The federal government last week put meat on the bones of the $1.5 billion in farm spending promises made in the first Conservative budget and answered the question of whether there will be spring money for farmers.
Yes, agriculture minister Chuck Strahl said May 18, but only as a loan.
He announced changes to the spring cash advance program that will double the interest-free portion to $100,000 and increase the total amount that can be borrowed against future crop sales to $400,000 from $250,000.
Repayment deadlines are being moved back to Sept. 30, 2007.
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Through legislation tabled in Parliament May 18, the government will eventually expand the popular cash advance program to other sectors including livestock and some horticultural crops.
Strahl told a news conference it is the fastest way to get money to farmers this spring.
“This will increase spring advances by over $500 million, which will allow for a total of $1.2 billion in cash flow to producers at a time when they need it most,” said the minister. “This is a practical program that addresses the needs of producers who have been quite articulate in expressing those needs to us.”
The cash advance changes were part of a larger package of programs announced by Strahl that will deliver $950 million of the $1.5 billion promised in the May 2 budget.
Strahl said $900 million will be paid out to farmers through a re-evaluation of Canadian Agricultural Income Stabilization program inventory values for 2003-05. Those payments could start to flow by summer or fall. He said to stretch the payments to as many farms as possible, there will be a $500,000 cap per operation.
Negotiations have started with provinces and territories to expand negative margin coverage for the next two years of CAIS. Strahl said that would increase federal CAIS spending by an extra $50 million.
“We are putting $950 million today into farmers’ hands,” the minister said in the House of Commons.
The Liberals noted May 18 that no new money was flowing to farmers.
In addition, during a Manitoba visit this week, Strahl was to announce funding for a program to compensate farmers whose fields were flooded.
In Regina, he was to meet with provincial ministers to begin developing a promised biofuel strategy.
Outside of Parliament, Strahl’s announcements were generally well received.
The Canadian Federation of Agriculture said the announcements were welcome although they did not answer all concerns.
“Cash advances, CAIS inventory evaluations, better negative margin coverage, these are all very positive and are things we have been calling for,” CFA president Bob Friesen said.
“But I am concerned that the only short-term money is more debt when debt levels already are very high.”
Friesen also complained that the CFA and industry groups have not yet been briefed on program details.
Tim Highmoor of the Saskatchewan Beef Industry Committee said the retroactive CAIS inventory evaluation announcement will help the beef industry for the 2003 CAIS year, because cattle inventory values plummeted after BSE.
“This is a very positive announcement that will help our industry,” he said. “The only unfortunate part of it is that we don’t really have information on how this will work.”
Grain values also fell in 2003 and 2004 so the grains sector should benefit from the $900 million enrichment of CAIS, although the CFA continues to say that the safety net has not worked well for the grains industry and is not the best vehicle for getting money out.
“There are no guarantees that the farmers who have excruciating needs will get anything from this,” said Friesen.
Meanwhile, Canadian Wheat Board chair Ken Ritter praised the Conservative government for the policy changes, particularly the increase in cash advances and the interest-free portion.
Western Canadian Wheat Growers Association president Cherilyn Jolly-Nagel said the cash advance expansion “is a good trade-friendly way of providing financial assistance to farmers.”
In the Commons, though, the judgment was more harsh.
Liberal agriculture critic Wayne Easter used the May 19 question period to denounce the announcement as “illusionary money” that will lead to more farm debt.
“Does any member of this House believe that farmers can borrow themselves out of debt?”
