Federal Budget a Mixed Bag for Agriculture

OTTAWA, January 28, 2009 -- The Canadian Federation of Agriculture (CFA) today welcomed the government's investment in agriculture through its budget and pre-budget announcements but cautioned that with many policy specifics still unknown the budget remains a mixed bag of positives and negatives for the agriculture sector. 

As indicated in its earlier release, CFA was pleased to see the Advance Payment Programs (APP) Repayment Flexibility pre-budget announcement which allows for the critical extension of the repayment deadline for livestock advances to September 30, 2010.

Further positive announcements included the recommitment to the Government's election promise of $50 million over the next three years to expand slaughterhouse capacity within Canada for beef, pork and other livestock producers. The program, which will make federal contributions available to match private sector investments, will support additional livestock slaughter capacity and help ensure Canada has a competitive livestock sector.

The CFA was also pleased to see that the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA) will be amended to make credit available to new farmers and established cooperatives while also supporting inter-generational farm transfers. In addition, the CFA appreciated the inclusion of a $225 million allocation to expand rural broadband expansion over the next three years in addition to tariff reductions on equipment and machinery. CFA members have been asking for expanded broadcast networks for some time.

However, CFA was disappointed with the details surrounding the budget announcement of $500 million to fund an agricultural stability program over the course of five years. In a pre-budget announcement on January 23,  Agriculture Minister Gerry Ritz stated the program will help farmers lower production costs, develop new technologies, and promote environmental sustainability and indicated the program was "similar in nature" to CFA's AgriFlex proposal. However, the funding parameters are very different from what CFA had proposed. Of the $500 million, now over five as opposed to four years announced earlier in the government's election platform, only $190 million is new funds flowing into agriculture, which will occur during the first two years. The remainder of funding is to be received from 'cost savings' realized within AAFC.  As well concern remains around the specific requirement these funds be used for strictly for non-BRM programming. CFA has always maintained AgriFlex would be used for BRM as well as non-BRM purposes.

"While an agricultural stability program is good news, the details announced are not in keeping with what the farm community has been calling for," said Laurent Pellerin, CFA's first vice-president. "Regional needs span both sides of the programming envelope, and this Budget 2009 proposal is not targeting a large portion of the need-need that could be addressed through regional BRM programming."

CFA is also concerned about the lack of specific departmental spending estimates in the budget, making it very difficult to determine how much will be spent and how it will be divided. "It is hard to tell where we sit until you get spending references," said Ron Bonnett, CFA's second vice-president. "There is concern that when we see spending estimates there may be some shaving of the Growing Forward programs to make up the difference between $500 and $190 million."

Some measures that the CFA had hoped would be outlined within the budget were not mentioned specifically. There was little mention of biofuels in this budget. However, the government did mention the creation of a new Clean Energy Fund to support clean energy research development and demonstration projects. The government has also created a $1 billion Green Infrastructure Fund to support projects such as sustainable energy over the next five years. CFA's members are very interested in the proposed excise tax measure. However, the budget made no reference to the promised 2 cent/litre diesel fuel excise tax reduction. Also lacking was the mention of CFA's proposed Coop Investment Plan or any reference to cash advance programs and FCC.

As announced earlier, the CFA and its members had hoped to see the following issues addressed within the budget:
· Commitment to fulfill the government's election promise by enacting AgriFlex - the federal/provincial flexibility funding envelope
· Commitment to immediately meet the government's campaign pledge of reducing diesel fuel excise taxes by 2 cents/litre
· Commitments to adequately support programs being developed under the new 'Growing Forward' policy framework
· Extension of the repayment schedule for the emergency Advance Payment Programs by an additional year to assist in addressing the ongoing crisis in the livestock sector as well as maintain the processing, transportation and marketing infrastructure
· Assurance that existing credit tools such as FCC and the regular cash advance program would be given adequate funds to meet demand

The CFA and its members remain committed to working with the government on the budget announcement details in the coming months in order to rectify these and any other outstanding issues not addressed in the 2009 Budget.

About the Canadian Federation of Agriculture

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, national and inter-provincial commodity organizations, and cooperatives from every province. Through its members, CFA represents over 200,000 Canadian farmers and farm families.