Friesen is president of the Canadian Federation of Agriculture.
On March 9, the government of Canada made an announcement that was of major importance for Canadian farmers. Some observers have questioned whether this announcement will have real impact for farmers. I would like to take this opportunity, as a farmer and a Canadian farm leader, to note the significance of what was announced.
Agriculture is an industry unlike any other. More than in any other industry sector, farmers are subject to factors beyond their control that can dramatically impact their businesses and revenue. Our national policy has always recognized that and has supported farmers with income stabilization programs – safety nets to catch farmers when they have an unexpectedly bad year.
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The current safety net program, the Canadian Agriculture Income Stabilization program, has simply not worked for all regions and agricultural commodity sectors. It has not been predictable or bankable for farmers.
At the start of the growing season a farmer does not know, should he have a bad year, what financial support will be there for him, if he will be eligible and when he will get the money if he is. That uncertainty is also a major obstacle when a farmer goes to apply for operating credit from his financial lender.
What the federal government announced March 9 is commitment to a new income stabilization program component that will work alongside the CAIS program to provide the predictability and bankability farmers have been asking for.
The program would establish income stabilization accounts for farmers. Farmers themselves would put money into these accounts, setting aside money for a rainy day. The federal government would contribute funds to these accounts, and we hope the provincial governments will sign on to contribute as well.
With his account, a farmer will always know how much money is there for him when he hits a rough patch, and he knows he will be able to access it as soon as he needs it.
It provides predictable money to cover the top 15 percent of a farmer’s margin loss. If the loss falls deeper, the second tier of CAIS will kick in. A NISA-like (Net Income Stabilization Account) top tier will respond better to long-term declining margins as an eligible net sales-based margin does not deteriorate as quickly or as deeply as a production margin. In the face of decreasing prices and escalating input costs, a production margin can go to zero almost overnight.
Over the past several years the Canadian Federation of Agriculture has been asking the government to evaluate the potential of a program like this. The March 9 announcement is a case of a government listening to and acting on advice from farm stakeholders.
The other money announced will go to address the cost of production, which is a major issue affecting the profitability of Canadian farmers today.
In recent years the input costs of Canadian agriculture, such as fuels and fertilizer, have skyrocketed. This cost of production program will draw attention to that and emphasize the impact it is having on our industry.
Canadian farmers are among the most efficient and competitive in the world, but their bottom line is still being hit hard.
This government announcement is not a final answer to the major farm income issues facing our industry today. It does not present a policy for growth and profitability. But what this announcement does represent is a significant step in building an effective safety nets program package that is bankable and predictable, and a positive step to creating a strong foundation for farmers to build growth.
