Federal/Provincial/Territorial Ministers of Agriculture

September 14, 2012 15:34 ET

New Growing Forward Agreement Will Drive Innovation, Market Development and Long-term Growth in Canadian Agriculture

WHITEHORSE, YUKON--(Marketwire - Sept. 14, 2012) -

Editors' Note: There is a photo associated with this press release.

Today, federal, provincial and territorial (FPT) Ministers of Agriculture reached agreement on the content of the Growing Forward 2 policy framework for the agriculture, agri-food and agri-products sector. The new five-year agreement includes investments in strategic initiatives of over $3 billion for innovation, competitiveness and market development, including a 50% increase in governments' cost-shared initiatives. In addition, governments will continue to deliver a complete and effective suite of Business Risk Management (BRM) programs to ensure farmers are protected against severe market volatility and disasters.

"Just as farmers continuously improve their business practices, so too have governments made adjustments to help Canada remain a world leader in agricultural innovation and trade," said Federal Agriculture Minister Gerry Ritz. "Growing Forward 2 will help drive economic growth and long-term prosperity through agricultural innovation and market development, while also ensuring governments continue to share the risk of severe market volatility and disasters."

Key highlights of Growing Forward 2 include:

  • 50% increase in cost-shared investments in strategic initiatives (non-BRM) to stimulate innovation, competitiveness, and market development.
  • Complete and effective suite of BRM programs to protect against severe market volatility and disasters.
  • Greater flexibility for provinces and territories to tailor programs to local needs.
  • Increased opportunity for provinces and territories to invest in environmental initiatives and on-farm water infrastructure.
  • Ongoing support for farmers with a full suite of risk management programs, including:
    • Improved negative margin coverage in AgriStability;
    • Lower program fees for AgriStability; and
    • Substantially increasing farmers' ability to contribute greater funds into their AgriInvest accounts to better manage risk.
  • In collaboration with the sector, governments will also encourage the development of private sector risk management tools and will continue to monitor and review BRM programming over the term of the framework.

Following consultations with industry, governments have committed to increase their focus on innovation, competitiveness and market development. As the global population rises and demand for consistency in supply of high quality food increases, Canadian farmers, producers and processors must be positioned to capitalize on emerging market opportunities. Research and development hold the promise of growth in both productivity and profitability for the sector.

Innovation will lead to more efficient, sustainable farming and processing operations and help position Canada as a world leader in agriculture.

"The new Growing Forward agreement pays particular attention to strategic investments that support sector sustainability and adaptability to ensure all government programs contribute to the sector's future economic growth," said meeting co-chair Brad Cathers, Yukon Minister of Energy, Mines and Resources. "Growing Forward 2 is important for Yukon with its emphasis on investment in innovation and market development. We are pleased to have worked collaboratively to reach this important stage in support of our sector's transformation."

Modifications to AgriStability and AgriInvest will ensure that Canadian producers continue to have access to a strong and effective suite of BRM programs. AgriInsurance (crop insurance), AgriRecovery, and the Advanced Payment Program will continue to help farmers manage production risks and provide cash flow assistance. Governments will boost coverage for those with negative margins as well as substantially increase farmers' ability to contribute greater funds into their AgriInvest account. BRM program reform is in line with government and industry agreement that programs should not mask market signals and should create space for the development of private risk management tools.

Ministers reviewed the status of federal trade negotiations and promotional and access initiatives in key export markets, including South Korea, Europe, Japan and China. They agreed to continue an aggressive trade agenda that is opening new markets and creating opportunities, while reaffirming their support for supply management. A roundtable discussion was also held on challenges and opportunities for the food processing sector. Under the new agreement, governments will continue to work to increase access to international markets and to reduce obstacles to trade, promoting growth and competitiveness for the entire agriculture, agri-products and agri-food sector.

FPT governments relied on their long history of collaboration in examining a range of options before achieving agreement on a framework that will serve the broad interests of the agriculture, agri-products and agri-food sector across Canada. Under the agreement, Ministers indicated they will: continue to work collaboratively on developing different insurance products; conduct a mid-term review of the entire BRM suite of programs; encourage reduction in interprovincial trade barriers; advance the bio-products sector; and work to reduce the regulatory burden. Governments will continue to work closely with the sector as Growing Forward 2 programs are developed and implemented. Consultations with stakeholders will be ongoing and focus on the longer-term direction for BRM programs, explore new insurance-based tools, and seek input and partnership on strategic investments.

Today's agreement sets the stage for FPT governments to complete bilateral agreements so programs will be in place by April 1, 2013, when the current framework expires.

More information about Growing Forward 2, is available at www.agr.gc.ca/GrowingForward. The next annual FPT Ministers' meeting will be held in Halifax, Nova Scotia, in July 2013.

Note: In the absence of a Quebec Minister responsible for agriculture, Quebec has not taken a position on these issues.

BACKGROUNDERS

  1. Growing Forward 2: Innovation, Competitiveness and Market Development
  2. Growing Forward 2: Business Risk Management Programs
  3. Growing Forward 2: Sector Engagement

Backgrounder - Growing Forward 2: Innovation, Competitiveness and Market Development

Growing Forward 2 focusses investments on strategic initiatives in innovation, competitiveness and market development. Cost-shared FPT investments will increase by 50%, and will contribute to improved productivity of the sector and profitability of primary producers and processors. Governments aim to have the new framework implemented by April 1, 2013, meaning there will be no lapse in programming for producers and processors.

Federal Growing Forward 2 activities will fall under three programs areas: "Innovation", "Competitiveness" and "Market Development".

Innovation

Federal activities to support research and innovation will be organized into three streams:

  • Research Accelerating Innovation;
  • Industry-led Research & Development (R&D) and Knowledge Transfer; and,
  • Enabling Commercialization and Adoption helping to position Canada as a world leader in innovation investment.

Some programming will be a continuation or evolution of existing activities, while others will be new, such as:

  • Re-focussed R&D activities, including consolidated agri-environmental scientific functions and knowledge transfer activities;
  • The expansion of the Agri-Science Clusters initiative;
  • Extension of R&D and commercialization support that is currently available under the Agricultural Innovation Program (AIP); and
  • New initiatives such as support for demonstration projects to help address a programming gap along the path to commercialization.

Competitiveness

The Competitiveness program area consists of federal activities that will strengthen the sector's capacity to independently and collectively manage risks and take advantage of market-based opportunities and are organized into three streams:

  • Facilitating Sector Capacity;
  • Fostering Business Development; and,
  • Instituting Regulatory Facilitation and Modernization.

The program will also see a re-focussing and evolution of Growing Forward 2 activities, including:

  • The continuation of the Value Chain Round Tables program with more flexibility to address cross-sectoral approaches and emerging industries;
  • The continuation of activities under the Business Development National Initiative;
  • The evolution of regulatory activities under Growing Forward 2 to further facilitate the modernization of regulations and use of new regulatory infrastructure; and,
  • Continuation of the Minor Use Pesticide program with increased emphasis on international harmonization and prevention of technology gap.

Market Development

Federal activities to support market access and development will be organized into four streams:

  • Breaking Down Trade Barriers;
  • Building Up Market Success;
  • Supporting Industry Leadership to Seize New Markets; and,
  • Supporting Assurance Systems.

There will also be a refocusing of existing activities and new initiatives to meet emerging needs including:

  • Market Access Secretariat (MAS) efforts will be enhanced to increase industry engagement and advocacy for science-based international standards;
  • The continuation of AAFC activities currently under the Growing Forward Canada Brand Initiative;
  • Re-focussed activities currently funded under the AgriMarketing Program;
  • Continuation of activities to support the development of food safety, biosecurity and traceability standards and systems; and
  • Expanded assurance systems support for surveillance systems and market-attribute requirements such as animal welfare and environmental sustainability.

Backgrounder - Growing Forward 2: Business Risk Management Programs

Business Risk Management (BRM) programs are in place to help farmers in managing risks from income declines resulting from drought, flooding, low prices, and increased input costs. The programs work together by providing protection for different types of losses, as well as cash flow options.

AgriInvest helps cover small margin declines.

AgriStability assists in cases of large margin declines caused by circumstances such as low prices and rising input costs.

AgriInsurance offers protection for production losses related to specific crops or commodities caused by hail, drought, flooding, disease and other natural hazards.

AgriRecovery helps producers return their farm businesses to operation following disaster situations.

Advance Payments Program is a complementary federal-only program to help crop and livestock producers with cash flow and provides flexibility for marketing of commodities.

Summary of Program Payments
Federal/Provincial Contributions and Payments
Program Payments To Date*
AgriInvest $1,300,664,320
AgriInvest Kickstart** $563,164,952
AgriStability $3,225,250,523
AgriInsurance $3,972,779,705
AgriRecovery $899,588,439
Advance Payment Program*** $123,866,351
BRM Program Totals $10,085,314,289
* Reflects payments since 2007 introduction of the suite. 2010 AgriInvest and AgriStability processing is currently being finalized, 2011 processing is just beginning. As of August 30, 2012.
** AgriInvest Kickstart was a one-time federal payment to producers to assist them in building their AgriInvest Accounts.
*** Advance Payments Program - This figure represents the interest paid on advances by the federal government.

What's in Effect for the 2013 Program Year

AgriStability

AgriStability is a margin-based program which allows producers to protect their farm operations against large declines in farm income. A program payment is triggered when a producer's margin (allowable revenue less allowable expenses) in the program year drops below their average margin from previous years (historical reference margin). Governments will continue to provide a share of the lost income.

70% Margin Coverage

Starting in the 2013 program year, governments will provide assistance once a producer's margin falls below 70 per cent of their historical reference margin. In other words, producers will receive an AgriStability payment when their income in the program year drops more than 30 per cent below their historical reference margin. Under the previous agreement, producers received a payment once their margin fell below 85 per cent of their reference margin, or dropped more than 15 percent below their historical reference margin. The AgriStability fee will be adjusted and reduced accordingly to make the program less expensive for producers.

Harmonized Compensation Rates

For 2013, a producer's payment will be based on the same level of government support (70%) regardless of the extent of margin loss, including negative margins. Under the previous agreement, payments were based on a tier system which provided different levels of government support depending on the degree of margins loss.

Limited Reference Margins

For 2013, producers' reference margins (support level under the program) will be limited to the lower of their historical reference margin or allowable expenses reported in previous years.

Payment Calculation With & Without Limited Reference Margins
Current Method
No limit on Reference Margins
With Limited Reference Margins
Reference Margin $150,000 $150,000
Allowable Expenses $100,000 $100,000
Program Year Margin $0 $0
Reference Margin for Payment Calculation $150,000 $100,0000
Payment Trigger Level (30% margin decline) $105,000 $70,000
AgriStability Payment $73,500 $49,000

For more information about the current program, visit the AgriStability web site: www.agr.gc.ca/agristability.

AgriInvest

AgriInvest is a self-managed producer-government savings account that allows producers to set money aside which can then be used to help risk manage small income shortfalls, or to make investments to reduce on-farm risks. Producers will continue to have the flexibility to withdraw funds at any time throughout the year.

Under the new agreement, producers can deposit up to 1.0 per cent (instead of 1.5 per cent as under the previous agreement) of their Allowable Net Sales* (ANS) each year into an AgriInvest account and receive a matching government contribution.

Although the limit on matching government contributions will be $15,000 a year, down from the current $22,500, producers will be able to contribute up to 100% of their ANS annually and up to 400% of ANS in total so that producers can better use AgriInvest as a risk management tool.

AgriInvest accounts are held at a participating financial institution of the producer's choice (in Quebec they are held by La Financière).

For more information about the current program, visit the AgriInvest web site: www.agr.gc.ca/agriinvest .

* ANS are the net sales of commodities allowable under AgriInvest. Allowable commodities include most primary agricultural commodities except those covered under supply management (dairy, poultry and eggs).

Allowable Net Sales (ANS) =Sales of Allowable Commodities less Purchases of Allowable Commodities

AgriInsurance

AgriInsurance offers protection for production losses related to specific crops or commodities caused by hail, drought, flooding, disease and other factors. Premiums for AgriInsurance coverage are cost-shared between the producer, the province and the federal government. Producers receive a payment when their production is below their guaranteed insured level of protection. AgriInsurance is delivered provincially by a Crown Corporation or a branch of the provincial agriculture department in each province.

In 2012, unseeded acreage benefits were expanded in Western provinces to address flooding.

Governments continue to look at ways to improve coverage for forage and livestock production. Beyond AgriInsurance, federal and provincial governments are also examining the feasibility of livestock price insurance coverage.

For more information, visit the AgriInsurance web site: www.agr.gc.ca/agriinsurance.

AgriRecovery

AgriRecovery is a framework that allows federal, provincial and territorial governments to work together on a case-by-case basis to assess natural disasters (e.g., extreme weather, disease, pests, etc.) affecting Canadian farmers and respond with targeted, disaster-specific programming when assistance is needed beyond existing programs (AgriStability, AgriInvest, AgriInsurance, CFIA, etc.). The funding of initiatives implemented under AgriRecovery is cost-shared on a 60/40 basis with the affected province(s).

The aim of AgriRecovery is to provide affected producers with assistance to help them with the cost of taking actions to mitigate the impacts of the disaster and/or resume business operations following a disaster event.

For more information, visit the AgriRecovery web site: www.agr.gc.ca/agrirecovery.

Advance Payments Program

The Advance Payments Program (APP) provides producers with a cash advance on the value of their agricultural products during a specified period. The APP is a financial loan guarantee program that gives producers easier access to credit through cash advances. The federal government guarantees repayment of cash advances issued to farmers by producer organizations.

This means improved cash flow throughout the year and better opportunities for marketing their agricultural products.

For more information, visit the Advance Payments Program web site: www.agr.gc.ca/app.

Facilitation

In an effort to facilitate the development of a range of agricultural risk management tools, the Government of Canada will support industry-led research and development projects for new insurance-based tools and other products. In addition, support will be available for shared Federal-Provincial-Territorial initiatives to implement and administer new risk management tools.

Backgrounder - Growing Forward 2: Sector Engagement

To support the development of Growing Forward 2, federal/provincial/territorial (FPT) governments have engaged with a broad range of industry stakeholders. A wide variety of views have been heard and taken into account in discussions and negotiations on the new five-year framework.

Growing Forward 2 consultations include:

- A series of online and face-to-face national and provincial engagement sessions with farmers, processors, distributors and manufacturers, including national organizations and formal advisory groups was held in two phases:

-- Phase 1 (May and June 2010) included a series of national and regional workshops. Over 400 farm leaders and other key value chain stakeholders discussed the current state of the sector, the key drivers shaping its future and the challenges and opportunities it may face over the next decade. Discussions also focused on the strategic review of Business Risk Management programming.

-- Phase 2 (February - September 2011) consisted of bilateral meetings with provincial federations of agriculture, public meetings across the country, meetings with young farmers and innovators, and opportunities for online submissions. FPT governments, stakeholders and the public discussed the next policy framework and identified policy needs. Over 500 participants discussed the roles of government and industry in achieving the desired outcomes. The result was general consensus on the policy framework priorities and proposed directions.

- Dozens of farmer roundtables across the country by FPT Ministers, federal parliamentarians, and departmental officials;

- One-on-one meetings with Canadian industry leadership and their provincial members;

- Annual meetings between FPT Ministers, the Canadian Federation of Agriculture and leading farm groups; and

- The House of Commons Standing Committee on Agriculture and Agri-Food (SCAAF) held five months of hearings covering 24 meetings and 119 industry stakeholders who delivered over 40 hours of testimony on suggestions for the path forward.

Other reports by organizations such as the Organization for Economic Co-operation and Development (OECD), George Morris Center and the Canadian Agri-Food Policy Institute (CAPI) each concluded that agricultural programs must work to improve competitiveness through innovation and trade and have provided valuable input towards the development of Growing Forward 2.

FPT Ministers remain committed to ongoing dialogue with producers and Canadians to shape governments' policies and programs in agriculture and agri-food.

The graphic "Cost Share - 2012 Program Year" is available at the following address: http://media3.marketwire.com/docs/Agriculture_EN_0914.pdf

To view the photo / video associated with this press release, please visit the following link: http://www.marketwire.com/library/20120914-federal800.jpg

Contact Information

  • Media Relations
    Agriculture and Agri-Food Canada
    Ottawa, Ontario
    613-773-7972
    1-866-345-7972