Quick Facts
- 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.
Issue Overview
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 support 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:
Recent Developments
Starting with the 2023 program year, the compensation rate under AgriStability will increase from 70% to 80%. As a result, producers may receive a payment if their production margin in the current year falls below their historical reference margin by more than 30%. AgriStability covers 80% of the loss for every dollar below the threshold.
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.
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.
Recommendations:
- Increase AgriStability program coverage to 85% of the reference margin to improve participation, predictability, and levels of support for producers;
- 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;
- Risk Management Programs should incentivize enrollment, such as increasing the payout levels for those who are enrolled in the program for multiple years without a claim;
- 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.