Supply chain improvement funds pledged in federal budget

Money also added for support of TFWs, P.E.I. potato sector

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Published: April 7, 2022

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Finance Minister Chrystia Freeland holds a news conference before delivering the 2022-23 budget in Ottawa on April 7, 2022. (Photo: Reuters/Blair Gable)

The federal government’s release last week of its Emissions Reduction Plan has turned out to be the spoiler for new ag funding in Thursday’s 2022 budget — although more money is also pledged to help strengthen cross-country supply chains generally.

Finance Minister Chrystia Freeland on Thursday laid out a federal budget with about $452.3 billion in total expenses against $408.4 billion in expected revenues from taxes and other sources, for a projected total 2022-23 deficit (after net actuarial losses) of $52.8 billion, down from $113.8 billion in 2021-22.

Canadians, she said, “know that fighting COVID and the COVID recession came at a high price” but “our ability to spend is not infinite. The time for extraordinary COVID support is over.”

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Freeland’s budget projects increases in both federal revenue and expenses over the following four fiscal years, gradually narrowing its projected annual budget deficit to $8.4 billion by 2026-27.

This year, with federal-provincial discussions still underway on the Next Policy Framework — the new five-year ag policy funding agreement due to replace the current Canadian Agricultural Partnership in April 2023 — new ag-specific programming in the 2022 budget instead comes mainly from the announcements made last week.

With that new framework deal still pending, “we don’t have any indication of commitments to increase funding for most of our essential programming,” Ian Boxall, president of the Agricultural Producers Association of Saskatchewan, said Thursday in a separate release. “In other areas, we have to wait and see if there is going to be more progress on agricultural priorities.”

The program pledges from last week’s Emissions Reduction Plan affirmed in Thursday’s budget include:

  • $329.4 million over six years to triple the size of the Agricultural Clean Technology Program;
  • $469.5 million over six years to expand the Agricultural Climate Solutions program’s On-Farm Climate Action Fund;
  • $150 million for a “resilient agricultural landscape” program, to support carbon sequestration and adaptation and to address other “environmental co-benefits,” with details still to be discussed with provinces and territories; and
  • $100 million over six years to federal granting councils to support post-secondary research in developing technologies and crop varieties that “will allow for net-zero emission agriculture.”

Potato probe

One ag sector, the Prince Edward Island potato industry, can expect a bit of indirect additional funding in 2022-23, over and above previous support programs announced during the recent closure of the U.S. border to P.E.I. table stock potatoes.

The budget calls for $16 million over two years for the Atlantic Canada Opportunities Agency toward “long-term investments and (to) assist in stabilizing the Prince Edward Island potato sector and supply chain.”

It also adds $12 million over two years for the Canadian Food Inspection Agency to “accelerate the investigation into the latest detection of potato wart (in P.E.I.) to help prevent its spread and to allow for full trade to resume with the United States as soon as possible” — a reference to the continuing U.S. ban on P.E.I. seed potatoes.

CUSMA compensation

Meanwhile, supply-managed producers in Canada’s dairy, poultry and egg sectors who have been waiting on details of compensation for “incremental” market access concessions made under the Canada-U.S.-Mexico Agreement (CUSMA) — the successor deal to NAFTA — will have to wait longer.

Those sectors in recent years have received federal compensation for concessions granted under the Canada-E.U. (CETA) and Trans-Pacific Partnership (CPTPP) trade deals.

Thursday’s budget, however, pledges instead to announce “full and fair compensation for the supply managed sector related to the new NAFTA” in the government’s 2022 fall economic and fiscal update.

Dairy Farmers of Canada, in a separate statement Thursday, thanked the government for the “clarity” it provided by giving a timetable for a compensation announcement. However, DFC added, “in tabling Budget 2022 without details, the government missed an opportunity to provide predictability to the industry.”

‘Surplus stripping’

Thursday’s budget also pledges a new round of consultations on federal income tax law to address changes made by Bill C-208, a 2021 private member’s bill from Manitoba MP Larry Maguire meant to standardize the tax treatment for sales of farms and other small businesses.

C-208, which took effect with the new tax year on Jan. 1, 2022, was passed in response to a rule in the Income Tax Act meant to prevent people from converting dividends into lower-taxed capital gains using certain “self-dealing transactions” referred to as “surplus stripping.”

C-208, according to Thursday’s budget, set up an exception to that rule “in order to facilitate intergenerational business transfers. However, the exception may unintentionally permit surplus stripping without requiring that a genuine intergenerational business transfer takes place.”

The consultations announced Thursday are to look at how existing rules could be strengthened to “protect the integrity of the tax system while continuing to facilitate genuine intergenerational business transfers.”

The government said it’s “committed to bringing forward legislation as necessary to address this specific issue,” noting such legislation could be included in a bill to be tabled in the fall after consultations wrap up.

Supply chain support

Among other new spending expected to benefit the broader ag sector, Freeland’s budget calls for the creation of a new Canada Growth Fund, to be initially capitalized at $15 billion over the next five years, to help attract private investment toward several policy goals, including “the restructuring of critical supply chains in areas important to Canada’s future prosperity.”

For Transport Canada, the budget also calls for $450 million over five years to support supply chain projects through the National Trade Corridors Fund, “which will help ease the movement of goods across Canada’s transportation networks.” That fund, in place since 2017, is due to be renamed “to reflect the government’s focus on supply chains.”

The transport department will also get $136.3 million over five years to develop “industry-driven solutions to use data to make our supply chains more efficient” and $16.9 million over five years “to continue making Canada’s supply chains more competitive by cutting needless red tape, including working to ensure that regulations across various modes of cargo transportation (e.g., ship, rail) work effectively together.”

“The budget does have some interesting initiatives and we’ll wait to see how they apply to the agricultural sector,” APAS’ Boxall said Thursday. “One of those initiatives is infrastructure funding for road and rail to the Port of Vancouver, and there is also funding to improve supply chains for essential industries, and we need governments to recognize our needs for better access and pricing for inputs.”

Foreign labour

The budget also lays out funding for several measures meant to help improve protections for temporary foreign workers (TFWs) coming to Canada to work in agriculture and other sectors. Those include:

  • $48.2 million over three years to set up a new foreign labour program specifically for agriculture and fish processing, “tailored to the unique needs of these employers and workers;”
  • $29.3 million over three years to set up a “Trusted Employer” model that reduces red tape for repeat TFW employers who “meet the highest standards for working and living conditions, protections, and wages in high-demand fields;”
  • $14.6 million in 2022-23 for “improvements to the quality of employer inspections and (to) hold employers accountable for the treatment of workers;” and
  • $64.6 million over three years for increased capacity to “process employer applications within established service standards.”

On the plan for a new foreign labour program targeting ag processing, Canadian Cattlemen’s Association president Reg Schellenberg said Thursday in a separate release that “one of the largest factors limiting our ability to grow Canada’s beef industry and our contributions to Canada’s economy is access to labour… We have long been advocates to create agriculture-specific solutions to address challenges related to labour and we are pleased to see this continue to advance.”

Also, among other emission reduction programs seeing a funding boost, the existing federal Nature Smart Climate Solutions Fund — which supports projects that “conserve, restore and enhance wetlands, peatlands and grasslands to capture and store carbon” — will now get $780 million over five years, starting in 2022, up from the $631 million over 10 years announced in 2021. — Glacier FarmMedia Network

About the author

Dave Bedard

Dave Bedard

Editor, Grainews

Editor, Grainews. A Saskatchewan transplant in Winnipeg.

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