When it next reviews the cash advance program, the federal government should ask some tough questions about whether the program is the best use of taxpayer dollars, says federal auditor general Denis Desautels.
In a report to Parliament last week, he conceded the program has been popular with farmers.
However, he said the government has done little to ensure the program does what it is supposed to do. And it does a poor job of making internal evaluations of the program available to Parliament and the public so the political debate can be well informed.
Read Also
Going beyond “Resistant” on crop seed labels
Variety resistance is getting more specific on crop disease pathogens, but that information must be conveyed in a way that actually helps producers make rotation decisions.
Desautels said Agriculture Canada has not adequately responded to a question from a 1993 evaluation about the need to have the government pick up the interest cost on the first $50,000 of an advance.
Is the program aimed at improved farm cash flow through marketing, or is it income support?
“The department still needs to clarify the reason why advances are provided interest free,” the auditor general said.
More information is needed about the cost of defaults, administration and whether the benefits that farmers receive from the program could more efficiently be delivered in other ways.
“It may be that a more cost-effective program could be designed,” wrote Desautels. “When the administrative costs incurred by producer organizations, the Canadian Wheat Board and elevator companies are added to that of the federal government, the total annual cost of program administration is likely upward of $5 million. These administrative costs might be reduced or better utilized under other program alternatives.”
Any advantage?
The auditor general even raised doubts about whether cash advances succeed in making more credit available to farmers than would otherwise be available.
“Several current and former senior officials of the department with an intimate knowledge of the cash advance program expressed concerns to us about the program’s effectiveness,” he wrote.
Agriculture Canada responded by noting that all aspects of the program will be assessed when the program is subjected to a required five-year review in 2001.
One opposition MP quickly jumped to the defence of the cash advance program.
New Democratic Party agriculture critic Dick Proctor said the government should not heed the auditor general’s questioning of the program.
“This program isn’t broken so don’t fix it,” the Regina MP said in a statement released in Ottawa. “I know it’s the auditor’s job to look for waste and mismanagement, but he didn’t find it here.”
Proctor said with commodity prices down and most government support programs eliminated, it is not the time to question this $40 million benefit.
