Ontario has become the first province to put in place, outside supply management, a permanent risk management program for farmers based on cost-of-production insurance coverage.
It takes effect for the 2011 crop year.
The program is not expected to pay out this year because of higher prices, but provincial grain and oilseed sector leaders couldn’t have been happier.
“We have been looking forward to the day our program was made permanent since our pilot RMP began in 2007,” Grain Farmers of Ontario chair Don Kenny said June 29 when the details were announced.
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“We appreciate and look forward to having this permanent risk management program for Ontario farmers.”
The new program was championed by the grain sector, but it is available to all farm sectors.
Producers will be able to buy coverage to guarantee a portion or all of their cost of production.
However, they can cover only the 40 percent provincial portion of their cost because the federal Conservatives have refused to take part.
Ontario has set aside $150 million for the grains and oilseeds sector coverage.
To launch the program, agriculture minister Carol Mitchell announced that there will be no premiums for 2011 crop year coverage.
“But we don’t expect a payment this year,” said Kenny.
According to rules largely written by farm lobbyists, any payments from the RMP will be considered an offset or “advance” on potential AgriStability payments. Farmers will receive the higher of the two.
However, even with the 40 percent restriction and the fact that payments will be deducted from AgriStability payments, Kenny said the program is an important victory for Ontario’s farmers.
It has been run as a three-year pilot project by the Ontario government, with the province insisting the program needed Ottawa’s 60 percent contribution.
When federal agriculture minister Gerry Ritz made it clear Ottawa considers such provincial programs potentially subject to trade countervail action, the election-bound Ontar io Liberal government announced in the spring budget that the provincial portion of the program would be made permanent anyway.
Kenny said the RMP program is an important program breakthrough, despite its limitations.
“It is bankable and predictable because you buy the coverage you want,” he said.
“You at least know your base is there and while it is just 40 percent, it is better than nothing.”
Kenny said it was a farmer decision to make RMP payments an offset against AgriStability payments, but it will be a guaranteed payment in years when AgriStability does not pay out.
“And I can tell you that with low margins, AgriStability will not pay out for many producers,” he said. “This at least will give us some support.”
Ontario has the largest farm economy in Canada, but its farm sector also has struggled in recent years, recording large debt increases and low realized net income.
The Ontario program has become the centre of a national agricultural political debate.
The Canadian Federation of Agriculture supports a federal-provincial risk management programs designed for specific provincial conditions, including cost of production- based support programs.
However, federal agriculture minister Gerry Ritz says such provincial support programs could attract trade challenges. He insists Ontario has no allies on the issue when federal-provincial ministers meet, as they will this week in New Brunswick.
