Ontario Budget 2016 — Can Agriculture Do More With Less?


Ontario’s 2016 budget made many headlines last week – from free university tuition for low income families to a 4.3 cent climate-change-fighting gas tax, and even a lower-than-expected deficit.

But what does it all mean for agriculture, farmers and rural Ontario? With some help from our RealAgriculture twitter followers, we peppered Ontario Agriculture, Food and Rural Affairs Minister Jeff Leal with a series of questions to get a clearer picture of what impact the budget could have on Ontario agriculture and food.

Overall, Leal described his government’s 2016 plan as a “good news budget that invests in jobs and growth in the province of Ontario.” He notes that agriculture generates $34.5 billion in GDP for Ontario’s economy, employs 780,000 people and represents 23% of the province’s manufacturing sector, through food processing.

But despite the tremendous contribution agriculture makes to the economy, the government will actually spend less on the sector – down to $915 million in 2016 from $943 million last year.

Leal acknowledges that the province is spending less on agriculture, but “my measurement of success is not necessarily money spent but the results we’re getting.” He notes that almost 20,000 jobs have been created in the sector in the last couple of years and exports are growing in excess of 5%. “That does clearly indicate that we are well on our way to achieving [Premier Kathleen Wynne’s] goal of 120,000 jobs by the year 2020.”

A favourable exchange rate is good for Ontario exports, says Leal who also points to an investment from P & H Milling in the first new Ontario flour mill in 75 years as evidence of investor confidence in the sector.

As weaker prices extend their grip on commodity markets, farmers were hoping to see a stronger financial commitment to the province’s business risk management program (RMP), but there were no new dollars offered in the budget. In pre-budget consultations, Ontario farm and commodity organizations had asked the Liberal government to increase the current $100 million program cap by $25 million a year over the next three years.

Leal says the Ontario government will continue to contribute 40% of the cost of the program, but he wants the federal government to share the cost as they do with cost-shared safety net programs such as AgriStability and AgriInvest. He says he’s raised the matter with federal Agriculture Minister Lawrence MacAulay and plans to continue the push.

“I’ve already flagged the new Minister. I had the opportunity to chat with him briefly one-on-one in Ottawa in November. This is a real window of opportunity to press the federal government to fund the 60% share and make this a program that our non-supply managed sectors can bank on in the future,” says Leal. “We have a window of opportunity. I intend to use that window of opportunity to negotiate on behalf of Ontario farmers.”

In recent weeks, Ontario farm organizations have been busy educating Ontario’s new Environmental Commissioner Diane Saxe on the value of government support for agriculture such as tax exemption status for coloured diesel. Saxe had suggested the government should re-evaluate the program. But Leal says the budget makes it very clear that’s not about to happen. He also notes that the new 4.3 cent gas tax will not apply to coloured diesel.

“We’ve heard the musings from the Ontario Environmental Commissioner about coloured diesel,” says Leal. “I remind our audience, of course, that the Minister of Finance sets tax policy so there will be no changes in terms of taxing coloured diesel in the province of Ontario.”

The Ontario Federation of Agriculture’s (OFA) budget wish list focussed on three key areas: investing in rural infrastructure; increasing support for risk management programs and more affordable energy; as well as action on climate change.

Leal indicates that there is a budget commitment to extend natural gas to rural Ontario, but OFA President Don McCabe wants to see action. “It was a commitment we saw in the 2014 budget, but we have to get shovels in the ground and get things moving,” says McCabe. “This infrastructure needs to become reality and no longer be just talk in a budget document.”

McCabe says he does not see how the budget would provide any immediate relief for farmers stung by higher electricity rates, but he is happy to see agriculture acknowledged as a key player in the government’s cap and trade carbon emission reduction program.

“It’s very good that agriculture has been identified as a carbon offset provider. It’s vital. We need this program out as quickly as possible,” says McCabe noting industries like agriculture that deliver emission reduction will be eligible for payments of up to $1.9 billion.

“The reality at the farmgate is we need to make sure offsets are recognized because of the increased costs the 4.3 cent carbon tax will place on fuel, chemical, concrete and other areas,” adds McCabe.

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