AGRI Committee Report
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Program Review: Dissenting Report by Conservative Party of Canada Members of the Standing Committee of Agriculture and Agri-Food. The Conservative Members on the Standing Committee of Agriculture and Agri-Food (SCAAF) are pleased to submit a dissenting opinion to the report Program Review. Although the Members feel that the Main Report was well balanced, they disagree with the proposed solutions outlined in the recommendations. Before commencing with the dissenting report, Conservative Members would like to thank each of the witnesses that came before Committee to present evidence. The time and effort they dedicated to this study has provided all Committee Members and Parliamentarians with greater understanding and insight into the issues affecting agricultural programs. 1. Program Review: Growing Forward The Conservative Government understands that in order for farmers to be successful, they need a Government that is committed to a competitive and profitable agricultural sector. That is why the Conservative Government implemented Growing Forward, an agreement with its provincial and territorial partners after consultation with more than 3,000 stakeholders in the summer of 2008. Since its inception, Growing Forward has focused on improving the competitiveness of Canada’s agriculture sector, while providing a proactive approach to managing risk. Its goal is to put the agricultural industry on solid footing and achieve long term support for farmers. Growing Forward’s success has been a direct result of the Conservative Government working cooperatively with the provinces and territories. As a result, farmers and those throughout the agricultural sector, have been able to gain advantages at home and abroad; as well as, gain the ability to effectively react and adapt to changing market forces. 1.1 Business Risk Management Since the Business Risk Management (BRM) programs were launched in 2007, $6.7 billion has flowed to the benefit of producers across Canada. Below is the list of BRM programs the Conservative Government has implemented as well as support that has been delievered to Canadian farmers. AgriStability – The AgriStability program is based on annual financial and production records for the farm. The programs calculations can only be completed after the farm’s fiscal period has ended, as it compares current year margins relative to historical margins. The historical margins are based on individual producer history. To date, the program has paid out more than $2 billion to farmers across Canada, including $696 million in 2007, $721 million in 2008, $576 million in 2009 and $35 million to date in 2010 (as processing for 2010 has just begun). AgriInvest - The AgriInvest program is designed to support farmers that have experienced a small income decline or to manage risk associated with new investments. Farmers are allowed to make annual deposits based on a percentage of the most recent year’s Allowable Net Sales, and are allowed to withdraw funds at any time. Since the program’s inception, AgriInvest has provided over $1.3 billion to producers to help offset declining incomes due to low prices and rising input costs. AgriInsurance - Individual production insurance plans are designed, delivered and administered by provincial governments to meet the demand of producers within the province while respecting federal and provincial guidelines. AgriInsurance requires historical production data in order to calculate a producer’s premium and level of coverage. So far, the program has delivered close to $3 billion in total government contributions to help protect producers against crop losses due to weather, pests and diseases. AgriRecovery - The AgriRecovery disaster relief framework sets the process and guiding principles by which the federal government works with the provinces/territories and industry to develop programming options in response to small to mid-size natural disasters. The programming developed under AgriRecovery provides cost-shared (60:40 federal-provincial), timely and effective assistance to producers to mitigate the impacts of a disaster and allow affected producers to resume farm business operations as quickly as possible. AgriRecovery complements the other programs in the new BRM suite, as well as other disaster programs. In total, federal and provincial governments have paid out more than $494 million to date through AgriRecovery initiatives to help producers deal with the impacts of different types of disasters across the country, such as drought and excess moisture/flooding, the discovery of Potato Cyst Nematode in potato fields in Quebec and Alberta, and the occurrence of Bovine Tuberculosis in British Columbia, among others. Advance Payments Program – The Advance Payments Program is a federal guaranteed loan program that gives all eligible farmers easier access to credit through repayable cash advances on their marketable commodities. This improves cash flow throughout the production period, allowing producers to meet their short-term financial obligations while selling their products when markets are most favourable. Since 2008, our Government has provided producers with over $6.2 billion in advances under the Advance Payments Program to help producers meet their financial obligations and benefit from the best market conditions. 1.2 Non- Business Risk Management AgriFlexibility – AgriFlexibility is a five-year (2009-2014) $500 million fund to facilitate the implementation of new initiatives, both federally and in partnership with provinces, territories and industry. It is designed to complement existing Growing Forward programs, and intended to improve competitiveness of the sector by funding non-BRM measures that:
2. Program Review: Growing Forward 2 Although Growing Forward has provided much stability for farmers over the course of its implementation, the Conservative Government recognizes that program development is an ongoing process. That is why the Conservative Government is once again discussing with its provincial and territorial partners a new suite of programs that will better meet the new and evolving challenges that farmers will encounter. In May 2010, a broad, multi-phased engagement process was initiated with a series of 15 national and regional engagement sessions that were attended by over 400 farm leaders including young farmers’ organizations and other key value chain stakeholders. The purpose was to promote discussion on the current state of the sector, review emerging global and domestic trends, and present a vision of what the industry may look like in 2020. Additionally, in conjunction with the provinces, the Federal Government has already started a multi-phased engagement process with the industry looking at the opportunities and challenges facing the sector, and special engagement sessions will be organized with young and beginning farmers. Through these consultations the Conservative Government hopes to work cooperatively with all its partners in the agricultural industry to build on the successes of Growing Forward, which will be represented in Growing Forward 2. Conservative Members are pleased to note that the federal Minister of Agriculture and Agri-Food, Gerry Ritz, along with his provincial and territorial counterparts have indicated during their recent Federal –Provincial - Territorial meetings that Growing Forward 2 will reflect a review of BRM programming. Following the February 11, 2011 Federal Provincial and Territorial meeting the ministers issued a statement regarding their priorities for Growing Forward 2 and BRM program renewal: Governments will continue to seek input from Canadians to help set priorities for the next policy framework, Growing Forward 2, which will drive the economy, help the industry maximize its resources, and reduce input costs. Ministers also agreed that young and beginning farmers will be key to the future of the sector and will be full partners in discussions on Growing Forward 2. Over the past year, Governments have delivered considerable support to producers to help them better manage weather and market related difficulties. Ministers encouraged farmers and producers to make use of business risk management options, and Ministers recognize the need for continuing to work to make sure these options meet the needs of the farm gate. (http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2011&page=n110211) 3. Program Review: Recommendations It is worth noting that this engagement with the provinces and territories is absolutely necessary before any changes are to occur. Under the Constitution, agriculture is a shared jurisdiction. In practice that means that the Federal Government contributes 60% of the costs for programming while the provinces and territories contribute 40%. Neither level of government can unilaterally make changes to BRM programming. Instead, a cooperative approach is taken and no changes are made until two-thirds of the provinces representing fifty percent of farm production and the federal government agree. The current BRM suite under Growing Forward is a direct result of this cooperative and consultative approach and any changes to the suite in Growing Forward 2 will need to be made cooperatively. Unfortunately, many of the recommendations made in the main report are suggestions that do not respect the role of the provinces and the territories. Conservative MPs do not support recommendations that direct the federal government to dictate farm programming to the provinces without seeking cooperation. Another aspect of the recommendations made in the main report is that some are likely not trade compliant. Canada is the fourth largest exporter of agricultural products in the world and export markets account for over 80% of farm cash receipts. With the exception of the supply managed sector, farmers from western grain growers to soy producers in Ontario to horticultural farmers in Atlantic Canada to livestock producers in every province enjoy the benefits of expanding market access through NAFTA and the WTO. However, these same farmers who are dependent on selling their products on the world stage have also seen borders shut to Canadian farmers when BRM programming moves from support to subsidy based programming. As a signatory to the World Trade Organisation, federal, provincial and Territorial governments have designed programs like AgriStability to fit in the “green box” of farm support to the extent possible. One of the ways of doing this is to use the Olympic Average when calculating payments. If federal, provincial and Territorial governments moved to the ten year average as recommended by the committee, Canada would likely be in breach of its WTO commitments on domestic support and would be vulnerable to trade challenges from a wide range of trading partners. The Risk Management Program in Ontario is another example of how BRM programming can put farmers’ futures at risk by shutting down the border. The province of Ontario implemented RMP as a pilot program for grains and oilseeds farmers. RMP payments are counted as an advance against the provincial potion of a producer Agristability payment. The Province and Ontario Federation of Agriculture have called upon the Federal Government to fund this program at the 60% level. However this program is commodity specific and creates significant countervail pressure on Canadian exports. Furthermore cost of production programs like RMP mask market signals and thereby distort farmers marketing ability. Additionally, the Federal Government is elected by the entire country and funding provided to Ontario would need to be provided to all provinces and territories. As no other provincial or territorial government have requested an RMP style program, the threshold of two-thirds of the provinces with fifty percent of production will not have been met. Therefore, the Conservative Members do not agree with Recommendations 2, 3 and 6. Conservative Members do agree with Recommendations 1, 4, 5 and 7. What Conservative Members would like the federal, provincial and Territorial governments to focus on during Growing Forward 2 consultations would be producer driven insurance programs. This expansion of AgriInsurance would allow producers to select margin covers that meet their specific price needs while remaining trade compliant. Federal and provincial governments should work closely with industry and producer associations to implement and modify plans to best meet specific producer requirements, including expanding AgriInsurance plans to additional commodities and the livestock sector. Industry-driven private sector insurance products have also been developed including Avian Influenza Policies for poultry producers in Ontario and British Columbia. While AgriInsurance provides insurance against production losses, Conservative Members also recognize the importance to the sector of effectively managing price fluctuations, and the ability of insurance mechanisms to provide timely and predictable responses. Alberta's producer-funded cattle price insurance program is one model which may provide these benefits to producers while limiting trade risks to the sector. The Government recognizes the importance of the need for insurance tools for the livestock sector and the Government will continue to support the development of private sector tools. Recommendation 1 That the Government of Canada work cooperatively with the provinces and territories in developing Growing Forward 2 and any changes to the BRM suite of programming. Recommendation 2 That the Government of Canada not fund any BRM programs that can potentially put Canadian farmers in jeopardy through countervail or other trade actions. Recommendation 3 That the Government of Canada approach its provincial and territorial counterparts during the negotiations for Growing Forward 2 to add a set of trade-compliant AgriInsurance price options like the Alberta Cattle Insurance Program. |