Despite efforts to reduce its $16 billion deficit, the Ontario Liberal government has vowed to continue funding the only Canadian cost-based provincial risk management program this year.
The provincial government also renewed its call for the federal government to contribute its traditional 60 percent of farm support program costs.
Ottawa has not responded directly, but agriculture minister Gerry Ritz has previously rejected RMP co-funding because he argues a cost-of -production-based program to support farmer income could be challenged as trade-distorting.
The March 29 federal budget didn’t include an RMP contribution.
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Mark Wales, president of the Ontario Federation of Agriculture, said farmers are grateful the RMP will be funded despite a recommendation against it by former bank vice-president Don Drummond, hired by the provincial government to recommend cost cutting.
“Despite the province’s tough economic realities, OFA is encouraged the Ontario government has preserved the RMP for 2012,” he said.
And although Ontario budget papers suggested funding for RMP had been frozen, Wales said the government has refuted that suggestion. The RMP’s budget will be $100 million, as it was last year, but the program is demand driven.
Farmers buy insurance based on their assumption of prices and costs in the year ahead.
In 2012-13, farmers for the first time will have to pay premiums for coverage, a cost that Wales said could total $30 to $50 million.
“The program is not capped and that has been confirmed to me,” he said.
“The program for 2012 will go as it is designed. But it may not pay out $100 million because it is driven by demand and right now prices are pretty good across the board, so it might end up paying out $50 million. Who knows?”
He said the cost will also depend on how many farmers decide to buy into the program. They have until the end of April to decide.
This year, the rules require that the producer be in AgriStability and have a premise identification number. If they do not sign up this year, they will have to sit out for two years.
“Growers have to take all of those things into account before they decide if they are in or out,” he said.
Wales said the OFA will continue to argue that the federal government has an obligation to co-fund provincial programs.
“They (the provincial government) reminded the federal government that they need to remain committed to funding 60 percent of risk management programs, so it was good of them to mention that in the budget,” he said.
