Farm groups ask province to explore separating business risk programs

Thursday, October 23, 2014

by SUSAN MANN

A coalition of commodity groups representing farmers who use the Ontario business risk management program has asked the provincial agriculture ministry to explore removing the program’s association with AgriStability.

The Ontario Agriculture Sustainability Coalition, made up of farm groups representing grains and oilseeds, beef, hogs, sheep and veal, has written to Ontario Agriculture, Food and Rural Affairs Minister Jeff Leal requesting his ministry look into the possibilities and implications of removing the mandatory requirement that farmers enrol in federal/provincial AgriStability risk management program to be able to use the provincial program.

Currently, growers pay separate fees to enrol in each of the AgriStability and Ontario business risk management programs and must also account for both separately. However, when a payment is received from the business risk program, a portion of it is treated as an advance on an AgriStability payment which is then reduced.

Bob Gordanier, president of Beef Farmers of Ontario, says the sustainability coalition has been working with the provincial agriculture minister for the past year “to ensure that RMP (risk management program) is working for our producers.”

Ontario Agriculture Minister Jeff Leal confirms by email his ministry has been working with the coalition “to determine how best to move forward to ensure the predictability and bankability of production insurance programs in Ontario despite a lack of involvement by the federal government. We continue to consider options to ensure Ontario producers are able to thrive and grow.”

Leal was referring to the federal government’s refusal to participate in the Ontario business risk management program. In February, federal Agriculture Minister Gerry Ritz told BetterFarming.com he would not support the provincial program because it is “countervailable, distorts market signals,” and “would put trade at risk.”

Mark Wales, Ontario Federation of Agriculture president and chair of the Ontario Fruit and Vegetable Growers Association’s safety net section, says industry requested linking the two programs when the provincial one began as a pilot to serve grain and oilseeds growers in 2007. As the program grew to include other commodities, all of those involved realized the link would eventually need to be reviewed, “especially with the $100 million cap being imposed on the (risk management program) starting in 2013,” he says.

Ontario farmers have lived under the cap for two years now and the federal government has made it clear it won’t support the provincial program. It’s time to deal with the link, he says.

Another concern farm leaders and growers have with the link he says, are the “dramatic” cuts to AgriStability that started in 2013. Assistance is now triggered when a producer’s yearly production income margin drops more than 30 per cent of the historical reference production income margin; previously it had been triggered when income dropped more than 25 per cent. What’s paid out has also been reduced to 70 per cent from 85 per cent of the amount claimed.

Those two factors are causing growers to question why they must be in AgriStability to be in the risk management program that they really want to use, Wales says.

Removing the mandatory link of AgriStability to the Ontario risk management program is about giving farmers a choice, he says. “Many growers may stay with those two programs” even if the link is severed.

One group eligible for the provincial program, however, has not thrown its support behind the request to explore separating the two programs.

The Ontario Fruit and Vegetable Growers Association announced in a recent communication the board had not yet come to a decision about supporting a separation of the two programs but plans to evaluate it.

Unlike the insurance-type setup other farmers of other commodities included in the provincial risk management program use, fruit and vegetable growers employ a self-directed risk management approach. Instead of paying a premium that entitles them to a payment if they incur a loss, fruit and vegetable growers make deposits to a special account to which the government also contributes.

Wales says if all the commodity groups using the business risk management program decided to support severing the link that request must go to the provincial agriculture minister who would have to submit it for Cabinet approval “because you’re fundamentally changing a program.”

According to numbers from Agricorp, there were a total of 9,774 farmers participating in the risk management and self-direct management program in 2012 and 9,832 participating in 2013. BF