EDMONTON – Farmers will soon be saddled with a “low slung” safety net that won’t help them when they need it most, says the National Farmers Union’s representative on the national safety net committee.
Federal and provincial agriculture ministers decided in December to use an revised Net Income Stabilization Account as the basic farm income support program.
But Jim Robbins told the recent annual convention of the National Farmers Union, that NISA is seriously flawed and will leave many farmers defenceless in the event of a disastrous drought or trade war.
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“We (in the NFU) question the wisdom of using NISA as the basis for a new safety net,” he said. “There will be times in the future … when it won’t work.”
He said the NFU wasn’t alone on the committee in questioning the idea of using NISA, but several governments involved had apparently decided ahead of time that NISA was the way to go.
“It was like trying to stop a snowball rolling downhill.”
As approved by the ministers, NISA would apply to all commodities and be funded equally by farmers and government (with the federal government contributing twice as much as the provinces). Crop insurance would remain a separate program and provinces could set up “companion” programs to top up the support provided by NISA.
The farmers union put forward an alternative proposal for a pooled insurance fund, which analysis showed would have done a better job of stabilizing farm income. But that was rejected because some participants felt it would have been easier to cheat.
While it may be just about impossible to cheat under NISA, Robbins told the NFU members, it has four fundamental problems:
- The majority of producers will likely have a “zero balance” in their NISA accounts at some times, leaving them without adequate protection in case of a crop failure or price collapse. For example in June 1994, more than 60 percent of the 173,215 accounts had $1,000 or less in them.
- At the same time, there are some very large accounts. Last June, 141 participants had more than $100,000 in their accounts; the largest was more than $750,000. That tells taxpayers there are some farmers getting a lot of government help that they don’t need.
“If you don’t need NISA, it works very well,” said Robbins. “If you do need it, sometimes it won’t work at all.”
- NISA is “useless” for beginning farmers. Newcomers to the industry will start with zero in their account and will be particularly vulnerable to a bad year.
- A feature that pays farmers a three percent interest bonus for additional deposits up to 22 percent of eligible sales simply means taxpayers are subsidizing people who already have a lot of money to save.
Robbins said the NFU will continue to promote its pooled stabilization fund. He predicted the safety net issue will be revisited the first time there is an unexpected farm income disaster.
