CALGARY – The Alberta government has announced a provincial farm safety net program for the 1995 tax year.
Known as the Farm Income Stability Program (FISP), it’s a low cost, voluntary program which covers all agricultural commodities and offers protection to beginning farmers against abnormal income declines.
Any farmer in Alberta is eligible and may request application forms in the new year. It will be administered by the Agriculture Financial Services Corporation and will operate in conjunction with crop insurance.
More than 30 percent margin
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A government news release said farmers can apply if their margin between agricultural income and eligible expenses falls more than 30 percent in one year compared to a three-year margin average. A farm’s margin is the difference between farm revenue and expenses.
To sign on, annual premiums are not required, however in a claim year the farmer must provide details of the farm’s reference margin and current year’s program margin. FISP relies on information from three years of operation and is based on income and expenses as reported for income tax.
An application fee of $50 is charged and one percent of any claim to a maximum of $450 will be withheld for administration costs.
Payment limits for individuals are $100,000. Corporate claims are capped at $500,000.
FISP falls under the so-called companion program category of the national safety net agreements, said Roger Eyvindson of the policy branch of Agriculture Canada.
Farmers are still eligible to participate in the Net Income Stabilization Account (NISA) which is being revamped by the federal government in negotiations with the provinces.
Gordon Herrington of Alberta Agriculture said FISP is a refined version of the original GATT 70 proposed by the safety net coalition. The group of provincial commodity groups and government has been discussing whole farm income protection for over two years.
The program is being touted as trade neutral, however Unifarm farm policy organization president Ron Leonhardt said trade lawyers may have to interpret whether the program is acceptable within international rules.
Wait and see
“I think it’s in line with what some of the (commodity) groups are willing to accept. It’ll have to be in operation for awhile before we know if it will be adequate,” he said.
Carstairs rancher Dave Foat, president of the Western Stock Growers Association, said cattle producers oppose any safety net.
Cattle producers have said repeatedly they don’t want any safety net program even if it is trade neutral.
“Regardless of the program it still involves the use of taxpayers’ money in Alberta to provide income for agriculture and that constitutes a subsidy in our mind,” said Foat.
The stock growers didn’t want it to cover the 1995 tax year because it could trigger a large payout for feedlot operators who join.
A hostile mood among northern United States cattle producers has been exacerbated by downturned markets and increased competition from Canada and Mexico. The U.S. could force retaliatory trade action against incoming beef and cattle if any safety net exists, he said.
Canada exports more than 40 percent of its annual beef production, mostly to the U.S.
“Given the current low prices, Canada would be in trouble if it had to retain 40 percent of its exports,” said Gary Sargent of the Alberta Cattle Commission.
