BRUDENELL, P.E.I. – Despite industry pleas Canada’s agriculture ministers have decided that farmers who want to enrol in the Canadian Agricultural Income Stabilization program will have to make an up-front deposit, at least for one more year.
However, the deposit requirement will be one-third of the original requirement. That means the $14,000 deposit for 70 percent coverage of a $100,000 margin will be reduced to $4,620. The $22,000 deposit for 100 percent coverage in the same margin will drop to $7,260.
Also the deadline for deposits to join the 2003 and 2004 CAIS year has been extended in all provinces until March 31, 2005 in an effort to boost enrolment.
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Meanwhile, ministers at their annual federal-provincial meeting Sept. 22 said they will try to find another way for farmers to enrol and contribute to the program.
“The case has been made that the deposit vehicle is not an effective, efficient one to utilize,” federal agriculture minister Andy Mitchell said in an interview after the meeting. “Ministers said that given your (producers’) view on that, it is incumbent on us to review that.”
It was only a partial victory for the farm lobby, which called for an immediate end to the deposit requirement.
Canadian Federation of Agriculture president Bob Friesen told ministers the farmer deposit is unnecessary, irrelevant to government finances and a deterrent to farmers who often have to borrow money to make a deposit.
In an interview after the private session, he said the deposit ties up at least $1 billion in farmer money that could be put to better use.
“I have never seen a rule that is so redundant and so onerous,” he said. “There is no increased cost to government if that deposit is not there. Having it there increases administrative costs and ties up money that farmers need. It should be abolished tomorrow.”
Hours later, in their final communiqué, ministers said they agreed with some parts of the argument.
The deposit is a sign of farmer commitment to the program, they said. If it is dropped, some other way for farmers to contribute must be found.
“The argument put forward at the meeting is that the industry needs to be part of it,” Saskatchewan minister Mark Wartman said.
“The federal minister refers to a three-legged stool, federal, provincial and industry. His view is that some type of mechanism needs to be in place to indicate that farmers are investing themselves.”
British Columbia agriculture minister John van Dongen said he agrees with the need for simplicity in the program, but there is a built-in presumption that farmers must “share the risk at the front end” and not just when a payout is triggered.
“There is recognition, as CFA has said, that there is additional administration costs, there is the issue of financing these deposits by farmers, additional hassle,” he said. “So the question is, is there a better way that we can still maintain an active involvement by farmers in the risk-sharing process but not have the administrative costs?”
Ministers announced they have “directed officials to review alternative approaches.”
The issue will be considered again next year.
“We’ll try to find something that’s better for farmers,” said Wartman. “Tying up that much capital really doesn’t make a lot of sense so we’ll try to find a way that does make sense but still has the three of us working together.”
