Building a more profitable agriculture and agri-food sector for Canada
The agriculture and agri-food sector has changed dramatically over the last half of the 20th century, both in Canada and internationally, and the pace of change is accelerating. New challenges have emerged to the continued success of the sector, as well as many new opportunities to increase farm income.
The most obvious challenge to continued success has been the sustained, long-term decline in most commodity prices. This decline has resulted from many factors, from productivity improvements based on advances in technology and management, to more intense competition from emerging low-cost producing countries, to reduced demand from traditional importing countries as they move toward self-sufficiency. In addition, the United States and the European Union continue to heavily subsidize the production of certain commodities - contributing to this downward pressure on prices.
Consumer preferences are evolving and the ability to deliver products that meet consumer expectations is becoming more critical. Recent high-profile events, for example, have raised the awareness and expectations of consumers about food safety. In addition, consumer interest in how agricultural products are produced is increasing, including potential environmental impacts. At the same time, consumers are becoming more discerning in their food choices and are demanding products with a greater range of attributes.
Markets are responding to these consumer demands. Major buyers of food and agricultural products are imposing more rigorous production and assurance specifications on their suppliers. And governments around the world are raising technical requirements for imports. These requisites are working their way through the entire agri-food chain. And if industry is to maintain existing markets, build profitability, and succeed in new markets it must accelerate the good work it is already doing to ensure it is producing and marketing products that stand above the competition in the minds of consumers, whether for their quality, safety, or the environmentally responsible manner of their production.
The individual elements of the Agricultural Policy Framework are not new. In fact, industry and governments have been strong advocates for action on these elements in the past. What is new is the linking of these elements in a comprehensive approach so that the Canadian agriculture and agri-food sector has a solid platform from which to maximize opportunities in the global marketplace, resulting in increased profitability through growth, diversification and value-added activity. But this policy framework is broader than just the agriculture and agri-food industry, it is also about benefits to Canadians. These benefits include greater food safety and quality assurance systems from the farm through to the grocery store, accelerated environmental stewardship initiatives on farms, and the positioning of the second largest sector of the Canadian economy for even greater growth.
This overview provides a brief introduction to the elements of the Agricultural Policy Framework and notes the feedback received during the first round of consultations.
The risks to profitability faced by farmers today are increasingly complex and broad in scope. Traditional risks from weather, pests, disease and global market fluctuations remain important, but have been joined by new risks, such as the potential loss of consumer confidence - and thus, markets - from food safety scares or environmental concerns around production. Expanding risk management programs to allow farmers to effectively mitigate these risks is one of the goals of the APF.
Stakeholders have underlined the critical importance of risk management in agriculture - including the system of supply management for certain commodities. Governments understand this and remain committed to risk management policy and programs, to cooperatives, and to Canada's system for supply management.
Stakeholders also agreed that the current safety net system has shortcomings that underline the need for a better approach - one that would protect farmers' incomes from the inherent risks in farming, but would build on the best of existing programs to promote on-farm productivity improvements, investment and innovation.
Building on this stakeholder feedback and the work under way among governments, a more integrated risk management system is proposed based on two key elements: broad-based insurance and a stabilization-investment component. As in the past, producers will also be encouraged to complement government-sponsored risk management programs through private risk management strategies, as both play a fundamental role in mitigating adverse effects.
Expanded Insurance Coverage: Under the Agricultural Policy Framework, options are being considered that would expand and enhance the existing crop-insurance model to encompass a wide range of perils and agricultural commodities. In addition, public and private industry alternatives are being investigated to determine program options to address income losses related to the destruction of productive assets.
Stabilization and Investment: Within the existing program framework, the Net Income Stabilization Account (NISA) program is being considered as a vehicle for stabilization (its current role), as well as for its potential to support investments to increase producers' capacity to manage risk and promote profitability, growth, diversification, and value-added activity.
Overall, governments, in close consultation with industry, aim to promote the use of an integrated set of programs to address risks on a whole-farm basis by building on the strengths of established programs and developing new instruments for the risks that fall outside existing programs. Renewal of the sector, with proposed program directions discussed below, will be designed to work hand-in-glove with the proposed risk management system to form an integrated set of modern management tools for producers.
Like other sectors of the Canadian economy, agriculture is rapidly becoming more knowledge intensive. Advances in science and technology are providing opportunities to address environmental, food safety and food quality pressures, and to create new products that better address consumer demands across a wide range of requirements. These changes are presenting new management challenges and opportunities, and producers are increasingly having to engage in continuous learning to keep up with the pace of change.
Input from stakeholders confirmed the importance of training, skills development and the adoption of best practices in positioning the sector for profitability. In this context, they further recognized that different skills and tools are required by beginning farmers, mid-career farmers and retiring farmers to address their unique needs.
The APF proposes a variety of measures designed to help farmers better understand their situation and their options, and to make informed choices for the benefit of themselves and their families. These proposals include the enhancement of public and private business management and consulting services, along with making available benchmark management and marketing information to assist farmers to enhance their profitability.
Also proposed are the development of a public/private process to reach consensus on the skills and tools required in agriculture and to explore development and delivery options where required; the enhancement of learning opportunities in business management, environmental management and food safety and quality systems management; as well as the provision of retraining and support programs for farmers who choose to pursue off-farm options.
Further development and support for producer-owned co-operatives also represent an important approach to support the achievements of renewal goals. Co-operatives could be a key partner with governments in ensuring that farmers have the tools to address issues, be competitive and capture opportunities in the area of science, food safety and environmental stewardship. In order to maintain and grow this direct producer investment, various enabling strategies will have to be considered.
Other proposals would facilitate access to capital for farmers entering the sector, expanding their business or moving into value-added and diversified production. Governments also propose the development of networks along the value-chain that would better link scientific advances to the creation of new economic opportunities for farmers.
These proposed initiatives to ensure renewal of the sector, along with the proposed risk management programs discussed previously, are intended to provide a solid foundation from which producers can pursue increased profitability.
Through the strong commitment of industry and governments, Canada's agriculture and agri-food sector enjoys a global reputation for consistently delivering safe, high-quality food. It is recognized by both industry and government that this reputation can be leveraged for greater profitability in the sector, particularly in today's market environment where consumers are expecting and demanding greater assurances about the safety and quality of the food they eat.
Industry is moving to meet these demands. Governments recognize the need to foster and support industry's initiative, while incorporating it into a broader policy framework aimed at securing greater profitability for the sector.
Discussions with stakeholders on the proposed APF confirmed solid support for a Canadian food system that can offer documented evidence of safety and quality. It was widely recognized that strengthening food safety and food quality systems throughout the agriculture and agri-food chain will yield profitable marketing opportunities for the sector.
Proposed APF actions would facilitate industry-led development throughout the agri-food chain of food safety systems, food quality systems as appropriate, and traceability systems. Government recognition of industry food safety and food quality systems where appropriate is also proposed, as is research to advance food safety, food quality and traceability systems. In addition, the APF would strengthen the food safety surveillance and information systems governments currently have in place.
Environmental stewardship is key to both the industry's long-term sustainability and its profitability, and was so noted in input from stakeholders. Public concerns about the environment and agriculture's role in stewardship are increasing. In response to these concerns, buyers of agriculture products are starting to require evidence of responsible production practices.
Farmers are stewards of the land, and the industry is already taking action to manage known environmental risks. The industry has indicated a desire to improve its stewardship, and the APF proposes five key areas where governments can provide help.
To enhance awareness and information about the environmental issues in agriculture and the sector's performance in addressing them, it is proposed that common agri-environmental indicators be used along with analytical tools that track and predict environmental performance.
Additional research, to improve our understanding of the linkages between agriculture and the environment and to develop best management practices, is also proposed.
To identify environmental priorities, it is proposed that governments work with the sector towards the eventual goal of every farmer completing a basic agri-environmental scan. Where environmental issues are identified that would benefit from further action, environmental farm plans, or equivalent environmental plans, could be developed and implemented to address these priorities. The emphasis would be on voluntary action and assistance to the sector to put this approach in place.
Finally, in order to leverage the above-noted activities for increased market share and profitability for the sector, governments propose to work with industry to develop and make available to producers a voluntary and recognized farm environmental certification program.
Advances in science and technology have long been associated with success in Canada's agriculture and agri-food sector and one of the goals of the APF is to make the sector a world leader in innovation. In order to attain this goal, new knowledge and technology must be developed and put to use by industry at a more rapid pace. Science and innovation improve productivity and are also the key to creating a whole new range of food and non-food products that will garner new markets at home and abroad. And staying ahead of the competition will, in turn, accelerate the pace of science and innovation in Canada, and help to attract even more R&D;, new investment and expertise.
Current proposals for science and innovation under the APF emphasize priority setting, realigning investments in science and innovation to support the other elements in the framework, and coordinating efforts across governments, the sector and private research institutions to achieve maximum return on our investments.
Among other measures, a proposed essential first step would be to undertake benchmark studies of science and innovation investments in priority areas as a prerequisite to development of an action plan aimed at realigning our efforts. A joint information base on technology adoption is also proposed to improve coordination in science and innovation. It's also important to note that research and development play vital roles in garnering new knowledge for the agriculture and agri-food sector in the areas of food safety and food quality and environmentally sustainable production.
Gaining Recognition at Home and Abroad and Maximizing International Opportunities
Building the infrastructure to make Canada the world leader is the first step. The next step is gaining recognition at home and abroad for our efforts to be the world leader - in food safety and food quality, environmentally responsible production and creating innovative agri-based products and services that meet or exceed market demands. This is the key to reaping maximum benefit from the APF for the sector and for Canada. And discussions with stakeholders clearly underlined that trade and international issues are critically important to sector success.
In order to take this next step, current proposals include the development of consistent messages to form the basis of a comprehensive branding campaign aimed at achieving recognition for the capacity of the Canadian sector to meet the sophisticated and fast-changing demands of both the domestic and international marketplace. The messaging would focus on the concrete progress made by industry to deliver quality for customers.
In addition, the Government of Canada would continue to work to advance the trade interests of the sector by using the Canada Brand to develop targeted market development strategies for key, fast-growing country markets.
The following sections provide more detail on each of the five components of the APF, including the main elements that will compose the agreement between governments in making the APF a reality. These are: common goals, targets and indicators, and implementation measures.
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| Date Modified: 2005-04-20 | Important Notices | |
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