Agricultural and Rural Policy: Agricultural Policy

Table of Contents

1.0 Description and Scope of Theme

1.1 Theme Description

1.2 Content Components

2.0 Context and Background for this Theme

2.1 Key Assumptions

2.2 Opportunities

2.3 Issues and Barriers

2.4 Enabling Components of The Theme

2.5 Dependencies and Linkages with the Theme

3.0 Research Areas and Priorities for the Theme

3.1 Description of Theme Areas

4.0 Critical Success Factors

4.1 Description

1.0 Description and Scope of this Theme

 

1.1 Theme Description

The Agricultural Policy theme encompasses policy issues relating to farming: government regulations and their impacts on farmers and rural communities, farm program analysis, farm management challenges, agricultural trade and marketing, agricultural business and finance, promotion of innovation, and agriculture in economic development.

• Agricultural policy is the process of assessing sectoral performance and provides the basis for correcting market failures, reacting to crisis issues, identifying policy alternatives including costs and benefits to all sectors of society, and to facilitate coordination, in an environment of interest groups politics. The focus of agricultural policy research is on identifying where markets fail and where coordination is required, and how corrective measures can be implemented.

• Impact of government actions on innovation, competitiveness and sustainability of the agri-food products sector.
  

 

1.2 Content Components of the Theme

The theme core components identified are Innovation, Competitiveness, and Sustainability.

• The sustainability component is to be interpreted as inclusive of reactionary needs to emergency events.

• Sustainability relates to two areas of focus- human resources and environment/land use. Aspects of "Agricultural Landscape" are combined with Environmental to become an "Environmental/Land Use" sub component within the sustainability theme.

• Competitiveness includes policies that facilitate or hinder Ontario profitability.
  

 

2.0 Context and Background for this Theme

 

2.1 Key Assumptions:

The assumptions listed below deal with inferences regarding Ontario-specific factors relevant to agriculture and food. Background items reflect important issues beyond the Ontario context.

• Agricultural policy research is conducted in support of OMAFRA policy development. Thus, OMAFRA needs policy research that addresses its policy objectives. The vision behind policy is most clearly described by the following, "Ontario's agri-food sector will be innovative, sustainable and provide opportunity for profit for all participants. We will be globally competitive and the supplier of choice by responding to consumer needs and contributing to provincial prosperity, the environment and the health of citizens".

• Ontario is a widely diverse agricultural region which is capable of the sustainable production of a broad range of farm products on its base of 5.38 million hectares.

• Ontario is centrally located geographically relative to agri-products markets in Canada and the Northeast US.

• Maintaining growth in productivity has been a struggle in Ontario agri-products.

• The median age of Ontario farmers has been increasing, and many are nearing retirement age. There has also been a broad decline in the number of farm operators in Ontario, and the human resource stock across the broader agri-products supply chain has lagged.

• Recruiting and retaining quality employees is an ongoing challenge in the agri-products sector, and competition for labour from other industries is intense.

• A diversity of marketing structures exists in Ontario and there is little consistency among them. The interests of supply managed industries, in terms of trade liberalization, are at odds with the freer market groups and most of the provincially regulated marketing groups. Trade policies which fully support one group's approach tend to diminish that of the others.

• Progress in trade liberalization is clearly beneficial to some segments of Ontario agri-products and is perceived as a threat to others. While the distribution issues are anticipated, it is assumed that liberalization would be a net benefit to Ontario.

• Governments and individual citizens in Ontario are becoming increasingly interested and concerned about the environment in agricultural areas and the impact of agricultural practices, and have demonstrated willingness to support initiatives to protect the rural environment.

• Farm profitability is an important objective of agricultural policy in Ontario.

• In Ontario and elsewhere, rural property rights issues and land use conflicts related to various government programs and policies are increasing. The rural issue overlaps with issues under the Expert Panel recommendations for rural policy research.
  

 

Background and Trends

• Trade liberalization is poised to continue its expansion in agri-products based on developing multilateral and bilateral agreements.

• Increased trade will be fueled by rapid economic growth and the emergence of a new middle class in developing countries.

• This is coincidental with steep inflation in energy prices, both in terms of energy consumed by devices and of energy contained in feedstuffs. As this has occurred, energy in feedstuff form has increased in price relative to protein feedstuffs.

• At the same time, consumer demands are segmenting across many different dimensions including price, convenience, environment/production practices, healthfulness, and natural/organic.

• Agricultural policy research is in flux, with changes in intellectual property rights, funding levels, transition to greater focus on private and public/private research, and very rapid dispersion driving change. Agricultural research is being done by an increasing number of institutions, requiring improved coordination.

• Awareness of food safety, zoonotic diseases, and the control of foreign animal and plant diseases is increasing. This creates a latent public health risk and risk in terms of agri-products sector liability from trade actions and product recalls. The ability to verify and certify product information is a critical means of product control, accessing markets, maintaining markets, and defending liability.

• Demographic changes are leading high-income countries toward an older profile, while less developed countries are relatively young. Aging consumers will be more focused on eating to attain health; this is also of interest in developing economies, but there will be relatively more interest in protein and carbohydrate to feed young populations.

• Governments are increasingly concerned about global warming, carbon emissions, and strategies for mitigation. Agriculture is a net CO2 sink.

• Technology from research is being adopted at a rapid rate.

• Markets are increasing volatility and there are more and more value perception conflicts - economic assessment will help work out the conflict.

 

2.2 Opportunities

The range of issues to be addressed by agricultural policy decision makers is broader than it used to be. Policy makers once focused mainly on producer safety nets, trade and regulator issues; now they must also address food processing, consumer needs and expectations, and a range of societal concerns among others

 

2.3 Issues and Barriers

• There is a need for comprehensive, quality data for economic research.

• There is a need for additional resources, especially human resources available to do the work.

• We must identify the audience for agricultural policy research in order for it to be relevant and for it to be implemented.

• Technology transfer from research is critical.

 

2.4 Enabling Components of the Theme

The following issues are important in allowing the core components to be successfully explored in research:

• The concept of an Ontario agri-products "Outlook" which places conditions in the sector in context. Rather than it being a forecasting effort (which would result in a standard outlook conference) the analysis should be based on alternative scenarios, with research determining what the implications would be. This scenario analysis would be foundational.

• Need for econometric or optimization models that can serve as a platform for targeted research projects - reference to the CRAM model at AAFC (tightly maintained) and a similar model at Food and Agricultural Policy Research Institute (FAPRI); these are very expensive to develop and to maintain.

  • Such models allow scenario analysis
  • There is a need for such a tool in Ontario/Canada outside AAFC

 

2.5 Dependencies and Linkages with the Theme

A number of issues raised under this theme are also relevant to other themes; e.g., environmental issues are related to the environmental sustainability theme, and food policy has linkages to the food for health theme, the rural policy theme or the emergency management theme.

 

In addition:

• There is a critical need for quality and timely data

• Linkages to technology transfer are vital

• A "systems" approach to policy research is necessary

• Better interaction of the research community with the producer/industry community would be beneficial in recognizing the increasing changeability of the farm community.
  

 

3.0 Research Areas and Priorities for the Theme

 

3.1 Description of Research Areas

A Innovation: How do government policies affect the ability of the agricultural sector to be innovative?

The innovation core area relates to how the agri-products sector uses resources for the purpose of discovery and knowledge creation. This is to be interpreted in its broadest sense, from policy relating to agricultural research to the impact of policy on the ability of the sector to be "innovative". Within this core are the following examples of research areas:

• Assisting evolution and targeting farm and food product marketing.

• Policies to facilitate producer adjustment and transition.

• Agricultural research policy and technology adoption. What do producers need to overcome barriers and take advantage of opportunities in technology adoption along the innovation continuum?

• Policies on non-food uses of farm products.

• Entrepreneurship: What are the critical factors which support and lead to the emergence of entrepreneurial behaviour?

• Ex ante evaluation of new technology.

• Role and net benefit of technology in securing a workforce in agri-products.

 

Top priorities: Policies to facilitate producer adjustment and transition, agricultural policy research and technology adoption, and ex ante evaluation of new technology.

 

B Competitiveness: How do government policies affect the ability of the agri-food sector to compete regionally, nationally and globally?

The competitiveness core area relates to the sustainability within which the sector can maintain market share, and the extent to which it can compete for resources with other jurisdictions and other segments of the domestic economy. Within this core are the following research areas:

• Regulatory impact in agri-products.

• Impacts and opportunities under trade agreements.

• Impact of risk mitigation and program design in the context of Ontario's competitive environment.

• Impact of financial and macro market conditions.

• Policy influences on supply chain profitability, organization, and cost competitiveness.

• Policy consistency with consumer perceptions and needs.

• Impact of animal and plant health policy on human health and farm competitiveness.

• Impact of North American market integration and broader globalization.

• Insights into the scale of production, from bulk production to local food production. And what are the implications for sustainability?

• The relationship between incentives/disincentives and the rate/appetite for change (i.e. farmers are reluctant to make changes if they are compensated for losses sustained in the production of their commodity).

 

Top priorities: Impacts and opportunities under trade agreements, policy influences on supply chain profitability, organization, and cost competitiveness, and Impact of financial and macro market conditions.

 

C Sustainability: How do government policies affect the ability of the agri-food sector to be sustainable in a time of transition with a changing demographic, social and cultural profile?

The sustainability core area considers carrying capacity in terms of human resources, rural landscape resources, and environment. It relates to the capacity of natural and human systems to support activity and growth in the agri-products sector. It is understood that in order for the sector to be sustainable, it must be innovative and competitive.

a. Social

• Integration of agricultural policy with human health policy.

• Sources, needs, exit, recruitment and securing the workforce in agri-products.

• Agri-products and agricultural research policy for a diverse agri-products sector.

b. Environmental/Land Use

• Costs and benefits to industry and/or taxpayers of existing and proposed environmental, land resource, and land use regulations.

• Assessing impact of agricultural policy on ecology/the environment.

• Policy alternatives for energy conservation, climate change, and environment.

• How can the concept of ecological goods and services be reflected in public policy in such a ways as to contribute to the sustainability of the agri-food sector?
  

 

Top priorities: Impacts, costs and benefits to industry and/or taxpayers of existing and proposed environmental, land resource, and land use regulations; assessing impact of agricultural policy on ecology/the environment; policy alternatives for energy conservation; climate change and environment.

4.0 Critical Success Factors

 

4.1 Description

The following factors are critical to the success of research areas identified above:

• Agricultural policy research needs to be coordinated with policy development to avoid bad policies.

• Agricultural policy research needs to be rooted in robust economic models.

• Need for improved institutional structure and resource support.

• Availability of timely and relevant data is critical.

• Need to better understand the audience for agricultural policy research. The results of research need to be communicated to users and taxpayers, with the rate of return on research measured and communicated.

• The beneficiaries for agricultural policy research tend to be more dispersed than other types of research. Alternatively, needed research is controversial or politically sensitive. As a result, matching funds are difficult to get for agricultural policy research. May want to consider lower matching requirements.

• Need for provincial governments to communicate with one another about cooperation/coordination/collaboration across research institutions (as pressure is already on institutions to do so).