Canadian farmers are lamenting the passing of a popular farm program.
Producers will wind down their Net Income Stabilization Accounts next year, to prepare for a new era of farm policy featuring the Canadian Agricultural Income Stabilization Program.
Canadian Federation of Agriculture president Bob Friesen said it’s not a good trade because people “really liked” NISA.
“Farmers were very, very sorry that they lost that program,” he said.
They appreciated the fact they could count on annual matching contributions from the federal government and that they had some control over how the safety net was managed.
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University of Saskatchewan agricultural economist Ken Rosaasen said with a little tinkering, NISA could have still been used.
NISA payout triggers needed to be more user-friendly and farmers should have been able to take out the tax-paid portion of their accounts whenever they wanted. Aside from minor complaints such as those, the program was largely admired by farmers, he said.
“Many people are upset that NISA is gone because it was the one program where they could at least predict how much they might qualify for,” said Rosaasen.
But the federal government has scrapped NISA in favour of CAISP, a new program that combines income stabilization with disaster protection.
It is a safety net where farmers receive more government money as their losses grow. A 15 percent decline in income triggers $1 from government for every dollar the producer has in his CAISP account. A loss of more than 30 percent would elicit $4 from government for every producer dollar.
The amount a producer has on account will vary from 14-22 percent of his reference margin or average income, depending on the level of coverage the farmer chooses.
A producer with an average income of $100,000 who wants 70 percent coverage would contribute $14,000 to his account. To receive 100 percent coverage, the same producer would have to deposit $22,000.
If the producer does not experience a decline in his reference margin, the account balance will be applied to the following year.
Rosaasen said the new program is better than NISA at linking government aid to those who suffer major declines in income. But he thinks there is still a fundamental flaw with CAISP.
Single commodity producers, who experience more income volatility than diversified farmers, will get more government money from the program, he said.
For instance, if two farmers have average incomes of $125,000, the one whose earnings over the past five years range from a low of $50,000 to a high of $165,000 will trigger more money than the farmer whose income swings from $105,000-$135,000.
Friesen also foresees problems.
“We’re very concerned about this proposal because we don’t feel the trigger is sensitive enough,” he said.
Under the old NISA program, there was a minimum income trigger. Farmers who couldn’t trigger a payout based on falling margins could still get one by dropping below a minimum income level. That fail-safe does not exist under CAISP.
“If you’ve had a long period of low prices, it’s very tough to trigger,” said Friesen.
The federal government needs more provincial signatures on its agricultural policy framework agreement before CAISP can be launched.
