- Canadian farmers and ranchers are at a significant competitive disadvantage, given the level financial support currently available to their counterparts in the US and EU
- Taking all subsidies into account, total public support of agricultural income reached 38% of agricultural income on average in the EU.
- In the US, government support accounted for almost 40% of farm income in 2020.
- The risk profile of many sectors in agriculture has increased dramatically over the past five years due to climate change, trade wars and supply chain disruptions.
- AgriStability, the primary risk management program for producers facing severe income losses, is seen as overly-complicated and providing an inadequate level of support for producers in need.
Farmers need flexible programs to help manage risks beyond their control.
While agriculture is one of Canada’s main economic pillars, it is also a high-risk business. Farmers must regularly balance decisions based on volatile prices, unpredictable weather, and a global market influenced by geopolitical risk and government supports to competing producers in other countries. Many of these risks represent challenges beyond the farmer’s control.
To reach its full potential, the Canadian agriculture sector needs a stable economic foundation that can withstand the pressures of a shifting global and domestic market climate. To manage risks that can’t be addressed through on-farm practices, Canadian producers participate in business risk management (BRM) programs that support them in adapting to evolving markets, facilitating investment in response to future opportunities and acquiring technological innovations. Several government programs help them to meet these needs:
In December 2020, the Federal Government proposed improvements to the AgriStability program, specifically to remove the Reference Margin Limit (RML) and to increase payments to cover 80% of the loss rather than the current 70%.
As the programs are cost-shared by the Federal and Provincial governments, 2/3 of provinces must sign on to this proposal to have it come into effect.
In March 2021, the Federal and Provincial governments agreed to remove the RML, but did not increase the compensation rate as outlined above. The Federal government continues to suggest this proposal is on the table, if a majority of provinces were to support it.
Working Towards Solutions
- During 2020 CFA launched the largest National Campaign in the organization’s history, Food for Thought, with one of the key messages being to improve the AgriStability program. This campaign led to the federal proposal mentioned above.
- CFA supports the November 2020 Federal Proposal to improve AgriStability and the recent removal of the RML from AgriStability and is now calling on the federal government to offer the enhanced compensation rate to those provinces willing to contribute their 40% share.
- CFA has been heavily involved in the BRM review process which has been ongoing for many years.
- That the government continue to support the proposed enhancements to the AgriStability program and implement programming to respond the depopulation events that arise from processing plant shutdowns and market closures.
- Risk management programs must be demand-driven and capable of accommodating year-to-year variation and multi-year income declines, while providing credible support to producers;
- Funding for any programs with annual budget allocations must roll-over unused program dollars for future use;
- Program design should ensure producers can make maximum use of all applicable risk management programs;
- Effective program design should ensure delivery of funds to producers is timely, predictable, bankable, and straightforward; and
- All programs must be regularly reviewed in a transparent fashion to ensure programs are meeting their objectives and responding to industry needs.