Ag ministers cut AgriStability funding

Saturday, September 15, 2012

by SUSAN MANN

Changes Canada’s agriculture ministers approved to business risk management programs in the new agricultural policy framework means two of the programs, AgriStability and AgriInvest, have been gutted, says the Ontario Federation of Agriculture president.

“They’ve really removed half the funding from AgriStability,” Mark Wales says.

Wales made the comments Friday afternoon after the federal government announced that it had reached an agreement with provinces and territories on the content of the Growing Forward 2 agricultural policy framework. The country’s agriculture ministers met this week in Whitehorse, Yukon to negotiate the policy. The changes are to begin on April 1, 2013.

The new five-year agreement includes investments in strategic initiatives of more than $3 billion for innovation, competitiveness and market development including a 50 per cent increase in government cost-shared initiatives.

Federal Agriculture Minister Gerry Ritz says overall the industry is doing well. The current Growing Forward policy framework “has put Canadian farmers on solid footing strengthening the farm gate onwards through the rest of the value chain. Our challenge is to keep that momentum moving.”

Ritz says the industry must expand its customer base “ensuring more of our great Canadian food reaches more consumers across Canada and around the world. We must make sure farmers and the entire sector have the tools and the resources they need to stay ahead of the ever changing demands of consumers.”

The minister says to meet this challenge the sector requires a new vision for agriculture – “one that will focus on any untapped potential of this dynamic industry.”

Among the highlights in Friday’s announcement are:

• greater flexibility for provinces and territories to tailor programs to local needs;
• increased opportunity for provinces and territories to invest in environmental initiatives and on-farm water infrastructure;
• collaborating with the sector to encourage development of private sector risk management tools
• the AgriStability fee will be reduced to make the program less expensive for producers and;
• the creation of an Agri-Innovators’ Committee.

Wales says Ritz has said all along his goal was to “save at least $430 million per year for each of the next five years from business risk management programs.” Ritz has also said they’d take about $80 million a year of the federal share of the savings and earmark it for innovation and provincial priorities.

Adjustments to AgriStability include government assistance once a producer’s margin falls below 70 per cent of their historical reference margin. Under the current Growing Forward framework, producers get a payment once their margin falls below 85 per cent of their historical reference margin.

One improvement to the program is coverage on negative margin losses has been increased to 70 per cent from 60 per cent.

“What the governments have done is they have limited by quite a bit what they will ever have to pay out through the AgriStability program,” Wales says.

Wales says historically Ontario farmers have used the AgriStability program but with good grain prices during the past few years the program has been used a lot less. Still, he predicts the changes will mean the new program won’t be as effective for farmers as previous ones.

He also predicts there will be reduced producer uptake under the new program. The changes mean “farmers fundamentally will be carrying more of the risk.”

During a press conference in Whitehorse Friday morning, Ritz says all ministers came to the table “looking out for the best interests of farmers and I’m proud to say we have achieved that result.”

Ritz added that governments “will continue to backstop the vast majority of business risk that farmers face to ensure they are protected from serious income declines and disasters. We will be there for farmers when they need us.”  

Wales credits Ontario Agriculture Minister Ted McMeekin with trying to get changes to the government proposals. “The original cuts were much greater,” he says.

Ann Slater, Ontario coordinator for the National Farmers Union, says they lobbied that the trigger for AgriStability stay at 85 per cent. “I understand it’s been lowered to 70 per cent. That’s what we heard was coming.”

Changes to AgriInvest include that farmers can deposit one per cent of their allowable net sales under the new program instead of 1.5 per cent in the current program. The limit on government matching contributions will be $15,000 a year, down from the current figure of $22,500.

Previously, producers were only allowed to put money into their account that governments would match. But under the new program, farmers can put additional money into the account that isn’t matched by the government and a farmer’s account can be built to a maximum of 400 per cent of allowable net sales so producers can use AgriInvest as a risk management tool.

Wales says the changes mean governments cut funding to AgriInvest by one-third.

Bob Seguin, executive director of the George Morris Centre, says the changes will “likely provide some additional funding for the innovation, environmental and sustainability programs. We just don’t know how much and will it be significant enough to really move those agendas. It should be a bit better than is currently available.”

In a news release Friday, the Canadian Cattlemen’s Association says it was pleased with the governments’ approach to Growing Forward 2. The release noted that research, innovation and market development are fundamental areas that help to deliver long-term benefits to Canada’s beef industry. BF