This presentation looks at the agriculture sector including tariffs, subsidies and food pricing/support.

1. AGRICULTURE SECTOR –
CANADA AND UNITED
STATES – JULY 2018
BY: PAUL YOUNG, CPA, CGA
JULY 25, 2018

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Emerging Technology
• SME – Business Process Change
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. AGENDA
• Summary
• Commodity Price Index
• Food Processing (Sales, Exports and Job Creation)
• Agriculture Subsidies
• WTO Subsidies
• Blog – Agriculture Sector

4. SUMMARY
• Countries around the world provide Agriculture Subsidies
• USA spends over $20B in subsidies to support their agriculture sector
• Canada at the federal level spends about $6B on subsidies.

5. COMMODITY PRICE INDEX
Source - http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/SCPI_2018-03-02.pdf
• Oil prices regained momentum after an early-February pullback
and WTI remains higher than we had initially anticipated in Q1;
price risk is now firmly to the upside of our 2018 forecast of
$57/bbl WTI.
• Industrial metal prices were firm through the month as strong
manufacturing activity offset waning investor interest and fresh
inflows of copper into LME inventories.
• Scotiabank Economics also took a deeper dive into the
Canadian oil patch and published notes on the impact of
ongoing pipeline shortages in Western Canada as well as the
vulnerability of the Canadian energy sector to a US-led NAFTA
disruption.
• Canada is having issues with getting goods to market -
https://ca.reuters.com/article/topNews/idCAKCN1GJ1JF-OCATP
or https://www.nationalnewswatch.com/2018/03/08/farm-
credit-canada-responds-to-impact-of-prairie-grain-
transportation-problems/#.WqeVi-jwZPY
• Lithium Production -
http://theportugalnews.com/news/portugal-seeks-lithium-
investments-in-canada/44979

6. Source – Stats Canada
• Canada inflation continues to rise - https://tradingeconomics.com/canada/consumer-price-index-cpi
• Carbon Tax will take over $10B out of the economy by 2022 - https://ipolitics.ca/2018/04/23/pbo-says-
carbon-tax-will-knock-10-billion-off-gdp-by-2022/
• Canada is facing pressures from trading partners as it relates to agriculture policies.

7. FOOD PROCESSING (SALES, MERCHANDISE TRADE
AND JOB CREATION)
Source – Stats Canada

8. TAX CHANGES / LIBERALS
Source - https://www.bnn.ca/tighter-tax-rules-for-small-businesses-and-passive-income-in-liberal-budget-1.1012980
The government had pitched the changes as a way to prevent wealthy Canadians from gaining
an unfair advantage and paying less tax, but small businesses said the changes hurt the middle
class.
In the budget this year, Ottawa moved to gradually eliminate the amount eligible for the
preferential small business rate as the amount of passive income rises above $50,000 with the
small business deduction limit reduced to zero at $150,000. It also moved to limit the advantages
that some businesses can obtain when they pay certain dividends.
The changes, which will apply starting with tax years that begin in 2019, are expected to bring in
$705 million a year by the 2022-23 fiscal year.
"We are changing the rules for three per cent of private corporations, because the wealthiest
Canadians should not be able to use private corporations to pay less tax than the middle class,"
Morneau said

9. AGRICULTURAL SUBSIDIES
• Source - https://www.thoughtco.com/us-farm-subsidies-3325162
Types of Subsidies
• Price Protection
• Price Support
• Grants to Farms
• Product Protection
• Crop insurance
• Capping imports
• Supply Management (Quotas)
• Government bail outs (Crop failures)

10. WTO SUBSIDIES
Source - https://www.ictsd.org/bridges-news/bridges/news/eu-brazil-call-for-new-wto-rules-on-farm-subsidies-food-security

11. SUBSIDIES
Source - https://www.washingtonpost.com/lifestyle/food/why-do-taxpayers-subsidize-rich-farmers/2018/03/15/50e89906-27b6-11e8-b79d-
f3d931db7f68_story.html?utm_term=.59ae0137f529 or https://reliefweb.int/sites/reliefweb.int/files/resources/132488.pdf

12. SUBSIDIES
Source - https://www.washingtonpost.com/lifestyle/food/why-do-taxpayers-subsidize-rich-farmers/2018/03/15/50e89906-27b6-11e8-b79d-
f3d931db7f68_story.html?utm_term=.59ae0137f529 or https://reliefweb.int/sites/reliefweb.int/files/resources/132488.pdf or https://www.downsizinggovernment.org/agriculture/subsidies
The federal government spends more than $20 billion a
year on subsidies for farm businesses. About 39 percent
of the nation's 2.1 million farms receive subsidies, with
the lion's share of the handouts going to the largest
producers of corn, soybeans, wheat, cotton, and rice.1
The government protects farmers against fluctuations in
prices, revenues, and yields. It subsidizes their
conservation efforts, insurance coverage, marketing,
export sales, research, and other activities. Federal aid
for crop farmers is deep and comprehensive.
However, agriculture is no riskier than many other
industries, and it does not need an array of federal
subsidies. Farm subsidies are costly to taxpayers, but
they also harm the economy and the environment.
Subsidies discourage farmers from innovating, cutting
costs, diversifying their land use, and taking other actions
needed to prosper in the competitive economy.
President Donald Trump has proposed modest reforms to
farm programs, but the longer-term goal should be to
repeal all farm subsidies.
“President Donald Trump arrived in Quebec for the G7
Summit on Friday morning, and before departing from
Washington, D.C., took the time to fire fresh volleys at the
Canadian system of supply management.
The system manages the supply of dairy, egg and poultry
products by imposing steep tariffs on imports of those goods
in order to prop up domestic industries that could face foreign
competition if the protections on them were to be dropped.
”
https://globalnews.ca/news/4262157/donald-trump-supply-
management-dairy-tweets-g7/
Supply Management / AG Sector
Bottom line
• USA provides over $20B in subsidies to its’ farmers
• Canada ‘s Federal Govt provides close to $6B per year
to farmers
Source -
https://lop.parl.ca/Content/LOP/ResearchPublications/2
015-138-e.html?cat=agriculture

13. BLOG – AGRICULTURE SECTOR
• Source -
https://www.slideshare.net/paulyoungcga/agricultur
e-and-mining-sector-canada-and-usa-august-2017
•
• Source: http://www.ft.com/intl/cms/s/2/53960dd4-
981e-11e5-9228-
87e603d47bdc.html#axzz3xhTQ3L1o
•
• Link – http://www.precisionag.com/data/high-tech-
farm-learning-project-shaping-next-generation-of-
precision-ag-experts/
•
• Smart farming has been around for many years due
to enhancement in technology. The biggest issues
facing agriculture are arable land and fresh water. I
did this presentation on food processing industry -
https://www.youtube.com/watch?v=ZJmVuIDvBtU.
FYI - Agriculture subsidies has always been a big
issue - http://www.ft.com/cms/s/0/a42540e4-3384-
11e4-85f1-00144feabdc0.html
Farmers are also concern with taxation polices -
http://www.producer.com/2017/08/tax-changes-impact-could-be-
humongous/ “Tax, accounting and succession experts say the
proposed rules could have a major impact on farm families;
undermining the ability of some family farms to survive and
encouraging farm families to get out of the business.
The changes to incorporated farms include:
 rules to make it more difficult and risky for full-time
farmers to share farm income with spouses and children;
 regulations that could make it dangerous to use farm
earnings to help pay for children’s post-secondary
education;
 rules that discourage farms from renting out their land or
saving cash within a farm company;
 changes that could make it risky to divide ownership of a
family farm’s land base among a number of children, while
allowing the land block to remain intact;
 rules that encourage farmers to sell their land to neighbours
or strangers rather than their own children.`

14. TRUMP AND AG SECTOR
• The U.S. government announced a US$12 billion plan Tuesday to assist farmers who have been hurt by
President Donald Trump’s trade disputes with China and other trading partners.
• The plan focuses on Midwest soybean producers and others targeted by retaliatory measures.
• The Agriculture Department said the proposal would include direct assistance for farmers, purchases of excess
crops and trade promotion activities aimed at building new export markets. Officials said the plan would not
require congressional approval and would come through the Commodity Credit Corporation, a wing of the
department that addresses agricultural prices.
• “This is a short-term solution that will give President Trump and his administration the time to work on long-
term trade deals,” said Agriculture Secretary Sonny Perdue. Officials said the direct payments could help
producers of soybeans, which have been hit hard by the Trump tariffs, along with sorghum, corn, wheat, cotton,
dairy and farmers raising hogs.
Source - https://www.canadianmanufacturing.com/exporting-and-importing/trump-tapping-us12b-to-help-
farmers-affected-by-tariffs-216532/