ARCHIVED - RPP 2006-2007
Agriculture and Agri-Food Canada

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SECTION II  - Analysis of Program Activities by Strategic Outcome

This section covers AAFC's program activities for the fiscal year 2006-2007 and outlines how these activities will contribute to achieving the Department's three strategic outcomes: 1) Security of the Food System,(2) Health of the Environment and 3) Innovation for Growth.

This section also contains information on other key areas for which the Department is responsible, including Rural Development , Co-operatives , the CPMA , and the NFPC .

The Agricultural Policy Framework

AAFC's Strategic Outcomes and all corresponding Program Activities are guided by the APF, and by the need to adjust the framework as necessary to ensure it best serves Canada's agriculture and agri-food sector and helps provide the best quality of life for all Canadians.

Over the next few years, significant policy and program development work will be required to ensure that the next generation of Canadian agriculture and agri-food policy is developed, negotiated and ready to implement in 2008, when the APF expires. This groundwork will also include the integration, within the next generation of the APF, of a food industry strategy to assist with the growth and development of the food processing sector in Canada. This approach is motivated by the growing significance of value-added products in today's marketplace as well as the recognition of the increasing importance of value-chain collaboration. AAFC's work under each of the following Strategic Outcomes is conducted with this in mind.

Strategic Outcome 1 : SECURITY OF THE FOOD SYSTEM

A secure and sustainable agriculture and agri-food system that provides safe and reliable food to meet the needs and preferences of consumers

INTRODUCTION

Security of the food system is about Canada's ability as a nation to produce, process and distribute safe and reliable food. To do this, Canadians need an agriculture and agri-food sector that is healthy, stable and viable.

The APF seeks to position the sector to meet the challenges and seize the opportunities of the 21st century. This means meeting and exceeding consumer demands and expectations, and branding Canada as a world leader in producing and supplying a variety of safe, high-quality and nutritious agri-food products while caring for the environment.

The APF puts significant emphasis on agricultural research and development to introduce new products, help the sector expand into new markets, and ensure product safety and quality, while protecting the environment.

OPERATING ENVIRONMENT

The Canadian agriculture and agri-food system produces approximately 80 per cent of the food and beverages consumed by Canadians. Canada enjoys one of the healthiest food supplies in the world. At the same time, the share of food in total household expenditures has been falling for the past 40 years. As we entered the 21st century, that share was less than 10 per cent. This is one of the lowest rates in the world, which can be attributed to not just increasing real incomes, but to Canada having one of the most efficient agriculture and agri-food systems in the world.

Canada is a prominent food exporter - the Canadian market of 32.4 million consumers is very small in relation to Canada's vast agricultural land base. Throughout the world, Canada has established a firm reputation as a reliable supplier of agriculture and food products that meet and exceed consumer demands and expectations regarding food safety, food quality, content, and stewardship of the resource base.

Opportunities for growth, prosperity and a stable future for Canadian producers and processors are expanding. National borders are becoming more open. Foreign markets are becoming more affluent. Sciences are converging to produce a new range of bioproducts, giving birth to the new bioeconomy. In addition, an increasing number of consumers are demanding and willing to buy more convenient, healthier products. Canada can capture its share of these opportunities through innovation.

STRATEGIC RESPONSE

To achieve the strategic outcome Security of the Food System, AAFC works through the departmental program activities of Business Risk Management, Food Safety and Quality, and Markets and International.

BUSINESS RISK MANAGEMENT

Enhancing producers' capacity to manage risk, and increasing the sector's viability and profitability

Planned Spending and Full Time Equivalents - Business Risk Management

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
2,689.2	996	1,487.0	997	1,149.7	706

The federal, provincial and territorial governments have long had policies and programs to deal with economic pressures and stabilize farm incomes. Common to the efforts is a focus on equipping producers with the tools and capacity to manage risks and ensure viable and profitable farming operations.

Under the APF, the federal government has targeted $5.5 billion over five years for business risk management (BRM) programs. In addition to this funding, Budget 2006 provided a further $1.5 billion in federal agricultural funding for 2006-2007, over $1.3 billion of which is expected to be directed toward BRM programs in Canada. These programs provide similar treatment to every producer across the country facing similar circumstances, and provide whole-farm assistance instead of being commodity-focused, to address the needs of the sector for stability and disaster protection.

The Budget's BRM initiatives are as follows:

• a one-time federal government injection of $900 million to adjust the inventory valuation calculation under the CAIS program retroactively for 2003, 2004, and 2005. Currently, changes in inventory are valued at year-end price. Under this transitional measure, inventory will be valued using a methodology that takes into consideration both opening price and end-of-year price. Producers entitled to more money after the recalculation will receive top-up payments;
• the Canadian Farm Families Options Program , a pilot program with a federal investmentof $550 million over two years, designed to help lower-income farm families explore options to raise their income for the future and provide short-term income support to lower-income farm families. Eligible applicants will receive a payment that will bring them to a maximum income of $25,000 for families and $15,000 for individuals if they have a commercial farm and must commit to participate in a business planning and skills development program;
• $50 million to expand the eligibility criteria for negative margin coverage under the CAIS program for the 2005 and 2006 program years. Previously, producers with negative margins were not eligible for CAIS program payments. Under this measure, they will be eligible if they have positive margins in two of three years used to calculate their reference margins. As well, producers could only receive two negative margin payments in a five year period. With the changes, there is no limit on the number of negative margins payments a producer can receive;
• a further $50 million for the Cover Crop Protection Program (CCPP) . This program provides a $15 per acre payment to help producers restore and protect their fields against excessive moisture and flooding damage, complementing the ongoing assistance available from the unseeded acreage or excess moisture benefits under Production Insurance . All farm operations across Canada affected by 2005-2006 spring flooding are eligible to apply;
• the implementation of the Enhanced Spring Credit Advance Program (ESCAP) , which doubles the maximum level of interest-free loans available under the existing Spring Credit Advance Program (SCAP) from $50,000 to $100,000 and extends the repayment period for these advances from December 31, 2006 to September 30, 2007; and
• in addition to the funding for the CCPP, a commitment to implement enhanced disaster relief separated from income stabilization to provide farmers with timely and broad-based assistance in the event of major natural disasters

AAFC and provincial governments, in consultation with industry organizations, are working to develop new and separate income stabilization and disaster assistance programs that provide responsive, predictable and timely assistance to producers. This programming will be implemented in 2007, and will form a core element of the next generation of agriculture and agri-food policy.

Business Risk Management programs

Two main programs are available to help producers manage risk and deal with income fluctuations. These core programs are the CAIS program and Production Insurance. The programs are complemented by province- and territory-based programming, the Private Sector Risk Management Partnerships (PSRMP) program and cash advance and financial guarantee programs including the Enhanced Spring Credit Advance Program (ESCAP), the Advance Payments Program (APP) in the fall, the Financial Improvement and Marketing Co-operatives Loan Act (FIMCLA) program and the Grains and Oilseeds Payment Program (GOPP) .

Canadian Agricultural Income Stabilization

The CAIS program is the successor to both the Net Income Stabilization Account (NISA) that focused on stabilization, and the Canadian Farm Income Program (CFIP) that focused on disaster protection. The CAIS program was officially launched in December 2003.

The CAIS program aims to help producers protect their farming operations from both small and large drops in income due to circumstances beyond their control. Like its predecessors, the CAIS program is cost-shared among federal, provincial and territorial governments and producers. A payment is made when a participant's margin in the program year falls below the reference or historical margin. The bigger the loss, the larger the share of the payment from governments.

The CAIS program is based on need, and provides coverage for disaster. It is a whole-farm program available to eligible farmers regardless of the primary agricultural commodities they produce, including dairy, poultry and eggs operating within supply-management systems. Farmers in supply managed sectors, who primarily use supply management to stabilize their revenues, are eligible for disaster assistance under the CAIS program.

The CAIS program is delivered in British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, and the Yukon under federal administration. In Alberta, Ontario, Quebec, and Prince Edward Island, the CAIS program is delivered provincially.

Federal-provincial-territorial working groups continue to review the program and address issues as they arise. Various issues were examined in 2005-2006 and changes have come into effect for the 2006-2007 fiscal year, including the replacement of the deposit requirement with a fee. This will help remove a significant financial irritant of producers regarding the program while ensuring that producers continue to cost share in the program. Governments have also agreed to change the rules in order to provide coverage for more producers with negative margins and pursue adjustment to the method for inventory valuation in order to make CAIS more responsive during periods of price declines.

Ongoing analysis of the CAIS program will continue to take place in the 2006-2007 fiscal year with federal officials working with their provincial counterparts to ensure programming is simpler and more responsive to the needs of Canada's producers. Officials are reviewing options and carrying out consultations on potential improvements including replacing the current integrated CAIS program with one that separates disaster relief from income stabilization. The objectives of these initiatives include improving the responsiveness of the CAIS program, and increasing producers' understanding of the program, to ensure this type of programming is simpler and more responsive to the needs of Canadian producers, as well as more affordable to taxpayers.

Production Insurance

Production Insurance is cost-shared by producers and governments. The program helps stabilize producers' incomes by minimizing the economic impacts of production losses arising from natural hazards like drought, hail, frost, and excessive moisture, as well as uncontrollable pests and diseases.

Production Insurance is provincially and territorially delivered, with the federal government contributing a portion of total premiums and administrative costs.

Production Insurance builds on the successes of the long-standing Crop Insurance program. Producers have access to a wider range of program options, which is expected to result in an expanded list of insurable commodities in most provinces and territories. These changes are expected to encourage greater producer participation in the program and hence reduce existing gaps in protection and the need for ad hoc compensation. In 2006-2007, a review of the Production Insurance program will be undertaken with a view to developing options for further expanding it to cover livestock and fresh horticultural commodities.

Producers are still able to purchase protection for severe, uncontrollable production and asset losses for crops. In addition, they can now participate in a range of new program options that are more consistent across provinces and territories. All provinces expanded plans or benefits available to producers during 2004 and 2005, and the subsequent year, 2006, will be the first year that all provinces' programs must comply with the federal funding levels identified in the Implementation Agreement.

Provincial/Territorial Programming

The purpose of province -and territory-based programming is to provide additional assistance to the agriculture and agri-food sector to help in the transition to the new BRM programs. Provinces and territories received funding over 2003-2006, for jointly agreed upon province- and territory-based initiatives that are consistent with the APF objectives. These initiatives included research and development programs and enhancements to the CAIS and Production Insurance programs. This initiative terminated on March 31, 2006. Any unspent funding will be used to fund non-BRM programs during 2006 and 2007.

Grains and Oilseeds Payment Program

This $755-million federally funded program was introduced late in 2005-2006 to assist Canadian producers of grains and oilseeds in dealing with the severe economic hardships they are facing. This funding began flowing to grains and oilseeds producers across the country in 2005-2006, and the remainder will be distributed in 2006-2007.

Producers who reported sales of eligible grains, oilseeds, or special crops for the 2004 tax year are eligible for the GOPP. The payments are based on producers' five-year average net sales of eligible grains, oilseeds and special crops for the 2000-2004 tax years (or the number of years available if less than five). Producers who started farming in 2005 and reported sales of eligible grains, oilseeds or special crops for the 2005 tax year are also eligible to apply.

Private Sector Risk Management Partnerships

Partnerships

While the APF has helped significantly to expand risk management coverage to primary producers, farmers have identified some gaps in available farm-level risk management coverage.

There is recognition of the important role of the private sector in developing and delivering risk management products and services to the sector. AAFC's PSRMP programming is designed to help find risk management solutions to these gaps, with products and services developed and delivered by the private sector.

By facilitating an expanding role for private sector providers of risk management products and services, the PSRMP approach allows for a limited investment of public resources in industry-led projects. The result of these specified investments will be an increased capacity to manage farm business risks, supported by an increasing range of private sector risk management products and services designed to meet the needs of Canadian farmers.

PSRMP is an alternative approach for governments to address gaps in farm-level agricultural risk management coverage. A total of 15 industry proposals were in place by the end of 2005-2006.

Financial Guarantee Programs

In addition to the risks traditionally associated with agricultural production, inadequate operating cash or access to credit can also affect the viability of farming operations. Financial guarantee programs address this need through credit facilities.

In May 2006, the Government of Canada announced amendments to the AMPA designed to provide expanded coverage and increased financial advances to farmers. The amendments will see the SCAP and APP combined into a single program that continues to provide farmers with advances during the production cycle to allow producers to store their products and market them throughout the year when market conditions may result in better prices. Also, on May 18, 2006, the federal government introduced a new program - the ESCAP - designed to give crop producers the greater assistance they need while the new AMPA program is developed.

New AMPA regulations will be drafted this year. Following approval of the regulations, agreements will be developed with the crop and livestock organizations that will administer the new APP. Financial institutions will also be able to administer the program in areas where a farm organization may not be available. Discussions with these administrators will be ongoing throughout the process to ensure an effective new APP is developed.

New AMPA regulations will be drafted this year. Following approval of the regulations, agreements will be developed with the crop and livestock organizations that will administer the new APP. Financial institutions will also be able to administer the program in areas where a farm organization may not be available. Discussions with these administrators will be ongoing throughout the process to ensure an effective new APP is developed.

The APP Delivery System was implemented in February 2006 to support current administrators of SCAP and APP. The new system will provide current administrators with an on-line delivery system for the programs. As well, enhancements have been started to allow the APP Delivery System to provide the functionality necessary to support both the ESCAP and the changes to the AMPA.

Producers also have access to the FIMCLA program, which increases the availability of loans for farm improvements and supports access to capital for agricultural co-operatives.

In 2006-2007 further analysis will be done regarding the debt access challenges for beginning farmers, inter-generational farm transfers and agricultural co-operatives. Included in this analysis process will be seven national stakeholder consultations spanning the country during the summer of 2006. Once this analysis is completed, options for changing FIMCLA to address these challenges may be considered.

BSE Programs

The confirmation of BSE in Canada, beginning in May 2003, required special measures and programs to deal with the impacts on the beef industry. The first set of programs was aimed at stabilizing the industry until normal trade patterns resumed. These programs were cost shared by federal, provincial and territorial governments, and included: the BSE Recovery Program, announced in June 2003, the Cull Animal Program, announced in November 2003, and the Transitional Industry Support Program, announced and implemented in March 2004.

As markets slowly began to recover, government assistance shifted to long-term measures designed to reposition the beef and cattle industry for profitability. Elements announced in September 2004 included continued efforts to reopen fully the U.S. border to live Canadian cattle, measures to increase domestic slaughter capacity, transitional measures such as the Fed Cattle Set-Aside Program, the Feeder Calf Set-Aside Program, the Farm Income Payment Program, the Managing Older Animals Program and the Ruminant Slaughter Loan Loss Reserve Program to assist in the expansion of slaughtering capacity in Canada to reduce the dependence on foreign markets for live slaughter animals. It also included measures to improve traceability across the livestock and meat value chain.

Additional measures were announced in June 2005 to further assist in the expansion of slaughtering capacity in Canada. The Ruminant Slaughter Equity Assistance Program and the Ruminant Slaughter Facility Assessment Assistance Program will contribute to the success of producer-led projects by providing equity investments and assistance to undertake business and feasibility plans for the construction or expansion of slaughter facilities for beef and other ruminants. Also included in measures introduced in June 2005 were programs designed to assist in recovering pre-BSE markets for genetic material and other ruminants, and for exploring new market potential.

Other BRM Programming

The Price Pooling Program is designed to facilitate the marketing of agricultural products under a co-operative by providing a price guarantee to protect against unanticipated declines in the market price.

Special Assistance Programming

The CCPP , announced in May 2006, is a Government of Canada initiative designed as part of a long-term solution to spring flooding across the country. The CCPP provides financial assistance to agricultural producers unable to seed commercial crops due to excessive moisture. Under the program, a one-time federal investment of $50 million will be delivered to producers who were affected by springtime crop-land flooding in 2005 and/or 2006.

In 2006-2007, the Department will continue to monitor challenges facing the industry and the ability of existing programs to respond. The Department will adjust current programs, or implement emergency measures, to respond to identified needs.

FOOD SAFETY AND QUALITY

Minimizing the risk and impact of food-borne hazards on human health, increasing consumer confidence and improving the sector's ability to meet or exceed market requirements for food products

Planned Spending and Full Time Equivalents - Food Safety and Quality

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
121.3	454	100.2	453	38.9	453

Consumers today expect and demand a variety of food products that are safe, high-quality and nutritious. In strengthening food safety, enhancing food quality, and retaining the sector's competitive edge both domestically and globally, consumers and the industry look to governments to play a leadership role.

The federal, provincial and territorial governments are committed to upholding Canada's reputation as a producer and supplier of food products that are among the safest and highest-quality in the world. As a step toward making this commitment a reality, federal, provincial and territorial partners are exploring the development of a National Food Policy Framework, designed to help co-ordinate policy development and priority setting on food issues by taking into account agriculture, economic and health consideration into the decision-making process. This will further strengthen the existing foundation for consumer confidence, health protection and economic growth.

The research focus and efforts of the Food Safety and Quality team include providing the knowledge and technology needed to enhance the ability of Canadian producers and governments to keep the food system safe, and to produce quality food products for consumers, now and in the future. AAFC science in support of this focus includes research designed to reduce food-borne hazards as well as post-harvest handling and storage research designed to maintain or enhance the quality of agricultural products.

Over the next three years, AAFC's efforts, working with the CFIA in the portfolio, and other federal, provincial and territorial partners, and engaging industry, will encompass food safety, food quality, traceability, and animal health:

• A National Food Quality Policy will guide federal, provincial, and territorial governments' program and policy development with respect to food quality, while supporting innovation and enhancing industry's opportunity and access to growing quality-driven markets.
• An Animal Health and Welfare Policy will allow governments and industry to move toward anticipating, preparing for, and managing evolving risks in animal health and welfare.
• A National Agriculture and Food Traceability System, starting with a National Livestock Traceability System, will guide implementation of animal and food traceability across the Canadian food-supply chain and encourage the development of processes that can trace the history, location and the movement of food products from field to fork. The system will support governments' roles in managing animal-health crises and in minimizing the risk of public exposure to food-safety hazards, while maximizing consumer confidence.

Canadian Food Safety and Quality Program (CFSQP)

The CFSQP, under the APF, is one of AAFC's on-going initiatives to address food issues. The program provides agriculture and agri-food industry associations with financial assistance to develop and implement food safety, traceability and quality-process-control systems. The strategic objectives of the program include:

• assuring the well-being of consumers by minimizing the risk of food-borne hazards;
• improving the ability of the industry to meet and exceed food-safety and food-quality requirements;
• developing national systems needed to support food safety, food quality and traceability; and
• maintaining and enhancing consumer confidence in the quality and safety of food products.

Using an integrated approach, the CFSQP has three distinct components: (1) Systems Development, (2) On-Farm Implementation and (3) Food Safety Initiative. Industry associations across the value chain will be able to use Systems Development funding to develop systems that form the foundation for food safety, quality assurance and traceability systems. The On-Farm Implementation and Food Safety Initiative will increase producers and processors' capacity to implement these systems and brand Canada as a supplier of safe and high quality food and food products.

The CFIA is an important partner in these endeavours, providing technical advice in all areas, as well as managing the On-Farm Food Safety Recognition Program. This program, requested by producers, ensures a consistent national approach to food safety based on internationally accepted, science-based, risk-management systems.

These initiatives are best carried out in collaboration rather than in isolation. Close working relationships among governments, industry and academic partners are crucial to:

• identify and address knowledge gaps and improve coordination of research activities and technology transfer;
• deliver safe and healthy food in a sustainable manner;
• develop an integrated approach to animal-health risk management;
• recognize and certify food-quality systems to improve market success;
• facilitate industry adoption of on-farm Hazard Analysis Critical Control Points (HACCP) systems; and
• develop and implement traceability systems that follow products from primary production through to the end consumer.

Markets and International

Expanding international opportunities for the Canadian agriculture and food sector

Planned Spending and Full Time Equivalents - Markets and International

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
79.5	537	78.3	539	57.5	560

The Canadian agriculture and agri-food sector, like other sectors of the Canadian economy, is both market-driven and market-oriented. The sector depends significantly on the international market. Therefore, integration of international and domestic activities is critical. AAFC's approach is designed to leverage domestic progress into success on the global stage. Market success requires supply-chain co-ordination to meet consumer demands and create enhanced value through innovation. International-market readiness begins with domestic system integration to provide evidence that Canada is a world-leading supplier of safe, high-quality, environmentally friendly food.

Canadian producers and processors have established a strong reputation as efficient and reliable suppliers of safe, high-quality products. But in an increasingly competitive marketplace, the sector cannot be complacent.

Canada's competitors in the global marketplace are not standing still. They face the same challenges as Canada - that consumers are increasingly demanding innovative, convenient foods that taste great, and expecting more in the areas of food safety and quality, environmental responsibility and animal welfare. While the ability of our competitors to meet these demands varies, many can make the same claims as Canada.

To maintain global-market share and build new markets for growth, Canada needs to find new ways to stand out from the competition. In response, governments and industry are working together on a research-based strategy for branding Canadian agriculture and food products. The strategy goes beyond logos and marketing activities. It is designed to focus industry on what customers want from Canada, develop the strengths that can set us apart from the competition, and communicate these strengths in a consistent way.

Indeed, the international component of the APF builds on the sector's domestic strengths to ensure increased exports for Canadian agriculture and food products, and increased domestic-market share for Canadian products as well.

To achieve these goals, AAFC's integrated international strategy will concentrate on further moving Canada's agriculture and food sector forward in three key areas:

• gaining recognition;
• improving market access; and
• overcoming technical barriers.

Gaining Recognition

Branding the agriculture and agri-food sector will help gain recognition for Canadian products. At the centre of Canada's Branding Strategy is a national Brand Promise focused on APF pillars and based on buyer and consumer research studies in the United States, Mexico, Japan, and the EU. These studies indicate Canada is seen as a reliable supplier of safe, high-quality goods and as being trustworthy, environmentally savvy, competent, and credible.

In tandem with these research efforts, industry-led value-chain roundtables, which include participation by the CFIA, the CGC and other government departments and agencies as appropriate, are using market research and benchmarking studies to assess Canada's performance versus the competition in key markets. This research also serves to pinpoint the issues on which industry and government need to work together to improve.

Roundtables have been established for the beef, pork, cereal grains, oilseeds, special crops, horticulture, and seafood sectors. They bring together players from across the value chain - input suppliers, producers, processors, traders, retailers, the CFIA, the CGC, and others - to build a shared view of their sector's competitive position and a plan to improve it for the benefit of all players. Continuing to support roundtable strategy development is a key priority for the Department.

In addition to work on branding and the roundtables, AAFC is leading a trade promotion program capitalizing on a network of agri-food specialists posted abroad and enhancing its representation in the U.S. Strong linkages to industry, provinces, territories, and other federal departments will continue to promote Canada and Canadian products to foreign buyers. Success in export markets benefits the entire sector and contributes substantially to Canada's economic prosperity and positive balance of trade.

Improving Market Access

In addition to raising Canada's visibility and profile in the international marketplace, the Government of Canada will continue its efforts to press for a more level international playing field so that producers and processors can trade more effectively on the basis of their competitive advantage.

Canada will continue to actively participate in and work hard to influence the WTO agriculture negotiations in a way consistent with our objectives. In December 2005, WTO members, including Canada, participated at the 6th WTO Ministerial Conference in Hong Kong. The Ministerial Declaration adopted in Hong Kong reflected progress achieved in some areas which are important to Canada's agriculture and agri-food sector. While not as comprehensive or as ambitious as Canada would have preferred, the Declaration did provide scope for Canada to continue to pursue its objectives.

In July 2006, following intensive efforts by WTO members to reach agreement on detailed rules and commitments for agriculture, the WTO Doha negotiations were suspended. Key WTO members had been unable to resolve differences in their negotiating positions. While Canada was extremely disappointed at the impasse reached in the negotiations, the country remains committed to more liberalized trade, the rules-based multilateral trading system and the objectives of the Doha negotiations. Canada will continue to work with other WTO members to advance the Doha negotiations, if and when key WTO members are able to narrow the differences in their positions and move the Round forward. Canada's objectives at the WTO remain to seek the elimination of all forms of export subsidies, substantial reductions in trade-distorting domestic support and real and significant market-access improvements. Canada will also continue to defend its ability to make decisions domestically about how to market Canadian products.

The Government will complement its efforts at the WTO with regional and bilateral negotiations designed to promote and improve market access for Canadian exporters. The Department will continue to be engaged in negotiations toward free-trade agreements with Korea, the Central America 4 (CA-4: El Salvador, Guatemala, Honduras, and Nicaragua), the European Free Trade Association, Singapore, and the Free Trade Area of the Americas (FTAA), and potentially with others including CARICOM (Caribbean Community and Common Market), the Andean countries and the Dominican Republic. It will also continue to negotiate equivalency of the Canadian organic production system with the EU.

Through these multilateral, regional and bilateral negotiations, AAFC will continue to press for outcomes which would benefit Canada's entire agricultural sector. Importantly, in support of this objective, AAFC will also continue to assign high priority to consulting closely with provincial governments and with the full range of Canada's agri-food industry, with regard to Canada's approach to WTO and other international trade negotiations.

A key tool for successfully addressing various trade irritants will remain the effective use of trade-advocacy initiatives, supported, when appropriate, by the CFIA and the CGC. Better messaging and targeting of key influencers remain ongoing priorities in this regard.

Overcoming Technical Barriers

Although adherence to scientific principles is one of Canada's trade tenets, some countries trade requirements are not based on science. Such technical trade barriers can be disruptive to global trade. Accordingly, Canada is moving to address technical issues that critically impact market access.

AAFC is developing strong agri-food positions to influence policy decisions on technical issues and development of standards in a broad range of multilateral decision-making fora. The Department will work domestically and internationally, in close co-operation with other federal agencies and departments such as the CFIA, Environment Canada, Health Canada, and Foreign Affairs and International Trade Canada, to build informed positions and influence negotiations on key issues (e.g., Cartagena Protocol on Biosafety, geographic indications and regionalization) and of trade-related arrangements such as mutual recognition agreements and training in inspection systems. AAFC will continue to engage industry and government partners on emerging issues such as labelling requirements, traceability, maximum residue limits, product attributes, and genetic resources.

BENEFITS FOR CANADIANS

While Canadians have achieved an enviable level of food security, the agriculture and agri-food sector is facing a host of pressures. Sustaining and enhancing the security of the food system will help cushion the sector against the impact of periodic downswings. Opportunities exist to greatly strengthen performance, increase profitability and provide stability for the sector.

Strategic Outcome 2:
HEALTH OF THE ENVIRONMENT

An agriculture and agri-food sector that uses environmental resources in a manner that ensures their sustainability for present and future generations

INTRODUCTION

Maintaining access to agri-environmental resources is a common goal. Farmers, industry, governments, environmental organizations, and citizens must work together to achieve the goals of sustainable development to ensure both an economically vibrant agriculture and agri-food sector and a healthy environment.

Canadian farmers have shown they can be admirable stewards of the country's environmental resources. They already apply many good environmental practices, which not only safeguard resources but also help boost the profitability of their operations. At the same time, it is clear that more must be done to conserve the environment. Further, consumers are increasingly basing their buying decisions on their desire to support environmental sustainability.

Working together under the APF, governments, producers and industry are looking to accelerate efforts to reduce production risks and impacts to Canada's resources, including air, water, soil, and biodiversity.

OPERATING ENVIRONMENT

Environmental stewardship is a priority for Canadians and consumers around the world. Indeed, the public both in Canada and abroad holds all sectors, including agriculture and agri-food, to high environmental standards.

To enhance their competitiveness in the global market place, Canadian producers have increasingly diversified, intensified and specialized their operations. The Government of Canada, through environmental programming, is taking steps with governments and the industry to mitigate the risks to the environment from agriculture and to position the agricultural sector to deal with the risks environmental factors may pose to production.

STRATEGIC RESPONSE

To achieve the Health of the Environment strategic outcome, AAFC has a suite of activities and initiatives in air, water, soil, and biodiversity that contribute to providing Canadian and international consumers with high-quality food that has been produced using environmentally sound crop and livestock management practices. This helps secure the sustainability of the Canadian agriculture and agri-food sector and the quality of environmental resources for present and future generations.

ENVIRONMENT

Achieving environmental sustainability of the industry by preserving the quality and availability of resources - air, water, soil and biodiversity - for present and future generations

Planned Spending and Full Time Equivalents - Environment

2006-200		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
331.4	1,914	275.1	1,920	158.5	2,023

Defining Priority Areas

The APF sets out the areas where the federal government, in collaboration with the provinces, can provide leadership in environmental actions, including better knowledge and understanding of the links between agriculture and the environment. Through the APF, AAFC, provincial and territorial counterparts and industry organizations will continue to work toward achieving common environmental goals.

Similarly, the Government of Canada's commitment to develop and implement a new Made-In-Canada approach to addressing environmental challenges to ensure the health of Canadians and communities will provide a framework for AAFC's work toward addressing environmental challenges as they relate to the agriculture and agri-food sector.

A focus on domestic action is a key component of the Made-In-Canada approach, to help ensure Canadians can enjoy clean air, water and land. This is where the agriculture and agri-food sector can make a real difference.

As AAFC continues to implement the APF, supports the Government of Canada's environmental strategy and prepares for the next generation of agriculture and agri-food policy in 2008, it will work towards reducing environmental risks and impacts related to agricultural production in the following priority areas:

• air and atmosphere quality, with a focus on particulate emissions, odours and emissions of gases that contribute to global warming;
• water availability and quality, with a focus on nutrients, pathogens and pesticides;
• soil health, with a focus on soil organic matter and soil erosion caused by water, wind or tillage; and
• biodiversity and agriculture compatibility, with a focus on habitat availability, species at risk, and economic damage to agriculture caused by wildlife.

In contributing to these priority areas, AAFC will focus its efforts and resources on:

Innovative environmental policy and program options

• developing knowledge and technologies, raising awareness, forging collaborative partnerships, increasing decision making capacity, and providing effective mechanisms to encourage the adoption of beneficial management practices by the agriculture and agri-food sector;
• providing the knowledge and understanding necessary to link agricultural production to environment components thereby identifying targets for the development and adoption of beneficial management practices;
• continuing the implementation of integrated, multidisciplinary, scientific approaches to the development and adoption of beneficial management practices favouring producer competitiveness and environmental health;
• providing the technical and knowledge support to farmers that will contribute to a healthier environment and economic sustainability (including implementation and promotion of comprehensive environmental planning and beneficial management practices);
• improving and expanding agri-environmental indicators and policy development and integration to monitor and report progress and to identify new tools and mechanisms in support of the environment program activity of the Department;
• continuing to explore environmental certification as an on-farm policy option;

National Land and Water Information Service implementation

• continuing to enhance the agricultural sector's land use decision making capacity by implementing the NLWIS;

Agriculture's interface with climate change initiatives

• continuing efforts to assist producers in reducing agricultural GHG emissions, including the implementation of beneficial crop and livestock management practices and the use of renewable energy sources such as biofuels and wind power;
• developing climate change scenarios for agriculture and improving prediction of the effects of associated stresses to crop production, thereby enhancing the understanding and awareness of climate change impacts and adaptation challenges and opportunities for the sector; and
• working with Natural Resources Canada and Environment Canada to develop a system for estimating and reporting emissions.

Taking Action on Priority Areas

AAFC will achieve results under each priority through four key areas.

Environmental Science

Acting on agricultural risks presumes a sound knowledge of the environment, and specifically of the relationship between agriculture and the environment. It is essential to understand the processes and mechanisms by which agricultural inputs, such as nutrients and pesticides, affect resources, such as air, water, soil, and biodiversity, under different agri-environmental landscapes and management practices. It is also necessary to understand the relations and interactions between the different components of the agri-environment, to reduce the environmental footprint of pest management practices and to determine the outcome of agricultural inputs and wastes (e.g. manure) in the environment. Such an understanding is crucial for providing sound advice to policy makers and land resource and extension specialists on the effects of agricultural production on air, water, soil, and biodiversity.

The knowledge gained can be used to develop beneficial management practices and indicators of the state of the environment, and also applied toward the use of innovative environmental technologies, genetic resources and biological information by the sector. The activities of the Department's Environmental Health National Science Program include fundamental and applied research to develop knowledge and technologies that will minimize the impact of agricultural production on natural resources.

Environmental Stewardship

Agricultural risks to the environment will be best tackled through collaborative efforts of governments, producers and stakeholders. The Department, through the PFRA, delivers a comprehensive package of tools and services to encourage environmental stewardship.

Environmental Farm Plans help producers assess their operations and determine environmental risks and opportunities. The National Farm Stewardship Program helps producers address these risks by providing financial and technical support to adopt beneficial management practices. Greencover Canada complements these programs by targeting technical and financial assistance to more fragile forage, range land and riparian areas.

AAFC will continue to support sustainable land management in other ways, such as through the management of 2.1 million acres of native range land under the PFRA Community Pasture Program, and agro-forestry programs provided through the PFRA Shelterbelt Centre that help to prevent soil erosion, protect riparian areas, provide wildlife habitat, and sequester carbon.

There is a continued need for improving producer access to secure water supplies of acceptable quality, especially in an environment of climate change and variability. The National Water Supply Expansion Program provides technical and financial assistance for on-farm and community infrastructure, and strategic studies to understand agricultural water supply and demand and evaluate new technologies. In particular, there are growing industry demands for sustainable irrigation development and management. The Department supports sustainable irrigation practices through applied research, demonstration and technology transfer conducted at PFRA irrigation centres in Saskatchewan and Manitoba.

Environmental Policy

The ongoing challenge under Environmental Policy involves improving and expanding agri-environmental indicators and policy development and integration to monitor and report progress. It also involves identifying new tools and mechanisms in support of the environment program activity of the Department. This means addressing agri-environmental policy issues, such as climate change, water, environmental goods and services, standards and certification in the broader contexts of rural landscapes, watersheds and ecosystems, and sustainable development, while acknowledging the positive impacts of producers on maintaining environmental quality.

National Land and Water Information Service

The NLWIS project was launched in 2005 to strengthen the capacity of land managers to make better decisions about land use.

The project is being implemented in phases over four years. It is a coordinated, national initiative providing access via the Internet to geospatial information and interpretive models that support local and regional land-use decision making. Through partnerships, the service will link the land-use, soil, water, climate and biodiversity information that supports local and regional land-use decision making by federal, provincial, territorial and municipal governments, non-governmental organizations, and the private sector. This improved access to information will provide value to producers and other land-use decision makers. It will help provide the support they need to balance economic development and environmental sustainability. The information will form the basis for environmental farm planning, and help producers make decisions such as the kind of production a particular section of land will best support.

Highlights of agri-environmental activities

AAFC will continue to build its capacity together with provinces, territories and the industry to respond to the challenges of managing agri-environmental issues. Efforts will continue to focus on the application of science to develop beneficial agricultural management practices; the development of information, knowledge and skills; and the means to assist Canadian producers to improve environmental performance and economic competitiveness through action on their farms. APF environmental initiatives, including Environmental Farm Planning , the National Farm Stewardship Program , and Greencover Canada , will be delivered in collaboration with the provinces and producer groups.

Some pertinent activities and initiatives worth highlighting include:

• the National Agri-environmental Health Analysis and Reporting Program , to enhance AAFC's capacity for developing and improving science-based agri-environmental indicators and policy tools;
• the Gaps initiative, now in its third of five years, to address gaps in knowledge through research on the impact of intensive livestock and cropping systems;
• AAFC strategies in air, water, soil, and biodiversity to help provide guidance in responding to the key risks and opportunities for the agriculture and agrifood sector, and ensuring these strategies contribute to the Government of Canada's broader goal to ensure the health of Canadians;
• the Watershed Evaluation of Beneficial Management Practices , a multi-partner project designed to evaluate the effects of beneficial management practices on water quality at a watershed scale;
• AAFC's Pest Management Centre (PMC) is working with farmers, pesticide companies, the provinces and other stakeholders to facilitate better access to safer, newer, pest-management technologies. The PMC operates two programs to enhance the environmental stewardship and competitiveness of Canadian farmers:
  • The Pesticide Risk Reduction Program , a joint initiative with Health Canada's Pest Management Regulatory Agency (PMRA) , to help producers to develop commodity-specific pesticide risk-reduction strategies, and provide support for implementing these strategies; and
  • The Minor Use Research Program , which supports the introduction of reduced-risk minoruse products that pose a lower risk to human health and the environment. The program provides funding to screen reduced-risk products which could potentially be candidates under the program, and develops new or novel application technologies. As well, the program conducts research needed for risk assessment in support of regulations. The program will provide benefits to Canadian producers, the environment and consumers by focusing on:
    • making minor use pesticide products, with emphasis on reduced-risk products, more readily available;
    • working on joint projects with the United States in an effort to have newer, safer products available in both countries simultaneously; and
    • providing Canadian producers with access to new pest-management technologies to improve their competitiveness domestically.

BENEFITS FOR CANADIANS

Environmental stewardship of air, water, soil, and biodiversity by agricultural producers will contribute to a healthy environment for all Canadians. A healthy environment is crucial to the sustainability and profitability of the agriculture and agri-food sector, a key component of the Canadian economy. AAFC activities and initiatives, in partnership with provinces, territories, municipalities, industry, and producers, will contribute to a secure future for the sector, a healthy environment and quality of life for all Canadians.

Strategic Outcome 3 :
INNOVATION FOR GROWTH

An innovative agriculture and agri-food sector that develops food and other agriculture-related products and services in order to capture opportunities in diversified domestic and global markets

INTRODUCTION

Increasingly rapid advances in science and technology mean producers and other industry stakeholders face greater challenges to keep pace. All players in the sector - from primary producers to value-added processors - operating in the marketplace today require access to state-of-the-art technology combined with the latest knowledge to help them address rapidly changing consumer needs and expectations. More than ever, keeping on top of change is key to profitability.

As farming operations become larger and more complex, both new and established producers need to add to their skills and knowledge, ranging from managing financial and human resources to mastering innovative technologies, products and practices to stay competitive. By acquiring additional skills, adopting new technologies, maximizing efficiencies in operations, or changing product mixes, those who earn their livelihoods in the Canadian agriculture and agri-food business will continue to be successful in the 21st century.

To a large degree, the competitive position of Canada's agriculture and agri-food sector will depend on all stakeholders - including producers, processors, researchers, etc. - working closely to develop new opportunities across the country. At the same time, governments will work with industry to foster a climate for innovation that encourages investment in the sector.

OPERATING ENVIRONMENT

As mentioned previously, the agriculture and agri-food sector operates in an uncertain business environment, facing pressure from a variety of risks. There are production risks, including adverse weather, and pests and diseases of crops and livestock. Market risks include increasingly stringent consumer expectations and standards for food safety and quality, environmental performance, restrictions to market access in other countries, and fluctuating exchange and interest rates that impact farm income and farm debt. There are also competitive risks, including those related to rapidly changing science and technology and increasing competition from both developed and developing countries.

As the sector expands, the scope and nature of the pressures it faces are becoming more varied and complex, requiring collaboration along the value chain from inputs through production, processing, distribution, and marketing. More and more, these pressures require multi-disciplinary solutions through coordinated and integrated action by a variety of stakeholders.

Value-chain roundtables, which include participation from the CFIA , will be instrumental in helping to identify these pressures and develop solutions to build and implement sector-specific market strategies and action plans in line with the Canada Brand.

STRATEGIC RESPONSE

To achieve the Innovation for Growth strategic outcome, and make Canada a world leader in developing food and other agricultural products and services that capture diversified opportunities in home and overseas markets, AAFC will work primarily through two departmental program activities: 1) Innovation and Renewal and 2) Markets and International.

The Department is committed to ensuring that priorities identified by participants in the value chain roundtables, including the CFIA, regarding policies and programs are factored into its planning and decision making. Resources will be directed to the right initiatives. In this way, AAFC is helping create the environment for a profitable and viable sector and strong rural and remote communities.

The Department is also expanding its linkages with the health community as perceptions regarding the role of food have changed with the mounting research demonstrating diet as a risk factor in chronic diseases, including cardiovascular disease, hypertension, type II diabetes and cancer. Exploring the intersection between agriculture and health and wellness will stimulate the development of innovative food products and agricultural ingredients that may be seen as a major contributor to health and a potential solution to rising healthcare costs associated with elevated rates of chronic disease.

In support of the future competitiveness and prosperity of the sector, Budget 2006 included a commitment to invest in ongoing measures, including new investments in biomass science and funding in support of a biofuels strategy, and new programming to support the sector in developing new market opportunities. In recognition of their unique challenge, the Government of Canada is also putting in place measures to help low-income farm families.

INNOVATION AND RENEWAL

Equipping the industry with new business and management skills, bioproducts, knowledge-based production systems, and strategies to capture opportunities and manage change

Planned Spending and Full Time Equivalents - Innovation and Renewal

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
572.2	1,947	599.1	1,938	271.9	2,095

Innovation

Agriculture has always been propelled by science and technology, but recent innovations and advances have transformed the sector more than ever before. Rapidly progressing fields such as biology and chemistry, combined with the ever-increasing power of new information and communications technologies, have fueled significant growth in the bio-economy. Innovation and scientific advances will lead to enhanced capabilities in the molecular design of customized food and non-food products from agriculture and the bioresource base. This will create product and market opportunities that are differentiated to a far greater degree than is feasible today.

To become a world leader, the Canadian agriculture and agri-food sector must be at the forefront of innovation. Accordingly, science is being recognized as a key component of the next generation of agriculture and agri-food policy. Science will support a Canadian agriculture and agri-food sector that is innovative and competitive, where all partners work together to be a world leader in the production of food and other agriculture-related products and services that meet global consumer needs in ways that respect the environment and contribute to the best quality of life for all Canadians.

In the autumn of 2005, AAFC reviewed its science priorities and held a series of cross-country consultations with communities, stakeholders, industry representatives, provincial and territorial governments, universities, and research institutes to seek feedback and advice on key science and research priorities and strategies to maximize returns from science investments. Results of these consultations will form the basis for AAFC's new Science and Innovation Business Plan for 2006-2010 and help guide the direction of the Department's resources and research efforts to maximize opportunities in the global marketplace, resulting in increased profitability through growth, diversification and value-added activities.

The Science and Innovation Business Plan will include:

• a vision for the sector, identifying challenges and opportunities;
• the science capacity required;
• the role of the various players performing agricultural science and innovation research;
• AAFC's research priorities in support of the vision for the sector and national priorities; and
• areas where partnership opportunities exist to establish critical masses of expertise and multidisciplinary research clusters.

It is clear from the feedback received throughout the consultations that future challenges will require strengthening overall national science and innovation capacity by positioning and integrating AAFC science resources and research efforts within a national frame of multi-disciplinary, multi-player partnerships that cross jurisdictional, disciplinary and institutional boundaries. Bringing supply chain participants together to form value chains that use transformational research to redefine the business of agriculture will position producers and the sector to take advantage of new economic opportunities and capture new markets.

Therefore, a key part of AAFC's Science and Innovation Business Plan will be the development of a partnership strategy, designed to explore collaboration among the various players involved in research and development. This strategy will examine ways to make the best use of buildings, equipment and the skills and knowledge of Canada's science community.

AAFC will take the lead on public agricultural research that is critical to the nation and where the Department has a unique capacity or leadership position.

Some of the Department's agricultural research is more or less location-independent and in these situations, AAFC will concentrate its activities at research hubs with significant capacity and infrastructure.

Other research is more location-dependent and AAFC will make extensive use its network of facilities to deploy research activities at more than one site to create national critical mass and infrastructure aligned with the needs of the producers.

AAFC will work in partnership on public agricultural research that is important to the nation, but where universities or other federal departments have significant capacity or leadership position, AAFC will integrate its research activities with those of universities and other federal departments through various models of co-location, partnerships and alliances. In so doing, AAFC will contribute to the establishment of critical mass of researchers, synergies or efficiencies. Examples of ongoing discussions in this regard include:

• Charlottetown with the National Research Council and the University of Prince Edward Island on nutraceuticals;
• Winnipeg with the St.Boniface Research Hospital and the University of Manitoba on nutraceuticals and with the CGC and the Canadian International Grains Institute on grain research;
• Saskatoon livestock germplasm with the University of Saskatchewan; and
• Summerland and Agazziz with the University of British Columbia on collaborative and integrated agricultural science programs.

AAFC will establish regional and national science and research consultation mechanisms to ensure ongoing relevance of research efforts with the strategic priorities of the sector and the government. AAFC will continue to work in cooperation with the value chain roundtables, which include the CFIA, and other vehicles to enhance coordination in support of accelerated adoption and commercialization of scientific and technical knowledge leading to improved economic opportunities for the sector and rural communities.

AAFC's consultations confirmed the need for national consultation, co-ordination and co-operation among science providers. The Department will engage Canadian stakeholders to participate in the development of a mechanism that would provide leadership in building integrated national agriculture science and innovation research capacity for Canada. This mechanism will help provide advice on research priority setting and research planning for the Canadian agriculture and agri-food sector, and facilitate the development of multi-stakeholder partnerships to address national research priorities. It will also: provide advice on strategic national agriculture and agri-food science capacity requirements (infrastructure, equipment, skills, funding) to support the vision for the Canadian agriculture and agri-food sector now, and in the future; identify strategic gaps in national science capacity; and facilitate the development of integrated national science capacity for the Canadian agriculture and agri-food sector.

Activities specific to Innovation will be carried out through research and development of two of the National Science Programs: 1) Sustainable Production Systems and 2) Bioproducts and BioProcesses. An Innovation and Renewal Policy and Strategy will enable an integrated approach to innovation and renewal policy through consultations with government, industry and other stakeholders in designing and implementing the policy.

AAFC is working collaboratively and in partnership with other science and research providers to explore the more efficient use of farm-based feedstocks for ethanol and biodiesel production and the use of waste products to generate methane gas for energy production to support the development of biofuels. This is a key element of the energy, environmental and economic agenda for the Government of Canada. In the longer-term, integrating biofuels production into biorefinery processes that produce fuels and a variety of high-value co-products from biomass, will create improved economic opportunities for farmers and the agriculture and agri-food sector while addressing energy and environmental goals at the same time. Such integrated production and processing solutions will provide a solid basis for sustainable sector growth and economic development opportunities for rural communities.

Initiatives in the areas of bioproducts and bioprocesses represent a snapshot of the efforts of AAFC as a science organization serving the sector by working to meet the demands of a highly segmented world market and by adapting as demands change. Implicit in achieving this goal is the need to be on the cutting edge of new scientific disciplines and tools as they develop.

Renewal

In a rapidly changing environment, strategic business planning and continuous learning are increasing in importance. Strategic planning, lifelong learning and upgrading skills can strengthen the performance of individual agricultural operations, and the industry as a whole. Using a variety of management skills and practices to assess their situation, define goals and implement change, Canadian producers can positively influence their financial performance.

Built on the concept of continuous learning, renewal programming helps producers assess their situation and plan for the future during critical transition times. Renewal programs enhance producers' access to information, advice and training and enable them to pursue on-and off-farm income opportunities, helping to make it possible for the family to remain on the farm.

AAFC ensures producers have access to public and private sector programs and services that will help them achieve their individual goals. These programs and services help producers acquire the requisite knowledge, tools and opportunities to upgrade management and technical skills, and develop the necessary skills to pursue alternative income opportunities should they choose to move out of farming. They also help producers assess the performance and potential profitability of their farm business, enhance their ability to make business management decisions, and explore and develop market opportunities.

During the next three years, AAFC will continue to work strategically with partners in the sector, including FCC , to identify the new skills and learning opportunities that producers need to succeed in the increasingly knowledge-intensive economy. Priorities will include finding improved ways to provide farm families with the assistance needed to enhance their skills and knowledge and expand access to tools, advice and information.

The Department, together with industry and government partners, offers a variety of programs and services to help producers acquire the skills they need to adapt to rapid business changes.

• Producers will continue to have access to the five-year CFBAS . The CFBAS has two components: Farm Business Assessment and Specialized Business Planning Services. These services provide farmers with access to financial consultants who help them assess their finances and develop action plans and in-depth business plans (that may cover finances, marketing, expansion and diversification) and succession plans. Farmers interested in developing value-added businesses can use the PAVE program services.
• Benchmarking is geared to providing information to help farmers make decisions about their business operations. Farmers will have continued access to information resources such as Web sites that provide benchmarks to help them compare their performance to that of other operations.
• Skills and Learning activities provide support to organizations focused on helping producers develop their skills and knowledge in the sector. These activities include exploring partnership opportunities (FCC and the Association of Canadian Community Colleges), providing input into development of an agriculture human resources council (Canadian Federation of Agriculture, Human Resources and Social Development Canada), and helping provide information through the Canadian Farm Business Management Council, Canadian 4-H Council, Canadian Outstanding Young Farmers Program, Canadian Young Farmers Forum, and Canadian Agricultural Safety Association.
• The CASS provides beginning farmers and established producers with lower incomes access to training designed to help them make choices about their future and enable them to pursue income opportunities both on and off the farm. Through the program, producers will continue to be able to access assistance for skills development and training that could result in higher on- or off-farm income.
• Capturing Opportunities from Science and Innovation is designed to improve the profitability of the sector by helping farmers pursue opportunities arising from advances in science and innovation. Renewal provides funding to the Canadian Farm Business Management Council (CFBMC), which disseminates, through its Web site, information on opportunities arising from science and innovation. In cooperation with AAFC, the provinces and territories are undertaking the initiatives to realize commercial opportunities arising from advances in science (e.g., feasibility studies, partnerships). PAVE support for feasibility studies and business planning has the potential to capture opportunities from science.
• Access to Capital is focused on increasing private sector investment and improving producers' chances of obtaining financing for proposed farm and other agri-business projects. Facilitating access to capital is supported through feasibility assessment, business planning and financial action plan components of the CFBAS programs. A baseline study was conducted on access to capital. Input was provided into the review of theFIMCLA program to cover the possibility of providing loan guarantees to beginning farmers. Provinces and territories have developed information on investment opportunities in the agriculture and agri-food sector.
• Producers will continue to be able to access the services of qualified financial counselors to prepare financial reviews and recovery plans for farming operations, through the Farm Debt Mediation Service . Qualified mediators are also available to assist in negotiations between producers and creditors to help them arrive at a mutually satisfactory arrangement.

During the next three years, AAFC will continue to work strategically with the sector to identify the new skills and learning opportunities needed to succeed in the increasingly knowledge-intensive economy. Priorities will include finding improved ways to provide farm families with the assistance needed to enhance their skills and knowledge and expand access to tools, advice and information. Through partnerships with CFBMC, the 4-H Council and the other organizations listed above, and through increased promotion of Renewal programs services, AAFC will continue to make farm business management information and tools more widely available.

The ACAAF Program

Launched in April 2004 as a successor to the Canadian Adaptation and Rural Development (CARD) Fund, the ACAAF program continues CARD's innovative and co-operative approach to funding projects at the national, multi-regional and regional level. This grassroots delivery structure provides greater responsibility and accountability to industry in responding to the needs and issues of the agriculture and agri-food sector at the local, regional and multi-regional level identified and carried out by the sector.

The objectives of the ACAAF program are to:

• expand the sector's capacity to respond to current and emerging issues;
• position the sector to capture market opportunities;
• engage the sector to contribute to future agricultural and agri-food policy directions; and
• integrate sector-led projects tested and piloted under the ACAAF program into future federal, provincial and territorial government or industry initiatives.

The ACAAF program is delivered under the following three pillars, which were confirmed through extensive consultation with industry:

• Pillar I: Industry-led Solutions to Emerging Issues, supporting projects that test or pilot approaches and solutions and acting as an incubator for projects that hold promise for setting the direction of future policy or program approaches;
• Pillar II: Capturing Market Opportunities by Advancing Research Results, supporting projects that transfer research results into market opportunities; and
• Pillar III: Sharing Information to Advance the Sector, supporting projects aimed at market and trend analyses and at gathering, analyzing and sharing information that contributes to future agricultural and agri-food policy directions.

The ACAAF program complements the objectives set out under the APF and will further advance progress toward its goals by engaging stakeholders in undertaking new activities that complement existing programming. The program also encourages the sector to contribute to future agriculture and agri-food directions. In 2006-2007, the ACAAF program will be used to respond to new needs identified by the sector, such as biosecurity.

Markets and International

Expanding international opportunities for the Canadian agriculture and agri-food sector

Planned Spending and Full Time Equivalents - Markets and International

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
34.1	230	33.6	231	24.6	240

Canada is a world leader in exports of agriculture and food products, shipping more than $25 billion worth of products each year to more than 180 countries around the world. The country is the world's fourth-largest agriculture and food exporter, after the European Union, the United States and Brazil.

However, global competition is intensifying, meaning Canadian producers and processors must continually innovate to stay ahead of their competitors in meeting market demands. Through the APF, Canada is building on its existing reputation as a premium food supplier, giving customers around the world even more reason to buy Canadian products.

The goal of AAFC's international strategy is to use improvements in food quality, safety and environmental sustainability to maximize global sales for Canadian producers and processors. This strategy is based on certain key principles: leveraging domestic program development to maximize international reputation and market access; linking all research and analytical work to create a comprehensive understanding of market opportunities and challenges; engaging industry continuously and through new relationships to ensure maximum effectiveness of programming; and working closely with portfolio partners, such as the CDC and the NFPC, other government departments and provinces to ensure that international approaches are cohesive and effective.

The strategic objectives of the international component are two-fold: to achieve greater recognition, at home and abroad, of Canada's world-leading capacity to meet the demands for quality in a rapidly changing and highly segmented global market; and to expand the industry's access to foreign markets. AAFC will continue to work closely with industry and provincial and territorial stakeholders.

Over the next three years, AAFC's Markets and International efforts will:

• continue implementing the Branding Strategy and work to ensure widespread integration of the Brand Promise into the work of the Department and industry;
• continue to support the development of sector-specific strategies for market success through the industry-led value chain roundtables;
• maximize and capture opportunities in both domestic and international markets;
• maximize investment potential of the Canadian sector by addressing policy issues that affect the investment climate and by capitalizing on our research and development capacity;
• provide technical and international development assistance to developing countries on agriculture and food-related issues; and
• strengthen international market and development relationships through initiatives such as the Canada-China Agriculture Development Program.

The Markets and International component of the APF contributes to the Innovation for Growth strategic outcome mainly through two of the key areas of the International Strategy: Building Markets and Increasing Investment; and Enhancing International Development and Fostering Science and Technology Linkages. The remainder of the key areas contribute primarily to the Security of the Food System strategic outcome and have been discussed under that outcome.

Building Markets

Significant progress has been made on implementing a strategy for branding Canadian agriculture and food. Key industry leaders and federal and provincial agriculture ministers have endorsed the national Brand Promise that serves as the strategy's backbone. Visuals and messaging to serve as the public face of the brand have also been finalized.

The focus will now be on the implementation of the strategy. A branding guide and a website are being developed and an aggressive outreach campaign is being planned to take these tools out to industry.

Industry-led value chain roundtables, which include the CFIA , are also playing an important role in helping implement the branding strategy sector by sector. In many cases, the roundtables are building sector-specific branding strategies to work in concert with the overall Canada branding effort.

Additional initiatives to build markets, include:

• marketing strategies that integrate promotion, advocacy and technical work aimed at key markets;
• technical marketing assistance to industry sectors; and
• a focus on emerging markets such as India and China.

Increasing Investment

Investment is essential in creating new jobs, driving the growth of exports in agriculture and food products and creating innovation in value-added production.

Promoting Canada as a preferred location to do business is therefore a critical component of AAFC's international activities. Accordingly, AAFC will continue to maximize investment potential of the Canadian agriculture and agri-food sector by addressing policy issues that affect the investment climate and by capitalizing on our research and development capacity.

AAFC's Investment Secretariat works with the provinces, territories and Foreign Affairs and International Trade Canada to raise awareness among potential investors of Canada's investment advantages.

Enhancing International Development

Canada's agriculture and agri-food sector has a long history and extensive capabilities in adapting to the constantly changing global agricultural economy. To help share this expertise with developing and transitional economies, AAFC has developed the International Development Strategy (IDS).

The Canadian agriculture and food partnerships of private sector industry, academic and research institutions, non-governmental organizations, governments, and the Canadian International Development Agency (CIDA), are working with developing and transitional economies around the world on: trade-related technical assistance and business risk management; food safety and quality, including biotechnology management; and innovative and environmentally sustainable farm production practices.

AAFC will further advance Canadian interests through international development by working with developing countries on solutions to agricultural problems that cross national boundaries, such as desertification and food-borne diseases. Canada also cooperates with developing countries on issues of shared concern through such organizations as the Food and Agriculture Organization and the Inter-American Institute for Cooperation on Agriculture.

In support of the International Development Strategy, AAFC is implementing the China-Canada Agriculture Development Program (CCADP), which is fully funded by CIDA. The CCADP is composed of two five-year projects for which AAFC is the Canadian Executing Agency: Small Farmers Adapting to Global Markets and Sustainable Agriculture Development, each funded with $20 million from CIDA and matching support from the Chinese government.

This program is being delivered with the assistance of many Canadian partners including the private sector, commodity associations, universities, provincial governments and other federal government departments and agencies such as the CFIA. AAFC signed an Inter-Departmental Administrative Arrangement with the CFIA in 2006 wherein the agency agreed to deliver at least five training courses for the program this year in Canada: Executive Management Training, three-month Practical Attachments and training on Handling Food Safety Crises, Nutritional Labelling and Food Recall.

Fostering Science and Technology Linkages

Canada must broaden international science and technology work to enhance its knowledge-base and help to bridge the gap between domestic innovation and international commercialization.

The Department will continue to provide science expertise to support Canada's markets and trade, address needs of developing countries and to brand Canada for its scientific excellence (e.g., OECD countries, genomics and scientist exchanges).

The CAFI Program

Launched in March of 2003 to replace the Agri-Food Trade Program, the CAFI program features a range of activities aligned with the objectives of the APF. The program supports industry associations to deliver on long-term international strategies to gain and expand international recognition for Canada and enhance market opportunities for Canadian agriculture and food products.

Funding under the CAFI program for branding and market development initiatives give industry partners the ability to establish generic, industry-wide brands within and across product and commodity groups. These industry brands will help brand Canada around the world by promoting Canada's superior safety and quality standards, to meet market demands for these attributes.

BENEFITS FOR CANADIANS

The rapid advances in science and technology present opportunities for increased prosperity and security in the Canadian agriculture and agri-food sector. Science and technology efforts will contribute to farm incomes being more stable and support an expanded agriculture and agri-food sector presence in the country's economy and in the lives of all Canadians. While science enables the economic gains, renewal programs help producers keep pace with the rapid changes and benefit from the opportunities available within and outside the sector. Markets and international activities contribute to the vitality of the sector through branding Canada as a leader not only in innovative products, but also in meeting or exceeding consumer expectations regarding food safety and quality, and stewardship of the environment. They will also provide a secure and profitable climate for foreign investment and partnerships with Canadians.

HORIZONTAL INITIATIVES

AAFC'S HORIZONTAL INITIATIVES

A "horizontal initiative" is an initiative in which partners, from two or more organizations, have agreed under a formal funding agreement (e.g. Memorandum to Cabinet, Treasury Board Submission, federal-provincial agreement) to work toward the achievement of shared outcomes. The objective of reporting on horizontal initiatives is to provide Parliament and the Canadian public and government with an overall picture of public spending and results achieved by departments working together.

Horizontal initiatives reported here are led by AAFC and have been either allocated federal funds that exceed $100 million (counting all federal partners) for the duration of the program, or allocated less than $100 million in federal funds but still considered key for the achievement of government priorities, or have a high public profile.

Following is a summary list of horizontal initiatives for 2006-2007. More complete information on each initiative, including planned spending by our federal partners, is available on the Treasury Board Secretariat's Horizontal Results Database.

Horizontal Initiative Information for 2006-2007

1. Production Insurance
2. Canadian Agricultural Income Stabilization program
3. Bovine Spongiform Encephalopathy Recovery Program (federal/provincial agreement)
4. Farm Business Services
5. Canadian Agricultural Skills Services
6. MOU with Health Canada on Food Safety and Quality and Environment
7. MOU with Canadian Food Inspection Agency on Food Safety and Quality
8. AAFC-Department of Foreign Affairs and International Trade MOU on Agri-Food Specialists Positions Abroad
9. MOU with Environment Canada on the National Agri-Environmental Standards Initiative
10. Rural Development
11. Co-operatives Secretariat

RURAL AND CO-OPERATIVES SECRETARIATS

Planned Spending and Full Time Equivalents - Rural and Co-operatives Secretariats

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
23.7	94	20.0	94	4.7	94

RURAL DEVELOPMENT

Introduction

Rural Canada makes a valuable contribution to Canada's economy. Approximately 21 per cent of the country's population lives in rural, remote and northern communities.

Since 1996, the federal government has recognized the importance of addressing rural issues. It affirmed this by creating the Canadian Rural Partnership (CRP) to coordinate federal government action in rural Canada.

The CRP, administered by AAFC's Rural Secretariat , coordinates a government-wide approach for rural policy and program development and implementation. This approach addresses the challenges and issues of rural Canada through partnership initiatives among federal departments and agencies, other levels of government and rural stakeholders.

Operating Environment

Rural Canadians face unique circumstances that include distance from urban markets, geography, low population density, and reliance on primary sector industries vulnerable to sharp, cyclical downturns, often related to globalization.

While there are indications of a strong rural economy, significant challenges remain. Rural employment is growing slower than employment in urban Canada, and unemployment remains higher. Diversification and value-added growth is occurring, but much of the rural economy remains reliant on slower-growth, traditional, primary-sector industries - industries crucial to the Canadian economy as they account for 40 per cent of total exports and 24 per cent of the country's GDP. On the social front, access to education and health care and the number of youth leaving rural communities are major challenges facing rural and remote areas.

Significant regional and local differences exist across rural Canada. Remote and northern communities face very different realities from those of communities in Canada's heartland or near larger metropolitan areas. These differences cannot be ignored when responding to the challenges facing rural and remote communities.

Strategic Response

Since its inception eight years ago, the CRP has been gathering momentum and support through its partnership initiatives with federal, provincial and territorial governments as well as other rural stakeholders.

During the next fiscal year, the Rural Secretariat will draw on its wide base of stakeholders to ensure that the rural voice continues to be heard, to enhance collaboration within the federal government, with other levels of government and with rural stakeholders, and to develop evidence-based knowledge for informed decision making, helping focus federal, provincial and territorial efforts on the viability and sustainability of rural communities.

Strong rural voice

The engagement of citizens, stakeholders and networks has been undertaken to ensure a citizen-centred approach to rural development and to respond to rural concerns.

Since the CRP's launch in 1998, a variety of mechanisms have been used by the Rural Secretariat to strengthen citizen engagement and influence public policy development at all levels of government. Rural Dialogue activities (workshops, surveys and conferences) involving over 17,000 citizens from rural, remote and northern regions have been held across the country. This forum for reaching out to citizens has been beneficial to both citizens and government.

Rural Dialogue activities will continue to engage rural citizens and stakeholders, giving them opportunity to provide the federal government with feedback about their priorities and what they need to prosper. In the coming year, the Rural Secretariat will implement a citizen and stakeholder engagement strategy that includes pan-Canadian and regional components to address citizen, stakeholder and government priorities. It will also continue working on rural youth engagement through the National Rural Youth Network, which is a forum for rural youth to exchange information and ideas about the issues they face.

The Rural Secretariat will continue to support the development of regional co-ordinating organizations which allow rural Canadians to learn from one another, undertake activities, connect with others across the country, and share information and perspectives on issues of importance to rural Canadians.

Working in partnership with other departments and agencies, the Secretariat will also take more deliberate action to ensure that government initiatives are communicated to rural citizens in a way that highlights their impact on their way of life.

More informed decisions by governments and rural communities through evidence-based research and analysis and improved accessibility of information

The Rural Secretariat's research and analysis work will complement the knowledge gained from citizen engagement activities and provide evidence-based data to inform the policy development process. A key part of this work will be identifying and undertaking research and analysis to establish baseline data, measure change and identify key issues in areas of importance to rural Canadians.

The CRP will continue building and maintaining research networks. The National Rural Research Network will be used as a mechanism to raise the profile and awareness of rural research and the application of research results in rural areas, and will continue to work with other departments and research partners on studies and reports such as the Rural and Small Town Canada Analysis Bulletin.

The Models Program will test approaches to rural development and community capacity building. Evaluations will be conducted to identify gaps and to determine whether or not it is beneficial to extend some of the models beyond 2007-2008. The Secretariat will continue to work with partners to explore other areas where programs can support rural communities.

The Secretariat will work towards the development of a collective base of knowledge and information to support informed decision making by governments and communities. It will launch the Community Information Database, a Web-based tool that will provide communities and governments with consistent, reliable and accessible information on economic and demographic factors and indicators at the community level. The information will be complementary to what is already provided by individual provinces and territories.

Finally, research information will continue to be available through the rural Web site, the Canadian Rural Information Services , and Rural and Remote Canada Online. These tools provide access to a range of information products of interest to rural Canadians including newsletters, toolkits, reports on dialogue activities, programs, and information pathfinders.

Better coordination of government policy responses to community priorities

Recognizing that the challenges faced by rural communities are multi-dimensional and multi-jurisdictional, and that no one department and no government alone can fully address the issues faced by rural communities, the Rural Secretariat will continue to build partnerships across the federal government, and with the provinces and territories, to better coordinate efforts for long-term rural sustainability.

Coordination among federal policy makers will benefit from the Rural Development Network -  a new initiative that brings together policy and research practitioners from across federal departments to create a better understanding of the unique challenges of rural and remote Canada and to strengthen the capacity of the federal government for rural policy development.

The Rural Lens is a tool used to bring the rural and remote perspective to bear on federal government decisions. At the national level, rural and remote implications are highlighted for consideration when the government assesses the impacts of new federal initiatives. Over the next year, analysts will target major issues, such as Canada's aging population, and work with sponsoring departments and agencies to ensure that rural perspectives are integrated in national policy development work.

At the regional level, the Rural Secretariat provides leadership to 13 Rural Teams comprised of representatives of the federal government, and in most cases, provincial or territorial government and sectoral stakeholders. Through their local presence and community interaction, Rural Teams are a valuable vehicle to satisfy rural citizens' demand for "one-government" responsiveness at the local level.

Rural Teams contribute to raising awareness of rural issues, coordinating and facilitating the development of partnerships, dialogue activities and reports on key rural issues. Over the next year, the role of the Rural Teams will be reinforced through the development of action plans that focus on community priorities. These action plans will help to facilitate collaboration at the regional level.

Performance Measurement

In addition to the completion of the activities outlined above, key performance indicators of the long-term success of rural development on a national scale include positive changes to indices of:

• economic stability;
• economic competitiveness;
• social progress; and
• local institutional capacity.

Benefits for Canadians

Through a strong rural voice, rural, remote and northern communities continue to benefit from government decisions that reflect their priorities and support them in addressing their challenges. Likewise, governments continue to benefit from gaining a better understanding of the issues and priorities of rural communities.

Better collaboration within governments and greater emphasis on decision making through evidence-based research and analysis will lay a firm foundation for rural development, enhancing Canadians' access to opportunities to contribute to, and benefit from, Canada's prosperity.

CO-OPERATIVES SECRETARIAT

Introduction

Co-operatives are an important model for community development. They help Canadians meet their social and economic needs in areas such as retail, banking, housing and service industries, as well as the agriculture and agri-food sector.

Canadian co-operatives and credit unions have combined assets of almost $190 billion, employ over 155,000 people as well as over 70,000 dedicated volunteers, and donate $60 million annually to their communities.

Since 1987, AAFC's Co-operatives Secretariat has been working across government to ensure that co-operatives are considered in the development and implementation of policies and programs. The Secretariat also works closely with co-operative sector partners, and is a centre of knowledge and expertise on co-operatives within Canada.

Operating Environment

Co-operatives are facing significant demographic pressures as Canada's rural exodus continues - leaving many communities facing important challenges in continuing to provide essential services to residents.

Canadian co-operatives, like other types of corporations, are facing additional pressures in the global business environment and require adequate financing (equity and debt) to remain competitive, foster innovation and improve productivity.

The issue of capitalization remains a challenge for many co-operatives, particularly agricultural co-operatives. Agricultural co-operatives are facing major challenges from two related factors: the need to attract new investment (particularly for new co-operatives) and the need to replace the capital of retiring farmer members.

Budget 2005 contained one of the measures recommended by both the co-operative sector and the Standing Committee on Finance to help address the capitalization needs of agricultural co-operatives - the tax deferral on patronage dividends kept in the co-operative - which was introduced in January 2006.

There continues to be a lack of awareness of the potential of the co-operative model to contribute to society and broad government objectives. As a result, there is a lack of support for co-operatives, preventing the sector from developing its full potential.

Strategic Response

The Secretariat's work in 2006-2007 will help co-operatives meet their current challenges by concentrating on the following priorities:

Ensure the needs of the co-operative sector are taken into account by the federal government, especially when developing policies, programs and legislation

The Secretariat will continue to collaborate with various federal departments on policy development initiatives. In particular, the Co-operatives Secretariat will work within AAFC and with Finance Canada in assessing options to foster an environment which provides more comprehensive and lasting support for the capitalization of co-operatives. In addition, the Secretariat will work with Human Resources and Social Development Canada to develop a policy framework to support the social economy.

The Secretariat will facilitate the work of the federal-provincial-territorial Committee of Officials Responsible for Co-operatives. The Secretariat aims to improve liaison with provinces and territories on policy and information related to co-operatives.

Foster and facilitate interaction among co-operative organizations and with the Government of Canada

The Secretariat will continue to foster relations between the government and the sector, including involvement with national and regional co-operative organizations, as well as individual co-operatives, through activities such as forums for developing and financing co-operatives.

Develop and disseminate new information, knowledge and tools that will help co-operatives and governments make informed decisions

The Secretariat will develop enhanced research and information tools for its Web site. In addition, the Secretariat plans to develop and publish tools for co-operative development such as start-up guides and information kits. As well, through closer collaboration with provincial governments, greater emphasis will be placed on collecting, inputting and generating information based on co-operative data.

Enhance development capacity for co-operatives through delivery of the Co-operative Development Initiative (CDI)

The Secretariat will continue to implement the CDI - a five-year (2003-2008), $15-million contribution program provided through the APF. The CDI is designed to help develop co-operatives, and research and test innovative ways of using the co-operative model.

The Secretariat will begin the process of analysing the impact that the CDI program has had in terms of benefits to Canadian society and economy.

Performance Measurement

Key performance indicators regarding co-operatives include:

• government initiatives that include co-operatives;
• partnerships established and maintained to address co-operative issues;
• change in available research pertinent to co-operative development;
• use of, or reference to, research and tools;
• number of co-operative initiatives supported by the CDI program; and
• level of co-operative development service provided by the sector.

Benefits for Canadians

Through strategic investments in partnership with the co-operative sector, the Government of Canada will enhance the capacity of co-operatives to contribute to the Canadian economy and society. New co-operatives will help respond to the current and emerging needs of citizens in areas such as access to health care and home care, rural economic development, value-added opportunities in agriculture, development of Aboriginal communities, the integration of immigrants into Canadian communities, and identification of community solutions to environmental challenges.

SUSTAINABLE DEVELOPMENT STRATEGY

Introduction

AAFC, like other federal departments and agencies, is required to table a Sustainable Development Strategy (SDS) in Parliament every three years. AAFC's fourth SDS is scheduled to be tabled in Parliament in December 2006, and will build on progress made in the Department's third SDS, titled Sustainable Agriculture: Our Path Forward , which presented the APF as the departmental approach to sustainable development.

Our Approach

The APF, with its integrated environmental, economic and social components, will continue to be the basis for the Department's approach to sustainable development through to 2008. The APF developed out of the realization that sustainable development is the only alternative for the security and growth of the sector. It was put into place because Canadian agriculture and agri-food can no longer survive by moving from crisis to crisis. Only by looking at agricultural production and processing through the lens of sustainable development can the sector move safely and prosperously into the next era. In keeping with this perspective, the APF effectively addresses all three pillars of sustainable development-environmental, economic and social.

The theme of AAFC's fourth SDS, covering the period of 2007 to 2009, will be to enhance the integration of the three pillars of sustainable development. Through various initiatives, AAFC will strive to strengthen linkages between the three pillars, to ensure a seamless approach to sustainable development. AAFC's fourth SDS will also highlight the ongoing implementation of the APF and illustrate how AAFC integrates sustainable development into decision making.

AAFC continues to implement its environment program for internal operations and is working towards achieving the commitments outlined in the section titled Leading by Example in the third SDS in the following areas: green procurement practices, improving the management of waste and wastewater, improving building energy efficiency, improving vehicle use, adopting best practices related to land management, and developing emergency preparedness and response programs.

AAFC's fourth SDS will also contribute to federal sustainable development goals and AAFC will continue to work horizontally with other departments and agencies on sustainable development in areas such as reduced greenhouse gas emissions, biodiversity, rural communities and international goals for sustainable development.

Next Steps

In the 2006-2007 fiscal year, the Department will continue to implement the APF, and strive to ensure AAFC integrates sustainable development into decision making. The Department will also develop its fourth SDS and begin implementation. Through various initiatives to enhance the integration of the three pillars of sustainable development and ongoing work to implement the APF, the Department will continue to further its efforts towards sustainable development.

AGENCIES REPORTING TO PARLIAMENT THROUGH AGRICULTURE AND AGRI-FOOD CANADA

CANADIAN PARI-MUTUEL AGENCY (CPMA)

The CPMA is a special operating agency within AAFC that regulates and supervises pari-mutuel betting on horse racing at racetracks across Canada, thereby ensuring that pari-mutuel betting is conducted in a way that is trusted by the horse-race-betting public.

Regulatory Environment

Section 204 of the Criminal Code of Canada designates the Minister of Agriculture and Agri-Food as the individual responsible for the policy and regulatory functions pertaining to pari-mutuel wagering on horse races.

The CPMA regulates and supervises pari-mutuel betting on horse racing at racetracks across Canada, thereby ensuring that pari-mutuel betting is conducted in a way that is fair to the betting public.

Costs associated with the activities of the CPMA are fully recovered through a levy on every dollar bet on horse races in Canada. The levy is currently set at eight-tenths of a cent of every dollar bet. This levy constitutes the financial resource base that is the CPMA's Revolving Fund, which has been self-sufficient since 1980.

Key Program Areas

• Drug Control & Research
• Surveillance
• Video Race Patrol
• Photo Finish

Strategic Response

CPMA's strategic plans are focused on maintaining the highest standards for pari-mutuel wagering and surveillance.

In 2006-2007, the CPMA plans on spending approximately $15.2 million to achieve these commitments. Planned spending requirements for the fiscal years 2006-2007 to 2008-2009 are summarized in the following table.

Planned Spending (Gross) and Full Time Equivalents

2006-2007		2007-2008		2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
15.2	67	15.2	67	15.2	67

Note: Revenues and Expenditures are dictated by collecting a levy of eight-tenths of a cent on every $1.00 bet in Canada. All the revenue generated is from the horse-race betting public and there is no cost to the Canadian taxpayer.

NATIONAL FARM PRODUCTS COUNCIL (NFPC)

The NFPC was established in 1972 through the Farm Products Agencies Act. The Act combines the marketing powers of the federal government, which has authority over inter-provincial and international trade, and provincial governments, which are restricted to intra-provincial trade. This enabling legislation provided for the establishment of national marketing agencies and, in 1993 was amended to provide for the founding of national promotion-research agencies.

The National Farm Products Council was established to:

• advise the Minister on all matters relating to the establishment and operations of agencies under the Act with a view to maintaining and promoting an efficient and competitive agriculture industry;
• review the operations of agencies with a view to ensuring that they carry on their operations in accordance with the objectives set out in the Act. The Council has a legislative responsibility to approve agency orders and regulations; and
• work with agencies in promoting more effective marketing of farm products in inter-provincial and export trade and, in the case of a promotion-research agency, in promoting such marketing in import trade and in connection with research and promotion activities relating to their farm products.

The Council monitors the operations of five national agencies:

• Canadian Egg Marketing Agency;
• Canadian Turkey Marketing Agency;
• Chicken Farmers of Canada;
• Canadian Broiler Hatching Egg Marketing Agency; and
• Canadian Beef Cattle Research, Market Development and Promotion Agency.

The NFPC undertakes activities that aim to promote the strength and enhance the competitiveness of the sectors which it oversees. It is committed to working with the agriculture and agri-food sector to meet the challenges and opportunities that arise from significant change in agri-food policies, business trends and market requirements at home and abroad.

The Council has been an active proponent of portfolio management with the aim of providing comprehensive advice to the Minister and the government. This co-operative approach within the agriculture and agri-food portfolio is done in a manner to maintain the Council's arms-length relationship due to its quasi-judicial status and the managerial autonomy and accountability required in today's modern comptrollership environment.

Operating Environment

In developing its strategic plan, NFPC took into account many trends and developments in Canadian agriculture and agri-food as they affect the sectors for which the Council has responsibility. Broadly, the four supply management agencies which the Council oversees deal with issues concerning:

• WTO Agreement and greater trade liberalization;
• Poultry and egg products consumption trends;
• Farm food safety programs;
• Animal health;
• Increasing productivity and innovation;
• Processor/retailer concentration;
• Regionalism/provincialization within Canada;
• Returns at producer level and industry level; and
• Conflict resolution, eg. commodity boards and downstream players in the industry.

The Canadian Beef Cattle Research Market Development and Promotion Agency and the beef cattle industry at large is facing the continuing impact of BSE on Canada's export markets. Other issues for the agency and its partners (the Beef Information Centre, the Canada Beef Export Federation and the Beef Cattle Research Council) include:

• Implementation of a national levy collection system;
• Food safety;
• Improved quality and consistency;
• Carcass value optimization;
• Improved product perception;
• Market development programs for Canada, Japan, Korea, Taiwan, China and Mexico; and
• Development of a national beef research strategy.

Planned Spending and Full Time Equivalents - National Farm Products Council

Planned Spending 2006-2007		Planned Spending 2007-2008		Planned Spending 2008-2009
$ millions	FTE	$ millions	FTE	$ millions	FTE
2.6	19	2.7	19	2.7	19

Notes:

1. These amounts are included in the Department of Agriculture and Agri-Food's reference levels and include $200,000 in grants and in $247,000 employee benefits.
2. Services provided without charge include:
   • Accommodation provided by Public Works and Government Services Canada; and
   • Corporate services such as financial systems, security, information technology, human resource management advice and services provided by Agriculture and Agri-Food Canada.
3. These amounts are not reflected in the program costs.

In 2006-2007, the first year of NFPC's Strategic Plan 2006-2009, the Council will focus on the priorities and commitments outlined in the following table.

 

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