Substitution

Agroecology (and aquaecology) Action Plan

Regulating plant varieties and fish and animal breeds

Transition advisory services

Mandatory purchasing requirements

Support for marketing groups, including co-ops

Production, processing, market and transport subsidies and regulations

Cross-compliance measures

Transition risk offset

Food, agriculture and aquaculture in carbon pricing and trading schemes

Tax Provisions

 

Agroecology (and aquaecology) Action Plan (adapted from Howe, 2017)

In the EU there have been organic action plans since the mid 90s, now totaling 27 national or regional schemes in effect since the mid-2000s.  Some evaluations conclude that having an action plan results in a better policy and program mix to support adoption.  The advantage of this approach is that it provides a way to integrate initiatives across a range of policy objectives and coordinate instrument selection and implementation and avoid contradictory undertakings. In particular, it helps with coordination of supply push and demand pull and lays out a framework for different actors - businesses, government, the organic sector - to collaborate (Sanders et al., 2011).

Building on this,  agroecology action plans are now emerging, that of France being one of the more elaborated.  French has long held a multifunctional view of agriculture, having participated in many programs under the Common Agricultural Policy including supports for organic transition.  Although these programs had produced some positive outcomes, the feeling was that environmental improvements had stalled and the current approach could not significantly improve soil carbon storage, a key part of the French efforts to reduce climate change.

In 2013, the French Ministry of Agriculture, Agrifood and Forestry (MAAF) launched ‘Produisons Autrement’ (producing differently), a wide-ranging plan to support a majority of farmers (200,000) to achieve high ecological performance that complement strong economic outcomes.  Produisons Autrement has been described as a “meta-instrument” which offers incentives and regulatory tools to empower farmers (Jolly, 2016, p. 87).

In June 2014, an official plan of action developed by a diverse steering committee was endorsed, structured around 10 themes and 10 specific action plans.  Annual reports since 2014 have tracked the goals, processes, and indicators.

The 10 themes that guide the project and organize the annual reports:

  1. Mobilizing the actors
  2. Communicating and raising awareness about the project
  3. Teaching to produce differently
  4. Accompanying the producers
  5. Supporting agroecological goals
  6. Supporting research and innovation
  7. Engaging the sectors
  8. Considering the realities of overseas territories
  9. Promoting agroecology internationally
  10. Monitoring and evaluating the project

10 specific action plans have their own goals, governance groups, funding, and indicators.

  1. Organic Ambition: 20% share of public procurement market, 10% of land in organic production by 2021
  2. Ecoantibiotics: reducing livestock antibiotic use by 25% over 5 years and other measures to fight antibiotic resistance
  3. Ecophyto II: halving pesticide use by 2025, engaging 30,000 operations in reduction plans
  4. Methane for Energy and Nitrogen Self-reliance: using methane for energy, supporting better nitrogen management and reducing need for it
  5. Vegetable Protein: producing more vegetable proteins domestically
  6. Sustainable Seeds: breeding seeds for better environmental and economic performance
  7. Agroforestry: supporting more research, policy, business planning, training and funds
  8. Development of Sustainable Beekeeping: research, hygiene, training, organization of producers
  9. Teaching to Produce Differently: updating diplomas/curriculum, training ministry staff, supporting regional governance, mobilizing farm operators and workshops (added in 2014)
  10. Animal Wellbeing: includes 20 priority actions for better animal and operation health

Following the French example, A Canadian plan could integrate a number of key strategies, e.g.:

  • Pesticide reduction strategy (see Goal 4)
  • Pollinator strategy and sustainable beekeeping (see Goal 5)
  • Antibiotic reduction strategy (see Goal 4)
  • Rural employment (see Goal 8)
  • Ecological aquaculture (see below)
  • Encouraging sustainable diets (see Goal 2, Demand-supply coordination)

Costa-Pierce (2010) sets out the core principles of an Aquaecology action plan, rooted in the long human history of ecological fish farming:

  1. Developed in the context of ecosystem functions and services (including biodiversity) with no degradation of these beyond their resilience capacity.
  2. Improves human well-being and equity for all relevant stakeholders.
  3. Uses systems thinking,  ecological modeling, and ecological economics methods in its design, operations, and communications.
  4. Is scaled to avoid the problems of current industrial approaches to aquaculture, reflecting the learnings of ecological scale in other food production systems
  5. Focuses on energy efficient design and feed conversion.
  6. Has integrated planning dimensions from farm to landscape level and links to the capture fishery and agriculture

Dimensions of such plans exist in different parts of the world, but nothing like this has been developed for Canada.  See Goal 2, Landscape level planning for more on the governance mechanisms required.

Regulating plant varieties and fish and animal breeds

The choice of variety can have a significant impact on resource inefficiency. Perhaps the most emblematic example is the Russet Burbank potato, long used in french fries by the fast food industry. It is a long season variety and historically very demanding of moisture and nutrients, resulting often in significant irrigation, pesticide and fertilizer use. Only about 50% of the potato is used during French fry production due to the standards of the industry and there can also be significant field culling. All these realities have encouraged the fast food industry to explore other varietal options (Escober, 2010). Under the Ontario Farm Products Sales and Grades Act and the Potato Regulations under the Farm Products Marketing Act, it would appear that the authority exists to determine what varieties can be processed and under what conditions . A set of varietal regulations should be developed that favour those with lower resource requirements and waste factors.

The Farm Products Marketing Act would also appear to provide measures that forbid other contract provisions that contribute to resource inefficiencies. The purpose of the Act provides “.... for the control and regulation in any or all aspects of the producing and marketing within Ontario of farm products including the prohibition of such producing or marketing in whole or in part” . With suitable supporting regulations, the Commission created by the Act could govern contracts so as to improve efficiencies. Some marketing boards, governed by the legislation, have already failed to take advantage of such opportunities. The Ontario Processing Vegetables Marketing Board has had opportunities to integrate IPM standards into their contracts and has failed to do so.

Another pertinent existing example is control of clubroot, mostly in canola production (Arnason, 2019).  Because many producers are using susceptible varieties and short canola rotations (1 year in 3 or 4 is recommended but often not followed), clubroot is on the rise and there are no chemical controls available.  Prevention is the key.  Consequently, in Alberta, under the Agricultural Pests Act, municipalities can place mandatory restrictions on canola growing in areas where clubroot has been found.  Some counties are using this authority to develop prevention plans with growers (e.g., Smoky Lake County). Saskatchewan counties have undertaken similar initiatives. We know that poor varietal selection and weak rotations are a major factor in many pest problems, so this creates the opportunity to expand the range of pests covered under such legislation to provide wider authority for intervention by governments.

Similar to plants, many fish and animal breeds are also resource inefficient, having very high growth rates, but often requiring high levels of inputs and feed that competes with human consumption (Smil, 2001).  Costa-Pierce (2010) compares the feed conversion efficiency and system energy efficiencies of common terrestrial and aquaculture systems and finds significant variability.  Many low input farmers and aquaculture producers have already shifted breeds and feeding regimes to reduce resource requirements, in many cases also eliminating or modifying animal housing and fish caging to reduce energy required.

To advance this shift requires alternations to the Animal Pedigree Act.  The Act is about breed improvement, but the definition of breed improvement has been rooted in the industrial model of agricultural production. For aquaculture, the federal National Code on Introductions and Transfers of Aquatic Organisms could be used to regulate types of fish permitted.  Due to divided jurisdiction, the provincial aquaculture leasing and licensing system could also be an instrument to encourage more metabolically efficient fish. A key consideration is which fish species might do well in ecological systems using plant and insect protein sources.  Could insect larvae be reared primarily on waste bioproducts and be sufficiently nourishing to provide a significant part of aquaculture diets? (Weidner et al., 2019).

Obviously, this involves complex changes to the entire farming and aquaculture operation with a transition period to implement the changes, but it would appear that the authority exists to make such transitions mandatory.  Such changes also have dietary implications, since unfortunately, many of the most popular animals, fish and breeds are the least metabolically and energy efficient (see Sustainable Diets, Goal 2, Demand-Supply Coordination).  The more efficient, catfish and rabbits for example, are only favoured in certain regions of North America and amongst a limited number of ethno-racial groups.  The ecological conditions of their rearing must also be taken into account as they often differ from the dominant breeds and varieties.

Transition advisory services

Formal advisory services, financed by the state, are a reasonably recent development, with funding generally beginning in the 90s although some private institutes offered services earlier. Several states in Europe and the US federal government have funded such services. The importance of advisory services is generally underreported in the literature (Lamine and Bellon, 2009a), but it appears that they can provide critical information and support during key moments in the decision to go organic and the implementation of the conversion process.  Their success, however, is particularly dependent on the quality of the conversion advisors and the degree to which services are provided at low or no cost to farmers.

In Europe, farm advisory services have operated in a more than a dozen nations and typically offer combinations of the following programs:

  •  telephone helplines
  •  information packages
  •  farm advisory visits
  •  courses
  • handbooks and manuals
  • farmer mentoring programs

The service in Wales was reasonably typical when created.  It was first funded by the Welsh government from 1996 and operated by the NGO The Soil Association and the Organic Centre Wales, University of Abersytwyth.  It offered three main services: a telephone help line, a conversion information package, farm visits (2 free ones, the first providing an overview of conversion, the second dealing specifically with the circumstances of the farm), carried out by staff of both non-profit and governmental agencies.  Farmers wishing more support for conversion paid directly for additional services. Through revisions to the Rural Development regulation, the EC helped defray advisory service costs for eligible farmers (CEC, 2002).

An evaluation of the Organic Conversion Information Service (OCIS), Wales (1996-2001) (Organic Centre Wales, 2001) revealed that most participants had limited to fair knowledge about organic farming when they contacted the service, and that most farmers followed through from initial telephone call to preliminary visit, to second visit.  There was generally high farmer satisfaction with the service.  Of the 2480 farmers who had called the service in a 5-year period, 56% had the first visit, 30% the second, and 11% had gone on to convert. 61% of farmers surveyed had decided to convert.  Of those, 56% said the service was very or fairly instrumental in their decision.  Those who decided not convert to organic agriculture cited larger issues around the stability of organic markets and costs as barriers.

A review of the English OCIS in 1997 drew similar conclusions except that the emphasis on marketing information did not emerge.  The UK evaluation suggested that information alone is insufficient to advance the transition, finding no connection between information and willingness to convert (Centre for Rural Economics Research, 2002).  However, providing information in the context of a free organic conversion information service appears to shift the equation.  The study found that such a service launched in the UK was an important source of pre-conversion information. Daughberg et al. (2011), however, did not find in their study that the conversion advisory services had a significant impact on the number of farmers and acres in organic. Some French studies contradict the UK results.  In one analysis, 50% of producers reported that information deficiency was a significant obstacle (Sautereau, 2009). Conventional producers will often be more comfortable getting advice through conventional channels with which they are familiar, speaking to the need to integrate organic advice into regular services (Sautereau, 2009).

A 1953-1996 duration analysis (Burton et al., 2003) in the UK revealed that, for organic adoptions in the horticultural sector : (i) the enhanced environment associated with (ii) the creation of a formal conversion advisory service, combined with (iii) strong environmental concerns and (iv) links with other farmer groups, created a higher likelihood of adoption.  Interestingly, despite the economic nature of this analysis, the authors found that non-economic forces appeared to be more powerful for the adoption process than economic ones. Age and education, farm size and non-farm income did not appear in the earlier, less supported periods, to be significant. But gender was important, with females more likely to adopt than males. Burton et al (2003:48) note that “[i]t may be that the longer the producer continues as a non-organic farmer, the greater are the costs associated with conversion to an organic system.”

Transition advisory services have been offered by NGOs in Canada,sometimes with government grants,  but no state led ones exist in Canada.  Almost all provincial departments of agriculture have staff people responsible for the organic portfolio, but most do not provide transition advisory services.  Quebec does have a program that reimburses organic producers, including those in transition, for 85% of the costs of hiring advisors.  Though not specifically identified as such, this program could be used for transition advisory support.  Presumably, this program should also now be available to aquaculture producers, since aquaculture can now fall under the organic standards.

Advisory services are also important for processors and other supply chain actors although they face  a different set of transition challenges. Unfortunately, some of the existing approaches, such as the Strategic Innovation Fund that according to the 2019 federal budget will re-allocate $100 million of its fund to food processing, are not suited to this function.

Compared to farmers, other supply chain actors typically have more resources to hire consultants to advise on transition.  The key challenges are converting from conventional to ecological supply chains, shifting processing techniques and processes, and rebranding, which includes certifications in ecological processes.

Mandatory purchasing requirements

In many countries, demand pull has been important, with retailer interest in organic products a significant confidence boost for converting farmers  (Sanders et al., 2011). Governments do not directly influence retailer procurement policies, but can contribute to market pull by mandating sustainable purchases in facilitates operating on government funding. The broad elements of a new approach are outlined under Goal 1, Economic Development.  This section deals specifically with sustainable food targets.

The limited number of certification schemes for sustainable food is one dimension of the barrier to sustainable procurement, since institutional procurement officials need assurances of the veracity of claims.  Another is the limited supply of processed sustainable food and the degree to which many institutional kitchens rely on processed items rather than cooking from scratch, part of a labour saving strategy that effectively means the kitchen is deskilled (Reynolds and Hunter, 2019).

Although there are numerous examples in the industrial world of individual institutions setting 100% sustainable food targets (e.g., colleges, hospitals, parliamentary dining rooms), for system-wide targets at the efficiency and substitution stages, 10-20% targets are more realistic. The presumption here is that sustainable food targets are sub-targets of related procurement targets such as locality, nutritional quality, animal welfare, fair trade (see Goal 1, Economic Development). This is because the state of sustainable supply chains has a major impact on the likelihood of targets being achieved.  Failing to set realistic targets has frequently resulted in the demise or weakening of sustainable or local procurement, Toronto's local food procurement policy being a prominent example.

A realistic target also better lends itself to a mandatory approach.  Voluntary targets are untenable because it is too easy for procurement officials to proclaim insufficient supply, excessive price, or inadequate quality as reasons to subvert the target.  Such realities exist, but a mandatory approach requires creativity, for example, menu changes, food waste reduction, better inventory control, co-operative purchasing, long term contracts with suppliers that help them build supply capacity and invest in quality improvements.  Acting on these issues is time and energy consuming and given other pressures, they will be avoided if there is an opt out.

Explore under Goal 1 Canadian content rules for private sector.  Explore Emergencies Act and CRTC and connect here to sustainable procurement.

Support for marketing groups, including coops

In the EU, funding is available to support establishment of producer groups that work collaboratively on development and marketing of new products. These funds have been particularly important in regions with an underdeveloped sustainable supply chain. There are also grants for the development of cooperative supply chains.  "Contributions are given to administrative costs, including the facilities arrangement, registration, drawing up of common rules on production, purchase of information technology and other equipment, and salary for one full time employee as well as the costs of purchasing the primary equipment necessary for joint marketing of producer groups. The maximum aid rate is up to 5% of the marketable production. No differentiation is made between organic and non‐organic producer groups." (Sanders et al., 2011).

Federal funding programs to which food and agricultural collaborations and  co-operatives can apply (e.g., AgriInnovate) typically are very product-focused (and often scaling up and export-driven) without much support for collaborative and co-operative structures and processes. Many are also financed on a reimbursement or repayable loan basis which puts cash flow pressure on new and small organizations and enterprises.  Although there are operating loan programs that food co-ops can theoretically access (Farm Credit Canada, Canadian Agricultural Loans Act (CALA)), capitalization (especially seed capital and micro-capital for starts up and small enterprises respectively) remains the key financial challenge for most collaborations in Canada because existing programs are not generally well suited to collaborations. Most co-op structures do not permit traditional venture capital.  Traditional lenders, potential institutional members, and many government programs view co-ops as more risky, often because they do not understand co-operative processes and structures (House of Commons, Report of the Special Committee on Co-operatives, 2012).   For years, as a result of these difficulties, the co-operative sector has lobbied governments to set up revolving loan funds specifically for co-ops, without any significant success.  Other collaborations that use more conventional business models are not considered as risky, but much depends on how investors and lenders view their management structure and prospects.

So, Canadian programming must be modified to be more in line with what's happened in Europe as described in the opening paragraph.  Since program designers are generally reluctant to design for specific target groups (the approach being that everyone can benefit from the programs), the best approach is likely to create sub-program streams within existing programs that support collaborations and SMEs, including the FCC, the CALA programs and Canadian Agricultural Partnership programs.

Production, processing, market and transport subsidies and regulations

The 2019 federal budget announced more support for food processors through the Strategic Innovation Fund, but this fund is poorly structured to address many of the core problems in the sustainable food processing chain.  The fund focuses primarily on R&D and technology innovation.  Although there are always needs in this regard in the sustainable food sector, the more pressing problems relate to scale, capital investment in SMEs, sustainable transport and logistics, and product mix and availability.  These kinds of problems require more than technological solutions. Although some argue that investors and market conditions can drive solutions to these problems, many investors, in particular institutional ones, are mostly drawn to larger  conventional food firms with what they consider lower risk profiles (Rohan, n.d.). The resource efficiency challenges of the modern food system are of a different type, but the degree of inefficiency has grossly increased compared to that period, warranting some extraordinary interventions. Policy, program and regulatory solutions to these problems are found in many other sections, but here the focus is on widening the supply of key processed goods.

During WWII, extensive tools were used to  shift production and distribution to assure sufficient supplies of key goods, and in different regions of the country (see Goal 2, Demand Supply Coordination, Lessons from WWII).  Payments, price ceilings and floors, and regulations were used to assure availability of specified goods at relatively low resource expenditures.  Using the organic market as an indicator since there is more data collected on it than other sustainable foods, the processed food market is expanding but mostly in mature markets of Ontario, Quebec and BC and processors report  challenges "sourcing ingredients, the costs of ingredients, technical sourcing expertise, and sourcing ingredients near manufacturing facilities" (Fresh Plaza, n.d.).  Many secondary and tertiary processed foods are in relatively limited supply or priced quite highly.  Small producers have trouble finding regional processing facilities nearby, particular for meat slaughtering, frozen fruit manufacturing and processing for food service markets, particularly grab and go.  Conventional farmers considering a transition are hindered by the equipment and facility changes required, particularly in areas such as hog production

So, at this stage of the transition a more targeted approach is required, similar to developments in Europe.  For example, producer supports under their Regional Development Program (RDP) help to modernize barns, equipment and other aspects of the transitioning farm, especially when new barns are required to address animal welfare considerations.  There are also agri-environmental subsidies for producers following high standard welfare schemes and since most organic producers exceed requirements, they are typically eligible for these (Sanders et al., 2011). Such types of interventions have been common to the Agricultural Policy Framework programming, so this involves more a different focus for supports rather than a different process.

Grants to construct SME processing facilities in under-served areas are required.  This is addressed under Goal 1 Economic Development.

Price setting is addressed under Goal 2, Supply-Demand Coordination, Redesign, Price Setting.  However, at the substitution stage, targeted processor price supports will be required for certain sustainable processed foods  for which the market is immature and prices very high.  This would permit processors to buy from suppliers, manufacturer and not pass on the full costs to food service providers, retailers and ultimately consumers.  Sustainable spices, condiments, some meats and some tertiary processed goods would likely fall into this category.

Cross compliance measures

“Cross-compliance refers to producers satisfying minimum environmental management requirements in  order to maintain eligibility for government support” (Schmidt et al., 2012:2). The federal government does not formally use cross-compliance measures, although measures with Environmental Farm Plans have been imposed in some provinces (Atari et al., 2009) and producers with an EFP appear to be more likely to be funded in some federal grant programs.  Quebec has been using them since 2004 outside of the EFP process, but in only a limited fashion related to phosphorus management.  Advocacy to widen the scope of application to other environmental problems has not been successful (Mundler and Ruiz, 2015).
Europe has applied cross-compliance measures since 2005 and applies them widely to agri-environmental and some socio-economic programming.  Based on their successes, the federal government should require all producers and processors to be in transition to a recognized and verifiable sustainable system or already converted before receiving funding for other measures.  These provisions can be built into funding requirements regarding eligibility.

Transition risk offset and environmental service payments

Direct payments to producers for transition to environmental practices have been criticized in the past because they are difficult to target to those who will generate significant environmental improvements from their funded actions.  Evaluations of programs in the US and Europe have found that some are both too expensive and only really taken up in less intensive agricultural production areas where the environmental problems are not as acute (Dobbs and Pretty, 2001; Batie, 2002).  Other complicating factors include:

(1) that many farmers and other actors may be contributing to the problem;

(2) that since much of the pollution is non-point source, it is difficult to observe and measure impacts and their sources;

(3) the wide variability in farm types and their economic and ecological conditions;

(4) the unpredictability of negative natural events;

(5) the need for many farms to improve their environmental management to achieve improvements (Batie, 2002).

All these complications can mean considerable costs for government administering the program.

If only one environmental target is sought, then it is more efficient to design a program specific to that.  But since many of the most significant environmental problems in agriculture are not related to a specific farming activity, then combinations of changes, or system alterations, are usually required.  If multiple environmental improvements are sought, then targeting farms participating in multidimensional environmental enhancements is a much more efficient allocation of policy and program resources then designing programs around each specific environmental target (Batie, 2002; Dabbert, 2003). Organic farming generates multidimensional environmental improvements and direct payments for organic farming mitigate some of these programme design problems.  There is some empirical evidence available to support this from Germany (Sanders et al., 2011), but evaluations must assign costs and benefits according to the multiple environmental benefits that result from organic farming, an admittedly difficult task.  One study (Jacobsen. 2003) assigned all the costs of organic farming support to one environmental target, suggesting that organic farming support schemes are therefore inefficient.  A more appropriate approach would be to examine the main benefits that result from organic farming, for which there is significant scientific support and then determine programme effectiveness and then to contrast it with programs that support very specific measures, as was done in Germany (Sanders et al., 2011).

European states have been supporting farmers through adoption of sustainable practices (e.g., pesticide and fertilizer reduction, biodiversity enhancement, sensitive areas protection, organic, animal welfare) by providing payments, usually on a per area or per animal basis, through the transition period. The rapid increases in organic acreage experienced in Europe owe much to the existence of multidimensional organic aid schemes, of which payments for environmental improvements have been the most significant component  (OECD, 2003; Sanders et al., 2011).  Over 80% of organic growth in Europe occurred reasonably quickly after implementation of definitional and control measures and support schemes (Stockdate et al., 2001).  According to Lohr (2001), “The ability of EU farmers to rely on direct payments for conversion to and continuation of organic enables greater risk-taking in enterprise mixes, including high-value, high-risk crops, faster adoption of practices that require land-use adjustments that improve yields, and broader extensification of organic acreage that increases total output.”  Comparing the US and Europe, she found that while dramatic growth rates were the result of the introduction of direct payments in the EU, during the same period, the number of organic farmers and acres actually declined slightly in the US where governments have relied primarily on market mechanisms and some grants.  A multiplication of organic support packages through the 2000s across multiple program platforms (rural development, agrienvironmental programs and competitiveness) has increased organic acreage even more rapidly in many countries (Sanders et al., 2011).  Many of these measures are not specifically designed for organic farmers, but these farmers are able to take significant advantage of them, as presumably would be able farmers following many other sustainability approaches.

A significant challenge has often been finding the right level of support.  A comparative assessment of direct subsidies in Canada and New Zealand (Bradshaw, 1995) indicated that the appropriate level of government support is not so high as to encourage unsustainable financial dependency, yet sufficient to compensate for the market’s inability to reward farmers for being good environmental stewards. Similarly, the European Commission has tried to find levels that do not substitute for the market’s contribution to income generation, but also recognize the broad societal benefits that result from farmer’s delivery of environmental services - benefits that can not necessarily be recouped from the market place.  When farmers are learning through the transition process, the benefits go beyond their own finances.  It is for this reason that governments began to support the transition in the late 1980s (Lampkin, 1996).  The intention, consequently, was to have the payment schemes be neutral - they would replace revenue foregone because of the adoption of environmental measures.  The EC believed that small incentives beyond this should only be paid to increase uptake to reach a stated environmental objective (European Commission, 1999). Lampkin (1996) concluded that the payment levels should take account of the costs of environmental improvements farmers are expected to meet, the resulting environmental benefits, the costs of conversion and the potential for savings in public expenditures.

In earlier programme periods, levels of payment in the EU were not sufficient to encourage arable, horticulture, pig and poultry producers.  The most common conversions in most countries were low to medium intensity dairying (Lampkin, 1996) and later in some countries grasslands in more hilly regions (Sanders et al., 2011).  This suggested that those systems reliant on pesticides were insufficiently encouraged to reduce the application of pesticides.  In the late 1990s, Austria (335 ECU/ha/yr for cereals) and Finland (365 ECU/ha/yr for cereals), with the highest payment rates also had the highest uptake, whereas the low rates in the UK (82 ECU/ha for all organic crops) proved to be less attractive (Lampkin, 1996).  Certainly, enhanced uptake in the UK was associated with programme and payment improvements in the early 2000s. The responses of farmers to both schemes, associated with programme changes, clearly exceeded projections, and funding was exhausted within six months (rather than 2 years as originally projected).  When the programme was altered and reopened, the take-up rates presented the largest wave of conversion to organic farming methods in the UK to that point, increasing the organic area 12-fold from 1997 (Centre for Rural Economics Research,, 2002).   On so-called improved land, a tripling of per hectare payments in the first year (to 225 £/ ha) and a near doubling in total payments over 5 years (to 450 £) accounted for the rapid increases (Centre for Rural Economics Research, 2002:Table 1.1).  On average, payments ranged from 190 ECU/ha/yr for cereals, 210 ECU for grassland, 280 for vegetables and 540 for fruit trees.  Conversion rates in livestock operations were particularly sensitive to available payments.  Rates have since been altered again (see Table 2 in Stolze and Lampkin [2009] for 2004/05 and Sanders et al., 2011 for up to 2011).  Depending on the region, grassland and arable payments in 2011 covered from 25-100% of additional costs associated with conversion (Sanders et al., 2011).

MacRae et al. (2009) in an examination of programme and policy incentives to encourage organic adoption to 10% of conventional production in Ontario set payment levels at 10% of foregone gross revenue.  This level was chosen to be slightly lower than Europe, where such payments have typically ranged from 15 - 20% of foregone revenue.  Using a different indicator, Offerman et al. (2009) found that EU payments in the mid 2000s amounted to 3-17% of gross output, for both existing and converting organic farmers. Zander et al. (2008) concluded that in Western Europe, payments amounted on average to 4-6% of gross output and 10-30% of farm family income plus wages.  This is less than other non-organic payments.  Payments per certified organic hectare, in 2008/2009, varied from €7 (UK except England) to €314 (Cyprus).  In the EU27, the average was €163 (Sanders et al., 2011).  Organic farmers, because of other environmental improvements associated with adoption, are also  eligible for complementary agrienvironmental payments, the amount and eligbility rules varying by region (Sanders et al., 2011).

Daughberg et al. (2011) found that the UK Organic Farming Scheme annual payments had some positive impacts on organic farms and acres after conversion, while some of the Danish permanent and conversion subsidy schemes were drivers of conversion. Based on Swedish data, and comparing a situation with no direct payments to provision of direct payments for conversion, direct payments were estimated to induce a 27% increase in farmers undertaking a conversion (Lohr and Solomonsson, 2000). Arfini and Donati (2013), using positive mathematical programming and cluster analysis with Italian data, found that subsidy payments of 150 Euros / ha for organic cereals were more effective than price premiums at increasing adoption. However, the stimulation of adoption was very dependent on farm and spatial characteristics, with the most significant uptake amongst small to medium farms in regions where organic production is already at a higher level. Offerman et al. (2009) found that at least 56% of Western European farmers felt that organic farming payments were important or very important to the decision to adopt and 76% of Eastern European farmers felt similarly. The Centre for Rural Economics Research (2002), assessing the lower rates of payments in the UK at that time, found that,  ”66% of non-organic farmers said they would consider switching if the OFS grants were increased. Our findings suggest that an aid package that offered roughly twice what is currently available would attract 7.8% of conventionally managed land area over to organic production, bringing the total up to just over 11%.”In their analysis, 34% of conventional producers would not convert whatever the level at which financial incentives were set.   The Centre for Rural Economics Research data suggest that a further 10% of conventional farmers would convert with rate increases of from 60-120%, but that a significant jump to over 20% would require a 150% payment increase. And they found that “...   An aid package offering roughly twice the amount currently available (90% more) would attract 7.8% of the conventionally managed land area over to organic production, bringing the total up to just over 11%. Austria has an aid package similar to this and has roughly 8% of its agricultural land area under organic management.” (Centre for Rural Economics Research, 2002).  In some regions, the relative difference between organic and non-organic payments has encouraged conversions (Sanders et al., 2011).

The Centre for Rural Economics Research (2002) study also drew some other conclusions to inform the construction of a program:

  • A quarter to a third of farms would have converted without the presence of the scheme, across the main enterprise types. Danish analysis drew similar conclusions (Sanders et al., 2011).
  • Reversion to conventional production also had to be considered. They estimated “that for every 100 farmers who enter the Scheme, 79 will retain organic management after 5 years, but only 53 of these can be attributed to the operation of the Scheme, since 26 would have converted anyway. In other words, 79% of the initial benefits of conversion continue to be delivered after 5 years, but only 53% can be attributed to the Scheme.”  In their review, Sahm et al. (2013) identified a range of reasons for reversion, but economic factors were typically a main consideration.
  • There is an augmented impact the more farms convert in an area: declining unit marketing costs; improved information dissemination; positive network effects; positive learning effects.

Certainly higher payments contribute to more rapid uptake, but many complications related to how schemes were administered, eligibility rules, acceptable practices, and changes in access to other non-organic schemes associated with participation in organic schemes.  In many cases, the loss of access to other schemes had significant negative impacts on organic uptake (Lampkin 2003). Kuminoff and Wossink (2010) found that conventional US soybean farmers would need to receive per acre payments over 10 years that exceeded the market price for soybeans (ie., a > 100% payment relative to gross income/acre) to compensate for risks associated with policy and program uncertainties. These kinds of complications, however, do not exist in Canada at present, given that conventional programme payments are far less robust than in Europe and the US.  However, interest in financial supports appears to be high, as a survey of Ontario sub-watersheds, including the one modeled in this project (Filson et al. 2009), found that 90% of farmers were interested in receiving payments for ecological services.

Many jurisdictions also provide maintenance payments, usually for the production systems with the highest conversion payments  (Sanders et al., 2011).

A 2000-2011 analysis of uptake of organic farming found that payments in combination with advisory support, market development, the presence of an enthusiastic farm organization and farmer attitudes were all elements of increased national adoption rates.  In the countries studied, the analysts largely found that changes in area in organic production correlated with increases and decreases in area payment levels, though the results suggested that other factors also had an impact,  With maturity of the organic sector, however, it appears that payment levels become somewhat less significant relative to other factors,  In other words, payments are particularly important in the early stages of building up an organic sector, though they remain important through the organic adoption lifecyle (Sanders et al., 2011).  Payments for other sustainable practices are also significant (in many jurisdictions the same as organic payments) but the relationship between payment levels and uptake is less well studied.

A few Canadian provinces offer transition programs for organic production on which more robust programming can be designed.  The most robust program is in Quebec, where farms producing field crops, fruits and vegetables, maple syrup and honey in conversion can receive up to $10,000 and those already certified and expanding operations can also receive up to $10,000 for a $20,000 maximum contribution. Organic livestock operations that require modification to infrastructure to meet organic standards are also eligible for up to $20,000 on a 50% reimbursement basis.  Farms can take advantage of both programs up to a maximum of $40,000 in support.

PEI also provides transition payments through its Organic Industry Development Program.  Producers in the first year of transition are eligible for per acre conversion payments, variable rates based on the crop, up to $10,000 / year.

Food, agriculture and aquaculture in carbon pricing and trading schemes

Because of their perceived efficiency, economists typically prefer market - based instruments - pricing and cap and trade - to reduce GHG emissions.  Some 61 jurisdictions across the world have carbon pricing schemes in operation or development (as of late 2017) (World Bank Group, Ecofys, and Vivid Economics, 2017) .  Some of these also involve carbon trading, others are structured more as taxes or regulatory charges. In addition to public schemes, there are also private arrangements, many of them originally established in anticipation of government intervention. Canada is one of the jurisdictions with a scheme under the Greenhouse Gas Pollution Pricing Act, and some of the provinces are in the process of developing schemes to comply with federal requirements.  Others are fighting the federal government in the courts in a dispute over jurisdiction and attempting to avoid implementing such measures. However, most jurisdictions (including Canada) have failed to fully incorporate the food  system into their schemes, in some cases actually exempting the sector from them.  Although understandable given the often poor state of farm and fishery finances, and the inability of farmers and aquaculture producers to pass on additional costs due to their weak economic position in corporately concentrated supply chains, this is unfortunate, since the food system is such a significant contributor to GHG emissions.  The premise here is that as other measures (many locations on this site) are put in place to support farm finances and increase producer economic power  in the transition to sustainability,  including the food  sector in carbon pricing and trading becomes more viable.

Typically, this failure to integrate food  into schemes is because:

  • Most food system emissions are very diffused (and often fugitive), the exception being certain input and food manufacturers.  Many of the carbon pricing and trading schemes are focused on big emitters and individual food firms are not typically large enough to fall in this category.  The food system is dominated by non-point source emissions and regulators have a weak track record of curtailing emissions of this kind.  Some industries that contribute to inputs are included in schemes (e.g., natural gas producers, electricity producers) but only a relatively small percentage of their emissions can typically be assigned to the food system, although that level is often very significant for determining food system behaviour (e.g, natural gas is the main feedstock for synthetic nitrogen fertilizer and the availability and price of such fertilizers have a major impact on the way the food system behaves).
  • As discussed across this site, Canada's agri-environmental data collection is poor, making it hard to set baselines and monitor improvements. Many food system actors have little information on their emissions and no incentives to collect it or the costs for individual operators are very high.  Equally problematic, food system emissions are often assigned to other sectors so the food system contribution is partly hidden.
  • Although agricultural soils can be a significant carbon sink, there is important debate about what constitutes  permanent carbon storage and the agricultural practices that contribute to it.  This makes the use of agricultural soils for cap and trade a dodgy proposition.  A suite of conventional practices, including reduced and zero tillage, may or may not be significant contributors to storage depending on the conditions, but it is fairly well established in the literature that organic farming creates permanent soil carbon pools (Lynch et al., 2011).
  • Even if there was a consensus on what practices contribute to long term carbon storage, the price for carbon  is often too low to make it a viable investment for farmers. In many schemes, farmer investment in soil carbon storage only yields a few dollars / ha in returns from trading.

Certain food industry actors are named in the federal scheme regulations as covered facilities, including fertilizer manufacturers, grain ethanol producers for industrial applications, potato and oilseed processing plants, animal vaccine manufacturers, corn wet milling operations and sugar refiners. It appears that AAFC has calculated the costs of carbon pricing for conventional farmers, but has not really considered how to make them part of the carbon solution. (See Western Producer).  A study conducted for the Canadian beef sector (Schaufele, 2017) on the private costs for beef producers (as opposed to the social costs) concluded that the carbon pricing scheme under a range of scenarios would shrink the beef sector and reduce beef consumption to varying degrees depending on the scenario.  Although for the purposes of the conventional beef sector that is undesirable, it is warranted to achieve sustainability and health objectives (positive for social costs). 

The federal scheme, a default backstop for provinces that do not put in place an equivalent approach, focuses on non-renewable fuel taxation.  With BC and Alberta, the federal scheme exempts on-farm fuel.  Direct emissions from livestock are not included in the scheme and as of late 2017 no countries in the world did so (Schaufele, 2017).  Most food system firms are not part of existing cap and trade schemes, either as emitters or sellers of credits except in Alberta which uses a hybrid model of carbon pricing and caps. Soil sequestration, primarily associated with reduced or zero tillage, has been recognized since 2003 as an offset (Alberta Emissions Offsets Registry) and the registry also includes several composting projects involving organic waste diversions from landfill. Soil sequestration projects must comply with Alberta's Specified Gas Emitters Regulation Quantification Protocol for Conservation Cropping.  The recent change of government might result in the elimination of this model.  Saskatchewan is supposed to be developing a carbon offset program similar to Alberta's in which farmers could participate, but is also fighting the federal plan in court and has no intention of imposing a carbon tax.

The federal backstop will require carbon tax increases, from the current $20 / tonne in provinces without an equivalent scheme, to $50 / tonne in 2022.  At this level, combined with other measures on this site, it becomes more likely that food system behaviour will shift and farmer investments in sustainability can be rewarded if they are included in cap and trade schemes. To make this viable, scheme regulations will have to be amended to include more food system actors as covered facilities, and also to cover livestock emissions.  The most straightforward way to address this is to include conventional livestock and fowl production facilities (e.g, industrial style feedlot and barn production facilities) as covered facilities.  Other conventional producers (e.g., cow - calf operations, small independent pork producers, specialty fowl producers) would remain exempt.  Certain conventional greenhouse and mushroom operations might also be covered.  Those with sustainable certifications (see discussion under Efficiency, Protocols) would be exempt.

Other important concepts are additionality and permanence. Eligible producers have to be following systems that add permanent carbon, above and beyond an established baseline.  Only those following approved sustainable protocols and authentication regimes should be eligible.  In this way, carbon trading becomes another measure to help finance the transition to sustainable approaches.

Although many countries are moving in similar directions on carbon pricing, there is still the problem of leakage when trading partners do not establish the same regimes.  It is appropriate in such cases to apply border taxes to level the playing field.  Although Canada might lose export sales to countries without a carbon tax, because we are also significant  importers, it creates the opportunity for import substitution based on higher prices generated by the border tax. As long as domestic and imported goods are subject to the same tax, they are consistent with the trade agreements (see Goal 10). And of course at this stage in the transition, the shift to sustainable practices is well underway and the dynamics of that market place are different from the conventional one.

Tax Provisions

Several tax instruments and programs can facilitate the transition.  See Instruments, Taxes for details on tax provisions.

  1.  Remove HST/GST zero rating and Provincial Sales Tax exemptions/zero ratings from pesticides with an Environmental Impact rating above 20 on the Cornell system scale.  On this scale, pesticides with a 20 or lower inherent toxicity are typically lower impact pesticides.  The purpose of this measure is to shift price signals to favour lower impact pesticides relative to higher impact ones.  This is important because the new low-dose, lower impact chemistry is typically more expensive than the old chemistry.
  2. Remove HST/GST zero rating and provincial sales tax exemptions / zero ratings from bulk synthetic fertilizers containing nitrogen, phosphorus and potassium.  All organic materials sold as fertilizer and soil amendments, regardless of quantity, should have a zero rating.  Currently, many organic fertilizers and amendments are taxed.  See also Goal 4 Fertilizers for more on how changes to the federal Fertilizer Act would shift consumption to organic fertilizers.
  3. Three years after these changes are adopted, if use has not fallen by at least 10%, place an additional retail sales tax on these synthetic chemicals in the 10-30% range, depending on degree of change to that point.
  4. Maintain HST/GST zero rating on farm and aquaculture equipment that facilitates the transition, and does not require excessive capital investment.  A schedule of approved equipment would need to be constructed and could be facilitated by the Organic Value Chain Roundtable.  The schedule would likely include such items as  rotary hoes, flame weeders, flail choppers and mowers, sod seeders.  On all other equipment, the zero rating would be removed.
  5. Adjust ACCA on farm and aquaculture equipment so that items that support transition have preferred rates.  For example, cultivators, tillers and weeders are Class 8 under Schedule II of the Income Tax Regulations with a depreciation rate of 20%, but in sustainability terms, not all  have positive impacts.  Those that are more favourable to soil health should have their rating doubled and should be part of a class 8 sub-category.  Greenhouses are class 6 with a depreciation rate of 10%, but many are highly energy inefficient, so a class 6 subclass should have a double rate for those that surpass a minimal  energy efficiency rating.