Sustainable Canadian Agricultural Partnership
Business Risk Management
Supply Management
Sale of Canadian Wheat Board
OECD Support Estimates
Canada's agricultural and trade policies encompass market-oriented activities such as participating in the United States-Mexico-Canada Agreement (USMCA) and encouraging a savings program for producers that is decoupled from production. Other activities—such as supply management in the dairy, egg, and poultry sectors—represent significant interventions in the market and limit the extent to which foreign suppliers can serve Canadian customers.
Agriculture and Agri-Food Canada (AAFC), Canada's counterpart to the USDA provides information, research, technology, policies, and programs to the agricultural sector. AAFC reports to the Canadian Parliament and to the Canadian people through the Minister of Agriculture and Agri-Food.
Sustainable Canadian Agricultural Partnership
The Sustainable Canadian Agricultural Partnership (Sustainable CAP) is the most recent policy framework for Canada’s domestic agricultural supports. Sustainable CAP was announced by Federal, Provincial, and Territorial (FPT) agricultural and food ministers at their annual meeting in November 2021 and took effect on April 1, 2023. Sustainable CAP is similar to the previous frameworks (Growing Forward 2 (GF2) and Canadian Agricultural Partnership (CAP)) in its approach to funding, intergovernmental cost-sharing, and programming. Sustainable CAP represents an expenditure of about $3.5 billion Canadian dollars (CAD) ($2.6 billion U.S. dollars (USD)) over a 5-year period (April 1, 2023, to March 31, 2028). Of the total, $2.5 billion CAD is being financed on a cost-sharing basis between the Canadian Federal Government (60 percent) and the Provincial and Territorial governments (40 percent). The remaining $1 billion CAD is dedicated to programs that foster innovation, competitiveness, and marketing; these programs are financed solely by the Canadian Federal Government.
Business Risk Management
Sustainable CAP retains a suite of business risk-management (BRM) programs, with some modifications, that were part of Canada’s three predecessor agricultural policy frameworks. The five main BRM programs are:
- AgriInvest – Encourages farm savings
- AgriStability – Stabilizes producer profit margins
- AgriInsurance – Provides insurance against natural perils
- AgriRecovery – Addresses the impacts of natural disasters
- Advance Payments Program – Provides access to cash advances
AgriInvest is described by the Canadian Government as “a self-managed producer-government savings account designed to help [the producer to] … manage small income declines and make investments to manage risk and improve market income.” Participants may deposit up to 100 percent annually of the difference between their sales and purchases of allowable commodities, defined as Allowable Net Sales (ANS), into an account and receive a matching contribution from the FPT governments. The matching contribution equals 1 percent of the deposit and is capped at $10,000 CAD per year. The account balance is limited to 400 percent of the average ANS from the current and 2 prior program years. AgriInvest covers most primary agricultural commodities, except those governed by supply management (dairy, poultry, and eggs). CAP sets the maximum ANS under AgriStability to equal $1 million CAD.
AgriStability covers 80 percent of declines greater than 30 percent in the margins of participating producers. The program is triggered when a participating producer’s “production margin” (allowable revenue less allowable expenses) falls to less than 70 percent of its 5-year Olympic average "reference margin." Producers participating in the program must pay a participation fee of $3.15 per $1,000 CAD of the contribution reference margin (the reference margin of the previous program year) and a fixed administrative cost fee of $55 CAD per account. In addition, AgriStability features a late participation mechanism that Provincial and Territorial governments can use “to allow producers the opportunity to join the program after the April 30 enrollment deadline if there has been a significant downturn in the farm sector and program participation is low.”
AgriInsurance encompasses benefits previously provided under the Crop Insurance program. The program aids farmers in mitigating risk by insuring losses to production and farm assets caused by natural perils. The program is similar to the U.S. crop insurance program. However, a significant difference is that the Canadian program is delivered through governmental crown corporations and Provincial administrations in Canada, rather than the private sector as in the United States. Premiums are shared between the producer, the Provincial government, and the Federal Government.
AgriRecovery is a framework through which the FPT governments jointly assess the effects of natural disasters on producers and the need for new initiatives to assist producers facing natural disasters whose needs have not been met by the other programs. AgriRecovery focuses on extraordinary costs that are necessary for the quick resumption of farming operations after a natural disaster or the mitigation of the adverse effects of such a disaster and are not covered by other government programs.
The Advance Payments Program is a Federal loan-guarantee program that allows agricultural producers to access up to $1 million CAD in total cash advances, based on the value of eligible products that either will be produced or are in storage. Canada’s Federal Government pays the interest on the first $100,000 CAD of the advance (for 2024, the first $250,000 CAD), and the producer generally has up to 18 months to repay the advance in full.
Supply Management
Supply management has been a feature of Canadian agricultural policy for more than four decades and continues to be dominant in the dairy, poultry, and egg commodity sectors. Production and marketing systems under supply management have three main features:
- Price support policies that are based on production costs and return on equity and management
- Production that is limited to domestic demand at the cost-determined price; and
- Border measures to guard against foreign competition, including tariff-rate quotas (TRQs).
The Government of Canada has expressed its support for the choice made by producers operating under supply management. This position has been communicated in many fora, including the Doha Round of multilateral trade negotiations at the World Trade Organization (WTO) and the negotiation of the United States-Mexico-Canada Agreement (USMCA) (the successor to NAFTA). The USMCA, which went into effect in July 2020, created a set of new TRQs specifically for U.S. exports to Canada for selected supply-managed commodities, that allows these exports to increase above past levels.
Sale of Canadian Wheat Board
The Canadian Wheat Board (CWB) was a shared governance marketing organization that operated as the sole marketer (the “single desk”) of wheat and barley produced in western Canada. Acting as a single agent on behalf of farmers, the CWB had statutory authority to purchase and market all wheat and barley produced in Alberta, Manitoba, Saskatchewan, and the Peace River District of British Columbia for domestic use and export.
In July 2015, Canada’s Federal Government completed the sale of the CWB to G3 Global Trade Group, a joint venture between SALIC Canada Limited and Bunge Canada. The former CWB was combined with Bunge Canada and is now part of a firm called G3 Canada Limited, with facilities in the Provinces of Saskatchewan, Alberta, Manitoba, Ontario, Quebec, and British Columbia. SALIC Canada Limited is a wholly owned subsidiary of SALIC (Saudi Agricultural and Livestock Investment Company), a joint stock company owned by Saudi Arabia’s Public Investment Fund. As of 2022, the company included two operating companies—one featuring grain elevators in western Canada and port terminals in eastern Canada; and the other featuring an export terminal in Vancouver. The former company now includes farmers from western Canada among its shareholders, while the latter is a joint venture with a stevedoring company.
OECD Support Estimates
Agricultural support estimates calculated by the Organisation for Economic Co-operation and Development (OECD) provide a common framework for evaluating the size of Government support to agriculture by the OECD countries. The Total Support Estimate (TSE) measures "the annual monetary value of all gross transfers from taxpayers and consumers arising from policy measures that support agriculture, net of the associated budgetary receipts, regardless of their objectives and impacts on farm production and income, or consumption of farm products." In 2023, Canada's TSE was about $9.7 billion CAD ($7.2 billion USD).
The TSE has three components:
- The Producer Support Estimate (PSE), which indicates "the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers, measured at farm gate level,"
- The General Services Support Estimate (GSSE), which indicates "the annual monetary value of gross transfers to general services provided to agricultural producers collectively (such as research, development, training, inspection, marketing, and promotion)," and
- Transfers to consumers from taxpayers (TCT), which in the Canadian case, were less than $100 million CAD in 2022 and 2023.
In 2023, the PSE accounted for 74 percent of Canada's TSE, the GSSE accounted for 25 percent, and the TCT accounted for 1 percent. Canada’s PSE, in turn, can be divided into different components. Market Price Support (MPS) accounted for 23.4 percent of Canada’s TSE and 31.5 percent of PSE; payments based on current area, animal numbers, receipts, or income, where production is required to qualify for the payments, accounted for 37.9 percent of TSE and 50.9 percent of PSE; and all other forms of producer support accounted for 13.1 percent of TSE and 17.6 percent of PSE.
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Click here for data on Canada's Total Agricultural Support Estimate, 2013-2023