There’s an affordable way to fix AgriStability

From across the country and from various sectors of agriculture, farm organizations have been calling for enhancements to AgriStability.

Federal and provincial governments continue to talk about it, but the sticking point is the price tag. It isn’t necessarily the feds to blame. The price is an even bigger pill to swallow for provinces with a small taxpayer base relative to the size of their agriculture sector.

After speaking with a keen observer of the business risk management programs, here’s an idea for how to balance the need with the cost. Don’t treat all of agriculture with the same broad brush.

Pork producers in this country have suffered through some horrendous losses. Hog production is declining in Canada while it continues to increase south of the border. If we want a pork industry in this country, better income stabilization is needed.

In the beef industry, the complaint has long been that AgriStability rarely works and that seems to be particularly true for cow-calf producers.

For pork and beef and many other sectors, AgriStability enhancements make a great deal of sense. The same need does not exist in the grain sector.

Prices for almost all the grains, oilseeds and specialty crops have been rising in recent months. With decent yields in most regions, above average quality, good grain movement and a harvest season requiring less grain drying, these are good times for grain farmers.

About the only lament, and one that I certainly have, is that too much grain was priced too soon, missing the post-harvest rally.

Of course, times won’t always be good and AgriStability is meant to cover producers when income drops. So why would it be reasonable for lower AgriStability support for grain producers than for other farmers? The answer is crop insurance.

Crop insurance is the first line of defence for the grain sector and it’s the biggest cost among the business risk management programs, eclipsing what is spent on AgriStability and AgriInvest.

While there are some forage insurance offerings through crop insurance programs, they tend to have limited scope and limited uptake. Programming is geared to grain producers.

There is a Western Livestock Price Insurance Program, but it isn’t used at all by hog producers and fewer than 20 percent of calves are typically insured. No government support is provided other than administrative costs.

Still considered a pilot program, the WLPIP should be expanded to the entire country and governments should cost share the premiums the way they do on crop insurance programming. These changes should occur in addition to improved AgriStability support.

By limiting AgriStability enhancements to sectors other than grain, it would be affordable for governments and it would help level the playing field for all the support provided to grain through crop insurance programming.

Another change is also warranted. There should be an ability to separate the enterprises within a farm.

Mixed farmers with both grain and livestock are far less likely to ever trigger an AgriStability payment. With modern accounting, it should be possible to separate the enterprises and allow each to be supported separately. Expenses and income would need to be properly allocated, but this should be feasible.

Rarely is there any praise for AgriStability, but no other approach has been forwarded. To make AgriStability enhancements affordable and palatable for governments, enhancements should be targeted to sectors other than grain.

Grain is already receiving the lion’s share of programming dollars through crop insurance.

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