Farm Income

The availability of detailed performance measuring tools is generally recognized as the basis for making good business management and public policy decisions. In 2008, the Canadian Agri-Food Policy Institute (CAPI) undertook a project to assess the adequacy of current farm sector measures of financial performance and the need to develop more insightful measures of farm sector performance.

Following a series of five consultations with more than 120 stakeholders across Canada, CAPI published the report Measuring Farm Profitability and Financial Performance. A steering committee representing academia, the accounting profession, financial institutions, producers, Agriculture and Agri-Food Canada (AAFC) and Statistics Canada provided guidance for the project.

This report indicates that financial performance of the farm sector is not adequately represented by the traditionally used aggregate measure of net farm income. Rather, financial performance of the farm sector is better represented through farm financial performance measures that are reported on a more disaggregated basis, such as for grain and oilseed operations or poultry operations in a certain size category. Stakeholders agreed that more detailed information on net farm income, and other measures of farm sector financial performance — such as return on assets employed, gross margin and contribution margin — would provide decision-makers and policy-makers with a more precise view of farm-level profitability and farm sector performance. This report lists a broad variety of key performance measures identified by the stakeholders that should be published on a regular basis.

More recently, Statistics Canada and AAFC have started to provide farm income statistics and forecasts of farm income on a more disaggregate basis. As well, data is now available to allow for computation of a number of useful farm sector performance measures on a disaggregated basis by farm type, such as for farms where the major business enterprise is hog or beef production.

CAPI's report identifies 13 performance indicators that should be published on a timely and regular basis, as suggested by the participants of the consultations. CAPI also noted that to achieve the desired outcome, stakeholders should become engaged in promoting the need to publish these indicators. Notably, producer groups, associations and governments will need to collaborate on developing appropriate financial performance measures that will encourage benchmarking and improve the competitiveness of the Canadian agricultural sector.

CAPI's findings have been forwarded to Statistics Canada and Agriculture and Agri-Food Canada for their consideration.

Regulatory Reform

Achieving regulatory efficiency and effectiveness is a matter of considerable attention across the agri-food value chain and in government. CAPI offers one approach to help advance regulatory change. In 2009, CAPI published the findings of a project aimed to advance the need for a more flexible regulatory system. CAPI's findings were published in a discussion paper called Regulatory Reform in Canada's Agri-Food Sector. The discussion paper synthesizes CAPI's findings and reflects consultations CAPI held on regulatory reform with Treasury Board officials and representatives of regulatory agencies in the agri-food sector. The discussion paper was made public at the annual general meeting of the Canadian Horticultural Council in March 2009.

In addressing regulatory reform, CAPI's objective is not about amending specific regulations. The CAPI report is focused on the regulatory process. After many years of effort to modernize the regulatory structure, CAPI believes this process can be enhanced by addressing regulatory issues and solutions jointly with senior decision-makers in regulatory agencies, government and industry. CAPI is advancing the concept of blue ribbon panels as a tool to help modernize the regulatory environment. The CAPI discussion paper suggests that facilitated discussions among industry and regulators is a valid approach to advance regulatory change.

CAPI also identified regulatory issues as part of a larger work on competitiveness, Moving Forward on Vision and Action for Canadian Agriculture, published in February of 2007.

In 2008, CAPI undertook a project to encourage a renaissance in rural economies in Canada, both in the agri-food sector and other areas. The project was called Growing Canada's Rural Economies. The cornerstone of this project was a one-day symposium that CAPI hosted in Winnipeg. The objective was to consult with experts who could help the Institute identify what is currently known on this issue, and highlight topics that should be addressed to stimulate a rural renaissance. Based on the symposium, CAPI produced a report — Growing Canada's Rural Economies — that identifies the major themes emerging from the symposium:

• Diversification: As agriculture plays a less significant role in rural economies, local communities must diversify;
• Community support: Government support needs to shift from a sector-based approach that favors traditional agriculture to one based on the unique geography of each region;
• Infrastructure: For value-added activities to occur, rural communities need the appropriate infrastructure, particularly in transportation and broadband internet;
• Entrepreneurship: Must be encouraged. This means relaxing regulations for small businesses, and empowering people to become leaders;
• Research: Needed in many areas. Should the "cluster" approach to economic development be encouraged? Why do some rural areas prosper and grow while others fail?
• Environment: Rural communities must consider environmental impacts, and develop sustainable technologies and living patterns. Sustainability is an economic opportunity. For example, in rural Quebec, wind power presents a great opportunity.

• Measuring Farm Profitability and Financial Performance
• Regulatory Reform in Canada's Agri-Food Sector
• Growing Canada's Rural Economies
• Moving Forward on Vision and Action for Canadian Agriculture

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