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Amending Canada’s Agricultural Policy Framework to Support Growth and Innovation

November 24, 2016

by Jeff Shepherd, Mentor Works Ltd.

Ontario’s agri-food industry is an economic leader and continues to experience sustained growth. In 2015, farming and food processing employed approximately 1 in 9 Ontarians and contributed $36.4 billion in GDP to the province, representing nearly 6% of Ontario’s total GDP. In fact, food processing contributes 15% of the province’s total manufacturing GDP, the highest of any manufacturing sector, even over the automotive industry.

One of the biggest reasons for this success is government policy supporting the agricultural industry. Canada’s Agricultural Policy Framework (APF) outlines specific programs and services that are vital to the wellbeing of agricultural producers and processors. The policy is constantly being updated to reflect industry changes, and this helps food companies react to changing consumer preferences or market trends.

The current APF, well-known within the Canadian government funding realm for Growing Forward 2 programs such as AgriMarketing, AgriInnovation, and provincial variants such as Growing Forward 2 Ontario, was instated as a 5-year plan, spanning from April 2013 to March 2018. Now approaching the end of this period, the federal and provincial governments have begun planning their next framework. Among expected changes, the new framework will likely lend greater support for innovative R&D and productivity projects.

How Canada’s Current APF Has Led to Agri-Food Industry Success

Under the current Agricultural Policy Framework, Ontario’s agri-food industry has experienced growth, diversification, innovation, and has become more sustainable. Some of the reasons for this include:

Global Brand Awareness and Product Traceability

From farm to fork, Ontario agri-food producers and processors must abide by some of the most comprehensive standards and regulations, meant to uphold product quality and consumer safety. These processes have led to domestic and international trust for Ontario-made products. Especially in emerging markets, such as China, where food regulations are not as high, consumers are increasingly demanding high-quality imported products.

This creates an opportunity for Ontario-based companies to leverage the reputation and grow their business. From adding new production lines, to creating new facilities altogether, Ontario food processors are engaging in business expansion projects just to keep up with growing demand.

Profitable International Trade Relationships

Canadian food exports provide an extreme economic boost for the country. As the largest producer of exported foods, Ontario is a key reason for our national success. Of the $51.5 billion in Canadian food being exported each year, Ontario contributes nearly 25% or $12.5 billion. Furthermore, 75% of Ontario food exports head to the United States but is declining as result of greater demand from emerging markets, such as China and India, where new trade agreements are encouraging partnerships.

As international markets become increasingly available, Ontario’s agri-food industry will thrive. Investing in export markets, either by attending tradeshows or performing market research, will help businesses to better understand these markets and identify opportunities to export more.

Sustainable Use of Natural Resources

The Province of Ontario is an international leader for sustainable environmental regulations. This protection of our soil, natural resources, and environment as a whole makes Ontario’s agriculture industry more sustainable than most other sub-national jurisdictions around the world.

The Ontario Cap and Trade program will transform food manufacturing to become more competitive and sustainable. For many food processors, this is an opportunity to adopt energy efficient machinery and processes. Government grants for clean technology adoption are becoming increasingly available and present a way for manufacturers to significantly reduce investment costs.

Innovative Research and Development

In Ontario, there is a deep connection between the agri-food industry and academic research institutions. Ontario’s advanced education system enables businesses to perform innovative research and development projects in state-of-the-art facilities. Better still, food producers and processors can even access researchers from the institutions to solve challenges for them.

Ontario government grants support a variety of research and development projects, both internally and in collaboration with research institutions. Ontario’s agri-food industry is well-versed with many of these programs, which often result in greater yields, productivity improvements, and innovative product development.

Performing R&D projects at colleges and universities across Ontario also supports the development of a highly-skilled workforce. As student researchers become more knowledgeable about the industry, they can then apply this knowledge for companies post-graduation. The agriculture and agri-food sectors even have hiring grants specifically designed to help companies hire recent graduates.

4 Ways Canada’s Next APF Can Enhance Food Processor Competitiveness

While the current Agricultural Policy Framework (APF) has been generally effective, the next framework must provide greater support towards certain priorities. For Ontario’s agri-food industry to remain competitive beyond 2018, the next APF must address:

A Supportive Regulatory Environment

Until recently, the Government of Ontario didn’t publicly release data on the effectiveness of small business grants and loans. Although the government has presented data about three of its top programs, it must continue to collect and publish these metrics. In order to guide Ontario government grants to the most deserving businesses and projects, an open and transparent reporting process must be put into place.

Ontario’s Cap and Trade regulations should also be implemented in a way that promotes efficiency and sustainability, but not hinder business success. Programs like the CME SMART Green Fund will support these new regulations imposed on manufacturers, and will provide funding to offset clean productivity enhancements.

Furthermore, all levels of Canadian government must work together to strengthen our nation’s agri-food industry. Under the current Agricultural Policy Framework, federal-provincial-territorial (FPT) programs such as the Growing Forward 2 Ontario grant leverage funding form multiple levels of government and provide a greater funding pool for successful applicants.

Workforce Development

A highly skilled and productive workforce is critical to the success of Ontario’s agri-food industry. While employers must be willing to train their employees on innovative equipment and processes, the government must continue funding this activity.

There also needs to be greater collaboration between businesses and academia. Partnering with universities to perform research is necessary in order to train the next generation of skilled food industry workers. There must be greater focus throughout the entire educational system to showing young Ontarians about the career opportunities available to them in the agri-food industry.

Workforce training programs, such as the Canada-Ontario Job Grant (COJG) are quite effective in upskilling employees so they can provide greater productivity and value. Collaborative post-secondary research programs, such as NSERC Engage or Mitacs Accelerate, can also help businesses expose youth to valuable learning experiences while receiving project assistance.

Enhanced Infrastructure

To support the agri-food industry, the provincial government needs to develop an infrastructure plan for rural and northern Ontario. Southern Ontario dominates agriculture production and processing, however there is significant potential to develop and profit from the north. Inadequate infrastructure is currently limiting this expansion, and in order for the sector to reach its full potential, rural and northern Ontario must receive assistance.

Bringing back Ontario government funding programs like the Rural Economic Diversification (RED) grant would greatly help food producers and processors in the area. Also, increased funding for municipalities would help to accelerate natural gas and other ongoing energy projects. Some small business funding programs still offer funding for northern Ontario businesses, such as the programs administered through the Northern Ontario Heritage Fund Corporation (NOHFC).

Food and Beverage Innovation

Ontario’s food and beverage processing industry must adapt to changing consumer preferences. As demand grows for new, innovative food and beverage products, Ontario must play a leadership role to enable competitive research and development projects.

Small business grants must provide support for each stage of innovative product development, from early-stage R&D to commercialization. That’s why the continuation of government grants such as Industrial Research Assistance Program (IRAP) are so important. IRAP funding supports the development and implementation of innovative products and processes that lead to higher profits, and is often used by agri-food processors.

Ontario Agriculture and Agri-Food Businesses Must Invest in Competitiveness

If the Government of Canada implements some of these changes as part of its new APF, food processors in Ontario and across the country will have more opportunity to grow and succeed. Since the APF is also where government funding programs are developed, it’s hoped that the new framework will provide more grants and loans for agri-food businesses of all sizes.

Food processors need to invest in their products and facilities to become more competitive. While government funding programs can help supplement these investments, business owners and executives need to develop a mindset of continuous improvement.

If you’re curious about Canadian government grants and would like to learn if your business is eligible, please contact Mentor Works. Most funding is reserved for mature, incorporated businesses, although resources are available for early-stage and startup companies too.

Jeff Shepherd obtained his Honours Bachelor of Business Administration from the University of Guelph-Humber. He has combined his passion for marketing and economic development in his role of Marketing Analyst at Mentor Works. To read more of Jeff’s government funding content, viewMentor Works’ blog.

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