FREDERICTON – Canada’s agriculture ministers have designed a new three-year farm income disaster program that offers less coverage and fewer benefits than the existing program.
In the face of opposition from most provinces, Ottawa is dropping its coverage of negative margins – yearly income losses – in the Canadian Farm Income Program, which is replacing the Agricultural Income Disaster Assistance program.
Changes to inventory valuation rules should reduce the claim on CFIP funds, federal officials said last week.
And ministers are suggesting a tighter link between the disaster aid program and the Net Income Stabilization Account program that, in some cases, could sharply reduce CFIP payments.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
“There is no doubt this is a rollback from what we have,” Canadian Federation of Agriculture president Bob Friesen said after the summer federal-provincial agriculture ministers’ meeting ended July 6.
“We are thankful they kept some of the key changes to AIDA 1999 but there has been some slippage. We think AIDA ’99 was the minimum base we should have.”
Even some ministers worried afterward that the new disaster aid program may not be well enough funded. It will have an annual budget of $725 million – $435 million from Ottawa and $290 million from the provinces. AIDA had a federal-provincial total of more than $830 million.
“The money available in the new program is less than before and yes, I am concerned that it might not be enough,” said Manitoba’s Rosann Wowchuk.
She joined with QuŽbec’s RŽmy Trudel in calling for any money left at the end of one year to be rolled over into the budget for the next year.
Federal minister Lyle Vanclief said rules do not allow that. Money not spent is returned to the treasury.
While final CFIP details will be worked out over the summer for a formal autumn agreement signing, the basic details of the new program have been decided:
- It will trigger when farm income falls 70 percent below a three-year average. Producers will have a one-time choice of whether the reference period is the previous three consecutive years or the so-called “olympic average” – three of the past five years with the worst and best years removed.
- Family wages will be eligible costs.
- Declining inventory values over the year can be counted as lost income, as long as the calculation is done with accrual accounting methods.
- Negative margins will not be covered unless provinces want to use some of their companion program money to do it. Ottawa would then pay 60 percent of the cost.
- Although negative margins would not be covered, a farmer showing a yearly income loss would not have government NISA contributions from the previous year deducted from the disaster aid cheque.
- The link between the disaster program and the Net Income Stabilization Account program could be strengthened.
Currently, the government’s three percent of eligible net NISA sales in the previous year is deducted from an AIDA cheque. The new program will make the deduction only if the farmer actually triggered government contributions by investing in NISA.
However, ministers also are proposing that a farmer triggering a disaster payment after three years without aid would see the government deduct its contributions for the three previous NISA years from the CFIP cheque.
A government official said it is to make sure producers do not receive the benefit of tens of thousands of government dollars put into their NISA accounts over three good years and then in the fourth year, apply for government disaster aid without acknowledging the earlier government contributions.
Friesen said later the stronger link to NISA is unacceptable to farmers.
Deducting three years of government NISA contributions from a disaster aid cheque would effectively reduce coverage from 70 percent of the three-year average to 41 percent.
“That would mean the year the farmer really needs help, he would receive far less than the program is supposed to offer,” said the farm leader. “We find that absurd.”
