January 31, 2005

(OTTAWA) – As federal and provincial agriculture ministers prepare to meet again February 8 to discuss the Canadian Agriculture Income Stabilization Program (CAISP), farmers are reasserting the CAISP deposit requirement must be eliminated.

“CFA members have found almost unanimous agreement among federal and provincial ministers that the deposit option does not meet the requirements of CAISP,” said Bob Friesen, President of the Canadian Federation of Agriculture (CFA). “So we don’t understand why the decision still hasn’t been made to drop the deposit. We need leadership from all agriculture ministers on this issue – right now.”

CAISP is the federal government program intended to support farmers in times of income crisis. The rules of the program require farmers to make an initial deposit. Farmers are being forced to take their deposits from their operating lines of credit, while many are wondering if they’ll have money to operate this year. Even at the current one-third rate of the required deposit, total CAISP deposits across Canada still add up to over $566 million. At an interest rate of six per cent, the cost of maintaining those deposits comes to $34 million in the first year alone.

“The deposit ties up a farmer’s working capital. This money is going out of farmers’ pockets and into the banks’ profits,” said Friesen. “At a time when we are facing the worst farm income situation in decades and are looking for solutions, here is part of the solution. Dropping the deposit would mean a five-per-cent difference in average net income for producers.”

The deposit requirement also brings an additional cost to government in administration. By the government’s own estimation, the CAISP deposit requirement costs the federal government approximately $14 million to administer. Unlike producers, however, the government is not required to put up-front money into farmers’ CAISP accounts.

“If government is not required to set aside funding up front to prove it is committed to the program, why do producers have to take out loans and risk their cash flow to demonstrate their commitment?” asked Bob Friesen, CFA President. “We naturally want producers to be actively engaged in the program. But does anyone really think more debt means more engagement?”

Under the current deposit requirement farmers must make their first one-third deposits by March 31, 2005. “It is unconscionable that ministers insist producers make deposits when those same ministers agree the deposit requirement should be dropped.  There is no excuse for delay. Drop the deposit now.” said Friesen.

-30- 

Founded in 1935 to provide Canada's farmers with a single voice in Ottawa, the Canadian Federation of Agriculture is the country's largest farmers' organization. Its members include provincial general farm organizations as well as national and inter-provincial commodity organizations from every province. Through its members, CFA represents over 200,000 Canadian farmers and farm families.