Ottawa and the provinces are nearing a deal in principle that will sharply cut farm income support in the next five-year agricultural program.
The result could be more than $2 billion in spending cuts over five years for Ottawa and the provinces combined — approximately $1.2 billion in lower payments for Ottawa alone.
The federal government proposed three alternatives to provincial and territorial ministers.
The most drastic was the eligibility threshold for when farmers receive an Agri-Stability payment from 85 percent of their historical average income to 50 percent.
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Most provinces rejected the 50 percent threshold at an unannounced meeting of ministers in Toronto July 6, according to a provincial source.
But the second option — reducing the triggers threshold from 85 percent to 70 percent — would save the provincial and federal treasuries almost as much as $2.2 billion.
Some provincial delegations believe the 70 percent option will be federal agricultural minister Gerry Ritz’s compromise position.
Final decisions are supposed to be taken at a ministers’ meeting in Whitehorse in September. The new programs take effect April 1, 2013.
Provincial opponents of the proposed cuts have argued it will simply force more farm support costs onto provincial only programs such as Ontario’s Risk Management Program.
“This simply would gut Agri-Stability,” said a provincial official close to the negotiations.
“It is an attempt to use high commodity prices and government restraint to gut a program.”
Ministers have decided to keep public information on the negotiations vague until a deal is reached.
Asked about Agri-Stability cut proposals, Ritz’s office issued a statement indicating that the Growing Forward 2 programs will emphasize support for disaster, as well as investments in innovation and competitiveness.
Strengthened income support for market fluctuations was not included in the list of federal priorities.
“Governments are currently looking at ways to ensure agricultural programming is helping the sector become more competitive over the longer term,” said the statement from Ritz’s office.
“The next multi-year framework agreement continues to be discussed among federal, provincial and territorial governments with no decisions having yet been taken.”
After the Toronto meeting, Ontario minister Ted McMeekin said ministers agreed the next generation of programs must be flexible, while details of any agreement must be transparent and include farmer input.
McMeekin is under intense pressure from Ontario farmers to save Agri-Stability levels and to include their income insurance Risk Management Program in the next suite of programs.
He has little chance of winning that battle.
Saskatchewan minister Lyle Stewart, attending his first ministerial meeting since his appointment in May, said the issue is more complicated than Agri-Stability threshold levels.
“I’d have to say (if choosing) between 70 and 50 on the face of it we’d choose 70,” he said in an interview.
“But it’s going to depend a little bit on how the program will work in the end, too. If the savings are going to be roughly equal, with 70 or 50 percent, there’s obviously going to be some differences in the way the programs pay out.”
Stewart said the federal government has suggested it could make more money available for crop insurance, research, market development and irrigation infrastructure if it saves money by changing the trigger. He said that could mitigate some of the risk of the change.
