Three provinces agree to remove reference margin limit but refuse to budge on changing compensation rate
UPDATED – April 1, 2021 – 1545 CST – This story has been updated from the printed version in our April 1 edition to correct some inaccuracies.
Canadian farmers will have access to only some of the proposed $170 million in new AgriStability money after agriculture ministers reached a partial deal last week.
The ministers agreed March 25 to remove the reference margin limit, at a cost of $95 million, and extend the application deadline to June 30 this year, but did not increase the compensation rate from 70 to 80 percent. The change is retroactive to include the 2020 program year and is in effect until the current Canadian Agricultural Partnership expires in 2023.
That leaves $75 million on the table.
Six of the jurisdictions, representing the majority of agricultural production, passed a motion during the meeting asking Ottawa to pay its 60 percent share of that anyway, without provincial participation.
But a statement from federal minister Marie-Claude Bibeau indicates that isn’t likely.
“Our offer remains on the table for cost-shared improvements to the compensation rate,” she said afterward. “Canadian agriculture is a shared jurisdiction and we’ve been clear BRM improvements must respect the cost-share fundamentals.”
When Bibeau proposed the changes last November, the prairie provinces said they couldn’t afford the cost of both. Two of them would have had to sign on to implement the change nation-wide.
Saskatchewan agriculture minister David Marit said his stakeholders told him the reference margin limit (RML) was the main issue and that’s what he took to the meeting.
“I said, ‘we will support the removal of the RML, that we would also support retroactive to 2020, but we couldn’t support the compensation going from 70 to 80 percent and that we were hopeful the federal government would reconsider and leave their 60 percent dollars on the compensation side on the table for the provinces’ producers to be able to access’,” Marit said in an interview.
Removing the RML will cost Saskatchewan about $20 million per year, depending on program uptake, while increasing compensation would have been about $10 million.
Marit said those who say that isn’t a large number should consider it’s about $10 per capita in Saskatchewan. For provinces with larger populations the relative cost is much less, he said.
Alberta minister Devin Dreeshen said he was disappointed Ottawa would withhold available money.
“That was about $12 million that the federal government chose not to transfer to Alberta,” he said. “When you look at the $20 billion plus of net transfers that we give to Ottawa annually (it’s) unfortunate.”
The change would have cost Alberta $8.4 million and Dreeshen said removing that much from the agriculture budget on top of cuts that have already occurred would devastate that ministry.
Blaine Pedersen, Manitoba’s minister, said farmers should consider the change a big win because more of them will be eligible for payments. He said Ottawa could still bump up compensation from 70 to 75 percent by paying its portion.
“We’re facing some severe challenges financially. The federal government put out this offer. If they want to contribute their 60 percent…I’m sure producers would accept federal money for that,” he said.
Farm organizations expressed nearly unanimous opinions on the change: removing the RML is a good step but increasing compensation would have been even better.
The Canadian Pork Council said removing the RML does little for pork producers.
“We had high expectations that provincial ministers understood that the situation was difficult for pork producers and that they placed their hope in this program for meaningful financial assistance,” said chair Rick Bergmann.
The Canadian Cattlemen’s Association was pleased that at least some change was made.
“The removal of the RML will help level the playing field for beef producers and better position our industry to contribute to Canada’s economic recovery,” said president Bob Lowe.
Canadian Federation of Agriculture president Mary Robinson admonished the governments for treating the negotiations like a game when farmers have been telling them for years they needed meaningful support.
“And now, at a time where Canadian agriculture faces immense disruptions and uncertainty, we see critical investments in risk management treated like a political game, with politicians haggling for over 100 days while farmers have real concerns about their livelihoods over the coming year,” she said.
Meanwhile, work continues on the whole farm margin insurance program that prairie ministers have been touting.
A request for proposals closed March 29. It follows a report from the Nichols Group done last year that recommended replacing AgriStability with margin insurance.
The proposal request includes examining the feasibility of the concept and identifying gaps and challenges.
The Nichols Group model proposed a program that insured an entire farm for margin decline due to fluctuations in revenues, expenses or a combination of the two.
It would use an insurable margin based on average historical yields, prices and expenses. Producers could select a coverage level and premiums would be calculated at the beginning of each program year.
Key objectives are to treat all farms equitably, respond quickly and be simple and predictable.
Dreeshen said an interim report should be done by summer so that it can be circulated to all the provinces and stakeholders, with a final report available for the next federal-provincial-territorial meeting Sept. 8-10 in Guelph, Ont.
He said that would mean provinces could sign off on a program in 2022 and implement it in 2023.