Annual Conference of Federal-Provincial-Territorial Ministers and Deputy Ministers of Agriculture

Whitehorse, Yukon –  September 14, 2012  – 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.

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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.

* 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.

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.