AGRICULTURE AND AGRI-FOOD INDUSTRY IN CANADA AND ITS REGULATIONS
INDUSTRY OVERVIEW:
Agriculture and agri-food industry is a highly complex, modern, integrated industry in Canada. Being an internationally competitive, the industry contributes a large sum to the Canadian economy. Agricultural industry in Canada is highly adaptive to increasing globalization, innovation and technology and changing consumer demands. This industry contributes significantly to country’s economy by making large contribution to employment and Gross Domestic Product (GDP). It accounts for 8% contribution in total GDP and employs around 2.1 million people in the country as according to 2013 statistics (Government of Canada, 2013). Canada is known as the sixth-largest exporter as well as importer of the agricultural and agri-food products worldwide (Transnationale, n.d.). The companies which are involved in agriculture business in Canadian market are:
- Potash Corporation of Saskatchewan Inc.
- Richardson International
- Agropur Cooperative Agro-Alimentaire
- McKenzie Seeds
- Burnbrae Farms
- Cavendish Farms
- Alberta Wheat Pool
Agricultural production sector produces numbers of products, but there are some largest products of the sector (Government of Canada, 2014), listed below:
- Red meats – livestock (which include hogs, beef cattle, lamb and veal)
- Oilseeds and grains (which include barley, oats, flax seeds, soybeans, wheat, rye, canola, corn, rice and durum)
- Dairy
- Poultry and eggs
- Horticulture
As the agricultural market of Canada works on domestic as well as export market, it has a wide range of customers around the world.
- United States
- Mexico
- Japan
- China
MARKET OVERVIEW:
Agricultural sector of Canada operates in the domestic market majorly as well as exports its products to various countries. With regards to agricultural trade, the province of Canada, Alberta exported primary and processed agricultural products of around $8.7 billion. This increase in export has led to increasing sales and profits, enlarge the scope and size of the agriculture industry in Canada, and enhance security owing to risks spread over a number of markets. As the worldwide population is increasing, the demand of agricultural products is also enhancing. In this situation, the market is seemed to be highly competitive and complex. There are many players in the market who efficiently produce agri-food and sell to local customers as well as export to other countries. Approximately 35% of the total agri-food export goes to the United States which accounts for $3 billion, 15% to Japan accounts for $1.3 billion, 17% to China accounts for 1.5 billion, and Mexico accounts for 6% of total exports that are $536 million (Alberta Canada, 2014). Canada exported agri-food products totaled of CDN$ 46,029.611 million which includes the major export of canola, soybeans, non-durum wheat, durum wheat and canola oil (Government of Canada, 2014).
REGULATION IN AGRICULTURAL INDUSTRY OF CANADA:
The policies and regulations are formulated to influence behavior and achieve some major outcomes. Government of Canada has used regulations as a policy instrument, some of which are guided by control and command approaches, whilst others are guided by flexible, voluntary and informal approaches. In below figure, a complete range of instruments is presented with which regulations are formulated.
(CAPI, 2009)
In order to obtain the desired result, certain instruments are considered that are important to use by policy-makers. Government of Canada has proposed a framework to select appropriate instruments to obtain the desired goal. Formulation of regulations processed through a proper life cycle which initiates with supposed problem, ways to influence behavior, and leads to ideal solutions. The life cycle structure is presented below:
(CAPI, 2009)
This life cycle helps to identify the core issue of the system, propose appropriate regulatory framework, implementing those regulations, concluding with problem solution.
There are certain elements that are positioned in the agri-food sector, to develop an appropriate regulatory reform. The federal government of Canada has developed advanced regulatory principles, and government has scheduled a process to help departments in executing these regulatory principles. An efficient and operational, regulatory principles structure has been developed for the agricultural sector with the guidance of Treasury Board. This framework is presented based on the following structure:
(CAPI, 2009)
Regulations related to the agricultural sector can be particular to just agriculture sector, or they can be applied across the economy in general. There are plenty of regulations specific to the agricultural sector, which are reported by the Minister of Agriculture sector and Agriculture Food, and some are reported by other Ministers such as Health Canada to support the Pest control Act and the Food and Drug Act. Moreover, Canada’s agri-food sector can impact the regulations of the country through international commerce. The entire agricultural industry is regulated through major bodies of regulation which include:
- Agri Food Specific Regulations AAFC (under the regulation of Minister of Agriculture and Agri-Food)
- Agri Food Specific Regulations AAFC (under the regulation of CFIA, CDC, CWB, CGC, NFPC)
- Agri-Food Specific Regulations (under the regulation of different Ministries).
AAFC are regulated under number of Acts which include Agricultural Marketing Programs Act, Animal Pedigree Act, Canada Agricultural Products Act, Department of Agriculture and Food Act, and Farm Income Protection Act (CAPI, 2009).
BENEFITS OF REGULATION:
Agriculture and Agri-food regulatory system of Canada helps the business to grow at international level, based on three major components including trust, innovation, and protection. These effective, transparent, cost efficient and timely regulations will help the country and its people to take benefits of innovation and encourage the participation of Canada in a global economy. The well-structured Agriculture and Agri-food regulations produce the number of benefits for the inhabitants of Canada, as well as for the overall growth of the company (CAPI, 2009). The following benefits are listed below:
- Obtain high standards for the protection of citizens
- Enable and encourage social, economic, and environmental priorities of Canada
- Foster the evolution to sustainable development
- Support efficient use of government resources
- Give recognition to the Canada at the international level as a place to carry out business operations
- Boost the business confidence and develop public trust in the regulatory body of Canada
- Assist people of Canada to take advantage of new developments
- Increase competitiveness in terms of domestic and exports activities
- Protect public by eliminating unsafe products, using healthy products and protecting environment
COST OF REGULATION:
Agriculture and Agri-food regulations may help businesses to support their operations but if regulations by government exceed the limit, it can emerge as a serious concern for Canadian business. According to the Canadian Federation of Independent Business (CFIB) research, it was concluded that these regulations are considered as the second most concerned issue after the burden of tax. It was found that regulatory agreements cost around $33billion for businesses, which accounts for 2.6% of GDP. Small businesses encounter even more cost of regulatory compliance than large firms. For a company with around 4 employees tolerate a cost of $5000 per employee annually (CAPI, 2009). This regulatory cost decreases as the size of the firm increases, as shown in figure below:
(CAPI, 2009)
As of the survey conducted by CFIB, results have stated that businesses in Canada were getting severely affected by regulations, especially the agricultural sector of the country. 63% of the agriculture and agri-food related businesses dropped their productivity owing to excessive regulations. The federal government of Canada also implemented cost recovery program to balance the cost of providing several regulated actions (CAPI, 2009).
WINNERS AND LOSERS FROM AGRICULTURAL REGULATION:
As according to the Agriculture and Agri-food regulations, there are numerous Acts and policies that come under this particular regulation. The winners and losers varies as the new bills and regulatory reforms come into consideration. For instance, the new farm bill under Agriculture and Agri-food regulations bring up following winners and losers (Seguin, 2012):
Winners:
- Farmers Market, who produces all the agricultural products
- Animal Welfare Activists, who protects and watch out livestock
- Crop Insurance, who subsidize industrial agriculture
Losers:
- Large Scale dairy farmers, who produce milk and dairy products
- Meat Processors, who process and pack raw meat
- Conservation Programs, who support soil conservation and techniques like drip irrigation
REGULATORY REFORMS OF AGRICULTURAL INDUSTRY IN CANADA:
Other different Acts include:
- Agricultural and Agri-Food Administrative Monetary Penalties Act
- Canadian Dairy Commission Act
- Canada Grain Act
- Canadian Wheat Board Act
- Health of Animals Act
- Farm Products Agencies Act
- Feeds Ac
- Meat inspection Act, and
- Plant Breeders’ Rights Act (CAPI, 2009)
Agri Food Specific Regulations are controlled by different Acts like Food and Drug Act and Pest Control Act. All these Acts and policies undertake the environmental concern as well as agricultural aspects.
AAFC presents relevant information, conduct research and develop technology, and regulations and laws to achieve the standardization of food system, innovation for growth, and constructive development of the environment. The initial objective of PMRA is to avoid hazardous and undesirable risks to the environment as well as people of the country by using the pest control products (CAPI, 2009).
The Canadian Food Inspection Agency imposes the acts and policies to ensure food safety and quality. It assists in preparing a guide to Food Labeling and Advertising to regulate consumers, industry and businesses. The basic purpose behind all these regulations is to ensure public protection and enhance competitiveness.
The federal authorities of Canada include the following regulatory bodies that deal with agricultural industry and its regulations:
- AAFC
- Fisheries and Oceans Canada
- Environment Canada
- Foreign Affairs and International Trade Canada
- Health Canada
- Industry Canada
- Transport Canada
- Canadian Dairy Commission
- Canadian Food Inspection Agency
- Canadian Wheat Board
- Canadian Grain Commission
- National Farm Products Council (and national supply management agencies)
- Pest Management Review Agency
- Prairie Farm Rehabilitation Agency
- Public Health Agency of Canada
ASSOCIATED INDUSTRY:
Numerous industries are also associated with Agriculture and Agri-food regulations of Canada that helps to formulate and implement regulations completely in an effective manner across the country. Following are the related industries and their roles:
- Health Canada: To test the quality of food, and highlight the relationship between disease and diet that are supported by effective scientific support. Also, indicating risks associated with pest management equipment comes under their head (CAPI, 2009).
- Environment Canada: Their responsibility is to protect wildlife species and maintain biological diversity.
- Foreign Affairs and International Trade Canada: Supports trade activities of different industries and facilitates trade agreements.
REFERENCES:
Alberta Canada. (2014). Agri Food. Retrieved June 27, 2014, from https://www.albertacanada.com/business/industries/agrifood-opportunities.aspx
CAPI. (2009). Regulatory Reform in Canada’s Agri-Food Sector. Retrieved June 27, 2014, from http://capi-icpa.ca/pdfs/CAPI-Regulatory-Framework-4March2009.pdf
Government of Canada (2013). Agriculture and Agri-Food Canada. Retrieved June 27, 2014, from http://www.agr.gc.ca/eng/about-us/publications/economic-publications/alphabetical-listing/an-overview-of-the-canadian-agriculture-and-agri-food-system-2013/?id=1331319696826
Government of Canada (2014). Canada at a Glance. Retrieved June 27, 2014, from http://www.ats-sea.agr.gc.ca/stats/4679-eng.htm
Seguin, B. (2012). Regulatory Innovation in Canada’s Agri-Food Sector: The Time Has Arrived. Retrieved June 27, 2014, from http://www.georgemorris.org/publications/file.aspx?id=b922072d-6c06-4158-a8e2-48c8379947e7
Transnationale. (n.d.). Canada. Retrieved June 27, 2014, from http://www.transnationale.org/countries/cans.php
