CRITICS say the much-maligned Canadian Agricultural Income Stabilization program is about to become much worse because of a combination of government planning and inaction by farm lobbies asleep at the switch.
Supporters say the change is an attempt to make the CAIS program more consistent and will benefit the majority of farmers.
For an outsider who wouldn’t know accrual accounting from cash accounting if they were floating in his soup, it is all very baffling.
It also has the instinctive feel of an issue that might develop legs. Enough sources are challenging the conventional wisdom of farm benefit to at least begin applying a more rigorous smell test to official explanations.
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At the centre of the issue is a decision by federal and provincial governments last autumn, supported by the majority on the federal-provincial-producer national CAIS committee last summer, to change calculation of historic margins for the 2007 CAIS program year from cash accounting to accrual.
Its first effects will be clear in 2008 when farmers do their 2007 calculations.
The official explanation makes it sound like bureaucratic logic, based on a consultant’s report commissioned shortly after CAIS started in 2003.
The official line goes like this: CAIS administration already converts current farmer cash accounting claims to accrual (taking account of inventory value changes, bills incurred whether paid or not and income earned whether received or not) so comparison of current to historic margins should compare accrual to accrual.
Besides, most farmers will benefit and in a case like BSE, when inventory values dropped sharply, CAIS payments will respond quickly.
By the way, Quebec always has compared accrual current to accrual historic under CAIS and Quebec is not known to pursue policies that hurt Quebec farmers.
When the change was revealed (there never was a formal announcement), a few farm groups and opposition MPs questioned it but there were no sustained queries. But some critics saw this as the hollowing out of historic margins that determine whether the program pays out. The lower the historic margin, the lower the base from which current margins must drop to trigger a payment.
Manitoba farmer, policy analyst and iconoclast Murray Downing used his own farm to calculate that accrual accounting would turn the last four years into negative margins instead of three of four positive years.
He suggests farm group representatives on the CAIS committee did not understand the implications when they first saw the proposal and now are reluctant to oppose what they once supported.
There has been, to be kind, no broad debate. New federal deputy agriculture minister Yaprak Baltacioglu, a veteran of the first agricultural policy framework debate of 2000-02, took the job this spring vowing to keep in touch with farmers and to oversee improvements to the system that came out of those first flawed negotiations.
This latest stealth change to CAIS would be a good issue on which to establish a reputation as a manager willing to look at facts and to challenge assumptions.
Would the CAIS changes really make the program better for most farmers? Maybe, but if not, it is not too late to say no.
