Farmers and their organizations have always asked governments for more, particularly as it relates to business risk management programs.
In the current environment, thinking needs to change.
As government makes necessary cuts to spending, what can be reduced or restructured in the budgets for agriculture?
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The new Mark Carney government has been far more right-wing and business-oriented than most observers expected. The consumer-facing carbon tax is gone and so are the changes to capital gains taxation.
Carney has established a much better relationship with provincial premiers than his predecessor, and talk about nation-building projects, including new pipelines, is no longer taboo.
We’ll have to see how talk translates to action, but a Conservative government wouldn’t have been able to wave a magic wand and make major projects happen overnight, either.
As well, a Conservative government would probably have kept the Trudeau government’s social programs for child care and dental care, and it too would have agreed to the massive increase in defence spending that is going from two to five per cent of gross domestic product.
Every opposition party talks about cutting government waste but find it difficult to actually accomplish if and when they ever form government.
With the sour trade dynamics between Canada and the United States and all the new spending commitments, the federal deficit will be huge when the Carney government actually tables a budget. Growing government debt is eating a huge chunk of revenue just to make interest payments.
Spending cuts are never popular, but they are now critical and need to be significant. One place to start is a revamp of AgriInvest.
Under that program, each farm receives up to $10,000 a year in free government money, and all it has to do is make a matching contribution. The government money comes out first and it’s taxable. What other businesses get such a sweet deal?
Cancelling AgriInvest would create a huge backlash, but what if the program money had to be spent on private farm insurance plans. Here is your one per cent of eligible net sales up to $10,000, but the money must be used exclusively to cover up to 50 per cent of the cost of non-subsidized insurance products.
That could be private hail insurance, margin insurance programs such as Global Ag Risk, Livestock Price Insurance or any new private programs that may be launched because the cost to farmers has effectively been cut in half.
The money couldn’t be used to pay for AgriInsurance (crop insurance) because that is already subsidized by government.
This change to AgriInvest could come with a corresponding change to crop insurance, and that’s where governments could reduce spending. Like AgriInvest and AgriStability, crop insurance should have a cap. Currently, no limit exists on the crop insurance liability held by a farm.
Why should a farm with 20,000 or 30,000 or 50,000 acres be eligible for cost-shared crop insurance on all those acres? At that size, aren’t they big enough to look after themselves? We can debate where the cap should be set, but let’s use $5 million in liability as an example.
When growing more than $5 million worth of insured crops, a farm would pay the full premium and its AgriInvest money could be used to cover up to half of this portion.
Canadians will face difficult economic times in the years ahead. Everyone will have to accept cuts in government support. It’s a good time to start discussing workable plans.
