Safety Nets
Nutrient Management Regulations – Phase II
Performance Trials
More Hybrids With EU Non-Approved Traits Enter Ontario Market
New Labelling Requirements for GM Food and Feed – EU
Biopharming
Environment, Science and Innovation and Food Safety Pillars of the APF
An Ontario Research Policy
Feasibility of Ethanol Studied by Local Group
Corn Prices - December 12, 2002

Safety Nets
Ontario Ag Minister Helen Johns participated in the December 4 Federal-Provincial-Territorial Ag Ministers’ meeting in Ottawa. Upon her return, she sent a letter to Agriculture & Agri-Food Canada (AAFC) Minister Vanclief reiterating concerns about the Ag Policy Framework (APF), concerns OCPA fully shares.

The first, and most important, concern is the need for flexibility.

Flexibility in program design: Ontario’s agriculture is far more diversified than any other province. Diversity in production necessarily means diversity of risk. One program cannot properly deal with all these risks. For example, extending Crop Insurance to all 200 or more horticultural crops grown in the province has proven an extremely difficult task over the last 20 years. Hasn’t been accomplished yet. May never be. That’s why Self-Directed Risk Management was developed (took 7 years) in order to provide support for those crops where Crop Insurance didn’t work adequately or didn’t exist.

But as proposed and reaffirmed at the December 4 meeting, the APF promoted by AAFC is inflexible, insisting on Federal funding for only two programs, with no provision for companion programs such as SDRM or Market Revenue Insurance.

Flexibility in funding and funding distribution: The APF as proposed is inflexible in funding because it caps federal commitment to risk management funding at ‘up to’ $1.1 billion per year. Could be less; but not more. Additionally, the APF proposes that Ontario receive the average of the previous 4 years of federal funding for the first year, and then move to a ‘demand-driven’ system by the end of the 3rd year. Translation: more federal dollars to Saskatchewan and the western provinces, less to Ontario and the east. Minister Johns’ letter clearly concludes “this will likely represent a decrease in commitment by the Federal government to the farmers of Ontario in the future. In fact, it will lead to a decreased commitment to all the eastern provinces.” The reason is that western cropping agriculture, being essentially cereal monoculture spread over an essentially similar prairie environment, presents a far greater probability for weather-related annual production losses across vast areas than does Ontario’s diversified cropping agriculture conducted in a more benign, humid and temperate environment. Ontario’s Crop Insurance program, for example, would require enormously higher premiums to be actuarially sound if applied in Saskatchewan. Federal funding is used to reduce those premiums. Un-restricted federal funding would artificially reduce those western premiums even further, attracting more participation, which would require even more federal funding. And, if funding commitments are exclusively ‘demand-driven’, federal funding could well be used to offset Saskatchewan’s huge current Crop Insurance debt (> $450 million) that has already been incurred. How will that debt be reduced if not through higher premiums which are partially reduced by federal funding?

Flexibility in time frame: Minister Vanclief is insisting that provinces sign individual implementation agreements before March 31, 2003 or risk losing his ‘hard-won’ commitment for $5.2 billion in ‘new’ funding from the Federal Cabinet. There has been insufficient time to adequately develop and analyze business risk programs proposed by AAFC under the APF.

Insisting on buy-in before adequate evaluation is like forcing the provinces to buy ‘a pig in a poke’. Minister Johns’ letter rightly requests that “current safety net programs be maintained until such time as we have detailed program components available for discussion with the farm community.” Minister Vanclief, to date, has adamantly denied any such extension of existing programs, insisting on his self-imposed March 31, 2003 deadline for implementation of the APF.

Moreover, AAFC appears about to tie Year 2 Transition Program funding (i.e., the second, and last, year of the $600 m Fed + $400 m Prov/year funding announced by Prime Minister Chrétien last June) exclusively to proposed APF risk management programming. This could mean that this time around, all payments would flow through NISA. OCPA argued against such a plan for 2002 and will do so again. Minister Vanclief didn’t heed our advice, which was the same advice provided by virtually all other commodity groups and sectors in Canada, and appears likely to ignore it again.
Flexibility is important, period.

Nutrient Management Regulations – Phase II
Phase II of Ontario’s proposed Nutrient Management regulations was released on Dec. 2. An overview of some of the regulations that will have an impact on cash crop farmers is provided in this issue of the Ontario Corn Producer. The proposed regulations are very complex and cover a lot of detail; as a result, some aspects of the proposed regulations that may affect you as a cash cropper have not been highlighted in the article.

The proposed regulations will be phased in - for some farmers this will be as early as April 2004. For farmers using only commercial fertilizer, the phase-in deadline is April 2008. However, there are aspects of the proposed NM regulations that will require an earlier phase-in date for many cash crop farmers, so it would be advisable to become familiar with the requirements and how they fit with your particular situation.

Public consultations on the proposed regulations will be wrapped up in January 2003, in order to meet the timelines for Gazetting and implementation as of April 1, 2003. This is a very short opportunity to provide feedback on a complex set of proposed rules that will have a significant impact on the farm sector. As well as the consultation meetings, a series of information sessions is being hosted across the province through December and January. Take advantage of these if at all possible. Information on the public consultation meetings (or other ways to provide feedback) as well as the information meetings can be obtained by contacting OMAF at 1-800-469-2285 (English) or 1-800-333-9723 (French).

As indicated previously, OCPA supports both the intent of the legislation and regulation – “to protect our water and the environment while maintaining the competitiveness of our agri-food industry” – as well as the underlying principles. The organization also continues to support a province-wide, science-based approach to nutrient management standards, in place of a patchwork of municipal rules. We do question, however, the scientific rationale of preventing use of commercial fertilizer within the 25m setback zone from a single residence and 50m from a residential area (4 houses) or designated health or educational facility when there is no similar restriction of fertilizer use on lawns or gardens of these properties, or considering that the setback for fertilizer use from residential wells is only 3m (as is appropriate).

We do concur with the proposed phase-in schedule over the next five years. However, meeting the targeted timelines will be a challenge for the government (OMAF and Ministry of Environment), given the enormity and complexity of administering the regulations as proposed.

The proposed regulations allow farm operators adequate flexibility to tailor their management of nutrients to their particular soils, crop mix, tillage systems, and other aspects of their farm operations. Indeed, many commercial farmers will be able to implement a NMP relatively easily based on current management, although there will still be some cost involved to complete the extensive documentation requirements and the necessary training. There are many other farmers, however, who will need to invest a tremendous effort and significant expense to document and implement their NM Plan (and Strategy, as required) to meet the criteria being imposed, even if their nutrient management activities already meet acceptable best management practices.

To date, there has been no cost/benefit assessment of these regulations – indeed a study commissioned by OMAF is only now underway, although this study was not mentioned in any of the news surrounding the phase II consultation materials (nor were farm groups privy to what the study’s terms of reference were). Will the proposed regulations be adjusted significantly if the study demonstrates that the proposed regulations will place undue economic burden on the farm sector?

Farmers should be (and most are) good stewards of the natural resources under their direct management. However, since these resources have societal benefit, farmers should not bear the cost of this stewardship without some additional support from society. As a regulatory instrument, the proposed regulation deals only with the legal aspect of nutrient management. To date, there has been no tangible information provided by OMAF regarding how the cost burden (and there will be a cost for every farmer, in time and effort, if not a cash cost) will be shared by the province. For example, how will crop producers be compensated for their lost production (yield and quality) as a result of the setback requirements? Or their time to complete the necessary documentation? Will the government invest with producers in more nutrient management research to provide better nutrient management options?

OCPA agrees that farmers, like others, should operate their businesses responsibly and be held accountable if their management poses undue risks or dangers to others or to the environment. We continue to question, though, whether the regulations as proposed will provide the most cost-effective means of achieving that objective.

Performance Trials
OCPA is encouraged by recent discussions with the University of Guelph, OMAF, AAFC and others in the effort to resolve the eastern Ontario corn performance testing ‘vacuum’ that resulted with the termination of the Kemptville corn and cereal agronomy research program. It is still too early to know the details of how the issue might be resolved, or if there will be a similar number of testing locations in the east as there were in 2002, but negotiations among the various groups are moving forward constructively to find some solution for 2003. (It is not clear whether similar progress is being achieved for spring cereals performance testing, and no winter wheat test-plots were established by Kemptville this fall.)

The Ontario Field Crop Research Coalition (OFCRC) has undertaken a study of performance testing needs (across the province and across all crops) and how a sustainable system to meet these needs over the longer term might be structured. Objectives of the study include:
• identify the needs of Ontario farmers and of the seed companies for variety performance trial information, including desired enhancements to the system
• document current public and private variety performance testing methods for all field crops (i.e., corn, soybeans, cereals, forages, edible beans and canola) in Ontario
• become familiar with the other testing options available and determine which methods could be used within Ontario’s public performance testing system to improve its efficiency and effectiveness
• recommend options to improve performance testing in Ontario.
David Morris, familiar to Ontario corn producers from his contribution of articles to this magazine over many years, has been contracted by OFCRC to conduct the study. David’s knowledge of the field crop sector and his current involvement with the Ontario Corn Committee (as secretary), as well as his experience with several other crop committees over the years, have given him considerable expertise and insight about the challenges faced by the performance testing system.

The bulk of the work on the first three objectives will be done over the winter months, followed by identification and discussion of the options through the summer and early fall of 2003. The goal is to be ready to begin implementing recommendations for the 2004 field season. The farm groups’ determination to proceed with this study has been an important component in the discussions to find a short-term fix in the east for 2003.

More Hybrids With EU Non-Approved Traits Enter Ontario Market
The introduction into the Ontario marketplace of more new hybrids with genetically modified traits that have not received approval in the European Union (EU) is an ever-increasing challenge for corn growers, marketers and processors. Although the EU approved the first generation of Bt events in the late 1990s, they have since maintained a moratorium on approval of further GM traits, despite the fact that these traits are fully approved for use in North America and many other nations such as Japan, Australia, New Zealand, etc. Most recently, the need to establish GM-food labelling rules has been used as the EU’s rationale for their moratorium. However, it remains to be seen whether the recent agreement announced on EU food labelling standards (see separate newsletter item) results in any movement on approvals of further GM traits for use in Europe.

The issue is of concern to Ontario farmers (and grain marketers and processors), since many corn-based foods, food ingredients and livestock feed products are marketed into Europe from Ontario. Thus, EU non-approved traits such as Roundup Ready corn (RR hybrids have been on the market for several years now, with many more expected over the next couple of years), the new Herculex brand Bt corn hybrids (providing cutworm control as well as corn borer control), as well as several ‘stacked trait’ hybrids (i.e., YieldGard/Liberty link ‘stacks’, as noted in our newsletters in previous years) will not be accepted by Casco, some other corn processors and certain elevators or brokers serving these markets.

Growers are urgently cautioned to know and understand the marketing implications for all of the hybrids they choose to grow. This caution is no reflection on the merit of the hybrids containing these traits. A full listing of hybrids that are currently marketed in Canada, but are not approved for use in the EU is available on the website of the Canadian Seed Trade Association: http://www.cdnseed.org/ news.html. Seed company representatives will also provide information on which of their hybrids carry traits that are not approved in the EU. (In the past, such seed companies have required their customers to sign a waiver acknowledging that the farmer knows the marketing restrictions placed on such hybrids – likely absolving the seed company of any liability should some EU non-approved trait inadvertently find its way into Europe-bound corn products).

New Labelling Requirements for GM Food and Feed – EU
Late in November, the European Union’s Agriculture Council reached agreement on a proposal to label all genetically modified feed and to extend the current labelling requirements for genetically modified food.

Under the proposed revisions, ALL foods produced from GM crops will have to be labelled, whether or not the final product contains DNA or protein of GM origin. As a result, highly refined products (such as corn oil, corn syrup, soy oil, canola oil), as well as processed foods containing such products, would require labelling to indicate that: "This product contains genetically modified organisms" or "... produced from genetically modified (name of organism)." To this point, only foods or food ingredients that contained genetically modified DNA or protein were classified as ‘GM’ for labelling purposes: all other products were exempt.

The Ag Council also proposed labelling requirements for feed produced from GM crops, such as corn gluten feed from GM corn and soymeal from GM soybeans. Livestock feed has been exempted from labelling requirements to date.
Other proposed changes include a reduction of the threshold for labelling requirements from the current 1% to .9% for the presence of GM material in food or feed.

Food from animals fed GM feed (milk, meat, eggs) and foods produced through the use of a GM enzyme (such as amylase for bakery products) remain outside labelling requirements under the proposed new rules.

This proposal, likely to be approved by the European Parliament within the next few months, is likely to have serious implications should it be fully implemented. The move to include all products of GM origin, regardless of the presence of GM material in the final product, ensures the need for a traceability system to follow all GM crops through the food/feed processing system. As the detectability of specific DNA sequences or protein, indicating the presence/ absence of GM material, will no longer be sufficient to determine a product’s GM status for labeling purposes, current test-based verification systems will no longer apply.

Biopharming
Production of pharmaceuticals and value-added biochemicals in plants has received considerable press recently, following the November incident in which a few volunteer plants of corn genetically engineered to produce pharmaceutical proteins were allowed to inadvertently mix with 500,000 bushels of soybeans.

The predictable backlash is to ban the production of all pharmaceutical traits in foods crops, particularly in crops such as corn that cross-pollinate (thus presenting an extra challenge for isolation and containment.) And in many cases, logic would suggest that such production be done in non-food crops.

Certainly, there are major risks, both real and perceived, with the production of pharmaceuticals in common food crops such as corn. However, on the other end of the spectrum, production of specialty industrial products in food crops is already being done. One example is high erucic acid canola (erucic acid was one of the two major 'toxins' removed from rapeseed to create canola several decades ago). Another example is industrial flax versus food flax. Incidentally, neither of these are GM (genetically modified)-derived traits. Crops such as these, capable of producing the large quantities of industrial bioproducts that would be needed, are more likely to provide farmers with diversified and value-added markets than would be the case with very high value, but low acreage crops for producing pharmaceutical proteins.

And with the emphasis on developing markets for bioproducts from corn - one of the proposed goals under the APF and a significant component of many USDA and Canadian research programs - there is every expectation that at least some of these traits (whether derived through GM technology or not) will be commercialized.

The challenge in producing them will be to devise fail-safe containment measures to ensure strict, trustworthy systems for production, handling, transportation and processing of these crops with very strict tolerances for co-mingling or contamination of conventional feed/food uses. For corn, the cross-pollination problem could be solved by producing such traits only in male-sterile plants (thus preventing inadvertent drift of the trait with fertile pollen).

This debate has only begun. The current public scrutiny will certainly mean that the industry (crop growers, trait developers, processors, handlers, etc.) in conjunction with government policymakers and the Canadian Food Inspection Agency, the regulatory agency responsible for primary oversight in Canada, will need to be exacting in devising the containment systems noted above. But this level of perfection should have been expected even before the ‘contamination’ event that sparked the current media coverage.

Environment, Science and Innovation and Food Safety Pillars of the APF
Much of the news coverage of the Agricultural Policy Framework (APF) of Agriculture and Agri-Food Canada over the past 6-8 months has been focused on the Risk Management pillar. Given the magnitude and immediacy of the economic impact on farmers, this has been necessary and important. However, policy discussions on the other pillars of the APF (environment, food safety, science and innovation, and renewal) have been proceeding internally within AAFC and between AAFC and their provincial counterparts, in preparation for an April 2003 implementation date. Unfortunately, as neither AAFC nor OMAF has been proactively eliciting input from the producer sector (and with farm groups’ attentions largely focused elsewhere), it remains to be seen whether the AAFC/OMAF bilateral agreements will reflect the true needs of the farm sector in these other ‘pillars’.

The following highlights (taken verbatim from overheads in most cases) are from information shared by AAFC on the ‘Science and Innovation’ pillar of the APF at the mid-November meeting of the Ontario Agricultural Research Coalition (with members from livestock, horticulture, field crop commodity groups and general farm organizations). However, this was not a consultation session and falls far short of the level of consultation that should be occurring on these important issues.

The federal Government’s Broad Overall Objectives:
• position Canada as a world leader in such areas as health sciences, biotechnology and clean energy
• implement regulations to achieve public good and enhance the climate for investment and trust in the markets
• work with small and medium-sized enterprises in the development and application of new technologies
• strengthen government science, integrating across departments and disciplines and focusing on the priorities of Canadians
• implement the APF, which is vital to rural Canada and all Canadians – the ultimate goal is sector growth and sustained profitability. Specific Goals:
• protect human health by reducing exposure to food-borne hazards
• increase consumer confidence
• develop a comprehensive branding campaign with consistent branding messages aimed at key, fast-growing markets
• increase industry’s ability to meet market requirements
• provide greater value-added opportunities
• reduce risks and provide benefits to the health of water (focusing on management of nutrients, pathogens, pesticides and conservation), soil (focusing on soil organic matter and erosion), and air (focusing on particulate matter, odours and greenhouse gases)
• ensure compatibility between biodiversity and agriculture.

Measures to be Taken:
• increase information and understanding, through development and use of common indicators and analytical tools, and environmental monitoring networks
• conduct R & D, assess technologies and make available sophisticated land management tools to aid in stewardship and build capacity
• realign public science resources by realigning and increasing science investments, and increase funding sourced from outside of the agriculture sector
• coordinate science efforts along the value chain by expanding and strengthening links with the science community and improving technology transfer, coordination and communication
• create an ‘innovation climate’, through promotion of business climate policies, assessing human resources and related infrastructure needs, improving intellectual property management and articulating an investment development strategy.
In the OMAF presentation on the same topic, there were, understandably, many similar issues and priorities, with a focus on Ontario’s ‘strategic priorities’:
• Food Safety and Quality – modernizing food safety programs
• Environment – nutrient management, and all producers completing an environmental scan (some completing an environmental plan)
• Science and Innovation – life sciences and biotechnology
• Sector Renewal – enhancing business management skills
• Risk Management – broader based insurance coverage.
Some of the provincial initiatives being undertaken include:
• integrated supply chain program, extending the Soy 20/20 concept to other commodities
• accelerating commercial success of knowledge-based agri-food businesses, through establishment of an Inno-Centre
• MARS (Medical and Related Sciences) Landing Project, networking of bio-clusters between Guelph (agri-food) rural Ontario and Toronto (medical and related)
• Alternative Renewable Fuel R & D fund
• Life Sciences and Agri-Food Innovation Fund, to promote commercialization of agri-food and life-sciences technologies
• Communications and Awareness Initiative to promote bioproducts and innovators in bioproducts.
The province plans to undertake consultations with stakeholders through the winter months.

An Ontario Research Policy
Also at the mid-November meeting, the Ontario Agricultural Research Coalition took initial steps towards developing a research strategy for Ontario agriculture. Using the 12 research-related recommendations from the Odyssey Group report as a basis, they are asking their member organizations to provide input as to whether they support the individual recommendations or not, what level of relative priority they would place on the recommendations, and what other aspects may merit consideration in development of a research strategy. Further information on OARC’s research strategy will be given in future newsletter items as plans develop.

The efforts of OARC are timely, given that both OMAF and ARIO have recently indicated that they are working on plans to develop a more focused research strategy for the agri-food sector for Ontario. A formal announcement outlining their plans is expected early in 2003.

Feasibility of Ethanol Studied by Local Group
For the past year, a group of Brant County and area farmers and agri-business people have been meeting to explore the potential offered by the ethanol industry. The meetings, initiated by Brant Agri Business, have led to the formation of the Integrated Grain Processors’ Cooperative Inc. (IGPC).

The goal of IGPC was to conduct a realistic assessment of building a commercial scale ethanol plant in Southwestern Ontario. To achieve this goal, IGPC retained the firm of BBI International, an industry expert based in Colorado, to conduct an initial feasibility study. Funding for the study and early development of the project was provided in part by the Agriculture Adaptation Council's (AAC) CanAdapt program.

For the past several months, BBI president Mike Bryan and his staff have been gathering information and examining numerous site locations across Southern Ontario. Assistance in gathering data has been provided by OCPA, OMAF and a number of local and regional municipalities. The result of this work is a 90-page Ethanol Feasibility Report that was recently presented to the board of directors of IGPC.

Based on the conclusions found in the feasibility report as well as the growing political interest in ethanol, the IGPC board has decided to continue moving forward with the development of the project. BBI will continue to work with the group in the role of Project Manager.

IGPC will hold a number of community information meetings over the next few months to share information about the project. The first of these is scheduled for January 14, 2003 at 7:00 p.m. at the Best Western Brant Park Inn and Conference Centre in Brantford. Local and provincial dignitaries, along with IGPC chair Tom Cox, will speak about ethanol and its potential in Ontario. Findings from the feasibility study will be presented by BBI president Mike Bryan.

Tom Cox and Mike Bryan will also speak at the Farmsmart conference at the University of Guelph in early January. Further information can be obtained by contacting IGPC at 866-211-0435 or visiting the website at http://www.igpc.ca

The above figures are based on levies received by OCPA for commercial sales.

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