Question Period Note: SUPPORTING THE AGRICULTURAL SECTOR

Q1 – How is the Government helping farmers struggling with inflation and the rising cost of inputs? Q2 – How is the Government supporting producers impacted by extreme weather situations, such as droughts and wildfires? Q3 – What is the Government doing to enhance the environmental performance and resilience of the agriculture sector? Q4 – What is the Government doing to protect and strengthen Canada’s supply chains? Q5 – What action is the Government taking to promote trade and market access? Q6 – How is the Government addressing labour challenges in the sector? Q7 – How is the Government supporting preparation and prevention of disease outbreaks in Canadian livestock?

R1 - Budget 2023 announced an increase of the interest-free limit for loans under the Advance Payments Program from $250,000 to $350,000 for the 2023 program year, building on relief provided in 2022.
Fertilizer prices have increased sharply due to global supply concerns and the tariff on Russian imports. 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 to optimize the use of fertilizers. R2 - Our Government was there to support producers during the 2021 drought, wildfires and floods, by working with provinces to provide access to over $1 billion through AgriRecovery.

On October 20, 2023, our government announced a contribution of $219 million to support farmers and ranchers in British Columbia, Alberta and Saskatchewan who are dealing with extraordinary costs due to drought conditions and wildfires.

This funding 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.

Federal, provincial and territorial ministers of agriculture are committed to working together expeditiously to share information and complete AgriRecovery assessments, while ensuring that producers have access to a full suite of business risk management programs that are timely and reliable.

This includes AgriStability, which provides protection for income losses of more than 30%. Under the new Sustainable Canadian Agricultural Partnership, the AgriStability compensation rate was raised from 70% to 80% to provide additional support in times of need. R3 - Over 2021 and 2022, 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 provided by the agriculture sector.

A $470 million investment to expand the On-Farm Climate Action Fund is advancing our commitment to triple support for the adoption of clean technologies and enhance support for the adoption of beneficial management practices that reduce emissions.

The Government is also developing a Sustainable Agriculture Strategy, which will guide our support of the livelihoods of farmers while growing a sustainable sector. R4 - We have seen how supply chain disruptions can severely impact the sector, and by extension impact Canadians.

Budget 2023 funded a Transportation Supply Chain Office (Transport Canada), and the development of a long-term roadmap for Canada's transportation infrastructure and supply chain data. These investments build on the over $600 million announced in Budget 2022 to increase supply chain efficiency and resiliency.

The Government is working on further strengthening and improving the resiliency of our domestic supply chains following disruptions from Russia’s war against Ukraine by collaborating with other federal departments to protect grain and fertilizer movements. R5 - As part of Canada’s Indo-Pacific Strategy, the Government announced $31.8 million to establish Canada’s first agriculture office in the Indo-Pacific region to help Canadian farmers and producers diversify their exports and position Canada as a preferred supplier in key emerging markets.

The Government has committed approximately $4.8 billion to fully and fairly compensate supply-managed sectors for the impacts of recent trade agreements. R6 - Both domestic and international workers are essential to the production of safe and reliable food in this country. The Government is developing a sector-specific Agricultural Labour Strategy with provinces and territories, employers, unions, and workers to help them address labour challenges.

The Government launched a three-year Recognized Employer Pilot, under the Temporary Foreign Worker Program, to simplify the hiring process and help reduce the administrative burden for repeat employers who demonstrate a history of program compliance. R7 - Strict measures are in place to prevent livestock diseases, such as African swine fever and foot and mouth disease, from entering Canada. Measures include animal and food import controls and declarations for travellers at the border. In the event of an outbreak, we would move quickly to detect, trace, and eradicate disease while ensuring the sector has the support needed.

The Government is implementing the African Swine Fever Action Plan and committing an investment of up to $45.3 million to enhance preparation and prevention efforts.

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.

Sustainable Canadian Agricultural Partnership (Sustainable CAP):
This new $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 to a $250 million Resilient Agricultural Landscape Program to support ecological goods and services provided by the agriculture sector.

Inflation
Across the country, producers are facing general inflation, increased costs on key inputs like fertilizer, supply chain disruptions and higher debt-servicing costs due to the surge in interest rates. Over the past three years, agricultural production costs in Canada have increased by nearly 30 percent. These higher costs of production create cash flow challenges for producers as they must commit to paying for their farm inputs (e.g., seed, fertilizer and feed) before knowing what their revenues will be for that year.

Year-over-year volatility has created cumulative pressures for farms, most of which are farm families facing inflation of household expenses as well. The increases in the interest-free limit for loans under the Advance Payments Program provide eligible producers with a relief in interest fees from their beginning of the season loans.

Inputs – Fertilizer
On March 3, 2022, the federal government implemented a 35 per cent tariff on all Russian imports, including fertilizer. Ontario, Quebec, and Atlantic Canada rely heavily on fertilizer imports. While Canada is a major producer and net exporter of nitrogen fertilizer, the vast majority of the production resides in Western Canada (Alberta) and is either used regionally (55%) or exported (45%) to the United States. Due to prohibitive transportation costs, there is no movement of nitrogen fertilizer from Western to Eastern Canada. Eastern Canada usually imports 85-90 per cent of its fertilizer from Russia. For the 2022 season, the producer price for fertilizers was impacted by the tariff as the vast majority of fertilizer purchases were made before it was put in place and not all buyers were able to change their sourcing following the tariff implementation.

Drought and Wildfires – Business Risk Management Support
Business Risk Management (BRM) programs are joint Federal-Provincial-Territorial (FPT) programs that help producers manage risks that threaten the viability of their farms, and provide protection against different types of income and production losses. Producers take responsibility for managing normal risks, while government support is in place to help manage events that exceed producers’ capacity to manage. The FPT programs are cost-shared 60:40 and have provided over $1.6 billion per year to producers over the last five years.

AgriRecovery focuses on assisting with the extraordinary costs required to recover following a disaster, but is not meant to replace available coverage under other programs such as AgriInsurance, AgriStability, and AgriInvest.

Environment and Climate Change
The Emissions Reduction Plan and Budget 2022 announced $330 million over six years to triple the size of the Agricultural Clean Technology Program; $470 million over six years to expand the Agricultural Climate Solutions program’s On-Farm Climate Action Fund; and $150 million in federal contributions for a Resilient Agricultural Landscape Program to support carbon sequestration, adaptation, and to address other environmental co-benefits.

Recent years have demonstrated the extraordinary challenges farmers face on the front lines of climate change. Extreme weather events are projected to become more severe and costly for the agricultural sector in the coming decades.

A Sustainable Agriculture Strategy was highlighted in the 2030 Emissions Reduction Plan, as well as in the Minister’s 2021 mandate letter. It will provide an integrated and coordinated approach to addressing agri-environmental issues in the sector, including climate change mitigation, adaptation and resilience, water, biodiversity and soil health. The guiding vision of the Strategy is to ensure that Canada continues to be recognized as a world leader in sustainable agriculture and agri-food production.

Supply Chains
In response to supply chain challenges, Budget 2022 announced over $600 million to help build more efficient and resilient supply chains, fund projects to ease the movement of goods, use data to make our supply chains more efficient, and reduce the burden of red tape.

Budget 2023 provided $27.2 million to Transport Canada to establish a Transportation Supply Chain Office to respond to disruptions and better coordinate action to increase the capacity, efficiency, and reliability of Canada’s transportation supply chain infrastructure.

The Government of Canada will also collaborate with stakeholders to develop a long-term roadmap for Canada’s transportation infrastructure to better plan and coordinate investments required to support future trade growth. Budget 2023 provided $25 million to Transport Canada to work with Statistics Canada to develop transportation supply chain data that will help reduce congestion, make our supply chains more efficient, and inform future infrastructure planning. Budget 2023 also announced a pilot of the extended interswitching limit in the prairie provinces to strengthen rail competition.

These measures are a down payment on Canada’s upcoming National Supply Chain Strategy, which will be informed by the recommendations of the National Supply Chain Task Force report.

Trade and Market Access
With $31.8 million earmarked in dedicated funding, Canada’s first ever Indo-Pacific Agriculture and Agri-Food Office (IPAAO) will help Canadian farmers, food processors and exporters maximize their opportunities and position Canada as a preferred supplier in key emerging markets. The Indo-Pacific encompasses more than 40 economies and is the fastest growing region in the world. It is Canada’s second-largest regional export market and trading partner (after the United States), with $26.5 billion in annual two-way agri-food and seafood trade in 2021.

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. 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 products. In total, the Government has announced $4.8 billion dollars in compensation to supply-managed sectors for the impacts of CETA, CPTPP and CUSMA.

Labour
Budget 2023 provided $48 million over two years for Employment and Social Development Canada 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.

Following an announcement in Budget 2022, the Government of Canada launched a three-year Recognized Employer Pilot (REP) under the Temporary Foreign Worker (TFW) 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
Canada Border Services Agency (CBSA) and the Canadian Food Inspection Agency (CFIA) have taken concrete actions to prevent the spread of African swine fever (ASF) from affected countries to Canada, which would devastate the pork industry. 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. The Government of Canada is investing up to $23.4 million to support the pork industry’s prevention and mitigation efforts through the African Swine Fever Industry Preparedness Program, $19.8 million in 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
Foot and mouth disease (FMD) presents one of the greatest economic threats to Canadian animal agriculture and is viewed as the most important transboundary animal disease in the world. 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 (NAFMDV) 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. By not securing this stockpile, Canada would be at a disadvantage given the now heightened global demand. This vaccine bank will help protect Canada from the emerging threat of this disease, maintain public confidence in the Canadian food supply, and help mitigate prolonged market disruptions to trade should an outbreak occur.

• The sector’s work is critically important in feeding the country and the world sustainably. We continue to take action to support farmers, ranchers, food businesses, and food processors across the value chain, as well as provide support for vulnerable populations through difficult times.

• Federal, provincial, and territorial governments are investing $3.5 billion over the next five years to strengthen and grow the sector through the new Sustainable Canadian Agricultural Partnership.

• This is in addition to other programs and continued support through our business risk management programs, which provide a bedrock to our producers facing extreme climate events, market disruptions, and the threat of pests and diseases.