Background:
• Existing safety net programs include both ‘whole farm’ income stabilization programs and ‘companion’ programs that address specific sector needs. Companion programs such as Market Revenue Insurance provide income support to help offset losses. Providing a safety net for farmers is the shared responsibility of federal and provincial governments: total funding has been approximately $2.9 billion/year for the last 3 crop years (2000/2002).
• Business Risk Management (BRM) programs proposed under the Agricultural Policy Framework focus exclusively on income stabilization, offering only a revised NISA program and Production Insurance (an enhanced version of the current Crop Insurance program). Combined federal-provincial funding will be reduced from $2.9 billion/year to $1.9 billion/year.

Concerns:
• Proposed approach to business risk management ignores the need for ongoing income support programs to offset losses caused by factors that farmers cannot control, such as the impact of agricultural subsidy practices in competing nations such as the U.S.
• Reduced funding levels in general and expected reduction in federal funding received by Ontario under new allocation arrangements will have a negative impact on the sector.

Needs:
• An effective business risk management program complement must address the need for income support as well as income stabilization. To date, there is little evidence to suggest that farmers will be as well protected under new BRM programs as they are under current programs.
• Income support programs should assess the cost of production for inclusion into the formula used to establish support programs.
• Farmers need a long-term commitment from their governments to make cropping and business decisions with any degree of certainty.
• Companion programs to offset artificially low prices are essential until such time as trade-distorting subsidies in the U.S. and E.U. can be reduced or eliminated through WTO negotiations.
• Combined federal-provincial funding levels must be maintained to prevent Ontario’s farmers from falling further behind their competitors.
• Provincial funding as required to meet the need even if the current 40% commitment level must be exceeded.

Issue Paper #2
Ethanol/Bioproducts

Background:
• Ethanol made from grain products such as corn and wheat can play a major role in improving air quality and helping Ontario reduce greenhouse gas emissions. Although other technologies for producing ethanol are currently in development, only grain-based ethanol can offer market-ready technology and provide substantial benefits now.
• Ethanol use decreases the ground-level ozone that results in smog, draws on renewable resources and creates valuable byproducts such as a high-protein livestock feed. It also provides the base for many biochemicals that can be used in the production of bio-based products.
• Ethanol production provides economic development in rural areas, creates jobs and stimulates the rural economy. It increases local grain prices and creates new markets for grain farmers.
• Both the Liberal and Progressive Conservative parties have announced intentions to mandate the use of ethanol- blended gasoline, requiring that all Ontario-sold gasoline contain 5% ethanol by 2007 and 10% ethanol by 2010.

Concerns:
• Mandating the use of ethanol, in the absence of initiatives to build Ontario’s domestic supply, will result in the importation of even more ethanol (currently we import more than 100 million litres from the U.S. each year) and potential economic and rural development benefits of domestic production will be lost.

Needs:
• An effective Renewable Fuels Policy for Ontario will build our domestic industry and provide economic and rural development benefits as well as health and environmental safety benefits. Such a policy will attract bioproducts manufacturers to locate in Ontario, within easy distance of major Canadian and U.S. markets. It should include:
• Tax incentives to encourage business development in Ontario renewable fuels industry
• Under the current Tax Incentive Zone (‘Smart Growth’) program, designation of at least two zones focused on agriculture-based developments such as ethanol, biorefineries, biodiesel
• Availability of the current Ethanol Manufacturers’ Agreement for each new ethanol manufacturing facility in
Ontario
• Expanded support for the Alternative Renewable Fuels Research Fund
• Support for the development of a Grain Ethanol Institute to promote grain-based ethanol fuel production and use.

Issue Paper #3
Nutrient Management/Water Quality

Background:
• First proposed in 2001, Ontario’s Nutrient Management Act establishes authority for the province to establish consistent standards for the management of materials containing agricultural nutrients and to determine requirements and responsibilities for those who manage nutrients, including municipalities and farmers. Designed to increase environmental protection and especially water safety, the legislation was passed in June 2002.
• Phase I and II regulations were released in 2002 and 2003: a public consultation process conducted jointly by Ministries of Agriculture and Food and Environment provided opportunities for input into proposed regulations.
• Based on consultations, Ontario government announced significant revisions to proposed regulations in March 2003, including: simplification of regulations; regulations applied initially only to new and expanding large livestock farms; establishment of a provincial advisory committee; government commitment to provide funding to help offset costs of implementation of new requirements.
• Additional legislation for protection of Ontario’s water resources is currently in development and may result in additional regulations.

Concerns:
• OCPA and farmers in general are highly supportive of the objectives of the legislation – “to protect water and the environment while maintaining the competitiveness of the agri-food industry”. Farmers are concerned however, that new legislative requirements may impose undue economic or regulatory burdens on the sector.
• Although the present government has committed to providing funding to help offset the costs of implementation, no details have been provided regarding the amount of funding that will be provided or how it will be delivered.

Needs:
• More detail is needed on mechanisms for offsetting implementation costs of nutrient management regulations.
• Funding assistance should be made available for all farmers who wish to enact changes required under the NM regulations in advance of implementation deadlines.
• Source Water Protection legislation should not supercede the Nutrient Management Act with more regulations in the same area. The Source Water Protection legislation should complement the agriculture sector needs.
• Meaningful opportunities for input from crop producers are also required in the development of proposed Source Water Protection legislation, such as the provincial advisory committee on Nutrient Management, which includes representation from the cropping sector.

Issue Paper #4
Research

Background:
• The benefits of agri-food research are clear: in the last 10-20 years, every dollar invested in agri-food research has resulted in benefits worth from $15-$40 (depending on specifics of the food/products concerned).
• Benefits are achieved through increased productivity/efficiency, increased quality, expanded diversity of food products, improved environmental management, etc.
• Research is a long-term strategy: investments now lead to new technologies and new products 5, 10 or even more years from now.

Concerns:
• Failure to invest in agri-food research will result in a gradual decline in the competitiveness of the sector, restrict our capacity for innovation and undermine Ontario’s economic well-being.

Needs:
• Research in traditional areas continues to be essential: such areas include nutrient and pest management, soil conservation and productivity, ongoing work on crop breeding and quality refinements.
• Targeted public sector investment in emerging research areas will allow Ontario to fulfill its natural potential as a world leader in agri-food development and innovation. Areas include:
• Life Sciences – using the biology and genetics of crops to achieve improvements in quality, nutrition and other desirable traits, or to address agronomic considerations such as safer, more effective or more efficient pest management.
• Bio-products – using plants or plant products as industrial feedstocks to replace petrochemical products provides many benefits: reduced reliance on petrochemicals, reduced environmental footprint, potential for both lower costs and improved marketability.
• Increased investment in the research and development of plant-based pharmaceuticals and industrial chemicals is also likely to provide broad social and economic benefit in the long term.

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