Alberta is unilaterally correcting what farmers have identified as the number one problem with the federal safety net program.
By using an alternative method to calculate Canadian Agricultural Income Stabilization reference margins for the 2003-05 program years, the province expects to dole out an additional $224 million to Alberta farmers.
Producers have long complained the Olympic average formula, which drops the highs and lows of their last five years of income and averages the remaining three years, doesn’t properly compensate for the hurt in consecutive years of disaster.
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So the province has decided to automatically review all CAIS claims submitted since 2003 using a method that averages the last three years of a producer’s financial history to calculate the reference margin.
It is anticipated the new averaging will result in $90 million in additional payments for 2003, $67 million for 2004 and $67 million for 2005.
“Our producers are crunching the numbers on their operations and telling us that back-to-back disasters have eroded the ability of the CAIS program to effectively respond,” said Alberta agriculture minister Doug Horner.
“While we recognize this is a national program, we can’t sit back and watch the hurt in our industry, especially in the grain sector.”
Wayne McDonald, senior manager with Agriculture Financial Services Corp., which administers CAIS in Alberta, said the extra $90 million for 2003 represents a 24 percent increase over the $378 million that 31,183 Alberta farmers received for that program year.
“It is significant,” he said.
Based on preliminary estimates, about half of the farmers who received CAIS payments in 2003 will be entitled to receive additional benefits. The same goes for 2004. It is too early to tell what will happen in 2005.
“It hits every sector of agriculture and it hits every region of our province, so it is a very widespread adjustment that is being made,” McDonald said.
For those who are eligible, the average bonus cheque is expected to amount to slightly more than $8,000 per program year under review.
Starting this week the agency will begin issuing bonus cheques for 2003 claims and the 7,000 claims that have been processed for 2004. All future claims for 2004 and 2005 will be processed using whichever of the two averaging methods delivers the best results.
Rod Scarlett, executive director of Wild Rose Agricultural Producers, said the money will be a reprieve for farmers facing cash flow problems, but added that the safety net changes were long overdue.
“It’s three years too late in some respects. Had this province and other provinces and the federal government listened to producer groups originally, this would have been adopted into the initial program.”
Travis Toews, finance chair of Alberta Beef Producers, said the new pilot program should be more lucrative than the old CAIS program, which has not been responsive to the needs of the cattle industry.
His association has two main criteria by which all new government aid programs are judged: they have to be market neutral and have no negative impact on trade.
“From my understanding I don’t see it affecting either one, which is important to us.”
Scarlett said he would have preferred to see the CAIS changes adopted on a national level.
Producers who did not qualify for CAIS benefits using the Olympic average reference margin but would have qualified using the new averaging technique will be able to retroactively apply for 2003, 2004 and 2005.
