A $284 million federal buyout pro-g ra m for southwestern Ontario tobacco farmers was hastily hatched and launched in 2008 and lacked proper risk assessment and clear rules, says the auditor general’s office.
In a report tabled in Parliament in late November that assessed the Tobacco Transition Program, interim auditor general John Wiersema said the result was confusion and an attempt by more than 300 tobacco quota holders to bend the rules.
The program was announced Aug. 1, 2008, with a federal election looming. It was meant to fulfill a promise of aid to the troubled tobacco industry.
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The program paid $1.05 per pound of quota to any producer who agreed to leave the industry.
Afterward, tobacco farmers would be licensed and then negotiate prices with tobacco buyers rather than have prices negotiated and set by the Ontario Flue-Cured Tobacco Growers’ Marketing Board.
Wiersema concluded that federal instructions to the board and farmers about how the program would work were confusing.
Federal officials also found quota holders were transferring quota to non-farming family members, who would receive the compensation, allowing the original quota holder to stay in the business either as a licence holder or an employee of a family member renting the land.
By March 2009, Ottawa sent instructions to deny licences to anyone involved in such a transaction.
Close to 1,000 quota holders received payment, although fewer than half of them were active farmers. Under scrutiny, only 22 of the 336 quota transfers were allowed.
Agriculture Canada then tried to curtail the questionable practices. However, the wording of the rules was vague and the government had to drop that attempt.
The report also determined that despite sloppy design, the quota system was ended and remaining farmers with licences appeared to be better offer without the quota debt.
