Farm groups see something for everyone in federal budget

Finance Minister Bill Morneau appears at a pre-budget event March 14 at the Toronto Kiwanis Boys + Girls Clubs. (

Response so far from farm and agribusiness organizations to Tuesday’s pre-election budget suggests the federal government has managed to find at least one line item for everyone in the ag sector.

Finance Minister Bill Morneau’s budget pledges compensation for supply-managed sectors facing financial hits from international trade pacts, funding for a new federal food policy and farmer-friendly changes to the small business deduction.

Quota value

“To ensure that Canada’s dairy, poultry, and egg farmers can continue to provide Canadians with high-quality products in a world of freer trade, we will make available an income protection program for supply-managed farmers,” Morneau said in his speech Tuesday.

Along with $250 million already provided in dairy farmer support following ratification of the Canada-European Union trade pact (CETA), the 2019 budget pledges another $2.15 billion in “coming years” for eligible supply-managed dairy, egg and poultry producers, “to deal with income losses” tied to CETA and the Trans-Pacific Partnership (CPTPP) trade pact.

The budget also includes “a measure to protect the value of quota investments these farmers have already made,” Morneau added.

Specifically, it calls for up to $1.5 billion for a “demand-driven” Quota Value Guarantee Program, meant to “protect against reduction in quota value when the quota is sold.”

It also pledges to work with supply-managed sectors to address those trade deals’ impacts on related processing sectors.

Dairy Farmers of Canada president Pierre Lampron, in a separate release, hailed the government for “recogniz(ing) the impact of trade agreements on our sector and… following through on its commitment to support our domestic dairy industry.”

Noting the budget focuses only on impacts from trade deals already ratified, DFC said it expects the combined impact from CETA, CPTPP and the renegotiated North American free trade pact (USMCA) will represent annual losses of 8.4 per cent of Canada’s milk production.

“We also welcome the government’s commitment to continue the dialogue on the future impact of (USMCA) on our sector,” Lampron said.

Policy reform

The budget commits the government to develop what it dubbed the Food Policy for Canada, pledging $134.4 million over five years starting in 2019-20 and $5.2 million ongoing.

That $134.4 million funding envelope includes:

  • $50 million for a local food infrastructure fund;
  • $25 million for a Buy Canadian promotional campaign;
  • $15 million for a northern isolated community initiatives fund, backing local food projects, skills training and community freezers and greenhouses, among other projects;
  • $20 million toward a Food Waste Reduction Challenge grant plan; and
  • $24.4 million to boost federal capacity for detection of and enforcement against food fraud.

The budget also allocates $100 million over five years from the federal Strategic Innovation Fund, starting in 2019–20, to go specifically toward innovation in food processing.

Groups including Grain Growers of Canada, the Canada Grains Council and the Canadian Produce Marketing Association praised the budget’s commitment to agricultural policy reviews, including reviews of the Canada Grain Act and the operations of the Canadian Grain Commission.

The review of the Grain Act and the grain commission was recently and quietly launched, the Manitoba Co-operator reported Monday.

GGC said it would work with Ottawa to “ensure that the consultations on reform lead to real changes that make it more competitive and more profitable to be a grain farmer in Canada.”

“We are hopeful that this will result in a regulatory framework that is supportive of plant breeding innovation and crop input products and that is agile, predictable and moves at the speed of commerce,” the Canada Grains Council said in a separate statement.

The budget also commits the government to a three-year immigration pilot program to draw “full-time, non-seasonal” workers for the agriculture and agri-food sectors, which “will include a pathway to permanent residency” for those workers.

Carbon price relief

GGC chair Jeff Nielsen also hailed the government’s pledge to exempt farm fuel bought at cardlocks from the federal carbon price.

Specifically, the budget calls attention to draft amendments seeking comments on “further refinements” to the federal carbon pollution pricing system, including “expanded relief” of the fuel charge for farmers on gasoline and diesel delivered at cardlock facilities.

“We wish the government had gone further and exempted all fuels used in grain farming from the carbon price, but this is another step in the right direction, and we look forward to continuing to work with the government to get further exemptions for the sector,” Nielsen said.

Other climate change-related funding includes up to $1 million for Western Economic Diversification Canada in 2019–20 to work up “a new strategy to sustainably manage water and land in the Prairies.”

Said strategy would be developed in concert with provincial governments and other public- and private-sector players and stakeholders.

“It would take stock of existing federal and provincial actions that address the impact of climate change on water and land resources, to help ensure greater resilience in Prairie communities for years to come.”

Small business support

The Canadian Federation of Independent Business on Tuesday hailed the budget’s proposal for relief for farmers from “arm’s length” rules which the CFIB said has limited their access to the small business deduction.

Currently, the government said Tuesday, “certain relief” goes to Canadian-controlled private corporations carrying on a farming business from the tax rules designed to prevent the multiplication of the small business deduction.

The budget proposes to extend that relief to sales of farming products to any “arm’s-length” corporation, applicable to taxation years beginning after March 21, 2016.

The budget also commits the government to “continue its outreach” to farmers, fishers and other business owners throughout 2019 to “develop new proposals to better accommodate intergenerational transfers of businesses while protecting the integrity and fairness of the tax system.”

The budget also proposes to eliminate the income threshold for small- and medium-sized businesses to access the Scientific Research and Experimental Development (SR+ED) tax incentive program.

The SR+ED program provides a 15 per cent tax credit for all businesses performing eligible research and development in Canada, but a 35 per cent credit for eligible small- and medium-sized businesses, up to set thresholds.

Cutting out the income threshold would “ensure continued enhanced support for small and medium-sized innovative businesses that are experiencing rapid growth in income or may have variable income from year to year,” the government said.

The capital threshold for the incentive will still apply, however, to “ensure that the enhanced rate remains targeted toward small- and medium-sized businesses.”

THC tax

The budget also notes new classes of cannabis products — edibles, extracts and topicals — will be permitted for legal sale in Canada later this year.

Most cannabis products, such as fresh and dried cannabis and seeds and seedlings, will see no changes to their current excise duty framework, the government said.

Effective May 1, however, edibles, topicals and extracts — including already-legalized cannabis oils — will see excise duties imposed based on the quantity of tetrahydrocannabinol (THC) the final product contains. THC is the psychoactive ingredient in cannabis.

That means certain “low-THC products” such as oils will “generally be subject to lower excise duties than before,” offering tax relief for cannabis products “typically used by individuals for medical purposes.” — Glacier FarmMedia Network

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