Canadian farmers are watching as the negotiations for the next Agriculture Policy Framework (APF) gyrate to completion, paving the way for the launch of the new, five-year plan in the first quarter of 2018.
This new document will be immensely influential, defining how federal and provincial government ag spending will be allocated for the following five years.
And it will also be immensely complex. Not only will it set the terms for the government’s business risk management programs, it will also fund market and business development and innovation projects for farmers and the food and agriculture sector.
For the past two five-year cycles, the program has been called Growing Forward. That name will change for the next five-year plan.
Farm lobbyists are heading into the discussions with a clear new objective. Ron Bonnett, president of the Canadian Federation of Agriculture, says the goal is to get governments (federal and provincial) to see agriculture as a strategic investment, “not as a hole to throw money into.”
Yet building resilience in a volatile industry is also an essential goal of farm organizations.
“That would go a long way in protecting us with business risk management,” says Dan Mazier, president of Keystone Agricultural Producers in Manitoba (KAP).
The overall package has created inequities in funding across industry sectors and jurisdictions. In some provinces, like Ontario, it is administered by the provincial government and organizations. In Manitoba, it is delivered by the federal government. Different provinces have different program success levels, and accessibility.
Those varying outcomes have resulted in different levels of consternation and affection across the country. But the largest request for the next APF is the same across the country.
Two Agri-Stability choices
Under the first Growing Forward, when a farmer’s current year program margin fell below 85 per cent of the farm’s reference margin, AgriStability helped cover the spread.
In the Growing Forward 2, the margin for the next five years was slashed to 70 per cent, greatly reducing the chances that grain farms in particular could ever get meaningful payouts
Now the question is: What will happen for the next five years?
Farm groups want more money injected into the program so the payouts would pump meaningful help to farms in need. Ottawa, meanwhile, is telling farmers: if they want more funding for AgriStability, they may have to accept cuts in other ag programs?
“People are frustrated with the AgriStability program,” says Bonnett. “It went from income stability to more of a disaster-type program.”
If your margin falls by 15 per cent, that’s a hit to your stability but it is manageable with some help. That’s how the first version of AgriStability was triggered.
More recently, the drop has had to be 30 per cent, Bonnett says. That’s a disaster, he says, and is usually created by unpredictable factors, like a drought, or an extraordinary collapse in the markets.
The current program is also more unpredictable due to its complex calculations of the reference margins. Accountants have been unable to predict when clients will qualify for the program, says Keith Degenhart, vice-president of the Alberta Federation of Agriculture (AFA).
“(Former Conservative Agriculture and Agri-Food Minister Gerry) Ritz said he wanted it bankable and predictable, but it wasn’t,” said Mazier.
The program has been useful to some farm sectors, especially those with faster boom-and-bust cycles, and to producers who farm mainly one commodity.
Hog farmers, many of whom contract out their crop growing or rent their land, have one main source of income and therefore it is easier to qualify for an AgriStability payment.
In Alberta where rotations have tightened so farmers can plant canola more often, it can be helpful, says Lynn Jacobson, president of AFA.
But should Ottawa favour farms that are inherently less stable? Farms that have diversified have better ability to average out the ups and downs in markets or weather, but they are also less likely to trigger a payment than their less-diversified neighbours.
In Saskatchewan, Todd Lewis, president of the Agriculture Producers Association of Saskatchewan (APAS), says they surveyed their members in the summer, who said AgriStability and its large drop in value is their biggest concern with GF2.
“As a start, to get it back to the prior levels and trigger mechanisms would help,” Lewis says.
However, there’s not a lot of optimism that the levels will be restored to 85 per cent.
“I gather there is very little appetite for that by the government,” says Degenhart. But maybe the program could be incrementally improved, so farmers will re-enroll. That could include tinkering with expense criteria so that the program will actually pay out when farmers believe their income has fallen to 70 per cent of previous averages.
Mark Wales, an Ontario Federation of Agriculture board member and former president, still uses the AgriStability program as a horticulture producer. He’s also involved with national APF consultation through the Canadian Horticultural Council. He attended the November national consultation meetings and says the leading concern was about AgriStability.
“It works far less than it did, but it does work,” Wales says. “It’s not what it once was, but there are no other alternatives. You can’t go to your insurance company and buy such coverage.”
Wales says the government is hearing about the need to increase funding for AgriStability, or whatever it will be called in the new APF, but “then they say if you want to put more into AgriStability, where are you going to take it from?”
Governments have made no financial commitments yet to the next APF and until that is known, farm organizations are just making requests within unknown parameters.
The AgriInvest program — a partial replacement to the old Net Income Stabilization Program (NISA) — is relatively popular with farmers. The program is a savings program for managing small income declines and investing in risk-reducing activities on the farm. The government provides one per cent matching funding.
“It has worked out fairly well because it is predictable,” says Lewis, who farms grains and oilseeds near Gray, Sask. Banks recognize the funds saved in an AgriInvest fund.
Bonnett has used AgriInvest funds on his farm to increase tile drainage.
“We need to get farmers to think about that fund strategically,” he says.
Some are advocating for higher government matching funds, but some are concerned that if too many outside of agriculture knew about the program, it could be in jeopardy.
Mazier says that AgriStability and AgriInvest are programs that are relics of the old NISA-type policy. “We should throw them out and sit down as an industry and decide what is our need,” he says.
Risk and recovery
There are several other programs under the business risk management section of Growing Forward2 and, for the most part, farm organizations look for those programs to continue, with some tinkering.
Funding for crop insurance programs gets the most support. These programs have worked well, and have expanded across the country.
The AgriRisk program paid for research and projects that aimed to reduce risk for farmers.
The program has helped beef farmers in Alberta create risk insurance programs, for example.
“Beef has not been part of the AgriRisk portfolio for a long time,” says Degenhart. “They are now very positive about being part of AgriRisk.”
However, Wales says the program — which is aimed at farm organizations, not directly at growers — has been difficult to understand. The Canadian Horticulture Council is looking at what risk management programs could be created for horticulture producers in the event of a recall or a need to destroy product.
The consensus generally appears to be that the AgriRisk program has support.
The AgriRecovery program was the portion of Growing Forward 2 intended to help in event of disasters. However, it has worked for some parts of the country and not for others.
On the Prairies, where weather events are widespread and devastating, the program has paid out more quickly and more broadly than in other areas.
In Ontario, Wales said the OFA is helping growers apply for help after the regional drought this past summer.
“It is a laborious process. It can take many, many months to trigger a program that has had limited benefits,” such as in the 2012 drought in Ontario. The only costs then awarded to livestock producers were to move breeding stock to where they could get more feed. Wales raises beef cows and calves as part of a diversified livestock and crops farming operation in southern and eastern Ontario.
A future AgriRecovery program should be more transparent, he says.
Mazier, in Manitoba, says the program does pay out well, but not if disasters occur in rapid succession. He points to floods in Manitoba in 2011. In the aftermath farmers got AgriRecovery funding. However, in 2014, some farmers were flooded in order to keep water away from urban areas during a second flood and they didn’t get support.
“It was absolutely ridiculous and I’m not happy with the hurt and what went on there,” he says.
All the rest
The business risk management portions of federal/provincial agriculture policy have taken up the vast majority of time, planning and words due to their critical nature, their complexity and the help they deliver to farms in times of crisis.
However, the innovation and market development parts of the policy are also critical and, as the industry has had fewer crises over the past five years, there has been more time to talk about those areas.
Bonnett said he was impressed that at the Canadian Federation of Agriculture board meeting in October, there was intense discussion about risk management programs, but there was more time spent on what strategic investments could be made through the program.
The amorphous non-BRM programs covered broad areas including research, innovation and climate change, and the priorities often were determined by province. More funding was switched to areas that would benefit all producers or a group of producers instead of one producer. Satisfaction with results often also varied by province.
Most provinces administer the GF2 programs, but some, like Manitoba, do not and there a producer has to go through the federal government to get funds.
Mazier says that there have been concerns about streamlining the process and actually finding someone to talk to about an application. “It has generally been very slow and cumbersome,” he says.
In Ontario, there was no communication about why a project was rejected.
“They need to make it clear and transparent about how I apply for something,” says Wales. “Nothing gets a producer as frustrated as when they are turned down and are not told why.”
Farmers will know broadly what the direction will be of the next federal-provincial policy framework for agriculture in July. More details will flow out over the rest the year. Farm organizations hope that they will know all the details by the fall, giving the industry time to gear up for the new program, so that there aren’t gaps in funding as one ends and another starts as there have been in the past.