Here is a look at the AG sector including the supply management system.

1. PRESENTER: PAUL YOUNG CPA, CGA
DATE: MAY 6 2019
Government Policies – Supply
Management – Canada – May 2019

2. Paul Young - Bio
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3.  This presentation is on perspective on supply chain management

4. Agenda
 Supply Chain Management
 Agricultural Subsidies
 Federal Government programs for Agriculture
 Dismantling of Supply management
 Blog – Supply Management Issues

5. Canada Supply Management /pricing
• An average, households spent
$8,109 on food in 2014, accounting
for 13.7% of their total spending on
goods and services. Households
spent an average of $5,880 on food
purchased from stores, and an
average of $2,229 on food
purchased from restaurants.
• Households in Alberta reported the
highest average spending on food
at $8,740, while households in
Prince Edward Island spent the
lowest average amount at $7,388.
• Couples with children reported the
highest average spending on both
food purchased from stores
($8,720) and food purchased from
restaurants ($3,204). The lowest
average spending on food
purchased from stores was
reported by one-person
households at $3,295. One-person
households headed by a senior
aged 65 years and older spent the
lowest average amount on food
purchased from restaurants at
$783.

6. Canada Supply Management
 . Agriculture sectors
 Marketing Boards
 What is marketing board
 A marketing board is an organization that holds a monopoly on the marketing of agricultural products, which means that
producers must sell their production to the appropriate board or must follow the rules imposed by the board when selling it.
Some marketing boards also have the responsibility of supply management, fixing in advance how much of the agricultural
commodity under its jurisdiction will be produced, in effect constraining supply and raising prices.
 Setting Quotas
 Impacts new market entrance
 Business to expand its operations
 Control of supply

7. How government protect agriculture sectors
 Imposing tariffs on imports
 Restrictions to imports
 Subsidies
 Foreign government provide government support to Agriculture sectors

8. Canada Agriculture Programs
 Farm Credit Canada (FCC) Loan Programs
 if your business is a farm operation, food processing business, farm equipment plant or an ag-biotech company, you could be eligible
for financing to:
 Purchase or improve land, buildings or equipment
 Buy quotas or livestock
 Expand your business domestically or export your products
 Make environmental improvements
 Fund diversification projects
 You could receive up to $15,000 from federal, provincial and territorial governments to match any savings you have set aside to
protect your agriculture business from a decline in profits.
 Advance Payments Program (APP)
 You may be eligible to get up to 50% of the average market price of your stored crops or unsold livestock. Cash advances of up to
$400,000 are delivered by industry associations, marketing boards and co-operatives in the agricultural sector.
 Agricultural Adaptation Council (AAC)
 Explore funding for innovative agricultural projects, that will help the industry and individual producers adapt and stay competitive.
The program provides support to help businesses respond to market and industry changes.

9.  Source - http://www.ourhenhouse.org/2014/01/how-the-government-uses-taxpayer-money-to-make-dairy-seem-cheaper-than-it-is/or http://www.mcclatchydc.com/news/politics-government/congress/article99619052.html or WASHINGTON Congress came up with a novel way to reduce the nation’s milk supply in 1985, paying farmers $1.5 billion
to slaughter their cows.
 Milk production dropped slightly, but the glut remained: Last week, the U.S. Departmentof Agriculturemoved to help dairy farmers once again by spending $20 millionto get 11 millionpounds of excess cheese off the market, sending it to food banks.

Read more here: http://www.mcclatchydc.com/news/politics-government/congress/article99619052.html#storylink=cpy
United States Government / Dairy
• Insurance
• operating loans
• counter-cyclical payments
• minimum milk prices,
• milk income loss contracts,
WASHINGTON Congress came up with a novel
way to reduce the nation’s milk supply in 1985,
paying farmers $1.5 billion to slaughter their
cows.
Milk production dropped slightly, but the glut
remained: Last week, the U.S. Department of
Agriculture moved to help dairy farmers once
again by spending $20 million to get 11 million
pounds of excess cheese off the market, sending
it to food banks. Source -
Read more here: http://www.mcclatchydc.com/news/politics-
government/congress/article99619052.html#storylink=cpy

10. Source - http://www.plant.ca/business-operations/american-dairy-divided-some-want-canadas-supply-management-left-alone-in-nafta-170227/
NAFTA / Supply Management

11. Source - https://www.msn.com/en-us/news/crime/us-dairy-lobby-increases-pressure-on-canada-nafta-fight-looms/vp-BBEB79n
USA Dairy vs- Canadian Dairy
The U.S. dairy lobby is ratcheting up the pressure on Canada as
talks to renegotiate NAFTA draw closer, demanding concessions
the Canadian government looks unwilling to grant, according to
people familiar with the file. The result could be a brawl that
sours efforts to modernize the North American Free Trade
Agreement, under which Canada sends most of its exports to the
United States. Mexico is the pact's third member. U.S.

12. Issues with Supply Management dismantling
 Compensation to Farmers as part of transitioning away from Tariffs
 Small family farm plays key role to local rural economies
 Canada has solid AG sector, i.e. arable land
 USA Dairy industry wants to export more milk.
 Protection against dumping of agriculture products
 Other issues
 Tax Policies (Cap and Trade)
 Commodity prices
 Interprovincial trade barriers
 Environmental rules (water, land usage, etc)

13.  Stats Canada
Food Manufacturing/Canada

14.  Stats Canada
Canada Exports

15.  Scotiabank
Commodity Index

16.  Stats Canada
Family Farm
Farm operators are slightly
older and there are fewer
farms in Canada than in 2011,
but farms are on average
larger and more area is
devoted to crop production
according to the results from
the 2016 Census of
Agriculture.

17.  Stats Canada
Family Farm

18. Source - https://globenewswire.com/news-release/2017/06/21/1027473/0/en/Vertical-Farming-Market-
to-Reach-6-372-5-Million-by-2023-P-S-Market-Research.html
Vertical Farming

19. Source - http://foodstarter.ca/2016/10/government-grants-spur-the-growth-of-canadian-food-processors/
Food Processing / Innovation Funds

20.  Supply management has many components. You need to look at all aspects and not just take the above article as being the gospel!
 Roads and Bridges – The liberals so call big dig never happen - https://nationalpost.com/news/politics/years-into-the-liberals-ambitious-infrastructure-program-have-the-promised-economic-
benefits-borne-out
 AG sector has seen higher taxes and regulations thanks to Trudeau and his so called carbon tax - https://www.slideshare.net/paulyoungcga/agriculture-sector-farming-whats-next
 The marketing boards need to be reviewed as they are ineffective - https://www.slideshare.net/paulyoungcga/government-policies-supply-management-canada-august-2017
 WTO has done little to address AG subsidies - https://www.ictsd.org/bridges-news/bridges/news/us-india-spar-over-agricultural-subsidy-data-at-wto-meeting
 Trade disputes due to failed foreign policies by Trudeau - https://www.slideshare.net/paulyoungcga/election-2019-foreign-policies-and-affairs-canada-and-the-world
 Trudeau’s small business tax reforms have hurt the AG sector - https://www.cbc.ca/news/canada/manitoba/federal-tax-changes-farmer-businesses-1.4394391
 Grocery chains control allot of the supply chain - https://www.newswire.ca/news-releases/loblaw-to-spend-150-million-more-each-year-supporting-canadian-farmers-686662271.html
 Interprovincial trade barriers hurt the economy, especially food processing sector - https://www.slideshare.net/paulyoungcga/trade-barriers-provincial-canada-march
 Food Terminal is very outdated. There needs to be changes on how produced gets to market - - https://www.thestar.com/business/2019/04/23/the-ford-government-is-reviewing-canadas-3-billion-
food-terminal-and-independent-grocers-are-worried.html ( a review is warranted to ensure the Food Terminal is effective
 There are many local markets hosted by chamber of commerce. More needs to be done to support buy local -
Blog – Supply Management

21.  Net cash income in 2016 is estimated to experience a modest 2% annual decline to $14.8
billion. A decline of 7% to $13.8 billion is expected in 2017, however 2016 and 2017 are still
expected to be the second and fourth best years on record, respectively.
 Livestock receipts in Canada are expected to decrease by 7% in 2016 to $23.9 billion as a
result of downward pressure on North American red meat prices from growing meat
supplies in the U.S. with a further decline of 4% for 2017.
 Crop receipts are expected to increase 2% to $32.6 billion in 2016, and increase by a further
1% to $32.9 billion in 2017.
 With lower market receipts anticipated in both forecast years, program payments are
expected to make up some of the shortfall, increasing by 24% in 2016 to $2.6 billion, and by
a further 22% in 2017 to reach $3.2 billion.
 Farm operating expenses are forecast to decline by about 1% in 2016, to $44.2 billion, and
increase by 2% in 2017 to $45.1 billion.
 The net worth of the average farm is expected to increase, reaching $2.8 million in 2017.
Canada AG Sector 2017 Outlook
Source https://www.canada.ca/en/agriculture-agri-
food/news/2017/02/canadian_farmingforecastsuggestscontinuedpositiveeconomicoutlook.html

22.  Minimum Wage changes (AB and ON)
 Country of Origin
 Hydro costs
 Port capacity toe expand exports
 Farm Income
 Grain growers in Canada who take deferred cash purchase tickets for crops are being asked whether it’s time to get rid of the rule that allows
income from those tickets to be put off to the following tax year.
 Tucked into federal Finance Minister Bill Morneau’s budget on Wednesday was an announcement of public consultation, running until May 24, on
the income tax deferral available to farmers holding deferred cash purchase tickets.
 Insurance Change
 eliminate the income tax exemption for insurers of farming and fishing property, which was introduced in 1954 to encourage the provision of
insurance in rural districts. With the increased sophistication today of the Canadian financial sector, insurance companies—including mutual
companies—are well placed to effectively underwrite farming and fishing risks.
 Carbon Tax / Price for Carbon
 Farmers will add the cost to their goods they produce which could mean higher consumer prices
 No assistance for Canadians to prepare for Justin Trudeau’s carbon tax, which at the start will cost agriculture producers $10-15 per acre and will increase. This will
cost a 3,000-acre farm $30-50,000 per year;
 Farmers will be at cost disadvantage with farmers in USA when it comes to cost position
Government Policies