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Section II - Analysis of Performance

Introduction

The agriculture and agri-food sector affects the lives of every Canadian and influences the country's success economically and socially.

The entire agriculture and agri-food system, or value chain - including primary farming, processing, distribution, and retail services - provides one out of every eight jobs in Canada, and accounts for about $130 billion in annual retail and food service sales, including almost $28 billion in exports. Canada is the world's fourth-largest agri-food exporter, behind the European Union, the United States and Brazil. Altogether, the sector is responsible for about eight per cent of Canada's total Gross Domestic Product.

The sector plays an equally important role socially, helping maintain Canada's rural communities and the rural way of life. The hard-working people, families and communities that make up Canada's farming and rural landscape continue to be at the heart of this proud and productive industry.

Canada's food system is one of the safest in the world, and the country's food and food products are recognized internationally for their quality. Indeed, Canada has built a strong reputation for products consumers can rely on. Today, consumers everywhere are calling for stronger assurances that their food is wholesome and safe. Canada puts safety first, and AAFC works with the Canadian Food Inspection Agency (CFIA), the Canadian Grain Commission (CGC), Health Canada, and industry to emphasize safety in every step of the food-production process. At the same time, the department strives to provide producers with a more secure operating environment, one in which they can manage the risks inherent in farming, to run stable and profitable businesses.

AAFC is working hand-in-hand with industry to make Canada the world leader in using environmental resources wisely. Long-term sustainability means developing and adopting smart technologies and farm-friendly solutions that protect the diverse ecosystems on which the country's future depends. It also means balancing protection with robust production, developing new green products to serve consumers' needs and wants, and helping rural communities grow and prosper.

To ensure its success in the future, Canada's agriculture and agri-food sector will need to develop and adopt new research and technology that will help drive innovation in areas where the country can claim a competitive advantage. Skills and business practices within the sector will need to be enhanced. Ties with the economic development, energy, health, biosecurity, and environment agendas will need to be strengthened.

While the future of Canadian agriculture is promising, ensuring it can realize its potential tomorrow means making sure it can cope with the pressures of today.

In 2006-2007, the Government of Canada committed to ensuring the country's agriculture and agri-food sector has the tools it needs to continue to succeed in the future, while also providing it with a firm base for the present.

The department's performance accomplishments for 2006-2007 are described in detail in the remainder of this section under program activities that contribute toward the department's three strategic outcomes:

• Security of the Food System;
• Health of the Environment; and
• Innovation for Growth.

Strategic Outcome 1: Security of the Food System

Program Activity: Business Risk Management 

Business Risk Management - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
2,438.5	1,150

The intent of BRM programs is to help producers better manage risk using a range of options, leading to greater profitability. By mitigating risk, producers can also focus on seeking out new opportunities to strengthen their ability to produce safe food and agri-products for Canadians and consumers around the world.

Two national farm-income risk-management programs are available to help producers deal with income fluctuations. These core programs are the Canadian Agricultural Income Stabilization (CAIS) program and Production Insurance (PI). These programs are complemented by province- and territory-based programming, the Private Sector Risk Management Partnerships (PSRMP) program, cash advance programs including the Advance Payments Programs (APP) and the Spring Credit Advance Program (SCAP) which became the Enhanced Spring Credit Advance Program during 2006-07 and other ad hoc and pilot programs.

Details of Performance

The expected results for the department's BRM program activity in 2006-07 were:

• producers better supported and able to manage business risks;
• increased producer capacity to manage operations (cashflow) throughout the production year;
• increased business planning and skills development among low income farm families; and
• increased sector viability and profitability.

Expected Result: Producers better supported and able to manage business risks
Status: Met

AAFC works on an ongoing basis to ensure Canada's agricultural and agri-food producers are best able to manage the many risks associated with farming in Canada. In 2006-07, the department worked with the provinces and industry to adjust BRM programs so they meet the needs of producers and are more responsive to changing market and production conditions.

Sub-Activity: Canadian Agricultural Income Stabilization

The CAIS program integrates stabilization and disaster protection into a single program, helping producers protect their farming operations from both small and large drops in income. It is a whole-farm program available to eligible farmers regardless of the commodities they produce.

In 2006, the Government of Canada recognized that the CAIS program was not providing effective coverage to all farmers, due to a lack of responsiveness, timeliness and predictability, and that disaster relief assistance should be separated from CAIS. As such, over the course of 2006-07, the department and its partners made vast improvements to the margin-based program to better support producers, including:

• a new inventory valuation methodology, which improves predictability and timeliness;
• expanded negative margin coverage, which increases responsiveness;
• a targeted advance mechanism for disaster situations, which improves timeliness of payments; and
• administrative refinements, including simplifying the program and its on-line services.

Also, help with the transition to the new program, AAFC implemented the $900 million CAIS Inventory Transition Initiative (CITI) under which the new methodology was applied retroactively to the 2003, 2004 and 2005 program years and payments were made to producers based on any benefit the new methodology would have produced.

Producer Savings Account

Also in 2006-07, the Government of Canada announced its intention to pursue a producer savings account program with the provinces that would replace the coverage for small income declines currently offered under the margin-based CAIS program. Agriculture ministers have agreed to consider the concept for the 2007 program year.

Disaster Relief Framework

To meet the government's commitment to create a separate disaster relief program, AAFC also developed, in conjunction with the provinces, a disaster relief framework, designed to provide structure and consistency to when and how governments respond to disasters. While agriculture ministers continue to consider the framework as part of the new BRM programming suite under the next generation of agriculture and agri-food policy, the framework principles and guidelines were used to implement the Golden Nematode Payment Program, which provided $1.5 million to producers in St. Amable, Quebec affected by the discovery of potato nematode.

Sub-Activity: Production Insurance

In 2006-07, a federal-provincial task team reviewed the Production Insurance program. The review identified options for expanding coverage for livestock, fresh horticulture, and forage, options for linkages between Production Insurance and the Canadian Agricultural Income Stabilization Program, and an overall assessment of program equity of producers across provinces.

The development work for livestock insurance, including analysis of coverage options for swine, continued in 2006-07, with implementation targeted to begin in 2008 in potentially three provinces. With the development in 2006-07 of acreage loss plans for horticulture crops in Ontario and New Brunswick, six provinces will soon offer coverage for horticulture crops under Production Insurance. Options for improved forage protection continue to be developed.

The 2006-07 year marked the first time all provinces were required to be in compliance with the Production Insurance funding levels identified in the program's Implementation Agreement. This requirement ensures all participating producers across the country pay an equitable share of premiums into the program.

In total, governments pay about 66 per cent of the costs of Production Insurance. In 2006-07, government contributions were $569 million, which was shared on a 60/40 basis between the federal and provincial governments. Producers paid premiums totaling $274 million.

Total coverage across Canada increased to $7.667 billion in 2006 from $7.227 billion in 2005.

An environmental assessment of Production Insurance is required for the 2006-07 fiscal year. AAFC expects to have the assessment completed by December 31, 2007.

Sub-Activity: Disaster Programs

Cover Crop Protection Program

This $90-million pilot program for producers in all provinces with unseeded acreage in 2005 and/or 2006 due to excess moisture was developed for delivery in 2006-07 by AAFC's Prairie Farm Rehabilitation Administration . The program helps producers with the costs of implementing best management practices : to prevent soil erosion on land that could not be seeded to a commercial crop due to excess soil moisture. Program payments and administration costs totaled about $82.6 million based on just over 5 million eligible unseeded acres.

Sub-Activity: Risk Management Programs

Private Sector Risk Management Program (PSRMP)

In September 2006, PSRMP held a forum entitled Showcasing Risk Management Innovations. The forum was attended by 135 representatives, including those from national and provincial agricultural organizations, domestic and international financial services industry, and federal and provincial governments, as well as the European Commission, the United States Department of Agriculture and the Australian Department of Agriculture, Fisheries and Forestry.

Specific outcomes of the forum include: improved agriculture-financial services industry (FSI) networking through an expanded range of FSI contacts available to projects, and, improved visibility for AAFC's activities in engaging and expanding the private sector's participation in agricultural risk management.

Five new Production Insurance contribution agreements, worth $1.6 million, were signed in 2006-07, allowing progress to continue on risk management research and development projects. In addition, 10 contribution agreements were signed with existing PSRMP clients to enable the project proponents to proceed with subsequent phases of their approved activities. Of these 10 contribution agreements, six are focused on plant or animal insurance tools, two are investigating financial risk management tools (e.g. agricultural clearing house and a private sector advance payments-type program) and two are risk assessments (bio-security protocols for the poultry services sector and an assessment of financial liability related to On-Farms Food Safety program participation).

Expected Result: Increased producer capacity to manage operations (cashflow) throughout the production year
Status: Partially Met

Historically, farm income varies with changing market prices and input costs, and production is often impacted by disease and weather events. Net Cash Income (NCI) is one measure of farm income and is defined as farm cash receipts (including program payments) less operating expenses, but excluding depreciation and change in the value of on-farm inventories. NCI has been trending downward since 2004, as seen in the table below. In 2006, NCI fell 12.7 per cent from 2005, and was down to 82.6 per cent of the five-year average.

The purpose of government program payments is to stabilize farm income variability, thus assisting producers in operating viable enterprises. Program payments in 2006 totaled $4.6 billion, as reported on a cash basis, and represented 82.7 per cent of NCI. Clearly, program payments play an important role in stabilizing producer income and maintaining viability of farming operations. The table below shows NCI and program payments in Canada (1999-2006).

Because declining farm income is a persistent challenge for the Canadian agriculture and agri-food sector, government efforts and investments in stabilizing and assisting the sector are critical. In 2006-07, AAFC worked to ensure Canada's farmers and farm families can make a living on the farm and remain in the sector, for their own benefit and for the benefit of all Canadians.

Sub-Activity: Canadian Agricultural Income Stabilization

The CAIS program, along with Production Insurance, is part of the core of BRM programming designed to help stabilize producers' income. CAIS payments are issued when current-year farm income (production margin), including Production Insurance payments, is less than the average farm income from previous years (reference margin). As CAIS payments are based on tax information, there is a lag in program payment calculations; the 2004 year is the last program year for which program payments have been finalized. CAIS program payments related to the 2004 production year totaled $1.42 billion, and allowed producers who qualified for a payment to raise their income from 60.2 per cent to 85.3 per cent of their reference margin.

Among the improvements made to the CAIS program in 2006-07 was the replacement of the previous deposit requirement with a fee. This has removed a significant financial irritant for producers, and helped ensure they can continue to cost share in the program. Governments involved in the CAIS program also changed the program's rules to provide coverage for more producers with negative margins and adjusted the method for inventory valuation which now reflects losses in inventory values due to declining commodity prices in a producer's benefit. These two changes to the program rules have made the CAIS program more responsive during periods of price declines.

Further increasing program responsiveness, a targeted advance payment feature was added to the program, allowing CAIS to provide rapid assistance in times of serious income declines without producers having to apply. Additionally, administrations have taken steps to make the final application process easier for producers by making greater use of technology, including e-filing initiatives and on-line accounts, as well as improved program calculators which help a producer to estimate a potential program payment. This has been complemented by the introduction of national service standards and late filing options which provide producers with more flexibility in meeting program requirements and more predictable turnaround times.

Sub-Activity: Grains and Oilseeds Payment Program

This $755-million federally funded program was introduced late in 2005-06 to assist Canadian producers of grains and oilseeds in dealing with the severe economic hardships they are facing. The remaining $315 million in program payments was distributed to producers in 2006-07. The program is now complete.

Sub-Activity: Disaster and Financial Guarantee Programs

Advance Payments Program

Ensuring cash flow at both ends of the growing season can be a challenge for many farmers. Low returns have made it hard for many producers to secure operating lines of credit prior to seeding. At the other end of the season, cash flow after harvest can be a critical factor for producers faced with short-term financial commitments who want to store crops and sell them throughout the year to achieve higher returns. To deal with these challenges, AAFC provides producers with cash advance and financial guarantee programs throughout the crop year.

Prior to 2006-07, the cash advance programs were delivered under the Advance Payments Program (APP) and the Spring Credit Advance Program (SCAP) . With the increasing demand from Canadian producers for cash advance programs that reflect the true cost of operating in today's competitive markets, these cash advance options were modified through legislative changes in 2006-07 as planned.

Legislative changes to the Agricultural Marketing Programs Act (AMPA) Program were announced in May 2006. The changes included the amalgamation of the SCAP and the APP into a new program which increased the maximum advance to $400,000, with the first $100,000 interest-free. The program was also broadened to cover livestock and more crops, and to provide a longer repayment period, allowing producers to make repayments when it suits them within an 18 month period, giving them the opportunity to yield higher returns on their agricultural products. The changes to AMPA received royal assent in June 2006 and came into effect in November 2006.

The APP Electronic Delivery System was successfully launched in 2006-07 to better allow the tracking of advances and also to improve the exchange of information between producer organizations delivering the program and AAFC.

Enhanced Spring Credit Advance Program

The Enhanced Spring Credit Advance Program (ESCAP) was announced in May 2006 as a transition toward the success of the legislative change to the AMPA. The program increases the interest free provision from the $50,000 that was available under the old SCAP, to $100,000 per applicant, with a repayment period extended up to September 30, 2007. As of March 31, 2007, $988.4 million was advanced under the program to 28,469 Canadian producers.

Farm Improvement and Marketing Co-operatives Loan Act

The Farm Improvement and Marketing Co-operatives Loan Act (FIMCLA) program provides producers with increased access to loans for farm improvements and supports access to capital for agricultural co-operatives. There were 1,797 loans registered during the 2006-07 fiscal year, totaling $63.7 million. This represents a 15.6 per cent reduction in the number of loans registered compared to 2005-06 (2,128), and a reduction in total value of 14.4 per cent ($74.5 million).

National consultations on the FIMCLA were completed in 2006-07 as planned, with all stakeholders, including farmers, financial institutions and marketing cooperatives, providing input on potential changes to the program. Discussions were held on expanding the FIMCLA program to include beginning farmers (including inter-generational farm transfers), expanding the program to allow more flexible eligibility rules for cooperatives, increasing the aggregate loan limits for farmers and cooperatives, increasing the eligible rate of loan amount and modifying the registration fee to incorporate different risk categories and amounts of loans.

Participants reiterated their strong support for the continuation of the FIMCLA program but underlined the importance to adapt it to today's farmers' needs. Some of the issues identified by participants included:

• the current aggregate loan limits are too low;
• the eligible loan rate of 80 per cent should be increased;
• the 100 per cent farmer requirement for co-operatives should be eliminated
• lack of awareness of the program exists; and
• there is too much of an administrative burden for financial institutions administering the program.

Price Pooling Program

The Price Pooling Program provides a price guarantee to marketing agencies for agricultural products. The guarantee protects the marketing agencies and its producers against unanticipated declines in the market price of their products. During 2006-07, six agreements were signed with marketing agencies, offering a total guarantee amount of $74.4 million to an estimated 18,290 producers. This results in a reduction from the 2005 crop year, in which a total guarantee amount of $85.5 million was offered to an estimated 20,036 producers.

Expected Result: Increased business planning and skills development among low income farm families
Status: Partially Met

Sub-Sub-Activity: Canadian Farm Families Options Program

This pilot program, announced in Budget 2006, provides $550 million over two years to help lower-income farm families explore options to raise their income for the future and provide short-term income support to lower-income farm families. Part of the delivery of the program was completed in collaboration with Farm Credit Canada through a memorandum of understanding. Changes to the second year of the program reduced the original budget of $550 million to $304 million. Eligible applicants receive a payment to bring them to a maximum income of $25,000 for families and $15,000 for individuals if they have a commercial farm. To receive a second year payment, a participant must have completed or be in the process of undertaking a business planning and skills development program.

It is still too early in the program's life to accurately determine its impact. The program is progressing as planned, although the number of funding recipients enrolled in business planning and skills development programs is lower than targeted. These factors have contributed to a performance rating of Partially Met.

Detailed performance information for this program is available under the Innovation for Growth Strategic Outcome .

Expected Result: Increased sector viability and profitability
Status: Partially Met

AAFC's approach to ensuring the agriculture and agri-food sector is viable and profitable involves ensuring producers and all industry stakeholders have access to the tools they need to be successful.

The reality is that the global agriculture business has changed significantly in recent years. When you add that fact to the ongoing production risks for farmers, profitability for the Canadian sector remains a challenging goal. Recent farm income figures support this: despite the best efforts of governments, industry and producers, net cash income for Canadian farmers fell for the second consecutive year in 2006. Rising interest, wage and fuel costs, together with falling hog receipts and program payments, more than offset increases in revenue from crops and cattle. For this reason, this result was Partially Met in 2006-07.

Through Budget 2006, the Government of Canada invested an additional $1.5 billion in agricultural programming. This was comprised of $1 billion to assist producers with the transition to the business risk management programming, through the Canadian Agricultural Income Stabilization (CAIS) Inventory Transition Initiative, and $500 million for measures designed to improve the long-term viability and profitability of the sector. The latter included measures to assist industry in responding to disasters, investments to help producers participate in the emerging bioeconomy, and assistance to help low-income farm families improve their circumstances.

Sub-Sub-Activity: BSE programs

In 2006-07, AAFC continued to implement measures and programs to deal with the impacts of BSE on the beef industry. The department's efforts included, most notably, work to fully re-open the U.S. border to live Canadian cattle, increase domestic slaughter capacity, assist in adapting to enhanced feed ban regulations and improve traceability across the livestock and meat value chain (discussed in the Food Safety and Quality Program Activity below).

Announced in June 2005, the Ruminant Slaughter Equity Assistance Program and the Ruminant Slaughter Facility Assessment Assistance Program contributed to the success of producer-led projects by providing equity investments and assistance to undertake business and feasibility plans for the construction or expansion of slaughter facilities for beef and other ruminants.

In December 2006, a new program was designed to help the beef industry adapt to an enhanced feed ban by providing financial assistance for adequate specified risk material disposal.

AAFC's BSE recovery efforts have contributed to help the Canadian beef industry deal with the impacts of BSE by supporting measures to increase the viability and profitability of Canada's agriculture and agri-food sector.

Ruminant Slaughter Facility Assessment Assistance Program and Ruminant Slaughter Equity Assistance Program

The Ruminant Slaughter Facility Assessment Assistance (RSFAA) and Ruminant Slaughter Equity Assistance (RSEA) programs have been successful in increasing Canada's slaughter capacity by contributing to producers' investments in slaughter facilities.

Program documents indicate that federally regulated weekly slaughter capacity has increased from an estimated 73,140 head in 2003 to a projected 102,325 in 2007, implying a Canadian kill in excess of five million head annually. This is higher than the expected 4.5 million head of fed and non-fed cattle available for slaughter in 2007, which could be reduced by the number of live cattle that are exported. As a result, AAFC has suspended and cancelled the RSFAA and RSEA programs as sufficient slaughter capacity has been, or soon will be, established.

In 2006-07, the RSEA program funded the establishment of one new federally inspected slaughter facility and the expansion of two federally inspected slaughter facilities. It did not fund any projects to upgrade provincially inspected facilities to meet federal standards. The three projects approved total $10.3 million in funding.

Despite the successes of these programs, some experts believe Canada now faces or risks an over-capacity situation, which could be exacerbated if export markets remove the ban on shipments of live cattle over 30 months of age. Program documents suggest that, in 2006, Canada was using 60 to 70 per cent of its slaughter capacity, and suggest that plants using less than 80 per cent of their capacity will face difficulties achieving profitability.

Ruminant Slaughter Loan Loss Reserve Program

In 2006-07, four projects were approved under the Ruminant Slaughter Loan Loss Reserve Program, for a total commitment of $29.12 million of the $41.7 million available through the program. Of that total, $24.92 million has been disbursed to lending institutions involved with the projects. The planned slaughter capacity is 569,000 head per year.

Program Activity: Food Safety and Quality (FSQ) 

Food Safety and Food Quality - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
66.8	451

Canada has a firm reputation as a producer and supplier of food products that are among the safest and highest quality in the world. The Government of Canada works with the provincial and territorial governments and portfolio and industry partners to uphold Canada's reputation for food safety, and ensure Canadians and other consumers continue to get the nutritious, high-quality food and food products for which Canada is known.

Under the FSQ program activity, AAFC provides policy direction, along with programs, services and tools for the industry to maintain Canada's solid international reputation regarding food safety and quality. These include an on-farm food-safety program, traceability initiatives, support for quality-control systems and data-management systems, and research and technology transfer.

Details of Performance

The expected results for the department's FSQ program activity in 2006-07 were:

• consumers confident about the safety and quality of food produced in Canada;
• industry able to meet or exceed market requirements for agri-food safety and quality, including animal and plant health;
• exposure to hazards reduced thereby protecting human health; and
• value-added opportunities for the sector through the adoption of food safety, food quality and traceability systems.

Expected Result: Consumers confident about the safety and quality of food produced in Canada
Status: Met

In 2006, the results of a national survey on consumer perceptions of food safety and quality were compared to those of a similar survey from 2004. While the findings cannot easily be attributed directly to AAFC initiatives, they are valuable from the perspective of Canada's agriculture and agri-food sector, and support the department's achievements toward maintaining and increasing consumer confidence.

• Consumers continue to give Canadian food top scores for freshness, taste and consistent quality and have marginally increased their perceptions of Canadian food as healthy;
• 92 per cent of Canadians feel that the quality of food produced in Canada is better in terms of quality than food produced in other countries;
• nearly all consumers are confident in the safety of our food supply, with four in 10 completely confident and more than half somewhat confident. This is a significant increase in confidence since 2004, when 3.5 in 10 said they were completely confident and an equal number somewhat confident;
• nearly half of all consumers now feel in control over what is in the food they buy than they did in 2004 - an increase of seven points - and fewer consumers report spending time worrying about the safety of the food they eat;
• managing animal disease ranks as the most important factor in maintaining consumer confidence in Canadian food safety, followed by managing the concern of hormones, antibiotics and chemicals on plants and in animals; and
• consumers continue to show little confidence in the ability of the Canadian food system to manage genetically modified organisms and the use of hormones, antibiotics and chemicals.

Sub-Activity: Policy Planning and Integration

In 2006-07, AAFC began work on a national food quality policy to provide a uniform approach to government decision-making, predicated on both public good and economic benefit. AAFC collaborated with its portfolio partners, the Canadian Food Inspection Agency and the Canadian Grain Commission, to develop a food quality policy decision-making process as a first step towards policy development. Work will continue in 2007-08 to develop a food quality policy consultations strategy including stakeholders from across the entire food system.

The department worked to enhance collaboration and oversight of food safety and quality activities performed under the APF. A federal-provincial-territorial working group provided the forum for ongoing discussion, sharing of information, and monitoring of activities and issues under the FSQ Chapter.

Sub-Sub-Activity: Traceability

A thorough and effective traceability system is an essential component in maintaining and advancing consumer confidence in Canadian agriculture and agri-food. In 2006-07, AAFC worked with the provinces, territories and agriculture and agri-food sector to accelerate the implementation of a multi-species traceability system including animal identification, premise identification and the tracking of animal movements.

Under the system, the tracking and tracing of livestock came into effect, beginning with animal identification for cattle and bison in 2001 and sheep in 2004. The system will manage all aspects of animal and product identification, and will include, by 2009, premises identification and movement data.

Below are some of the major achievements made on traceability in 2006-07.

Canadian Cattle Identification Agency (CCIA)

The CCIA received an incremental approval of funding of $300,000 in 2006-07 as an amendment to an existing contribution agreement to integrate its old Cattle Tracking System with a new internet-based system called the Canadian Livestock Tracking System (CLTS). This new system was released in January 2006 and uses Radio Frequency Identification technology.

The system tracks age verification (AV), premise identification and movement and sighting, and has allowed for new value-added services to be added to further enhance the CCIA's traceability program. Since its release, the CLTS has provided the cattle industry with a reliable and integrated method of data retention to re-open and keep international and domestic markets open to Canadian beef exports. The system also assists the CFIA in locating physical locations of animals in the event of animal health or food safety crisis.

To date, the CCIA has allocated or sold more than 56 million unique ID numbers to tag manufacturers across Canada. Since the introduction of AV to the cattle industry, the CCIA has processed more than 202 million events within the system and recorded more than 3.7 million birth dates. AAFC, the CFIA and the CCIA are working together to conduct, review and evaluate the industry's AV program, as required by international markets to keep market access open to Canadian beef exports. As a result, AV audits have been carried out to ensure that the integrity of the information submitted to the database is sustained. This audit process began in December 2006 with the CCIA sending letters of intent to 478 randomly selected producers across Canada. The CCIA has reported a tremendous positive response to the industry's animal identification and traceability initiatives.

Canadian Integrated Traceability Program (CITP)

Under the CITP, 15 projects were approved for a total funding commitment of $1.5 million (contracted $600,000). Projects approved under the program support traceability pilot projects to accelerate the development, implementation and integration of traceability systems across the Canadian meat and livestock industry.

Canadian Livestock Identification Agency (CLIA)

CLIA was funded to develop a self-sustainable financial and management model for the agency and national standards for a comprehensive national livestock identification system. It would also make recommendations for the establishment of such a system.

The Business and Finance committee submitted funding model considerations based upon three levels of activities to the Board of Directors. In addition, the CLIA together with working groups from the Canadian Cattle Identification Agency (CCIA) and the Canadian Pork Council (CPC) developed a business structure and governance model for the Canadian Livestock Traceability System (CLTS) that will be presented to the CCIA and CPC.

In October 2006 the CLIA national Standards and Targets Working Group presented their review of Traceability Standards and Performance Objectives covering the following categories: overarching system standards, protocols and procedures, animal identification, premises identification and animal movement. There has been a significant amount of progress made by CLIA to build industry consensus on national standards that would form the basis for a Canadian Livestock Traceability System.

The total funding for the CLIA project is $1.1 million. The expenditures so far have been $300,000 in 2006-07 and $400,000 in 2005-06.

Canadian Radio Frequency Identification Reader Program (CRFID)

The CRFID Reader Program is a reimbursement program with the objective to accelerate a comprehensive livestock tracking and tracing system in support of a traceability initiative. Applicants purchase an eligible radio frequency reader and then apply for a 50 per cent reimbursement for the costs of the reader and associated hardware and software costs - up to $3,000 for panel readers and $1,000 for handheld readers. Such support also encourages participation and reduces the costs of compliance and enforcement.

As of March 31, 2007, the CRFIP had reimbursed 125 applicants for $100,000 of the total $800,000 allocated to the program. On May 17, 2006, the program was extended to December 31, 2007, the list of eligible applicants was expanded to include commercial feedlots, truckers and community pastures, and applicants can be reimbursed for more than one reader.

Since the launch of the program in April 2005, 26 slaughter and processing plants, 23 sales barns, 42 veterinarians, seven schools, two dead-stock operators, and 25 commercial feedlots have purchased readers.

A communications plan has been developed to increase participation in the CRFID program.

Expected Result: Industry able to meet or exceed market requirements for agri-food safety and quality, including animal and plant health
Status: Mostly Met

Domestic and international market requirements for food safety and food quality are consistently high, with an increasing focus on getting the maximum health benefits from food. As detailed below, Food Safety and Food Quality programming has assisted industry in developing food safety systems, which will help maintain Canada's ability to provide safe, high-quality food products.

Sub-Sub-Activity: Canadian Food Safety and Quality Program

AAFC works through the Canadian Food Safety and Quality Program (CFSQP) to help the agriculture and agri-food sector meet the food safety and quality requirements of consumers. There are three components to the program: 1) Systems Development, which provides funding to help industry associations develop systems that form the foundation for food safety, quality assurance and traceability systems; 2) On-Farm Implementation, and 3) the Food Safety Initiative, both of which help increase the capacity of producers' and processors' to implement their systems and brand Canada as a supplier of safe and high-quality food and food products.

Systems Development (SD)

The SD component is made up of an On-Farm Element, Post-Farm Element, Traceability Element, and Food Quality Element. In 2006-07:

• under the On-Farm Element, 16 of 19 eligible industry organizations were at various stages of system development. Of those 16 organizations, 10 completed the first part of a three-part CFIA recognition process , two completed the second part of the process and the remaining four are in process. In total, 17 projects worth $5.2 million were approved in 2006-07, compared to 12 projects and$2.3 million in 2005-06;
• under the Post-Farm Element, 13 of approximately 28 eligible organizations participated and had systems at various stages of development. The 13 projects were approved for $2.9 million in funding for 2006-07, compared to three projects and three project amendments worth $440,000 in 2005-06; and
• under the Traceability Element, two projects worth $650,000 were approved in 2006-07, compared to three projects and one project amendment worth $700,000 in 2005-06.

The Systems Development component continues to face challenges, including:

• the average three- to six-year timeframe needed for a national organization to develop a food safety system. As national organizations began developing their food safety systems, there was a lack of expertise in this field. Organizations had to develop this expertise as they were developing these systems;
• the post-farm sector's lack of prior knowledge and expertise on Hazard Analysis Critical Control Point, systems have taken longer to complete than originally anticipated. When the program began, national post-farm associations did not have food safety expertise originally anticipated. This expertise had to be created and an awareness had to be built to encourage voluntary industry participation;
• the lack of a national industry association with staff dedicated to food safety to co-ordinate the efforts of the post-farm sector in developing food safety systems; and
• the lack of a government recognition process for the post-farm gate sector, as there is for the on-farm sector with the CFIA's previously mentioned three-step recognition process. The CFIA is currently exploring post-farm gate recognition. This will most likely be part of future food safety programming.

Overall, in 2006-07, the number of approved projects under the SD component of the CFSQP increased by more than 178 per cent over 2005-06, 18 last year to 32 this year. The total amount of funding also increased - from $3.4 million last year to $8.8 million this year.

On-Farm Implementation (OFI)

Under the OFI component, four national commodity organizations offered workshops and technical support (services or equipment purchase) on food safety directly to farmers. Under OFI, two projects worth $6.6 million were approved during 2006-07, compared to two project amendments approved in 2005-06 worth $3.4 million.

There were two main challenges related to OFI for 2006-07, which resulted in lower program participation than targeted:

• for a national producer organization to apply for funding under OFI, it must first have developed an on-farm food safety system program, and completed the CFIA's technical review process and received a letter of completion of the process. On-farm food safety systems can take up to six years to complete. As the pool of expertise is developed, it is expected that the time period to develop a food safety system will decrease; and
• several eligible national commodity organizations have not applied for funding under OFI as they or their provincial delivery agents were not in a position or had the capacity to administer the OFI. Future programming will look at various options to ensure a seamless delivery and administration of OFI.

Food Safety Initiative (FSI)

Under the FSI component, consensus was reached among the joint federal, provincial and territorial food safety and quality working group in identifying the following priorities for the initiative:

• to support non-federally registered processing plants in developing food safety systems; and
• to conduct outreach and staff training to strengthen provincial food safety structures.

Financial assistance was provided to six provinces (B.C., Alta., Sask., Man., Ont., and N.S) after Saskatchewan joined the FSI in August 2006, bringing approved funding under this component in 2006-07 to $48.9 million from $48.3 million in 2005-06. All six provinces listed above are involved in outreach activities aimed at improving Canada's food safety infrastructure by increasing the industry's awareness and knowledge of food safety systems.

Of the 4,840 non-federally registered processing plants in Alberta, Manitoba and Ontario, 553 projects were approved under the FSI in non-federally registered processing plants, and 25 pilot projects were approved by the provinces to date.

The fact that the FSI is not being delivered in all provinces remains a challenge. It is hoped that in future programming, all provinces would participate.

Expected Result: Exposure to hazards reduced thereby protecting human health
Status: Met

In 2006-07, AAFC conducted research and worked with its partners on other collaborative efforts to minimize the risk and impact of food-borne hazards on human health, and reduce the overall level of exposure to agri-food hazards. This helped enhance the ability of the agriculture and agri-food sector to keep the food system safe and produce quality food products for consumers.

Sub-Activity: Food Safety and Quality (FSQ) Science

AAFC's FSQ science program covers research and technology development in food safety, food quality and nutrition, as well as in food processing across several sectors such as meat, dairy, horticulture products, cereals, and processed food products. It is based on the use of innovative technologies and processes that contribute to safer and higher-quality food products.

Food Safety Science

The establishment and monitoring of food safety standards relies initially on the ability to detect and quantify food-borne hazards on the farm, in products, or during processing. Much progress has been made in this regard.

A new research program on allergen was initiated and received international recognition through Europreval, an EU-based large allergen research consortium, which accepted AAFC as a regular partner. This effectively gave Canada free access to the largest data bank of scientific information on allergens and allergenicity in the world. In addition, the effects of food processing on allergenicity of casein have been partially clarified.

Some examples of tangible benefits achieved for the industry and Canadians in 2006-07 include:

• a method to detect noroviruses in oysters was successfully used to investigate an outbreak linked to oyster consumption in B.C.;
• a method to detect mycotoxins was used to demonstrate that B.C. wines from late-harvested grapes were free from the mycotoxins ochratoxin A and tenuaazonic acid, contrary to what was previously believed;
• a physico-chemical detoxification strategy for barley contaminated with the mycotoxin deoxyvalenol (DON) was developed;
• a bacterial strain was isolated from chicken gut that could detoxify material contaminated with DON, opening the way to a novel biological decontamination process;
• the pathogenic bacterial strains in feedlots, slaughterhouses and beef packing plants were partially mapped and are being characterized for their resistance to antimicrobials;
• bacteriophagic viruses, natural antimicrobials, probiotics, prebiotics, and competing flora are being tested as substitutes for the prophylactic use of antibiotics in animal feed, which would result in a decrease of human exposure to bacterial pathogens resistant to clinical antibiotics;
• Hazard Analysis Critical Control Points in meat packing plants and throughout the distribution system were characterized and a better understanding of the origin of E. coli contamination in beef was achieved; and
• methods were developed and tested for E. coli decontamination of fresh lettuce and alfalfa sprouts.

In addition, the APF helped encourage collaboration among partners in 2006-07, by bringing together complementary expertise, and allowing for the integration of science in new standards and guidelines. For example, scientists at AAFC, CFIA, and Health Canada jointly created the Federal Food and Environment Virology Network. The network has yielded novel viral detection methods in food, with a first method already approved in Health Canada's compendium of analytical methods. This was recognized by the deputy minister of Health Canada in early-2007 as a significant achievement.

The scientific productivity of the food safety group is outlined in the following table:

Publications (scientific journals)	53 externally peer-reviewed publications and 28 externally peer-reviews abstracts out of a total contribution of 116 articles
Innovations	22 gene sequences, 10 improved processes, two improved products out of a total of 59 contributions
Technology Transfer	15 invited talks, 34 oral communications, 53 posters, 54 technical transfer, 15 reports out of 192 contributions
Cooperative Research	66 projects realized in collaboration

Challenges

The APF memorandum of understanding provided common inter-departmental objectives and kept AAFC on track to fulfill science objectives (virology, pathogenic bacteria, antimicrobial resistance, and chemical safety allergen) underpinning the overall food safety outcomes. In 2006-07, AAFC hired two virologists - one each at the Lacombe and Guelph research centres - to increase capacity in food safety research. Three AAFC employees were sent for long term training to become scientists in the area of pathogenic microorganisms and will be coming back in 2007-08. Scientific expertise to fulfill some objectives are lacking in rapidly advancing areas such as allergen research and food safety processing. The department has initiated scientist staffing actions to address these needs.

Food Quality Science

Food quality science is highly product-oriented. Cereal quality work is performed in Swift Current, Sask. and Winnipeg. Horticultural product quality work is being performed at Kentville, N.S. and Summerland, B.C.. Meat and dairy quality work is being realized at St. Hyacinthe, Que., Lacombe, Alta. and Lennoxville, Que. More complex food systems are being studied in St. Hyacinthe. Food Quality Science is also well connected to the various sectors. A variety of technologies were assessed for their potential to maintain or enhance food quality in cereals, horticultural and meat products. Some of them have been already transferred to the industry.

In 2006-07, as part of the human nutrition research initiative, two general activities took place: 1) the development of protocols and procedures to establish an ethics committee to evaluate research and development activities in the area of human nutrition and, 2) the development of a laboratory capability to measure fecal components (microbiological and chemical) essential to assess efficacy in human feeding trials.

The sensory science group is a small but essential component of the department's food research. Work in this area is performed at centres in Summerland, St. Hyacinthe and Kentville. Recent work has focused more extensively on consumer preferences, rather than on the development of methodologies with the hiring of one scientist specialized in meat consumer preferences. Through the long-term training program, one scientist is currently being trained in consumer perception and preferences.

The scientific productivity of the food quality group is outlined in the following table:

Publications (scientific journals)	188 externally peer-reviewed publications and nine externally peer-reviews abstracts, 20 book chapters and five books out of a total contribution of 281 publications
Innovations	eight gene sequences, 19 improved processes, eight declarations of invention, nine improved systems out of a total of 65 contributions
Technology Transfer	73 invited talks, 67 oral communications, 113 posters, nine press articles, 22 technical transfer, 45 reports out of 354 contributions
Cooperative Research	153 projects realized in collaboration

In the area of product development, platforms are being used to demonstrate the technical feasibility of various technologies. Confidential technical work performed by companies under the St. Hyacinthe industrial program (ISO-9001/2000) generates revenues of $500, 000 per year.

Challenges

AAFC officially declared a mandate to perform research and development into nutrition in May 2006, meaning the group working on this research within the department is very new. In addition, much of the engineering expertise within the department, especially in the area of food processing, is disappearing as scientists take management positions, and, in some cases, retire.

There is also an ongoing challenge to ensure foods incorporating the health benefits of bioactives are palatable to consumers.

Sub-Sub-Activity: Traceability

AAFC's work on traceability, as described in the expected result section titled Consumers confident about the safety and quality of food produced in Canada, also contributed to reducing exposure to hazards in 2006-07. For more information, please see that section .

Also in 2006-07, work continued on a national framework to define the impact of antimicrobial use on-farm on the prevalence of antibiotic-resistant infections in humans. Under this project, which is being piloted on swine, one full year of data has been obtained and is currently being analyzed. A framework for national surveillance of enteric illness and the ability to track it back to potential food, animal, water, environment, and site sources has been operating for the past year.

Expected Result: Value-added opportunities for the sector through the adoption of food safety, food quality and traceability systems
Status: Not Met

While AAFC achieved its planned objectives during 2006-07 related to the development and implementation of food safety, quality and traceability systems, no reliable cause and effect data can be identified to determine how this work contributed to value-added opportunities for the agriculture and agri-food sector, resulting in a performance status rating of Not Met. The indicators of success are being revised.

Program Activity: Markets and International 

Markets and International (70%) - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
91.8	494

Canadian producers and processors have established a strong reputation as efficient and reliable suppliers of safe, high-quality products. But in an increasingly competitive marketplace, the sector cannot be complacent. It depends significantly on the international market, meaning the integration of international and domestic activities is critical.

AAFC's approach for 2006-07 was designed to leverage domestic progress into success on the global stage. Market success requires supply-chain co-ordination to meet consumer demands and create enhanced value. International-market readiness begins with domestic system integration to provide evidence that Canada is a world-leading supplier of safe, high-quality, environmentally friendly food. Consumers are increasingly demanding these requirements be met; Canada's competitors are increasingly meeting them. Ensuring Canadian producers and processors can do the same is key to the success of the sector.

Details of Performance

The expected results for the department's Markets and International program activity under the Security of the Food System strategic outcome in 2006-07 were:

• increased exports of Canadian agriculture and food products;
• increased domestic and foreign investment in Canada's agriculture and food sector;
• increased domestic market share of Canadian agriculture and food products; and
• increased influence in the development and application of international rules, technical standards and policies governing the trade of agriculture products.

Expected Result: Increased exports of Canadian agriculture and food products
Status: Mostly Met

The Government of Canada's work in 2006-07 resulted in improved market access in a number of important international markets. Primary product exports increased to $12 billion in 2006, from $10.2 billion in the previous year, mostly due to the increasing price of commodities such as wheat and canola. In addition, a larger share of Canadian farm production was exported in 2006 compared to 2005, from 59 to 75 per cent in the case of wheat, from 70 to 75 per cent for oilseeds and from 44.9 to 47.3 per cent for cattle and beef.

It is worth noting however that processed food exports declined to $14.8 billion from $15.5 billion in 2005, mostly due to significant declines in the export of meat products. Processed food exports now account for 53 per cent of total Canadian agri-food exports to the world.

Sub-Activity: Market Access and Market Development

The effects of BSE continued to be felt in 2006-07, but AAFC made considerable progress in its efforts to regain markets for Canadian beef and cattle. Various stages of market re-opening were achieved in: Russia, which is again accepting live Canadian cattle following high level meetings between Canadian and Russian agriculture officials; Egypt, which re-opened its borders to Canadian livestock in February 2007 following capacity-building efforts on the part of AAFC in that country; as well as El Salvador, Macedonia, Thailand, and Indonesia.

AAFC also continued to work with Mexico to avoid any unnecessary delays in the resumption of trade in Canadian dairy heifers, and met Venezuelan officials to move a number of trade issues forward including Canadian access for cattle and beef. The department also raised these trade issues at the World Trade Organization's (WTO) Committee on the Application of Sanitary and Phytosanitary Measures (SPS), which sets out the basic rules for food safety and animal and plant health standards.

Through the Genetics Marketing Program and the Other Ruminants Market Development Program, AAFC provided $2.5 million in support of 10 industry association projects to implement marketing strategies targeting traditional and non-traditional markets. Russia was a targeted country of development efforts and, as a result, a contract for almost 2,000 cattle with a value of $7.5 million was negotiated. This was the first significant shipment of breeding cattle since the discovery of BSE in May 2003 and was facilitated through government negotiation of access.

The Sustaining the Genetic Quality of Ruminants Program provided $6.5 million in support of 17 industry association projects to help maintain Canada's reputation for genetics and the marketability of genetic ruminant products. Canadian Dairy Herd Improvement partners worked on developing a National Dairy Cattle Health and Disease Data Management System, the primary objective being the creation of a national dairy cattle health and disease database for herd management and genetic evaluation. The system will move Canada into the forefront in terms of recording animal health information. In 2006, exports of dairy semen increased by 18per cent or $10 million, up from $59 million in 2005 to $69 million in 2006.

The value of Canadian beef and cattle exports is now $2.6 billion, compared to pre-BSE levels of $3.9 billion. The value of exports of these products has increased steadily after the BSE crisis emerged in 2003.

In addition to the beef and cattle sector, AAFC helped other sectors achieve success in 2006-07. Departmental technical experts have been working with India to develop a protocol for pulse crop imports, and in 2006 that country began accepting Canadian wheat shipments for the first time since 1999. Through negotiations, the Canada-Venezuela Potato protocol and the Canada-Mexico Potato protocol were extended, facilitating Canadian exports to these markets, and canola exports to Argentina were resumed after Argentine authorities stopped issuing import permits.

The department also worked to ensure the remaining tariffs on Canadian bean exports to Mexico are liberalized as scheduled under NAFTA, and provided support for the ongoing HS 2007 technical rectification proposals for the Canada-Chile FTA product specific rules of origin. This process is ongoing and it not expected to reach completion until 2008.

Total Canadian exports of agri-food and seafood to Russia increased dramatically in 2006-07, reaching a value of nearly $220 million. Seafood exports to the country were below $1 million in 2002-03, but by partnering with Russian importers following participation at major Russian seafood trade shows, the industry exported close to $44 million in 2006. Canadian swine and genetic exports also increased following a number of outgoing missions, and were valued at more than $150 million in 2006. Frozen and prepared shrimp, white fish, cattle embryos, animal feed and pet food accounted for much of the remainder of the $220 million in exports to Russia.

AAFC delivery of international capacity building programming contributed to the resolution of bilateral market access issues. In one instance, China restricted imports of Canadian peas containing specified excess levels of selenium -- a naturally occurring mineral. As a result of relationships and commitments developed while representatives of AAFC and several Chinese ministries were members of the board overseeing AAFC capacity building programming in China, AAFC's board representative was able to negotiate an interim solution to this trade barrier. As a result, China now tests only the processed or semi-processed products of pea imported to Shandong province (importing more than 90 per cent of peas from Canada, which has a much lower level of selenium); there is agreement that there is no selenium standard for feed pea, which can thus be exported to China without the selenium concern; and the Ministry of Health of China began a review in July 2006 of the selenium standard, in co-operation with Canada.

Pressure used by AAFC includes the negotiation and proposition of binding SPS provisions in the five ongoing FTAs, the multilateral expression of trade concerns at two WTO SPS Committee meetings held in June 2006 and February 2007, and the bilateral expression of trade concerns in ten bilateral meetings held on the margins of the WTO SPS Committee meetings (March 2006, June 2006 and February 2007).

In meetings held on the margins of the meetings mentioned above, AAFC also pushed for improved market access for Canadian plant products.

Informal negotiating rounds were also held with the Central America 4 (CA4, made up of El Salvador, Guatemala, Honduras and Nicaragua) in an effort to formally re-launch full negotiations while trade negotiations with Korea are well advanced after ten rounds of talks. In addition, Canada formally re-launched negotiations with Singapore and with the European Free Trade Association (EFTA) with good progress achieved towards completing these FTAs.

The Government of Canada also held exploratory talks with the Dominican Republic and with the Andean Community (Colombia, Peru, Ecuador and Bolivia) on the feasibility of launching FTA negotiations. The provinces and agriculture and agri-food sector stakeholders were consulted on how best to achieve Canada's objectives in the regional and bilateral FTA agenda.

Expected Result: Increased domestic and foreign investment in Canada's agriculture and food sector
Status: Partially Met

Due to issues of confidentiality, quantitative measurement of investments from both foreign and domestic sources in Canada's agriculture and agri-food sector are difficult to assess. While AAFC is aware of specific investments, there are certainly others that remain undisclosed due to reasons of confidentiality, leading to what could be only a partial account. Although actual tracking may prove difficult, there were notable highlights in 2006-07 which demonstrate the department's progress.

Domestic and foreign investments in Canada's agriculture and food sector have increased in the past year. Canadian and international agri-food companies continued to choose Canada as a location to invest. This has been demonstrated through various forms including new incremental (greenfield) investment, joint-ventures, R&D partnerships, acquisitions and expansions by multinationals and small-to-medium enterprises.

The department collaborated with federal and provincial investment partners, including the Department of Foreign Affairs and International Trade's (DFAIT) Foreign Posts, to support promotion initiatives aimed at increasing awareness of Canada's advantages as an investment location. Taking advantage of these collaborative partnerships, AAFC has increased awareness of Canada's advantages, including the safety and quality of its inputs, the excellence of its science and research in the area of bioproducts and bioprocesses, and its cost-competitiveness. This was accomplished through the use of investor seminars, face-to-face meetings with potential investors and direct responses to corporate inquiries.

In addition, training at DFAIT's Foreign Posts has increased the knowledge and capacity of the staff, and enabled them to better target foreign firms and identify investment opportunities.

However, the department noted three key challenges in 2006-07 that affected the ability to increase investment in the sector:

• the increased availability of foreign incentives, particularly financial-related incentives, has increased global competition to attract investment;
• decreasing cost-competitiveness versus Mexico due to low cost labour and, in some cases, improved infrastructure has made it a more attractive location for foreign investment and therefore a direct substitute for choosing to invest in Canada to serve the North American market; and
• continued rise of the Canadian dollar, eroding long-standing cost advantages in the North American market.

Expected Result: Increased domestic market share of Canadian agriculture and food products
Status: Mostly Met

In 2006-07, AAFC made progress on several fronts with activities that promoted Canadian products in the domestic market and supported agriculture and food producers in developing the domestic market. This progress has contributed towards meeting the ongoing and long-term objective of increasing domestic market share for Canadian agriculture and food products.

Key activities in this area in 2006-07 included the following:

• a study was undertaken to gain an understanding of the attitudes of Canadian health non-governmental organizations with respect to the role of the agriculture and agri-food value chain in innovating for health. The results should help facilitate mutually productive relationships among government, industry and the health community;
• progress was made on national approaches to the regulation of organic agriculture and wine quality, legislation for spirits blending and certification and standards for animal welfare. These collaborative AAFC/CFIA initiatives, developed through a joint task force on organics, should allow for maintained or enhanced market access for industry and sound information for consumers over the long-term;
• through the Seafood Value Chain Roundtable, AAFC sponsored domestic consumer market research which will support industry marketing efforts to increase the domestic consumption of mussels and lobsters in Canada;
• progress was made regarding industry acceptance of national wine quality standards that will lead to support and enhancement of domestic consumer recognition and consumption of Canadian wine; and
• a Canadian consumer survey report was completed, and, in partnership with Statistics Canada, an industry survey report was completed aimed at better understanding the Canadian functional foods and nutraceutical landscape in Canada to capitalize on new and existing market opportunities.

Expected Result: Increased influence in the development and application of international rules, technical standards and policies governing the trade of agriculture products
Status: Met

AAFC worked in 2006-07 to influence policy decisions on technical issues and the development of standards in a broad range of multilateral decision-making fora. Together with its federal government partners, and in consultation with the provinces and the full range of stakeholders from throughout the sector, the department worked domestically and internationally to build informed positions and influence negotiations on issues of key importance to Canadian agriculture and agri-food, and best achieve Canada's agricultural trade policy objectives.

Canada remained very active last year, in particular at the June 2006 Ministerial meeting in Geneva, in pressing for an ambitious outcome at the WTO. Canada was particularly influential in pressing not only for an ambitious overall tariff reduction formula, but also for substantial reductions to and disciplines on trade-distorting domestic support and the elimination of all forms of export subsidies. Minister Strahl and Minister of International Trade, David Emerson, at the Davos meeting in January 2007, reiterated the need to move the Doha Round forward.

Canada participated actively through a range of groups and activities at the WTO to exchange new ideas and perspectives about how to advance the negotiations. For example, Canada has been involved in longstanding collaboration with the Cairns Group countries to press for an ambitious outcome in the WTO agriculture negotiations.

The Government of Canada also consulted extensively with provinces and the full range of agriculture and agri-food sector stakeholders, including supply managed and export oriented industries, about how best to achieve our agricultural trade policy objectives.

In the context of trade-related aspects of intellectual property (TRIPS), AAFC:

provided input and analysis to instructions and participated directly in formal and informal negotiating sessions and discussions. The department's participation was focussed on responding to demands by some WTO members for amendments to the WTO TRIPS agreement that would increase protection for geographical indications at the expense of the rights of existing trademark holders in Canada.

AAFC has been actively involved in the ongoing work of the WTO Committee on Technical Barriers to Trade (TBT), which deals with regulatory and other non-tariff barriers to trade that are not related to plant, animal and human health. In 2006-07, AAFC:

provided input on horizontal issues as well as specific trade concerns facing the agriculture and agri-food sector. In November 2006, the fourth triennial review of the program of work of the TBT Committee was successfully completed and Canada's objectives were met.

The federal government also continued to advocate Canada's interests with other WTO members, including the European Union and the U.S., and continued to ensure these countries respect their current WTO obligations. For example, the Government has launched a WTO dispute settlement process against US agricultural subsidies designed to influence the debate surrounding the drafting of a new U.S. Farm Bill in 2007. Canada believes many U.S. programs are trade-distorting and in need of reform. Canada's action was noted in the U.S. media as well as with the U.S. Congress. Agriculture Secretary Mike Johanns used this case to advocate the need to reform the U.S. Farm Bill to mitigate the risk of future WTO challenges. Canada also continued its longstanding collaboration with the Cairns Group countries to press for an ambitious outcome in the WTO agriculture negotiations.

AAFC's successful advocacy efforts in the United States culminated with the publication for comment of the U.S. Minimal Risk Region Rule #2, or the BSE Second Rule. AAFC continued to actively advocate for the repeal of the United States' mandatory Country-of-Origin labeling legislation, and monitor the U.S. Farm Bill process to ensure U.S. proposals do not harm Canadian interests. Also, on the issue of APHIS inspections and user fees, despite Canadian interventions at all levels in 2006-07 for the removal of the rule and the presentation of an innovative alternative proposal, the U.S. proceeded with full implementation on June 1, 2007. This U.S. decision largely reflects the U.S. focus on generating increased revenue sources to finance border activities.

Canada's influence in agricultural negotiation sessions and other multilateral fora also increased in 2006-07. Some key examples include:

• AAFC participated in the ongoing work of the Codex Committee on Food Labeling and was actively involved in developing Canadian positions for other Codex meetings. Canada defended its position against mandatory country-of-origin labeling provisions in 16 cheese standards and general mandatory labeling of genetically engineered food;
• Canada signed the World Wine Trade Group Agreement on Requirements for Wine Labelling in January 2007. In keeping with Canada's international trade policy objectives, the agreement will help facilitate Canadian wine exports and lower labelling costs for the wine industry by removing certain technical barriers to trade. The agreement also protects the reputation of Canada's flagship wine export, icewine, by defining what may be labelled as icewine. A regulatory change will be required to implement the agreement and the Government of Canada is considering a number of options for its implementation; and
• re-launched negotiations with Singapore and with the European Free Trade Association (EFTA).

Other key results related to this Program Activity

Negotiating organic equivalency standards with the European Commission (EC)

AAFC's active involvement in the process of establishing and modifying national organic production standards, often through joint efforts with CFIA, contributed to the publication by the Standards Council of Canada of Canada's National Organic Standards in September 2006. Based on these standards, Organic Products Regulations were promulgated in December 2006, setting the stage for equivalency negotiations with export destinations, such as the EU. A formal request for equivalency, including line-by-line comparative tables, was submitted to the EU in December 2006 and is currently being reviewed. Achieving equivalency will facilitate the free flow of organic products out of and into Canada, while respecting the import requirements of respective regulations.

Increasing trade advocacy efforts abroad

In 2006-07, Canada worked to influence and advance Canada's agricultural and agri-food trade policy interests through increased trade advocacy. Canada rejuvenated the Canada-Mexico Consultative Committee on Agriculture (CCA), established new terms of reference for the Canada-China Joint Agriculture Committee as well as the joint collaboration with India in developing a Cooperation Committee on Agriculture and Food, and signed an MOU establishing a CCA with Brazil. These successes will provide additional venues for productive and mutually beneficial consultations.

In the context of effective participation in bi-lateral and multi-lateral meetings (e.g. Codex Ad Hoc Task Force on Foods Derived from Biotechnology, APEC, IICA) on a number of issues (e.g. adventitious presence, liability and redress provisions of the Cartagena Protocol on Biosafety), efforts were successful in showing leadership and advocating Canada's position on these and other issues abroad.

Reviewing the Canadian regulatory environment to enhance the competitiveness of Canadian agriculture

Through participation in various intra- and interdepartmental fora (e.g. Portfolio Working Group on Adventitious Presence, Portfolio Seed Policy Coordination Group, Working Group on Animal Biotechnology) and in bilateral work with other departments and agencies, AAFC's efforts were successful in integrating international trade policy considerations into work on issues such as adventitious presence and animal cloning.

In 2006-07, the department provided issue-specific advice to the Oilseeds Roundtable through presentations on the Cartagena Protocol on Biosafety and adventitious presence, and supported the work of the roundtable's International Trade Issues Working Group by co-ordinating the production of an independent study on the potential impact of country regulations related to biotechnology on the Canadian oilseed industry. Based on the conclusions of the report, the working group recommended to the roundtable that the major issues could be addressed either by recommending that the Canadian government adopt certain policy directions or inviting the industry to develop mechanisms to improve the exchange of information on major markets' regulations and policies that apply to genetically modified products.

AAFC continues to co-chair the federal-provincial Working Group on Chapter Nine of the Agreement on Internal Trade (AIT) regarding Agricultural Products and Goods. This working group was tasked with the revision of Chapter Nine of the AIT to make it inclusive of all technical measures, while ensuring the protection of orderly marketing system. A broader-scoped Chapter Nine would help eliminate barriers to agricultural trade within Canada and therefore further liberalize internal trade.

In parallel with the revision of Chapter Nine of the AIT, the department continued to work with the CFIA towards the revision of the Fresh Fruit and Vegetable Regulations of the Canadian Agricultural Products Act to alleviate domestic requirements for the interprovincial movement of apples. This work will directly impact the apple industry in Canada, encourage innovation and increase competition with export markets.

Also in 2006-07, as a result of AAFC's participation on the PCO Smart Regulation's Healthy Canada Theme Table, a draft framework was developed for consultation that is intended to provide increased access to diet-related health claims. In addition, officials with AAFC's Research Branch and Market and Industry Services Branch are working together to develop co-operative approaches with Health Canada in an effort to enhance capacity to improve the quality and efficiency of approval of regulatory submissions for novel food ingredients and health claims.

With the objective in mind of helping ensure Canada's food sector remains competitive with that of the U.S., AAFC commissioned a report on the strategies American food companies and commodity associations use to obtain diet-related health claims. This information provided valuable input as AAFC continues planning for the next generation of agriculture and agri-food-related policy and related programs.

AAFC officials also provided analysis and advice on a range of issues such as trans fat, health claims, natural health products, and the development of the revised Canada's Food Guide to various government, industry and academic networks such as the industry-led Value-Chain Round Tables, the University of Toronto's program in Food Science and Regulatory Affairs and Canada's National Task Force on Trans Fat. More broadly, AAFC also undertook research to explore non-governmental organizational attitudes toward the food industry as a profit-driven partner in innovating for health.

Enhance the abilities of the Canadian food industry to produce high-quality food products while meeting current and future consumer needs

In 2006-07, AAFC made progress on national approaches to the regulation of organic agriculture and wine quality, legislation for spirits blending and certification, and standards for animal welfare. These achievements should allow for maintained or enhanced market access for industry and sound information for consumers over the longer term.

There were numerous challenges facing the department to this end, notably:

• stakeholder difficulty in reaching a consensus on standards, regulations, legislation or enforcement-related issues;
• resolution of technical issues in the organic standard and issues around regulatory implementation;
• delays in deciding on a legislative approach to spirits and in reaching a consensus on national wine standards, which could potentially lead to lost market access for these sub-sectors in the longer run;
• funding delays to cover industry's costs in organic-standard work and for transgenic animal registry system;
• uncertainty regarding appropriate government-industry roles and commitments on food quality attributes, especially animal welfare during the transition from the APF to the next generation of agriculture and agri-food policy, affecting funding assistance options; and
• insufficiency in qualitative and quantitative data available to support policy and regulatory decisions impacting food industry.

The department also completed the second wave of its study titled Consumer Perceptions of Food Safety and Quality, and disseminated the results to government and industry stakeholders for use in policy, program and strategy development. Probing research was also undertaken on the issues of food quality, organics and food safety information sources used by consumers to refine marketing and information dissemination effectiveness.

National Farm Products Council (NFPC) 

National Farm Products Council - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
2.5	14

The NFPC was established in 1972 through the Farm Products Agencies Act. The Council reports directly to Parliament through the Minister of Agriculture and Agri-Food. The Council's main role, pursuant to Part II of the Act, is to oversee the national orderly marketing systems for poultry and eggs, by monitoring the activities of the Canadian Egg Marketing Agency, the Canadian Turkey Marketing Agency, the Chicken Farmers of Canada, the Canadian Broiler Hatching Egg Marketing Agency. In addition and pursuant to Part III of the Act, it also monitors the activities of the Canadian Beef Cattle Research, Market Development and Promotion Agency.

Operating Environment

The Council, in carrying out its duties, consults on a continuous basis with the governments of all provinces and territories with an interest in establishing or exercising the powers of any one or more of the agencies established under the Act.

In addition to its legislative responsibility to review agency operations, orders and regulations, make inquiries into complaints against agency decisions and conduct inquiries into the merits of establishing new agencies, the Council undertakes activities that aim to promote the strength and enhance the competitiveness of the sectors that the Council oversees.

As previously noted, the Council has a legislative responsibility to monitor the operations of the five agencies established under the Act. These duties include the regulatory review and approval of all agency orders and regulations, requiring ongoing review and analysis of agency issues, attendance at agency meetings and regular meetings of the full Council and the agencies' executive members. As well, the Council prepares submissions to the federal Cabinet for any regulatory initiatives of the agencies requiring Governor-in-Council approval.

The Council undertakes activities that aim to promote the strength and enhance the competitiveness of the sectors which it oversees. It has remained committed to working with the agriculture and agri-food sector to meet the challenges and opportunities that arise from significant change in agri-food policies, business trends and market requirements at home and abroad.

Also, the Council remains an active proponent of portfolio management with the aim of providing a comprehensive and coordinated government approach to agri-food challenges and issues that affects the poultry industry. This co-operative approach within the agriculture and agri-food portfolio is done in a manner to maintain the Council's arms-length relationship due to its quasi-judicial status and the managerial autonomy and accountability required in today's modern comptrollership environment.

The Council currently consists of one full-time chairperson and eight part-time members appointed by the Governor-in-Council. The Council is supported by a staff of 19 public servants.

Details of Performance

The expected results for the NFPC in 2006-07 were:

• receive and complete draft federal-provincial-territorial agreements by the three national agencies (the broiler hatching egg agency, the turkey agency and the egg agency);
• establish a levy collection system in place and monitor progress on a check-off imports of beef and beef products;
• action plan to respond to proposed changes to the regulatory framework; and
• continued implementation of the Government of Canada's Management Accountability Framework and further alignment with the framework.

Expected Result: Receive and complete draft federal-provincial-territorial agreements by the three national agencies
Status: Not Met

NFPC has not yet received draft federal-provincial agreements (FPAs) from the three national marketing agencies (egg, turkey and broiler hatching eggs).

Work by the agency has resumed on the FPA for table eggs, and the revised FPA for broiler hatching eggs is nearing completion. The FPA for turkey is expected to resume pending completion of the new allocation policy.

The renewal of federal-provincial-territorial agreements is a very complex process involving many stakeholders and provincial governments. As the WTO negotiations are still underway, and the results are as yet unknown, the renewal of the agency federal-provincial agreements delayed the completion of this commitment.

Expected Result: Establish a levy collection system in place and monitor progress on a check-off imports of beef and beef products
Status: Partially Met

Implementation of a levy collection system on a national basis is halfway completed, with all Western provinces finalizing and implementing their legal infrastructures. Federal-provincial agreements with several provinces need to be implemented and other arrangements need to be made and implemented in the remaining provinces. No levy system for imports will be implemented until the national system is fully operational.

Expected Result: Action plan to respond to proposed changes to the regulatory framework
Status: Partially Met

As part of the ATNCG, the council monitored developments of the WTO negotiations and initiated several meetings with the executives of the four national marketing agencies to raise awareness on potential implications of these negotiations on the Canadian Supply system and discuss next steps and strategies.

As part of the NFPC's oversight role, it worked with the executives of the four national marketing agencies on a regular basis to discuss ongoing challenges, opportunities and potential options in facilitating the marketing of agri-food products.

This is an ongoing item of discussion between the council, the four national marketing agencies and the downstream stakeholders during meetings of the Agencies and provincial boards, conferences and seminars.

Expected Result: Continued implementation of the Government of Canada's Management Accountability Framework and further alignment with the framework
Status: Met

The NFPC completed it's 2006-07 Departmental Staffing Accountability Report (DSAR), which included its responsibilities under the Management Accountability Framework, which sets out the Treasury Board of Canada Secretariat's expectations for senior public service managers for good public service management.

In 2006-07, NFPC management received several training opportunities and took a proactive role in implementing fundamental guiding principles, approaches and tools such as reaffirming organizational and public service values as part of day-to-day operations, focusing on people and citizens, and aligning staffing practices with the new Public Service Employment Act.

Setting key organizational objectives focused on results and performance with strategic Performance and Learning Agreements for all employees was also at the forefront of management practices. This included a management commitment for training opportunities and financial resources to support such requirements.

Sound stewardship and accountability in the review and improvement of operational internal practices and protocols was a major focus of operations at NFPC in 2006-07, and will continue to be a focus in the future.

Overall staffing strategies linking the HR Plan and organizational objectives are now an integral part of business operations at NFPC.

Strategic Outcome: Health of the Environment

Program Activity: Environment 

Environment - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
364.4	2,095

Maintaining access to agri-environmental resources is a common goal. Farmers, industry, governments, environmental organizations, and citizens must work together to achieve the goals of sustainable development to ensure both an economically vibrant agriculture and agri-food sector and a healthy environment.

Canadian farmers have shown they can be admirable stewards of the country's environmental resources. They already apply many good environmental practices, which not only safeguard resources but also help boost the profitability of their operations. At the same time, it is clear that more must be done to conserve the environment. Further, consumers are increasingly basing their buying decisions on their desire to support environmental sustainability.

In 2006-07, governments, producers and industry are looking to accelerate efforts to reduce production risks and impacts to Canada's resources, including air, water, soil, and biodiversity.

Details of Performance

The expected results for the department's Environment program activity in 2006-07 were:

• air: reduced agricultural risks and improved benefits to the health of air and the atmosphere, with key priority areas being particulate emissions, odours, and emissions of gases that contribute to global warming;
• soil: reduced agricultural risks and improved benefits to the health of soils, with key priority areas being soil organic matter and soil erosion caused by water, wind or tillage;
• water: reduced agricultural risks and improved benefits to the health and supply of water, with key priority areas being nutrients, pathogens, pesticides, and water conservation; and
• biodiversity: ensured compatibility between biodiversity and agriculture, with key priority areas being habitat availability, species at risk, and reduction of economic damage to agriculture from wildlife.

Environmental Science

Acting on agricultural risks presumes a sound knowledge of the environment, and specifically of the relationship between agriculture and the environment. It is essential to understand the processes and mechanisms by which agricultural inputs, such as nutrients and pesticides, affect resources, such as air, water, soil, and biodiversity, under different agri-environmental landscapes and management practices. It is also necessary to understand the relations and interactions between the different components of the agri-environment, to reduce the environmental footprint of pest management practices and to determine the outcome of agricultural inputs and wastes in the environment.

Such an understanding is crucial for providing sound advice to policy makers and land resource and extension specialists on the effects of agricultural production on air, water, soil, and biodiversity. The knowledge gained can be used to develop beneficial management practices and indicators of the state of the environment, and also be applied toward the use of innovative environmental technologies, genetic resources and biological information by the sector.

The purpose of environmental research at AAFC is to develop knowledge and technologies that minimize the impact of agricultural production on the resources used by the agriculture and agri-food sector, while maintaining the sustainability of the sector. In 2006-07, this was achieved through three national research themes:

• Soils, Water, and Air Quality, which aims to provide new knowledge on how the agriculture and agri-food sector interacts with the environment and new technologies and practices to minimize the potential adverse impacts of production practices on soil, water and air;
• Integrated Pest Management, which aims to provide new knowledge on how the agriculture and agri-food sector interacts with the environment and new technologies and practices to reduce pesticide leaching in the environment and potentially affecting non-target organisms; and
• Bioresources, which aims to provide new knowledge on how the agriculture and agri-food sector interacts with the environment and new technologies and practices to minimize the potential adverse impacts and enhance the benefits on biodiversity and bio-resources.

Specific productivity for each theme is summarized in the following table. More information on the work presented in this table is available at: Director General's Office, Environmental Health National Science Program, 613-759-1723 or Program Director's Office, Environmental Health National Science Program, 418-210-5003.

Soils, Water and Air Quality
Publications	302 external peer reviewed articles in scientific journals; 72 internal peer reviewed publications; 197 non-peer reviewed scientific articles
Technology Transfer	79 reports; 20 industry articles; eight guides; 19 interviews; 138 invited talks; 14 newsletter articles; 196 oral communications; 17 popular articles; 94 posters; five press articles; 11 technical bulletins; 22 technical transfer activities; two trade journal publications; one other publication
Innovations	three copyrights; one declaration on innovation; one gene sequence; 10 improved designs; one improved genetic material; 36 improved processes; 13 improved products; 63 improved systems; one license; one new variety registration; 52 other innovations; one royalty

Integrated Pest Management
Publications	184 external peer reviewed articles in scientific journals; 53 internal peer reviewed science publications; 42 non-peer reviewed scientific articles
Technology Transfer	46 reports; one industry article; one guide; two interviews; 53 invited talks; six newsletter articles; 32 oral communications; 18 popular articles; 30 posters; four press articles; six technical bulletins; eight technical transfer activities; one trade journal publication; 20 other publications
Innovations	four copyrights; one declaration on innovation; 10 gene sequences; one improved design; two instances of improved genetic material; 10 improved processes; four improved products; 13 improved systems; one license; two new variety registrations; 19 other innovations; one patent

Bioresources
Publications	209 external peer reviewed articles in scientific journals; 75 internal peer reviewed publications; 190 non-peer reviewed scientific articles
Technology Transfer	82 reports; one industry article; seven guides; 14 interviews; 156 invited talks; 10 newsletter articles; 173 oral communications; nine popularizing articles; 88 posters; 16 press articles; 25 technical bulletins; 50 technical transfer activities; nine trade journal publications; and five other publications
Innovations	one declaration on innovation; eight gene sequences; four improved designs; four improvements to genetic material; 28 improved processes; 14 improved systems; two licenses; two new variety registrations; 27 other innovations; four public servant invention disclosure reports

Environmental Stewardship

Agricultural risks to the environment are best tackled through collaborative efforts of governments, producers and stakeholders. The Department, through the PFRA, delivers a comprehensive package of tools and services to encourage environmental stewardship. Environmental Farm Plans help producers assess their operations and determine environmental risks and opportunities. The National Farm Stewardship Program helps producers address these risks by providing financial and technical support to adopt beneficial management practices. Greencover Canada complements these programs by targeting technical and financial assistance to more fragile forage, range land and riparian areas.

AAFC continues to support sustainable land management in other ways, such as through the management of 2.1 million acres of native range land under the PFRA Community Pasture Program, and agro-forestry programs provided through the PFRA Shelterbelt Centre that help to prevent soil erosion, protect riparian areas, provide wildlife habitat, and sequester carbon.

There is a continued need for improving producer access to secure water supplies of acceptable quality, especially in an environment of climate change and variability. The National Water Supply Expansion Program provides technical and financial assistance for on-farm and community infrastructure, and strategic studies to understand agricultural water supply and demand and evaluate new technologies. In particular, there are growing industry demands for sustainable irrigation development and management. The Department supports sustainable irrigation practices through applied research, demonstration and technology transfer conducted at PFRA irrigation centres in Saskatchewan and Manitoba.

Key results and benefits

AAFC activities in basic and applied environmental sciences support a competitive and innovative agriculture and agri-food sector while ensuring the environmental footprint of agricultural practices does not impair system sustainability for future generations.

As such, the products or outputs of the environmental health research activities may appear to be somewhat intangible. This is because these results are part of a continuum that ranges from identifying problems, to initiating basic research activities, to developing new technologies, to implementing beneficial management practices (BMPs) at the farm level, to the adopting of theses technologies by the sector.

In addition, this continuum often takes anywhere from a few years to a decade or more to play out. For example, a scientific publication describing the processes by which a pathogen affects the life cycle of a specific weed may have no obvious short-term or direct impact on the sector or Canadians, but in the long-term it could result in the availability of a biological control strategy which could result in reduced herbicide use, to the benefit of the sector, the environment and Canadians.

Extracted from the above list of achievements are some key tangible examples showing how AAFC met its expected results in 2006-07, for the benefit of producers, the agriculture and agri-food sector, consumers, and all Canadians.

Expected Result: Air - reduced agricultural risks and improved benefits to the health of air and the atmosphere, with key priority areas being particulate emissions, odours, and emissions of gases that contribute to global warming
Status: Met

• Scientists determined new methods of nitrogen placement and reduced tillage favored a reduction of N₂O emissions from agricultural soils. N₂O is by far the most significant agriculture contributor to greenhouse gas emissions; by reducing N₂O emissions we are reducing the environmental footprint of agriculture.
• Scientists developed drift models that allow calculation and adjustment of buffer zones for pesticide application according to sprayer type and weather conditions. The application of these models allow determination of optimal buffer zones for spray application herein maximizing the efficacy of pesticide application while minimizing possible off-target damages.
• Promotion by AAFC scientists of new low-drift nozzle technology for pesticide application resulted in extensive adoption (up to 50 per cent among producers and 100 per cent by custom applicators) of the technology. This resulted in a reduction of spray pesticide drift in the environment.
• Scientists developed a unique Greenhouse Gas Accounting and Verification System for documenting Canada's National Inventory Report in support of Canada's accounting commitment. This tool provides annual estimates of the GHG emissions and removals from Canada's agricultural lands to meet international reporting and accounting obligations under the Kyoto protocol. Canadian croplands are a net sink for carbon dioxide which means agriculture can help reduce Canadian overall GHG emissions.
• Scientists designed a computer program (GHGFarm) that calculates emissions from CO₂, N₂O, and CH₄, and can assist farmers in evaluating GHG mitigation strategies.
• Scientists demonstrated that soil and plants can absorb ammonia release by intensive livestock operations, and that producers with land downwind from ammonia sources could reduce N fertilizer application.

Expected Result: Soil - reduced agricultural risks and improved benefits to the health of soils, with key priority areas being soil organic matter and soil erosion caused by water, wind or tillage
Status: Met

• AAFC land resource professionals are successfully using a soil interpretation model developed by AAFC for the agronomic evaluation and assessment of land parcels in New Brunswick, Nova Scotia, and P.E.I. The model allows improved management of tree plantations and parcels of lands occupied by natural tree stands.
• Scientists demonstrated that remote sensing can be used to determine field spatial variability and delineate zones characterized by uniform soil parameters. This constitutes a valuable tool to delineate differential management units at the farm level which allows applying fertilizer rates according to the specific needs of each unit (limits losses/leaching).
• Scientists determined the elimination of tillage and addition of straw and other organic amendments increase the sustainability of high crop yields, improve soil structure and organic matter quantity and quality, and reduce the risk of soil erosion, nitrogen leaching and lower greenhouse gas emissions (and enhanced C sinks).

Expected Result: Water - reduced agricultural risks and improved benefits to the health and supply of water, with key priority areas being nutrients, pathogens, pesticides, and water conservation
Status: Met

• Scientists demonstrated that proper land application of liquid municipal bio-solids reduced by several orders of magnitude the net export of contaminants derived from the waste to tile and groundwater; herein reducing the potential risk related to valorizing municipal bio-solids in agriculture.
• Scientists successfully estimated the potential benefits of improved nutrient management practices when applied at the watershed level. This scaling up exercise demonstrate the real benefits of generalized adoption of improved management practices.
• Scientists determined the use of an integrated reservoir for irrigation recycling prevents off-farm movement of sediments, nutrients, and chemicals. This practice limits the risk of non point source pollution arising from those locations as sediments, nutrients, and chemicals can no longer enter the water stream.
• Bacterial source tracking was used to determine that the main source of bacteria in the water was from wildlife with significant contamination coming from bovine and humans as well. This knowledge will help inform the public on the real risk from agriculture; which is less than the risk incurred from wildlife.
• Scientists determined that application of composted manure to cropland (rather than fresh manure) may lower certain forms of phosphorous and nitrogen in runoff. This practice limits the risk of excess phosphorous and nitrogen contaminating surface and ground water.
• A major change to the management regime of AAFC's water infrastructure was initiated that will see local agricultural producers assume responsibility for ownership and operation of irrigation delivery infrastructure in southwest Saskatchewan. This change will lead to the elimination of the false economy associated with federal government-owned water infrastructure, and to increased water-use efficiency and resource conservation in the region.
• AAFC revitalized its Dam Safety Management System. The improved asset-management system will result in technological improvements that will not only assist in improving the safety of the dams but will also position the infrastructure for changes in water management that could result from climate change. This ensures that public infrastructure remains safe, functional and capable of meeting the general public's and the agriculture and agri-food sector's expectations for water management and resource care.
• AAFC - PFRA worked with Boulardarie Water Club on Cape Breton Island to promote irrigation scheduling to improve the use of water in the area. Irrigation scheduling controls the timing and the amount of water that is applied to fields. The project promoted the use of scheduling technology for irrigation and has introduced new and specific equipment for watering different crops. The project also met the crop water requirements while preventing over-application of water which can have harmful effects on the environment and reduce crop yield. The project looked at three irrigation methods: drip, sprinkler and travelling gun, each one designed for specific crops. Other new technologies such as soil moisture sensors and weather equipment which can measure evapo-transpiration (i.e. crop water demand) directly were also tested for on-farm utility. The benefits of this project are reducing costs for producers, building producer expertise and encouraging the efficient use of water.

Expected Result: Biodiversity - ensured compatibility between biodiversity and agriculture, with key priority areas being habitat availability, species at risk, and reduction of economic damage to agriculture from wildlife
Status: Met

• Scientists resolved a nomenclatural dilemma around the causal agent of the human form of PCP (Pneumocystis pneumonia). This basic knowledge on the identity of threat organisms is essential to understand their life cycle, mode of action, dangerousness, etc. and to develop preventive or curative solutions.
• Scientists developed the most efficient detection system for the plant pathogen Phytophthora ramorum. About $1 million per year is being spent in Canada to try to prevent the introduction of this pathogen in the country and this efficient detection method will increase the efficacy of this program.
• The results of systematic studies conducted on the natural enemies of the pest insect Lygus lineolaris will assist researchers in the development of biocontrol agents for this pest.
• AAFC's work on DNA barcoding showed that developing genetic markers for all living species is achievable with practical and commercial uses for biodetection, pest assessment, certification, contaminant detection, bioprospection, etc.
• Scientists first identified the soybean aphid when it was discovered in Canada as an invasive pest from Asia. Identifying and studying invasive alien species is critical in protecting the sector.
• In a four-year study, transgenic corn (expressing a Bt ‘Cry' protein) appears to be a relatively minor factor affecting the biodiversity of non-target ground beetle assemblages in agro-ecosystems.

Integrated Pest Management

In 2006-07, AAFC achieved the following notable results in the area of integrated pest management (IPM). IPM activities contributes directly to the four expected results under the department's Environment program activity: soil, water and air quality, and preserving biodiversity.

• A five-year study concluded there was no evidence of pest resistance to Bt-corn developing in populations of European corn borer from various regions of Ontario and Québec. This means the mitigation rules developed to prevent the apparition of pest resistance are efficient.
• Scientists developed a new control strategy for pests of potted flowers. This new strategy can be integrated with other non-chemical control strategies to reduce pesticide usage by more than 90 per cent.
• Scientists developed a mechanical control device to control European corn borer in potatoes in P.E.I. This device reduces the need for chemical pesticides.
• Scientists demonstrated that integrated weed management can mitigate the evolution, spread, and economic impact of herbicide-resistant weeds.
• Scientists determined that herbicide-resistant crops often have improved weed management characteristics, greater yields or economic returns, and similar or reduced environmental impact compared to their conventional counterparts.

Other key agri-environmental activities, results and challenges

In addition to its work related to environmental science, in 2006-07 AAFC provided a range of agri-environmental programs, initiatives and services to producers, and continued its ongoing policy work, to help the agriculture and agri-food sector achieve greater environmental sustainability. This section provides highlights of notable progress on policy and program work, and explains some of the challenges facing the department in 2006-07.

National Agri-Environmental Health Analysis and Reporting Program (NAHARP) 

In 2006-07 work continued on the three primary components of NAHARP: Agri-Enviornmental Indicators, Integrated Environmental/Economic Modelling, and Economic Valuation. The 12 existing indicators and 13 indicators under development measure the environmental performance of the agriculture and agri-food sector in the key priority areas of air quality, water quality, soil quality and biodiversity.

Work in 2006-07 focused on refining, updating and further development of the indicators in preparation for NAHARP's third report, expected in 2009. Under the Integrated/Economic modelling component, work continued on updating APF targets in support of the next generation of agriculture and agri-food policy, and updating and linking the indicators to the CRAM model in order to conduct economic analysis. The Economic Valuation component was initiated in 2006-07 to identify environmental risk in economic terms where no market currently exists. This component will allow AAFC to better assess, in economic terms, environmental risk to the sector.

Environmental Farm Planning 

The Environmental Farm Plan (EFP) initiative has exceeded its initial target for program participation, providing close to 65,000 of Canada's producers (28 per cent) with access to tools and information to assess the environmental management of their operations. In turn, they have increased their awareness of environmental risks and opportunities in terms of water, soil, air and biodiversity. This awareness translates into enhanced on-farm action and improved agri-environmental management. Since the program inception, 45,600 producers (20 per cent) have developed a formally reviewed individual or group plan, which identifies specific actions to address risks to air, water, soil and biodiversity. These plans cover an estimated 27 per cent of the total agricultural landscape in Canada.

The number of producers developing reviewed plans continues to increase. In 2006-07 alone, more than 21,000 producers participated in the EFP program, with almost 17,000 developing a reviewed individual or group plan. While individual planning remains the foundation of the national EFP Initiative, the use of the group planning approach has increased with several provinces delivering or piloting group planning, providing an opportunity for provinces to more strategically address regional priorities. In 2006-07, twice as many producers developed a reviewed group farm plan as during the previous year. This approach supports planning by a group of producers addressing a common priority issue for a defined geographical area, and results greater cumulative impact on the landscape.

First Nations EFPs in Saskatchewan

AAFC - PFRA delivered environmental farm planning to First Nations producers on and off reserve lands in Saskatchewan through a contribution agreement with the First Nations Agriculture Council of Saskatchewan (FNACS). Through this process of First Nations delivering to First Nations people, a total of 280 farmers and land managers attended the initial workshop, followed by 146 completed certificates from the FNACS peer reviewed process. The initial target for this group was to have 110 First Nations individual farms complete the workshop. FNACS is working with seven First Nation communities on Community Environmental Farm Plans. These group plans include a review of technical information on soils, land condition, wildlife habitat and environmental issues on each of the First Nations reserves. The target for 2006-07 was to complete 10 community plans on First Nations Bands in Saskatchewan.

National Farm Stewardship Program 

The National Farm Stewardship Program (NFSP) provides technical and financial support to help producers adopt beneficial management practices (BMPs) that address actions identified in their reviewed individual or group environmental farm plan. Two components of Greencover Canada, Critical Areas and Shelterbelts, have been integrated into the delivery of NFSP, providing additional technical and financial support to encourage BMP adoption. To date, 16,850 BMP projects have been supported, with a total value of $63.6 million in federal expenditures under NFSP and Greencover. (See Table 1). For NFSP alone, 13,007 projects have been funded from $54.4 million in federal expenditures. Recognizing the value of the adoption of BMPs on the landscape, many provinces and stakeholders continue to provide additional financial “top up” funding to producers to implement specific BMPs that address the priorities of these agencies. Total producer, provincial and other stakeholder contributions to these projects is between two and three times the federal commitment.

Producer participation in NFSP increased significantly in 2006-07, with 9,655 projects receiving almost $39 million in federal funding. This represented a 400 per cent increase in the number of projects supported compared to 2005-06.

Table 1: Assessment of Key APF Priority Area addressed by BMP Projects Funded Through National Farm Stewardship Program and Greencover Canada - Critical Areas and Shelterbelt Components.

APF Key Priority Area	Number of BMP Projects Addressing Priority Area1	Federal Funding2	% of Total Projects3	% of Total Federal Funding4
Improving Water Quality Nutrients, Pathogens, and Pesticides	13,365	$55,435,682	79%	87%
Improving Water Quantity Water Conservation	554	$2,482,760	3%	4%
Improving Soil Quality Wind, Water, and Tillage Erosion and Soil Organic Matter	9,823	$31,065,599	58%	49%
Improving Biodiversity Habitat Availability, Species at Risk, and Wildlife Damage	4,811	$9,844,654	29%	16%
Improving Air Quality GHG emissions, particulates, and Odour	10,832	$46,361,046	64%	73%

^1,2 Total BMPs projects implemented is16,850. Total funding was $63.5 million However, many BMPs projects have multiple benefits and address more than one Key Priority Area. Thus, individual projects can be included in more than one priority areas. (e.g. improved manure storage BMPs reduces nutrient run-off and reduce GHG emissions. These BMP projects are accounted for in the assessment of both priority areas). As such, the total number of projects and funding outlined in five priority areas in the table exceed the total national project and funding totals under NFSP and Greencover.
³ These represent the number of projects that address the priority area of the 16,850 total projects funded.
⁴ These represent the funding of those projects that address the priority area of the total program expenditures of $63.5 million.

Greencover Canada 

Greencover Canada provides producers with technical and financial assistance to improve grassland management practices, protect water quality, reduce greenhouse gas emissions, and enhance biodiversity and wildlife habitat. The Land Conversion component of Greencover provides technical and financial assistance to landowners to convert environmentally sensitive cropland to perennial cover. To date 6,213 projects comprised of 624,704 acres with expenditures to date of $16.5M have been enrolled in the program, representing 95 per cent of the estimated target for the program. The Technical Assistance Component (TAC) provides financial assistance in support of the accelerated adoption of BMPs by producers for the sustainable use and management of pasture, hayland, critical/riparian areas, and shelterbelts. Under TAC, 174 projects have been approved with expenditures to date of $4.9 million.

Producers continued to access the various components of Greencover Canada. In 2006-07, 2,031 projects were enrolled in Land Conversion, comprising 211,680 acres. 1,758 BMP projects were funded under Critical Areas and Shelterbelt Components, receiving $4.58 million in federal expenditures, which represents a 70per cent increase in total projects from the previous year. An additional 30 technical assistance projects were approved during the 2006-07 year that support BMP adoption that meet Greencover objectives.

Additionally, the Watershed Evaluation of Beneficial Management Practices (WEBs) project, funded under Greencover, continues to quantify the relative environmental and economic effects of selected BMPs on water quality. Results from this project will be used to support future policy and program development to enhance AAFC's ability to work with producers to address agri-environmental objectives and provide public benefit.

National Water Supply Expansion Program 

The National Water Supply Expansion Program (NWSEP) provides technical and financial assistance to on-farm and community water infrastructure projects, aiming to reduce the risk of future water shortages for the sector, and to meet its everyday needs through the planning and development of secure, healthy and reliable water resources. The program has helped more than 5,000 projects to date, including 1,251 new projects in 2006-07. In addition, the NWSEP has supported approximately 65 strategic studies designed to get a better understanding of agricultural water supply and demand across Canada and evaluate new water management technologies.

The final NWSEP expenditure for 2006-07 was $15.914 million. NWSEP met participation targets for most program components, but was slightly below target for project completion in 2006-07.

Community Pastures Program 

The Community Pastures Program manages 2.1 million acres of native range land on the prairies through sustainable grazing and range management initiatives. The benefits of the program to Canadians are a productive bio-diverse rangeland and promotion of environmentally responsible land use and practices. The valuable land resource is utilized to compliment livestock production. The program provides stakeholders with expertise and services for the sustainable use of rangeland and water. In January 2007, a new multi-year business plan outlining strategies and commitments for the next five years was approved by the Minister of Agriculture and Agri-Food.

Agroforestry

Agroforestry programs provided through the PFRA's Shelterbelt Centre help prevent soil erosion, protect riparian areas, provide wildlife habitat, and sequester carbon. Tree seedlings delivered to more than 7,000 clients will protect the equivalent of 10,287 hectares of agricultural land, 166 km of riparian land, 228 hectares of wildlife habitat and will sequester 1.3 million tonnes of CO2 by 2056.

In 2006-07, agroforestry research programs continued to improve tree and shrub adaptation through research on drought and cold adaptation on poplar, gene conservation on native willows and balsam poplar, development of environmental value models, and research on the production and utilization of woody biomass production for bioproducts such as biofuels.

Agriculture and Agri-Food Canada has benefited from the experience of hiring Aboriginal students through the Federal Student Work Experience Program (FSWEP). A total of 34 Aboriginal students from across Canada were hired for jobs within the department fostering relationships between Aboriginal peoples and AAFC. The department has provided, through this program, opportunities to learn about the federal government and allow students to gain valuable experience while developing and improving their employability skills. Aboriginal summer students at the Indian Head Shelterbelt Centre in Saskatchewan earned a valuable experience through activities that included: tree nursery maintenance; agroforestry technology transfer; research and selection of a name for a new poplar variety; and promotion of AAFC and the Prairie Shelterbelt Program at First Nations Science Fairs within Saskatchewan.

Ecological Goods and Services (EG&S) 

EG&S are the benefits that human populations derive, directly or indirectly, from healthy functioning ecosystems. Healthy agro-ecosystems can provide numerous EG&S, such as clean water, flood and erosion control, carbon sequestration, and wildlife habitat. EG&S policy development aims to analyze various policy options for the agriculture sector with respect to enhancement of EG&S in Canada.

Progress in 2006-07 included:

• 2006 National Symposium on EG&S was held, gathering together 200 industry and government stakeholders, including international experts, to discuss various policy approaches;
• eight EG&S pilot projects recommended for total funding of $4.5 million;
• cost-benefit analysis (CBA) of potential EG&S options drafted for tendering. The analysis will be based on achieving measurable environmental improvements and will assess efficiency of a range of instruments, including current programming, tax credits, credit trading, acreage payments, BMP insurance, etc. The CBA is to be completed by March 2008; and
• international EG&S policy experts were consulted on the details and results of their policy approaches. A representative of the UK provided details on that country's Agri-Environmental Schemes, while a representative from Australia provided details on the country's Market-based Initiatives for EG&S. Some of Canada's EG&S pilot projects are incorporating some of the international approaches learned about through these consultations.

Environmental Certification

Early in the 2006-07 fiscal year, AAFC decided to set aside work on a national environmental certification program, based on feedback from provincial governments and industry groups, and the fact that industry-led pilot projects were not successful as anticipated.

The National Land and Water Information Service (NLWIS) 

The NLWIS is an Internet-based service being implemented collaboratively with other federal government departments, the sector, provinces, and territories to give producers the information, tools and expertise they need to make environmentally responsible land-use decisions. The service provides interactive maps, data and tools focusing on land, soil, water, climate, and biodiversity resources across Canada. These interactive mapping applications, data and tools provide information to producers and other land-use decision makers to support an environmentally sustainable agricultural sector. As well they help producers identify and adopt Best Management Practices for soil, water, nutrient, and livestock management and provide data and analysis for the generation of key environmental indicators for the National Agri-Environmental Health Analysis and Reporting Program.

Examples of increased access to data for producers provided through the NLWIS in 2006-07 include:

• acquisition of high resolution imagery data, in conjunction with the Farm Financial Programs Branch of AAFC, to support the Cover Crop Protection Program;
• renewal of acquisition of agriculture census data from Statistics Canada for the Crop Condition Assessment Program for 2007, which will use the 2006 census data. This agreement has been extended from only Western Canada to national programs; and
• acquisition of seamless framework data using the National Topographic Data base from Natural Resources Canada.

The NLWIS is a Major Crown Project, currently in year two of a four-year implementation plan. At the end of the first year of the project, NLWIS provided a single point of access for current applications and data, introduced standards and added a service desk to provide users with better service related to geospatial applications in AAFC. It integrated the dispersed Geographic Information System capabilities within AAFC to provide a unified approach, access and links to existing data and generated a series of deliverables to provide basic support to the APF programs. During the second year of the project, the work focused on building the technology framework, the data warehouse and the data management software on which the new applications and decision tools will be developed. These applications, decision tools and additional data acquisitions are part of Phase 3 implementation activities of the NLWIS project which will provide additional access to the Service as the products are built and move from development to operational mode.

NLWIS is an investment in agri-environmental sustainability. Improved access to data, information and decision tools will provide value to producers and other land-use decision makers. It will help provide the support they need to balance economic development and environmental sustainability. The information will form the basis for environmental farm planning, and help producers make decisions such as the kind of production a particular section of land will best support.

Co-ordination with Government of Canada environmental priorities

In 2006-07, AAFC managed its agri-environmental policies and programs by linking them directly to Canada's overall environmental priorities, while at the same time ensuring cohesiveness with the broader policy priorities of the department and the Government of Canada.

Based on in-depth research and consultations with various industry stakeholders, the provinces, and other government departments such as Environment Canada (EC), AAFC has been able to contribute agri-environmental policy advice to initiatives such as EC's Clean Air agenda. The emergence of the environment as a priority for Canadians has created some challenges, such as determining the net contribution of agriculture to greenhouse gas (GHG) balance (emissions versus sequestration), and required the Government of Canada to respond with new policy approaches.

Related to the federal climate change priority, in 2006-07:

• AAFC, with strong support from producer-level soil conservation groups across Canada, worked with the federal ‘sinks team' to ensure that carbon sinks could be used to help countries meet their commitments for reducing greenhouse gas emissions. In February 2007, Canada notified the UN Convention on Climate Change : that it will account for emissions and removals (sequestration) on cropland as part of its accounting system. Canadian croplands are a net sink for carbon dioxide because the rate of soil organic matter increase exceeds the rate of loss, mainly because farmers are direct seeding and using zero tillage practices, using less summerfallow and converting some annual cropland to perennial crops;
• AAFC, on the designation of EC, took over reporting responsibility for agricultural lands under the terms of a memorandum of understanding (MOU) signed in 2004. EC is Canada's central “Inventory Agency,” responsible for reporting Canada's national GHG inventory under the UN Convention on Climate Change and the Intergovernmental Panel on Climate Change . The MOU formally recognized that AAFC is responsible for providing annual estimates of the GHG emissions and removals from Canada's agricultural lands to meet international reporting and accounting obligations;
• AAFC, under the terms of the above mentioned MOU, developed an inventory within the National Carbon and Greenhouse Gas Accounting and Verification System (NCGAVS) , designed to account for emissions and removals (sinks) from agricultural lands. The inventory is called the Canadian Agricultural Greenhouse Gas Monitoring, Accounting and Reporting System (CanAG-MARS). Inventories of agricultural GHG emissions and removals were generated using CanAG-MARS for submission to the UN Framework on Climate Change in Canada's National Inventory Reports in 2006 (1990 to 2004 emissions) and 2007 (1990 to 2005 emissions); and
• AAFC's National Agroclimate Information Service developed a number of products to enhance understanding of the potential implications of climate change on the agricultural landscape. Examples include statistical analysis of climate data to better understand historic, current and predicted trends in temperature and precipitation and assessment of risk to agriculture from climate and weather extremes. Methodology developed by AAFC scientists resulted in the application of the Intergovernmental Panel on Climate Change (IPCC) climate change scenarios to the AAFC Land Suitability Rating System, which helps producers assess risks and make cropping decisions.

Pesticide Risk Reduction Program 

AAFC is involved in the development of pesticide risk reduction strategies with the support and participation of agricultural stakeholders. These strategies identify pest management tools and integrated pest management practices that need to be developed or implemented in order to address priority issues identified by Canadian growers. Projects are funded to support the implementation of strategies resulting in effective alternative reduced risk pest-management solutions for growers.

In 2006-07, 30 research and implementation projects were funded to develop innovative reduced risk tools, technologies, products and practices. An innovative carrot foliage trimmer was designed and tested, resulting in a 75 per cent reduction of disease incidence compared to conventional control methods. A novel tool for quick and economical identification of fungicide resistant apple scab strains will help growers avoid the use of ineffective fungicides and reduce fungicide use. Most projects involved a grower communication component, such as the production of laminated field cards, factsheets, booklets, field tours and grower meetings. Promoting grower pest management needs and working directly with a number of biopesticide companies has resulted in regulatory submissions for new priority products such as, two new biopesticides for the suppression of fire blight in apples and pears.

Minor Use Pesticide Program

AAFC conducts field trials and laboratory analyses to obtain the required data for the registration of new minor uses of pesticides to control pest problems identified through a grower-driven priority setting workshop. In 2006-07, more than 400 field trials were conducted and 41 submissions for new minor uses were submitted for evaluation to Health Canada's Pest Management Regulatory Agency . Since the program's inception in 2002, more than 40 new registrations have been obtained, resulting in over 120 new uses of pest control products.

Strategic Outcome: Innovation for Growth

Program Activity: Innovation  and Renewal 

Innovation and Renewal - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
544.3	2,012

Increasingly rapid advances in science and technology mean producers and other industry stakeholders face greater challenges to keep pace. All players in the sector - from primary producers to value-added processors - require access to state-of-the-art technology, combined with the latest knowledge, to help them address rapidly changing consumer needs and expectations. More than ever, keeping on top of change is key to profitability.

In addition, as farming operations become larger and more complex, both new and established producers need to regularly add to their skills and knowledge, whether managing financial and human resources or mastering innovative technologies, products and practices, to stay competitive. By acquiring additional skills, adopting new technologies, maximizing efficiencies in operations, or changing product mixes, those who earn their livelihoods in the Canadian agriculture and agri-food business will continue to be successful in the 21st century.

To a large degree, the competitive position of Canada's agriculture and agri-food sector will depend on all stakeholders - including producers, processors, researchers, etc. - working closely to develop new opportunities across the country. At the same time, governments will work with industry to foster a climate for innovation that encourages investment in the sector.

Details of Performance

The expected results for the department's Innovation and Renewal program activity in 2006-07 were:

• increased market opportunities for the agriculture and agri-food sector;
• Canadian farmers optimize their businesses through renewal programming and services;
• utilization of advances in value-added research that enable farmers, processors, rural communities, and service providers to differentiate their products and services;
• Science and Innovation Business Plan that integrates national science and innovation capacity for the agriculture and agri-food sector;
• utilization of advances in innovative production systems;
• innovation programming strengthened due to enhanced linkages within and between science and innovation community and the agriculture and agri-food value chain;
• utilization by the agriculture and agri-food sector of advances in crop genetic advancement; and
• enhanced and integrated approach to Innovation and Renewal Policy.

Many of the 2006-07 performance results listed below cut across several Expected Result areas. For the purpose of this report, results are reported in relation to the Expected Result to which they primarily apply. If they apply to additional results, that fact is mentioned and a link is provided.

Expected Result: increased market opportunities for the agriculture and agri-food sector
Status: Met

Science and innovation are key to helping the Canadian agriculture and agri-food develop and take advantage of new market opportunities. To this end, AAFC's launched its Science and Innovation Strategy in 2006-07. More information and detailed results on the plan are available in the Expected Results section below (link), titled Science and Innovation Business Plan that integrates national science and innovation capacity for the agriculture and agri-food sector.

Sub-Sub-Activity: Broker and Agri-Innovation Programs

In 2006-07, AAFC delivered two science-based programs - the Broker and Agri-Innovation Programs - designed to bring together a full spectrum of organizations to accelerate the adoption of innovation and the commercialization of products into the marketplace, and increase opportunities for farmers.

These two five-year contribution programs work hand-in-hand to achieve results: The Broker Program supports a number of “broker” and producer organizations working between industry, government and universities to foster strategic innovation opportunities, while the Agri-Innovation Program supports projects and opportunities identified by the broker processes. Approved projects bring together key players along entire value-chains and act as mechanisms for co-operation in research, production and marketing.

In 2006-07:

• eight national contribution projects were approved, for a total new funding commitment of $3.6 million. Since 2004, 23 multi-year projects have been approved, for a total investment of $22 million. The program has already surpassed its goal of 10 - 15 projects.

The opportunities created through these projects have increased dramatically during the latter part of the programs, as awareness and interest on the part of the sector have increased. As an example of the success of the program, demand for funding reached a high in 2006-07, with 40 project applications submitted. Examples of successful projects under the programs can be found at (http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1176220287890&lang=e).

While the program has been a success, it has faced some challenges. Some of the areas where improvements could be made include:

• more clearly formalizing the program proposal and management process;
• improving program promotion;
• speeding up departmental clearance and approval of Contribution and Collateral Agreements;
• improving linkages of key initiatives with AAFC Science, Marketing and Policy teams, value-chain roundtables, and Science Advisory Board;
• improving linkages of innovation with related policy and program initiatives and activities inside and outside of AAFC; and
• co-ordination of bioeconomy development efforts with other federal departments and provincial governments.

Sub-Activity: Advancing Canadian Agriculture and Agri-Food program

The Advancing Canadian Agriculture and Agri-Food (ACAAF) program is a five-year, $240 million program designed to help Canada's agriculture and agri-food sector seize new market opportunities, respond to current and emerging issues and contribute to the direction of future policies and programs for the sector. In 2006-07, the program continued its innovative and co-operative approach to funding projects at the national, multi-regional and regional levels. The program is delivered both nationally and regionally.

In 2006-07, the program approved a total of 333 new projects, for a total commitment of $32.3 million. Of these 333 new projects, the national component approved 31 new projects for a total commitment of $14.1 million and the 14 regional Industry Councils approved 302 new projects, for a total commitment of $18.2 million. Of the 302 new regional projects, 54 were multi-regional collective outcome projects. Collective outcome projects foster greater collaboration among national, regional and multi-regional stakeholders. The councils participating in these projects received national ACAAF matching funds, which in 2006-07 totalled $2.85 million.

The ACAAF program has been designed to address new issues as they emerge to be responsive to the agriculture and agri-food sector's constantly changing opportunities and challenges. In 2006-07, as part of the commitments above, a total of $4.5 million was allocated to eight ecological goods and services (EG&S) pilot projects. The expectation is that these projects will contribute measurable results to future EG&S policy development.

In July 2006, AAFC launched the Biofuels Opportunities for Producers Initiative (BOPI) , a two-year, $20-million initiative under the ACAAF program. It was designed to help farmers and rural communities conduct feasibility studies and develop sound, viable business proposals to create and expand biofuel production capacity involving significant ownership by agricultural producers. Building on the innovative industry-led regional delivery of the ACAAF program, the BOPI is delivered by the ACAAF regional Industry Councils. Funding for the BOPI is in addition to regular ACAAF funding.

In 2006-07, 86 projects received funding under BOPI, for a total funding commitment of $11.4 million in all provinces and territories, with the exception of Nunavut and British Columbia. For 2007-08, the remaining available funds will be dedicated to new projects approved by the regional Industry Councils. As well, the results of the initial set of projects will become apparent as most of them were not scheduled to conclude until this fiscal year.

For details on the ACAAF program's contribution to achieving other Expected Results under the Innovation for Growth Strategic Outcome, please see the section below titled (need to link to this section).

Expected Result: Canadian farmers optimize their businesses through renewal programming and services
Status: Mostly Met

Sub-Activity: Renewal Programs

Research on farm business management and training indicates that farm income is correlated to management skills. Additionally, total income is increasingly associated with off-farm work, value-added and provision of additional services to the public. Statistics Canada reported that off-farm income accounted for 78.8 per cent of total farm family income in 2004, matching the highest proportion reached during any point in the last decade. This ratio reflects not only rising income from off-farm activities but also declining realized net income from on-farm activities. In fact, Statistics Canada reported that realized net income for Canadian farmers (the difference between a farmer's cash receipts and operating expenses minus depreciation, plus income in kind) fell for the second consecutive year in 2006 to $1.1 billion, its lowest level since 2003.

Participation in Renewal programming allows producers to moderate the impact of increases in input costs, decreases in commodity prices and downturns in production that can effect realized net income. This programming strengthens the ability of producers to make business decisions by facilitating access to advisory services, training, benchmark information, assistance for business plans and succession plans, and by providing networking opportunities to explore options to enhance income and profitability. These skills and services could potentially affect and inform producers' decisions around farm purchase, expansion, diversification and transfer, development and management of agri-business, and accessing off-farm income. However, the impact is often difficult to detect on a sectoral basis because of the high variability in farm incomes, the number of years that it requires for impacts to reach a large proportion of the farm population, and the time it takes to make changes in individual operations.

While it is still too early in the life of AAFC's Renewal programming to properly document behaviourial change and determine the overall impact of these programs, some of the benefits Renewal programs provide to farmers and the entire sector include:

• professionally prepared financial statements with associated recommendations, which helps farmers to make informed management decisions to reach their business and personal goals and may increase farm income;
• retirement and transfer plans, which helps to prepare all individuals involved, for the changes that may or will occur at the time of retirement or transfer;
• training to enhance on-farm operations including training in: business management, accounting, finance, risk management, human resources and more. This training has led to improved skills and can help producers to take an active role in monitoring the performance of their operation and making informed decisions that will help to improve their profitability and income;
• training to secure off-farm income, which may help to enhance the likelihood for farm business continuity;
• the creation of value-added business plans, which helps to ensure successful start-up or expansion of value-added enterprises that meet consumer and market demands.

Following is a list of Renewal programs offered through AAFC in 2006-07, with detailed results for each program.

Advisory Services

Advisory services and expert advice are delivered through two Renewal programs: Canadian Farm Business Advisory Services and Planning and Assessment for Value-Added Enterprises. In 2006-07, a total of 5,436 producers across Canada applied to participate in the two programs - a 48 per cent increase in applicants compared to the previous year.

Canadian Farm Business Advisory Services (CFBAS)

CFBAS gives eligible producers access to consultants who can assess their financial situations, help them set goals for their business and develop plans to meet those goals. The result of the process is improved farm management. The service has two components: the Farm Business Assessment (FBA) , which provides eligible producers with up to five days of consultation services, including a Farm Financial Assessment and Action Plan; and Specialized Business Planning Service (SBPS), which offers assistance to producers to hire consultants who help prepare specialized plans related to areas such as diversification, succession planning, marketing, or risk management. In 2006-07, a total of 4,793 producers applied to the FBA program and 596 applied to SBPS - an increase in applicants as compared to the previous year of 33 per cent and 34 per cent for FBA and SBPS respectively.

In 2006-07:

• more than 80 per cent of FBA participants reported they were satisfied with the program;
• 57 per cent of FBA participants were confident their FBA would lead to improved farm income and profitability;
• 77 per cent of SBPS participants indicated the program had helped them develop a more realistic and comprehensive plan for their farms.

Planning and Assessment for Value-Added Enterprises (PAVE)

PAVE is intended for producers who are considering expanding or establishing a value-added enterprise. It provides assistance to hire a business-planning professional to develop a feasibility assessment and comprehensive business plan. In 2006-07, a total of 45 producers applied to PAVE - a decrease in applicants as compared to the previous year by just under 30 per cent.

Benchmarking

To complement to advisory services discussed above, an electronic financial tool called Benchmark for Success was created to allow producers to compare the financial performance of their farm with other farms of similar size and type, and thus enable farmers to make better informed decisions about their business operations. Since 2003, close to 30,000 Benchmark for Success CD-ROMs have been distributed upon request, including 32,900 in 2006-07. The tool is also available online

Farm Debt Mediation Services (FDMS)

Sometimes, farmers' financial situations are such that they need assistance of a different nature. FDMS, operational since April 1998, is a legislated program that provides insolvent farmers and their creditors with mediation services to help them arrive at a mutually satisfactory arrangement. The service is a private, confidential and economical alternative to the process of resolving insolvency disputes in the courts.

FDMS is as a mature and established program that is achieving its objectives. It is well-accepted throughout the farming and farm-lending community.

In 2006-07:

• FDMS received 481 applications from farmers. These farmers received the services of a consultant who provided them with farm financial statements and a recovery plan in order to help them improve their financial situation. In addition, these producers were provided with the opportunity to use a mediator to facilitate discussions with creditors regarding the recovery of debt. An evaluation is currently underway to determine the success of FDMS participants' recovery plans and agreements with their creditors.

Skills Development

Initiatives in the area of skills development aim to help producers become more competitive and profitable by assessing skills and getting training in business management, accounting, finance, and human-resource management.

Canadian Agricultural Skills Service (CASS)

CASS provides financial assistance to farmers and their spouses to obtain a skills assessment and to access training for new opportunities, both on- and off-farm, to increase profitability and open up choice for alternate sources of income. The CASS is targeted to producers and their spouses with a net family income of $45,000 or less. It is available in all provinces and territories except Quebec, which offers an alternative skills initiative.

In 2006-07:

• 6,528 producers applied to participate in CASS, a 160-per-cent increase compared to the previous year; and
• 83 per cent of CASS participants indicated they are satisfied with the program.

Other notable Renewal programs and results

In 2006-07:

• the Canadian Farm Business Management Council (CFBMC) developed and distributed advanced farm-management information, tools, programs and services for established and beginning farmers. The leading edge resources they provided enabled Canadian farmers to make sound management decisions. These resources included: farm succession and transfer management tools, speakers for national and international conferences and training seminars, the publication of the FarmCenter journal, two National Agriculture Excellence Conferences, numerous agri-webinars, farm business management publications, web-based courses and the management of the popular farmcentre.com web site;
• the Canadian 4-H Council enhanced youth leadership by providing opportunities to learn through national apprenticeship programs and services. 4-H youth and leaders, many of whom will become the next generation of Canadian farmers, develop a strong base of skills and knowledge through educational projects and 4-H opportunities such as livestock judging, equestrian camps, club activities, farm safety training, public speaking workshops and competitions, numerous leadership and farm skills training videos and the opportunity to attend four national conferences centered around career planning, the Canadian Government System, Leadership and Volunteer Leaders skills;
• the Canadian Agricultural Safety Association (CASA) improved the health and safety conditions of the men, women and children that work and live on Canadian farms. The organization plays a facilitation role in the networking of stakeholders interested in agricultural health and safety in Canada and fosters improvements in safety practices and machinery design in order to reduce farm accidents. CASA organized 43 Farm Safety Days in Alberta, Saskatchewan, Ontario, Quebec and P.E.I., reaching 4,721 children. CASA also organizes the National Farm Safety Week, national conferences and gathers data about farm safety across Canada;
• the Canadian Young Farmers Forum (CYFF) facilitates the exchange of information and best farming practices amongst young and beginning farmers between the ages of 18 to 40 from across Canada. CYFF members organize and participate in provincial, national and international conferences. They are regularly invited to discuss the issues and concerns of young and beginning Canadian farmers by parliamentarians and senior governmental and industry leaders;
• the Canadian Outstanding Young Farmers Program (COYFP) recognize young farmers between the ages of 18 and 39 that exemplify excellence in their profession. Each year, one farming couple is selected from each of the program's seven Regional Recognition Events to represent their respective region at the National Recognition Event. At the National Event, the seven honourees are recognized for their achievement and two of the seven honourees are chosen by the judges as Canada's Outstanding Young Farmers.

Canadian Farm Family Options Program 

This pilot program, announced in Budget 2006, provides $550 million over two years to help lower-income farm families explore options to raise their income for the future and provide short-term income support to lower-income farm families. Part of the program is delivered in collaboration with Farm Credit Canada through a memorandum of understanding. Changes to the second year of the program reduced the original budget of $550 million to $304 million. Eligible applicants receive a payment to bring them to a maximum income of $25,000 for families and $15,000 for individuals if they have a commercial farm. To receive a second year payment, a participant must have completed or be in the process of undertaking a business planning and skills development program.

To be eligible, a participant must have reported gross farming income of at least $50,000 to the Canada Revenue Agency for 2005 and 2006, and must commit to completing one of the following Renewal activities by November 20, 2008:

• a Farm Business Assessment offered by the Canadian Farm Business Advisory Services, or an approved equivalent activity offered through other services;
• an Individual Learning Plan and skills training through the Canadian Agricultural Skills Service or an approved equivalent activity offered through other services.

The FBA and CASS programs offered by Renewal Services are provided free of charge to applicants of the Canadian Farm Families Options Program. By applying for Options and receiving a payment, participants commit to completing a Renewal activity by November 20, 2008.

In 2006-07:

• 17,092 applications were received;
• $143 million has been distributed to 15,146 farm families and individuals farmers, with an average payment per participant of $9,450;
• 30 per cent of participants have applied to the business planning and skills development component. Of the eligible participants who received an Options payment in the first year, it is anticipated that 70per cent of participants will return in Year 2 and will sign-up for their Renewal activity between June and October 2007.

It is still too early in the program's life to accurately determine its impact. The program is progressing as planned, although the number of funding recipients enrolled in business planning and skills development programs is lower than targeted. This has contributed to the Mostly Met performance rating for Renewal Programs.

Options will continue to be offered for the 2006 program year to farm families and individual farmers who received a 2005 Options payment (including applicants who were eligible but were not issued a cheque because it was less than $100). The 2006 program will not be available to those not already participating in Options.

Expected Result: Utilization of advances in value-added research that enable farmers, processors, rural communities, and service providers to differentiate their products and services
Status: Partially Met

Research on export markets and innovative business strategies, as well as support through the ACAAF program, have provided incentives for the formation of value chains in the agriculture and agri-food sector. Over the past few years, the number of value chains developed in Canada increased. Most of these value chains are producing and marketing high-valued and differentiated products to the domestic and international markets.

However, detailed performance data is not available for this Expected Result, and as such it has been assigned a rating of Partially Met.

Expected Result: Science and Innovation Business Plan that integrates national science and innovation capacity for the agriculture and agri-food sector
Status: Met

In October and November 2005, AAFC undertook national science consultations designed to help set the direction and priorities for the development of a national science and innovation business plan. The result was the department's Science and Innovation Strategy , which was officially launched in May 2006.

The strategy identifies seven management goals for science and innovation, and seven national research priorities designed to build a competitive edge for the agriculture and agri-food sector.

It supports economic growth, improved competitiveness of the Canadian agriculture and agri-food sector and farm profitability by positioning the sector to capture significant growth opportunities that exist for non-food products such as biomaterials, bio-medical and bio-health products, bio-energy, bio-chemicals and biopharmaceuticals.

In 2006-07, AAFC worked to implement and deliver the strategy. Specifically, the department:

• established an external peer review process to enhance value for money in research;
• developed and implemented the Agricultural Bioproducts Innovation Program (ABIP); and
• worked towards the development of a national innovation co-ordination mechanism to provide advice on research priority setting and research planning for the Canadian agriculture and agri-food sector, and facilitate the development of multi-stakeholder partnerships to address national research priorities.

These initiatives fulfilled key strategic goals outlined in the strategy, most notably:

• building partnerships that will lead to concrete results;
• pursuing excellence in conducting and managing departmental science and research efforts; and
• extending the integrated national science and innovation capacity to the bioeconomy.

External Peer Review of Research Projects at Agriculture and Agri-Food Canada

In June 2006, AAFC launched a new External Peer Review process by which AAFC submits research proposals for external evaluation by the scientific community prior to allocating funding. This process helps the department ensure scientific excellence and relevance in its research activities by targeted investments of public funds in priority areas of national importance to the agriculture and agri-food sector and Canadians. The process also delivers on one of the key strategic goals identified in the Science and Innovation Strategy: Pursuing excellence in conducting and managing science and research efforts.

During the months of January and February 2007, four panels (Environment and Ecology, Plant Science, Animal Science and Food Science), comprised of 38 expert scientists from organizations outside AAFC, evaluated research proposals using preliminary evaluations of 330 external experts and the following selection criteria: 1) scientific excellence of the scientists, 2) scientific merit and originality of the proposal, 3) contribution to innovation and to AAFC National Priorities, and 4) feasibility or the potential to achieve objectives and deliver outputs.

The scientists were encouraged to develop integrated, multi-disciplinary research proposals that involved teams of scientists and included research coordination and collaboration with other government departments and agencies, academia and or industry.

The evaluation of research proposals by external expert scientists is a well recognized best practice and is widely used in the scientific community nationally and internationally. The process used at AAFC was designed to take into account the mandate, constraints and federal research context.

Outcome, evaluation and benefits of the External Peer Review

The results of the External Peer Review process were well received, and 233 research proposals received funding for delivery in 2007-08. Many of the projects involve large teams, bringing together scientists from multiple AAFC research centres across Canada. The results of the review were announced to the public in March 2007.

Overall, AAFC scientists recognized the merit and value associated with the establishment of an external peer review process. It is an accepted part of the scientific culture. Several comments and suggestions for improvement were collected from scientists who submitted research proposals in the 2007-08 evaluation, and this feedback will be used to refine the process for coming years.

The External Peer Review process fulfilled the need for a process to ensure the credibility of federal science activities, and, more importantly, to ensure the sound investment of public funds in research projects that align with national research priorities identified in the AAFC Science and Innovation Strategy. These national research priorities were developed from feedback after extensive national consultations with key stakeholders, producers, processors, and other agri-industry organizations, as well as provincial, university, and other federal department representatives.

Agricultural Bioproducts Innovation Program (ABIP) 

In 2006-07, the department launched the Agricultural Bioproducts Innovation Program (ABIP), a $145-million five-year program, designed to mobilize Canada's creative talent in the academic, private and public sectors in new and existing science and innovation networks to help Canada exploit its natural advantage in biomass in support of a bio-based economy. The program also delivers on two of the key strategic goals identified in AAFC's Science and Innovation Strategy: Building partnerships that will lead to concrete results and Extending the integrated national science and innovation capacity to the bioeconomy.

The ABIP will enhance linkages within and between the science and innovation community including academia, and the public and private sector. Currently, the program development has been completed, and applications for funding are now being submitted and evaluated.

Expected Result: utilization of advances in innovative production systems
Status: Met

AAFC's crop production system research in 2006-07 focused on effectiveness of productivity, which includes efficiency of production, crop quality, economic and environmental sustainability.

Of note, in 2006-07:

• minor use label expansions were granted for 1) The Use of Buctril M Emulsifiable Selective Weedkiller (bromoxynil and MCPA), Reg. No. 18022 for the control of labeled broadleaf weeds on perennial cereal rye, and 2) the use of Achieve Liquid Herbicide (Tralkoxydim), PCP 27011, for the control of labeled weeds on perennial cereal rye grown in the prairie region. The control of weeds will enhance the yield of the perennial cereal rye enhancing its use for the production of silage for cattle;
• novel analytical techniques were developed to establish the role of soluble silicon in plants to protect them against the powdery mildew patho-system. It was found that soluble silicon enabled crops to withstand stress and have increased resistance to disease;
• improved control of plant diseases in barley was developed. Crop production factors associated with persistence of Fusarium head blight, root rot and leaf spots in cereals were delineated. Apparently tillage system, previous pesticide use and previous crop residue were all sources of the diseases and could affect vigour and yield from subsequent cereal crops on the land. The published information is valuable in developing best management practices for the production of barley with reduced disease incidence, thus higher yielding;
• carrot production without Sclerotinia was improved. Sclerotinia rot of carrots is a major disease in carrots with no chemical control. Preliminary research 5-7 yrs. ago in Ontario on carrots grown on muck soils indicated canopy trimming may reduce disease levels. A scientist at the AAFC Research Centre in Charlottetown, P.E.I. led a team that designed, constructed and tested a four-row commercial prototype that would successfully trim the canopy of carrots grown on raised beds. Trimming at row closure reduced disease by 80 per cent. Oxford Frozen Foods Ltd., the largest carrot processor east of the Mississippi, is in the process of building a nine-row commercial unit, based on the original AAFC design, for use on 500 acres of carrots in 2007 and up to 2,000 acres in 2008. Plans are also underway for a smaller version for use by P.E.I. growers in the 2007 growing season.
• economical weed control in wheat crops was improved. The value of sweet clover as a weed controlling cover crop for subsequent wheat crops was established by AAFC scientists. It was demonstrated that cutting and leaving the sweet clover through fall would reduce weeds in wheat crops that followed and provided nitrogen, reducing the requirement of fertilizer applications thus reducing input cost yet boosting yields of wheat.

AAFC's livestock production system research in 2006-07 focused on developing new technology to reduce production costs, and improve product safety, quality and animal health.

Of note, in 2006-07:

• the results of three years of research provided to the CFIA showed that vector-based transmission of cattle bluetongue disease was an extremely low risk from cattle imported from the U.S. to domestic cattle, based on weather differences and the vector's life cycle. On the basis of this work, the CFIA has relaxed import regulations and feeder cattle can now be more easily imported from the United States, partly settling a long-standing trade dispute for cattle movement in the North American market;
• research by the Western Forage Beef Group at Lacombe Research Centre, Brandon Research Centre and Nappan Research Farm has shown costs of wintering cows can be reduced by 40- to 50-per-cent through the cost savings of not having to harvest, haul, store feed and feed beef cows in a wintering feeding facility. In addition there is a considerable saving of not having to haul manure in the spring time. There are also reduced labour costs. These cost savings of approximately $70 per cow, per winter, translate into an overall cost savings of over $50 million annually for the Canadian cow calf producer. It is estimated that 40- to 50-per-cent of the cows in Western Canada are now winter-fed using the new approaches developed from this research effort. Several popular publications have been developed on this research and to date 6000 copies have been distributed;
• multiple approaches were evaluated to identify cattle management conditions to reduce pathogenic E. coli shedding in manure, including animal management, microbial intervention and feeding strategies to progressively eliminate shedding of E.coli by cattle to protect the food supply, water and the environment; and
• the dietary strategies that would elevate the concentration of factors to provide positive health consequences were investigated. Research indicated that provision of sunflower seeds or flax at 15 per cent of the diet to cattle doubled the content of conjugated linoleic acid (CLA) in milk and beef. CLA reduces number of fat cells, provides protection from compounds that cause cancer and decreases symptoms of diabetes in consumers. Along with CLA, compounds that reduce inflammation and coronary disease were found to be increased by 40 per cent in meat of pastured cattle. Canadians consume about 31kg of beef annually thus producing such beef to provide health protection through a dietary staple may be an important avenue to reduce overall health care costs.

Other key results

Significant new knowledge was gained in 2006-07 as indicated by the 446 peer-reviewed scientific manuscripts published by AAFC scientists during the year. Substantial technology transfer activities were undertaken by the scientists in Sustainable Production Systems, thus gaining personal professional growth and improving the profile of AAFC's research contribution in Canada and abroad. The total flow back to AAFC from royalties is $5.5 million from the varieties and technologies licensed, clearly signalling the importance placed in the research output from AAFC.

To strengthen innovation flow from research by the science and innovation community to producers and then to consumers, and along the entire agriculture and agri-food value-chain, investments of $5.37 million were committed in 2006-07 through the Matching Investment Initiative (MII), under which industry investments in research are matched by AAFC funds.

Furthermore, agreements were signed with the Western Grains Research Foundation, for a total of $12.24 million from 2005-10 to support AAFC research in wheat and barley development. This funding has been invested largely in 22 projects under Genetic Enhancement and Crop Production.

A similar agreement has been signed with the Okanagan Plant Improvement Corporation to support work in small fruit. This is a ten-year agreement, and funds flow from the royalties received for the licensing of AAFC varieties of small fruit. The royalties (approximately $260,000 per year) are provided for research.

Expected Result: innovation programming strengthened due to enhanced linkages within and between science and innovation community and the agriculture and agri-food value chain
Status: Met

In 2006-07, AAFC introduced yellow-seeded napus canola into Canadian and international research and development collaborations, helping establish a strategic alliance of Canadian researchers to produce the next generation of canola, with more oil-bearing and nutritional qualities.

This resulted in:

• an enhanced scientific capacity, which will be required to enhance Canada's canola varieties and guard its position as the world leader in the global dollar canola industry, represented by about $2.5 billion of Canadian economic activity;
• the creation of new regional and science partnerships between AAFC and Canadian universities and other governmental organizations;
• the positioning of Canada to better collaborate and compete with other canola research alliances around the world; and
• a way to ensure new and existing canola varieties used in this collaboration are transferred to Canadian and international collaborators in a way that optimally protects Canada's intellectual property legacy arising from this research.

This agreement achieved benefits for:

• Canadian producers, by having AAFC and other parties pool their resources to create new canola varieties that will continue to enhance their economic position in world canola markets;
• the agriculture and agri-food sector, by having new canola varieties that are better in tune with their food meal needs as well as oil-producing activities; and
• Canadian consumers, from having the potential for new canola-based products with superior nutritional varieties.

This initiative also contributes to the Expected Result below titled Utilization by the agriculture and agri-food sector of advances in crop genetic advancement.

Also of note in 2006-07:

• a cherry breeding agreement between Canada and Chile was executed. This agreement further facilitates the development and international interchange of new cherry varieties by doubling the speed at which they can be evaluated;
• an umbrella agreement was executed co-ordinating the research efforts of AAFC, Alberta Agriculture and Food, the Alberta Research Council, and the University of Alberta. This agreement contains two key areas of relevance to AAFC: 1) three AAFC scientists will be co-located on the University of Alberta campus, and 2) an AAFC-driven project on value-added meats will be based out of the department's Lacombe Research Centre.

Expected Result: utilization by the agriculture and agri-food sector of advances in crop genetic advancement
Status: Met

AAFC has a long history of providing the agriculture and agri-food sector with scientifically investigated knowledge, technologies and resources that improve the quality and quantity of agricultural products and increase the efficiency and competitiveness of the sector.

The department's genetic enhancement research in 2006-07 focused on developing new cultivars of crops with improved yield, disease resistance, quality and resistance to environmental stress.

New varieties

Of note, in 2006-07:

• new varieties of wheat, barley, oats, oilseeds, beans, peas, vegetables, fruits, berries and roses were developed, registered by the CFIA and licensed to 23 producers for production
• AAFC-developed wheat varieties with improved yield, disease resistance and quality are currently planted on more than 70 per cent of the 7.5 million hectares for hard red spring wheat and 100per cent of the seeded 1.7 million hectares for durum (pasta) wheat. Strongfield, the first durum wheat variety in the world with low cadmium levels, is growing in importance as demand for its special quality increases.
• AAFC obtained registration for the first wheat varieties with natural resistance to the orange blossom midge fly. These varieties have been licensed to the private sector for seed increase and sale to farmers;
• a research partnership developed between AAFC and Quebec lettuce producers resulted in the creation of crisp-head lettuce varieties. These varieties have generated interest from California and Spain;
• seven of the licenses granted to industry for varieties developed by AAFC earned the royalties; these royalties were received for wheat varieties – Strongfield, AC Lillian, AC Barrie, AC Superb and Kane (BW342; CWRS), AC Metcalf barley, Rose varieties and Staccato cherries.

Novel technologies

Of note, in 2006-07:

• research results by AAFC scientists were published in peer-reviewed primary journals indicating generation of new knowledge;
• intellectual properties developed were protected by patents. Patent was granted (US patent # 6,955,016) for methods developed to accelerate the generation of fertile plants which will help increase the rate at which genetic improvement of traits can be introduced, an Australian patent was granted (# 783733) for novel technologies for production of seeds, oils and seed meals from Sinapis alba (white mustard), and a Canadian patent was granted (#7,081,564) for the encoding of an enzyme in oilseeds which can alter the fatty acid composition of the oil in oilseeds, thus making the oil more suited than before for their intended use (increasing health-enhancing characteristics and increasing the utility of the oil in industrial applications). Four U.S. patents were granted for strawberry and apple varieties developed by AAFC scientists because of the enhanced advantages of disease resistance and winter hardiness of the plants, early fruit production, increased shelf life of the fruit and other desirable characteristics (low browning upon exposure to atmospheric oxygen). Seventeen newly developed varieties were registered by the CFIA for a number of crops because they were recognized as providing advantages to the producer and/or consumer with respect to improved yield and disease resistance.

Expected Result: enhanced and integrated approach to Innovation and Renewal Policy
Status: Mostly Met

AAFC's Science and Innovation Strategy and the Agricultural Policy Framework identify the need for the department to play a leadership role in the co-ordination and optimization of innovation resources to support an integrated national agriculture innovation system.

In 2006-07, AAFC engaged in discussion with stakeholders, academia and government to explore options for establishing a national innovation co-ordination mechanism designed to:

• facilitate a collaborative environment with federal partners, provincial governments, universities, and industry to define research requirements;
• optimize public investment in developing and maintaining an integrated national capacity and capability in support of innovation;
• mobilize public-private actions to support innovation chains; and
• engage public-private investors in helping to develop and capture new opportunities from agriculture.

This mechanism would provide advice on:

• research priority setting and research planning for the Canadian agriculture and agri-food sector, and facilitate the development of multi-stakeholder partnerships to address national research priorities;
• the strategic national agriculture and agri-food science capacity requirements to support the vision for the Canadian agriculture and agri-food sector now, and in the future; and
• identifying strategic gaps in national science capacity.

Sub-Activity: Advancing Canadian Agriculture and Agri-Food (ACAAF) program

The ACAAF program also contributed in 2006-07 to helping AAFC achieve results under this Expected Result, by supporting the sector to contribute to the future direction of agriculture and agri-food policy. ACAAF supported sector-led projects addressing new and emerging issues that may lead to new programs for integration into future federal, provincial or territorial government or industry initiatives.

Program Activity: Markets and International 

Markets and International (30%) - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
39.3	212

Global competition continues to intensify, meaning Canadian producers and processors must be continually innovative to stay ahead of their competitors and best meet market demands.

In 2006-07, the goal of AAFC's international strategy was to use improvements in food quality, safety and environmental sustainability to brand Canada and maximize global sales for Canadian producers and processors. This strategy was based on certain key principles, including: leveraging domestic program development to maximize international reputation and market access; linking all research and analytical work to create a comprehensive understanding of market opportunities and challenges; engaging industry continuously and through new relationships to ensure maximum effectiveness of programming; and working closely with portfolio partners, such as the CDC and the NFPC, other government departments and provinces to ensure that international approaches are cohesive and effective.

The strategic objectives of AAFC's international component are two-fold: to achieve greater recognition, at home and abroad, of Canada's world-leading capacity to meet the demands for quality in a rapidly changing and highly segmented global market; and to expand the industry's access to foreign markets.

Details of Performance

The expected results for the department's Markets and International program activity under the Innovation for Growth strategic outcome in 2006-07 were:

• increased exports of Canadian agriculture and food products;
• increased domestic and foreign investment in Canada's agriculture and food sector;
• increased domestic market share of Canadian agriculture and food products; and
• increased recognition of Canadian products and capabilities.

Expected Result: increased exports of Canadian agriculture and food products.
Status: Mostly Met

Progress on this Expected Result is shared with the Security of the Food System Strategic Outcome above (link here).

Sub-Activity: Canadian Agriculture and Food International (CAFI) program

The CAFI program provides funding for industry initiatives designed to increase international sales of Canadian agriculture and food products, by building upon Canada's reputation as a provider of high-quality, safe and innovative agriculture, agri-food, beverage, and seafood products.

In 2006-07, through initiatives funded under the CAFI program:

• the Canadian Aquaculture Industry Alliance, despite a challenging year, took advantage of reduced competition from Chile in the U.S. market and increased the value of its exports by nearly 19 per cent;
• Chilled pork exports grew by 24 per cent in volume and experienced a 5 per cent growth in value. Canadian pork exports continue to expand even in light of a number of challenges facing the sector such as labour shortages, and the high Canadian dollar;
• the Canadian Beef Export Federation produced a six-country (Japan, Taiwan, South Korea, China, Hong Kong and Mexico) comparative market intelligence report regarding activities such as promotion, awareness and knowledge of Canadian beef. Respondents were supportive of the federation's efforts to promote Canadian beef in their countries and offered constructive suggestions on how to improve their work;
• Pulse Canada continued its work to identify buyer requirements and provide feedback to the Canadian scientific community on priority areas to meet market demands. Pulse Canada updated 42 country profiles including exports, tariff rates, market share and consumption for their Market Intelligence Database, and developed a standard template for competitive intelligence-gathering in Turkey and Syria. The 2006 production trends of red lentil in those countries were gathered and communicated to exporters, growers and researchers to facilitate decision-making;
• canola oil sales to the U.S. increased by nearly 23 per cent to from 591,121 tonnes in 2005-06 to 726,494 tonnes in 2006-07, partly due to efforts by the U.S. Canola Oil Promotion Program to raise awareness of the health and functional food value of canola oil. On October 6, 2006 the Canola Council was successful in achieving U.S. Food and Drug Administration (FDA) approval for a qualified health claim for canola oil's ability to reduce the risk of coronary heart disease due to its unsaturated fat content. It is only one of five favourable qualified health claims since the FDA began authorization of these claims in 1993; and
• the Wild Blueberry Association of North America achieved the results it set out to achieve in its 2006-07 strategic plan, i.e., an increased awareness of the health benefits of wild blueberries, an increase in demand for fruit, particularly at the retail level, and increased sales and profits for Canadian blueberry producers and processors.

As the CAFI program works to gain greater international recognition for Canadian agriculture and food products, the program also contributes to the Increased recognition of Canadian products and capabilities Expected Result listed below.

Expected Result: increased domestic and foreign investment in Canada's agriculture and food sector
Status: Met

Departmental progress on this Expected Result is shared with the same Expected Result under the Security of the Food System Strategic Outcome on page 43.

Expected Result: increased domestic market share of Canadian agriculture and food products
Status: Mostly Met

In 2006-07, AAFC made progress on several fronts with activities that promoted Canadian products in the domestic market and supported agriculture and food producers in developing the domestic market. This progress has contributed towards meeting the ongoing and long-term objective of increasing domestic market share for Canadian agriculture and food products.

Departmental progress on this Expected Result is shared with the same Expected Result under the Security of the Food System Strategic Outcome. Please see that section of the report (link here) for related performance information.

Expected Result: increased recognition of Canadian products and capabilities
Status: Met

AAFC continued to work in 2006-07 to generate greater recognition for Canada by branding its achievements in food quality, safety and environmental sustainability to maximize exports and generate greater sales for Canadian agriculture and agri-food producers and processors.

The CAFI Program assists industry associations in undertaking activities with these same objectives. In 2006-07, the program supported several international in-store marketing campaigns aimed at increasing international consumers' recognition of high quality Canadian products with the ultimate goal of increasing sales and exports.

The Canadian Association of Prawn Producers, a new CAFI recipient, conducted in-store pilot promotions in 45 hypermarkets and supermarkets across five target Chinese cities. These activities resulted in a dramatic spike of in-store sales of wild cold-water shrimp, from an average daily value of 40 Yuan to an average daily value of 1150 Yuan.

The CAFI Program is also committed to increasing international recognition of Canada's capabilities as a net exporter of agriculture, agri-food, and seafood products. To this end, the CAFI Program supported numerous incoming missions of international delegations interested in learning about the superior capabilities of the Canadian industry first-hand. The Canadian Swine Exporters (CSEA) association considers incoming missions a significant building block in their quest for increasing sales and developing new markets. In August 2006 two Chilean veterinary inspectors came on an incoming mission and inspected approximately 20 farms in four provinces. As a result of the inspections several hundred breeding swine were shipped to Chile.

Sub-Activity: Branding Management and Value-Chain Roundtables

Brand Canada

AAFC has developed a branding strategy designed to help take Canada's strong international image and leverage it to increase the sales and profile of Canadian food and agriculture products.

As a result of the branding activities carried out in 2006-07, domestic industry stakeholders, staff in AAFC, Canadian embassies and provincial governments have received training in the department's branding strategy, and have been offered access to a range of Canada brand marketing materials.

While there continues to be a need for outreach activities to broaden awareness and participation in the initiative, significant progress was made. Many stakeholders have begun using the Canada brand in their marketing activities, and the brand is being displayed more prominently in trade shows and other events around the world, serving to draw attention to Canada's food and agricultural products and expertise, and to increase interest in Canadian businesses among foreign customers. Information gathered through exit surveys and informal reports indicates the brand is gaining recognition internationally.

Portfolio organizations such as CGC and CFIA have also proven to be key players in the Canada branding strategy particularly through their role in the International Branding Working Group which works closely with the AAFC Branding Management Team.

The key challenge for 2006-07 was to promote adoption of the Canada branding strategy by industry and provincial government partners, as well as federal partners in international trade consulates. To this end, AAFC:

• developed A Guide to Building and Managing the Canada Brand for Food and Agriculture , which served as a tool to inform all industry and government partners about the branding strategy, how they could get involved and what tools were available;
• co-ordinated outreach sessions with government and industry in all provinces; and
• launched a Web site to provide key information and access to branding tools. More than 40 branding tools were designed and produced for a variety of purposes, including promoting Canadian food and agriculture products in foreign markets, communicating with international clients, and informing the domestic sector about the branding initiative. These items were available and in use through the latter part of 2006-07.

As a result of these activities, 89 stakeholders submitted signed Canada Brand usage agreements, indicating their interest in incorporating the branding strategy in their own marketing activities and their intent to abide by the legal requirements so as to preserve the integrity of the Canada brand and protect its users.

Value-Chain Roundtables

In 2006-07, AAFC held 14 full roundtable meetings and 50 working group meetings for the eight sector-specific value-chain roundtables to support their work in developing strategies to increase their presence in existing markets and take advantage of new opportunities for market access.

Key results achieved in 2006-07 included:

• the development of the Special Crops brand architecture, resulting in a pilot project to utilize the sector's brand proof points to market mustard to international customers;
• continued work with industry through the Seafood Value-Chain Roundtable to develop strategies for market success. Following the completion of five benchmarking reports, working groups were established for farmed mussels, lobster and Pacific sea urchins. Initiatives emerging from these working groups have led to consumer research for mussels, an industry forum for Pacific sea urchins, and a lobster summit planned for 2007-08. A working group was also established to oversee the development of a web-based educational document aimed at health professionals to communicate the health benefits of eating seafood by summarizing the current state of medical and scientific research in this area; and
• the launch of an Organic Sector Value Chain Roundtable (OVCRT), which had its inaugural meeting in December, 2006. The OVCRT established four pillars of concentration to promote growth of the sector: Regulations; Market Development; Increasing Canadian Production Capacity; and Science and Innovation.

The roundtables continued to face challenges in 2006-07, notably:

• difficulty getting some roundtables to focus more on international market success and less on domestic issues; and
• cross-cutting issues such as regulations, transportation, innovation, traceability, and health claims. Many roundtables have struck working groups to deal with these issues and in some cases roundtables are collaborating to identify common problems and identify potential solutions.

Other results and progress

Also in 2006-07, AAFC:

• operated a variety of displays (Canada Pavilion, AAFC booth) at seven major U.S. trade shows, generating more than $12 million in sales;
• conducted two research projects in China to assess the attitudes of commercial buyers in that country with respect to Canadian agriculture and food products and suppliers. Analysis is currently being done on these reports. The results, once analyzed, will inform a marketing strategy, helping Canada's agriculture and food exporters segment the Chinese market and position Canadian products to the best advantage;
• through its European market engagement strategy, deepened Canada's integration in Europe's supply chain by positioning the Canadian sector as a partner of choice for product, investment and scientific co-operation; and increased recognition of Canadian products and capabilities among key importers and consumers in Europe through successful promotional events in high-end food retailers in Germany, Austria and Spain. These are priority markets for Canada. More than 400 new consumer products were introduced to the market and there are now 350 permanent listings at the retail level in the market. Fifty new Canadian companies export to the European Union.

International Science Co-operation Bureau

The efforts of the International Scientific Cooperation Bureau (ISCB) can be seen in a variety of events, both national and international. In 2006-07, the ISCB organized joint workshops and missions, some strictly scientific, others supporting market development or capacity building.

That commitment made it possible for the ISCB to position Canada in the international scientific arena and strengthen ties with various agriculture and agri-food stakeholders abroad.

On the national scene, the ISCB was active in Government of Canada initiatives (such as IGX), the negotiation of science and technology agreements with India and China, and the science and technology interdepartmental network. The ISCB made it possible for AAFC to establish links with other governmental agencies in 14 countries.

Considerable progress has been made with China, the European Union and Russia. For example, a home stay program for Chinese students was set up, AAFC research scientists joined two European consortia and a number of Russia-Canada projects were submitted for IGX funding. The work of the ISCB with the Egyptian markets team has been influential, especially regarding canola. The government of Egypt had enacted a new regulation to allow imports of canola oil; not long after the 2006 mission, it authorized the production of canola in Egypt.

Through its participation in gatherings all over the world, the ISCB has worked to boost the brand image of Canadian products in various markets. By sharing and disseminating AAFC knowledge and know-how, the ISCB also helps showcase Canada as a world leader in the production of wholesome, high-quality foods.

Agreements for co-operation

Agreements for cooperation make it possible to officially recognize the contributions of AAFC research scientists to already existing, informal collaborations; provide a frame of reference for setting up cooperative activities; streamline the visa application process (especially for students seeking internships); and provide access to sources of foreign funding.

Since 2004, the ISCB has taken part in negotiating and signing 30 agreements with governmental (federal and regional), intergovernmental, academic and industrial organizations. Most of the agreements have been made with universities (59 per cent) and federal government agencies (30 per cent).

The signing of an agreement initiates a legal and technical process that can sometimes be complicated, especially when the agreement links government agencies or when it falls under a treaty between Canada and the partner country. The ISCB has gained extensive experience in this area and has become an indispensable resource for helping promote Canadian excellence abroad, as well as helping AAFC research scientists obtain access to international resources.

The ISCB has agreement templates that are used as a starting point for discussions. These include the following:

• letter of understanding;
• memorandum of understanding; and
• academic exchange arrangements (university exchanges).

Every signed agreement provides for the creation of a management committee by the ISCB, and the Canadian representative is appointed by the Chief Scientist, International. Through the annual reports of the management committees, the ISCB is able to responsibly manage each agreement signed and recommend amendments or renewal.

Descriptions of ISCB-managed agreements can be found on the ISCB website.

Hosting research staff

AAFC research centres have long enjoyed an international reputation of excellence and are a place of choice for internships or research activities. Furthermore, ISCB-managed agreements attract foreign research scientists and students, in varying numbers depending on the country and AAFC centre.

A study conducted by the ISCB showed that it was necessary to standardize the procedures for hosting guest research staff and foreign students in the department and its 19 research centres. To this end, the ISCB took an active part in developing and implementing a national program for hosting foreign research staff. The procedure for hosting foreign research staff has been standardized for all research centres, and it ensures that various regulations and standards are observed where they apply. The program also aims to ensure that all foreign staff is treated fairly.

Management of involvement of science-based intergovernmental organizations

Canada and AAFC contribute scientific expertise and commit funding to numerous intergovernmental organizations. This is required to help Canada meet its international commitments and advance national interests.

It is in this context that the ISCB coordinates and develops AAFC's position with regard to numerous international intergovernmental organizations. The ISCB also ensures that required funding is provided.

Commission on Genetic Resources for Food and Agriculture (FAO)

The Commission on Genetic Resources for Food and Agriculture is one of the largest scientific commissions in the Food and Agriculture Organization of the United Nations (FAO), with 168 member countries. The ISCB chaired the interdepartmental committee on genetic resources addressed by the FAO and led Canadian delegations participating in the work of the Commission. The ISCB represented Canada in meetings of the Commission's intergovernmental working groups that are paving the way for the implementation of the Commission's program.

The standard Material Transfer Agreement (MTA) of the Treaty is of the utmost importance to facilitate the transfer of genetic material to research scientists and plant breeders throughout the world. The ISCB led a multidisciplinary team of negotiators (including representatives from the agriculture sector) whose mandate was to negotiate an effective and cost-effective MTA.

The Treaty is now in place to improve the conservation of worldwide plant genetic resources, as well as to facilitate access to samples and promote the sharing of benefits from their use in an equitable manner.

Consultative Group on International Agricultural Research (CGIAR)

The Consultative Group on International Agricultural Research (CGIAR) consists of 15 international research centres with a number of common programs. The Canadian International Development Agency (CIDA) provides significant funding on behalf of the Government of Canada. The ISCB was part of the Canadian delegation (led by CIDA) at two annual CGIAR meetings.

The ISCB-CIDA collaboration with regard to the CGIAR has broadened the scope of Canada-CGIAR funding so that AAFC research scientists have become eligible. AAFC scientists can now request funding in partnership with their fellow CGIAR members.

The ISCB also participated in a review panel mandated by the CGIAR, as part of the Generation Challenge Program, to comment on the role of gene libraries in identifying and cataloguing new alleles that could be used in crop breeding throughout the world.

AAFC hosted the directors general of the CGIAR research centres and organized a special seminar with the winner of the 1970 Nobel Peace Prize, NormanBorlaug. Dr.Borlaug stressed the importance of international cooperation to foster development of the entire worldwide agriculture sector.

Asia-Pacific Economic Cooperation (APEC)

APEC is the main forum for promoting economic growth, cooperation, trade and investment in the Asia-Pacific region. Its Agricultural Technical Cooperation Working Group (ATCWG) focuses on seven scientific areas. The ISCB took part in two workshops on the conservation and utilization of genetic resources.

Assessment of benefits from technology transfer activities

The international scientific cooperation activities that AAFC leads generate technology transfers (TT), which are mainly transfers of research knowledge, to other research centres, private or public, for the purpose of industrial development or other kinds of development. The ISCB's purpose in this study was to identify benefits AAFC would gain from TTs and, if possible, find ways to measure those TT benefits.

In general, TT activities occur most often in a scientific cooperation context in which each party obtains scientific benefits, according to the terms of the research project; furthermore, TT activities produce significant benefits for Canada. First, they are a remarkable vehicle for Branding Canada and its quest for excellence, in addition to often helping meet Canada's political obligations. In the medium and long term, TT activities help develop Canadian expertise, attract talent and qualified workers, obtain access to resources not available in Canada (genetic material, expertise) and seize business opportunities.

As well, private sector involvement in TT activities, the vigilance of research scientists and managers with regard to intellectual property enforcement, and the ISCB's work in close collaboration with the Markets and Trade Team should be encouraged, as they attract business opportunities for the Canadian agriculture and agri-food sector.

Successes in leveraging AAFC science and trade capacity

The purpose of this study, completed in summer 2006, was to find and document cases in which AAFC science and trade capacity was used successfully. Three cases were documented: the creation and market introduction of a food-grade soybean for the Asian market, the maintaining of Canada's lead in the production of durum wheat that satisfies both consumer requirements and European market regulations, and the development of a commercial technology to completely harness the highly nutritious properties of flax (omega-3, lignane and fibre).

Analyzing these three cases revealed two essential factors for the scientific and commercial success of an innovation. First, there must be both well-documented and disseminated scientific research results and a quantifiable economic benefit. Second, there must be a vision, leadership, teamwork and commitment to succeed. The vision must guide both research scientists and industry partners. Leadership and teamwork generate the will to overcome obstacles. Commitment must be in the form of monetary investment as well as time.

The international science cooperation is providing enhanced knowledge base for the competitiveness of the sector.

Canada's research sector is very small, and leveraging our capacity with other countries is providing precious new information for the benefit of producers and consumers.

Program Activity: Rural and Co-operatives Secretariats

Rural and Co-operatives Secretariats - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
20.8	96

Rural Development 

Much of Canada's wealth and prosperity as a country can be traced back to rural Canada. Many of our aspirations as a nation in the future will require a strong contribution from rural Canada and its residents.

More than 20 per cent of Canadians live in rural, remote and northern communities, and the rural population actually increased slightly in the 2006 census. Over the last ten years, the federal government has placed great importance on addressing rural issues and has designated the Canadian Rural Partnership (CRP) as the key government response mechanism for action in rural Canada.

The CRP, housed within AAFC and co-ordinated by the Rural Secretariat, is a government-wide approach to rural policy and program development and implementation. It is designed to focus on the challenges and issues facing rural areas by working together with federal government departments and agencies, other levels of government, stakeholders and rural communities.

Performance Accomplishments for 2006-07

Strong Rural Voice

There will always be challenges for rural Canadians associated with geography, population density, and globalization among others. However, there is a real effort taking place at the federal level to further strengthen the rural voice. This was achieved almost exclusively by simply working more effectively with partners. This included an on-line consultation with other departments to discuss the key factors and trends that will affect rural communities over the next 10 years.

A new working group was formed with strategically selected departments who play a large role in rural communities to discuss the long-term sustainability of resource based communities. The Rural Development Network began to spread its wings bringing together policy makers and researchers from 24 different departments to work and share information about the challenges of rural Canada.

More informed decisions by governments and rural communities through evidence-based research and analysis and improved accessibility to information

To make the best possible decisions for rural Canada, the best possible information is needed. It must be available for community planners right up to the decision making levels of the federal government. To this end, the Community Information Database was launched in October 2006. The database contains informative data based on the 1996 and 2001 census but applied in a way that helps rural movers and shakers look at their community in progressing and potential opportunities that may exist that they might not have even realized. The database, which is free to all users, receives as many as 100,000 hits per month. The Rural Secretariat and its Rural Teams have been promoting the use of this rural development tool to communities and stakeholders.

The work doesn't stop there. The models program continues to test various approaches to rural development to see what will work and what won't in different rural venues. This multi-year program continues to the end of fiscal year 2007-08, but has already shown great potential results that other government departments can adopt in the delivery of future policy and programming for rural areas.

The information must also be available to Canadians for their use. Two-and-a-half million rural households received rural information newsletters in 2006-07 through Canada Post. These newsletters highlighted success stories and also provided up to date information about the Community Information Database and the New Generation of Agriculture Policy Framework discussions. The rural web site also holds information from sessions held over the past 12 months, such as rural dialogue reports from Isle Madame, N.S., and a learning series held in Saskatchewan, Alberta and the Yukon. The new Community Decision Making Tool Kit, which documents how communities have made decisions regarding their future, was also added to www.rural.gc.ca.

Better co-ordination of government policy responses to community priorities

Every federal government department and agency has an interest in rural Canada. By working together to provide tools and services, they can help ensure rural Canadians have the opportunity to reach their potential. On the ground, the CRP provides leadership to rural teams across the country. These teams are made up of representatives from other departments, as well as like-minded provincial departments and sometimes rural stakeholders. The teams set their own agenda to assist in moving rural files forward. This coming together of people and resources translated into 90 collaborative and partnership initiatives across Canada.

Co-operatives Secretariat 

The Co-operatives Secretariat advises the federal government on policies affecting co-operatives, co-ordinates the implementation of these policies and encourages the use of the co-operative model in developing the Canadian economy. It also provides a link between the co-operative sector and the many federal departments and agencies with which the sector interacts.

In 2006-07, the Co-operatives Secretariat continued its partnerships with the co-operative sector to increase awareness and promote the benefit of the co-operative model, supported co-operative development through research, policies and programs, and worked within other branches of AAFC and other federal departments to ensure co-operatives had a place in key policy initiatives.

Performance Accomplishments for 2006-07

Ensure the needs of the co-operative sector are taken into account by the federal government, especially when developing policies, programs and legislation.

The Co-operatives Secretariat collaborated with various federal departments on policy development initiatives with linkages to or implications for the co-operative sector.

The Secretariat collaborated with the Financial Guarantee Programs Division on a review of the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA). This included consideration of possible changes to the Act and organizing a series of stakeholder consultations to seek input on the modifications and the issues they were designed to address. The Secretariat also provided input to AAFC policy and program initiatives in support of the Biofuels Strategy, and the preparation of discussion documents for the Next Generation Agricultural Policy Framework consultations.

The Co-operatives Secretariat partnered with HRSDC to fund a study on child care co-operatives to support policy work in this area. It also undertook consultations with HRSDC and Citizenship and Immigration Canada on the potential of the co-operative model to assist immigrant integration.

The Co-operatives Secretariat maintained a good working relationship with the provinces and territories. The network of senior officers responsible for co-operatives had ongoing exchanges during the year to address common co-operative issues including the review of legislation or the recent development of co-operatives in the area of alternative energy (i.e. wind energy, ethanol). Provincial officials continued to play an essential role in the evaluation process of projects submitted under the Co-operative Development Initiative (CDI).

Foster and facilitate interaction among co-operative organizations and with the Government of Canada

In collaboration with other AAFC officials, the Co-operatives Secretariat held consultations with farmers and representatives of co-operatives on FIMCLA and agricultural co-operatives in eight locations across Canada in the summer of 2006. The consultations provided a venue to gather views on proposed changes to FIMCLA and to explore the challenges and opportunities that exist for agricultural co-operative development in Canada at this time.

The Secretariat participated on the Board of Directors of the Canadian Social Economy Hub, an organization that coordinates a network of regional centres and partners involved in the Canadian Social Economy Research Partnerships.

The Secretariat continued to maintain effective relations with the national associations - Canadian Co-operative Association (CCA) and Conseil Canadien de la Coopération (CCC) - which jointly deliver the Advisory Services component of CDI. Their involvement has encouraged the organizations to work more closely together and share resources, tools and information in support of co-operative development.

Develop and disseminate new information, knowledge and tools that will help co-operatives and governments make informed decisions

The Co-operative Secretariat continues to publish statistical information on co-operatives, including the Top 50 Co-operatives and an annual publication on Co-ops in Canada that provides an overview of co-operatives in all sectors of the economy.

Information and links on the website were updated as new items became available. Work on a web tool to facilitate access to co-operative reports and statistics was put on hold but will take place in fiscal year 2007-08.

The Secretariat provided support for the development of 'Co-op Zone', a web based centre of documentation and resources primarily for the use of co-operative developers. The site contains general information, templates, tools and list of resources to support the development of new or existing co-operatives.

The Co-operatives Secretariat collaborated with the Rural Secretariat to deliver the 2006 Rural Learning Series on Community Revitalization: Co-ops and other Social Enterprises. A representative from the Co-operatives Secretariat participated in the events, which involved presentations in Saskatchewan, Alberta and Yukon. The significant level of interest in the Yukon resulted in an additional seminar and workshops for Yukon communities that wanted to explore the co-operative model further.

Enhance development capacity for co-operatives through delivery of the Co-operative Development Initiative (CDI)

In 2006-2007, the Co-operative Development Initiative (CDI) supported through its Advisory Services component, more than 584 local initiatives that led to the creation of some 38 new co-operatives. In addition, 114 existing co-operatives received assistance to help them in the area of governance, co-operative training, business restructuring and diversification. Under the Innovation and Research component close to 120 project applications were submitted and 29 projects were approved, in addition to the 41 on-going projects. Projects were distributed amongst the six priorities of the program:

• adding value to agriculture;
• access to health care and home care;
• economic development in rural, remote or Northern communities;
• development of aboriginal communities;
• integration of immigrants into Canadian communities; and
• community solutions to environmental challenges.

A $1 million, one-year addition to the CDI, called the Agricultural Co-operative Development Initiative, was announced in July 2006 and implemented through a contribution agreement with the CCA and CCC. The objective of this initiative is to support the development of farmer-led biofuel and value-added agricultural co-operatives through provision of technical assistance and building capacity to support co-op development in these areas. A total of 27 biofuel and value-added co-op projects were funded and a national conference was held which brought together new and existing co-ops to share knowledge and receive presentations by experts in these fields.

A Sharing the Learning project was initiated to look at the impact that the CDI program has had in terms of benefits to Canadian society and economy. Summaries of 60 projects have been prepared for further analysis. The project is to be completed in 2007 and the results will be used by the Secretariat for policy and program development, and will be made accessible to support co-operatives in development.

Throughout 2006-07 the Co-operatives Secretariat continued to encourage the understanding, use and development of the co-operative model through research, policy and program activities. The Secretariat was effective in working with other AAFC branches and federal departments in shared priority areas, and will continue to seek these opportunities. The development of new information tools and products will carry forward in the current year. Finally, the implementation of the Ag-CDI program is considered a key achievement for 2006-07, and both the CDI and Ag-CDI were effective in supporting the development of new co-operatives in federal priority areas.

Program Activity: Canadian Pari-Mutuel Agency 

Canadian Pari-Mutuel Agency - 2006-2007

Actual Spending (Net) $ Millions	Full Time Equivalents
(0.8)	61

The CPMA is a Special Operating Agency within AAFC that regulates and supervises pari-mutuel betting on horse racing at racetracks across Canada, thereby ensuring that pari-mutuel betting is conducted in a way that is fair to the public. The mandate and authority of CPMA derive from the Pari-Mutuel Betting Supervision Regulations made under Section 204 of the Criminal Code.

The CPMA has an excellent reputation and record of performance. It is recognized as a leader in maintaining a well-regulated horse-racing industry. The Canadian system enjoys a high degree of confidence from the betting public and the industry. Costs associated with the activities of the CPMA are recovered through a levy on every dollar bet on horse races in Canada. The levy is currently set at eight-tenths of a cent of every dollar bet.

The betting public was well protected in 2006-07 through the effective and efficient delivery of surveillance and enforcement operations. Agency officers ensured compliance with all betting policies and regulations.

Details of Performance

The expected results for the CPMA in 2006-07 were:

• confidence of the betting public in pari-mutuel wagering;
• detection against betting irregularities and performance-affecting drugs in horses;
• determination of the exact order of the finish of a race;
• availability of leading-edge, automated monitoring technologies to agency officers;
• self-sufficient Revolving Fund;
• improved levels of awareness and acceptance of regulations and policies; and
• strong federal, provincial and industry partnerships and increased international recognition.

Expected Result: confidence of the betting public in pari-mutuel wagering
Status: Met

The CPMA has an excellent reputation and record of performance with respect to supervising the conduct of pari-mutuel betting on horse races. The Canadian system enjoys a high degree of confidence from the betting public and industry.

In 2006-07, 54 full- and part-time agency officers were assigned to supervise wagering activities at racetracks and betting theatres across the country. CPMA officers were regularly scheduled at all racetracks that were issued permits to conduct pari-mutuel betting, and oversaw wagering activity during the running of 3,010 individual race-days. All licensed betting theatres were inspected at least once in the year. More than 263,000 separate betting pools were hosted by Canadian racetracks, on 45,459 individual races. CPMA officers audited 119,171 pools (approximately 45 per cent) to ensure ongoing compliance with regulations describing pool calculation methodologies.

The CPMA traditionally targets a minimum of 25 per cent of all Canadian-hosted pari-mutuel pools for auditing of pay-out prices. However, the graduated introduction of an automated auditing system has allowed us to exceed this target.

Expected Result: detection against betting irregularities and performance-affecting drugs in horses
Status: Met

In 2006-07, the CPMA provided an Equine Drug Control Program at 54 racetracks across the country. There were 52,648 urine and 1,718 blood samples collected for horses that competed in 31,689 Canadian-run races on which pari-mutuel betting was conducted. These samples were tested for the presence of controlled substances. Of the total number of 54,366 samples collected, there were 80 ‘positives’; a positive test rate of 0.14 per cent.

The CPMA's Betting Analysis Team, a specialized unit that audits pay-out prices, reviewed betting information in relation to the conduct of 14,772 races. A number of these races were identified for further investigation, and where appropriate, referred to provincial authorities.

Expected Result: determination of the exact order of the finish of a race
Status: Met

The CPMA provided photo finish and video race patrol programs at 38 racetracks in 2006-07 (2,953 race days, 31,039 races). These programs assist provincial racing officials determine the exact orders of finish for the races.

Expected Result: availability of leading-edge, automated monitoring technologies to agency officers
Status: Met

The CPMA's Internal Control System was operational at all five Canadian betting centres (‘tote’ hubs). This system is capable of auditing 100 per cent of all pari-mutuel betting activity hosted in Canada. The system remains on schedule for becoming the primary audit tool for CPMA officers at all Canadian racetracks by July 2007.

The CPMA continued the successful transition from traditional auditing mechanisms to utilization of the ICS, and by the end of the reporting period had completed more than 50 per cent of all auditing activity through use of the automated system. As previously noted, this provided for the CPMA to audit 45 per cent of all pay-out price; well in excess of our 25 per cent target.

Expected Result: self-sufficient Revolving Fund
Status: Met

The CPMA Revolving Fund achieved self-sufficiency for fiscal year 2006-07. Despite decreasing revenues (-1.3 per cent), the CPMA managed to maintain financial self-dependence through effective expenditure controls. The CPMA also introduced more effective means for ensuring the timely collection of outstanding accounts receivable.

Expected Result: improved levels of awareness and acceptance of regulations and policies
Status: Met

A comprehensive review of the regulatory framework for supervising pari-mutuel betting on horseraces, including the regulations, policies and programs of the CPMA, was introduced to industry stakeholders and agency staff in Spring 2006 through a series of regionally-scheduled information meetings in Calgary, Toronto, Montreal, and Halifax. Similar meetings with racetrack bettors were conducted through targeted sessions in Vancouver, Toronto, Montreal, and Charlottetown.

A discussion document outlining the objectives and scope of the review generated submissions from all recognized stakeholders, including racetracks, horsemen's groups, provincial regulators, bettors, and CPMA staff. Clarification meetings were conducted with provincial regulators and the industry group Racetracks of Canada in November 2006. International consultations were undertaken with a number of key foreign horse-racing jurisdictions in fall 2006 and spring 2007. Outside of review-related activities, regular meetings and consultations were held throughout the fiscal year with various industry groups. Comprehensive statistical reports were continuously maintained on the CPMA web-site.

Expected Result: strong federal, provincial and industry partnerships and increased international recognition
Status: Met

Federal-provincial relationships continue to be enhanced by regular interaction throughout the review process, and by active participation, including presentations and delivery of materials and information, in international forums, including the Arizona-based Racetrack Industry Symposium in December 2006, and the Association of Racing Commissioners International annual meeting in Jackson Hole, Wyoming, in March 2007.

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