118 NAFTA- Report Card on Agriculture BACKGROUND

The country policy review paper on policy developments in Canadian agriculture gives a concise listing of program changes for agriculture and food that have occurred since the mid-1980s. A major focus of many of the changes, as noted in that paper, is to orient agricultural programs to be consistent with the Uruguay Round Agreement on Agriculture (URA). The related, and even more compelling, focus underlying the reorientation of Canadian agricultural policy in the last half of the 1990s, has been reduction of budget outlays. A further motivation for changes in farm programs has been the high levels of costs associated with trade disputes. However, the need for expenditure reduc-tions reinforced political will for action on a number of the policy changes highlighted in the country policy review paper for Canada. IMPACTS ON THE CANADIAN FOOD INDUSTRY The changes in Canadian agri-food policy that are outlined in the country review paper have accompanied considerable transformation of the Canadian food processing and distributing industry. At the start of the period under re-view, Canadian food processing and distribution were highly concentrated. Food manufacturing, in particular, contained numbers of relatively small-scale, high-cost plants, sheltered behind protective tariff walls. Industrial reorganiza-tion has occurred during the period since the mid-1980s and the industry now includes many lower-cost, larger technologically advanced processing units. This underlies increased exports of prepared and semi-prepared food by Cana-dian food processors. A recent study of Canadian food manufacturing compa-nies, by Agriculture and Agri-Food Canada and Statistics Canada, focuses on advanced technology in food manufacturing. The study included assessment, by managers of the sampled firms, of their technological competitiveness. O