Parliament has approved legislation that the government says will make up to $3.3 billion in loans and program advance payments available to farmers starting later this month.
The legislation, which is amendments to the Agricultural Marketing Payments Act, was passed in close to record time last week. It will allow more efficient delivery of livestock sector aid that federal agriculture minister Gerry Ritz announced before Christmas but which producers complained was ineffective.
“There were two things that the livestock sector told us when we started working on the situation in late fall and early winter,” Ritz told the Senate agriculture committee Feb. 28.
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“They said work within existing programs and keep the chance of countervail as slight as possible. We have done that and hit the medium here that will give us the best bang for our buck.”
Farm groups praised the bill, which was introduced to the House of Commons Feb. 25, passed that night, introduced to the Senate the next day, approved and passed into law Feb. 28.
Canadian Federation of Agriculture president Bob Friesen joined with cattle and pork sector leaders in praising the government for introducing the bill and the opposition for co-operating in getting it into law.
“These measures give our hard-hit livestock producers more tools for overcoming the obstacles they face and getting through this difficult time,” Friesen said in a CFA statement.
Bill C-44 will:
- Allow producers to apply for cash advances of up to $400,000, using their inventory as security. The first $100,000 will be interest free, and repayment will be within 12 months.
- Allow the government to use a “severe economic hardship” designation to trigger emergency advances.
- Allow the government to use half a farmer’s inventory as security, leaving the other half as security for private sector lenders.
- Remove any connection between the advance payments program and other government programs so advances received will not be deducted from other program payments.
- Authorize a $50 million sow cull program that will pay farmers $225 per destroyed sow. The goal is to reduce the breeding sow herd by 10 percent.
“We have too many sows producing too many healthy piglets,” Ritz told senators.
“Our genetics are such that we are overproducing and that is driving the price down.”
Last week’s legislation will cost government little. Ritz said he will have to get Treasury Board authority for $200 million in new spending, close to $150 million to cover the interest-free portion of the advances and $50 million for the sow cull.
In effect, it allows farmers to more efficiently borrow against future income.
Ritz said it will not save all farms but will inject equity to stabilize the livestock sector until market prices increase. Hog and cattle producers have been bleeding equity as prices tumble and input costs soar.
“Under this program, a finishing barn will have the cash flow to have the liquidity to hang on until the market cycle rights itself,” said Ritz, who predicted the next hog cycle will see prices rise $20 to $30 an animal.
“Anybody who is serious about staying in the industry will have the tools at their behest in order to make the financial sector back up a little bit.”
The legislation was needed to correct problems producers encountered in trying to get access to money first announced Dec. 19. Canadian Pork Council president Clare Schlegel argued that announcing a multibillion-dollar loan program that turned out not to be easily available was a cruel joke for panicking hog producers.
Because the old rules allowed the government to be first in line to claim security if the farmer defaulted, private sector lenders had less security and often wanted to call in their loans.
And because the old rules connected the advance payment program to other government programs, producers who received advances often found them clawed back when they were deducted from Canadian Agricultural Income Stabilization program payment.
Ritz promised that with speedy parliamentary approval, the program would begin sending out money by late March.
