What else could and should governments do to assist producers facing the most widespread and serious drought in decades? Many ideas are being floated. Some have merit and some are non-starters.
The AgriRecovery program is being explored by federal and provincial governments, but what will result is difficult to say.
AgriRecovery has always been vaguely defined, but it’s meant to cover extraordinary revenue shortfalls not covered by crop insurance, AgriInvest and AgriStability.
Another possibility is that the prairie provinces will finally relent and increase AgriStability coverage from 70 to 80 percent. The feds have long had this offer on the table, but the western provinces have balked at paying their share of the extra cost.
Interestingly, even with an impending drought, few producers took advantage of the extended deadline to join or rejoin AgriStability.
For grain producers, contract buy-outs have become a big issue. Producers unable to fill deferred delivery contract obligations face hefty bills to get out of the contracts. Contract buy-outs are an eligible expense under AgriStability.
Could AgriRecovery be used to cover the extraordinary expense associated with contract buy-outs? While on the surface this may seem viable, there’s no way to design a support program that would be equitable and wouldn’t be abused.
Crop insurance is going to be the first line of defence. This may sound insensitive, but producers not enrolled in crop insurance have no one to blame but themselves.
The same is true for AgriStability. The program has many flaws, but this is the magnitude of disaster where the program will kick in for many producers facing a serious income shortfall.
No simple program can be designed to provide equitable support to different sectors of agriculture across such a vast country. Producers may hope AgriStability undergoes major changes or is replaced by some other income stabilization scheme, but realistically if those changes come, they are years away.
As a grain producer, it’s easy to be depressed about shrivelled crops and the lack of revenue to pay impending bills, but the vast majority will find a way to carry on. The situation is different for cow-calf producers.
The biggest imperative is to help cow-calf producers secure enough feed at an affordable cost to avoid a massive sell-off of the beef breeding herd.
Crop insurance changes making it easier to salvage drought damaged crops as cattle feed is a logical response — a win-win for both grain producers and cattle producers, assuming they can reach agreement on what the salvaged crop is worth.
But where do cattle producers get the money? Unlike the grain sector, where returns have been generally good for a number of years, cattle margins have remained tight.
Selling breeding cows into an oversupplied market this summer and fall seems like a bad idea, but what else can you do if you can’t afford feed?
AgriRecovery discussions should centre on that question. Maintaining as much of the breeding herd as possible is in the national interest.
Here’s one idea. Provide cow-calf producers with a forgivable loan of a set amount for each cow to help defray extraordinary feeding costs this winter. If the producer still has the cow a year from now, the loan is forgiven.
Such a program needs to be announced quickly so cattle producers can make appropriate plans. Significant support to defray feeding costs is the only way to prevent a major downsizing of the industry.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at firstname.lastname@example.org.