Risk management needs support now

After providing Canadian families with a reliable source of food throughout the COVID-19 pandemic, Canada’s agriculture sector is in a position to help lead the post-pandemic economic recovery. But in order to do so, farmers are telling their governments that they cannot do it without help.

Beyond the unprecedented challenges presented by the COVID-19 pandemic, producers have faced many extraordinary challenges beyond our control over the last few years. We have experienced trade disputes such as the Chinese canola embargo. Unpredictable climate and weather patterns are a growing concern — most recently 2019’s prolonged drought that stretched into the spring of 2020. Our competing producers in the U.S. and European Union have received significantly greater subsidization. These huge subsidy payments have artificially inflated the price of many of our inputs and farm equipment, while distorting global agricultural markets.

Effective business risk management programs are essential to provide farmers with the confidence to invest in their operations while managing risks such as international trade disputes and poor weather. For years, Canadian farmers have been asking for improvements to AgriStability, the centrepiece of Canada’s risk management programs.

In late November, federal agriculture minister Marie-Claude Bibeau listened to farmers’ concerns and tabled proposed changes to BRM programs at the federal, provincial and territorial agricultural ministers meeting. The changes include removing the reference margin limit, which would increase funding for farmers by more than 30 percent, and increasing the compensation rate from 70 to 80 percent, bringing funding to farmers up by more than 50 percent

This was welcome news to many agricultural producers across Canada and will reverse some of the cuts to the program made in 2013 — but only if provincial governments agree to the federal proposal. The Canadian Federation of Agriculture has been pushing provincial governments to support our members in their greatest time of need.

Farmers have been consistent that AgriStability needs to be more robust, predictable, and bankable for it to be an effective risk management tool. It is important to recognize that the program acts as insurance. Payments are only made when there is a major drop in income at the farmgate. Just like you never want to have to use your house fire insurance, no producer ever wants to have to trigger AgriStability.

Market disruption and uncertainty due to processing plant lockdowns during the COVID-19 pandemic have seriously affected livestock, driving up costs and causing major farmgate revenue losses. Farmers have struggled to manage these risks without a credible AgriStability system in place, and the current funding model has remained stagnant. Since 2013, governments have not increased funding to keep up with inflation, let alone the increasing risks producers are facing.

Agriculture is a major driver of the Canadian economy. Producers have invested billions of dollars in inputs, equipment, technology, and land improvements. This investment has created a world leading food production system that produces billions of dollars of gross domestic product annually.

A short-term investment is needed right now to provide a bridge to a better long-term program and a foundation for new programming options in 2023. Agriculture can be one of the economic leaders as Canada recovers from the impact of COVID-19. A better funded BRM program is needed to provide a backstop if circumstances arise that cause a major drop in farm income. Producers need to manage risk if we want to see continued growth and expansion of the industry.

It is time for governments across the country to provide increased support for this critical sector during these uncertain times. The offer that has been tabled is not perfect, but it is the first new offer of funding into the program since 2013.

Bibeau’s offer needs the support of the provinces before it can be ratified, without which these long-sought reforms are in jeopardy for farmers across Canada. Farmers in all provinces are telling their governments that they need this help, and they need it now.

Farmers across Canada urge the provinces and federal government to come together and agree to the proposed policy changes before the end of January so that we can have the support we need during this crucial year. Given the uncertainties that will persist into 2021 and beyond, this is an opportunity to support Canadian agriculture that cannot be passed by.

Mary Robinson is president of the Canadian Federation of Agriculture. She is also managing partner of a sixth generation family farm operation in Albany, P.E.I.

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