Agricultural & Food Policy Evolution in Canada 2011 and beyond

1. Agricultural & Food PolicyEvolution in Canada2011 and beyond Al Loyns, Prairie Horizons Ltd James Rude, University of Alberta

2. Objectives & Scope • Snapshot of Cdnag • RR Cdn/US policy framework • Recent Cdn policy directions • Prairie grain marketing reform: the CWB single desk is gone; some implications & questions Only significant anticipated change al.ph/ jr.ua

3. Snapshot of Cdn Agriculture rule of thumb: divide US by 10 • 2011 Farm Cash Income $C47.9 b • Lvsk $C19.9b -10.5m slhogs; 2.6m sl cattle • Crops $C25.2b • Govt $C 2.8b Most crop income $C7.8b (SK) Most lvsk $C4.9b (Ont) -AB and Que are close on lvsk al.ph/ jr.ua

4. Snapshot (Cont’d) • CROPS production: - wheat 20mmt (735m bu) - durum 4mmt (240m bu) - barley 7.5mmt (344m bu) - corn 11mmt (434m bu) - sb 4.2 (158m bu) - canola 16mmt (800m bu) - oats 3mmt (195m bu) al.ph/ jr.ua

5. Canadian Policy Environment Canada’s Constitution (the BNA) provides clear fed/prov’l division of powers in Ag: • Resources are provincial • T & C within provinces is prov’l • T & C across prov’l borders and offshore is federal • Provinces can and do run their own ag programs • Education inc. extension is provincial Much of ag policy is cost and planning shared al.ph/ jr.ua

6. Cdn/US Policy Environment • Fed authority; shared vs dominant • Provvs State; shared, active vs small • Leg’n;instit’ns & permanency vs Farm Bills [[changing in Canada]] • Inst’l; mbs/crown agencies vs USDA • Cdn evolution since 2000, negotiated federal/provincial/territorial 5 year programs al.ph/ jr.ua

7. Cdn/US Policy Environment(cont’d) • Food Aid; none to little vsdom & AID • R&D; small & ↓↓ vs Hatch Act et al • Water;prov’l (little irr’n) vs USACE & irr’n • Lands; mostly prov’l/small vs CRP & fed • Environment;more prov’lvs EPA • Food Safety & Security; similar al.ph/ jr.ua

8. Cdn Policy (2003- 2020) • Toward a “Farm Bill” model?? • Stabil’n/Bus Risk Mgmt (post 2003) • “Growing Forward” (2 stages to 2020) • Marketing & Trade ( pre & post 2011) • Please note • Food Safety/Environment/Lands/Water/R&D/ Govt support unlikely to change much. • Supply management is a question. • Fiscal constraints prevail. al.ph/ jr.ua

9. Business Risk Management • Politicial and CWB believers viewed CWB power, pools and payments as BRM • Still evolving: ASA/ Crop Ins/GRIP/ disasters, over expenditures to NOW: • Toward Whole Farm Accounting, stability of programs, min production incentive, avoid TRL attention and driven by fiscal constraints • [2011 and forward) AgriInvest savings account plus • AgriStabilitymargin based deficiency payments based on measures of OVERALL farm income. • Five year changes, (direct payments, targetting, cross-compliance) unlikely. al.ph/ jr.ua

10. Mkting /Trade (ex CWB) • Cdnposture has been/is avoid TRL in Ag (Al Loyns position is CHANGE TRL) • CWB issue is gone • Cdn trade priority shift from south, to west Is the Keystone Pipeline important?? • Trade agreements are popular • SS Mgmt is interesting: TPP dependent?? Japan (rice exemption ?) Canada (SS Mgmt exemption?) • Will Keystone be an issue? South or north al.ph/ jr.ua

11. CWB Single Desk Gone • SEE: www.kis.usask.ca/GrainConference.html • Bill C-18 passed 12.11 effective 1.8.12 (outstanding legal challenges) • Majority producer BoD replaced • BoD now 6 Fed appointees • 5 yr transition to t.b.d. corp model • Voluntary use/patronage • Competes with private grain cos • Privates forward contracting 2012 wht • ICE (Wpg) wht futures trading 1/15/12 al.ph/ jr.ua

12. Mkting Reform: Implications • Potential for price discovery, transparency • Potential for futures options trading • Potential for reduced price uncertainty • Lower handling costs, higher prod returns PROVIDED Competition in B&S is strong/effective ►Potential for on-prairie processing, new prod development, wheat derivatives ► Potential for more responsive crop mix and production al.ph/ jr.ua

13. Implications (cont’d) • Buying highly concentrated, “compet- itive fringe” of buyers essential ► Info, data analysis & reporting essent’l ►Will the new ‘CWB’ survive & evolve? ► Will wheat flow SOUTH?? NORTH?? ► Are we in for more trade actions?? ►Harmoniz’n of seg’n, insp’n, cert’netc end use certificates?? ► Leads to more standardized varieties ► Comparative elevator and terminal charges al.ph/ jr.ua

14. Conclusions • Many got what was asked for: CWB gone • Significant change in NA grain market • Some positive, some uncertain. • There will be pressure on the border • Can we be Free and Fair traders in wht? • Cdn policy evolution $$ constrained • SS Mgmt uncertain • Other policy direction more stable today al.ph/ jr.ua

15. AGRIWEEK FEB. 6, 2012 “Prospects for reform of the grading system improve greatly with removal of the Wheat Board monopoly. The Board has been the principal booster and defender of statutory grading to the extent that even mentioning the possibility of change was off limits. Times are changing, and it’s about time” al.ph/ jr.ua

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17. Cdn Ag “mkts” in N. America • East/ West vs North / South Trade areas • Winnipeg MB, the heart of the continent • Geographically it is • Van. west/ Montreal east ► 90% Cdnpop’n • Distance from Wpg ►2300 km. al.ph/ jr.ua

18. US Comparisons • Austin TX 2300 km due south • Atlanta GA 2526 km • Washington DC 2521 km • New York City 2600 km • Sacramento CA 2944 km • Los Angeles CA 3200 km What pop’n within those boundaries?? al.ph/ jr.ua