Agricultural consequences of 2025 federal budget won’t be visible for years

Farm organizations took longer than usual to react and were remarkably nuanced in their response to this week’s long-awaited federal budget.

When the news releases did flow into inboxes, the responses were measured. None gave this budget a failing grade. There were no ringing endorsements either.

The Canadian government has come up with measures that will put real dollars into farmers’ pockets at a critical time. The impact of some of the “takes,” however, is less tangible. The consequences won’t become visible for years.

The government officially backed down on measures such as the enhanced capital gains provisions that would have increased the collection on land transfers by millions due to the relentless appreciation in farmland values.

The budget also increases the coverage levels in AgriStability, the cost-shared program that works alongside crop insurance to buffer farmers from income downturns.

It also confirmed a previous announcement the government is boosting the amount of interest-free cash advances farmers can access until they sell their crops.

Some of these provisions will help farmers through short-term uncertainty until other investments in diversifying exports pay off, including efforts to improve diplomatic relations with key customers such as China.

However, aside from the hard dollars in increased spending, the cuts and growing deficit, there are some costs hidden within this budget that will become more apparent in the generations ahead.

Agriculture and Agri-Food Canada is expected to cut its expenses by 15 per cent over the next three years, which will come out of programming, scientific research and operational costs “to better align with the government priorities.”

The most noticeable cut is the decision to wind down a $185 million investment in Agricultural Climate Solutions — Living Labs. It was characterized in the budget documents as being outside the department’s core mandate.

Yet the very next statement is contradictory.

“The government is focusing on supports for producers and agri-businesses to innovate, adopt clean technologies and stay competitive in a shifting global market, ensuring Canada remains a leader in sustainable food production,” the budget notes say.

The Living Labs program, which established 14 research farms across the country starting in 2021, was a long-term project designed to explore practices that support carbon sequestration, reduce greenhouse gas emissions and provide other environmental benefits. It brought researchers and farmers together to explore better practices tailored to the needs of each region’s environment.

Farmers tend to be climate change skeptics, despite the evidence of warming and more extreme weather variation. They are also reluctant to invest the expense and resources into “innovating” on their farms unless they have a clear payback.

If governments don’t share the risk of implementing unproven technologies, adoption and adaptation will be slower, which leaves the sector poorly positioned for future climate volatility.

In the meantime, reliance on support programs to maintain the status quo is growing. Stabilization and crop insurance payments are consuming an increasing proportion of government expenditures on agriculture, leaving less to spend on research and innovation.

The payoff from publicly funded research is irrefutable, but it is a long-term game.

Private-sector investment in research and development is limited to developing products and technologies that guarantee a return on investment. Research into innovations that don’t involve buying something must come from farmers and governments.

Likewise, Canada’s $2.7 billion retreat from foreign development spending over four years isn’t high on farmers’ radar, but it will have consequences that extend beyond the tragic humanitarian impacts.

“Any savings resulting from cutting the international assistance budget will be short-lived. Cuts erode Canada’s credibility with our global partners and blunt our capacity to shape outcomes that affect Canadians at home,” said Co-operation Canada CEO Kate Higgins in a statement signed by more than 100 non-government organizations.

Poverty and food insecurity lead to political instability, creating more conflict and market disruption, which shrinks rather than grows trade opportunities.

Circumstances south of the U.S. border explain Canada’s sudden shift into economic and military defensiveness. However, as a trade-dependent nation, it cannot afford to retreat from making the world more equitable and secure.

Laura Rance is executive editor, production content lead for Glacier FarmMedia. She can be reached at lrance@farmmedia.com.