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Business risk management (BRM) continues to be the central objective of agricultural policy in many countries, including Canada and the US. The unprecedented volatility that has characterized the farming sector in recent years is only expected to rise. Thus, governments continue to implement comprehensive suites of BRM programs to assist farmers in coping with these gyrations. This paper aims to examine 1) the relationships between the main Canadian BRM programs (AgriInsurance, AgriStability, and AgriInvest), and 2) if and how those relationships differ across different farms. Understanding the interlinkages between government BRM programs is central for policy makers in order to achieve the desired objectives. The analysis uses data from the Ontario Farm Income Database (OFID), which is a longitudinal farm-level dataset compiled from Ontario farm tax-file records from 2003 to 2011. The dataset contains detailed financial, production and program payment (except for Production Insurance/AgriInsurance payments) data for all Ontario tax-filling farm operations. Additional operator-level Production Insurance/AgriInsurance payment data is linked to farm-level OFID records to complement the program payment data. The paper uses a two-stage approach to examine the relationships between AgriInsurance, AgriStability, and AgriInvest. First, a multinomial probit model is estimated in which the dependent variables are dummies for all eight possible combinations of participation in the three programs and the independent variables include program participation in previous year, operating profit margin, operating expense ratio, leverage, diversification index, size, and sector. In the second stage, the predicted probabilities of the eight participation states from the first stage multinomial function is used as regressors against percentage falls in gross margin (operating revenue minus operating expense), controlled for size and sector. We find that participation in the previous year has a strong and positive effect on participation in the current year, and the three programs are generally treated as compliments. We also find that in general, farms that participate in some combination programs have smaller drops in gross margin compared to those that participate in no programs. Despite this effect, operators continue to drop out of BRM programs.

The risk balancing literature suggests that business risk management (BRM) programs may, through risk balancing (offsetting adjustments between business risk and financial risk), lead farmers to take on more financial risk than they would take otherwise, which, in turn, increases the risk of equity loss. Business risk management continues to be the central objective of Canadian agricultural policy, and this was re-enforced with the recent introduction of the Growing Forward II policy framework. However, it is not known whether Canadian BRM programs designed to offset business risk lead to increased financial risk and possibly higher levels of overall risk for individual farm operations. This paper aims to empirically examine the impact of Canadian BRM programs on the financial riskiness of farms using a longitudinal farm data set from Ontario. Results show that: 1) the lag of payment of Canadian Agricultural Income Stabilization/AgriStability diminishes the effectiveness of BRM programs in reducing business risk; 2) a relatively small share of farms exhibit risk balancing behaviour, and 3) BRM payments have no impact on the likelihood of risk balancing. Taken together, these findings suggest that the impact of BRM programs on the financial riskiness of farms is limited.

Bioproducts are often presented as one of the potential saviours of Canadian agriculture, offering non-food applications for agricultural products. However, relatively little is known about the sector or the characteristics of the firms. This paper presents an analysis of the Canadian bioproducts sector based on the first survey of bioproduct firms in Canada. The survey was performed by Statistics Canada in 2004 using 2003 firm results. The paper analyzes the responses to the bioproducts survey on two important dimensions, by region and firm size. The results indicate that for most of Canada's 232 bioproducts firms, bioproducts are just one part of the business activities, accounting for less than one third of employees and slightly more than one quarter of total firm revenue. Bioproduct activities provide both market and environmental benefits. The major challenges to the industry are financing and regulation. However, the relative importance of bioproducts, benefits and strategies and the focus and success of firms vary dramatically by region and by firm size.

Growing consumer interest in functional foods and nutraceuticals has been seen as a significant business opportunity for the agri-food sector. Many of the new firms in this sector are small and medium sized enterprises (SMEs). These SMEs often face difficulties in obtaining financing for their functional food and nutraceutical innovation activities. We develop and implement two models to show what factors affect a firm's decision to seek external financing and the level of financing obtained. Firm size, being privately held and engaging in contractual arrangements, have negative impacts on the likelihood of a firm seeking external funding, while firms which are intensively involved in the functional food and nutraceutical sector, with greater prospects for business expansion and/or are involved in partnerships are more likely to seek external financing. Larger firms and those involved in functional food and nutraceutical research and development receive a greater amount of capital when they decided to raise capital. However, firms focused on functional foods and nutraceuticals, as opposed to more diversified firms, and those involved in product development and concept scale-up receive less capital. Our findings highlight the importance of public support in addressing the capital requirements of functional food and nutraceutical firms and underscore the considerable burden in this respect borne by smaller sized firms.

The agri-food chain today is significantly different from that of twenty years ago. Changing consumer demands, knowledge intensive technology, North American integration and globalization have all contributed to the evolution of the different segments of the chain, which include input suppliers, agricultural producers, food processors, and food distributors. The purpose of the performance report series is to create a picture of the economic health of the entire agri-food chain and its various segments, and to identify the challenges and opportunities that they will face in the future. To get a full picture of each component's and the whole chain's economic health, these reports will measure economic performance from several different perspectives; profitability, competitiveness, investment, productivity, innovativeness, etc. Traceability is the process of tracking or tracing the flow of products through a supply chain. Traceability systems can vary from simple traceback systems to systems that provide identity preservation and quality assurance. This report examines the extent of traceability in the Canadian dairy processing industry. The authors use a mail survey and Principal Component Analysis to better understand the drivers, the challenges and the costs and benefits experienced by firms which have implemented traceability systems. The report finds that most dairy processing plants had implemented a system of product traceability and are able to trace forward and backwards.

Advancement in biotechnology requires continued innovative activity by firms. To grow, biotechnology firms must understand the factors affecting their innovative activity. Such understanding also informs policy makers, and supports the development of policies promoting one's biotechnology sector. This study explores factors which determine innovative activity within the Canadian biotechnology industry. Innovative activity is measured as the natural log of the number of products/processes a firm has at different stages of the innovation spectrum. A model is developed to regress this measure on several determinants of innovation. Significant drivers of innovation include: collaborative arrangements, transfer of intellectual property, firm size and age, whether the firm was in the agricultural or human health biotechnology sectors and whether the firm focused on development or commercialization. Generally speaking, these factors all contributed to firms having more products/processes either under development, undergoing clinical trials or regulatory approval, or on the market.