Thank you, Mr. Chairman, and committee members for the opportunity to appear before you, and present the Canadian Federation of Agriculture's perspectives on the next agriculture policy framework.
As you're aware, the Canadian Federation of Agriculture represents producer groups and a number of commodity groups across the country.
For the past two years, the CFA has engaged members and other producer groups in this discussion. Producers and staff from across Canada support this discussion by undertaking the technical analyses needed to inform a clear vision for the next policy framework.
To start with, I'll touch on some of the overarching administrative issues our members have raised, and what we believe will ensure these issues are addressed moving forward.
Our members' concerns fell into three key areas. The first area dealt with the transparency and reporting of cost-shared growing forward 2 dollars. Producer groups often have little insight into how growing forward 2 dollars are spent at the provincial level. The second area was that inconsistency in funding applications and program requirements continued to cause major challenges for industry. Finally, the timeliness for many programs remained a major concern, with funding delays resulting in lost opportunities and inefficient project rollout in many instances.
To address these issues, CFA has developed a number of targeted proposals. I'll touch on a couple of those now, but can provide more detail if you have further questions.
The first is that provincial governments should be providing detailed annual accounts to industry and other stakeholders on where APF funding was directed, the rationale, and associated objectives, providing assurances that funded initiatives are supporting the needs of industry.
Second, programs need to maintain consistency in their application documents and requirements for in-kind and cash contributions throughout the entire application process and the life of the program.
Finally, programs must be ready and in place to launch at the outset of the APF, without lengthy delays, and program approvals need to be completed in a much timelier fashion.
Next, I'll speak to some of the key concerns and challenges our members have identified with regard to business risk management programs under growing forward 2. I'll touch briefly on each issue, and what we believe is needed to address it.
First and foremost, as mentioned earlier, we've seen a significant decline in AgriStability participation, which increased as a result of the cuts to AgriStability under growing forward 2.
In our discussions with producers across Canada, the primary driver behind this is that producers no longer see the program as credible and able to provide meaningful support. CFA members continue to identify AgriStability as the backbone of the business risk management suite, but we need to ensure this program provides the support producers need to manage significant risks beyond their control.
To re-establish credibility and participation, the program needs to provide support capable of keeping farms viable following income declines. To achieve this, we believe it is essential the coverage rate be returned to 85% of the historical reference margin.
The support available through AgriStability was also reduced with the introduction of a reference margin limit under growing forward 2. This was intended to prevent AgriStability from paying farmers in profitable situations, but has limited support for many producers who needed support. It increases complexity and reduces support for producers who have managed to improve their efficiency by reducing their inputs and expenses. We strongly advocate for the removal of the reference margin limit.
For Agrilnvest, we continue to hear concerns with the adequacy of support. Under growing forward 2, governments only match 1% of eligible net sales.
We believe Agrilnvest has great potential as a source of proactive investment in risk mitigation and income generation, but this requires enhancing the matching contributions back to 1.5%, and also providing producers with flexibility to access their own contributions for priority investments.
Program rules and tax planning combine to prevent many producers from accessing nearly $1 billion in producer contributions currently sitting in accounts. Meanwhile, producers continue to support Agrilnsurance as a straightforward and predictable program, although we continue to recommend expanding this program's access for livestock and other products.
One of the other key challenges that our producers identified was the frequency of disaster events due to climate change, and the need to ensure our programs, particularly Agrilnsurance and AgriRecovery, are responsive. Both programs need to be more flexible to accommodate and provide support for the often multi-year impacts of disaster events.
Finally, one common issue we heard across Canada is the need to ensure business risk management programs are meeting the risk management needs of beginning farmers. We need to be sure that all programs are available to them at minimal cost so that farmers entering the industry can immediately receive support and engage with the programs from day one. This will help address participation issues, but more importantly, it will ensure the next generation of agriculture has the tools they need to remain viable.
I'll take a few moments to talk about the strategic investments side of growing forward 2. The strategic investments are mostly cost-shared funding between the federal government and provincial/territorial governments, and there is a lot of flexibility in how provinces can use that money to respond to regional priorities.
It is our belief that all strategic investments through the next policy framework should, first, support agricultural producers in continuous improvement to long-term economic, social, and environmental sustainability; second, create the necessary conditions for us to access the latest and best technologies, research, inputs, and market opportunities to support improvements to Canada's agricultural leadership in global competitiveness and innovation; third, build support and recognition for public goods and services provided by agricultural landscapes; and finally, continually engage Canadian agricultural producers in the development, implementation, monitoring, and evaluation of agricultural policy frameworks.
As you are no doubt aware, farming is facing a demographic crisis as the average age of farmers continues to increase. We're calling upon the next policy framework to better address this challenge through encouraging a breadth of programming related to access to capital for young producers and new entrants that addresses both transitional funding for intergenerational farm transfers and seed capital requirements for establishment of new operations. Provincial flexibility to build upon access to preferential financing arrangements and grants for young farmers and new entrants is needed at a scale that enables commercially viable operations to move forward. Starting a commercially scaled farm is very expensive and we've seen a shrinking number of medium-sized farms. This should be supported with regular and detailed information-sharing between provinces in best practices, a recommendation that applies to all strategic investment funding.
On the environmental sustainability side of GF2 programming, the sector would greatly benefit from increased funding for best management practices overall, and a priority focus on those that contribute to climate change mitigation and adaptation. Agriculture policy framework funding must also continue to support regional ecological goods and services concepts, and the federal government must recognize the role that these programs play in building resiliency, supporting producers, and water infrastructure that impacts many downstream users.
Environmental farm plans have been tremendously successful programs and now is the time to invest in a renewal to develop a national baseline for the environmental farm plans and to launch an enhanced, strengthened program. Work for this is already under way. The national environmental farm plan must remain industry led and government supported. It must improve environmental outcomes through being science-based and it must be sufficiently resourced.
Public trust has been an emerging issue over the last year and a process to address it has been led by industry working together. Yet there are elements that the next policy framework must clearly play in supporting industry, through providing a public trust lens on policy, programs, and funding, and also in enabling two-way communication between producers and the public, both nationally and provincially, by funding communications activity.
We're calling on government to reduce the cost-shared funding requirement from 50-50 to 25-75 for the fostering business development program funding so these critical organizations can focus their resources on projects that benefit producers rather than fundraising. We see youth engagement, farm safety, and business development as priorities within this stream. Farm safety can be promoted and improved through supporting regional organizations in conducting localized work that leverages their direct contact with producers. Furthermore, farm business management programming must be improved across provincial governments in an integrated fashion that promotes co-operation and that creates basic requirements for all jurisdictions to meet.
CFA has a long list of recommendations regarding research funding that is provided, but to sum it up succinctly, they boil down to making research funding more pertinent to producers' needs, faster to approve, streamlined to administer, and consistent from one policy framework to the next.
The next policy framework must bring a greater focus on knowledge translation and dissemination to encourage uptake within the industry.
I would also like to offer support for the cluster model, which is used in funding, although there are barriers. Many smaller commodities do not have the funding or administrative capacity in order to support a cluster, yet would greatly benefit from having one. Therefore, we would recommend for these a second-tier funding match formula and coordinated or pooled administrative support.
We've heard from the department that investments in the processing sector will feature more prominently in the next policy framework. Any additional investment in processing must illustrate a clear benefit to Canadian agricultural producers. In other words, processors would demonstrate that the investment would be for instances where Canadian agricultural products are sourced and would demonstrate the expected impact. On-farm processing should also be a priority.
The types of strategic investments that are needed will change in response to markets and other factors and should be flexible to respond to emerging priorities.
In conclusion, these comments reflect a very high-level overview of CFA's recommendations. I would recommend that everyone review our report—and I believe copies have been provided to you—entitled “The Next Agriculture Policy Framework: Positioning Canadian Agriculture for Continued Success.”
Again, thank you for your time. I look forward to your questions.