The billion dollar farm aid package announced March 29 will actually be worth closer to $700 million in net benefits to farmers when its impact on other farm support programs is calculated, says a senior Agriculture Canada official.
Danny Foster, acting director general for farm income and adaptation policy, said payments made this year will count as farm income, reducing eligibility for 2005 payments under the Canadian Agricultural Income Stabilization program.
“We are guestimating that the overall effect (on CAIS payments for the 2005 year) will be $300 million,” Foster said.
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It led opposition MPs to accuse the government of deliberately misleading farmers by over-stating the net value of the aid.
Meanwhile, farm groups were lobbying last week to try to convince the government to change the rule and to end the CAIS offset.
Randy Hoback from the Prince Albert, Sask., area and a director of the Western Canadian Wheat Growers Association was part of an association delegation in Ottawa urging the government to reverse the decision.
“If some of this is clawed back through CAIS, it really is just an advance on CAIS 2005,” he complained in an April 5 interview. “We want to ensure they understand that the help they implement should be the help they announce.”
Canadian Federation of Agriculture president Bob Friesen said the announcement was welcome but it should not be diminished by offsetting part of it with lower future payments.
“This was designed to help get farmers out of the income hole they are in and if some of this is clawed back through CAIS, it just keeps that hole there and we’ll be back looking for more help,” he said.
The CFA already had noted that the $1 billion was less than the $1.9 billion income “hole” it thinks exists in 2005.
Opposition critics were harsher.
“If $300 million of this money is just going to be eaten up in CAIS offsets, the agriculture minister and the government have completely misled Canadians and farmers,” said Saskatchewan Conservative MP and Commons agriculture committee member David Anderson.
The government response is that farmers should have known there would be some CAIS offset. However, this money will get to farmers much faster than CAIS 2005 payments that will not come until 2006 at the earliest.
“It is not, as some are suggesting out there, a dollar for dollar reduction in CAIS,” said Wayne Easter, parliamentary secretary to agriculture minister Andy Mitchell. “But it will be considered income in the year it is received so it will affect CAIS eligibility the same way an increase in cattle prices would. Farmers expected this would be the case. I don’t see how it could not be counted as income.”
Foster said the aid package will not be included as income in the CAIS reference margin, which would have helped trigger payments in future if incomes fell below the margin boosted by 2005 results.
