As a general rule, farmers enjoy making bank deposits. But not when it comes to the Canadian Agricultural Income Stabilization program.
To participate in the federal business risk management program, producers must select a level of protection they want for their operation and make a deposit at a participating financial institution to secure that coverage.
The Agricultural Producers Association of Saskatchewan is lobbying to get rid of that deposit requirement.
“For producers to have to borrow money and pay interest to financial institutions to be able to participate in a government-designed producer stabilization program is ludicrous,” said APAS president Terry Hildebrandt.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
The deposit was initially set between 14 and 22 percent of a producer’s reference margin, depending on the chosen level of coverage.
Ottawa has since softened that requirement, allowing producers to contribute only one-third of that amount in the first year of the program, said Bill Schissel, a member of Agriculture Canada’s business risk management team.
He said the idea of the deposit is to ensure producer participation in CAIS, which is intended to be a cost-shared program.
But due to producer complaints that the deposit takes away from their ability to borrow money to invest in their operations, federal and provincial governments are entertaining alternative methods of accomplishing that goal.
Farmer proposals include a flat fee, an application fee or an insurance type fee to replace the deposit requirement, but changes are unlikely for the 2004 CAIS program.
“It’s late in the day, we’re into 2004 already. We’d like to extend this one-third (deposit) design for another year,” said Schissel.
Hildebrandt said APAS wants the deposit requirement replaced with”nothing, zero, zilch” because it’s an unprecedented requirement for a farm aid program.
Farmers had to put money into their Net Income Stabilization Accounts but that was “altogether different” because it was matched by government contributions and collected interest bonuses, said Hildebrandt.
“This one the government has no money on deposit.”
Beyond that discrepancy in up-front funding requirements, the program is missing its target audience under the current rules.
“The producers that need the assistance most are the ones least able to afford it and unable to participate. This further promotes a continuation of poorly designed bureaucratic business risk management programs,” said Hildebrandt.
He wants the CAIS program scrapped altogether. As a bare minimum the program’s deposit requirement should be “thrown in the bush” because it prevents farmers from taking out full coverage on their operations.
“At the very least we must allow all producers the same access to the program by removing the deposit. This would save producers millions in interest charges. It’s time for a little common sense to prevail.”
Schissel said federal and provincial agriculture ministers will address the deposit issue this fall with the goal of implementing possible changes to the program prior to the new year when producers start filling out their 2005 CAIS applications.
“We are under a bit of pressure so we’d like to make as much progress as we can over the next two to three months,” he said.
