“Do you want a better AgriInvest program? One with higher matching con-tributions that allows you to better manage risks and invest in your farm?”
That’s the preamble to a survey being conducted by the Canadian Federation of Agriculture.
Of course the answer is “heck yeah”. They might as well be asking if Santa Claus should bring more and bigger presents.
While that will be the typical re-sponse of individual producers, there are many reasons why governments should not be doling out more money through AgriInvest.
Government direction to date has been to trim the program. Up until a few years ago, federal and provincial governments would match up to 1.5 percent of allowable net sales. The current level is one percent with a maximum matching contribution of $15,000 per year.
So if you have $1.5 million in allowable net sales, you can contribute the $15,000 maximum and receive a matching government contribution. You can withdraw the money at any time, and there’s no restriction on how to use it. However, the government’s portion must be removed first, and it’s taxable when withdrawn.
A resolution in the CFA’s policy manual calls for the contribution to return to 1.5 percent, and there are suggestions that the association is pushing for a much higher level. As well, the CFA wants to see the cap on matching contributions in-crease to $100,000.
The survey asks farmers if they have withdrawn money from AgriInvest and how they intend to use it. Buying land is grouped under the heading of farm investments, but there’s little doubt that any and all income tends to become capitalized into farmland values.
Crop insurance provides support when yields are bad, and AgriStability is supposed to provide support when farm income drops dramatically.
AgriInvest is supposed to help producers cover small income declines, but many don’t use it for that purpose. Raising the cap from $15,000 to $100,000 per year would mean a pile of money flowing to large operations. What public good does that fulfill?
The CFA notes that AgriInvest account balances across Canada contain $1.9 billion. With the Net Income Stabilization Account program that pre-dated AgriInvest, account balances remained high even when farmers were protesting for billions in ad hoc government payments.
As a producer, it’s great to get AgriInvest money and I’ll take it as long as it’s available. But the money is going to everyone whether they need it or not. How is that defensible public policy? What’s more, how can you advocate that more money be transferred in this manner?
The argument that farmers are special and deserve this money just doesn’t cut it. Many producers intuitively know this and so do many farm organizations, but no one wants to say it. We’re conditioned to lobby for as many government handouts as we can get.
There are many areas in which governments should be providing more support, namely research, food safety and environmental stewardship. No strings attached money based on your eligible net sales is not good use of resources.