Generally, the international community lumps subsidies into the following categories (adapted from OECD. 2004):
|Producer subsidies||Consumer subsidies||General services subsidies|
|Market price support
Based on transfers to farmers to accommodate differences between domestic farm gate prices and border prices
|Consumption subsidies in cash or in-kind||Research and development|
|Payments based on output
Payments per tonne, per hectare or per animal
|Payments to processors by taxpayers||Agricultural training|
|Payments based on area planted/animal numbers
Payments per planted hectare or livestock held
|Payments to vendors by taxpayers||Food safety and quality|
|Payments based on historical entitlements
Payments for which farmers do not have to produce specific goods or incur costs, e.g., emergency payments or historical production patterns
|Building distribution infrastructure and commodity chains|
|Payments based on input use
Based on use of specific inputs or factors of production
|Marketing and promotion|
|Payments based on input restraints
Based on constraining input use
|Public storage of agricultural commodities|
|Payments based on overall farming income
Based on farm income or revenue and not on production of specific commodities
Canada, however, employs only a limited number of subsidies in some of these categories. General service subsidies are commonly employed, particularly for research, development, training, marketing and promotion, food safety and quality, and infrastructure. Consumer subsidies are rarely employed, except that regional economic development subsidies have been received in the past by food processors and the Nutrition North program subsidizes food distribution to Northern and remote communities (see below). During the COVID-19 pandemic, a range of subsidy programs have been rolled out, first as stop gap measure and then as recovery programs. The most recently announced affecting the food system is the Tourism and Hospitality Recovery Program for which restaurant and food service operations are eligible for wage and rent subsidies if their pandemic losses amount to at least 40% during specified periods (see Targeting COVID-19 Support Measures). Producer subsidies have been most commonly employed but these have been reduced over time to comply with Canada's perceptions of its trade deal obligations (see Goal 10 and Instruments, International Agreements). The largest subsidy category is for General Service Subsidies (which includes some business risk management [BRMs] and environmental programming under the Canadian Agricultural Partnerships), and non-product specific domestic supports that include much of the rest of the federal suite of BRMs where farmers, the provincial and federal governments all contribute (see Goal 4). The government also gives out grants (contribution agreements) on a cost-shared basis to farmers and farm organizations to effect certain food safety and environmental initiatives. The government also runs various "competitive grant" programs on matters such as economic superclusters, food waste, and local food infrastructure projects.
Other jurisdictions have been more creative and adventurous with their use of subsidies. Many of these are discussed under Goals.
Assessing subsidy effectiveness
(adapted from Committee on Agriculture, WTO. Notification: Canada (for 2013). G/AG/N/CAN/113/Rev.1 and Export Subsidies (2015/16, G/AG/N/CAN/118)
Because most of Canada's agricultural subsidies are provided through the Agricultural Policy Framework (APF, GF1, GF2, Canadian Agricultural Partnership), many are cost - shared and WTO reporting does not always break out the federal vs. provincial contributions. When they are cost shared between the two levels, the typical funding arrangement is 60% federal, 40% provincial.
For 2013, general service subsidies with significant federal contributions amounted to about $838 million.
- Income insurance and income safety net, $445 million
- Environmental programs, $43 million
- Market price supports (butter and skim milk powder), $485 million
- Other product specific supports (AMS, a range of products), $263 million
- Export subsidies (dairy products): $20 million
The Nutrition North program was funded by Indigenous and Northern Affairs Canada (INAC) and now by Indigenous - Crown Relations and Northern Affairs Canada, which administers the food retail subsidy and Health Canada and the Public Health Agency of Canada which support nutrition education. "The subsidy applies to perishable, nutritious foods (fresh, frozen, refrigerated, or foods that have a limited shelf life) that are shipped by air. Country / traditional food is also subsidized when processed in government regulated and/or approved - for-export commercial plants. The subsidy must be passed on to the consumer through the retailer reducing the price of subsidized foods in stores ..... Registered retailers in the North, country food processors/distributors located in eligible communities, and food suppliers in the South who supply small retailers, institutions and individuals in these eligible isolated communities, can apply for a subsidy based on the weight of eligible foods shipped by air to eligible northern communities. These subsidies are to be passed on to northern consumers by appropriate reductions in the selling prices of eligible foods" (Vanderlee et al. 2017).
The subsides go to perishable and nutritionally dense foods (fruit, vegetables, milk, eggs, meat and cheese) that are typically shipped by air. A higher subsidy rate is applied to the most nutritious perishable food. There are also subsides for air freighted country foods, arctic char, muskox and caribou. The annual subsidy amounted to about $57 million (Nutrition North Canada), however, there have been additions related to the pandemic emergency and also recent program changes (see Actors, Federal Government and blog posts regarding the national food policy).
A 2020 OECD report found that Canadian supports to producers have been well below international averages in recent years, declining from 35% of gross farm receipts in 1986-88 to 17% in 2000-02, and then 8% in 2017-19. The OECD average during that period was almost 12% among 54 countries studied. More funding has been allocated recently to support science and innovation related to manufacturing, for example the plant protein supercluster (Pratt, 2020).