Question Period Note: SUPPLY MANAGEMENT

1. Producers under supply management are at the heart of the vitality of rural communities across the country.
2. Our government has kept its word by offering full and fair compensation to producers and processors under supply management following the signing of trade agreements with the European Union and the Transpacific community.
3. We confirmed in Budget 2022 that we will announce full and fair compensation for the supply managed sector related to CUSMA in the 2022 fall economic and fiscal update.

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. The trade agreements offer significant opportunities for the Canadian agriculture and agri-food sector, while creating some challenges due to new market access for supply managed dairy, poultry, and egg products.

Working groups
Following the signing of the CUSMA, the Government of Canada has created working groups with representatives from supply-managed industries.
The Poultry and Egg Working Group has concluded, and its recommendations were shared with the Minister of Agriculture and Agri-Food in 2019.

Further consultations between AAFC and national poultry and egg organizations took place following the November 2020 announcement that $691 million would be made available to poultry and egg producers for the impacts of the CPTPP. Through these consultations, industry provided input on the allocation of funding by program and commodity, as well as program design.

Budget Commitments:

In Budget 2019, the Government of Canada made a commitment to support farmers in the supply managed sectors following ratifications of new trade agreements. Budget 2019 proposed support to sustain the incomes of eligible dairy, poultry, and egg farmers, by making available up to $2.4 billion. Of this amount, $250 million has already been provided under the Dairy Farm Investment Program to support dairy farmers as a result of CETA.

Budget 2021 included up to $292.5 million over seven years for a Processor Investment Fund to help processors of supply-managed agricultural products adapt to the impacts of CETA and CPTPP.

Budget 2022 included a committed to announce CUSMA compensation for supply managed sectors through the 2022 fall economic and fiscal update.

Current Status:

On November 28, 2020, the Government announced that funding of $691 million for 10-year programs would be made available for Canada's 4,800 chicken, egg, broiler hatching egg, and turkey farmers, with program details to be designed in consultation with sector representatives. AAFC held consultations with representatives from national poultry and egg producer associations from January to May 2021. These consultations helped to inform funding allocation by program type and commodity, as well as program parameters.

On April 13, 2021, the Government announced details on the 10-year programs announced in November 2020. These new programs, totaling more than $691 million over ten years, respond directly to requests from producer associations and provide full and fair compensation for market impacts from the CPTPP.

On May 31, 2021, the Government announced that the Poultry and Egg On-Farm Investment Program was open to applications. As of April 1, 2022, 1,075 applications have been received for a total of over $121.8 million and 289 applications have been approved for a total of over $38.4 million.

Poultry and Egg On-Farm Investment Program

The Poultry and Egg On-Farm Investment Program will provide close to $647 million to support poultry and egg farmers through on-farm investments. Every producer will be entitled to an amount proportional to their quota holdings as of January 2021. An average chicken producer will have access to up to $122,411; an average turkey producer will have access to up to $147,356; an average egg producer will have access to up to $111,203; and, an average hatching egg producer will have access to up to $375,297. Eligible projects are anything that help a producer increase efficiency or productivity, respond to consumer preferences, or improve on-farm safety, biosecurity or environmental sustainability. This includes new barn construction or upgrading of equipment such as feeding, watering, lighting, ventilation, heating, and comfort systems that will promote energy efficiency and reduce our environmental footprint.

The Program will consider eligible costs on a retroactive basis to the announcement of support for supply-managed sectors made through Budget 2019, on March 19, 2019. Applicants therefore have the flexibility to seek funding for eligible activities that started on or after March 19, 2019. The project activities must be completed by March 31, 2031.

The Government of Canada will contribute up to 70 percent of the project cost, a ratio that goes up to 85 percent for young farmers (who were 35 years of age or under on January 1, 2021) to help ensure a strong future for Canada’s farms.

Funding will be dispersed over a ten-year period starting in 2021-22, according to the following breakdown:

• $347.3 million for chicken producers;
• $76.9 million for turkey producers;
• $134 million for egg producers;
• $88.6 million for broiler hatching egg producers.

Market Development Program for Turkey and Chicken

The Market Development Program for Turkey and Chicken will provide $19.2 million for the Turkey Farmers of Canada (TFC) and $25 million for the Chicken Farmers of Canada (CFC) to help increase domestic consumption through promotional activities that differentiate Canadian-made products’ reputation for high-quality, safe food that adheres to strict animal welfare standards and is sustainably farmed. Examples of activities could include promotion and advertising campaigns done in partnership with the retail sector, or market research and product development to meet emerging consumer demands. Funding will be distributed over a ten-year period to national industry organizations that will submit a multi-year strategy to Agriculture and Agri-Food Canada (AAFC) for approval. The intake for applications from these organizations was launched on April 13, 2021. Projects were approved on January 6, 2022, for TFC ($2.5M) and CFC ($1M) to undertake promotional activities in the first year of the Program (2021-22). TFC and CFC plan on submitting applications in the next few months for funding for the next fiscal year. Both associations have yet to develop long-range marketing strategies; therefore it is anticipated that multi-year applications will not commence until 2023.

Marketing activities will be cost shared with industry, with AAFC providing 80 percent funding for eligible project costs. AAFC may provide up to 90 percent funding for specific projects aimed at promoting inclusiveness and diversity in the market development activities supported by the program. The program and funding allocation is based on feedback received through industry consultations that took place earlier this year.

Processors Investment Fund

The Processors Investment Fund was announced in Budget 2021, and launched on March 9, 2022. The 6-year, $292.5M program will provide compensation for CETA and the CPTPP to support private investment in supply-managed processing plants. The program is based on industry’s recommendation for compensation.

CUSMA Compensation

In Budget 2021, the government committed to full and fair compensation with respect to the Canada-United States-Mexico Agreement (CUSMA), and to working with representatives of the supply-managed sectors in determining that compensation.

The Minister’s current mandate letter includes a commitment to work with supply-managed sectors to provide full and fair compensation with respect to the CUSMA, and to making this determination within the first year of the Government’s mandate.

Through Budget 2022, the Government committed to announcing full and fair compensation for the supply managed sectors for impacts related to CUSMA in the 2022 fall economic and fiscal update.

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