What might a Liberal government mean for agri-retail?

The 2015 election was the most dramatic in recent memory, with no shortage of ambitious promises. It was Justin Trudeau’s message of change that swept the Liberal Party of Canada to power, and that message was not modest. With a raft of agenda items from Syrian Refugees, to the Paris climate summit and the fight against ISIS, many in our sector are left asking: “What’s next for Agriculture?”

A Public Mandate Letter

After forming a new government, the Prime Minister writes each of the ministers a letter outlining the expectations for their time in the cabinet. These letters are traditionally kept between the Prime Minister and the recipient, however in early November Prime Minister Trudeau opted to publish these letters in a display of openness and transparency.

The mandate letter to the new Minister of Agriculture, Lawrence MacAulay, highlighted many of the policies outlined in the Liberals’ election platform. Minister MacAulay has been tasked with creating an Agri-Food Value Added Investment Fund to assist with food processing, increase funding for agriculture research, develop a successor to Growing Forward 2 and develop a National Food Policy to promote healthy living as safe food.

With Trudeau promising to operate his government “by cabinet” rather than use the centralized approach of his predecessor, let’s take a look at the man who will be influencing the agriculture sector for the next four years.

Ritz’s Successor

Lawrence MacAulay brings to his new position a history as a P.E.I. potato seed farmer. He was first elected as an MP in 1988, and recently became the longest serving MP in P.E.I.’s history.

Under Jean Chretien, Minister MacAulay was given a number of increasingly important roles. He served as Minister of State for Veterans, as well as for the Atlantic Canada Opportunities Agency, before being promoted to Minister of Labour. He served as Solicitor General from 1998 to 2002.

As a member of the official opposition, MacAulay served as the critic for Seniors, and then later as critic for Fisheries and Oceans. Terry Clark, Director of Global Market Development for Adjuvants Plus, an Ontario-based agrochemicals, biologicals and crop nutrition company, thinks the Minister’s background is cause for optimism. “His history in farming is pretty positive, and I like that he comes from the agricultural production sector,” he says. “His background in government also brings added value.”

However, MacAulay was a slightly surprising choice for the job. While the Liberals have a limited number of farmers in their caucus, prior Agriculture critics Mark Eyking and Wayne Easter (who were both considered likely candidates for the job) also come from farming backgrounds.

Too Early to Foresee Change?

Aside from the Prime Minister’s mandate letter, there has been very little content to form expectations for the new Agriculture Minister. “We’ve really only had early indicators,” says Clark, “but my sense is one of staying the course.”

“As far as the transition from Minister Ritz to Minister MacAulay, we expect it will be business as usual,” says Fertilizer Canada president and CEO, Garth Whyte, in an email interview. “We currently have no concerns with the new government’s agriculture policies because it’s too early to tell.”

During the new government’s speech from the throne on Dec. 4, agriculture was one of several topics that went without mention. While in opposition the Liberals often heavily criticized the Conservatives’ handling of the Agriculture portfolio. But with the dismantling of the wheat board well in the past, major differences with the Tories’ previous policies are not in abundance.

Notably, the Liberals supported the Agricultural Growth Act, which paved the way for the Conservative government to ratify the UPOV ’91 international plant breeding agreement.

Research and Industry Innovation

Another key responsibility given to Minister MacAulay was to make the sector “more innovative, safer and stronger.” To this end, MacAulay has promised $260 million over four years for the Agri-Food Value Added Investment Fund and for agricultural research. This is in conjunction with an undetermined portion of $200 million that will be spent annually to bring clean technologies to natural resource sectors.

In June, then-Liberal House of Commons member (and recently appointed Public Safety Minister) Ralph Goodale told The Western Producer that while applied science is important, “you need the other side of it, too. You need pure scientific discovery to feed the pipeline of new ideas for the long term.” This could mean a shift in focus for funding priorities, but with more research funding available overall, it’s possible the level of funding being used for private partnerships will remain stable. The Liberal platform also includes a promise to undertake a complete review of Agriculture and Agri-Food Canada (AAFC)’s programming within the government’s first year.

A running narrative of the Liberals’ campaign was the anti-science nature of the Conservative government, with both Liberal and NDP parties promising to allow more open scientific discussion and to take scientific evidence into account.

When asked about GM crop production, however, Trudeau was tentative in his comments to The Canadian Press: “There are some challenging dimensions to GM crop production. Some consumers here in Canada and elsewhere are seeking reassurance about the validity of our science and its products.”

Coupled with the new administration’s close ties to the Ontario Liberals responsible for a near-ban on neonicotinoids, it can be tempting to form conclusions about how the Liberals will treat crop regulations. However, despite his party adopting a policy position of banning neonicotinoid, Trudeau would not commit to following through on that ban. “We’ll be looking at ways to move forward and to support farmers based around science and research and not necessarily implement a ban on neonics,” Trudeau told the Canadian Federation of Agriculture in 2014.

With funding already promised, and a public commitment to broad scientific advancement from the Prime Minister, it would appear that research will be a priority for MacAulay’s ministry. The exact focus of this priority is unclear, though we do know one area that will receive significant attention: climate change.

Sustainability and Climate Change

Among the major policies of the new government is an overarching attempt to address climate change. Each ministers’ mandate letter included instructions to use their ministries and policies to have a positive impact on this area.

“In the industry, there’s a sense of reluctance or worry that the greener policies could become an issue,” says David Dow, the chair of the CAAR’s Advocacy Committee. Agricultural stakeholders need to be at the table to ensure that the voice of those working in the industry is heard.

CAAR’s president and CEO, Delaney Ross Burtnack, agrees. “The agriculture industry is focused on the science of sustainability. CAAR, along with other stakeholder groups, is working proactively to ensure that Canada is a leader in developing practices and policies to continue producing safe, healthy, affordable food, and we look forward to working with the Liberal government to do so.”

One of the stakeholders working to advance Canada’s agricultural development is Fertilizer Canada, which has already taken great strides towards demonstrating and promoting environmental stewardship within the fertilizer industry. “The 4R Nutrient Stewardship Program promotes efficient and responsible nutrient use by farmers, helping them protect our soil, water and air while enhancing productivity,” says Fertilizer Canada’s Whyte. “This framework can be helpful to achieve the government’s mandate of addressing climate change, protecting other aspects of our environment.”

Agriculture accounts for one third of all worldwide emissions, and while that figure is only eight per cent in Canada, Minister MacAulay will have to do his part in this area. However, within the cabinet MacAulay will not be taking the lead. His instructions are to “Support the Ministers of Natural Resources and the Environment and Climate Change,” but the complexity extends beyond Ottawa. The ongoing international climate change discussion will certainly inform what policy is put in place, along with alignment of the disparate provincial systems.

Trade Policy

One of the most important areas of interest for agriculture is trade. “Trade agreements are very important for all of agriculture, and making sure that we can get our product to market,” says Clark. Catherine Scovil, director of government relations with the Canadian Canola Growers Association, says that “over 90 per cent of canola grown in Canada is exported, so it’s no surprise that trade is at the top of our list of priorities.”

The Liberals have historically been pro-trade, and through the early weeks of their government this has held true. In her mandate letter, International Trade Minister Freeland has instructions to implement the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), and Minister MacAulay has also been mandated to work with her on several issues pertaining to trade.

Messaging from the Liberal government regarding the Trans-Pacific Partnership (TPP) has generally been favourable, but there has yet to be a firm commitment at this publication’s press time. The TPP would see the elimination of some prohibitive tariffs on Canadian agriculture in Japan, Vietnam and Malaysia.

It would also create a multinational working group on biotechnology regulation and establish dispute resolution mechanisms. The ongoing challenge of varying GM regulations around the world will hopefully be addressed through this working group, as each nation will be required to provide a comprehensive list of approved products, but it will remain up to each nation to change their own regulations.

Transportation

Over the last couple of years, the government portfolio that has most affected Canadian agriculture has arguably not been agriculture itself, but transportation. Following the Conservative government’s battle with the railways throughout the 2013- 2014 transportation crisis, the Liberals’ handling of the rail transportation issue will be of some significance.

Marc Garneau, perhaps the Liberals’ biggest celebrity aside from Trudeau, takes over for Lisa Raitt as Minister of Transportation. Despite his high profile, Garneau brings an air of mystery to his new portfolio. He has rarely, if ever, commented on rail service in the past, much less grain handling specifically. In his own mandate letter, Minister Garneau was tasked with leading a full review of the rail system in the context of the Canada Transportation Act (CTA) review, but was given very little direction on particular changes.

Periodically, the Canada Transportation Act, the legislation regulating all transportation in Canada, must be reviewed. It so happened that a review was due shortly after the rail transportation crisis of 2013-14. Then-Transportation Minister Raitt instructed the review panel to focus on grain transportation.

Last year, a panel led by former Conservative House of Commons member David Emerson reviewed submissions and consulted experts, submitting a final report on Dec. 24. However, this report is simply a set of recommendations to the government. The power to change the system remains firmly in the Liberals’ hands. So what do we know about what they want?

Michael Bourque, president of the Railway Association of Canada, told The Financial Post on Nov. 4, 2015 that his reaction to Garneau’s appointment was “delight”, but the Liberals were not kind to the railways in opposition. During the height of the 2013-14 rail crisis, Ralph Goodale wrote on his blog “No doubt [the railways] have done a lousy job…Why did CP Rail actually reduce its grain fleet in the midst of this mess? There is nothing redeeming about the railways’ behaviour.”

The Liberals have consistently attacked the Conservatives for creating a system without regulations to counter the “closed duopoly” of the rail system. During passage of the Fair Rail for Grain Farmers Act, which mandated that the railways move 500,000 tonnes of grain each week, the Liberals criticized the bill for being hastily written and for allowing the crisis to escalate, but they did not defend the railways.

There are two rail policies that the Liberals have publicly supported so far. The first is to provide a precise definition of “service levels” to alleviate contractual issues, something widely supported by producer groups. The second is a full costing review of the railway system.

The CCGA’s Scovil says that while cost is important, their focus is on the quality of rail service. “We see cost and service as two separate things,” she says. “While the cost of rail transportation is important for farmers, poor service impacts their ability to generate cash flow on farm, and to export products to customers around the world. When it comes to transportation, our first priority is rail service.”

With the CTA review, the Liberals have an opportunity to make the sort of massive changes to the rail system to match their rhetoric in opposition. While the Liberals are treating rail transportation as an important issue, it is as yet unclear how ambitious they will be in affecting change.

Ministers

Of course, Ministers MacAulay and Garneau aren’t the only ones relevant to agri-retailers. Handling the health portfolio is Jane Philpott, a rookie MP and former family doctor. Neither Minister Philpott, nor her mandate letter make any mention of pesticide policy, and despite the party approving a policy of banning neonicotinoid at their 2014 convention, as stated earlier Trudeau refused to commit to such a ban.

Another rookie MP handling a large portfolio is Catherine McKenna, the newly appointed Minister of Environment and Climate Change. The Liberals campaigned on an environmental plan that included millions of dollars of investment into clean technology in agriculture. Minister MacAulay’s mandate letter included instructions to help the sector adjust to climate change, as well as support Minister McKenna’s work.

Firm predictions for agriculture policy under the new Liberal government are hard to make. Agriculture was not a key campaign issue, with little meat on the bone in the Liberal platform. While the party certainly had its issues with how the Conservatives handled this sector, it is still unclear as to whether the Liberals will bring their Real Change to agriculture.

What exactly is the Trans-Pacific Partnership (TPP)?

Very simply, it is a trade agreement between 12 Pacific Rim countries: Brunei, Australia, New Zealand, Vietnam, Chile, Singapore, Malaysia, Japan, Peru, Mexico, the United States and Canada. Together, these countries represent 40 per cent of the world’s GDP, and over 800 million people.

While the treaty is far-reaching, from intellectual property to investor-state arbitration, its chief attribute is a massive reduction in tariffs. Canadian agriculture will gain greater access to the large Japanese market, a potential boon for canola and beef farmers.

On the other hand, the Canadian market is also opening to other countries, threatening industries currently under supply management. Dairy, egg and poultry farmers will all face import competition, which is why the Conservative government proposed to spend $4.3 billion on keeping those farmers’ incomes safe for 10 years after the TPP comes into effect – an expense so far supported by the Liberals.

While the Liberals remain in consultations regarding the Trans-Pacific Partnership, all indications point to the Liberal government ratifying the massive trade agreement. Minister MacAulay told The Western Producer that it will likely be “something I support”, and that he thought the compensation package offered by the Conservative government for dairy, poultry and egg farmers “looks fair.”

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