Ontario's Risk Management Program delinked from AgriStability

Saturday, January 31, 2015

It's no longer mandatory for farmers joining the provincial Risk Management Program (RMP) to be enrolled in federal AgriStability and the grain and oilseed sector, for one, is fine with that.

by SUSAN MANN

Ontario farmers participating in the provincial risk management program will notice a significant change in the rules this year – the mandatory requirement to enroll in AgriStability as part of participation in the Ontario program is gone.

And that's good news, says Essex County cash crop farmer Leo Guilbeault, who's also the District 1 Grain Farmers of Ontario director. "In the grain and oilseed sector, AgriStability has never really worked well for us."

Guilbeault says he has enrolled in AgriStability for years and has never been able to trigger a payment or claim, "mainly because of the way the reference margins are set up. Now that we have a reduced AgriStability after Growing Forward 2 came along, it's even less appealing to the grain and oilseed sector."

Guilbeault is not alone in his dissatisfaction with AgriStability. An Ontario Federation of Agriculture member survey found AgriStability was the least popular of the business risk management programs, which includes production insurance and AgriInvest. About 250 members responded, according to the federation's Dec. 11, 2014, news release.

Despite the Ontario government's decision to separate the risk management program and AgriStability starting this year, the two programs will still work the same way as before for farmers who enroll in both.

And that means the provincial risk management program (RMP) and self-directed risk management payments for edible horticulture farmers will continue to be considered an advance on the province's 40 per cent AgriStability payment. The federal 60 per cent portion of a farmer's AgriStability payment will not be affected, according to an email from Bryan Bossin, senior press and communications adviser to Agriculture, Food and Rural Affairs Minister Jeff Leal.

For the Ontario risk management payment and the provincial portion of the federal/provincial AgriStability payment, "producers keep the greater of the two payments," Bossin says.

If a farmer's risk management program payment is less than the provincial portion of AgriStability, the sample calculation in the RMP handbook notes that the farmer would get an RMP payment of $4,500, plus $12,000 in federal AgriStability money, plus $3,500 for the provincial portion of AgriStability, which is the amount left after the $4,500 already received through RMP is subtracted from the $8,000 provincial AgriStability amount. The total payment would be $20,000.

For a farmer with a risk management program payment that's greater than the provincial portion of AgriStability, the sample calculation would result in a total payment of $22,000, including $10,000 from RMP and $12,000 from federal AgriStability. (The $8,000 provincial portion of AgriStability is already included in the $10,000 RMP payment.)

Farmers pay fees and/or premiums for each of these programs they are enrolled in.

In October 2014, Ontario decided to remove the mandatory requirement that farmers enroll in AgriStability to participate in the provincial risk management program. Bossin says Ontario will continue providing a total of $100 million annually to fund the provincial risk management program. That money is "available entirely for Ontario producers" and does not count as the province's contribution to the federal/provincial business risk management program envelope.

The Ontario government's decision to separate the two programs was in response to the Ontario Agriculture Sustainability Coalition asking Leal last year to remove the mandatory connection. Leal supported the request from the coalition, which is made up of Grain Farmers of Ontario, Beef Farmers of Ontario, Ontario Pork, Ontario Sheep Marketing Agency and the Ontario Veal Association.

Bossin says that "program cuts and design flaws have resulted in an eroded federal AgriStability program that is no longer meeting producer needs."

The change means farmers have a choice of which program or programs to sign up for and it won't be mandatory to participate in AgriStability when signing up for Ontario's risk management program. But farmers can still get AgriStability if they want to.

Bossin says the provincial government included the $100 million for the risk management program in the 2014 budget. "We will continue supporting (the provincial risk management program) as it has been recognized by Ontario producers as superior to any other program in terms of assisting job creation, bankability and predictability for the agri-food sector."

As for Ontario's share of AgriStability, Bossin says the province will continue contributing the provincial 40 per cent portion of AgriStability payments to the province's farmers. "By doing so, we are able to leverage one and a half dollars of federal contribution for every dollar Ontario pays."

AgriStability is part of the business risk management programs in Growing Forward 2, the five-year national agricultural policy framework, along with AgriInvest and AgriInsurance.

Bossin says AgriStability is a demand-driven program and costs to the Ontario government for its portion of payments fluctuate each year. For 2012/13, the provincial portion of AgriStability payments was $43.8 million, while for 2013/14 it was $26.1 million.

With the new voluntary sign-up for AgriStability, Patrick Girard, spokesman for Agriculture and Agri-Food Canada, that it's difficult to predict how Ontario farmers will react but "we expect many producers will continue to see value in AgriStability."

Guilbeault also couldn't predict how many farmers will ditch AgriStability. "It's an individual decision." But he probably won't sign up for it.

Girard says that, in deciding what programs to use, farmers must understand the provincial risk management program "is not a direct substitute for the coverage provided by AgriStability." The provincial program "does not provide the individualized protection offered by AgriStability nor the level of protection against production losses."

Even though the mandatory requirement between the two programs is severed, AgriStability will continue providing all Ontario farmers who sign up for it "with support for severe margin declines, as it currently does; regardless of their participation in the provincial RMP."

Girard says funding for the federal/provincial programs is demand-driven and there is no cap on total funding. The AgriStability program "helps to ensure that producers receive the support they are eligible for under the program regardless of the situation experienced by other producers," he says.

For the Ontario risk management program, total funding is capped at $100 million annually and, when program payments are triggered, several sectors can tap into that fund, including grains and oilseeds, beef, hog, sheep, veal and for self-directed risk management, edible horticulture.

Girard says that, as one of the participating governments signing the Growing Forward 2 agreement, Ontario "is expected to honour its agreement and continue supporting the provision of the BRM (business risk management) suite of programs for its producers" including AgriStability.

But the federal government still has no interest in helping to fund the Ontario risk management program. Girard asserts the federal government cannot support the program because under the current international trade rules it's countervailable and commodity-specific. BF