Greenhouse Canada

Business Management
Efforts to boost competitiveness

March 6, 2009
By Canadian Agri-Food Policy Institute


capi_logoMarch 6, 2009, Calgary — Canada’s agri-food sector will become more
efficient and competitive if industry and government work in
partnership to reform the regulations that affect agriculture, says a
new discussion paper commissioned by the Canadian Agri-Food Policy
Institute (CAPI).

March 6, 2009, Calgary — Canada’s agri-food sector will become more efficient and competitive if industry and government work in partnership to reform the regulations that affect agriculture, says a new discussion paper commissioned by the Canadian Agri-Food Policy Institute (CAPI).

The discussion paper, entitled Regulatory Reform in Canada’s Agri-Food Sector, was made public at a presentation during the annual general meeting of the Canadian Horticultural Council in Calgary.
“The need for regulatory reform has been a long-standing call from across the agri-food sector and this need for change has been acknowledged by government,” says Gaëtan Lussier, CAPI Chair. “In response, CAPI initiated a review of the regulatory framework in Canada and among its competitors and considered ways to constructively respond for this need to change.”


The CAPI discussion paper suggests that a more effective regulatory policy framework is now conceivable for the agri-food sector. In 2007, the federal government published a new directive instructing federal departments to evaluate their current set of regulations. The CAPI discussion paper outlines ways that agri-food sectors can and should work in partnership with relevant federal departments and agencies to develop a more streamlined – or “whole of government” – regulatory approach.

“The agri-food sector needs a means for federal government departments and agencies to come together with industry to review current regulations, such as through facilitated panels and symposia,” says Lussier. “The horticulture sector could consider this approach in working with regulators to bring about needed regulatory improvements.”

The discussion paper is based on discussions held by the Institute with the Treasury Board of Canada and other government departments and agencies. It highlights the general extent to which industry is impacted by regulations. Feedback from this initial work will enable CAPI, and its partners, to assess the concepts outlined in this report and determine what additional steps could be considered to advance regulatory reform.

CAPI provides an independent voice on long-term issues facing the agriculture and agri-food sector. It is a catalyst. As a policy forum, it identifies significant emerging issues and trends and promotes dialogue across the diverse value chain, and among academia, research institutes and governments, in order to advance the success of Canada’s agriculture and agri-food sector.

Based in Ottawa, CAPI was established as a non-profit corporation in 2004 by the federal government and is guided by a diverse board of directors and an advisory committee.

For several years, many interested parties have advocated the need for regulatory reform in Canada’s agri-food sector. Such reform can help improve the mix of regulations that impact on agriculture, and enhance the industry’s competitiveness. In support of these objectives, the Canadian Agri-Food Policy Institute (CAPI) initiated a review of the regulatory framework in Canada and among its competitors. The purpose of this project was to help the government implement regulatory flexibility and reforms, and provide input that could result in a more flexible regulatory system.

On March 4, 2009, CAPI released a discussion paper that synthesizes the findings of the review, and reflects consultations CAPI has held on regulatory reform with Treasury Board officials and representatives of regulatory agencies in the agri-food sector. The discussion paper – entitled Regulatory Reform in Canada’s Agri-Food Sector – was made public at the annual general meeting of the Canadian Horticultural Council.

The Organization for Economic Cooperation and Development (OECD) has developed, with input from countries such as Canada, an “ideal” regulatory framework (with policies, institutions and tools and processes). According to the OECD, regulatory policies should incorporate a “whole of government” view. They should link policies, actions and regulations, and should be driven at the highest political level.

High-level direction will best ensure that coordination occurs between regulators in a sector, that cross-sector regulations are coordinated, consistent and congruent, and that regulatory quality is encouraged.

Typically, the implementation and enforcement of regulations occur through independent regulatory agencies. A good regulatory toolbox has both regulatory instruments and alternative instruments (such as market-based options) and provides a check that the best form of regulation is used. It also facilitates compliance, enforcement, transparency, communication, administrative simplification and accountability.

Some countries, including Canada, are modifying the way they regulate to be closer to the OECD ideals.

In 2007, the federal government published a new directive, called the “Cabinet Directive on Streamlining Regulation.” The directive instructs federal departments to evaluate current regulations to ensure that policy objectives are being met. The directive describes the attributes of an ideal “regulatory policy framework.”

In concert with the new directive, Ottawa has developed a regulatory policy framework to help federal departments begin implementing high-level regulatory principles. With Treasury Board guidance, an effective and operational regulatory policy framework is now conceivable for the agri-food sector. A framework is needed that could bring about a more flexible regulatory system for the sector, one that supports innovation and competitiveness.

In Canada, the agri-food sector is influenced by regulations from many different federal departments and agencies, each with its own mandate. The departments affecting the sector include Agriculture and Agri- Food Canada, Fisheries and Ocean Canada, Environment Canada, Foreign Affairs and International Trade Canada, Health Canada, Industry Canada, and Transport Canada. Federal agencies that affect the sector include the Canadian Dairy Commission, the Canadian Food Inspection Agency, the Canadian Wheat Board, the Canadian Grain Commission, the National Farm Products Council (and national supply management agencies), the Pest Management Review Agency, the Prairie Farm Rehabilitation Agency, and the Public Health Agency of Canada.

The discussion paper found that a number of studies and reviews have been made on the impact of regulations in Canada’s agri-food sector. For example, the OECD carried out a high-level review that found that Canada is a “vigorous innovator in the areas of good regulatory governance.” But it recommended that Canada:
• Strengthen the contribution of competition policy to regulatory reform and market openness, including an enhanced advocacy role for the Competition Bureau.
• Encourage a more systematic and strategic review of the federal, provincial and territorial regulatory environment and work to harmonize inter-provincial regulatory frameworks.
• Continue to foster regulatory reform to encourage greater productivity and innovation.
• Take a more pro-active approach to trade policy in international negotiations, while maintaining a careful balance between bilateral and multilateral liberalisation efforts. In its discussion paper, CAPI suggests that the measures that could improve the regulation of the agri-food sector could include.
• Developing over-arching objectives for regulation.
• Encouraging greater collaboration between departments and agencies.
• Seeking industry input on the choice and design of regulatory instruments.
• Giving greater consideration to non-prescriptive types of regulations.
• Allocating sufficient resources for an effective infrastructure to support the regulatory process.
• Harmonizing regulations with major trading partners and between provinces.
• Designing legislation that provides for more regulatory flexibility.
• Conducting a comprehensive examination that evaluates regulations using agreed upon principles.
• Doing ex-post evaluation of regulations.
• Making a commitment to implement required changes.

A range of instruments are available to governments to encourage outcomes that benefit society at large, from command and control approaches to those that are informal, flexible and voluntary. In the agri-food sector, the desired outcomes include a safe food supply, protecting the health and well-being of all Canadians, providing credible information to consumers upon which they can make informed choices, and creating the operating environment for a competitive and innovative economy.

Regulations are just one type of policy instrument used by governments to achieve policy objectives and to help society achieve desired outcomes. In general, behaviour can be influenced in three ways:
• Pricing mechanisms, such as the use of incentives (e.g., subsidies), and disincentives (e.g., specific taxes).
• Preaching to create change, which entails providing information and using moral suasion and persuasion (e.g., anti-littering campaigns).
• Policing, or using regulations (codes, minimal standards).

This discussion paper is an initial step in CAPI’s effort to help move the regulatory agenda forward for the agri-food sector. Moving forward, one option under considering is the creation of “blue ribbon panels,” composed of decision-makers in industry and in regulatory agencies, to study regulatory issues in specific sectors. The findings of these panels could then be communicated to a broader audience, with a view to facilitating regulatory reform and ultimately enacting a regulatory framework for the agri-food sector. Not only will a coherent and consistent regulatory framework benefit the competitiveness of the agri-food sector, but it will help the industry contribute to one of the chief aims of the federal government’s Cabinet Directive on Streamlining Regulation, which is to ensure that regulatory activities result in the greatest overall benefit to current and future generations of Canadians.