Backgrounder:
New regulatory framework needed for agri-food sector

OTTAWA, March 4, 2009 — 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, 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, the federal government 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 harmonise inter-provincial regulatory frameworks;
• Continue to foster regulatory reform to encourage greater productivity and innovation; and,
• Take a more proactive approach to trade policy in international negotiations, while maintaining a careful balance between bilateral and multilateral liberalisation efforts.

• 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; and,
• Making a commitment to implement required changes.

• 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); and,
• 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 consideration 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.