New programs for supply management sector

The Government of Canada has announced a series of new programs and initiatives for supply-managed producers and processors to support them throughout the implementation of the Trans-Pacific Partnership (TPP)

October 5, 2015 – The Government of Canada has announced a series of new programs and initiatives for supply-managed producers and processors to support them throughout the implementation of the Trans-Pacific Partnership (TPP) and the Canada-EU Trade Agreement. Under both agreements, the three pillars of the supply management system will remain protected.

The following programs will be implemented:

• The Income Guarantee Program will keep producers whole by providing 100 per cent income protection to producers for a full 10 years from the day TPP comes into force. Income support assistance will continue on a tapered basis for an additional five years, for a total of 15 years. $2.4 billion is available for this program.
• The Quota Value Guarantee Program will protect producers against reduction in quota value when the quota is sold following the implementation of TPP. $1.5 billion has been set aside for this demand-driven program, which will be in place for 10 years.

The Government also announced two additional programs:

• The $450 million-Processor Modernization Program will provide processors in the supply-managed value chain with support to further advance their competitiveness and growth.
• The Market Development Initiative will assist supply-managed groups in promoting and marketing their top-quality products. To support the initiative $15 million in new funding will be added to the AgriMarketing Program. 

In addition to the long-term $4.3-billion investment outlined above, the Government will intensify on-going anti-circumvention measures that will enhance border controls. These measures include requiring certification for spent fowl, preventing importers from circumventing import quotas by adding sauce packets to chicken products, and excluding supply-managed products from the Government of Canada’s Duties Relief Program.

Cheese compositional standards, introduced by the Government of Canada in 2008, have been maintained.  The Government remains committed to ensuring they are enforced, so the standards we have for Canadian cheese are fully maintained.

The Canadian Dairy Commission and the Farm Products Council of Canada will work with Agriculture and Agri-Food Canada to ensure the Income Guarantee and Quota Value Guarantee programs are delivered to producers in an effective and efficient manner.  The Government will continue to work closely with dairy, poultry and egg producers and the entire supply-managed sector to implement these initiatives.

These Cabinet-approved initiatives will support producers and processors throughout the implementation period of TPP and the Canada-EU Trade Agreement.

The TPP will secure new market access opportunities for Canadian dairy, poultry and egg exports. Dairy, poultry and egg producers and processors will benefit over time from increased duty-free access to the United States and all other TPP countries. This will include complete tariff elimination on some specialty cheeses, including several artisanal cheeses, entering the United States.

Despite significant and broad demands from several of our TPP negotiating partners, Canada has offered only limited new access for supply-managed products. This access, which will be granted through quotas phased in over five years, amounts to a small fraction of Canada’s current annual production: 3.25 per cent for dairy (with a significant majority of the additional milk and butter being directed to value-added processing), 2.3 per cent for eggs, 2.1 per cent for chicken, 2 per cent for turkey and 1.5 per cent for broiler hatching eggs.

Programs for Canada’s dairy, poultry and egg farmers
 
The Government of Canada is providing new programs for dairy, chicken, turkey, egg and hatching egg producers as the implementation of the Trans-Pacific Partnership (TPP) and the Canada-European Union Trade Agreement proceeds. The Trans-Pacific Partnership will secure new market access opportunities for Canadian dairy, poultry and egg exports. Dairy, poultry and egg producers and processors will benefit over time from increased duty-free access to the United States and all other TPP countries.

The Income Guarantee Program and the Quota Value Guarantee Program have been approved by Cabinet and will be available the day the TPP comes into force.
 
Income Guarantee Program

What will it cover?

The Income Guarantee Program will keep producers whole by providing 100 per cent income protection to producers for 10 years. Income support assistance will continue on a tapered basis for an additional five years, for a total of 15 years. $2.4 billion is available for this program. Annual payments will be directly linked to the amount of quota a producer holds.

The Income Guarantee Program transfers with the sale of the quota, meaning that if the quota is sold at any point in the 15-year period, the remaining direct payments linked to that quota will transfer to the new quota holder.

What are the estimated payments producers will receive?

The following examples provide an estimate of the total compensation the typical producer may receive over the 15-year period. These amounts will vary by individual producer, depending on their level of production:

• A typical dairy farm could expect to receive approximately $165,600
• A typical chicken farm could expect to receive approximately $84,100
• A typical turkey farm could expect to receive approximately $88,000
• A typical egg farm could expect to receive approximately $71,500
• A typical hatching egg farm could expect to receive approximately $191,700 

When will the program come into effect?

Annual payments will begin when TPP comes into force. There will be an application process designed to limit the administrative burden on producers which will be developed in consultation with the Canadian Dairy Commission and the Farm Products Council of Canada.

How are the income guarantee payments calculated?

The income guarantee payments will be calculated based on expected domestic production levels under conditions with TPP and the Canada-EU Trade Agreement in place.  A model will be used that takes into account detailed historic economic and farm level data, projected into the future.

Quota Value Guarantee Program

What will it cover?

The Quota Value Guarantee Program will protect producers against reduction in quota valuewhen the quota is sold following the implementation of TPP, and $1.5 billion has been set aside for this demand-driven program that will be in place for 10 years.

When will the program come into effect?

The Quota Value Guarantee will come into effect once TPP comes into force.

How will quota value be calculated?

Agriculture and Agri-Food Canada along with the Canadian Dairy Commission and the Farm Products Council of Canada will work with industry to develop the appropriate mechanism to operationalize the Quota Value Guarantee Program.

Programs for Canada’s dairy, poultry and egg processors and industry

The Processor Modernization Program and Market Development Initiative will be available for agri-food processors in the supply-managed sectors.  These programs have been approved by Cabinet and will be phased in starting fiscal year 2015/16.

Processor Modernization Program

The seven-year $450-million Processor Modernization Program will provide processors with support to increase competitiveness through capital investments and technical and management capacity.

Who is eligible?

• For-profit agri-food cooperatives and processors in the supply-managed sectors (dairy, poultry and egg), including small and medium-sized enterprises (SMEs)

What activities are eligible?

• Purchase and installation of new equipment
• Construction, renovation and expansion of facilities
• Hiring of required expertise to complete the project
• Development of new products/product lines
• Improvement of manufacturing processes
• Collaborative partnerships for research

What is the application process?

There will be a two-step application process:

• A letter of intent with screening form
• If eligible, a full application to follow

Assessment will be based on merit, feasibility and quality of business plan. Funding for activities will begin in advance of the implementation of TPP.

Market Development Initiative

The Market Development Initiative provides new funding over five years to the AgriMarketing Program to help the supply-managed sector to maintain, develop and expand their Canadian and international market share. The Initiative will add $15 million of new funding to the AgriMarketing Program.

Who is eligible?

• Not-for-profit organizations working on behalf of supply-managed producers and processors
• Small and medium-sized enterprises in the supply-managed sector

What activities are eligible?

• Additional promotional campaigns and activities that position and differentiate Canadian supply-managed products
• Marketing materials, events (e.g., attendance at trade shows) and research that supports the sale of Canadian supply-managed products

What is the application process?

• An initial round of applications will be solicited prior to the implementation of the TPP and the Canada-EU Trade Agreement.
• Applications will be reviewed and awarded on a competitive/merit basis
• Eligible activities will be cost-shared on a 50/50 basis with industry