AgriStability still works for most Canadian farmers, even if they don’t think so, says a farm income program expert.
And where it doesn’t work, it’s because of a poorly understood change made in 2013, said Steve Funk, farm income programs technical director at MNP in Leth-bridge.
Many critics of the changes made to Growing Forward 2 focused on dropping the payment claim trigger from 85 percent of a farm’s reference margin to 70 percent, suggesting fewer would qualify for payments from a program that is supposed to help during margin declines.
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However, a more complex change was made at the same time. Reference margins were limited to using either the lower of a farm’s historic reference margin or allowable expenses from the years used to calculate that margin.
This is called reference margin limiting and it flew under the radar, Funk said.
That’s where many are getting caught, including grain farmers, pollinators and maple syrup producers.
He said farmers could see their reference margins were limited when they received their assessment notices for 2013 AgriStability, but don’t really know why.
“Even with the limiting of reference margins, it’s still the first program to kick in when there’s some type of whole farm disaster for a lot of producers,” Funk said.
“But there are some cases where the producers’ margins have been limited to such a great extent that the program doesn’t kick in in a reasonable time.”
Grain farmers seem to be most affected because they have low allowable AgriStability expenses relative to their reference margins, he said.
MNP uses a computer model to show producers how they benefit from crop insurance, AgriStability and private insurance providers such as Global Ag Risk Solutions and when each type of coverage would kick in.
The company’s Ag Risk Management Projector plugs in the numbers for individual operations and calculates how the programs would work for them.
The model generally predicts AgriStability will provide benefits in most situations of low to moderate reference margin limiting and even in some cases of severe margin limiting.
However, Funk said the margin limiting is so severe for some that the program won’t work at all.
Governments changed AgriStability because they believed the program was “paying into profitability” rather than helping farmers stabilize their income.
Even with the changes, it still pays into profitability for some and moved others who hadn’t been close into the profitable category.
Funk said the 2013 changes made a great program only good.
It pays out first, remains the cheapest form of insurance and the benefits are still likely to exceed costs. However, farmers are dropping out because of the negativity toward it.
“I see that as a huge problem.”
Funk would like to see the issue resolved soon.
Organizations such as a Manitoba task force have already begun reviewing Growing Forward 2 and planning for Growing Forward 3, and a formal review is to begin next year.
Funk has met with federal agriculture minister Gerry Ritz, the Canadian Federation of Agriculture and others to demonstrate the model and plans further discussions with federal agriculture officials.
An Agriculture Canada spokesperson said it’s too early to assess the full impact of reference margin limiting because processing of 2013 applications is just finishing.
“However, it is clear that AgriStability continues to play an important role in risk management for producers with over $324 million in payments to date since the introduction of the new suite for the 2013 year,” the spokesperson said an emailed statement.
Ottawa administers AgriStability in Manitoba, where payments in 2013 were $21.5 million. Sask-atchewan and Alberta administer their own programs and paid out $71.8 million and $52 million, respectively.
Funk said producers and their organizations have to let the federal government know what they think about programs.
Federal officials generally analyze data in aggregate and need to be aware of how the programs affect individual farmers.
“They need to come to the table with their position and some way of demonstrating whether or not the program is meeting their objectives,” he said.
“They need a voice to adequately explain this to the government.”
The negativity toward reference margin limiting has likely caused some to drop out.
“Even though there is a drought, they’re not going to be getting a payment,” Funk said. “For those that stayed in, it is going to be a big test for the program this year.”
