AAFC Policy and Programs supporting Value Added and Biofuels

AAFC Policy and Programs supporting Value-Added and Biofuels Presentation to the Ag CDI Conference March 8, 2007 Overview AAFC’s vision A competitive and innovative sector where partners work together to be the world leader in agriculture and agri-food, meeting domestic and global customer needs while respecting the environment to obtain the following outcomes: – Security of the Food System – Health of the Environment – Innovation for Growth Overview • • Agriculture represents 8.2% of GDP - Canada is 4th largest exporter of agricultural products in the world. AAFC’s role is to develop policies, deliver programs, and provide information, scientific research, and technology support (pesticide and Agro-Technology) leading to: – Security of the food system – Health of the environment – Innovation and growth of the sector • • • Operates in a complex FPT environment – joint jurisdiction. Over 70 different programs - directly funded by federal government; cost-shared with provinces; Business Risk Management; Non-Business Risk Management. Many of the key programs are encompassed within the Agricultural Policy Framework (APF), a five-year (2003-2008) federal-provincial-territorial (FPT) Framework Agreement on agriculture. – Provides a national approach to agriculture that fosters a solid foundation for success and profitability throughout the value chain. – $11.5 billion over 5 years. • • • Many other federal-only programs to support the sector. Complex delivery mechanisms – direct, shared, third party. Services are program-based – not client-based (multiple locations, multiple channels). Overview • AAFC’s five main client segments: – – – – – Producers Agri-industries International business Science research community Land/Water managers • Programs are delivered in partnership with – Provincial and Territorial Governments – Regional/provincial organizations e.g., Agricultural councils – National and provincial producer organizations e.g., Canadian Federation of Agriculture, Canadian Pork Council, Canadian Horticultural Council – Other Federal government Departments and Agencies e.g., Canadian Food Inspection Agency …..on principles of partnership, integration and transparency AAFC has various types of programs • 2003-08 APF programs - divided into two categories: – Business Risk Management (BRM): Developed infrastructure to help farmers better manage risks – Non-BRM / Transformational programming • Food Safety and Quality: Improved food safety and quality systems • Environment: Accelerated action to improve the sector’s environmental performance • Renewal: Initiated programs to help producers enhance their skills and knowledge to better adapt to a changing business environment • Science and Innovation: Facilitated the use of science to create new opportunities/innovation for farmers • Other programs outside the APF – Created post-APF to respond to unexpected sectoral challenges such as BSE and Avian Influenza • These are one-time, short-term, ad-hoc programming – Others already existed prior to the APF and could not be automatically terminated or incorporated into the APF for fiscal year 2003/04 • Some have been re-aligned or created to meet APF and AAFC’s innovation, transformation and marketing objectives. • Others are expected to be sunsetting in the near future APF non-BRM programming • The goal of non-BRM programming is to foster longerterm growth, competitiveness and profitability of the sector • Non-BRM programming consists of: – – – – Environment Food Safety and Quality Renewal Innovation and Science Renewal Programming • Agriculture is an increasingly knowledge-intensive sector – Innovative practices and technologies and better management practices are key to remaining competitive. – Producers must engage in continuous learning to keep pace with changes. • APF recognized that Renewal is key to competing in the agricultural sector – The Renewal pillar of the APF is designed to help producers improve access to skills, knowledge and choice over income source in order to achieve sustainable profitability. – Previous initiatives (e.g. Farm Debt Mediation Service) concentrated on failing farm operations, but gap existed to help viable farmers. – Renewal was also intended to complement BRM programming. Renewal Programming • Canadian Farm Business Advisory Services (CFBAS) – Increases profitability of all producers by increasing access to business management skills. Consists of: • Farm Business Assessment (FBA) - provides producers with financial consulting services; and • Specialized Business Planning Services (SBPS) - helps producers to access specialized services such as succession, expansion, marketing, diversification, risk management and human resource planning. • Planning and Assessment for Value-Added Enterprises (PAVE) – Increases profitability of producers by facilitating market opportunities in value-added business. • Canadian Agricultural Skills Service (CASS) – Enables farmers to increase profitability and make choices about sources of income through financial assistance for skills assessment and training. • Renewal programs also include the Canadian Farm Business Management Council, Canadian 4-H Council, Canadian Young Farmers Forum, Canadian Agriculture Safety Association and Canadian Outstanding Young Farmers Awards Program. Innovation and Science Programming • • The need for innovation and science in the agriculture and agri-food sector is acute Competition is fierce – Productivity growth is no longer enough to offset decreasing prices and rising input costs. • Countries such as Brazil and Argentina are experiencing high production growth in bulk commodities, with low levels of government support. • Brazil has surpassed US production in oilseeds, despite high US subsidies. • The opportunities for growth in the sector are much greater for non-food areas due to increasing demands for: – Renewable fuels based on biomass (e.g., ethanol), and, new fibre crops for construction and manufacturing to reduce reliance on fossil fuels; and – New treatments for diseases and identification and extraction of nutraceuticals or pharmaceuticals from crops to meet wellness needs and control rising health costs. Low-cost, low-subsidy competitors are rapidly expanding production -Canadian agricultural and agri-food enterprises risk falling behind if they do not innovate continuously. Innovation and Science Programming • • The APF recognized the role of science and innovation in generating wealth. The APF requires: – Realigning public and private science resources; – Co-ordination along the whole value chain; and – Creating an innovation climate. • AAFC supports these objectives with science and programming for innovation that includes: – A brokering initiative to bring together agri-businesses who might make up new value chains for new products – An “Agri-Innovation” Initiative to support new value chains in formulating strategic business plans; and – Funding capacity development in the sector (e.g., ACAAF). • AAFC also promotes innovation through: – Strategic policy support; and – Expertise to promote investment in the sector and facilitate trade. Advancing Canadian Agriculture and Agri-Food (ACAAF) Program • As the successor to Canadian Adaptation and Rural Development (CARD) Fund, ACAAF is aimed at positioning Canada’s agriculture and agri-food sector at the leading edge. It is a federal-only program that complements the objectives of the Agricultural Policy Framework. • The ACAAF Program objectives are to: – Expand the sector's capacity to respond to current and emerging issues – Position the sector to capture market opportunities – Actively and continuously engage the sector to contribute to future agriculture and agrifood policy directions – Integrate sector-led projects tested and piloted under ACAAF into future government or industry initiatives • These objectives are addressed through a three-pillar approach – Pillar I: Industry-led Solutions to Emerging Issues • Ex. Project to develop the functional and organic food industry – Pillar II: Capturing Market Opportunities by Advancing Research Results • Ex. Project to conduct a feasibility analysis and production pilot on oilseed crops for feedstock for biofuel production – Pillar III: Sharing Information to Advance the Sector • Ex. Project to conduct 12 studies that examine health protection, heath promotion and barriers to healthy eating at the levels of production, processing distribution and consumption Farm Improvement and Marketing Cooperatives Loans Act • FIMCLA is a federal government guaranteed loans program designed to increase the availability of loans for the purpose of the improvement and development of farms and the processing, distribution or marketing of farm products by cooperative associations. • Provides guarantees up to $250,000 for farmers and $3 million for agricultural co-operatives. • Consultations were held last summer to determine how FIMCLA could better address the financial challenges facing beginning farmers and agricultural co-operatives. Agricultural Bioproducts Innovation Program • WHAT – Up to $145 million over 5 years. • OBJECTIVE – To promote research, development, technology transfer and commercialization activity in agricultural bioproducts in Canada through research networks comprising a critical mass of intellectual capacity to address strategic research questions; – To increase the generation of new knowledge and technology with the potential to strengthen Canada's industrial base and generate wealth; – To increase the number of effective networks/clusters involving Canadian-based researchers; and – To improve the transfer of knowledge, technology and expertise to organizations that can commercialize these innovations. Agri-Opportunities • WHAT – Up to $134 million over 5 years. • OBJECTIVE – To push new products (agriculture, food and bioproducts), processes and services along the innovation chain and move them to the commercial phase. • OUTCOME – Program investments will enhance industry competitiveness and prosperity through transition into new and value-added areas of opportunity. • ELEGIBLE ACTIVITIES – Development or demonstration of a new or improved product, production, process or service if it has good potential for commercial exploitation. – Greater use of new technology likely to lead to improved efficiency and competitiveness. – Establishment, expansion and modernization of an agriculture or agri-product facility producing new products for new markets. – Support for marketing, human resource development, productivity improvement or quality improvement, including human, business and technical capacity building directly related to new and value-added opportunities. Biofuels – BOPI and CFAP • Canada’s New Government commitment to 5% renewable content in gasoline by 2010 and 2% renewable content in diesel and heating oil by 2012. • Farmers face two significant hurdles: – Forming a group that is able to develop feasibility and business plans. – Forming the necessary capital base. • BOPI provides support for first hurdle – Hiring technical, financial, and business planning advisors to assist in developing sound, viable business proposals. – Undertaking feasibility and other studies required to support business proposals. • CFAP provides support for the second hurdle – $200 million four year repayable capital funding for projects to help construct biofuels facilities based on volume and level of farmer contribution to project costs. – Program details are being developed and will be available in early spring, 2007. Next Generation of APF Objective: Develop and refine policy options to support a competitive and profitable agriculture and agri-food sector Specific consultation objectives: Help governments prepare a framework for FPT negotiations Promote frank and honest discussion Ensure a wide range of stakeholders and experts are engaged Industry expertise will underpin the long term vision: Stakeholders deal day in and day out with the challenges of doing business Their expertise is critical to developing policy that works Next Generation - Process Consultations are being structured into three rounds Round One (December 2006 – January 2007) Structured by the six thematic areas Small number of locations Round Two (January – February 2007) Builds on feedback from Round One Multiple public consultation events across Canada Consultation sessions on the new BRM suite will also be held Round Three (Spring 2007) Based on outcomes of Rounds One and Two Input into the next generation framework for FPT negotiations Small number of locations Format to be determined