A decision by administrators of the Canadian Agricultural Income Stabilization program to deny benefits to farm operations that produce tree seedlings for the forest industry has opened a debate about whether CAIS eligibility should be governed by the nature of the customer.
Should farmers selling product that is converted to an industrial non-food use be eligible for support?
Seedling producers who sell to orchards are eligible for CAIS payments. Seedling producers who sell to reforestation companies are denied CAIS benefits although they are defined as farms for program purposes.
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“It really is an unfair contradictory policy and I believe it is in contravention of the legislation,” said Robin Dawes, nursery manager for K & C Silviculture in Oliver, B.C. “I believe some nurseries in Alberta are close to taking the government to court on this and I’m certain the government would lose.”
She cites the principles governing use of the Farm Income Protection Act that say program design and payments “should not unduly influence the decisions of producers of agricultural products with respect to production or marketing.”
In effect, CAIS administrators, supported so far by ministers, are telling seedling producers who they can count as customers.
K & C Silviculture was one of a number of seedling operations that received CAIS payments for the 2003-04 year that later were rescinded because officials said tree seedlings for the forestry industry are not an eligible commodity.
Dawes appealed and lost but won the support of local MP and NDP agriculture critic Alex Atamanenko, as well as the National Farmers Union.
CAIS officials and some politicians acknowledge that the ruling on reforestation customers could have much broader implications for farmers who sell their products for non-food purposes, whether biofuel or pharmaceuticals.
“I think we need an advance ruling from CAIS on whether sales for biofuel are eligible or not,” Liberal agriculture critic Wayne Easter said. “They should be.”
He is not sympathetic to the idea that seedlings for the forestry industry should be eligible for CAIS payments, citing the example of Maritime corporate giant Irving Inc. that has both a farm subsidiary and massive corporate forestry interests that could benefit from subsidized seedlings.
B.C. agriculture minister Pat Bell said in an interview the issue of whether the end use of an agricultural product should determine eligibility for payments is on the table among ministers designing the next generation of farm supports.
“It is being discussed but it is too early to predict an outcome,” he said in a Feb. 21 interview. “I want it discussed. I am not yet prepared to say what is correct.”
The NFU came to the defence of K & C Silviculture.
In a late 2007 letter to agriculture minister Gerry Ritz, NFU president Stewart Wells said the nature of a customer’s business should not determine eligibility for farm benefits.
“Many agricultural commodities are ultimately marketed to industrial processors including ethanol plants and an increasing number of farmers are entering into production contracts with large companies in exchange for guaranteed markets,” Wells wrote. “The CAIS program regulations should not be used as a mechanism for disqualifying legitimate agricultural producers based on the end use of the producers’ product.”
Last year, a senior CAIS official acknowledged to the B.C. Landscape Nursery Association that the exclusion of seedlings for the forestry industry may have broader implications that are being reviewed.
“While reforestation seedlings are currently the only commodity excluded on this basis, there are potential eligibility implications for many other traditional agricultural commodities that are non-agricultural when defined by the nature of sale and not of production,” B.C. CAIS manager Pat DeBoer wrote.
Dawes has argued that because her seedling operation, defined as agriculture, has been declared ineligible for CAIS payments, other federal farm aid that depends on CAIS eligibility also has been denied.
“K & C has been selectively excluded from other federal funding which has been extended to our competitors in similar circumstances,” she wrote in late February.
And she notes that CAIS still has not clawed back the payment, although it has said it will.
“I suspect they are uncertain about the legality of this while the issue is being debated by ministers.”
