Plan, and through the Fund’s links with the Natural Climate Solutions Fund. There exist a number of initiatives with incentives for adoption of on-farm practices that maximize GHG reductions and environmental co-benefits to help address environment and climate issues in the agricultural sector.

The OFCAF program was initially launched on August 12, 2021.

Through Budget 2023 the Government of Canada announced an additional $34.1 million for Eastern Canadian producers subject to fertilizer market price increases in 2022, specifically for the adoption of nitrogen management BMPs to optimize fertilizer use and reduce the need for fertilizers.

Existing initial recipient organizations and selected eligible organizations in Saskatchewan and Newfoundland have been asked to submit project plans for the second phase of OFCAF, which will run from April 2025 until March 2028.

Drivers forward through to 2028 —evaluators' recommendations, lessons learned, sector feedback

• OFCAF was initially launched in 2021 as a three-year initiative. Budget 2022 then announced an additional three year expansion of the program set to run from 2025-2028 for a total investment of $704.1 million to support farmers in the adoption of beneficial management practices (practices) that demonstrate positive environmental and economic impacts to agricultural lands.
• Its first two years of delivery reported positive results with OFCAF having supported 7,500 farmers adopt practices on over 2.4 million hectares of land, and mitigating over 450,000t Co2e. Recipient organizations are confident momentum will continue through to 2028.
• Current 11 recipients plus two new organizations in Saskatchewan and Newfoundland and Labrador (two jurisdictions previously without provincially-based representation) presented enhanced project plans that respond to sector feedback and recommendations by the Office of the Auditor General and the Office of Audit and Evaluation.
• Strengthened project plans address drivers for greater impacts identified such as strategies to reach new farmers on more hectares to maximize mitigation efforts, and concepts to further address barriers to adoption, including training and knowledge transfer activities, two key extension and education activities stakeholders note, are an important gap OFCAF fills.
• A key highlight of the evaluation praised AAFC in its mitigation efforts for being well- aligned with federal priorities and international reporting obligations and, is effective in developing trusted networks that could drive broader adoption of practices.

Commissioner of the Environment and Sustainable Development — overview and responses

Background: The CESD report focussed on 3 programs: On-Farm Climate Action Fund (OFCAF), Agricultural Clean Technology – Adoption Stream (ACT-A), and Living Labs (LL), resulting in 4 recommendations:

• finalize and implement a sustainable agriculture strategy
• expedite the review, approval and finalization of contribution agreements to avoid program implementation delays
• identify and implement concrete actions to expedite emissions reductions and carbon sequestration from its programs and finalize program targets
• implement a results-monitoring framework to enable accurate, timely and transparent assessments of results

Sustainable agriculture strategy

The audit was critical of AAFC for not having a strategy in place to guide program design. In the absence of a strategy, program approaches were guided by an extensive science-based analysis identifying a pathway to emissions reductions from the sector by 2030. This analysis informed BMP selection for programs that will maximize emissions reductions.

Timelines program context

The audit was critical of GHG reductions achieved to date through the programs. However, the audit was conducted after only 1 to 2 growing seasons of implementation for 5-, 7-, and 10-year programs, with only 1 year of performance data. We have seen record numbers of interest in these programs and in some cases, we have already surpassed most of our original expectations - for producers involved, hectares under improved management, and reductions in fossil fuel use. Additionally, we continue to respond to the sector and pivot as needed. We have already made positive changes to program delivery to enhance GHG impact.

Program targets

Each program has multiple performance targets that reflect their unique focus, and the dynamic nature of efforts to mitigate emissions. Efforts are underway to review program specific targets based on additional performance data.

BMP permanency

The audit was critical of AAFC's approaches to data reliability and assumptions of permanence. Permanency is complex in agriculture, with many factors influencing annual farm management decisions and whether a producer will maintain a new practice or technology. AAFC takes a risk-based approach to assumptions on permanency, relying on the best available data and evidence. Assumptions on permanence are adaptive and change as new evidence becomes available.

GOC climate commitments

AAFC programs have been responsive to contribute to achieving the government of Canada's fertilizer emissions target and methane commitments:

Fertilizer

• ACT-A: funding for precision agriculture technologies that reduce the application of fertilizers (that is, variable rate application and precision planting).
• OFCAF: Support for nitrogen management practices was estimated to reduce GHGs by approximately 65,000 tonnes CO2e.
• LL: 10 living labs are developing and testing innovative solutions around the use of fertilizer in agriculture, examining strategies and products related to 4R nitrogen stewardship, fertilizer efficiency and optimization, among others.

Methane

• ACT-A: Funding for anaerobic digestors, manure management, and composting technologies.
• OFCAF: Funding for practices (that is, low methane pastures reduced GHGs) by approximately 142 tonnes CO2e.
• LL: 5 Living Labs have components dedicated to manure storage and/or livestock feeding strategies.
• AAFC launched the $12-million Agricultural Methane Reduction Challenge to attract innovative ideas to reduce methane emissions from cattle.

When pressed

Are the Clean Fuel Regulations another 'carbon tax'?

The Regulations are not a tax and are a market-based mechanism designed to spur innovation of clean technologies and expand the use of less polluting fuels throughout the economy.

What is the Government of Canada doing to help Canadian biofuel producers stay competitive?

As outlined in Budget 2024, the Government of Canada will invest nearly $1.8 billion to support the growth of the biofuels industry in Canada.

What about the sustainability of agriculture-based biofuels?

The Land Use and Biodiversity Criteria aim to ensure that the biofuels that are used to generate credits under the Regulations will support our goals to protect biodiversity and the environment.

Background

Canadian production of grains and oilseeds was 90.5 million metric tons (MMT) in the 2022/23 crop year. According to AAFC calculations, about 6.2% of that total, or 5.6MMT of grains and oilseeds, went into Canadian biofuels production in 2022/23. Approximately 4.0MMT of corn (28% of production) and 0.5MMT of wheat (1.3% of production) were used to produce ethanol, while approximately 0.8MMT (4.1% of production) of canola and 0.4MMT (6.3% of production) of soybeans were used to produce biodiesel.

In 2022, domestic biofuel production was approximately 1.8 billion litres of ethanol and 400 million litres of biodiesel while biofuel consumption in Canada was approximately 4 billion litres. Canada currently has no production of renewable diesel, though multiple projects have been announced. Canada imports 45% of its ethanol consumption, most of which is from the US. Meanwhile, due largely to favourable US tax incentives, Canada exports 88 to 99% of domestic biodiesel production to the US, while importing US biodiesel and renewable diesel for consumption in Canada.

Agriculture and the Clean Fuel Regulations

The Clean Fuel Regulations (CFR) were announced as part of the strengthened climate plan, A Healthy Environment and a Healthy Economy, on December 11, 2020, and were published in Canada Gazette, Part II, on June 21, 2022. Additional components of the strengthened climate plan include a $1.5-billion investment — led by Natural Resources Canada — in a Clean Fuels Fund to increase the production and use of low-carbon fuels. AAFC is also delivering $429.4-million over 7 years through the Agricultural Clean Technology-Adoption and Research and Innovation Streams to support research, development and adoption of clean technologies in the agriculture sector.

Under the CFR, as of July 1, 2023, fossil fuel producers or importers are required to reduce the carbon intensity of liquid fuels they provide. The CFR uses lifecycle analysis to assess the carbon intensity of various fuels, with a view to incenting those that offer the deepest carbon reduction potential for the cost. The CFR is not a tax and is a market-based mechanism designed to spur innovation of clean technologies and expand the use of less polluting fuels throughout the economy. The actual price impacts will depend on the choices of oil refiners, who have the flexibility to find the most cost-effective and innovative approaches that work best for them, whether investing in cleaner production or more affordable fuels for their customers.

Agricultural stakeholders have been engaged in the design of the Regulations. Agricultural and renewable fuels stakeholders have advocated for the CFR to send a clear and direct demand signal for increased production of biofuels, including biodiesel derived from canola. Stakeholders are concerned about sustainability requirements for fuels and feedstocks called "Land Use and Biodiversity Criteria". This includes requirements to provide field-level GPS coordinates in declarations, that follow the feedstock through the supply chain from harvest to biofuel production. In November 2023, ECCC announced a compliance pathway to address these concerns for Canadian and U.S. agricultural feedstocks. The Criteria came into force on January 1, 2024.

AAFC is continuing to work with ECCC on aspects of the CFR including future versions of the Fuel Life Cycle Assessment Model.

Budget 2024: Securing the Canadian biofuels industry

As outlined in Budget 2024, the Government of Canada will invest nearly $1.8 billion to support growing the biofuels industry, including:

• $776.3M to retool the Clean Fuels Fund until 2029-30
• up to $500 million per year from the Clean Fuel Regulations compliance payment revenues to support biofuels production in Canada. More details will be announced in the 2024 Fall Economic Statement
• at least $500 million invested by the Canada Infrastructure Bank in biofuels production under its green infrastructure investment stream

• Launched on April 1, 2023, the Sustainable Canadian Agricultural Partnership (CAP) is a 5-year, $3.5 billion investment by federal, provincial and territorial governments.
• Sustainable CAP includes $1 billion in federal programs and activities, and $2.5 billion that is cost-shared 60% federally and 40% provincially/territorially for programs designed and delivered by the provinces and territories.
• This new framework provides an additional $500 million in support for the sector and includes a commitment to reduce GHG emissions by 3 to 5 megatonnes, strengthen the resiliency of the food system, and encourage diversity and inclusion in the sector.

When pressed

What is the suite of Federal Programming under Sustainable CAP?

The federally delivered programs and activities under Sustainable CAP represents an investment of $1 billion to programs such as: the AgriAssurance Program, the AgriCompetitiveness Program, the AgriMarketing Program, the AgriDiversity Program, the AgriScience Program and the AgriInnovate Program.

What is the status of federal programming under Sustainable CAP?

All of the federal Sustainable CAP programs have been launched. Most programs prioritized projects that best aligned with program objectives.

How will Sustainable CAP cost-shared programming support the Canadian agriculture sector?

$2.5 billion will be cost-shared 60% federally and 40% provincially/territorially for programs that are designed and delivered by provinces and territories. This represents $500 million in new funds for cost-shared activities, a 25% increase above the Canadian Agricultural Partnership.

This increase in cost-shared funds includes the introduction of the Resilient Agricultural Landscape Program (RALP), a new $250-million cost-shared program, $150 million in federal and $100 million in provincial/territorial funds, that will use an ecological goods and services payment approach to support on-farm adoption of environmental beneficial management practices that reduce GHG emissions and increase carbon sequestration.

How will Sustainable CAP address the environment and climate change?

Resilient Agricultural Landscape Program, a $250-million investment by FPT governments will support on-farm adoption of environmental beneficial management practices that reduce GHG emissions and increase carbon sequestration.

All provinces have agreed to spend at least 12.5% of their total spending, excluding federal-attributed initiatives, on activities that specifically support GHG emissions-reducing and carbon sequestration activities.

Background

Sustainable Canadian Agricultural Partnership (Sustainable CAP)

• The Sustainable CAP is a $3.5-billion, 5-year agreement (April 1, 2023 to March 31, 2028), between the federal, provincial and territorial governments.
• The agreement includes $1 billion in federal programs and activities and $2.5 billion in cost-shared programs and activities funded by federal, provincial and territorial governments.
• This new five-year agreement will inject $500 million in new funds, representing a 25% increase in the cost-shared portion of the partnership.
• Under the cost-shared envelope, FPT governments agreed to a $250 million Resilient Agricultural Landscape Program to support ecological goods and services provided by the agriculture sector.

FPT Ministers 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 partnership, in particular contributing to:

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

Federal programs and activities under Sustainable CAP

• Federal programs and activities are national in scope and represent a $1 billion investment over 5 years.
• Sustainable CAP federal programs and activities include a greater focus on priority areas such as:
  • Science, research and development of innovative technologies and practices that address sector and government research priorities;
  • Supporting science, research and development of transformative solutions that can contribute to the Government of Canada's 2030 and 2050 emissions targets; and,
  • Market diversification, including activities in the Indo-Pacific region; marketing green products; and supporting inclusive trade.
• Key changes to the programs since the last framework include:
  • greater focus on environmental priorities
  • better cost-share and/or stacking ratio for underrepresented groups
  • design changes to help incentivize small enterprises, start-ups and emerging innovators
  • greater emphasis on impacts and performance measurement
  • the launch of the Grants and Contributions Digital Platform solution for end-to-end online program administration

Cost-shared strategic initiatives under Sustainable CAP

Cost-shared strategic initiatives are a joint undertaking whereby both federal and provincial/territorial governments provide funding for programming that is designed and delivered by provinces and territories (PT).

These initiatives represent a $2.5 billion investment over 5 years: 60% federally funded ($1.5 billion) and 40% PT funded ($1 billion) including $250 million for the Resilient Agricultural Landscape Program.

The main objective is to provide the PT governments with flexibility to meet regional priorities and resolve issues while contributing to broader national outcomes that are developed collaboratively among federal, provincial and territorial governments.

Funding will be allocated among the five Priority Areas identified in the Guelph Statement:

• Climate Change and Environment
• Science, Research, and Innovation
• Market Development and Trade
• Building Sector Capacity, Growth, and Competitiveness
• Resiliency and Public Trust

Key changes to the programs since the last framework include:

• introduction of the new Resilient Agricultural Landscape Program
• PT governments agreed to a level of proportionate spending of at least 12.5% of cost-shared funds to support GHG emissions-reducing and carbon sequestration activities
• increased emphasis on understanding programming impact through improved data sharing, results reporting, and a commitment to contribute to measurable outcomes

Resilient Agricultural Landscape Program

• The new $250-million cost-shared program will use an ecological goods and services payment approach (per-acre payments to farmers and land agreements).
• It will be designed and delivered by provinces and territories to reflect local conditions and regional needs.
• It will complement other programs.

• Net cash income reached a record high of $24.9 billion, 11% higher than 2022, as North American cattle prices and crop marketings increased.
• The latest data indicates that farm cash receipts for the first six months of 2024 are down 3%.
• While overall expenses saw significant increases in both 2021 and 2022, expense growth was much more modest in 2023.

When pressed

Many farmers have seen large increases in expenses in recent years. How has this impacted their bottom line?

Overall income has remained strong, as increasing crop prices in 2021 and 2022, higher crop marketings in 2023, and strong cattle prices helped offset the elevated input costs. Expectations are for lower global crop prices in 2024 compared with the 2021 to 2023. This, combined with elevated expenses will result in lower incomes. However, higher incomes from 2020 to 2023 put most farms in solid financial positions such that weathering a period of lower prices and incomes is possible.

Which expenses have seen the largest increases in recent years?

Fuel, fertilizer, and feed expenses saw sharp increases in 2021 and 2022, as the economy recovered from the pandemic with rising global inflation. These expenses moderated in 2023.

Interest expenses also increased in 2022 as the Bank of Canada raised rates to fight inflation. Interest expenses increased further in 2023.

Expense growth is expected to be small in 2024.

How are the recent weather and climate challenges impacting farmers' economic stability in 2024?

Impacts of the recent weather and climate challenges have been varied across the country, and the full extent of their impact is not yet known. Initial data indicates that the production of principal field crops is expected to be up 2.3% from 2023, as crops in Western Canada benefited from July and August rains after a very dry conditions at the beginning of the growing season and the previous fall and winter.

What is the Government doing to support farmers during this challenging period?

Federal and provincial governments continue to provide support through the business risk management programs to help producers manage risks (for example, drought, flooding, market declines and increased input costs).

Background

As of May 29, 2024, Statistics Canada reported that NCI in 2023 reached a record high of $24.9 billion, up 11% from 2022. There was a modest increase in expenses of 2% to $74.7 billion. Despite lower global crop prices, farm cash receipts increased 4% to $99.6 billion, offsetting the increase in expenses.

Abundant supplies in the U.S. and South America amidst moderate global demand growth is expected to ease global crop prices further in 2024. However, AAFC expects farm cash receipts in 2024 to remain well above the previous five-year average.

Data from Statistics Canada for the first 6 months of 2024 indicate farm cash receipts decreased 3% to $47.4 billion compared to the same period in 2023.

Statistics Canada has not released any estimates of expenses for 2024, but AAFC expects overall expenses to be largely stable.

Overall, farm incomes are expected to decline in 2024, but from exceptionally high levels.

The final farm income situation for 2024 is still uncertain. One of the key uncertainties is the current size and status of the crop. Based on model-based data from Statistics Canada released on September 16, production of principal field crops is estimated to be 93.9 million tonnes (MT) in 2024, up 2% from 2023 and 2% above the previous 2019-2023 average of 91.6 MT.

In Western Canada, overall growing conditions have been better as compared to last year, leading to higher yields. In Eastern Canada, despite excessive moisture in parts of Ontario in July, and warmer weather and below-average rainfall in Quebec and the Maritimes, overall growing conditions have been positive and conducive to good corn and soybean yield.

When pressed

Is the Government still planning to introduce legislation?

While the timeline will depend on many factors, we are still aiming to introduce legislation.

Is modernizing the Canada Grain Act still a priority for this Government?

The department remains committed to modernizing the Canada Grain Act.

Has the thinking evolved since the What We Heard report was released in 2021?

Stakeholders provided valuable input and ideas for modernization of the Canada Grain Act during consultations.

Modernized legislation needs to be fair, balanced, and responsive to the evolving needs of the grain sector.

Background

• The Canada Grain Act has not been comprehensively updated since 1971.
• A formal review of the act and the Canadian Grain Commission was conducted in 2006.
• Comprehensive legislative reforms to the act were attempted in 2007 and 2009, but both of these bills died on the Order Paper.
• Targeted amendments to the act were made in 2012 and 2014, as components of broader legislation.
• The most recent attempt to modernize the act was introduced in late 2014, but did not proceed.
• The commission was an active participant in the regulatory review process, and advocated review and comprehensive modernization of the act and supporting regulations. The commission is also looking at other potential modernization initiatives within its existing regulatory framework.
• Budget 2019 highlighted the review of the act as part of its proposal to introduce regulatory roadmaps.

On January 12, 2021, consultations for the review of the act were announced. Feedback from stakeholders was gathered through 66 submissions, a public Town Hall and 3 stakeholder roundtables. A "what we heard" report was published on August 13, 2021.

$1.5 billion in initiatives for the agriculture sector that will incentivize producers to adopt practices and technologies that will reduce greenhouse gas emissions, sequester carbon in soils, and improve soil health.

Background

In 2022, AAFC released a Strategic Plan for Science, which emphasizes mission-driven science to establish clearly defined outcomes and inject urgency into the development of solutions for grand challenges.

Sustainable Agriculture Strategy, a coordinated federal initiative to establish a long-term vision for agri-environmental issues, including climate change adaptation and resilience, climate change mitigation, water, biodiversity, and soil health. The strategy will be the first of its kind for Canada, bringing federal action on environment and climate in the agriculture sector together under one umbrella.

Consultations for the strategy launched in December 2022 and ran until March 2023. Following consultations, the Sustainable Agriculture Strategy: What We Heard Report was released in December 2023. The strategy is expected to be released in 2024.

Budget 2024 announced key investments to strengthen food security in communities throughout Canada, such as $62.9 million in renewed investments for the Local Food Infrastructure Fund and $1 billion for a National School Food Program.

Background

These investments included $62.9 million over three years to strengthen local food security (Local Food Infrastructure Fund), $42.8 million to strengthen access to culturally important foods (Northern Isolated Community Initiatives Fund, Canadian Shellfish Sanitation Program and implementing the United Nations Declaration on the Rights of Indigenous Peoples Act).

Local Food Infrastructure Fund

Budget 2024 announced $62.9 million over 3 years, starting in 2024-25, to renew and expand the Local Food Infrastructure Fund (LFIF) to support community organizations across Canada to invest in local food infrastructure.

Under the first Food Policy, the Government invested $50 million over five years (2019-2024) with an additional $20 million in top-ups in the LFIF through Budget 2021 and Budget 2023. Since 2019, approximately 1,110 projects were funded through LFIF over 5 intake periods, representing $65 million in AAFC funding. Projects ranged in funding size from $5,000 to $500,000 and spanned all provinces and territories.

Northern Isolated Community Initiatives Fund

Budget 2024 provided $14.9 million over 3 years, starting in 2024-25, to renew and expand the Northern Isolated Community Initiatives Fund to all regions of Inuit Nunangat to support local and Indigenous food production systems, including innovative northern food businesses, which contribute to food security in the North.

Under the first Food Policy, the Government invested $15 million over 5 years in the Northern Isolated Community Initiatives Fund led by the Canadian Northern Economic Development Agency.

Canadian Shellfish Sanitation Program

Budget 2024 provided $25.1 million over two years, starting in 2024–25, on a cash basis, to expand the Canadian Shellfish Sanitation Program led by the Canadian Food Inspection Agency. The funding will assist Indigenous communities to safely access shellfish harvest for food, as well as social and ceremonial purposes.

Implementing the UNDA Action Plan measures

Budget 2024 provided $2.8 million over three years, starting in 2024-25, to implement the United Nations Declaration on the Rights of Indigenous Peoples Act (UNDA) Action Plan Measures. This will bolster the policy and engagement capacity among Inuit Tapiriit Kanatami and Inuit treaty organizations to co-develop legislative and policy options to facilitate the production, sale and trade of traditional and country food.

National School Food Program

Budget 2024 announced the creation of a National School Food Program, which will provide $1 billion over 5 years to Employment and Social Development Canada, Crown-Indigenous Relations and Northern Affairs Canada, and Indigenous Services.

Canada, starting in 2024-25, to work with provinces, territories, and Indigenous partners to expand access to school food programs.

Agriculture and Agri-Food Canada's approach to reducing food loss and waste

The department works with other federal departments and stakeholders across the country to identify effective solutions for reducing food loss and food waste.

Food Waste Reduction Challenge

The challenge, which ran from November 2020 to March 2024, delivered high-impact solutions to food loss and waste in Canada with a stage-gated approach to support applicants through the innovation development cycle. The challenge was divided into 2 categories: the Business Models Streams and the Novel Technologies Streams.

Business Model Streams

• The Business Models Streams (Streams A & B) supported innovators with business model solutions that prevented or diverted food loss and waste at any point from farm to plate.
• In Stage One, 24 semi-finalists were selected to receive a $100,000 prize to continue developing their innovations.
• In Stage Two, 12 finalists received $400,000 to test their solution with at least one Canadian implementation partner and evaluate the effectiveness of their solution.
• On March 20, 2024, the Business Models Streams grand prize winners were announced: LOOP Mission and Still Good each received a grand prize of $1,500,000 to scale their solutions.
  • LOOP Mission creates beverages from fruits and vegetables that would otherwise go to waste.
  • Still Good develops business solutions for companies to transform nutrient-rich by-products that would otherwise go to waste into new food products.

Novel Technologies Streams

The Novel Technologies Streams (Streams C & D) of the Food Waste Reduction Challenge focussed on novel technologies that could extend the life of food or transform food waste into new foods or value-added products.

• In Stage One, 18 semi-finalists received $100,000 and moved on to build or complete an existing prototype of their technology.
• In Stage Two, 6 finalists received $450,000 each and moved on to the final stage of the Challenge where they tested their prototype in an operational environment with at least one implementation partner.
• On May 14, 2024, the Novel Technologies Streams grand prize winners were announced: Genecis Bioindustries Inc. and Clean Works Inc. Each received a grand prize of $1,000,000 to scale their solutions.
  • Genecis Bioindustries has developed a specialized bacteria that transforms food waste into compostable bioplastics.
  • Clean Works has developed a solution that uses hydrogen peroxide, ozone and UV to control mildew and micro-organism growth in pre-harvest (greenhouses, field crops, grapevines) fruit and vegetables.

The department's plan will see $39.4 million in savings by 2026–27 under the Refocusing Government Spending initiative.

When pressed

How does AAFC propose to refocus grants and contributions' spending?

Spending under the Agricultural Clean Technology (ACT) Program and the AgriInnovate program (AIP) will be adjusted starting in fiscal year 2024–25. Both programs are expected to sunset in 2027–28.

How do the proposed spending targets impact overall results of the programs?

The savings from the changes to the ACT program and the AIP will have minimal regional or sectoral impacts while slightly adjusting the number of projects that will be supported.

Background

Budget 2023 proposed refocusing spending on consulting, other professional services and travel by roughly 15% of planned 2023–24 discretionary spending in these areas. This will result in total government savings of $7.1 billion over five years, starting in 2023–24, and $1.7 billion ongoing. The government will focus on targeting these targets on professional services, particularly management consulting.

Budget 2023 also proposed a phase-in of a roughly 3% decrease of eligible spending by departments and agencies by 2026–27. This will lessen government spending by $7.0 billion over 4 years, starting in 2024–25, and $2.4 billion ongoing. Targets will not impact: direct benefits and service delivery to Canadians; direct transfers to other orders of government and Indigenous communities; or the Canadian Armed Forces.

AAFC has mapped out savings of $39.4 million by 2026-27 and beyond.

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The Departmental Plan outlines five types of actions to achieve projected savings:

• Relying less on professional services through greater alignment of contracting to priorities.
• Increasing automation, decommissioning legacy internal systems, avoiding costly software customizations and implementing digital tools.
• Improving internal efficiencies by ensuring that there are fewer duplicative processes, right-sizing our fleet and managing vacant positions.
• Reviewing travel expenditures through adoption of revised guidelines, processes, and enhanced monitoring.
• Adjusting a small proportion of grants and contributions expenditures. These targets will still enable the programs to meet their objectives, including achieving GHG targets.

• March 1, 2024, the Government announced an extension to the Wine Sector Support Program, investing up to an additional $177 million over the next 3 years.

When pressed

How is the government continuing to support the wine sector in its ongoing challenges?

The Government of Canada extended the Wine Sector Support Program, providing up to an additional $177 million in support for the next 3 years (2024–25 to 2026–27) to help the sector improve its competitiveness and adapt to challenges.

How else does the department support the wine sector as a whole?

The Sustainable Canadian Agricultural Partnership offers a range of federal-only programming (by way of AgriAssurance and AgriMarketing) to organizations delivering national projects that support Canada's agricultural sector, including wine. For example, the AgriAssurance Program approved up to $836,220 over 5 years in funding to the Canadian Grapevine Certification Network, to provide Canadian grape growers and wineries with the material necessary to replant or plant certified virus-free grapevines in their vineyards to ensure the long-term viability of the Canadian grape and wine sectors. The AgriMarketing Program has approved up to $1.8 million to Wine Growers Canada, to increase domestic and export sales of Canadian wine through market development, increased recognition, awareness and trust in 100% Canadian-grown and made premium wines. This investment will also protect, maintain and enhance market access for Canadian wine producers.

Will the government modify the Wine Sector Support Program to broaden its support for the wine sector writ large (for example, for grape growers)?

At this time, Agriculture and Agri-Food Canada is not seeking to expand the Wine Sector Support Program, as any such modification would take significant time, and have unintended implications for the market, Canada's trade policy and existing supply chains.

Will the government develop a national wine strategy?

The Government of Canada is actively considering the best way to ensure that our domestic sector is well positioned to grow in a way that supports resiliency and aligns with international trade objectives.

Background

In 2021, the Canadian wine industry generated approximately $2.1 billion in annual sales. There are approximately 800 wineries in Canada, and the sector is concentrated in British Columbia, Ontario, Quebec and Nova Scotia.

On April 21, 2021, Canada and Australia reached a mutually agreed solution regarding Australia's claims about the disputed Quebec measures on the sale of wine. On April 22, 2021, Australia officially withdrew its claim and both parties asked the Panel to refrain from making any findings or recommendations with respect to these measures. The wine industry requested the initiation of settlement discussions, and supported the mutually agreed solution.

On June 30, 2022, the Government of Canada repealed the federal excise duty exemption on wine, as set out in subsection 135(2) of the Excise Act, 2001.

Budget 2021 proposed to provide $101 million over 2 years, starting in 2022–23, to Agriculture and Agri-Food Canada, to implement a program to help the wine sector adapt to ongoing and emerging challenges, in line with Canada's trade obligations. Stakeholders indicated that the $101 million was $34 million short of the Budget 2022 estimate of impacts of the repeal of the excise tax ($135 million), and that a 2-year program would not provide the certainty needed to support investments. On June 16, 2022, the Government of Canada approved an additional $65 million in grant funding for the program.

The initial 2 years (2022–23 and 2023–24) of the Wine Sector Support Program provided up to $158 million in grant funding to Canadian wine licensees.

On March 1, 2024, the Government of Canada announced an extension to the program, investing up to an additional $177 million over the following 3 years (2024–25 to 2026–27).

Applications for 2024–25 were accepted from April 8, 2024 until May 24, 2024.

In 2024–25, the program approved 478 applications, representing approximately 71 million litres of production, totalling approximately $55 million in payments, which began to be released in September 2024.

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Lastly, some participants in the wine sector have expressed a desire to see the government develop a national wine strategy. In this respect, departments are actively considering the best way to ensure our domestic sector is well positioned to grow in a way that supports resiliency and aligns with international trade objectives.

• Budget 2024 included key investments to strengthen Canada's food system and advance the Food Policy for Canada's vision to ensure access to safe, nutritious, and culturally important food.
• Investments to ensure a competitive and sustainable agriculture and agri-food sector.

When pressed

How did Budget 2024 support families and communities struggling with food security?

Budget 2024 included key investments to strengthen Canada's food systems and make progress toward the Food Policy for Canada's vision to ensure access to safe, nutritious, and culturally diverse food.

These investments included $62.9 million over three years to strengthen local food security, $42.8 million to strengthen access to culturally important foods, $124.3 million for northern food security, and $1 billion for a National School Food Program.

What are the linkages between the National School Food Program and the Food Policy for Canada?

Proposed investments to strengthen the Food Policy for Canada will directly support the National School Food Program and together will address broader affordability and food access challenges. As part of the proposed expansion of the Local Food Infrastructure Fund, support will be available to improve infrastructure for school food programs.

How did Budget 2024 support farmers struggling with increasing costs?

As announced on March 25, 2024, and reiterated in Budget 2024, the interest-free limit for loans under the Advance Payments Program has been temporarily set at $250,000 for the 2024 program year instead of returning to $100,000. Building on similar changes to the program in 2022 and 2023, this measure will support approximately 11,950 participating producers by providing access to additional cash flow and interest savings to help cover their costs until they can sell their products.

How did Budget 2024 support agricultural youth?

Budget 2024 announced an additional $150.7 million for the Youth Employment and Skills Strategy in 2025-26.

Background

Local Food Infrastructure Fund

Budget 2024 announced $62.9 million over 3 years, starting in 2024–25, to renew and expand the Local Food Infrastructure Fund (LFIF) to support community organizations across Canada to invest in local food infrastructure, with priority to be given to Indigenous and Black communities, along with other equity-deserving groups.

Under the first Food Policy, $50 million over five years with an additional $20 million in top-ups in the LFIF. Funding sunsetted on March 31, 2024. LFIF supports community- based, not-for-profit organizations with a mission to reduce food insecurity by establishing and strengthening their local food system.

Northern Isolated Community Initiatives Fund

$14.9 million over 3 years, starting in 2024–25, to renew and expand the Northern Isolated Community Initiatives Fund to all regions of Inuit Nunangat to support local and Indigenous food production systems, including innovative northern food businesses, which contribute to food security in the North.

Under the first Food Policy, invested $15 million over five years in the Northern Isolated Community Initiatives Fund led by the Canadian Northern Economic Development Agency.

Canadian Shellfish Sanitation Program

Budget 2024 announced $25.1 million over 2 years, starting in 2024–25, on a cash basis, to expand the Canadian Shellfish Sanitation Program led by the Canadian Food Inspection Agency to assist Indigenous communities to safely access shellfish harvest for food, as well as social and ceremonial purposes.

Northern food security

Budget 2024 announced:

• $23.2 million in 2024-25, to Crown-Indigenous Relations and Northern Affairs Canada for Nutrition North Canada's subsidy program to lower the cost of nutritious food and other essential household items; and,
• $101.1 million over three years starting in 2024-25, to support the Harvesters Support Grant and Community Food Program Fund and promote Indigenous communities in implementing culturally appropriate, local solutions to address food insecurity.

National School Food Program

Budget 2024 announced the creation of a National School Food Program, which will provide $1 billion over five years to Employment and Social Development Canada (ESDC), Crown-Indigenous Relations and Northern Affairs Canada, and Indigenous Services Canada, starting in 2024-25, to work with provinces, territories, and Indigenous partners to expand access to school food programs.

This fulfills a commitment first put forward in Budget 2019 as part of the Food Policy for Canada to work with provinces and territories towards the creation of a National School Food Program. It also fulfills a December 2021 mandate letter commitment for the Minister of Agriculture and Agri-Food, with the Minister of Families, Children and Social Development and provinces, territories, municipalities, Indigenous partners and stakeholders to develop a National School Food Policy and to work toward a national school nutritious meal program.

Potato wart on Prince Edward Island

In October 2021, the Canadian Food Inspection Agency confirmed the presence of potato wart on two processing farms in Prince Edward Island. The investigations that followed were the largest since potato wart was first detected in Prince Edward Island in 2000 and involved the collection and analysis of almost 50,000 soil samples. Potato wart was detected in an additional 4 fields as part of the investigation.

The Minister of Agriculture and Agri-Food issued a Potato Wart Order in November 2021 to help contain, control and prevent the spread of potato wart to other parts of Canada and support continued trade, including with the United States. The Canadian Food Inspection Agency is actively working with industry and stakeholders to develop a new National Potato Wart Response Plan, which will aim to help further enhance risk mitigation measures, minimize the impact of potato wart on Canadian industry, keep trade open, and prevent potato wart from spreading. It is expected to be finalized in 2024.

Advance Payments Program

Temporary increases to the interest-free limit for loans under the Advance Payments Program provide eligible producers with interest relief and increase their access to cash flow through the program. Producers are eligible for low-cost cash advances of up to $1 million, based on the expected value of the agricultural products they will produce or have in storage. The program is delivered through 27 industry-led associations, and advances are available on over 500 crop and livestock products across Canada.

Due to exceptional circumstances, the Government temporarily increased the interest-free limit (that is, the portion of the APP advances on which the Government pays interest) from $100,000 to $250,000 for the 2022 program year, and to $350,000 for the 2023 program year. On March 25, 2024, the Government announced that the interest-free limit was set at $250,000 for the 2024 program year. It is currently set to return to $100,000 for 2025. The interest on the interest-bearing portion of advances is at competitive rates.

Sustainable pesticide management

Renewed funding for AAFC will support research into lower risk pesticide alternatives through the Alternative Pest Management Solutions (APMS) Initiative.

Youth Employment and Skills Program

The Youth Employment and Skills Strategy is the Government of Canada's commitment to help young people, particularly those facing barriers to employment, get the information and gain the skills and experience needed to access quality employment. It is a horizontal initiative led by ESDC involving 12 federal departments and agencies, including AAFC.

Agriculture and Agri-Food Canada is aware of the proposed merger, and of the results of the Competition Bureau's report.

When pressed

Will the Agriculture and Agrifood Minister ensure that the best interests of farmers are met?

This proposed merger is of significant national interest to farmers, grain companies and Canadians. A public interest assessment of a proposed transaction like this involves consulting with many stakeholders across the country. Transport Canada's public interest review process included consultations with grain and transportation industry stakeholders across the country. A public online consultation portal was also open from October 23, 2023, to December 22, 2023, ensuring Canadians were able to share their views. The results of that process and the findings of the Competition Bureau published in April, will be given careful consideration before reaching a conclusion.

• Supporting further reduction and reuse by contributing funding to Cleanfarms, a national not-for-profit industry stewardship organization that has programs in place across Canada to recover and manage plastic waste.
• Providing funding to producers and processors to develop innovative, plastic-free food storage and preservation techniques that maintain quality and shelf life. We are also increasing support for research into the potential use of bio-based plastics as a renewable alternative.

Background

Plastic use in primary agriculture

Canadian primary agriculture currently uses close to 62,000 tonnes of plastics annually in the process of growing crops and raising livestock.

Plastic use in food packaging

A recent audit of large grocery stores across Canada found that nearly two-thirds (64%) of products in select grocery sections (produce, baby food, pet food and soup) were packaged in plastic intended for single use. Additionally, single-use food and beverage packaging represented more than a quarter of the litter found on Canadian shorelines in 2020.

Growing concerns over microplastics that are generated when these items degrade in the environment and could cause harm to the ecosystem and human health. As a result, plastic waste from food packaging is being raised with increasing frequency, including in meetings with industry, US representatives, and international bodies like the Food and Agriculture Organization. Additionally, the United Nations Environment Program is spearheading an effort to develop an international treaty on plastic pollution prevention, which will implicate agriculture and agri-food.

While AAFC has no dedicated programming for plastic waste, a few programs have funded specific projects to help the food sector increase plastic sustainability or create plastics alternatives (for example, under the Agricultural Clean Technologies program and the Food Waste Reduction Challenge).

Plastic pollution reduction measures in the agriculture and agri-food sector

Proposed regulatory measures include:

• Recycled content requirements that mandate minimum levels of recycled post- consumer plastics for beverage containers and secondary food packaging.
• Requirement that Price Look-Up (PLU) stickers for produce be compostable by 2026.
• Recyclability labelling rules requiring accurate information be communicated to Canadians on whether packaging or single use plastics are recyclable, and how to dispose of them properly.
• Compost labelling rules prohibiting the terms "biodegradable" or "degradable" on plastic packaging and single use plastics and limiting the use of the term "compostable" to plastics that meet certain standards and labelling requirements.

Proposed non-regulatory measures

• A Federal Plastics Registry that would require businesses, including agri-food, to report annually, by 2026, on the quantity and types of plastic they place on the Canadian market, how it moves through the economy, and, most importantly, how it is managed at its end-of-life.
• A Pollution Prevention (P2) Planning Notice that targets primary food packaging by requiring that large grocers develop plans to reduce plastic primary food packaging waste through reduction, reuse and design for circularity. While the P2 Plans are not regulations that will be enforced, plans are mandatory and will be reviewed by ECCC for completeness. A draft P2 consultation document was published in August 2023.

The food industry has raised significant concerns over some of these proposed measures, particularly the P2 Notice. They argue that the six major retailers would be in charge of implementing corporate plans and that this could result in food manufacturers potentially having to adapt to multiple P2 approaches, which could lead to logistical issues and higher costs. It is unclear how imports would be addressed in the P2 plan and what impact this would have on domestic manufacturers. Another major concern is that fresh produce products could have very high proposed elimination targets: 75% of produce to be sold in bulk (that is, with no plastic packaging) by 2026 and 95% by 2028.

In response to the ECCC proposal, AAFC carried out a study in collaboration with ECCC to determine how much plastic packaging could be eliminated in the produce aisle while preserving fruit and vegetable quality and without compromising the variety of produce available. Results indicated that given current technology and structure, it would not be possible to meet the target of eliminating 95% of primary plastic packaging in produce. The study demonstrated that 25% of produce will need to continue to be sold prepackaged in plastic.

AAFC also undertook a reuse contract in collaboration with ECCC to explore the use of reusable plastic packaging. The report concluded that there could be some potential for reuse/refill systems with individual high-volume fast-moving consumer products distributed regionally and representing the potential for higher-than-average number of rotations. This could include products such as milk, yoghurt, cream, whipping cream, sour cream, cottage cheese, bottled water, soft drinks, juices and other drinks.

Aside from the Federal Plastics Registry, the other proposed measures depend on the outcome of a court case, anticipated in late 2024 – early 2025, related to the Canadian Environmental Protection Act (CEPA). The federal government is only able to regulate substances for environmental protection if they are listed as toxic under CEPA, therefore, ECCC moved to add "plastic manufactured items" to the list of toxic substances on Schedule 1 of CEPA through an Order in Council (OIC) on May 12, 2021. A case against the OIC was brought forward by a coalition of plastic companies, including Dow Chemical, Imperial Oil and Nova Chemicals (and supported by the Government of Alberta). In November 2023, a Federal Court judge ruled that the federal government's decision to list plastic items as toxic was unreasonable and unconstitutional, writing that the category of plastic manufactured items was too broad to be given a blanket toxicity label under federal law. The federal government has appealed this decision, and the case is currently underway at the Federal Court of Appeals.

Should the federal government's position in court be successful, ECCC will resume activities to reduce plastic waste.

• Actively engaged with the BC government and industry on the difficulties currently faced by tree fruit producers in the province.
• Make full use of our business risk management programs.
• Agreed to increase interim payment rates under AgriStability, to address short-term cash flow issues and allow for late participation. AgriInsurance is also available to provide support for production losses.
• Department granted a 6-month stay of default for 2023 Advance Payments Program advances on apples and provided repayment flexibilities for 2024 advances on cherries, plums, pears, and grapes.

When pressed

What exactly is the Government doing to support the tree fruit sector?

AAFC and the BC Government have agreed to the increase of interim payment rates from 50% to 75% as well as the initiation of late participation in the AgriStability program.

Farm Credit Canada is working directly with its customers to support them by reducing interest and re-structuring loans.

Why didn’t the Government step in to prevent the bankruptcy of the BC Tree Fruits Cooperative?

The closure of this organization was sudden and unexpected.

Background

Tree fruit receipts make up about one-third of total fruit receipts in British Columbia and about 8% of total crop receipts. Tree fruit receipts in British Columbia make up about 38% of the national total on average.

British Columbia is Canada's largest sweet cherry- and pear-producing province, accounting respectively for 96% and 53% of Canada's production in 2023.

On Friday July 26, 2024, BC Tree Fruits Cooperative, the largest fruit packer in BC, announced that they intend to wind down the cooperative.

Since 2013, AAFC has provided $9.4 million of funding through the AgriScience Program — Projects component to the British Columbia tree fruit industry to support applied research and development with the aim of genetic improvement of cherry and apple tree varieties for Canada's tree fruit industry.

The AgriMarketing program is providing funding to the BC Fruit Growers' Association and the BC Cherry Association to help the sector promote and find new export markets for cherries and Ambrosia apples.

AgriStability

The AgriStability compensation rate increased from 70% to 80% beginning in the 2023 program year, increasing support to farmers by up to $72 million per year. Under AgriStability, producers can receive a maximum payment of $3 million for a program year.

British Columbia has announced a provincial-only top-up program for producers who receive AgriStability payments in the 2024 program year. This program will pay an additional amount as if the compensation rate was 90% and the payment cap was $6.2 million. While it uses AgriStability data, it is independent from the FPT cost-share framework.

Under the framework, Canada has agreed to a request from British Columbia to initiate late participation and enhanced interim payments for the AgriStability program. For the 2024 program year, producers can receive up to 75% of their expected payment by contacting their AgriStability administrator. In addition, producers that did not enroll in the program before the deadline earlier this year can still access support as long as they apply before April 30, 2025, however that payment will be reduced by 20% to maintain an incentive for proactive enrolment.

AgriInsurance

Insurance coverage in BC is available for many commodities for yield loss, quality loss and plant loss, with different options for coverage and deductibles, depending on the product.

AgriRecovery

Should British Columbia request a formal assessment to determine if additional assistance is needed to support recovery from extreme weather, federal officials will work with the province to complete it in a timely manner.

Advance Payments Program

On March 25, 2024, the interest-free limit was temporarily increased to $250,000, continuing the trend from the 2022 and 2023 program years.

With support from the British Columbia government, the Agricultural Credit Corporation, which is an APP administrator, requested a stay of default for tree fruit producers. A stay of default was granted by the Minister on September 9, 2024, and will provide additional time and flexibilities for producers to repay their advances.

Standing Committee on Agriculture and Agri-Food, Tuesday, October 29, 2024

• The Government is committed to supporting Canada's fruit and vegetable industry.
• Our system provides for a single dispute resolution body to resolve incidents where fresh produce sellers do not receive payments they are owed.
• We will continue to engage with industry to support the resolution of disputes.

When pressed

Is the Government of Canada planning to implement a regime similar to the USA for Canadian fresh produce sellers?

Private Members' Bill C-280, an Act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, would see the establishment of a deemed trust for fresh fruit and vegetable sellers. It was studied and amended by the Standing Senate Committee on Banking, Commerce and the Economy and is currently before the Senate for debate.

Meanwhile, Canadian fresh produce sellers continue to have access to the United States market and to their dispute resolution mechanism, the Perishable Agricultural Commodities Act (PACA).

The Safe Food for Canadians Regulations enable the Fruit and Vegetable Dispute Resolution Corporation to levy strict penalties against partial or absence of payment.

Background

What is Private Member's Bill C-280?

The fresh produce industry asserts that the perishable nature of their product exposes it to higher risks of payment defaults than other industries.

Private Member's Bill C-280, An Act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (deemed trust — perishable fruits and vegetables), was introduced by the Conservative MP from York-Simcoe on June 8, 2022. Bill C-280 seeks to amend the Bankruptcy and Insolvency Act (BIA) as well as the Companies' Creditors Arrangement Act (CCAA) to grant fresh produce sellers a level of priority in insolvency proceedings so they would be paid ahead of all other creditors, otherwise known as a deemed trust.

The Standing Committee on Agriculture and Agri-Food (AGRI) completed its report on Bill C-280 (Financial Protection for Fresh Fruit and Vegetable Farmers Act) and presented the bill back to the House of Commons without amendment on September 20, 2023. Bill C-280 was then passed by the House of Commons at third reading on October 25, 2023, and is currently before the Senate. On October 31, 2024, following the Standing Senate Committee on Banking, Commerce and the Economy's (BANC) study of the bill, senators adopted the two amendments which would limit the scope of Bill C-280's protections to farmers and to those sellers who buy produce directly from the farmers in order to resell them, rather than to all sellers within the value chain.

Should Bill C-280 (as amended) pass third reading in the Senate, it will return to the House of Commons for consideration.

On June 19, 2024, as part of its study on issues facing the horticultural sector, AGRI presented a report, entitled 'Improving the Resilience of Canada's Horticultural Sector', which recommended that "the Government of Canada establish critical support for Canada's fresh fruit and vegetable sector by encouraging the Senate's speedy adoption of Bill C-280 (in its original form)."

What is the Perishable Agricultural Commodities Act?

The Canadian and American industries want Canada to implement a regime similar to the United States' Perishable Agricultural Commodities Act (PACA), a broad regulatory regime for the produce industry that includes licensing, inspection services and dispute mediation for payment issues by solvent buyers. In the case of bankruptcy, the act also includes a legislated deemed trust, which requires that a buyer's property be held in trust to secure payment of any amount owed to a seller for fresh produce sales, ahead of all other creditors (including secured creditors such as banks).

In Canada, the Department of Innovation, Science and Economic Development (ISED) has the mandate for bankruptcy and insolvency. ISED undertook a statutory review of the Bankruptcy and Insolvency Act. This included public consultations on whether to expand protections in the Act that give Canadian farmers a super-priority, whereby debts owed to them from insolvent buyers are paid ahead of all others except secured creditors. Due to potential negative effects on credit cost and availability, stakeholders outside of the fresh produce industry were not supportive of enhanced provisions.

What protections currently exist in Canada?

Canada has taken several steps to achieve comparability with outcomes under PACA. For instance, under the Safe Food for Canadians Regulations, which came into force on January 15, 2019, the Fruit and Vegetable Dispute Resolution Corporation (DRC) is permitted to act on behalf of the Minister of Agriculture and Agri-Food as the single dispute resolution body and ensure DRC members, all along the supply chain, adhere to a unified set of trading rules. The DRC also governs against slow, partial or no pay by buyers, with strict penalties for non-payment. The DRC is expected to resolve most non- payment issues in Canada and will achieve comparable results to that of the U.S. in terms of non-payment from solvent buyers. In 2023, the DRC handled a total of 37 informal complaints (averaging $62,000 in value) and 15 formal complaints (averaging $74,000 in value) on behalf of its 1,716 members. However, insolvency losses within the Canadian fresh produce sector are small, with total losses to all creditors in fresh produce insolvencies averaging less than 0.3% of total sales over the last five years. A total of 58 insolvencies and 15 proposals were filed in 2023 with $51.8 million in total net liabilities among produce wholesalers, supermarkets and produce markets. However, most of these insolvencies fall under supermarkets which have many non- produce creditors, with produce sellers comprising only a share of the value.

Both Agriculture and Agri-Food Canada and ISED had significant engagement with the Canadian Produce Marketing Association (CPMA), the Fruit and Vegetable Growers of Canada (FVGC) and the DRC on this issue. At a meeting on September 13, 2019, AAFC officials met with the CPMA, FVGC (then known as the Canadian Horticultural Council), DRC and other industry leaders to reiterate the policy implications the creation of a deemed trust would have on the Bankruptcy and Insolvency Act and ensure that the Canadian fresh produce industry understood that any future policy consideration would require compelling and significant evidence of significant harm. This has not yet been fully demonstrated by the Canadian fresh produce industry.

• The Government of Canada is committed to supporting the supply management system by respecting its pledge to not provide additional market access for supply-managed goods.
• The Government continues to encourage the Senate to accelerate its work on delivering an outcome that is in line with the Government's pledge.
• The Government strongly supports supply management and has delivered on its commitment to provide full and fair compensation to producers and processors in the sector for the impacts of recent trade agreements.

When pressed

What is the Government of Canada’s position on this bill?

• We recognize the different views that the agriculture sector has on this legislation.
• It is important to find the right balance in Canada’s free trade negotiations.
• The Government of Canada has a longstanding policy to defend the integrity of Canada’s supply management system for dairy products, poultry, and eggs.

Would this Bill impact negotiating dynamics or principles in Agriculture?

• An ambitious free trade agenda will continue to be a priority for Canada.
• We will always strongly defend the agriculture sector's interests and seek commercially meaningful access for our high-quality and safe products.
• Canada's approach on supply management in free trade agreements has not impacted its ability to negotiate ambitious free trade agreements, including in the area of agricultural market access.
• Negotiators continue to be guided by the Prime Minister's commitment to not provide any new market access with respect to supply-managed products in future trade negotiations.

Does this Bill prioritize one Canadian agriculture sector over other sectors of the Canadian economy?

• At the negotiating table, Canada represents the interests of the Canadian economy, including the entire agriculture sector and seeks commercially meaningful access for our high-quality and safe products.
• Providing market access for supply-managed products in recent trade deals was difficult and not taken lightly – but was ultimately necessary to get these deals done.
• We evaluate trade deals based on the overall benefits for Canadians and the Canadian economy, including agriculture.

Background

Private Members Bill C-282 seeks to amend the Department of Foreign Affairs, Trade and Development Act to prevent the Minister of Foreign Affairs from making commitments that would increase tariff rate quota (TRQ) volumes or reduce over-quota tariff rates for dairy products, poultry or eggs.

Bill C-282 is identical to the previous Bill C-216, which was introduced in the 43rd Parliament, also by the Bloc Québécois. Bill C-216 passed the committee stage but died on the order paper after the 43rd Parliament was dissolved in advance of the federal election in 2021.

Bill C-282 was introduced in the House of Commons on June 13, 2022, by BQ Member of Parliament Luc Thériault (Montcalm). The bill was studied by the Standing Committee on International Trade (CIIT) from February 16, 2023 to April 20, 2023.

Witnesses included AAFC and GAC officials and agriculture stakeholders, from supply managed sectors as well as of export-oriented sectors. Within the agriculture sector, there were opposing views on this legislation. Supply-managed stakeholders (such as Dairy Farmers of Canada) overwhelmingly supported the bill, while export-oriented stakeholders (for example, the Canadian Agri-Food Trade Alliance) have strongly opposed it. The supply-managed sectors argued that continued concessions in supply management are unsustainable. The export-oriented sectors argued that passing the Bill sets a dangerous precedent by undermining Canada’s reputation as a trading nation, while putting future free trade agreements at risk.

The bill was adopted by the Standing Committee on International Trade (CIIT) without amendment and completed third reading in the House of Commons on June 21, 2023 by a vote of 262 to 51. While the Bill received multi-partisan support (including from the Leader of the Opposition), the large majority of the votes against belonged to members of the Conservative Party. Subsequent to the bill completing the legislative process in the House of Commons, the bill was sent to the Senate of Canada and completed first reading on the same day (June 21, 2023).

In the Senate during second reading, eight debates were held between September 2023 and April 2024. During these debates, five senators rose to speak in support and three senators spoke against it (including members of Foreign Affairs and International Trade (AEFA) Committee Senators Harder and Woo). In a Hill Times article on August 16, 2023, Senator Boehm, AEFA chair, stated that he did not intend to support the bill. His main concerns are: the impact that the bill would have on Crown prerogative with respect to trade negotiations; that it would unduly limit the ability of negotiators — in particular vis-à-vis the 2026 CUSMA review; and his perspective that it was not rigorously debated in the House of Commons.

On April 16, 2024, Bill C-282 was voted on at second reading in the Senate. The bill was adopted on the following division: yeas: 58, nays: 12, abstentions: 2, following which it was referred to the AEFA committee for further study. Its study began on September 26, 2024.

On April 22, 2024, an opinion piece by a number of former senior public officials, including former trade negotiators, was published urging the Senate to not approve the bill, noting that the legislation would seriously hinder Canada in future negotiations, and could make supply management an explicit priority negotiating target, including in the context of the upcoming CUSMA review.

During the AEFA study, agri-food associations, federal parliamentarians, subject matter experts, as well as government officials have appeared, providing views for and against the bill. On November 6, 2024, the Bill was adopted by AEFA with an amendment and observations. The Bill was reported back to the Senate, as amended. The amendment is as follows:

Clause 1, page 1, after line 17:

(2.2) sub-section 2.1 does not apply to a commitment made on behalf of Canada:

1. An international trade treaty or agreement that existed upon the coming into force of that subsection;
2. The renegotiation of an international trade treaty;
3. An international trade treaty or agreement in the course of being negotiated.

The Senate will now debate the amendment at Report Stage until they agree to move to a vote.

Supply management system

Canada's supply management system, which applies to dairy, poultry and egg products, rests on three pillars: production controls, import controls and pricing mechanisms.

Canada's import control measures for supply-managed products, including tariff rate quota (TRQ) volumes and over-quota tariffs, are reflected in Canada's international trade obligations, including those at the World Trade Organization, and in regional and bilateral free trade agreements. Bill C-282 primarily concerns the import control pillar of supply management.

• If approved, Agriculture and Agri-Food Canada's 2024–25 Supplementary Estimates (B) of $123.4 million would provide funds to support the agriculture and agri-food sector.
• Approximately 49% of the funds would support the implementation of federal and cost-shared initiatives under Sustainable Canadian Agricultural Partnership, a five-year (2023–2028), $3.5 billion investment by federal, provincial and territorial governments to strengthen and grow Canada's agriculture and agri-food sector.
• As announced in Budget 2024, we are investing $19.9 million in the Local Food Infrastructure Fund to strengthen food security and $3.4 million in support of sustainable pesticide management.

Background

Agriculture and Agri-Food Canada's (AAFC) 2024–25 Supplementary Estimates (B) total $123.4 million, which, when added to the 2024–25 Main Estimates, the 2024–25 Supplementary Estimates (A), amounts carried forward from the prior year and amounts transferred from TB central votes, bring the Department's total 2024–25 Spending Authorities to Date to $3.991 billion.

• On November 1, 2024, The Canadian Dairy Commission announced a decrease to the farm gate price of less than one cent per litre of milk, effective February 1, 2025.
• The price of milk at the farm is set using an annual process which accounts for variations in cost of production and inflation as well as other external factors.
• We strongly believe in our supply management system, which ensures a supply of high-quality products at fair prices while supporting farm families across the country.

When pressed

How might this price change impact the retail price of milk and dairy products?

The change results in a decrease of less than 1 cent per litre at the farm gate price.

However, the price paid to dairy farmers is only one factor influencing consumer prices, which are also affected by other supply chain factors like transportation, distribution and packaging costs.

How is the government addressing concerns about milk price-setting transparency?

As part of its commitment to transparency, the Canadian Dairy Commission has taken steps to provide Canadians and dairy stakeholders with more information about the way the price of milk is set in Canada.

Background

Next milk price adjustment

The Canadian Dairy Commission (CDC) calculates the price of milk at the farm using the National Pricing Formula (50% of the annual change in the indexed cost of production (COP) and 50% of the annual change in the consumer price index [CPI]). The result is then evaluated considering exceptional circumstances criteria to account for unanticipated effects. These criteria can be used to stabilize the results of the pricing formula over time.

The November 1 announcement is the result of a process that started on October 4, 2024. At the time the CDC informed stakeholders of the results of the cost of production survey, the result of the National Pricing Formula, and the fact that stakeholders can invoke exceptional circumstances.

• Stakeholders did not invoke exceptional circumstances this year.
• While the 2024 indexed cost of production has decreased by 2.93% compared to last year, the CPI has increased by 2.89% over the last two 12-month periods ending August 2024. Using the cost of production and CPI figures in the pricing formula, the CDC obtains a net potential adjustment of -0.02%.
• On November 1, The CDC announced a -0.02% change of the milk component Class 1 to 4, excluding Class 4(a) SNF and Special Classes.
• Once applied to total milk production (that is, including sales in all classes), the change in milk component prices resulting from the calculation will result in a decrease in producer revenues of less than 1 cent per litre.
• The net impact of this decrease on retail prices is unknown since retail prices are also influenced by other factors in the supply chain such as labour, transportation, distribution and packaging costs. A change in price paid to producers for their milk does not necessarily translate to a similar retail price change as it is only one of the elements that affect prices for consumers.
• Once reviewed and approved for recommendation, prices will be presented to the P5 Supervisory Body and the WMP Coordinating Committee for approval by e-vote on November 15, 2024.
• Prices will be adjusted on February 1, 2025.

Consumer price increases

Consumer prices for dairy products depend on the fat and solids non-fat (protein and other solids) content of finished products.

Raw milk pricing is one of many factors influencing the wholesale and retail price for dairy products paid by consumers. Other factors include the balance between supply and demand, seasonality, and costs throughout the supply chain related to processing, transportation, distribution, and packaging.

In the last 12 months ending in September 2024, the Consumer Price Index for dairy products has increased at a slightly slower rate than overall food inflation (2.7% versus 2.8%). The situation is different for poultry, as prices increased at a slower rate of 1.1%, while egg prices increased at a higher rate, 5.0%. Inflation across other categories that are not supply-managed varied further, including beef (9.2%), pork (3.7%), fresh fruit (1.6%), and fresh vegetables (4.4%) for the same period.

• Our government is committed to ensuring tax fairness and to seeing farm families succeed.
• Recent changes to the capital gains tax will benefit many operators of small to medium sized farms, especially after the Canadian Entrepreneurs' Incentive is fully rolled out.
• Budget 2024 increased the lifetime capital gains exemption to $1.25 million for all Canadians, including farm families.
• This government also made amendments to the Income Tax Act that make it easier for farming families to pass their farm on to the next generation.

When pressed

The Standing Committee on Agriculture and Agri-Food has heard from a farmer of a medium sized operation that these changes have prevented him and his wife from retiring. How are they benefitting his family?

The Canadian Entrepreneurs' Incentive will begin rolling out next year, and by 2029 will reduce the capital gains taxes paid by many eligible operators of small to medium sized farms. Additionally, farmers already benefit from a higher lifetime capital gains exemption of $1.25 million.

How is the new capital gains inclusion rate supporting farmers?

Once the Canadian Entrepreneurs' Incentive is fully implemented, entrepreneurs with capital gains on eligible business assets of up to $6.25 million will be better off than before. This includes the vast majority of small- and medium-sized farms in Canada.

Background

Significant changes to capital gains taxation were announced in Budget 2024:

• Effective June 25, 2024, the proportion of capital gains realized from the sale of assets that are taxable will increase:
  • For individuals, the first $250,000 of capital gains in a given year will continue to be taxed at a 50% inclusion rate; any further capital gains will be taxed at a 66.67% inclusion rate.
  • For corporations and trusts, the inclusion rate will increase from 50% to 66.67% on all capital gains.
• The Lifetime Capital Gains Exemption, which provides a tax exemption on capital gains from the sale of qualified small business shares and qualified farms and fishing properties will increase from $1 million to $1.25 million for dispositions occurring on or after January 1, 2024, and be indexed to inflation starting in 2026.
• A new Canadian Entrepreneurs' Incentive will be introduced that will allow eligible individuals to have a reduced inclusion rate (33.3% versus. 66.7%) on up to $2 million of capital gains from the sale of qualifying business shares over their lifetime and to be phased in annual increments of $400,000, until 2029.

Budget 2024 states that these changes have several anticipated effects on businesses:

• Canadians with capital gains on eligible business assets of $2.25 million and below will be better off.
• By 2029, entrepreneurs with capital gains on eligible business assets of up to $6.25 million will be better off.

Farm businesses are structured in different ways, with roughly 50% of farms being sole proprietorships, 23% being partnerships, and 22% being family or non-family corporations. A farm's structure may affect the tax it pays on capital gains. Broadly speaking, almost all farm businesses should benefit from the changes to the Lifetime Capital Gains Exemption.

The proposed changes will most heavily impact farms with significant farmland holdings, such as grain and oilseed farms. These farms have experienced a significant increase in the value of their farm assets and net worth, as farmland values increased over the past years. Over the past ten years alone, the value of farmland in Canada has, on average, more than doubled, according to Statistics Canada data.

• Farmers are directly impacted by climate change and its effects are becoming increasingly unpredictable and more devastating on their operations and livelihoods.
• Pricing carbon pollution is considered one of the most effective ways to reduce greenhouse gas emissions that cause climate change, which is why establishing a national price on carbon pollution remains a key federal commitment.
• The Government recognizes the important efforts that Canadian farmers continue to make in the fight against climate change, and the federal carbon pricing system has been specifically designed to account for the agriculture sector's unique circumstances.
• We continue to work with farmers to find win-win solutions for reducing GHG emissions while at the same time enhancing farm productivity. This includes an investment of over $1.5 billion in programs aimed at supporting climate change action in the agriculture sector.

When pressed

How is the Government ensuring that the federal carbon pollution pricing system does not create an unreasonable burden on Canadian farmers?

We understand the unique challenges faced by the agriculture sector and have designed the carbon pricing system to reflect these challenges.

Approximately 97% of GHG emissions from the agriculture sector are not subject to federal carbon pollution pricing, including any emissions from crop and livestock production. We also provide exemptions for gasoline and diesel used in eligible farming activities, and commercial greenhouse operators are eligible for 80% relief from the fuel charge on natural gas and propane.

A portion of the proceeds from the price on pollution is being returned directly to farmers in backstop jurisdictions through a refundable tax credit. It is estimated that farmers would receive $100 million in the first year.

What is the government doing to support farmers facing increasing costs due to pollution pricing?

We recognize that pollution pricing can increase the costs of grain drying and heating for those farmers who use fossil fuels.

As announced in Budget 2021, a portion of the proceeds from the price on pollution is being returned directly to farmers in backstop jurisdictions via a credit which is available to all eligible farms. The tax credit is based on eligible farm expenses, using a standard payment rate across farms.

In addition, the Canada Carbon Rebate (CCR) is available to all eligible residents, including farm families. Families living in small communities or rural areas, including farmers, are eligible for the rural supplement.

We have also made grain drying a priority under the Agricultural Clean Technology Program. The program has prioritized $50 million for the purchase of more efficient grain dryers for farmers across Canada under the Adoption Stream.

Through the program, we have tripled the funding for cleantech on farms, including for renewable energy, precision agriculture, and energy efficiency. This will provide an opportunity for the agriculture sector to increase adoption of clean technology on the farm, resulting in improved operational efficiency and decreased greenhouse gas emissions.

How will the Sustainable Agriculture Strategy help mitigate climate change?

The Government of Canada is developing a Sustainable Agriculture Strategy to support the agriculture sector's actions on climate change and other environmental priorities towards 2030 and 2050.

Climate mitigation is one of the strategy's five priority areas.

The strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada's role as a global food provider.

As part of strategy development, we have been working with the sector to identify pathways to lowering GHG emissions that also result in economic and social benefits.

Background – Bill C-234, An Act to Amend the Greenhouse Gas Pollution Pricing Act

Pricing carbon pollution is one of the most effective ways to reduce greenhouse gas emissions that cause climate change, which is why establishing a national price on carbon pollution is a key federal commitment. It has been implemented in provinces and territories that choose to adopt it or that do not have a carbon pollution pricing system that meets the federal benchmark stringency requirements.

In provinces or territories where the federal carbon pollution pricing system applies, as established by the Greenhouse Gas Pollution Pricing Act, biological emissions from animal and crop production are not covered by pollution pricing.

Exemptions are also provided for the agriculture sector for gasoline and diesel used on farms, and commercial greenhouse operators are eligible for 80% relief from the federal fuel charge on marketable natural gas and propane.

AAFC has estimated that about 97% of the greenhouse gas emissions generated by farming activities are exempt from, or not subject to, federal carbon pollution pricing. Natural gas and propane used on farms is not exempt from the federal fuel charge and represents approximately 4% of agricultural emissions. The total impact on farm operations depends on a large number of factors, including farm size, type, location, and weather. In non-backstop jurisdictions, where a provincial or territorial pricing system applies, most agriculture emissions are exempt, with the exception of Quebec, where all fuels used in the agriculture sector are covered by its pricing system.

Private Member’s Bill C-234, sponsored by Ben Lobb (Conservative), seeks to amend the Greenhouse Gas Pollution Pricing Act to expand fuel charge relief for farmers by amending the definition of “eligible farming machinery” to include property used for the purpose of heating and cooling a building or similar structure and modifying that definition to specifically include grain dryers. The bill also modifies the definition of “qualifying farming fuel” to include marketable natural gas and propane.

The bill passed the vote in the House of Commons on March 29, 2023, and on December 12, 2023, it was adopted in the Senate with amendments to remove a proposed exemption for natural gas and propane used to heat or cool buildings or similar structures used for raising or housing livestock and growing crops, and restricting the sunset clause to three years from eight. The bill has been sent back to the House of Commons for consideration of these amendments.

Recognizing that many farmers use natural gas and propane in their operations, the Government of Canada implemented the Return of Fuel Charge Proceeds to Farmers Tax Credit in order to return a portion of fuel charge proceeds to eligible farm businesses in backstop jurisdictions. To be eligible, farming businesses must be a Canadian-controlled private corporation and have fewer than 500 employees. The payment rate of the refundable tax credit is established on an annual basis and is based on the number of employees that a business has in that year. The refundable tax credit for farmers does not undermine the effectiveness of pollution pricing because it does not return fuel charge proceeds in direct proportion to a farm’s actual natural gas or propane use, but rather according to the approximate size of the farm as measured by its total operating expenses.

The Canada Carbon Rebate is also available to eligible individuals and their families to help offset the cost of federal carbon pollution pricing. Residents of small and rural communities, including farmers, can receive a 20% supplement of the baseline amount.

Some farming businesses may also be eligible for the Canada Carbon Rebate for Small Businesses, which will return over $2.5 billion in proceeds from the price on pollution directly to small- and medium-sized businesses in backstop jurisdictions through a refundable tax credit. The Canada Carbon Rebate for Small Businesses can help offset the cost of pollution pricing in addition to what farmers may also be eligible for under the Canada Carbon Rebate for individuals and families and the Return of Fuel Charge Proceeds to Farmers Tax Credit.

Since 2021, the Government has invested over $1.5 billion into supporting farmers with new technologies and farming practices to reduce GHG emissions and improve farm performance. This includes the Agricultural Climate Solutions – Living Labs Program, Agricultural Climate Solutions – On-Farm Climate Action Fund, and the Agricultural Clean Technology Program.

The Government of Canada is also developing a Sustainable Agriculture Strategy as a means to support the agriculture sector’s actions on climate change and other environmental priorities towards 2030 and 2050. The strategy is a coordinated federal plan to establish a long-term vision and strategic approach to agri-environmental issues, including climate adaptation and resilience, climate change mitigation, water, biodiversity, and soil health. The strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada’s role as a global food provider.

Commercial greenhouse operations in Canada

In 2023, there were a total of 920 commercial greenhouse vegetable operations in Canada producing 802,163 metric tons of vegetables, representing a 7% increase in production compared to 2022. Total sales of greenhouse fruit and vegetables rose 9% from 2022 to reach $2.5 billion in 2023 - continuing the annual increases that began in 2013. The value of greenhouse vegetable exports rose 19% from 2022 to reach approximately $1.7 billion in 2023. The value of greenhouse vegetable exports is the highest of all fresh produce (fruits, greenhouse vegetables, mushrooms, field vegetables and potatoes) in Canada, accounting for 48% in terms of value of all fresh produce exports.

The majority of Canadian greenhouse facilities are highly automated with growers typically investing in the latest technology available. Growers are continuously seeking to obtain improved and advanced technology to increase production efficiency, reduce labour costs/inputs, and enhance product quality. These innovative technologies have allowed farmers to extend the natural harvest seasons and fuelled continuous efficiency gains, which has increased their competitiveness and improved product quality.

As it stands currently, greenhouse growers' use of CO2 from a natural gas-powered system is the best option available in terms of meeting growers' needs for on-site, on-demand energy management, and high fuel efficiency. Greenhouse growers' energy needs are driven by several factors including the timing of the crop's carbon dioxide demands (peak photosynthesis in the daytime dictates natural gas consumption).

• The agriculture and agri-food sector plays a crucial role in supporting our economy and feeding Canada and the world. At the same time, producers and processors have been working to make their operations more sustainable.
• Steps need to be taken to minimize greenwashing, which undermines our environmental progress and ultimately hurts those who are making legitimate environmental claims. However, it is essential that these efforts do not discourage or slow down the important progress that the agriculture and agri-food sector is already making.
• The sector has expressed significant concerns with the proposed amendments to the Competition Act. The Government is committed to working with the sector in order to provide advice to the Competition Bureau and ensure that the implementation of these provisions does not put an undue cost or burden on those making genuine efforts to improve Canada's sustainability.

When pressed

What measures are you taking to limit undue burden and negative economic impacts on the agricultural sector?

AAFC will continue to work closely with stakeholders to ensure we understand their concerns. AAFC officials will also collaborate closely with other federal departments to better understand implications and potential mitigation measures for other sectors of the economy.

Once the Competition Bureau releases the draft guidance on the implementation of the provisions (expected December 2024), AAFC will review and work closely with stakeholders to provide coordinated feedback and ensure that these provisions do not put an undue cost or burden on those who are making genuine environmental efforts.

Background

The Competition Act in Canada has recently been updated with new provisions specifically targeting greenwashing, which came into effect on June 20, 2024. These amendments require businesses to have adequate and proper testing or substantiation to support any environmental claims they make about their business or its activities.

Key points include:

• Testing requirements: Businesses must ensure that any claims about the environmental benefits of their products or services are backed by adequate and proper testing.
• Substantiation of claims: Representations about the environmental benefits of a business or its activities must be substantiated in accordance with internationally recognized methodologies.
• Reverse onus: The burden of proof lies on the business making the environmental claim.
• Private rights of action for greenwashing claims: Starting June 20, 2025, Bill C-59 will allow private parties to directly bring actions for deceptive advertising before the Tribunal if they can demonstrate "public interest." This means individuals and businesses won't need to rely solely on the Bureau to address greenwashing complaints.

Current status

• From July 22-September 27, 2024, the Competition Bureau held a public consultation to gather feedback on these new provisions, aiming to develop clear enforcement guidelines.
• The written responses to the consultation on the Competition Act's new greenwashing provisions are publicly available on the Competition Bureau's website.
• These responses include feedback from a wide range of stakeholders, such as industry associations, environmental groups, businesses, and individuals.
• The submissions cover various perspectives on the new provisions, including challenges and suggestions for effective implementation.
• The Bureau is preparing draft guidelines on the provisions and intends to release them by the end of the calendar year, for further stakeholder comments.
• The final version of the guidelines, expected to be published in June 2025, will set out the Bureau's approach and could include some hypothetical examples.

Considerations

Potential impact to the sector: The new greenwashing provisions could have a negative effect on environmental and sustainability reporting within the agriculture sector. Some industry players may back away from making legitimate sustainability claims (particularly as it relates to greenhouse gas emissions) over concerns of being accused of greenwashing. This could also have an impact on genuine marketing efforts domestically and could impact the ability of Canadian products to compete in international markets where claims over environmental impacts will not be subject to the same burden of proof.

Increased legal risk to the sector: Starting June 20, 2025, private parties will have the ability to directly apply to the Competition Tribunal to challenge specific types of anti-competitive conduct. This new provision will empower the Tribunal to mandate monetary payments from those found in violation of the Competition Act to individuals affected by such conduct.

Considerations at the Standing Senate Committee on National Finance: During Senate review of Bill C-59, while the Standing Senate Committee on National Finance declined to make amendments that would have risked delays to implementing the Fall Economic Statement, they did make certain observations with respect to the greenwashing provisions. The committee stated that meaningful consultation to set out clear guidelines as to what may be considered deceptive would be important. The committee also expressed the view that the analysis should also include federal and other Canadian best practices, such as those set out by Environment and Climate Change Canada.

Stakeholder reactions: Many Canadian companies and associations in the agriculture and agri-food sector will be affected by the new greenwashing provisions. Some agriculture groups think that the new provisions put people and companies at legal risk if found liable about claims to environmental benefits that do not stand up to thresholds or standards (which are not yet defined).

Common concerns from the sector

1. Lack of clarity and guidance: Many responses highlight the need for clear definitions and guidance on terms like "adequate and proper testing" and "internationally recognized methodologies."
2. Complexity and diversity of methodologies: The evolving nature of environmental methodologies and the diversity of practices across different sectors make it challenging to comply with the provisions.
3. Risk of frivolous claims: The potential for frivolous investigations and legal actions due to the reverse onus provision is a significant concern.
4. Chilling effect on sustainability efforts: Fear of legal repercussions may discourage businesses from making environmental claims, hindering innovation and transparency.
5. Need for sector-specific considerations: Different sectors, such as agriculture and food production, have unique challenges and practices that need to be considered in the enforcement of the provisions.

Common recommendations from the sector

1. Provide clear and flexible guidance: Issue clear, non-prescriptive guidance that accommodates the evolving nature of environmental methodologies and supports transparency.
2. Recognize existing standards: Accept existing certifications and standards as valid evidence of environmental claims to reduce the burden on businesses.
3. Balance burden of proof: Ensure that those making accusations of greenwashing provide some level of evidence before an investigation proceeds.
4. Allow for a transition period: Implement a reasonable transition period to allow businesses to adjust to the new provisions.
5. Encourage transparency and innovation: Foster an environment where businesses are encouraged to communicate their sustainability efforts without fear of severe penalties or frivolous legal actions.
6. Engage stakeholders: Collaborate with industry stakeholders to develop practical and effective guidelines that support sustainability effort.

Producers have long been responsible stewards of the land and are already adopting sustainable practices. However, we recognize that additional support is needed to reach Canada's climate objectives and to avert the worst impacts of climate change.

Since 2021, our government has announced $1.5 billion in initiatives for climate change mitigation and adaptation in the agriculture sector.

The Sustainable Canadian Agricultural Partnership was launched in 2023, with a priority of addressing climate change and advancing environmental sustainability. It aims for a cumulative greenhouse gas emission reduction outcome of three to five megatonnes over five years.

We are also developing a Sustainable Agriculture Strategy that will outline a shared vision for long-term action on climate change and other environmental priorities in the sector.

When pressed

How is the Government ensuring that the federal carbon pollution pricing system does not create an unreasonable burden on Canadian farmers?

We understand the unique challenges faced by the agriculture sector and have designed the carbon pricing system to reflect these challenges.

Approximately 97% of greenhouse gas emissions from the agriculture sector are not subject to federal carbon pollution pricing, including any emissions from crop and livestock production. We also provide exemptions for gasoline and diesel used in eligible farming activities, and commercial greenhouse operators are eligible for 80% relief from the fuel charge on natural gas and propane.

A portion of the proceeds from the price on pollution is being returned directly to eligible farm operations in backstop jurisdictions through a refundable tax credit. In addition, the Canada Carbon Rebate for Small Businesses for eligible farm businesses and the Canada Carbon Rebate for eligible residents, including farm families, can help offset the cost of federal carbon pollution pricing.

What actions has the Government taken to reduce methane emissions from the agriculture sector?

In October 2021, we confirmed our support for the Global Methane Pledge, which aims to reduce global methane emissions from all sources by 30% below 2020 levels by 2030. In support of the Global Methane Pledge, Environment and Climate Change Canada published Canada's Methane Strategy in September 2022, which outlines existing and upcoming measures targeting methane emissions reductions from the three key emitting sectors, including the agriculture sector. We intend to continue working with the sector to determine the best path forward for reducing emissions.

Launched in November 2023, the Agricultural Methane Reduction Challenge will provide up to $12 million to advance innovative, low-cost, and scalable practices, processes, and technologies that reduce enteric methane emissions produced by cattle. In the summer of 2024, the 13 semi-finalist projects were announced as a part of the first stage of the challenge.

In December 2023, Environment and Climate Change Canada published a draft protocol "Reducing Enteric Methane Emissions from Beef Cattle federal offset" for a 60-day public comment period to seek public input to inform the preparation of the final protocol. An offset protocol for the avoidance of manure methane emissions through anaerobic digestion and other treatments is also currently in development.

AAFC will continue to work with key stakeholders and partners, including through the development of the Sustainable Agriculture Strategy, to better understand barriers and opportunities for reducing methane emissions in the agriculture sector.

Budget 2022 committed $100 million to the federal granting councils to support sustainable agriculture to fight climate change. Nearly all of this funding is being delivered through the Sustainable Agriculture Research Initiative by Innovation, Science and Economic Development Canada in collaboration with Agriculture and Agri-Food Canada. This initiative will support research on transformative solutions for a sustainable, resilient and profitable agriculture sector in a net-zero economy - including reducing methane emissions from beef and dairy cattle through improved management practices and technologies.

What is the Government doing in response to nitrous oxide emissions from synthetic fertilizer application?

We have set a national target to reduce emissions from fertilizers by 30 percent below 2020 levels by 2030. The target is focused solely on reducing emissions and does not represent a mandatory reduction in the amount of fertilizer used on the farm. The goal is to reduce emissions while maintaining or enhancing yields and profitability.

Through the Sustainable Agriculture Strategy Advisory Committee, a multi-stakeholder, expert-driven Fertilizer Emissions Reduction Working Group was created to provide advice and guidance on the development of an approach to reach the target. The Working Group met regularly throughout its one-year term, ending in May 2024, and held discussions focused on economic policy tools, innovation and research and development, beneficial management practice adoption and implementation, data and measurement, and extension and communication. In June 2024, The Working Group submitted its recommendations and advice to the Advisory Committee that will help guide the development of a collaborative approach for reducing emissions from fertilizer application in Canada's agriculture sector.

We look forward to working with provinces and territories, industry partners, and Canadian farmers who are already taking action to reduce greenhouse gas emissions, sequester carbon and continuously improve their operations to ensure they remain sustainable, productive, and competitive.

How will the Sustainable Agriculture Strategy help mitigate climate change?

The Government of Canada is developing a Sustainable Agriculture Strategy to support the agriculture sector's actions on climate change and other environmental priorities towards 2030 and 2050. Climate change mitigation is one of five priority areas of the Strategy.

The strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada's role as a global food provider. As part of developing the strategy, we have been working with the sector to identify pathways to lowering emissions that also result in economic and social benefits.

Background

The sector has demonstrated a commitment to sustainable practices that help protect Canada's soil, air, water, biodiversity and climate change. However, the sector accounts for 10% of Canada's total greenhouse gas (GHG) emissions through crop production, animal production, and on-farm fuel use. Agricultural lands can also act as "carbon sinks" by storing (or sequestering) carbon in the soil, reducing the amount of carbon in the atmosphere.

The $3.5-billion, 5-year Sustainable Canadian Agricultural Partnership aims to achieve a three-to-five megatonne reduction in greenhouse gas emissions and includes a $250-million federal, provincial and territorial cost-shared Resilient Agricultural Landscape Program to help producers conserve and enhance the resiliency of agricultural landscapes.

Since 2021, the Government has invested over $1.5 billion into supporting farmers with new technologies and farming practices to reduce emissions and improve farm performance. This includes the $185-million Agricultural Climate Solutions—Living Labs, $704.1-million Agricultural Climate Solutions—On-Farm Climate Action Fund, and the $441.4-million Agricultural Clean Technology Program, including the $12-million Agricultural Methane Reduction Challenge.

The Government has also set a national target to reduce emissions from fertilizer application by 30% below 2020 levels by 2030 and is working with fertilizer manufacturers, farmers, provinces and territories to develop an approach to meet it. The target does not represent a ban or mandatory reduction in the amount of fertilizer that can be used on farms, but rather is intended to build on progress already made by Canadian farmers to reduce emissions and apply fertilizers more efficiently.

Sustainable Agriculture Strategy

The Government of Canada is developing a Sustainable Agriculture Strategy as a means to support the agriculture sector’s actions on climate change and other environmental priorities towards 2030 and 2050. The strategy is a coordinated federal plan to establish a long-term vision and strategic approach to agri-environmental issues, including climate adaptation and resilience, climate change mitigation, water, biodiversity, and soil health. The strategy will build on past and current successes, recognizing action already taken by producers to meet environmental objectives while growing production and supporting Canada’s role as a global food provider.

Carbon pollution pricing

Establishing a national price on carbon pollution is a key federal commitment under the Pan-Canadian Framework on Clean Growth and Climate Change. The Government of Canada has implemented a carbon pollution pricing legislation (backstop) effective January 1, 2019, in provinces and territories that choose to adopt it or that do not have a carbon pollution pricing system that meets the federal benchmark stringency requirements and carbon price benchmark rising to $170 per tonne in 2030.

Private Member's Bill C-234 seeks to amend the Greenhouse Gas Pollution Pricing Act to expand fuel charge relief for farmers with respect to the use of propane and natural gas. Bill C-234 passed the vote in the House of Commons on March 29, 2023, and was adopted in the Senate on December 12, 2023. It included amendments to remove the exemption for natural gas and propane used to heat or cool buildings as well as similar structures used for raising or housing livestock, growing crops, and restrict the sunset clause to three years from eight. Bill C-234 has now been sent back to the House of Commons for consideration of the amendments made by the Senate.

There are 3 distinct payments to help farmers offset the cost of federal pollution pricing: the Return of Fuel Charge Proceeds to Farmers Tax Credit, the Canada Carbon Rebate (CCR) for Small Businesses for eligible farm businesses, and the CCR for eligible residents, including farm families (that is, families with one or more farm owners or operators).

The Return of Fuel Charge Proceeds to Farmers Tax Credit returns a portion of the fuel charge proceeds directly to farm operations in provinces where the fuel charge applies, which currently includes Ontario, Manitoba, Saskatchewan, Alberta, Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Yukon and Nunavut. The credit amount available to farmers will be equal to the eligible farming expenses in the calendar year when the fuel charge year starts, multiplied by a payment rate.

As outlined in Budget 2024, some farming businesses may also be eligible to receive the Canada Carbon Rebate, which will return over $2.5 billion in proceeds from pollution pricing directly to small- and medium-sized businesses in backstop jurisdictions. To be eligible, farming businesses must be a Canadian-controlled private corporation and have fewer than 500 employees. The amount or payment rate of the refundable tax credit has not yet been specified, but it will be based on the number of employees that a business has in that year. The CCR for Small Businesses can help offset the cost of pollution pricing in addition to what farmers may also be eligible for under the Canada Carbon Rebate for individuals and families and the Return of Fuel Charge Proceeds to Farmers Tax Credit.

The CCR is available to all residents, including farm families, residing in provinces where the fuel charge applies, and consists of a basic amount (depending on the province of residence) and a supplement for residents of small and rural communities. The CCR is provided in quarterly tax-free payments starting in July 2022.

On October 26, 2023, the Prime Minister announced that the CCR supplement for residents of small and rural communities was increased from 10% to 20% of the baseline amount beginning in April 2024. The Prime Minister also announced that the Government is moving ahead with a temporary, three-year pause to the federal price on pollution on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect. In the meantime, the federal government is working with provinces to roll out heat pumps and phase out oil for heating over the longer term.

Canada's Greenhouse Gas Offset Credit System

Canada's Greenhouse Gas Offset Credit System is designed to encourage cost-effective domestic GHG emissions reductions and removal from activities that go beyond business as usual, that are not required by regulation, and that are not already incentivized by carbon pollution pricing. The focus is on activities in the forestry, agriculture and waste sectors.

The specific agriculture practices that can generate offset credits will be determined during the protocol development process. Protocols for enhanced soil organic carbon, reducing enteric methane emissions from beef cattle, and the avoidance of manure methane emissions through anaerobic digestion and other treatments are currently being developed for the agriculture sector. Technical expert teams have been established, which include scientists from Agriculture and Agri-Food Canada, to provide advice on the latest science. Members of the public will have an opportunity to comment on draft protocols as a part of the protocol development process.

In December 2023, a draft federal offset protocol for reducing enteric methane emissions from beef cattle was published for a 60-day public comment period. The protocol is intended for use by a proponent undertaking a project to reduce enteric methane emissions in confined beef cattle feeding operations through improved management, diet reformulation, the use of feed additives, growth promoters, or other innovative strategies.

Supporting postsecondary research

Budget 2022 committed $100 million to the federal granting councils to support sustainable agriculture to fight climate change. The NSERC-SSHRC Sustainable Agriculture Research Initiative's objective is to provide financial support to research in order to initiate or accelerate the development of solutions that will be required for a sustainable, resilient and profitable agriculture sector in a net-zero economy. In addition, the Common Ground Network, established through the Social Sciences and Humanities Research Network on Sustainable Agriculture in Net-Zero Economy initiative, will bring together academic institutions, research institutes, Indigenous communities, non-governmental organizations, industry and producers to advance sustainable agricultural sectors and food systems to support a just transition to net-zero in Canada.

• We are aware of China’s Ministry of Commerce initiating an anti-dumping investigation into Canadian canola seed exports.
• The Government of Canada remains committed to supporting the canola sector and is closely monitoring these developments.
• The Government understands that maintaining and expanding access to key export markets, including China, is critical to the success and growth of the Canadian agricultural sector and the Canadian economy.
• Canada and like-minded trading partners continue to engage China bilaterally and multilaterally to advance a rules-based, predictable multilateral trading system, with the World Trade Organization at its core, to prevent unjustified disruptions to trade.
• The Government will always stand shoulder-to-shoulder with our farmers, producers and workers who export the finest products around the world.
• We will continue to work to promote and advance Canada’s agricultural interests abroad.

When pressed

What has been the Government’s response to China’s launching its anti-dumping investigation on canola seed exports?

The Government of Canada appreciates the close collaboration with the Canadian canola sector further to China’s launching an anti-dumping investigation on the imports of canola seed from Canada. We will always stand up for Canadian canola farmers, businesses, exporters and their communities, and support their interests and success at home and in markets abroad.

Canola is one of Canada’s most valuable agricultural exports and an important driver of the economy. We remain committed to ensuring fair market access for our exporters, farmers and producers.

More broadly, Canada is focussed on reinforcing supply chains while building and maintaining predictable international trade rules upheld by the WTO dispute resolution settlement system.

What is the Government doing to resolve other outstanding trade issues impacting agricultural exports to China?

The Government of Canada is committed to addressing trade issues and advancing Canada's agricultural interests in export markets, including China.

Thus, the Government continues to allocate significant resources, both in Canada and across China, to support Canada's engagement efforts with China to address trade issues, promote Canadian products in-market, and advocate for science-based trade to advance Canada's agricultural interests.

Canada will continue to pursue every available opportunity, both at the bilateral and multilateral level, to press China to resolve current trade issues and to base its trade measures on scientific and non-discriminatory principles.

Doing business with China is high-risk, and Canadian exporters are facing increasing challenges. The Government continues to encourage Canadian exporters to adopt appropriate risk mitigation and diversification plans.

What was the purpose of your travel to China?

I travelled to China from November 11 to 15, 2024, to advocate for fair trade to the benefit of producers, exporters and consumers in both our countries.

With key Canadian stakeholders by my side, I took the opportunity to build and strengthen relations with local industry groups, discuss opportunities, priorities, and challenges for Canadian imports to China.

I also attended the Canada-China Business Council Annual General Meeting and Business Forum, where I was the keynote speaker.

Background

Canada–China agricultural bilateral trade

China is a priority market for Canadian exports of agricultural, agri-food, and fish and seafood products, and despite market access disruptions, China remains Canada's second largest export market for the sector, behind the United States. Canadian exports of agricultural, agri-food, and fish and seafood products to China were valued at $9.5 billion in 2022 and increased to $11.5 billion in 2023, representing 11.6% of Canada's total agriculture, agri-food, and fish and seafood exports that same year. Key exports to China in 2023 were: grains and oilseeds, such as canola seed, barley and wheat; fish and seafood; dried peas; pork products; and animal feed, such as canola meal and pet food. Canadian exports of agricultural, agri-food, and fish and seafood products to China have totalled $6.3 billion so far in 2024 (January to August).

However, increases in Canadian exports tend to be in commodities that China currently needs, such as canola and wheat, and are not indicative of stable market growth nor sustained market share. For example, Canada's share of China's global imports of agriculture, agri-food, and fish and seafood products (by value) has been in decline since 2018: 5.8% in 2018 (ranked 4th), 4.8% in 2019 (ranked 5th), 4.2% in 2020 (ranked 6th), 4.0% in 2021 (ranked 7th), 3.2% in 2022 (ranked 8th). While Canada's share increased in 2023 to 4.35% (ranked 5th), this could be partly attributed by an increase in commodity prices for key Canadian exports. Canada's share in 2024 (January-August) is 3.8% (ranked 6th).

Since 2018, Canadian agricultural exports have been increasingly subject to arbitrary trade actions and non-tariff barriers by China (for example, unjustified sanitary and phytosanitary measures and lack of transparency), putting market access for Canadian agriculture, agri-food, and fish and seafood exports at risk and adding significant costs and uncertainty for Canadian exporters. China's current measures against Canada include:

• Since December 2021, Canadian beef exports to China remain halted due to China's BSE-related trade suspension following Canada's notification of an atypical case of BSE. In accordance with guidelines of the World Organization for Animal Health (WOAH), the detection and reporting of this atypical BSE case did not affect Canada's WOAH negligible risk status for BSE and should not have affected trade. Moreover, revised WOAH standards on atypical BSE adopted in May 2023 reaffirm that atypical BSE detections do not affect the BSE risk status of a country or zone. Despite Canada providing all the technical information requested, China has yet to provide timelines for the restoration of access. Canada continues to engage China to resume trade without further delays.
• Since February 2022, Canadian exports of heat-treated dry pet food containing poultry ingredients remain halted due to China's Highly Pathogenic Avian Influenza (HPAI) trade-related restrictions following confirmation of HPAI in Canada. Canadian officials have stressed that China's restrictions are not consistent with its World Trade Organization (WTO) obligations, international guidance, and negotiated veterinary certificate, which does not specify that Canada must be recognized as free of HPAI. Canada continues to engage China to remove its restrictions without further delays.

Chinese authorities have shown limited willingness to constructively engage with Canadian officials to resolve and advance outstanding agricultural trade issues impacting Canadian exports. In some key cases, such as pet food and beef, Canada's market access requests and submissions of technical data and/or official letters go unanswered by the General Administration of Customs of the People's Republic of China (China Customs), the CFIA's Chinese counterpart.

Canadian officials continue to work closely with officials from like-minded countries to share information and experiences and develop common approaches with respect to raising concerns with China's measures at the WTO. China's approach to trade continues to shift in contradiction to established international trade rules, its WTO obligations, and concerns by trading partners.

China's anti-dumping investigation on Canadian canola seed exports

On August 26, 2024, the Government of Canada announced a series of measures to level the playing field for Canadian workers and allow Canada's EV industry and steel and aluminium producers to compete in domestic, North American, and global markets. This included the implementation of a 100 per cent surtax on all Chinese-made EVs and a 25% surtax on imports of steel and aluminium products from China to become effective in October 2024.

On September 3, 2024, China's Ministry of Commerce announced a series of measures in response to Canada's announcement, including:

• China will initiate a WTO dispute against Canada
• China will start an "anti-discrimination investigation" under a domestic law against Canada's measures and promises to take additional measures against Canada in the future "according to the actual situation"
• China will launch anti-dumping investigations into Canadian exports of canola seed and unspecified chemical products

On September 9, 2024, China's Ministry of Commerce formally launched the anti-dumping investigation on Canadian canola seed (rapeseed), stating that:

• it had commenced effective September 9, 2024
• that preliminary evidence and information showed dumping had taken place between January 1, 2023 and December 31, 2023; China's domestic industry was materially injured between January 1, 2021 and December 31, 2023
• it would be a year-long investigation (with a possible six-month extension under special circumstances)

Canada is monitoring developments closely and participating actively in the investigation to help defend Canadian interests. For example, Canada has filed initial written comments to China's Ministry of Commerce noting the apparent retaliatory nature of China's investigation and arguing that the ministry failed to meet the legal standard under the WTO Anti-Dumping Agreement to justify the initiation of the case. Canada has also helped the industry respond to the Chinese ministry's detailed anti-dumping questionnaire, by developing responses to questions related to federal and sub-federal laws, regulations and programs related to the growth, sale and exports of agricultural products, including canola seed.

Ministerial mission to China, November 11–15, 2024

As part of ongoing engagement efforts, Minister MacAulay travelled to Beijing from November 11–15, 2024. During the mission, the Minister sought to demonstrate that Canada remains open and willing to engage with China at every opportunity, continue to advance Canada's agricultural relations and interests in China, engage in-person with key partners in market, and build and strengthen relationships to advance Canada's position.

Minister MacAulay's program included delivering remarks at the Canada-China Business Council's Annual General Meeting and Business Forum on November 15, 2024, and meetings with Chinese companies and industry associations to help deepen the relationship between our industries. The Minister also participated in a roundtable meeting with Canadian agricultural industry stakeholders from the grains, meat and seafood sectors. The meeting provided an opportunity to hear from Canadian companies on the key challenges and issues in exporting to the market, as well as on key opportunities to expand trade in the market.

Minister MacAulay requested meetings with Chinese ministries, including the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce and the General Administration of Customs China, during his visit to Beijing; however, AAFC was informed that the Minister's counterparts were not available to meet with him during his visit.

• Across Canada, the agriculture sector has been facing significant impacts from extreme weather events, including droughts, wildfires and hurricanes.
• Our government continues to monitor the situation and is ready to support the sector in managing the impacts of these weather events through a full range of programs and initiatives. This includes the suite of business risk management programs as well as other tools.
• In addition, the government is working with provincial and territorial counterparts and industry to support adaptation to extreme weather, climate change mitigation and overall greater resilience.
• Initiatives such as the Sustainable Canadian Agricultural Partnership, already in place, the Sustainable Agriculture Strategy, currently being developed, and ongoing research and development guided by Agriculture and Agri-Food Canada's Strategic Plan for Science are contributing to these efforts.

When pressed

What is AAFC doing to support farmers in Western Canada facing extreme conditions in 2023 and possibly 2024?

The suite of business risk management (BRM) programs provides tools to agricultural producers, including protection against production losses, helping them manage risks that threaten the viability of their farms. We continue to work with our provincial and territorial counterparts to look for ways at increasing the effectiveness of these programs.

In 2023, federal and provincial governments announced up to $365 million to support farmers and ranchers in British Columbia, Alberta and Saskatchewan dealing with extraordinary costs due to drought conditions and wildfires. In 2024, federal and provincial governments announced an eligibility area expansion and an extension to the application deadline in Saskatchewan and Alberta to further support livestock farmers impacted by droughts through existing AgriRecovery initiatives.

We stand with producers and ranchers. This support will help them recover and ensure that they have the tools they need to continue to be resilient in the face of natural disasters and extreme weather events. Going forward, the government is ready to continue to support the sector in managing the impacts of extreme weather events through a full range of programs and initiatives.

What is the government doing to prepare the sector for increased extreme weather in the future?

The government is engaged in a broad set of actions to support the sector in managing future conditions, including potentially increased instances and severity of extreme weather events.

For example, the Sustainable Canadian Agricultural Partnership (Sustainable CAP) is a $3.5-billion investment over 5 years by federal, provincial and territorial governments focused on key priorities including science and innovation, resiliency as well as environment and climate change. The Sustainable CAP is one important way that the government is helping position the sector to better face future challenges.

In addition, we are reviewing the BRM suite to assess its interactions with climate risks and how the sector is addressing them, in consultation with provinces and territories.

As part of the Strategic Plan for Science, increasing the resiliency of agroecosystems is one of four missions for the department. This mission enables outcomes like enhancing the resilience of the sector to a changing climate.

Other initiatives include the Sustainable Agriculture Strategy, which will strengthen collaboration on environment and climate action in the sector.

Is the AgriRecovery framework responding to the current disasters?

Our government was there to support producers during the 2023 drought and wildfires. We worked with provinces to provide a federal contribution of up to $219 million in AgriRecovery support for extraordinary costs farmers and ranchers incurred due to drought conditions and wildfires in British Columbia, Alberta and Saskatchewan.

This funding helped them recover and ensured that they had the tools they needed to continue to be resilient in the face of natural disasters and extreme weather events.

How is the government addressing climate change through business risk management?

Integrating climate risk management and climate readiness into business risk management programs is a top priority. We are conducting a BRM climate review that is looking at how climate change could impact future BRM payments as well as how BRM programs could encourage climate action.

Starting in 2025, the largest producers will need to have an agri-environmental risk assessment to receive the government contribution in AgriInvest. We are also working with provinces to pilot AgriInsurance premium rebates for producers who adopt practices that have environmental benefits and reduce production risks.

Background

Recent extreme weather events

The 2023 production season was highly impacted by extreme weather events that included drought, wildfires and grasshopper destruction in Western Canada, wildfires and floods in Quebec, and floods in Nova Scotia. This closely followed the 2021 production year, which included one of the worst drought episodes in the last 40 years in Western Canada in addition to the Pacific Northwest floods in British Columbia. In 2022, Atlantic provinces were impacted by Hurricane Fiona.

Following the extreme dry conditions that dominated much of Western Canada in 2023, drought conditions had generally improved since spring 2024 before worsening somewhat in July. By the end of July 2024, 67% of the country's agricultural landscape was classified as abnormally dry or in moderate to exceptional drought. Drought conditions continue to be severe and extensive in northern regions of British Columbia. Extreme drought conditions have re-emerged in west-central Alberta.

2023 drought and wildfires responses

On August 18, 2023, the Province of British Columbia declared a Provincial State of Emergency, under the authority of the Emergency Program Act, to support ongoing response and recovery efforts caused by wildfires.

On October 20, 2023 the Government announced $219 million in federal support through the AgriRecovery framework to farmers and ranchers in these areas dealing with extraordinary costs due to drought conditions and wildfires.

On January 25, 2024, AAFC and Alberta announced updates to the 2023 Canada–Alberta Drought Livestock Assistance initiative, expanding eligibility to 23 new regions and extending the application deadline.

On January 30, 2024, AAFC and Saskatchewan announced updates to Saskatchewan's 2023 Canada-Saskatchewan Feed Program, expanding eligibility to 10 additional designated Rural Municipalities (RMs) and extending the application deadline. The updates respond to the dry conditions that further impacted livestock producers throughout the later months this past fall. Additional payments to eligible livestock producers were announced on April 8, 2024.

Livestock Tax Deferral

The Livestock Tax Deferral provision allows livestock producers who are forced to sell all or part of their breeding herd due to drought or excess moisture to defer a portion of their income from sales until the following tax year. The income may be at least partially offset by the cost of reacquiring breeding animals, thus reducing the tax burden associated with the original sale. Given the 2023 extreme weather conditions, a list of designated regions in British Columbia, Alberta, Saskatchewan, and Manitoba was authorized for 2023. This year, the Government of Canada has streamlined the process to identify regions earlier in the growing season and instituted a buffer zone to adjacent regions to capture impacted producers on the edges of affected regions. An early list of regions eligible for the Livestock Tax Deferral in 2024 was announced on June 14, 2024.

AgriRecovery

AgriRecovery is a framework which forms the basis by which federal-provincial-territorial governments can work together when natural disasters occur to assess the impacts and determine whether there is a need for further assistance over and above the existing BRM programs. When the need is demonstrated, an initiative is put in place to provide targeted assistance to help with the extraordinary costs producers incur to recover.

AgriInsurance

The AgriInsurance program helps to stabilize producer income by minimizing the economic effects of production losses caused by severe but uncontrollable natural hazards. It provides support largely to crop producers, averaging over $1 billion per year since 2013, which represents approximately two-thirds of all BRM contributions.

Sustainable Canadian Agricultural Partnership

AAFC and its provincial and territorial counterparts are implementing programming under the Sustainable Canadian Agricultural Partnership (Sustainable CAP), a five-year, $3.5 billion federal, provincial and territorial policy framework that is the successor to the Canadian Agricultural Partnership.

The Sustainable CAP places a strong emphasis on climate change and the environment, which are critical to the continued prosperity of the sector as well as supporting economic growth and competitiveness. The Sustainable CAP will focus on supporting environmental, economic, and social objectives across all five priority areas, including science, research and innovation, market development and trade, building sector capacity, and resiliency and public trust.

Sustainable Agriculture Strategy

The Sustainable Agriculture Strategy (SAS) is a long-term plan that will help bring together action on priority environment and climate issues in the agriculture sector. The SAS is a shared direction and vision for collective action to improve environmental performance and enhance resilience to climate change in the agriculture sector. The strategy will take action on environmental and climate issues while providing the vital role of responding to growing demands for healthy and affordable food and supporting economic growth.

The main areas that SAS focuses on are the following:

• Soil health
• Adaptation and resilience
• Water
• Climate change mitigation
• Biodiversity

AAFC's Strategic Plan for Science

Higher-risk transformative science under AAFC's Strategic Plan for Science will help ensure a sustainable, resilient, and profitable agriculture and agri-food sector by 2050. Mission-driven science will bring together multiple disciplines, including economics, social science, and natural science, from across the Department and other science organizations working towards a similar goal, including increasing the resiliency of agroecosystems.

The missions are

• Mitigating and adapting to climate change
• Increasing the resiliency of agroecosystems
• Advancing the circular economy by developing value-added opportunities
• Accelerating the digital transformation of agriculture and agri-food

• The Government of Canada is working to identify solutions to minimize bottlenecks and improve the efficiency and reliability of Canadian supply chains, including through the National Supply Chain Office.
• We are committed to ensuring a strong and stable food supply chain by responding to challenges, including severe weather events, labour shortages or disruptions, and other ongoing supply chain challenges.
• Agriculture and Agri-Food Canada closely monitors the impacts of labour disruptions on the food supply chain, including the resumption of rail and port services following labour disruptions over the course of August and into the fall. This includes communication with industry stakeholders throughout the disruptions and working with colleagues at Transport Canada to ensure that recovery efforts support the movement of Canadian agricultural commodities.
• We recognize the importance of maintaining a stable supply chain and ensuring Canadian agricultural products can reach the domestic and international markets that depend on them.

When pressed

What is Canada doing to improve bottlenecks along Canada's trade corridors which negatively impact the supply chain?

My department is actively supporting Transport Canada efforts to reduce bottlenecks and increase transparency and fluidity along the supply chain, such as the establishment of the National Supply Chain Office and the development of a National Transportation Supply Chain Strategy.

We are also supporting the Government's efforts to identify areas where improvements to supply chain-related regulation or regulatory practices can support the movement of goods, services and people in Canada.

What is the Government doing to support farmers affected by supply chain issues?

To support farmers affected by supply chain issues and rising input costs, the Government increased the interest-free portion of the Advance Payments Program from $100,000 to $250,000 for the 2022 program year, to $350,000 for the 2023 program year and to $250,000 for the 2024 program year. This change represented additional savings of up to $188.2 million over these 3 years for the approximately 12,000 producers who took advantage of advances above $100,000 during the time the increase was in place.

What is the Government doing to ensure that farmers are able to move this year's crop for export?

Agriculture and Agri-Food Canada is closely monitoring the current state of the grain transportation network and working with Transport Canada to ensure that grain moves efficiently to our ports. Canada’s agriculture and agri-food sector relies heavily on resilient domestic and global supply chains. We continue to engage with stakeholders and provincial and territorial counterparts to ensure that our food supply chains are sustainable and resilient.

What is the Government doing to protect farmers and the agricultural sector against supply chain labour disruptions?

The Government of Canada respects the collective bargaining process and believes negotiated agreements are the best way forward. The work stoppage at the BC and Montreal Ports were significantly impacting farmers' businesses, agricultural shippers and our reputation as a reliable trading partner. This led the Minister of Labour to invoke his authorities under the Canada Labour Code to direct the Canada Industrial Relations Board to impose final and binding arbitration and to order operations at the Ports to resume.

Background: supply chains

Over the past few years, Agriculture and Agri-Food Canada has seen how vulnerable Canadian supply chains are and how disruptions can severely impact the sector. As a result, the Government of Canada continues to work on improvements to supply chains.

In March 2022, the Minister of Transport announced the creation of an independent National Supply Chain Task Force to examine the key pressures affecting Canada's supply chain operations. Agriculture stakeholders actively participated in the task force and the resulting final report (October 2022), which included 21 recommendations on short- and long-term actions. These recommendations served to inform the development of Canada's National Transportation Supply Chain Strategy, as committed to in Budget 2022. This strategy will help ensure that Canada's agricultural sector can continue to meet the needs of its global customers.

AAFC has continued to support Transport Canada with the implementation of the National Supply Chain Office and provided agricultural-specific input to Transport Canada on the Supply Chain Task Force recommendations. AAFC has maintained ongoing engagement regarding supply chains with Transport Canada across multiple levels (including ADM-level discussions).

Additionally, AAFC has liaised with the grain handling industry via the Crop Logistics Working Group and participated in a shared contract with Transport Canada for the Grain Monitor (Quorum Corporation) to ensure consistent review of Canada's grain handling transportation system.

On August 22, 2024, Canadian National (CN) and Canadian Pacific Kansas City (CPKC) locked out close to 9,300 rail workers and shut down service on both major railways. Later that day, the Minister of Labour invoked section 107 of the Canada Labour Code to order the railways back to work and to use binding arbitration to settle their differences. Approximately 830,000 tonnes of goods valued at $1.1 billion was halted. The union representing rail workers has filed a challenge on the directives for binding arbitration in the Federal Court of Appeal.

On November 4, 2024, the BC Maritime Employers Association began a lockout of all BC longshore workers, shutting down all cargo operations at BC ports (Vancouver and Prince Rupert). On November 12, Minister MacKinnon referred the matter to the Canadian Industrial Relations Board for final and binding arbitration and directed the board to order the resumption of all operations at BC ports.

The longshore union (CUPE 375) at the Port of Montreal held a series of rolling strikes throughout fall 2024. Starting September 30, the union initiated a three-day partial strike at the Termont container terminals. An ongoing "no overtime work" strike was later initiated, followed by a series of localized strikes at specified terminals. On November 10, the employer responded by locking out workers and calling for the Government's intervention. On November 12, the Minister of Labour referred the matter along with the dispute at the BC ports, to the CIRB for final and binding arbitration. Operations resumed at the Port of Montreal on November 16.

Both unions at the BC ports and at the port of Montreal intend to challenge the Government's intervention in court.

• Canada and the United States have a long-standing and strong trading relationship in agriculture, one that benefits both of our countries.
• Last year, Canada exported almost $60 billion in agriculture and seafood products to the U.S.
• Canada imported almost $38B from the U.S. (2023) and is the number one agriculture export market for 27 states.
• Our supply chains are deeply integrated, allowing us to supply safe and affordable food year-round.
• Canada is committed to working with the incoming Administration to further deepen the strong ties between our two countries.
• The Government of Canada will continue to defend Canadian farmers against trade distorting measures that could be introduced in the U.S.

When pressed

What is the Government of Canada doing to protect the agriculture sector?

• There is no more important economic relationship than Canada's with the United States.
• As announced by the Prime Minister in January, the Government has deployed a Team Canada approach in the U.S. to highlight the importance of our deep connections and of our integrated supply chains.
• To reinforce that Canada is a reliable and indispensable agricultural trading partner to the U.S., I led missions to Washington, D.C., Boston, Iowa and Minnesota to meet with my counterparts in the regions and other government officials.
• The U.S. agriculture community is dispersed across the entire country and is politically influential. We have excellent and well-established relationships between government and industry and industry-to-industry, which will be valuable going forward.

How is the Government of Canada preparing for potential tariff increases on agriculture exports to our largest trading partner?

• An across-the-board tariff on Canadian products would be harmful to American consumers, workers, and the American economy.
• We are deeply integrated economies with tens of thousands of jobs on both sides of the border that depend on the fair and balanced Canada-U.S. trade relationship.
• The Government is engaging with the incoming U.S. administration to communicate these points and signal our readiness to work together to advance our shared economic prosperity and security.
• We will always defend Canada's interests and do what is best for Canadians and the Canadian economy.

How is the Government of Canada ensuring that Canadian agriculture stakeholders will be protected during the 2026 CUSMA review?

• The Government is closely monitoring the political landscape, keeping track of emerging agricultural trade issues, and gathering views and experiences from stakeholders on key areas in CUSMA that are working well and potential areas for improvement.
• Part of that work is advocating in the U.S. about Canada's significant contributions to local economies in all parts of the U.S.
• The Government of Canada stood with Canadian stakeholders and farmers during the CUSMA negotiations, and we will always stand shoulder-to-shoulder with them.
• [If pressed on the 2025 dairy review]: Canada will preserve and defend its supply management system.

Background

Agriculture trading relationship

The United States is Canada's largest agriculture and seafood export market. Canada exported CA$59.5 billion to the U.S., while importing CA$37.5 billion from the U.S. in 2023. Canada's largest exports included bakery products, canola oil and beef. The U.S. is also Canada's largest fish and seafood export market, valued at CA$4.9 billion in 2023. Canada's largest sector imports from the U.S. were undenatured ethyl alcohol with alcohol content higher than 80% (for example, ethyl alcohol for fuel), various food preparations and bakery products. Canada is an important and mutually beneficial partner for agriculture and food trade for the U.S., as Canada is the 2nd largest export market for the U.S. as well as second largest import origin, accounting for one-fifth of the U.S.'s import needs.

Canada is the top agricultural export market for 27 U.S. states, including all border states (except Washington) as well as high population states such as California and New York. [REDACTED]

The agricultural trade balance in favour of Canada has increased significantly since 2019, when it was around CAD $3.5 billion at the time as opposed to CAD $22 billion today. While the rise observed in the Canada-U.S. agricultural trade balance can be attributed to a multitude of factors, the growth was largely driven by the increased value of U.S. imports from Canada rather than by increased volumes. Between 2019 and 2023, U.S. imports from Canada increased by 21% in volume (kg) but by 65% in value (USD).

Canada–United States–Mexico Agreement (CUSMA) review

CUSMA includes a commitment to undertake a joint review of the agreement after 6 years (2026). CUSMA also mandates a review of certain Canada-U.S. dairy-related provisions, set out in Chapter 3, in July 2025, and every 2 years thereafter. In preparation for the upcoming CUSMA and dairy reviews, the department has begun analysis and engagement with other government departments, Canadian industry and other stakeholders to prepare for a range of scenarios.

Canada’s priority will be to ensure that market access and the other benefits of the agreement are preserved in any discussions with the U.S. and Mexico. A Gazette public consultation process was completed by Global Affairs Canada in the fall to gather views from stakeholder priorities and concerns as Canada prepares for these discussions.

Potential tariffs on all U.S. imports

According to the Republican electoral platform, the new Trump Administration plans to impose significant tariffs, including a 10% to 20% tariff on all U.S. imports and a 60% tariff on imports from China. These tariffs would be in addition to those implemented during the previous Trump Administration, which have continued under the current Biden Administration. The proposed tariffs are unprecedented in scope and scale, with broad implications for global trade and Canada's trade relationship with the U.S.

We are committed to ensuring a strong and stable food supply chain by responding to challenges, including severe weather events, labour shortages or disruptions, and other ongoing supply chain challenges.

The Minister of Labour invoked his authorities under the Canada Labour Code to impose final and binding arbitration and order operations at ports in BC and Montreal to resume because the work stoppage was significantly impacting farmers' businesses, agricultural shippers and Canada's reputation as a reliable trading partner.

The Government of Canada is working to identify solutions to minimize bottlenecks and improve the efficiency and reliability of Canadian supply chains, including through the National Supply Chain Office.

Agriculture and Agri-Food Canada closely monitors the impacts of labour disruptions on the food supply chain, including the resumption of service following the recent disruptions at the Ports of Montreal and BC. This includes communication with industry stakeholders throughout the disruption and working with colleagues at Transport Canada to ensure that recovery efforts support the movement of Canadian agricultural commodities.

When pressed

What has the Government done to protect farmers and the agricultural sector in the face of supply chain labour disruptions?

The Government of Canada respects the collective bargaining process and believes negotiated agreements are the best way forward. The work stoppage at the BC and Montreal ports were significantly impacting farmers' businesses, agricultural shippers and our reputation as a reliable trading partner, which is why the Minister of Labour invoked his authorities under the Canada Labour Code to direct the Canada Industrial Relations Board to impose final and binding arbitration and order operations at the ports to resume.

What is Canada doing to improve bottlenecks along Canada's trade corridors which are negatively impacting the supply chain?

AAFC is actively supporting Transport Canada's efforts to reduce bottlenecks and increase transparency and fluidity along the supply chain, such as the establishment of the National Supply Chain Office and the development of a National Transportation Supply Chain Strategy.

We are also supporting the Government's efforts to identify areas where improvements to supply chain-related regulation or regulatory practices can support the movement of goods, services, and people in Canada.

What is the Government doing to support farmers affected by supply chain issues?

To support farmers affected by supply chain issues and rising input costs, the Government increased the interest-free portion of the Advance Payments Program from $100,000 to $250,000 for the 2022 program year, to $350,000 for the 2023 program year and to $250,000 for the 2024 program year. This change represented additional savings of up to $188.2 million over these three years for the approximately 12,000 producers who took advantage of advances above $100,000 during the time the increase was in place.

What is the Government doing to ensure that farmers are able to move this year's crop for export?

Agriculture and Agri-food Canada is closely monitoring the current state of the grain transportation network and working with Transport Canada to ensure that grain moves efficiently to our ports. Canada's agriculture and agri-food sector relies heavily on resilient domestic and global supply chains. We continue to engage with stakeholders and provincial and territorial counterparts to ensure that our food supply chains are sustainable and resilient.

Background

Longshore foremen at the Port of Vancouver/Prince Rupert

On November 4, 2024, the BC Maritime Employers Association (BCMEA) began a lockout of all BC longshore workers, shutting down all cargo operations at BC ports (Vancouver and Prince Rupert). The BCMEA called this a "defensive" lockout to wind down operations in an orderly fashion in response to the Local 514 union's strike notice, issued on October 31.

On November 12, the Minister of Labour referred the matter to the Canada Industrial Relations Board for final and binding arbitration and directed the board to order the resumption of all operations at BC ports The union intends to challenge the Government's intervention in court.

While grain terminals were not impacted by the lockout due to the Canada Labor Code exemption to continue the loading and unloading of bulk grain in the event of a strike/lockout, all containerized grain traffic was halted. As a result of the disruption, the pulse sector took the unprecedented move of invoking force majeure to end contracts based on external events. Losses to pulse shippers were significant given peak demand for containerized grain during the fall harvest period. The food and beverage sector flagged concern over reduced access to packaging material and access to incoming fresh fruit based on seasonality.

Throughout negotiations, a number of complaints had been filed with the Canadian Industrial Relations Board, but the main bargaining issue is automation (and by extension, minimum staffing requirements) at Centerm terminal (Operated by DP World).

Port of Montreal longshoremen

The longshore union (CUPE 375) at the Port of Montreal held a series of rolling strikes throughout fall 2024. Starting September 30, the union initiated a 3-day partial strike at the Termont container terminals. An ongoing "no overtime work" strike was later initiated, followed by a series of localized strikes at specified terminals. On November 10, the employer responded by locking out workers and calling for the Government's intervention.

On November 12, the Minister of Labour referred the matter, along with the dispute at BC ports happening concurrently, to the Canada Industrial Relations Board for final and binding arbitration and ordered the resumption of operations. The union representing longshore workers in Montreal intends to launch a charter challenge over the Government's intervention in the dispute. This aligns with challenges raised by the longshore workers unions in BC and Teamsters Canada rail workers following the Government's intervention in the August CN/CPKC work stoppage.

Bulk grain continued to move, per the Canada Labour Code exemption, but containerized grain at impacted terminals stopped affecting pulse and specialty crop shipments during peak shipping season. Impacts were most heavily felt by the produce sector. In the final days of the work stoppage, close to 400 refrigerated containers sat on the ground at port. The Global Cold Chain Alliance had signaled that fresh citrus and other short shelf-life products could have been lost and consumer prices affected, had the work stoppage continued much longer.

• The Government of Canada is taking action to reduce food waste at all levels to make our food systems more efficient and productive, redistribute surplus food to those in need and reduce greenhouse gas emissions.
• Under the Food Policy for Canada, we launched the $20-million Food Waste Reduction Challenge, which ran from 2020-2024, to spark new ideas and challenge innovators to deliver game-changing solutions that prevent or divert food waste.
• The Government of Canada is committed to developing a food loss and waste reduction action plan that builds on positive achievements across the sector, as well as launching a No-Waste Food Fund to help all players along the food supply chain adopt new ways to eliminate, reduce, or repurpose food waste.

When pressed

Who have you engaged to address this important issue?

In the lead-up to the United Nations Food Systems Summit, our government engaged with diverse food systems partners and stakeholders, including a dedicated dialogue on Fostering collaboration on food loss and waste (April 2021).

The Canadian Food Policy Advisory Council has provided advice on the most pressing issues facing Canada's food systems. Food loss and waste have been a focal point of the Council's work, and recommendations have identified the importance of establishing a baseline, setting targets, and collaborating with key stakeholders across food systems to achieve meaningful reductions.

Internationally, Canada has affirmed its commitment to food loss and waste reduction through participation in a variety of multilateral forums, including the UN 2030 Agenda for Sustainable Development, the Kunming-Montreal Global Biodiversity Framework and the Organisation for Economic Co-operation and Development.

When will the food loss and waste reduction action plan be launched?

At the 10th Annual North American Leaders' Summit (January 2023), Canada committed to developing a domestically focussed food loss and waste reduction action plan by the end of 2025 outlining efforts to cut food loss and waste in half by 2030.

Background

Food loss and waste is a complex, dynamic challenge facing global food systems, including in Canada. Food loss occurs at the earlier parts of the food supply chain, including production, processing, transportation and distribution. Food waste occurs at the consumption stages, including retail, food services, institutions and households. The term "food waste" is often used to refer to food loss and food waste collectively.

• The UN estimates that 14% of total global food production is lost between harvest and distribution, and 17% is wasted in retail, food service and households.
• In Canada, it is estimated that nearly half (46.5%) of all food in Canada is lost or wasted every year, 41.7% of which could be rescued to support communities across Canada, and $58 billion worth of food that is disposed of which could be avoided each year.
• Food waste represents the single largest percentage (23%) of Canadian municipal solid waste disposed.

There are a multitude of reasons that food loss and waste is generated throughout the food system, including lack of awareness and quantification, operational inefficiencies, relationships among supply chain partners, quality standards, inadequate transportation and storage, inaccurate forecasting and inventory management.

Where prevention is not feasible, there are missed economic and social opportunities when food, as a resource, is discarded, as well as environmental consequences such as landfill methane emissions.

Agriculture and Agri-Food Canada's approach to reducing food loss and waste

The department works with other federal departments and stakeholders across the country to identify effective solutions for reducing food loss and food waste.

Since 2019, Agriculture and Agri-Food Canada has implemented:

• Food Waste Reduction Challenge
  • The challenge, which ran from November 2020 to March 2024, delivered high-impact solutions to food loss and waste in Canada with a stage-gated approach to support applicants through the innovation development cycle. The challenge was divided into two categories: the Business Models Streams and the Novel Technologies Streams.
  • Business Models Streams
    • The Business Models Streams (Streams A amp; B) supported innovators with business model solutions that prevented or diverted food loss and waste at any point from farm to plate.
    • In Stage One, 24 semi-finalists were selected to receive a $100,000 prize to continue developing their innovations.
    • In Stage Two, 12 finalists received $400,000 to test their solution with at least one Canadian implementation partner and evaluate the effectiveness of their solution.
    • On March 20, 2024, the Business Models Streams grand prize winners were announced: LOOP Mission and Still Good each received a grand prize of $1,500,000 to scale their solutions.
      • LOOP Mission creates beverages from fruits and vegetables that would otherwise go to waste.
      • Still Good develops business solutions for companies to transform nutrient-rich by-products that would otherwise go to waste into new food products.

Novel Technologies Streams

The Novel Technologies Streams (Streams C & D) of the Food Waste Reduction Challenge focussed on novel technologies that could extend the life of food or transform food waste into new foods or value-added products.

In Stage One, 18 semi-finalists received $100,000 and moved on to build or complete an existing prototype of their technology.

In Stage Two, 6 finalists received $450,000 each and moved on to the final stage of the Challenge where they tested their prototype in an operational environment with at least one implementation partner.

On May 14, 2024, the Novel Technologies Streams grand prize winners were announced: Genecis Bioindustries Inc. and Clean Works Inc. each received a grand prize of $1,000,000 to scale their solutions.

• Genecis Bioindustries has developed a specialized bacteria that transforms food waste into compostable bioplastics.
• Clean Works has developed a solution that uses hydrogen peroxide, ozone and UV to control mildew and micro-organism growth in pre-harvest (greenhouses, field crops, grapevines) fruit and vegetables.

Surplus Food Rescue Program

$50 million in funding to address the urgent COVID-19 related surplus of food that could not otherwise be routed through the supply chain due to disruptions, including the closure of restaurants and other food service- and hospitality-related businesses.

Through the program, over 7 million kilograms of surplus food and 1 million dozen eggs were redistributed to food banks and community food organizations that would otherwise have gone to waste.

This program sunset on March 31, 2021.

Key outstanding commitments include the development of a Food Loss and Waste Reduction Action Plan by the end of 2025 as agreed to by Canada at the 2023 North American Leaders’ Summit and the 2021 Minister of Agriculture and Agri-Food’s mandate letter commitment to launch a no-waste food fund.

Progress on food loss and waste reduction

Canada is making progress on FLW reduction. Recently released research estimates that FLW has been reduced by 20% in the last 5 years (2019-2024) due largely to the commendable efforts of farmers, the hospitality sector, and Canadian households.

However, there is still too much food being wasted and more than three-quarters of the waste occurs before food reaches store shelves. This represents a significant burden on the economic productivity of Canada's agriculture and food sector and contributes up to 12% to the price of food paid by consumers. Furthermore, Canada still wastes nearly 9 million tonnes of food that could have been rescued to support food security in communities across the country.

• Canadian farmers are facing increased pressure to feed Canada and the world in a manner that is environmentally responsible and allows famers to make a good living, all within the context of a changing climate.
• The Sustainable Agriculture Strategy will provide a long-term approach to address these challenges, and will recognize the environmental achievements producers have already attained while increasing production.
• The strategy will help prioritize areas where more investment, innovation, and partnerships and collaboration are needed to advance the sustainability of Canada's agriculture sector.

When pressed

Why do we need a Sustainable Agriculture Strategy?

Canadian producers are at the front lines of climate change and are experiencing increased pressure to feed Canada and the world. Agricultural production and the ability of farmers to make a good living from their work depend on a healthy environment and resilience to climate change.

The Sustainable Agriculture Strategy will establish a long-term vision and approach so that Canada's agriculture sector is ready and able to recover quickly from extreme events, thrive in a changing climate, improve environmental performance, and ensure a steady food supply that we all depend on.

How will the Sustainable Agriculture Strategy benefit the Canadian agriculture sector?

The Sustainable Agriculture Strategy will support Canada's position as a key producer of in-demand sustainable food and agriculture products — generating wealth for operators and producers over the long-term.

The strategy will help leverage opportunities that benefit the environment and producers through collaboration with public, private, Indigenous and other partners, as well as find new ways of working together.

How is the Sustainable Agriculture Strategy different from other government strategies that relate to environmental sustainability?

The Sustainable Agriculture Strategy will be the first such strategy for Canada, bringing together under one umbrella federal action on environment and climate in the agriculture sector.

The strategy will help show the connections between existing initiatives that advance sustainability in the sector and point to where more attention is needed. This includes connections between existing federal commitments outlined in the Strengthened Climate Plan and Emissions Reduction Plan, Global Biodiversity Framework, National Adaptation Strategy and others.

Beyond federal initiatives, the strategy will incentivize action across the sector on priority areas for environment and climate action, through shared vision, goals and principles.

Canadians are facing high food prices at grocery stores and dealing with daily affordability challenges due to inflation. How will the Sustainable Agriculture Strategy help Canadians feed their families?

Many practices that farmers implement on their farm can benefit the environment and a farmer's bottom line. Through a coordinated approach that aims to improve resilience, environmental performance, and productivity, the strategy can support a steady food supply for Canadians regardless of floods, droughts and other natural events that can affect the cost of food.

Background

The Government of Canada is developing a Sustainable Agriculture Strategy, which was highlighted in the 2030 Emissions Reduction Plan and the Strengthened Climate Plan as a means to support the agriculture sector's actions on climate change and other environmental priorities towards 2030 and 2050. The Sustainable Agriculture Strategy is a coordinated federal initiative to establish a long-term vision and strategic approach to agri-environmental issues, including climate adaptation and resilience, climate change mitigation, water, biodiversity, and soil health.

In December 2022, the Government of Canada launched consultations to develop this strategy. Consultations formally ran until March 2023 where the department engaged with producers, producer associations, industry groups, non-government organizations, federal/provincial/territorial governments and Indigenous groups to understand the challenges and opportunities in the sector and identify effective solutions that support the strategy's objectives. Consultations included an online public discussion paper and survey, stakeholder workshops on components of the strategy, dedicated Indigenous engagement (developing and ongoing) and regional producer engagement.

As part of these consultations, AAFC created an advisory committee with diverse representation of sector stakeholders to facilitate two-way information sharing and to help identify shared challenges. The committee was created to keep the agriculture and agri-food sector updated on the progress of the Sustainable Agriculture Strategy and consider sector perspectives on specific approaches or actions to be included in the strategy. The committee shared information about sector initiatives that complement the strategy and contribute to advancing agri-environmental outcomes.

Feedback and perspectives shared during the consultation process will support the development of the Sustainable Agriculture Strategy, which is currently under development.

What we heard report

A “what we heard” report summarizing feedback from the consultations was released on December 29, 2023. Feedback on the SAS was gained through over 400 responses to an online survey based on the SAS discussion document, 123 written submissions, 4 regional producer workshops, 4 virtual stakeholder workshops, self-led Indigenous workshops, and various virtual and in-person roundtables. The following considerations were shared by participants that the Government of Canada should keep in mind when developing the strategy:

• the importance of applying an economic lens to ensure economic challenges and opportunities in the sector are reflected in order to support productivity, profitability, competitiveness, and producer livelihoods
• reflecting regional differences across the country in terms of varying strengths, needs and opportunities
• recognizing early adopters as many producers have already led the path toward the adoption of environmentally sustainable beneficial management practices and technologies
• improving data and measurement as there is a lack of consistency across agri-environmental data collection and analysis at the national, regional and field levels.

Participants also shared specific ideas on actions that are needed to advance sustainability in Canada’s agriculture sector.

• The Government recognizes the vital importance of a resilient agriculture and agri-food sector that is able to adapt to climate change, grow sustainably and continue to feed Canada and a growing global population.
• We support and conduct science and on-farm programming to help the sector prepare for, respond to, and recover from climate-related risks like extreme weather. This includes developing more climate resilient crop varieties and on-farm technologies to improve water-use efficiency.
• The Sustainable Canadian Agricultural Partnership includes a commitment among federal, provincial and territorial governments to tackle climate change and reduce GHG emissions, protect the environment, and support the sustainable growth of the sector.
• We are also developing a Sustainable Agriculture Strategy, which will provide a long-term approach to ensuring Canada's agriculture sector is ready and able to recover quickly from extreme events, thrive in a changing climate, and ensure a steady food supply that we all depend on.

When pressed

What is the Government of Canada doing to enhance the environmental resilience of the sector, including adapting to the impacts of climate change?

Through AAFC, the Government of Canada is supporting the sector in increasing its resiliency in the face of climate-related risks. Cost-shared programs between the federal and provincial/territorial governments under the Sustainable Canadian Agricultural Partnership, help to increase farmers' awareness and management of on-farm environmental risks and support the adoption of beneficial management practices (BMPs) and technologies to reduce those risks including through adaptation and resilience to climate change.

AAFC supports and conducts science in a variety of areas that enhance sector adaptation and resiliency, including monitoring and improving the health of agricultural soils, developing drought-resilient seed and crop varieties, managing water and biodiversity on the agricultural landscape, and providing producers with the tools to help them better adapt to climate change. AAFC's Agricultural Climate Solutions – Living Labs brings together farmers, scientists and other sector partners to co-develop, test, and monitor BMPs on working farms, including BMPs that enhance climate resiliency. In fact, under AAFC's Strategic Plan for Science, mitigating and adapting to climate change and increasing the resiliency of agro-ecosystems are core research missions of the department.

In June 2023, the Government of Canada launched Canada's first National Adaptation Strategy – a whole-of-society approach to reducing climate risks and building climate- resilient communities developed through engagement with provinces, territories, Indigenous partners, and other key partners across Canada. The strategy includes specific objectives and actions for the agriculture sector, and a framework for measuring progress at the national level.

The development of a Sustainable Agriculture Strategy will provide a long-term approach to ensuring Canada's agriculture sector is ready and able to recover quickly from extreme events, thrive in a changing climate, and ensure a steady food supply that we all depend on.

What is the Government of Canada doing to enhance sustainable water management in the agriculture and agri-food sector?

Cost-shared programs between the federal and provincial/territorial governments under the Sustainable Canadian Agricultural Partnership, are critical to protecting water resources and support the adoption of beneficial management practices (BMPs) and technologies, including those focused on protecting water resources and enhancing climate resiliency. AAFC also has a long history of researching, developing and promoting the sustainable management of water resources, including conducting and funding collaborative agricultural research and technology development, and providing timely data and analysis on agroclimatic conditions impacting Canada's farmers and the agriculture sector through the Canadian Drought Monitor.

As part of the Strategic Plan for Science, AAFC's vision for the future of research and development, increasing the resiliency of agro-ecosystems is one of four missions. This mission enables outcomes like enhanced and protected soil and water resources.

Budget 2022 announced an investment of $43.5 million over five years as well as $8.7 million in ongoing funding to ECCC to create a new Canada Water Agency, which was established in 2023. There was also the announcement of $19.6 million in 2022-2023 to ECCC to sustain the Freshwater Action Plan. Budget 2023 renews and expands the Freshwater Action Plan, which will support regionally specific measures to further protect Canada's freshwater reserves across the country. The Plan will continue to improve water quality and respond to the impacts of climate change, including monitoring, assessment, and restoration work. The Canada Water Agency will lead the delivery of major elements of the Freshwater Action Plan. AAFC continues to work with ECCC to identify opportunities to enhance the management of water resources on the agricultural landscape through the Canada Water Agency and enhanced Freshwater Action Plan.

Major investments in fresh water in Canada announced in Budget 2023 include:

• $650 million over 10 years, starting in 2023-24, to support monitoring, assessment, and restoration work in the Great Lakes, Lake Winnipeg, Lake of the Woods, St. Lawrence River, Fraser River, Saint John River, Mackenzie River and Lake Simcoe (note that this figure includes the $420 million announced by the Prime Minister for the Great Lakes).
• $22.6 million over 3 years, starting in 2023-24, to support better coordination of efforts to protect fresh water across Canada.
• $85.1 million over 5 years, starting in 2023-24, and $21 million ongoing thereafter to support the creation of a Canada Water Agency, which will be headquartered in Winnipeg.

What is the Government of Canada doing to protect biodiversity in the agriculture and agri-food sector?

Canadian food producers are responsible and innovative stewards of the land and are committed to further supporting and promoting sustainable food systems in Canada and abroad. Biodiversity is essential to producing food, fuel and fibre, to maintaining other ecosystem services like soil fertility, water conservation, pollination and pest management, and to supporting the ability of species and ecosystems to adapt to changing conditions, including to climate change.

One of four mission areas under the Strategic Plan for Science, which is AAFC's vision for the future of research and development, is to increase the resiliency of agro-ecosystems. This mission enables outcomes, like enhanced biodiversity, to stimulate productivity and resilience, cementing biodiversity as a research priority for the department. Furthermore, AAFC has extensive biological collections, representing the wide genetic diversity of many important food crops and livestock species, where the answers to current and emerging climatic, biotic and abiotic challenges may be found.

Cost-shared programs between the federal and provincial/territorial governments under the Sustainable Canadian Agricultural Partnership support the adoption of on-farm technologies and land management practices that can provide co-benefits for biodiversity, including shelterbelts, cover crops, conversion of marginal cropland to grass and treed areas, and restoration and improvement of wetlands and riparian areas.

The Kunming-Montreal Global Biodiversity Framework (KMGBF) was adopted in Montréal in December 2022 by the Parties to the UN Convention on Biological Diversity, including Canada, to halt and reverse biodiversity loss by 2030. The Framework includes 23 targets to 2030, several of which have direct links to agriculture. For example, KMGBF Target 10 aims to enhance biodiversity and sustainability in the agriculture and agri-food sector through sustainable use of biodiversity and the application of biodiversity friendly practices. Target 7 aims to reduce pollution to levels that are not harmful to biodiversity by reducing excess nutrient loss to the environment and reducing the overall risk from pesticides and highly hazardous chemicals by at least half and working towards eliminating plastic pollution. The Government of Canada released its 2030 Nature Strategy in June 2024, which outlined a path for Canadian governments, sectors, and citizens to implement and achieve the goals and targets of the KMGBF. Canada's 2030 Nature Strategy charts, an ambitious path forward and references ongoing initiatives that can support the agriculture sector's contribution to the KMGBF's targets. It includes the Sustainable Canadian Agricultural Partnership, the Agriculture Climate Solutions' Living Labs program and On-Farm Climate Action Fund, and AAFC's Strategic Plan for Science.

Background

The department supports climate change adaptation and resilience by supporting farmers in developing and implementing farming practices to tackle climate change and by leading on policy solutions to the challenges of climate change in the sector. AAFC collaborates with provinces and territories through 5-year FPT agricultural policy frameworks to support agriculture sector stakeholders in the responsible stewardship of Canada's agricultural land and environment:

• Sustainable Canadian Agricultural Partnership (Sustainable CAP) – a 5-year (2023-28), $3.5-billion agreement, including $500 million in new funds. This includes delivery of the $250-million FPT cost-shared Resilient Agricultural Landscape Program to help producers conserve and enhance the resiliency of agricultural landscapes.

Additional investments outside of Sustainable CAP to support the agriculture sector in reducing greenhouse gas emissions that also have the potential to produce environmental co-benefits to support climate adaptation, soil health, biodiversity and water include

• Agricultural Climate Solutions: On-Farm Climate Action Fund — a $200-million, 3-year fund (2021-2024), with an additional $470 million announced in Budget 2022 over six years (starting in 2022-23), to support farmers in adopting beneficial management practices in three areas: nitrogen management, cover cropping, and rotational grazing practices. Budget 2023 announced an additional $34.1 million over 3 years, starting in 2023-24, to support adoption of nitrogen management practices by Eastern Canadian farmers, that will help optimize the use of and reduce the need for fertilizer.
• Agricultural Climate Solutions: Living Labs — a $185-million, 10-year program (2021-2031) to establish a strong, Canada-wide network of living labs, bringing together farmers, scientists and other sector partners to co-develop, test and monitor BMPs on working farms to reduce Canada's environmental footprint and enhance climate resiliency.

The Government of Canada is also developing a Sustainable Agriculture Strategy, a coordinated federal initiative, to establish a long-term vision for agri-environmental issues, including climate change adaptation and resilience, climate change mitigation, water, biodiversity, and soil health. The Strategy will be the first of its kind for Canada, bringing all federal action on environment and climate in the agriculture sector together under one umbrella.

Higher-risk transformative science under AAFC's Strategic Plan for Science will help ensure a sustainable, resilient, and profitable agriculture and agri-food sector by 2050. Mission-driven science will bring together multiple disciplines, including economics, social science and natural science, from across the department and other science organizations working towards a similar goal, including increasing the resiliency of agro-ecosystems.

The missions are as follows:

• Mitigating and adapting to climate change
• Increasing the resiliency of agro-ecosystems
• Advancing the circular economy by developing value-added opportunities
• Accelerating the digital transformation of agriculture and agri-food

• The Government is aware of the importance of fertilizer for Canadian farmers while also recognizing Russia's illegal war against Ukraine.
• Since Russia's invasion of Ukraine, we have remained in regular contact with importers and suppliers of fertilizer products to help ensure an adequate supply for Canadian farmers.
• Although still high, global fertilizer prices have significantly declined since their peaks in 2022, thus relieving some pressure on the sector.

When pressed

How is the department supporting the sector amid high input prices?

To provide rapid cash flow to producers, we temporarily amended the Advance Payments Program, a low-interest federal loan program.

As farm operating costs remain uncertain heading into this crop year, the interest-free limit was recently increased from $100,000 to $250,000 for the 2024 program year. This change is expected to provide an additional $4,916 in interest savings to producers for a total savings of up to $58.7 million this program year, and a total interest savings of $188.2 million over the 3 years.

When will the Government return funds collected by the tariff on Russian fertilizers back to the sector?

The Government will not be granting tariff relief for Russian fertilizer in order to preserve the integrity of Canada's response measures to the war against Ukraine.

Through the On-Farm Climate Action Fund, $34.1 million is available to Eastern Canadian growers to optimize fertilizer use and reduce GHG emissions.

How will this funding help producers with fertilizer management?

Funding aims to provide Eastern Canadian producers additional financial support in their adoption of practices that optimize fertilizer use and reduce GHG emissions from synthetic fertilizer use.

These practices help adopters apply fertilizers in a way that minimizes negative impacts on the environment while maximizing crop yields.

How can Canadian farmers and producers apply?

Canadian farmers and producers can apply directly to one of the (5) recipients for cost-shared funding support to implement Best Management Practices (BMPs). They are encouraged to use the On-Farm Climate Action Fund Web Tool for Farmers to determine which recipient organization best serves their needs.

What is the current status of Sollio's appeal with Canada Border Services Agency (CBSA)?

We are aware of the situation. As this case is under review by CBSA, any questions related to the enforcement of the Customs Act and recourse activities should be directed to the CBSA.

We understand that both Sollio representatives and CBSA officials had an opportunity to appear before the AGRI Standing Committee (November 2024) to explain their perspectives on the matter.

AAFC is aware of the importance of fertilizer for Canadian farmers. We continue to work with the fertilizer value chain to help ensure an adequate supply for Canadian farmers.

Background

Fertilizer production and Canadian imports

Fertilizer products vary depending on the nutrients sought by growers, but generally, the most important nutrients are nitrogen (N), phosphorus (P) and potassium (K). Farmers will apply fertilizer with different ratios and amounts of these nutrients depending on the crop they are growing. For example, a high ratio of nitrogen is used to grow corn while soy requires minimal nitrogen as it produces its own.

Farmers largely depend on synthetic fertilizers, as opposed to organic fertilizers such as manure, due to their higher nutrient content. There are currently no valid cost-effective alternatives to synthetic fertilizers.

Nitrogen fertilizers are produced from natural gas, while phosphorus and potassium are mined. Canada is the world's largest producer and exporter of potassium and is self-sufficient. Over 90% of Canadian potash fertilizer production is typically exported, and import quantities are very small.

Canada largely relies on imports of phosphorus fertilizers, primarily from the United States. Canada is a net exporter of nitrogen fertilizers with 45% of its production being exported. However, this production is concentrated in Western Canada, and it is often cheaper for Eastern Canada to import fertilizer than transporting it by rail from Western Canada. As such, Eastern Canada was, prior to 2023, dependant on nitrogen fertilizer imports, most of which come from Russia.

Securing nitrogen Russian fertilizer for Eastern Canada

Despite sanctions against Russian goods, including fertilizer, Eastern Canadian fertilizer suppliers have successfully established new supply chains to replace Russian nitrogen fertilizer supplies with alternative sources from Northern Africa and the Caribbean, as well as continued trade with the United States, albeit at a higher cost.

Impacts of the Russian war against Ukraine on the price of nitrogen fertilizer

Fertilizer is the largest on-farm expense for crop producers. Prior to the conflict, the price of fertilizer had already reached historic highs, especially the price of nitrogen fertilizer, which nearly doubled in price in 2021 and rose further in 2022. These increases were due to strong crop prices, supply chain issues related to the pandemic, high natural gas prices (a primary feedstock in the production of nitrogen fertilizer), and restricted supply of fertilizer in the global market due to China, Russia, and Belarus banning select exports.

Since then, most regular trading routes on world nitrogen markets have reopened and, prices have fallen.

Fertilizers remain relatively expensive

Each fertilizer type is subject to different market and geopolitical forces that affect their price:

• Urea, an important nitrogen (N) fertilizer, is now worth about one-third of what it cost in 2022, at the start of the Russian invasion. However, it remains high compared to 2020 prices.
• Potassium Chloride (K) prices also spiked in 2022, fell in 2023, but are still significantly more expensive than in 2021.
• Phosphorous (P) prices also rose significantly in 2022. The main driver of this hike was China's decision to limit P exports to curtail domestic inflation and protect their citizen's food security. Prices of phosphate rock, the main ingredient in P fertilizer, also recently fell but, remains high when compared to 2020.

Fertilizer prices are quite volatile as global geopolitical decisions can greatly affect their price and availability. Because of recent geopolitical events, fertilizers will remain expensive for the 2024 growing season. For example, DAP fertilizer prices (a mix of N and P) are 50% more expensive when compared to 2020 prices.

Available support for farmers amidst rising fertilizer prices

The federal–provincial–territorial business risk management suite is available to help producers manage losses caused by risks that are beyond their control such as natural disasters, weather events, and severe market volatility. Existing programs, such as AgriStability and AgriInvest, are in place to assist producers when they experience income declines, both large and small.

Additionally, the federal government offers the Advance Payments Program (APP), a federal loan guarantee program that provides agricultural producers with easy access to low-interest cash advances.

On March 25, 2024, the interest-free limit was again temporarily increased to $250,000, which was confirmed in Budget 2024. Approximately 11,950 producers are expected to save an additional $4,916 in interest as a result of the change. This represents a total interest savings of up to $58.7 million for the program year 2024, and a total savings of $188.2 million for producers over the 3-year period.

OFCAF support — nitrogen management

AAFC's On-Farm Climate Action Fund (OFCAF) can directly support producers in the adoption of nitrogen management practices that will help optimize fertilizer use and reduce GHG emissions from synthetic fertilizer. Farmers can access nitrogen management funding from most OFCAF delivery organizations nationally, which will help support the costs of adoption. Through the adoption of these practices, farmers can reduce the amount of excess fertilizer that enters water bodies, helping to protect and preserve these ecosystems.

First announced in Budget 2021, the $704.1-million On-Farm Climate Action Fund is an initiative to help farmers tackle climate change. The fund is part of the Government of Canada's Agricultural Climate Solutions initiative, which falls under the more than $5 billion Natural Climate Solutions Fund. In consultation with agriculture industry associations in Eastern Canada, Budget 2023 provided OFCAF with an additional $34.1 million in nitrogen management funding to support Eastern Canadian farmers who undertake projects to adopt nitrogen management practices.

Sollio's appeal with CBSA

On March 2, 2022, the Canadian government withdrew Russia and Belarus's entitlement to the most-favoured-nation tariff. This resulted in a 35% tariff on virtually all goods that originated in these nations and that were not already in transit, including fertilizers. Shipments en route to Canada on or prior to March 2 were exempted from the tariff.

There is an ongoing CBSA case involving Sollio, who is seeking relief from tariffs for past fertilizer shipments. This case is under review by CBSA. As such, any questions related to the enforcement of the Customs Act and recourse activities should be directed to the CBSA.

On November 21, 2024, Sollio representatives participated in the Standing Committee on Agriculture and Agri-Food, and indicated that their inability to import Russian products leaves them more vulnerable to geopolitical risks in other source countries. AAFC is aware of the importance of fertilizer for Canadian farmers. We continue to work with the fertilizer value chain to help ensure an adequate supply for Canadian farmers.

Backgrounder: Sollio fertilizer tariffs

On March 2, 2022, the Canadian government withdrew Russia and Belarus’s entitlement to the most favoured nation tariff. This resulted in a 35% tariff on virtually all goods that originate in these nations that were not already in transit, including fertilizers. Shipments en route to Canada on or prior to March 2 are exempt from the tariff.

Sollio has reported that 7 cargoes of their Russian fertilizer imports were in transit prior to the March 2, 2022, decision. The CBSA initially provided refunds on 2 of these cargoes. However, upon further review, the CBSA deemed the shipments ineligible for the “in transit” exemption, as documents provided did not clearly demonstrate the products were en route prior to March 2, 2022. A subsequent decision rendered all 7 cargoes ineligible for refunds. This resulted in Sollio having to pay a total of approximately $30 million in tariffs.

Current status

Sollio had initially brought forward the tariff decision for judicial review with the Federal Court; however, they have subsequently withdrawn their case. Currently, Sollio has filed an appeal with the CBSA which is underway; hence they should communicate with CBSA directly on this matter.

CBSA's role in managing refunds (via adjustment requests), compliance verification audits, and requests for appeals

The Customs Act is the main piece of legislation that regulates the importation of goods into Canada. The act prohibits CBSA officials from disclosing customs information, with few exceptions.

An importer may submit an adjustment request, which may result in a refund if they are eligible so long as the importer provides sufficient documentation to substantiate the claim.

Adjustment requests are reviewed by CBSA regional officers, and additional documentation to substantiate the claim may be requested. The CBSA will render a decision based on the documents presented, which may result in a refund to the importer or an amount owing to the CBSA.

The CBSA can within the prescribed legislative time limits, further review the adjustment and issue a new decision, which may require the importer to repay amounts previously refunded, as is the case with Sollio.

1. A person subject to a CBSA decision on tariff treatment can appeal the decision to the President of the CBSA within 90 days and after all duties and interest in respect of the goods are paid or security satisfactory to the Minister is given. The appeal is conducted under a de novo process where a fresh record is examined and where the onus is on the appellant to support their claim with evidentiary documents. The President's decision is impartial, without delay, based on the application of relevant legislation, regulations as well as with consideration for consistent policy application and Government priorities.
2. The person may then appeal the President's decision to the Canadian International Trade Tribunal under section 67 of the Customs Act within 90 days.

Any questions related to the enforcement of the Customs Act and recourse activities should be directed to the CBSA.

Talking points

• AAFC is aware of the importance of fertilizer for Canadian farmers. We work with the fertilizer value chain to help ensure an adequate supply for Canadian farmers.
• I understand that both Sollio representatives and CBSA officials had an opportunity to appear before this committee last week to explain their perspectives on the matter.

Responsive: When will the Government return funds collected by the tariff on Russian fertilizers back to the sector?

• The Government will not be granting tariff relief for Russian fertilizer in order to preserve the integrity of Canada's response measures to the war against Ukraine.
• Through our On-Farm Climate Action Fund, $34.1 the department supports farmers in efforts to optimize fertilizer use and reduce GHG emissions.

Follow-up Q&A (from last agriculture committee appearance) question

"In the department of agriculture, third party consultant fees have increased by 95% since 2015. Do you know what the employee count has increased by in the department of agriculture?"

Answery

• Since 2015, third party professional services expenses increased by 21% (from $61 million in 2015 to $73 million in 2024)
• Since 2015, the number of AAFC employees have increased by 525 full-time equivalents (FTE), from 4,513 FTE in 2015-16 to 5,038 FTE in 2024-25, or approximately 12%

Notes

• Looking at our data we were unable to re-create the 95% referenced by the Member.
• Total professional services as per the Public Accounts 2015 vs 2023 amounted to $106 million versus $122 million — a 15% increase.
  • After removing all Other Government Department expenditures, total professional services were $61 million in 2015 versus $80 million in 2023 — 31% increase.
• There are many items in professional services that are not third-party consultant fees, such as protection services, motor vehicle licenses, tuition fees and membership fees.

• The Responsible Government Spending initiative announced in Budget 2024 extends and expands on the Refocusing Government Spending initiative that was announced in Budget 2023 and the 2023 Fall Economic Statement.
• Budget 2024 announced the second phase of the refocusing government spending initiative by directing organizations to identify operating cost savings totaling $4.2 billion from 2025-26 to 2028-29, and $1.3 billion ongoing.
• Savings will primarily be drawn from operating budgets and through natural attrition, to the greatest extent possible, without impacting programs and services that benefit Canadians and in a way that continues to support regional representation and a diverse public service workforce.
• Organizations are in the process of developing proposals to meet their specific savings targets, and approved savings amounts will be presented in the 2025-26 Main Estimates and departmental plans.

When pressed

How much in savings is being targeted in the Responsible Government Spending (Budget 2024) initiative?

Budget 2024 directs organizations to identify savings totalling $4.2 billion from 2025-26 to 2028-29, and $1.3 billion ongoing.

What are AAFC's savings targets?

AAFC's spending targets will be confirmed through the tabling of the 2025-26 Main Estimates and Departmental Plan.

Will services to Canadians or programs be affected by reductions as part of the Responsible Government Spending initiative?

As stated in Budget 2024 and in direction shared with ministers, these savings will not impact the delivery of benefits to Canadians and should be done in a way that continues to support regional representation and a diverse public service workforce.

How many jobs are expected to be cut as a result of this savings exercise?

Through this initiative, federal public service organizations are required to cover a portion of increased operating costs through their existing resources. Individual organizations are responsible for identifying how best to implement savings, which are expected to be generated primarily through natural attrition, to the greatest extent possible.

Are unions being informed?

Union representatives were provided with information about this initiative by TBS. AAFC is committed to respecting the provisions of collective agreements and will engage with bargaining agents once decisions are made by Treasury Board.

What will be the impact on current and future terms, student and casual contracts?

Term employees, students and casuals do important work in the department and future decisions relating to their employment, including the possibility of renewals and new hires, will be based on what priority work must be done within the constraints of allocated budgets.

Will there be job losses at AAFC?

Individual organizations are responsible for identifying how best to implement savings, which are expected to be generated primarily through natural attrition, to the greatest extent possible. These savings should be done in a way that continues to support regional representation and a diverse public service workforce.

When will we know what budget savings will occur at AAFC?

Communications on the department's budget savings will be done once AAFC's approved plans are presented in the 2025-26 Main Estimates and Departmental Plan.

• AAFC continues to meet and exceed the department's 5% target for Indigenous procurement.
• As of Q2 of the current fiscal year, AAFC has achieved an Indigenous Procurement rate of 8.7%, and is on track to exceed its year-end target of 5%. Progress is being actively monitored to ensure continued success.
• AAFC continues to enhance Indigenous procurement efforts through the work of its Indigenous Procurement Working Group; contracts awarded through set-asides and incidentals, and the ongoing monitoring, analysis, and reporting of procurement data.

Background

AAFC targets and results

AAFC has been actively engaged in this initiative since 2022 through the submission of Procurement Plans and Results Reports to Indigenous Services Canada (ISC).

• In 2022-23, AAFC set a target of 4%; however, exceeded that target by awarding 6.8%, or approximately $11.3 million, to Indigenous businesses.
• In 2023-24, AAFC set a target of 5%; however, exceeded that target by awarding 6.7%, or approximately $12.5 million, to Indigenous businesses.

Targets are established based on an analysis of procurement data and trends, including set-asides and incidental purchases.

Results are generated through a standardized departmental verification process that ensures each procurement file and its corresponding data entry in the departmental integrated financial and materiel management system (SAP) include the required evidence validating Indigenous Business status at the time of contract award.

Areas of procurement contributing to these results include:

• information technology and telecommunications consultants
• computer equipment
• office furniture and furnishings, including parts
• other office equipment and parts
• management consulting
• road motor vehicles

Gaps reported to ISC include:

• instruments and laboratory equipment
• agricultural machinery and equipment
• information products
• exposition design and fabrication services

AAFC's validation activities

In early 2022 AAFC established an Indigenous Procurement Working Group, consisting of key internal stakeholders and business owners with department-wide representation and the goal of identifying and planning Indigenous procurements to facilitate the department's mandate of achieving and exceeding the 5% target.

AAFC ensures compliance with the Procurement Strategy for Indigenous Business by adhering to its obligations, operational requirements, and Section 4.1.2.1 of the Directive on the Management of Procurement. This includes oversight, planning and reporting on contracts awarded to Indigenous businesses.

During the procurement process, business owners and procurement officers verify the Indigenous Business Directory, hosted by Indigenous Services Canada (ISC), and other modern treaty business lists or directories, to confirm Indigenous business status is validated and evidenced in procurement files.

Background

The Commissioner of the Environment and Sustainable Development's (CESD) report focussed on 3 programs: On-Farm Climate Action Fund (OFCAF), Agricultural Clean Technology — Adoption Stream (ACT-A), and Living Labs (LL), resulting in 4 recommendations:

1. Finalize and implement a sustainable agriculture strategy.
2. Expedite the review, approval and finalization of contribution agreements to avoid program implementation delays.
3. Identify and implement concrete actions to expedite emissions reductions and carbon sequestration from its programs and finalize program targets.
4. Implement a results-monitoring framework to enable accurate, timely and transparent assessments of results.

Departmental response and actions

Sustainable agriculture strategy (SAS)

In the absence of a strategy, program approaches were guided by an extensive science-based analysis identifying a pathway to emissions reductions from the sector by 2030. This analysis informs beneficial management practices (BMP) selection and program design to maximize emissions reductions.

AAFC is currently finalizing the SAS based on feedback from the SAS Advisory Committee. While no release date has been set, the SAS is nearing completion.

Program improvements

The department continues to respond to the sector and is committed to continuous improvement of our programs. We have already made positive changes to program delivery, including:

• streamlining application processes
• prioritization of projects with greatest GHG impact (ACT-A)
• more data capture to quantify additional GHG reductions (OFCAF)
• prioritization of key GHGs: fertilizer and methane (ACT and OFCAF)
• creating opportunities to add new BMPs as evidence becomes available (OFCAF)
• adjusting assumptions on permanence and GHG estimates as science/data becomes available (OFCAF)

The department is currently in the process of approving applications for the expansion of OFCAF to 2028, and will be developing contribution agreements with recipients in early 2025. The expanded program included a component that invited recipients to propose activities that further develop emerging BMPs with the potential to reduce or remove GHGs.

Program targets and results

The audit was critical of GHG reductions achieved to date through the programs. However, the audit was conducted after only 1 to 2 growing seasons of implementation for 5-, 7-, and 10-year programs, with only 1 year of performance data. We have seen record numbers of interest in these programs and in some cases, we have already surpassed most of our original expectations — for producers involved, hectares under improved management and reductions in fossil fuel use.

Results for the second growing season are being finalized but indicate that they will surpass results from the first year, in terms of producer engagement through OFCAF or areas under land management for Living Labs for example. It takes time to observe the impacts of implementing new environmental practices and technologies on-farm. (see Annex A)

Each program has multiple performance targets that reflect their unique focus, and the dynamic nature of efforts to mitigate emissions. Efforts are underway to review program specific targets based on additional performance data by March 2025.

Results monitoring and BMP permanence

The audit was critical of AAFC's approaches to data reliability and assumptions of permanence. Permanency is complex in agriculture, with many factors influencing annual farm management decisions and whether a producer will maintain a new practice or technology.

AAFC takes a risk-based approach to assumptions on permanence, relying on the best available data and evidence. Assumptions on permanence are adaptive and change as new evidence becomes available.

Responsive — other targets and commitments

GOC climate commitments

AAFC programs have been responsive to contribute to achieving the government of Canada's fertilizer emissions target and methane commitments:

Fertilizer

• ACT-A: funding for precision agriculture technologies that reduce the application of fertilizers (that is, variable rate application and precision planting).
• OFCAF: Support for nitrogen management practices was estimated to reduce GHGs by approximately 65,000 tonnes CO2e.
• LL: 10 living labs are developing and testing innovative solutions around the use of fertilizer in agriculture, examining strategies and products related to 4R nitrogen stewardship, fertilizer efficiency and optimization, among others.

Methane

• ACT-A: Funding for anaerobic digestors, manure management, and composting technologies.
• OFCAF: Funding for practices (that is, low methane pastures) reduced GHGs by approximately 142 tonnes CO2e.
• LL: 5 Living Labs have components dedicated to manure storage and/or livestock feeding strategies.
• AAFC launched the $12-million Agricultural Methane Reduction Challenge to attract innovative ideas to reduce methane emissions from cattle.

Annex A: Summary program results

(updated from results presented in CESD report)

ACT-A as of November 2024

• Adoption of 418 clean technologies, including:
  • Biomass boilers for heating barns or drying grain (switching fossil fuel usage)
  • On-farm solar systems (renewable electricity)
  • More efficient grain dryers (reducing fuel usage)
  • Precision planting or fertilizer spreading with variable rate application (reducing fertilizer emissions and fuel usage)
  • GPS technology on field equipment (reducing fuel usage)
• 0.03Mt CO2 eq emissions reduced (equivalent to removing 9,308 cars off the road)
• 5,548 metric tonnes reduction of fertilizer (23% reduction from baseline)

OFCAF

The first two years of program delivery reported positive results with OFCAF having supported 7,500 farmers to adopt practices on over 2.4 million hectares of land, and mitigating over 450,000t Co2e. Recipient organizations are confident that momentum will continue through to 2028.

Year 1 also reported the training of over 1,000 professionals, such as agronomists, and over 14,000 producer attendees at peer-to-peer learning and on-farm demonstration events.

Living Labs

14 Living Labs established across country, including an Indigenous-led Living Lab, a Living Lab centred on regenerative agriculture, and another that includes a focus on the social and behavioural aspects of BMP adoption.

Work is ongoing on the co-development or modification of regional BMPs in 79 areas across the country, including on:

• optimization of fertilizer use
• manure and compost management
• cover cropping
• precision farming (seeding and fertilizing)

Early results for 2023-24 show a significant increase in hectares under improved management (estimated over 190,000 hectares)

Briefing on the mandate and priorities of the Minister of Agriculture and Agri-Food November 28, 2024

Greenhouse gas emissions

The most recent National Inventory Report (NIR) is the 2024 report, which contains emission data up until 2022. For 2022, agriculture sector direct emissions were 70 Mt, representing approximately 10% of Canada's total emissions.

Livestock is the largest source of emissions. Most of that is from cows, mostly for beef production. Livestock related emissions have declined since the early 2002, and have remained fairly stable over the last decade, but they still account for more than half of the sector's emissions.

Crop emissions are the fastest growing emissions source, driven largely by increased fertilizer related emissions. Fertilizer related emissions have doubled since 2005.

Crop sequestration, which factors into the LULUCF figures reported in the NIR, tends to bounce up and down a great deal from year to year. Most years agricultural lands act as a carbon sink, reducing the net emissions of the sector. For much of the last 20 years agricultural lands have been sequestering about 20 Mt per year of emissions, reducing sector net emissions by 20 Mt. In some years, agricultural land has sequestered up to 40 Mt.

2022 was the worst year in 3 decades for land use emissions, with land use accounting for an increase in emissions of 22 Mt, rather than contributing to the reduction in net emissions normally generated by carbon sequestration. 2022 is expected to be a blip, driven by extreme weather events, and is not indicative of likely land use emissions going forward.

Support for reducing greenhouse gas emissions

The department helping to support the sector in reducing greenhouse gas emissions through investments of over $1.5 billion through several programs that aim to not only reduce greenhouse gas emissions but also support the sustainability and resiliency of the sector.

This includes supporting farmers with new technologies and farming practices that reduce emissions and improve farm performance through programs such as Agricultural Clean Technology, and Agricultural Climate Solutions.

We have also invested $12 million though the Agricultural Methane Reduction Challenge to advance solutions that are designed to reduce methane emissions from cattle. This will further Canada's broader reduction targets, but also our commitment to the Global Methane Pledge, which aims to reduce global methane emissions by 30% below 2020 levels by 2030.

In support of the Global Methane Pledge, officials from the department also played a key role in the development of Canada's Methane Strategy, which outlines action in reducing methane emissions, including a chapter specific to the agriculture sector that highlights challenges and opportunities.

The Sustainable Canadian Agricultural Partnership, a $3.5-billion 5-year agreement between the federal, provincial and territorial governments, includes a key priority area on climate change and environment, with a goal of 3-5 Mt reduction in greenhouse gas emissions.

The Sustainable Agriculture Strategy, currently under development, provides an opportunity to identify a vision, key measures and approaches to reducing emissions in the agriculture sector.

My department is also working with Environment and Climate Change Canada on the development of several carbon offset protocols for the sector, which aim to provide an incentive to reduce emissions on farms through a potential diversified income stream.

Progress on reducing greenhouse gas emissions

Since 2005, emissions from the agriculture sector have remained relatively stable.

Achieving emissions reductions will be challenging and costly for the agriculture sector, given that the majority of emissions are closely tied to production, and largely biological in nature, making them difficult to measure and address.

AAFC estimates that existing programs will lower projected emissions by about 11 Mt per year in 2030. Program emission reductions estimates are based on available funding for Beneficial Management Practices (BMPs), rather than total program funding, as not all program funding goes directly to funding BMPs that aim to reduce emissions.

Estimates are based available performance data, which may not capture recent program improvements, nor improvements in greenhouse gas measurement, such as updated emission factors.

The largest share of the emission reductions come from Resilient Agricultural Landscape Program (RALP), followed by the On Farm Climate Action Fund (OFCAF). The Agricultural Clean Technology (ACT) program primarily funds technologies that are different from the those funded by the former two programs. ACT emission reductions are significantly lower than those attributed to other programs.

The department has a range for Living Labs emission reductions but since ECCC requires a single number for their publications, rather than a range, the centre point of AAFC's range was selected which is simply 1 Mt of reductions.

Fertilizer Emission Reduction Target (additional is provided in Annex A)

The Government of Canada has set a national target to reduce greenhouse gas emissions from fertilizer application by 30% below 2020 levels by 2030. In order to meet the 30% fertilizer emission reduction target, fertilizer emissions will need to be reduced by about 3 Mt.

The target does not represent a ban or mandatory reduction in the amount of fertilizer that can be used on Canadian farms but is rather intended to build upon the sector's progress in reducing emissions while maintaining competitiveness and maximizing food production.

As reported in the most recent National Inventory Report, emissions from fertilizer application for agriculture in 2020 were 10.30 Mt of carbon dioxide equivalent. In the 2022 production year, emissions from fertilizer application for agriculture were reported to have declined to 9.72 Mt of carbon dioxide equivalent.

The Government of Canada is committed to collaborating with the sector to expand the use of beneficial management practices and new products to achieve additional emissions reductions while maintaining or increasing yields.

Some of the existing programs are funding fertilizer related BMPs that will help to achieve this target. It is estimated that existing programs will support roughly 1.44 Mt per year in 2030 of fertilizer emission reductions.

In June 2024, an industry–government Fertilizer Emissions Reduction Working Group submitted recommendations and advice to the Sustainable Agriculture Strategy Advisory Committee that will inform the development of a collaborative approach for further reducing emissions from fertilizer application in Canada.

Annex A

Additional information on the Fertilizer Emission Reduction Target

Context

In December 2020, the Government of Canada set a target to reduce greenhouse gas emissions from fertilizer application by 30% below 2020 levels by 2030.

The fertilizer emissions reduction target does not represent a ban or mandatory reduction in fertilizer use on Canadian farms but rather is intended to reduce emissions while maintaining or increasing yields.

The fertilizer emissions reduction target was developed considering existing approaches available that, when adopted at scale, could help significantly reduce nitrous oxide emissions from fertilizer use without compromising productivity.

These include approaches in line with the principles of 4R Nutrient Stewardship, as well as practices such as reduced tillage, cover crops, irrigation and drainage management, and investments in clean technology and innovation.

As growing conditions vary across the country, beneficial management practices that improve nutrient use efficiency while reducing greenhouse gas emissions and nutrient losses must be locally selected to account for unique regional circumstances. This is why the Government is focussed on voluntary efforts to improve nitrogen management and optimization of fertilizer use, which will not only help to reduce emissions but can also result in long-term improvements in soil health and water quality.

Progress toward reaching the target will be achieved using voluntary measures developed in collaboration with industry and producers, ensuring Canada can continue feeding the world under a changing climate.

The Government of Canada is developing a sustainable agriculture strategy to support the agriculture sector's actions on climate change and other environmental priorities toward 2030 and 2050, which involved the creation of an Advisory Committee to consider sector perspectives on specific approaches or actions to be included in the Strategy.

In May 2023, a multi-stakeholder, expert-driven Fertilizer Emissions Reduction Working Group was formed under the Sustainable Agriculture Strategy Advisory Committee, with a mandate to provide advice and guidance on the development of a collaborative approach for reducing emissions from fertilizer application.

The Fertilizer Emissions Reduction Working Group ran for a one-year term between May 2023 and May 2024, with discussions having focused on economic policy tools, innovation and research and development, beneficial management practices, data and measurement, and extension and communication.

The Government of Canada received over 2,000 responses during the consultation period and published a What We Heard report summarizing the feedback received throughout the engagement process on March 22, 2023.

The recommendations and advice submitted by the industry-government Fertilizer Emissions Reduction Working Group to the Sustainable Agriculture Strategy Advisory Committee will inform the development of a collaborative approach for reducing emissions from fertilizer application in Canada.

We are committed to a collaborative approach and ongoing dialogue with industry, provinces and territories to ensure the long-term competitiveness of the agriculture sector and the health of our water, air and soil for generations to come.

Funding

Under the $3.5-billion, 5-year Sustainable Canadian Agricultural Partnership, federal, provincial, territorial (FPT) cost-shared programs are available to support farmers with the adoption of on-farm beneficial management practices, including those that improve nitrogen management and optimize fertilizer use. In addition, federally funded programs such as AgriInnovate and AgriScience have supported a variety of fertilizer innovations, ranging from fundamental research on nitrogen management practices to the development of fertilizer alternatives.

The $704.1-million Agricultural Climate Solutions — On-Farm Climate Action Fund supports farmers in the adoption of beneficial management practices that store carbon and reduce greenhouse gas emissions in three areas: nitrogen management, cover cropping and rotational grazing.

The $185-million Agricultural Climate Solutions — Living Labs accelerates the co-development, testing, adoption, dissemination, and monitoring of beneficial management practices that sequester carbon and/or reduce greenhouse gas emissions. 10 living labs are developing and testing innovative solutions around the use of fertilizer in agriculture, examining strategies and products related to 4R nitrogen stewardship, fertilizer efficiency and optimization, among others.

The $441.4-million Agricultural Clean Technology Program aims to create an enabling environment for the development and adoption of clean technology in three priority areas: green energy and energy efficiency, precision, agriculture, and bioeconomy. The Adoption Stream supports the purchase of commercially available clean technologies that reduce greenhouse gas emissions, while the Research and Innovation Stream supports pre-market innovation to develop transformative clean technologies and expand current technologies.

The Government of Canada is a founding member of the Efficient Fertilizer Consortium, and has committed $1.3 million over 2024 to 2028 ($347,500 in 2024-25) to facilitate international collaboration in support of research on enhanced efficiency and novel fertilizer products and practices.

Historical GHG emissions

The information in this section is public. It can be found in the 2024 National Inventory Report.

The most recent National Inventory Report is the 2024 report, which contains emission data up until 2022. For 2022, agriculture sector direct emissions were 70 Mt, while net emissions were 92 Mt.

Livestock is the largest source of emissions. Most of that is from cows, mostly for beef production. Livestock related emissions have declined since the early 2002, and have remained fairly stable over the last decade, but they still account for more than half of the sector’s emissions.

Crop emissions are the fastest growing emissions source, driven largely by increased fertilizer related emissions. Fertilizer related emissions have doubled since 2005.

Crop sequestration, which factors into the LULUCF figures reported in the National Inventory Report, tends to bounce up and down a great deal from year to year. Most years agricultural lands act as a carbon sink, reducing the net emissions of the sector. For much of the last 20 years agricultural lands have been sequestering about 20 Mt per year of emissions, reducing sector net emissions by 20 Mt. In some years, agricultural land has sequestered up to 40 Mt.

2022 was the worst year in 3 decades for land use emissions, with land use accounting for an increase in emissions of 22 Mt, rather than contributing to the reduction in net emissions normally generated by carbon sequestration. 2022 is expected to be a blip, driven by extreme weather events, and is not indicative of likely land use emissions going forward.

Source: 2024 National Inventory Report 1990–2022: Greenhouse Gas Sources and Sinks in Canada

GHG Business As Usual projections

The information in this section is not public. The updated projections will be released by ECCC in the Biennial Transparency Report in December.

• AAFC Business as Usual GHG emission projections are driven by projected agriculture sector activity, drawn from the Medium Term Outlook (MTO).
• Activity is mapped across Canada and emission factors are then applied to activity levels to estimate emissions.
• Under the Business As Usual scenario, in the absence of any recent agricultural sector programming, sector emissions would be expected to be relatively flat across most major emission sources.

Emissions with programs

The information in this section is not public. The updated projections will be released by ECCC in the Biennial Transparency Report in December.

AAFC estimates that existing programs will lower projected 2030 emissions by about 9.85 Mt.

Emission reductions by program are in the chart below.

Depending on the program in question not all of the program funding may go directly to funding BMPs to reduce emissions. For example, only about half of total OFCAF funding will go directly to supporting BMP adoption. Program emission reductions estimates are based on the available funding for BMPs, rather than total program funding.

The largest share of the emission reductions come from Resilient Agricultural Landscape Program (RALP), followed by the On Farm Climate Action Fund (OFCAF).

The types of activities funded under RALP and OFCAF include many of the same activities that were identified as "Star Practice" beneficial management practices (BMPs) under the Climate Change Roadmap, including:

• growing and maintaining grasslands
• planting trees
• rotational grazing
• legumes in rotation
• legumes in pasture
• cover crops
• split N application
• enhanced efficiency fertilizer use
• wetland restoration
• avoided wetland conversion

The Agricultural Clean Technology (ACT) program primarily funds technologies that are different from the Star Practice BMPs. ACT emission reductions are significantly lower than OFCAF or RALP.

The department has a range for Living Labs emission reductions but since ECCC requires a single number for their publications, rather than a range, the centre point of AAFC's range was selected which is simply 1 Mt of reductions.

Note that AAFC's projected emission reductions from the "with programs" scenario includes the assumption that the fertilizer target will be met. In order to meet the 30% reduction fertilizer target fertilizer emissions will need to be reduced by about 3 Mt. Some of the existing programs are funding fertilizer related BMPs that will help to achieve this target. It is estimated that existing programs will support roughly 1.2 Mt of fertilizer emission reductions. That still leaves about 1.9 Mt of fertilizer emission reductions that will be needed to meet the target. [Redacted] If we include only existing and funded programs then the sector emission reductions would be projected to be about 7.95 Mt (rather than 9.85).

Climate change roadmap star practice BMPs

The information in this section is not public. It is internal to AAFC.

As part of the Climate Change Roadmap AAFC identified about 13 management practices (BMPs) to reduce sector GHG emissions, the "star practices". These 13 practices were selected on the basis of significant potential for increased adoption resulting in significant BMP reductions. The practices were not necessarily selected based on their cost effectiveness, but only for their total mitigation potential.

It was estimated that if these practices were adopted on 100% of farms where they are realistically applicable, then this would result in an additional 19 Mt of emission reductions by 2030.

However, 100% adoption was not considered very realistic. The roadmap proposed "aspirational" adoption levels for the different BMPs; adoption levels that are still ambitious, but somewhat more realistic.

At aspirational adoption levels the 13 BMPs would generate about 14 Mt of emission reductions by 2030.

Note that the emission reductions from these star practices are not additive with projected program emission reductions. Most of the projected emission reductions from existing programs come from practices that are included in the Roadmap Star Practices. So program emission reductions are a subset of the emission reductions achievable via star practices.

At 100% adoption of Star Practices there would be about 9 Mt of additional emission reductions achieved above and beyond what is expected from existing programs.

Star practices and emission reduction potential are shown below. The practices that have the most significant potential to reduce GHG emissions include:

• tree planting (3.1 Mt)
• fertilizer with inhibitors (3 Mt)
• grassland preservation (2.2 Mt)
• reducing tillage (1.7 Mt)
• legumes in pasture (1.6 Mt)

Fertilizer target

This information in this section is public. It is from the 2024 NIR.

The fertilizer target is a 30% reduction relative to 2020 emissions. Fertilizer emissions in 2020 were about 10 Mt, so this means a 3 Mt reduction, down to 7 Mt, by 2030.

Fertilizer emissions were tending upwards for most of the last 20 years.

Fertilizer emissions have dropped slightly in the last 2 years.

However, multiple factors influence fertilizer emissions and we should be cautious about interpreting the last 2 years as a new trend, or the result of program interventions.

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Most of the information in this section is not public. The information on historical emissions is public. [REDACTED] The information on projected emissions (that is, in 2030 and 2035) is not public.

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