Group rolls out revised RMP

Thursday, December 6, 2012

by SUSAN MANN

A coalition of farm groups' changes to Ontario’s risk management program has received the provincial government’s stamp of approval this week. The coalition, the Ontario Agricultural Sustainability Coalition, is made up of leading non-supply managed commodity organizations plus the Ontario Federation of Agriculture.

The commodities had to modify both the risk management program for grains and oilseeds, beef, hogs, sheep and veal and the self-directed risk management program for edible horticulture after the provincial government announced in its 2012 budget that spending for the entire program would be capped at $100 million annually starting next year.

The requirement to modify the series of programs came just one year after it was put in place. Developed by the commodity groups, the risk management programs work like insurance to help farmers offset losses caused by low commodity prices and rising production costs. Participants pay premiums based on their annual anticipated sales and chosen coverage levels.

For self-directed risk management there aren’t any premiums. Farmers deposit funds into an account with Agricorp and their money is matched by government up to a maximum based on farm sales. The program helps growers cover various farm risks.

Dan Darling, Ontario Cattlemen’s Association president, says being able to retain the premiums year-over-year is a “big win” for OASC.

Amy Cronin, chair of Ontario Pork and OASC, says in times when the capped money isn’t enough for farmers to get what they should receive “as calculated within the formulas of the risk management program, then we can draw on those premium funds at that time.”

The amount of money going into the premium funds will vary by commodity and by participation within each commodity, she says.

Darling says each commodity will keep track of its own premiums and they will only be used for the farmers of the commodity that paid them. For example, the beef sector can draw out whatever premiums beef farmers put in. Cronin says for pork there will be three separate funds because “we have three separate programs within pork to accommodate each sector of the industry.”

Darling says during the roll out of this year’s program farmers said they liked the idea of “being able to bank the premiums but the government wasn’t big on that. They wanted it to go right back into general revenue.”

For the most part, the modified programs will be identical to this year’s programs, Darling says. Erin Fletcher, spokesperson for Grain Farmers of Ontario, says the timing for delivering the modified program is the same as the current program. “It has been tied in with production insurance as much as possible” and that will continue.

As for the $100 million annually, if all of that money isn’t needed for the risk management and self directed risk management programs in some years, Darling says it “would be spent on non-business risk management programs.”

Darling also notes that “because we know that it’s not going to be a fully-funded program the premiums will likely be less in 2013 than they have been.”

Fletcher says in years where more than $100 million is needed, premiums are available for use plus farmers will get a pro rated amount. “There’s $100 million for all of the programs and our goal is for the money to go where the need is greatest. There are calculations behind the scenes that we’ve come up with in order to allow for the money to go where the need is greatest” and for participating farmers to “get fair access to the money.”

Cronin says if a commodity uses up its allocation in a very devastating year and certain commodities aren’t using their allocation “it will be used to top up other commodities.”

Even though the capped program isn’t as good as “what we’ve got right now,” Darling says commodities came up with the best program they could after the government announced the cap.

Each commodity in the program is responsible for its own administration costs and those come out of the $100 million, Darling says.

The $100 million annually has been divided up between the commodities.

Darling says he’s restricted from saying what the commodities percentages are because of “trade implications.”

Art Smith, CEO of the Ontario Fruit and Vegetable Growers Association, confirmed that horticulture’s share is 23 per cent a year plus the first $2 million of unspent funds annually, but requested that these details not be used. He says the cap in place means a relatively small hit for horticulture farmers in self-directed risk management but it really “depends on the draw of the total program.”

In the original program, for every dollar a farmer put in “he got an additional dollar back from the government. What it means now is that for every dollar the farmer puts in he probably won’t get an additional dollar back,” Smith says. The amount returned to farmers will change from year to year and for every dollar a farmer puts in they will probably receive 95 to 98 cents from the government. “But the cap will prevent it from being $1.”

Cronin says each commodity organization will have information sessions early next year to ensure farmers fully understand the program before the sign up date. BF

UPDATE: December 11, 2012

by SUSAN MANN

The Ontario government will continue collecting premiums next year when changes to the risk management programs for non-supply managed livestock and grains begin.

But that money will be transferred to an industry organization premium fund to be managed by the industry, Ontario agriculture ministry spokesperson Susan Murray says by email.

That’s different than the current program, where premiums go into general government revenues and all farmer payments are made from government funds, she says.

With the changed program, the government’s $100 million will be used first to pay farmers’ claims in the risk management programs. If that isn’t enough, the premiums would be used to pay claims.

Murray says if the premium dollars aren’t needed in a given year, they will be rolled over to the next year. “The fund will track premiums for each commodity separately,” she notes.

In a Dec. 6 letter addressed to the six chairs of the commodity organizations participating the in risk management and self-directed risk management programs, Ontario Agriculture Minister Ted McMeekin congratulated the leaders on their successfully redesigning the programs. “This achievement signals not only an important milestone in securing the programs, but also a notable step forward in collaboration among the various commodity groups in partnership with government.”

The minister adds that he knows “there was some heavy lifting to sort out program details.” BF