Voluntary Report - public distribution

**Date:** 1/20/2006

**GAIN Report Number:** CA6002

CA6002

**Canada**

**Agricultural Situation**

**This Week in Canadian Agriculture, Issue 1**

**2006**

**Approved by:**

![](media/image1.wmf)Lisa Anderson

U.S. Embassy

**Prepared by:**

Christina Patterson and George Myles

**Report Highlights:**

\* Agriculture Minister in a Tight Race \* Former Agriculture Minister
Attempts a Come Back \* Ag Platforms of the Three Major Parties \*
Canadian Farmers Support a Conservative Government \* Economics Tops
List of Priorities For Farmers \* Canfor Buys Into the U.S. Lumber
Industry \* Value of Agricultural Production Rose in 2004

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Ottawa \[CA1\]

\[CA\]

This Week in Canadian Agriculture is a weekly review of Canadian
agricultural industry developments of interest to the U.S. agricultural
community. The issues summarized in this report cover a wide range of
subject matter obtained from Canadian press reports, government press
releases, and host country agricultural officials and representatives.

*Disclaimer*: Any press report summaries in this report are included to
bring U.S. readership closer to the pulse of Canadian developments in
agriculture. In no way do the views and opinions of these sources
reflect USDA's, the U.S. Embassy's, or any other U.S. Government
agency's point of view or official policy.

**AGRICULTURE MINISTER IN A TIGHT RACE**: Canadian Agriculture Minister
Andy Mitchell is in a tight race in his riding of Parry Sound-Muskoka in
Ontario. Conservative candidate Tony Clement, a former Provincial Health
Minister in the Mike Harris government, is challenging Minister
Mitchell. Recent polls indicate that the race is very tight and the
outcome is too hard to predict. In 2004, Minister Mitchell won the
riding by 3301 votes, but with polls predicting a Conservative Party win
on Monday, January 23rd, this could sway enough voters in the riding to
elect a Conservative Member of Parliament. Parry Sound-Muskoka was a
Conservative riding for 36 years prior to the 1993 federal election, but
has been a Liberal riding since Mr. Mitchell was elected in 1993.

**FORMER AGRICULTURE MINISTER ATTEMPTS A COME BACK**: Bob Speller, the
former Minister of Agriculture under former Prime Minister Jean
Chretien, is attempting to unseat Diane Finley, a Conservative Member of
Parliament and the Conservative Party Agriculture Critic, in the riding
of Haldimand-Norfolk in Ontario. In the 2004 election, Mr. Speller lost
the riding to Ms. Finley by 1645 votes. Polls are predicting that Ms.
Finley has increased her support and is expected to defeat Mr. Speller
by a larger margin on Monday.

**AG PLATFORMS OF THE THREE MAJOR PARTIES**: As the Canadian election
closes in on its January 23 election date, the three major parties have
announced their party platforms in regards to agriculture.

###### The Conservative Party of Canada

-   Replace the Canadian Agricultural Income Stabilization (CAIS)
    program with a new income scheme.

-   Introduce a separate disaster relief program.

-   Add \$500 million (CDN) a year annually to farm support programs.

-   Continue with the \$755 million (CDN) in emergency assistance to
    grain and oilseed producers previously announced by the Government
    of Canada.

-   Give western grain farmers the freedom to make their own marketing
    and transportation decisions. Western grain farmers should be able
    to participate voluntarily in the Canadian Wheat Board.

-   Ensure that agricultural industries that operate under supply
    management remain viable.

-   Defend Canada's agricultural sectors when negotiating international
    trade agreements.

-   Seek better market access in foreign markets.

-   Implement a Green Cover Crop Program to protect prairie farmers.

-   Require 5 percent average renewable content in Canadian gasoline and
    diesel fuel by 2010.

###### The Liberal Party of Canada

-   Increase by 50%, the lifetime capital gains tax exemption for
    farmers, from \$500,000 to \$750,000.

-   Make modifications to the CAIS program.

-   Re-introduce amendments to the Agriculture Marketing Programs Act.

-   Establish a National Renewable Fuels Standard that will call for
    minimum of 5% mix of renewable fuels in gasoline and diesel by the
    end of 2010.

-   Provide \$100 million (CDN) over five years to extend broadband
    access to rural and remote communities.

-   Support supply management.

-   Develop domestic "offset credits" for farmers who adopt low-till or
    zero-till practices to reduce greenhouse gas emission using the
    government's new Climate Fund.

-   Make all directors' positions in the Canadian Wheat Board subject to
    election, thereby giving farmers complete control.

-   Ensure the one-time payment of \$755 million, announced by the
    Government in November 2005, would not be treated as income for the
    purpose of CAIS calculations.

***The New Democratic Party***

-   Fight to end export subsidies and dumping.

-   Overhaul the CAIS program by abandoning "one size fits all" approach
    and work with producers to develop a program tailored for farm
    sectors.

-   Protect supply management boards in international trade
    negotiations.

-   Promise to work with farmers to ensure the right to save and reuse
    seed.

-   Protect the CWB monopoly.

**CANADIAN FARMERS SUPPORT A CONSERVATIVE GOVERNMENT**: According to the
recent Ipsos Reid poll, the majority of farmers in Canada would vote
Conservative (64%). This is slightly higher than in the 2004 election,
when 60% of farmers indicated an intention to vote Conservative. The
ruling Liberal Party sits at a distant second, receiving only 20% of
decided farm voters' support. The NDP have garnered 6% of the decided
vote, while the Green Party has received only 3% support from farm
voters. When compared to the voting intentions of farmers prior to the
June 2004 election, there is an indication that farmers have not really
changed their minds regarding whom they want to see in power. Overall,
the Conservatives are up four points from where farmers voting
intentions where prior to the 2004 federal election and the Liberals are
down 3 points. Regionally there have been dramatic shifts in farmer
support. In Alberta, Saskatchewan and Ontario, support for the
Conservatives has increased at the expense of the Liberals. The NDP has
also lost support in Saskatchewan and Ontario. In British Columbia and
the Atlantic Provinces, the Liberals have gained farmer support, while
the Conservatives and NDP have both lost support. In Quebec, the Bloc
Quebecois has gained slightly, while support for the Conservatives has
fallen and NDP support has increased. Manitoba is the one province where
farmer support, as compared to the 2004 election, has remained
relatively unchanged for the three major parties.

**ECONOMICS TOPS LIST OF PRIORITIES FOR FARMERS**: According to the
Ipsos Reid poll, farm economics tops the priority list for farmers when
they are considering agricultural issues for the election. According to
the poll, the primary issues for farmers that need to be addressed are
low commodity prices and the price of farm inputs. In addition, trade
barriers and policies, government support and income stabilization, were
also considered important priorities that need to be addressed by the
various parities during and after the election.

**CANFOR BUYS INTO THE U.S. LUMBER INDUSTRY**: According to *The Globe
and Mail*, Canada's lumber giant Canfor Corp., has agreed to buy the
U.S. timber producer, New South Companies Inc. for \$205 million (USD).
New South Companies is a member of the Coalition For Fair Lumber
Imports, the lobby group that speaks for the U.S. lumber industry in the
long-running softwood lumber trade dispute. The purchase of New South by
Canfor puts the company in the position to cancel New South's membership
in the Coalition. Canfor has not indicated whether or not it will make
such a move. The deal represents the first foray into the U.S. market
for the company. Canfor is following in the footsteps of other Canadian
companies like West Fraser Timber Co. Ltd., and International Forest
Products Ltd., which have both bought assets in the United States. The
expansion into the U.S. provides Canfor with a foothold in the key U.S.
market and provides the company with a platform to increase production
of timber in the U.S. that would not be affected by either the strong
Canadian dollar or duties stemming from the softwood lumber dispute.
Other benefits to the deal include the opportunity to acquire two of the
most profitable sawmills in the U.S. and a fleet of 50 delivery trucks
that come with them.

**VALUE OF AGRICULTURAL PRODUCTION ROSE IN 2004**: According to
Statistics Canada, the value of agricultural production in Canada rose
2.5% to \$47.4 billion in 2004. Sales of agricultural products, program
payments, and the value of inventory changes, were the major
contributors to the increase. Sales of agricultural products rose to
\$38.3 billion in 2004, due to the 6.9% increase in sales of
agricultural products to other sectors. Higher revenues for crops and
hogs helped pushed sales up. Hog prices strengthened in 2004 as a result
of robust exports and strong domestic demand. Production of grains and
oilseeds returned to more normal levels following the droughts in 2001
and 2002. This contributed to higher deliveries from most major crops
and higher Canadian Wheat Board payments. Program payments reached a
record \$4.9 billion in 2004, with producers receiving \$1.1 billion
through BSE-related programs and withdrawals from the government portion
of the Net Income Stabilization Account also reaching record levels. The
Canadian Agricultural Income Stabilization program also delivered money
to producers. The value of inventory change increased by \$1.8 billion.
Droughts in 2001 and 2002 drastically reduced farm grain and oilseed
inventories by the end of 2002. The return to more normal levels of
production 2003 and 2004 helped to increase inventories. In addition,
BSE resulted in producers holding onto livestock, thereby increasing
inventories.

Find FAS on the World Wide Web:

Visit our headquarters' home page at
[http://www.fas.usda.gov](http://www.fas.usda.gov/) for a complete
listing of FAS' worldwide agricultural reporting.

# 

# Recent Reports from FAS/Ottawa: 

  ----------------- ---------------------------------------- -------------
  Report Number     Title of Report                          Date

  CA5087            Strawberry Market Update                 12/30/2005

  CA5086            This Week in Canadian Agriculture, Issue 12/16/2005
                    42                                       

  CA5085            Provisional Dumping and Countervailing   12/16/2005
                    Duties on U.S. Corn Imports              

  CA5084            This Week in Canadian Agriculture, Issue 12/09/2005
                    41                                       
  ----------------- ---------------------------------------- -------------

VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
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on Embassy Ottawa offices, then Foreign Agricultural Service. The
FAS/Ottawa office can be reached via e-mail at: <agottawa@usda.gov>