Federal agriculture minister Heath MacDonald announced Feb. 25 the change would be implemented for the 2026 program year. Ministers had committed to this change at their meeting in July.

Livestock producers had asked for this to make the program more attractive to that sector.

WHY IT MATTERS: The costs related to feeding grazing animals on rented pasture were not allowable and producers argued they should be.

The federal government said this would provide more equitable support for cow-calf, sheep and goat producers.

MacDonald said the government is committed to effective, responsive programs for all producers.

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• The budget includes about $1 trillion in investment and posts a deficit over $78 billion.
• The government set a goal of doubling non-U.S. exports over 10 years.
• The federal government proposes to increase the AgriStability compensation rate to 90 per cent from 80 per cent and the payment cap per farm to $6 million from $3 million.
• The Advance Payments Program for canola will see $97.5 million spent over two years to increase the interest-free limit on advances to $500,000 for the 2025 and 2026 program years.
• Agriculture and Agri-Food Canada will wind down, streamline or realign some of its research to better fit government priorities. Agricultural Climate Solution Living Labs will be phased out.

The 2025 federal budget puts a hefty focus on trade diversification along with pledged investments into biofuel production and increased business risk management supports.

The “Canada Strong” budget is touted as a “plan to transform our economy from one that is reliant on a single trade partner, to one that is stronger, more self-sufficient, and more resilient to global shocks” in a federal news release.

It boasts some $1 trillion of investments. It also posts a $78.3 billion deficit.

Investments in transport and trade diversification

The Carney government pledged several efforts to guide Canadian exports, including agri-food, away from overreliance on the American market.

“Canada’s trade remains heavily concentrated with a single partner: the United States,” the budget document says. “At the same time, Canada has significant untapped potential to diversify its trade.”

The budget sets a goal to double non-U.S. exports over 10 years. It says this will generate $300 billion more in trade.

This goal includes a new strategic exports office at Global Affairs Canada, which aims to pave the way for Canadian companies and international business opportunities.

The Asia-Pacific region will be an area of particular focus for Canadian exports going forward, which the budget identifies as a “critical market for Canadian agriculture.”

The government pledged $5 billion over seven years toward a trade diversification corridors fund through Transport Canada, beginning in 2025-26.

It also promised an additional $68.5 million over four years to enhance CanExport, which encourages small and medium-sized businesses to find markets abroad by sharing the costs of international business development activities like legal expenses and market research.

Aside from Asia, the budget also promises new trade efforts in the European market, including $8 million over four years to Global Affairs Canada to deepen trade relationships with European partners, beginning in 2026-27. This same period will also see $20 million to enhance the agency’s capacity to negotiate and implement trade investment-related agreements.

Despite challenges from export markets, the budget notes Canada’s domestic-facing sectors have been faring well. It gives credit to Canadians intentionally redirecting spending to domestic industries.

Direct investments in agriculture programs

The budget promises to help Canada’s agriculture sector to “adapt and respond to economic challenges and a shifting trade environment, while positioning them to take advantage of new opportunities.”

One major investment is in the AgriStability program, where the compensation rate will be increased from 80 per cent to 90 per cent and the payment cap per farm raised from $3 million to $6 million. The government will also work to will identify barriers underrepresented groups face in accessing farm financing.

The Advance Payments Program for canola will see $97.5 million spent over two years to increase the interest-free limit on advances to $500,000 for the 2025 and 2026 program years. In September, the federal government announced it would temporarily increase the interest-free portion to $500,000 from $250,000 to help farmers facing market disruptions due to Chinese tariffs on canola.

The AgriMarketing program has $75 million earmarked to enhance diversification and promotion into new markets over five years, starting in 2026-27.

The biofuel sector will be another recipient of government investment. In a move telegraphed earlier this year, $372 million over two years will go to a Biofuels Production Incentive to support domestic biofuels producers beginning in 2026. This repurposes $175.2 million from the Clean Fuels Fund.

The government also said it intends to amend the Clean Fuel Regulations to support the domestic biofuels industry.

Changes within government bodies

Agriculture and Agri-Food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA) are set to see changes and streamlining.

AAFC will reorient programming, research and expenditures to better align with the government’s overall priorities. This will include phasing out programs outside the core mandate like the Agricultural Climate Solution Living Labs and reducing scientific activities where a “more streamlined approach can be taken.”

The budget proposes several measures withing CFIA to support increased food exports, including modernized trade tools to simplify processes and reduce the risk of errors and product safety concerns overseas.

CFIA will also receive $32.8 million over four years, beginning in 2026-27, to “secure, expand and restore market access for Canadian agriculture and agri-food, fish and seafood sectors,” including looking to other countries for new trade agreements and better market access.

Other investments and projects

The budget included several other projects and legislative changes which could support the agriculture sector. They include:

• An amendment to the Farm Credit Canada act which would require regular legislative reviews to ensure alignment with the needs of the agriculture and agri-food sector.
• “Winding down mechanisms to return direct fuel charge proceeds to Canadians, small- and medium-sized businesses, farmers, and Indigenous governments,” following the cancellation of consumer carbon pricing.
• Nation-building projects to expand trade corridors, including upgrades the Port of Churchill.
• Consideration to invest in projects like ports in Quebec, rail lines in Alberta and rail infrastructure on the West Coast.
• A proposed extension of the 2005 agricultural cooperative tax rules to apply in respect of eligible shares issued before the end of 2030.
• The Contrecoeur Terminal Container Project, which will expand the Port of Montreal’s capacity by approximately 60 per cent to boost Eastern Canada’s trading infrastructure, to be completed in the first round of major nation-building projects.

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Following a meeting of federal, provincial and territorial governments last week, Agriculture Canada announced the compensation rate would increase from 80 to 90 per cent, the compensation cap would be doubled from $3 million to $6 million and interest-free payments to farmers would be advanced for up to 75 per cent of their expected final claim.

The changes are a result of increased strains on producers such as international trade concerns and extreme weather damages from flooding and wildfires, according to the federal government.

Agriculture minister Heath MacDonald said the federal and provincial governments “agreed to make changes to AgriStability so that producers facing trade uncertainty and dry conditions have more protection” after last week’s meeting.

“The improvements take into account the practical considerations that producers must apply to their operations as they respond to market and environmental challenges,” B.C. Agriculture Council president Jennifer Woike said.

The AgriStability program is meant to protect Canadian farmers from large drops in income from external factors. Farmers in B.C. have until July 31, to enrol for the 2025 program year.

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The federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million. However, provinces have to agree in order for the changes to occur.

Federal minister Heath MacDonald said after a July 17 virtual meeting ministers were “receptive” to this plan and agreed to take the steps required to make the changes. Under the federal-provincial agreement, changes to AgriStability can only be made if two-thirds of provinces agree.

The changes are meant to help with trade challenges Canadian farmers are currently facing, particularly from China and the United States.

Beginning in the 2026 program year, provinces will be able to use a new inventory valuation method for inventory used on farm, such as feed. Ministers agreed to obtain approvals to include feed costs associated with rented pasture as an allowable expense ahead of the 2026 program year.

The ministers will meet in person in Winnipeg Sept. 7-9, at which time they will continue reviewing allowable expenses under AgriStability.

Trade was also on the agenda at the virtual meeting, both interprovincial and international.

Meanwhile, MacDonald said his next trip is to Toronto to tout the benefits of agriculture to the investment community. He said he is trying to push the envelope for agricultural success, which has strong positive implications for the Canadian economy.

He also said he can’t overemphasize the collaboration and support he has received from his provincial and territorial counterparts since becoming minister in May.

More to come.

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The federal and provincial governments extended the deadline to July 31 from April 30.

AgriStability is a business risk management designed to cushion producers against large income declines.

“Farmers experiencing losses are encouraged to apply for interim payments under AgriStability for more rapid support,” said a federal news release.

In March, in response to China’s tariffs on Canadian peas, canola oil and meal, pork and seafood, Agriculture Minister Kody Blois increased the AgriStability compensation rate to 90 per cent from 80 per cent and doubled the $3-million payment cap for the 2025 year

Two thirds of provinces must approve the changes for them to go into effect.

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It would likely put business risk management spending under the microscope as costs have soared in recent years, and the leaders of both major parties currently campaigning to be prime minister are talking about spending less.

“It is worth noting the cost of the BRM suite effectively doubled between 2019-20 and 2023-24,” said CAPI managing director and co-author of the report Tyler McCann. “The cost to Agriculture Canada alone for their 60 per cent is over $2 billion, most of that because of the increased costs of crop insurance.”

‘Sacred cows’

The report notes, however, that BRM programs are “sacred cows” that both farmers and politicians would like to preserve. It said the question is not just how much is spent but how effective it is spent.

“To the crop insurance cost, I think that the industry itself needs to understand that we’re living in a world today where the impact of the trade war that we’re in could do more harm to farmers than a drought does, but we have a significant substantial BRM program to respond to drought, but we don’t have a substantial program to respond to trade wars,” McCann said.

Federal agriculture spending flows through several channels. For example, the department itself had a budget of about $4.2 billion in 2024-25, but there are other organizations such as the Canadian Food Inspection Agency and Pest Management Regulatory Agency that are funded through other departments.

McCann said the Sustainable Canadian Agricultural Partnership is usually referred to as a $3-billion program, but it’s cost-shared and doesn’t include the BRM suite.

“That ag policy framework is actually a $15-billion initiative, and probably on track to be more than now, because of the significant cost of the BRM suite,” he said. “I think we need to be more transparent and understand that there are significant implications of that spending.”

There are questions about the sustainability of the crop insurance program, although government rarely says that out loud, he said. The report said everything should be on the table for review, including the sacred cows and politically sensitive programs that are often off the table.

“This status quo bias can perpetuate inefficiencies and prevent the reallocation of resources to more effective or innovative initiatives,” the report said. “Audit reports consistently highlight problems and gaps, yet these findings often fail to translate into meaningful changes, instead gathering dust on shelves.”

How effective is the spending?

Despite this substantial support for agriculture stakeholders always call for more. A review would look at how effective the spending is rather than just the funding level.

The report, co-authored with Elisabeta Lika, suggests the review proceed the way it did during the Jean Chretien government of the 1990s when it applied a test across government to assess its role and value for money. This differs from the last review of the across-the-board cuts through Stephen Harper’s Deficit Reduction Action Plan completed in 2012.

The 1995 program review used six-test methodology to make decisions, beginning with the question of whether a program continues to serve a public interest. If the answer was no, it was abandoned or transferred.

If yes, the question became if there was a legitimate role for the government, followed by whether it should be federal or provincial government, if the activities could be transferred to the private sector, how it could be more efficient and finally, if the result is affordable within fiscal restraint.

McCann and Lika applied the six tests to several areas of agricultural spending, noting the challenges of federal-provincial-territorial relations and business risk management programs, along with what they called hidden complexities of the role of the department and public goods, climate change, market volatility and supply chain issues, and program cycles and performance measurement gaps.

McCann said a program review undertaken right away would allow enough time before the next version of the agricultural policy framework is negotiated and launched in 2028.

The authors reviewed AgriInvest specifically and found it probably doesn’t pass the public good test, he said, because it is intended to help producers manage small fluctuations that a typical business should be able to manage.

“Similarly the examination of on-farm programs (On-Farm Climate Action Fund, Agricultural Clean Technology Program) highlights potential duplication with provincial efforts,” the report said. “The lack of clarity between federal and provincial roles has increased as AAFC has shifted to funding more on-farm activities.”

But the historic practice is to let provinces lead, meaning the programs don’t pass the federalism test, McCann said.

Funding innovation

In the area of innovation, McCann said there is a strong case for government to fund it but in a different way.

“The last example we use is trade and market access. Given the climate that we’re in, if anything there’s a greater public role and opportunity to actually spend more in that space than they’re spending today,” he said.

McCann added the context of a trade war with the United States puts extra pressure on the need for review because everyone requires a clear sense of whether programs align with priorities, meet the test of the moment, or if governments are providing them just because they have been for 30 years.

“We don’t often have this conversation in agriculture and we do live in a reality where often the response is always, ‘we need government to invest more.’ I think there is a strong argument to be made for governments to invest more in the ag space, but I think before we do that we need to really look at what they’re spending today already and ask ourselves the questions around is it being spent the right way and are we getting the right result.”

He said typically the reviews happen behind closed doors and CAPI would like more of this discussion out in the open.

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The announcement came late Saturday afternoon, ahead of Sunday’s election call.

Agriculture minister Kody Blois said the agriculture sector is experiencing multiple challenges, including the 100-percent tariff on canola oil, meal and peas and 25-percent tariffs on some pork, fish and seafood products. There is also continuing uncertainty regarding what the United States might do.

What support is promised?

The support is coming through AgriStability, by increasing the compensation rate from 80 percent to 90 percent and doubling the $3-million payment cap for the 2025 year.

“To get money to producers faster the Government of Canada has also provided provincial and territorial governments with the option to proactively enter into an agreement to issue interim payments at a higher payment rate and initiate targeted advance payments in the event of tariffs, or for the hog sector in the event of African Swine Fever,” the news release said.

In provinces that adopt the changes producers who participate in AgriStability would be eligible for an interim payment of up to 75 percent of their estimated final payment.

The government said an administrator will be able to establish the targeted advance payments “where analysis shows that market disruptions have resulted in a sufficient loss to trigger AgriStability payments for a particular sector or region.”

Blois said China’s decision will have a devastating impact on farm families. He said the announcement is a direct result of advocacy from producers.

“I will continue to stand shoulder-to-shoulder with our producers and will defend the sector every step of the way,” he said.

APAS calls for swift action

On Monday morning, the Agricultural Producers Association of Saskatchewan (APAS) called for the Saskatchewan government to swiftly implement the changes to AgriStability and suggested further avenues for support.

While AgriStability offers whole farm protection, payments are often received long after significant financial losses have occurred. Saskatchewan farmers will potentially have to borrow a lot of money in the interim to manage critical cash flow due to these market disruptions,” said APAS president Bill Prybylski in a news release.

APAS said it has had discussion with the federal agriculture minister asking him to increase the Advance Payments Program interest free portion to $350,000 from $250,000. They also asked Blois to assess if AgriInvest can be used to give farmers access to capital.

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They said existing programs won’t be sufficient for the economic hurt tariffs would cause.

Sam Millar, assistant deputy minister of economic development and corporate finance in the finance department, said work is underway across departments on how Canada would respond to American tariffs.

He said Canada is also making sure Americans know they will be affected, too.

“The main message that we’ve been delivering on all fronts, and the one which has been well-received by many at the national and state level, is that a 25 per cent tariff would be a very self-defeating action for the United States and would cause severe harm to American consumers, workers and to the U.S. economy broadly,” he said at the Canadian Federation of Agriculture meeting.

The meeting took place against the backdrop of tariff uncertainty and as many industry and government officials were in Washington to make their case against president Donald Trump’s plans.

The latest deadline for imposing U.S. tariffs is March 4.

Millar said the tariffs would be a direct and flagrant violation of the U.S. market access obligations under the Canada-U.S.-Mexico Agreement and its commitments under the World Trade Organizations.

Canada prepares to respond

Canada is prepared to react, Millar said, and the initial response prepared earlier last month is to minimize disruption to Canadian supply chains and limit the negative impacts on integrated sectors such as agriculture. The plan includes a remission process to consider requests for relief in exceptional circumstances.

Financial agencies such as Farm Credit Canada have been instructed to think about how it can increase business liquidity to mitigate some of the impact.

CFA past-president Ron Bonnett said Canada should engage with other countries as it prepares its response. Millar said the deputy minister of agriculture, Lawrence Hanson, was in various European capitals, and all embassies and high commissions are doing outreach.

Other farmers at the meeting suggested the government look now at trade corridors for more east-west traffic and specific infrastructure projects, such as another bridge at the Port of Vancouver.

Andrew Morse from the Canadian Ornamental Horticulture Alliance said members of the organization are entirely reliant on the U.S. market and are already seeing pinch points.

The industry relies on Valentine’s Day to Mother’s Day as its busiest season, and he said lost sales are already reported.

“People are already starting to look for alternative providers because the rhetoric around this is enough that retailers in the U.S. are trying to reduce their risk exposure,” he said.

Canadian growers post bonds to gain access to the market, and Morse said some are being asked to find a lot of capital very quickly.

AgriStability not enough

The flower sector is worried about liability and loan protection because there are about $3.8 billion in long-term liabilities across the country and probably more when all greenhouses are included, Morse said.

The industry will need capital support and loan protection.

“AgriStability is not designed to handle the economic shock that we’re talking about,” he said.

Colin Hornby from Keystone Agricultural Producers agreed AgriStability won’t be enough. He said the government should also consider the effect the carbon tax has on livestock buildings, greenhouses and grain drying while it’s looking at ways to help.

He asked if the government has decided how any countertariffs would be distributed, but Millar didn’t say. Millar did, however, say, changes to the Advance Payment Program are under consideration.

Ontario Federation of Agriculture director Teresa VanRaay drew attention to how the hog sector would be affected.

She said pigs shipped from Ontario to a plant in the U.S. make that plant efficient, and it may not be able to operate without them.

“As of today, if the tariff is on it’ll cost our farm $78 Canadian per pig,” she told the meeting.

She said there is no alternative plant if pigs can’t go south.

“We can’t just put them out into the field to grow,” VanRaay said.

“There will have to be some thought for live animals.”

British Columbia Cherry Growers Association president Sukhpaul Bal made a case for the APP to be offered at the highest level possible. He also said AgriStability hasn’t worked for the last several years to deal with climate events, and adding an economic disaster to it would mean it will fall far short.

He said Canada should take advantage of the current sentiment to support Canadian-made products and make key investments to add value to farm products.

Steve Peters, chair of Ontario Greenhouse Vegetable Growers, said 87 per cent of what is grown under glass in that province goes to the U.S.

“We’re not going to eat our way out of this in any way shape or form,” he said.

“It’s extremely important to us that you look at business risk management programs because existing programs do not work well for the greenhouse sector.”

CFA president Keith Currie said the government should look at how to alter existing programs for immediate help.

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Federal minister Lawrence MacAulay and his Yukon counterpart, John Streicker, said during the closing news conference they held productive meetings on a wide number of topics.

However, there was no mention of changes to the capital gains inclusion rate, which at least two ministers said they raised and that have drawn criticism throughout the agricultural sector.

Both Saskatchewan minister David Marit and Alberta’s R.J. Sigurdson said they found support among their colleagues in that they agree the changes are harmful.

“The provinces are aligned,” Marit said during an interview after the meeting.

Ministers want to adjust both AgriRecovery and AgriStability, and Striecker said they would advance work on proposals at their next ministerial meeting.

MacAulay acknowledged that payments through AgriRecovery take too long.

“We want to make sure we get the money into the pockets of the farmers and ranchers quicker than we have been,” he said.

Streicker added it’s not productive to have to “fire up” a specialized program each time there is a natural disaster.

“We’re looking for something that will be more predictable across the board,” he said.

Ministers also agreed to advance the pesticide working group action plan so that the Pest Management Regulatory Agency makes decisions based on evidence.

Further discussions included preparedness for African swine fever, avian influenza in dairy cattle, trade and accelerating work on specified risk material regulations that currently put Canadian cattle producers at a disadvantage to their American counterparts.

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The Nova Scotia and federal governments on Friday announced enrolment for the ag income stabilization program, which ended on April 30, has now been reopened for late participation until Dec. 31, 2024 for the 2023 program year.

“Nova Scotia’s agricultural businesses have faced real challenges due to several extreme weather events this year,” provincial Agriculture Minister Greg Morrow said in a release. “We are giving farmers who need income support more opportunity to get it, if their incomes have dropped sharply due to damaging rains, extreme heat, wildfires or other conditions.”

Late participation in AgriStability is offered only in a program year in which a given province or territory’s producers experience a “significant agricultural disaster,” either sector-wide or provincewide.

This spring over 61,000 acres were burned in wildfires across Nova Scotia from April into June. The province then reported periods of heavy rainfall and record-level heat during the summer, including storms on the weekend of July 21 that caused severe flash flooding which killed four people and led to estimated damages of over $170 million on insured property and infrastructure alone.

Those weather events “have had a devastating impact on Nova Scotia’s agriculture industry this year,” federal Agriculture Minister Lawrence MacAulay said in Friday’s release. “By allowing late participation in the AgriStability risk management program, we are ensuring producers have the time and support they need to protect their operations.”

AgriStability — which in Nova Scotia is delivered by the federal ag department — is meant to cover an enrolled producer’s margin declines greater than 30 per cent, at 80 cents for every dollar of decline.

That said, payouts — including interim payouts — to those who sign up via a late participation option such as this one are reduced by 20 per cent, to “encourage proactive enrolment.”

Late participants in Nova Scotia will need to pay a fee in two portions: a non-refundable up-front fee of $300, due by Dec. 31 next year, and $3.15 for every $1,000 of reference margin covered. Application forms will not be processed until the fee is paid.

Between June 1 and Dec. 31 in an affected program year, a province or territory can request that late participation be allowed. The federal government and affected jurisdiction must then agree jointly to extend the deadline.

For example, Nova Scotia last October opened up late participation for the 2022 program year in the wake of Hurricane Fiona.

Alberta producers last month were also granted late participation for 2023, with a deadline of Sept. 29, due to that province’s ongoing drought and wildfires. — Glacier FarmMedia Network

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