Ad hoc aid to ease trade pressure divides prairie farmers

Canadian farmers are far from united on whether they want Ottawa to issue ad hoc payments to compensate producers for lost markets.

“Farmers are all over the map whether they want something like that or not,” said Rick White, chief executive officer of the Canadian Canola Growers Association (CCGA).

Opinions vary depending on factors such as region, commodity type, demographics and debt level.

“Right now there doesn’t seem to be any consensus in the farm community about that,” he said during a Canola Council of Canada podcast updating growers on the China trade impasse.

Some farm groups favour direct subsidies. The Canadian Pork Council and the Canadian Meat Council are seeking hundreds of millions of dollars in compensation.

The Western Canadian Wheat Growers Association said it is “shameful” that the federal government has doled out $1.75 billion to the supply management sector, saying it expects equal treatment.

The Canadian Federation of Agriculture welcomed the dairy compensation but said the pork, beef and canola sectors deserved the same kind of support “whether through direct compensation or improved business risk management (BRM) programming.”

Other farm groups are solely focused on fixing what they consider to be flawed BRM programs, specifically AgriStability. Those groups include Grain Growers of Canada, the AgGrowth Coalition and the CCGA.

White noted that ad hoc payments provide short-term relief to what could be a long-term problem with China and fail to address future trade disruptions.

But he acknowledged that some farmers are in desperate need of short-term relief, so it presents a policy conundrum.

The CCGA wants Ottawa to adjust AgriStability to cover losses starting at 85 percent of reference margins, which was how the program was initially designed.

The government dropped coverage to 70 percent when the farm economy was booming because margins were rising and coverage levels were getting too expensive.

“Nobody really complained because things were good,” said White in a recent interview.

Farmers are now complaining. Canola prices would have to drop to $8.64 per bushel to trigger a payment on a 3,000-acre farm with average yields of 43 bushels per acre. Under that scenario, the farmer would receive a $20 payout for the entire 3,000 acres.

“We have said until we are blue in the face that we want those reference margins within that program returned to their previous levels of 85 percent,” he said.

White was hoping Ottawa would implement the necessary policy changes before last week’s federal election call but that didn’t happen, so the new focus is on generating election promises out of the various parties.

He said that may be a challenge since the provinces fund 40 percent of the AgriStability program.

“I could envision something like the federal government making an ad hoc contribution into AgriStability without the participation of the provinces,” said White.

“The beauty of that is at least there’s a proper distribution mechanism. The money would go to the farmers that actually need it.”

The problem with a broad-based ad hoc payment is the money gets “sprinkled around” in an untargeted and sometimes political fashion.

White said fixing AgriStability needs to be a top priority of whatever party is elected because it will be too late if it takes a year or two to make the program functional.

Canola Council of Canada president Jim Everson said canola generated $10 billion in farm cash receipts last year. Canola prices have fallen 10 to 12 percent since the start of the China crisis.

“That’s a billion dollars out of the canola economy,” he said during the podcast.

Everson said that lost revenue has ripple effects throughout the farm economy from delaying new equipment purchases to postponing expansion at crush facilities.

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