Dear minister: Here's how business risk management programs are not working

The Liberal Member of Parliament who chairs the House of Commons’ agriculture committee has written a letter to his colleague who serves as agriculture minister pointing out the flaws in the government’s business risk management (BRM) programs for agriculture.

The agriculture committee has been studying the federal government’s suite of risk management programs, which includes AgriStability, AgriInsurance, AgriInvest and AgriRecovery, since late February. Between May 5 and June 5, the committee also looked at the government’s response to COVID-19.

In a letter to Agriculture Minister Marie-Claude Bibeau, Pat Finnigan, who chairs the ag committee and serves as MP for the riding of Miramichi—Grand Lake in New Brunswick, calls agriculture “a cornerstone of the Canadian economy,” noting it contributed over $143 billion to Canada’s GDP and employed one in eight workers in 2018.

He also points out it’s a sector that involves major risks — extreme weather, fluctuating global markets, non-tariff trade barriers, labour shortages, animal diseases, and transportation challenges.

“The impacts of the COVID-19 pandemic on Canada’s food supply chain add to these pre-existing risks, but also highlight the structural weaknesses in the current BRM programs,” he writes.

From there, Finnigan summarizes some of the main concerns and suggestions made by farm groups that presented to the committee, including the reasons why many farms do not participate in AgriStability.

“Many witnesses explained that this limited participation rate (in AgriStability) is the result of the administrative burden imposed by the program. They argued that application processes need to be simplified. The witnesses also called for payments to be issued faster. The Union des producteurs agricoles reported that payments can sometimes take up to 18 months to arrive,” he writes.

Stakeholder groups also requested the reference margin for triggering AgriStability support be raised from 70 per cent back to 85 per cent, says Finnigan.

“Some witnesses asked that the program’s coverage level be also increased and that the limits on the reference margin based on allowable expenses be removed. The latter measure would improve funding access for industries that generally have lower expenses, such as businesses in the beef, horticulture or beekeeping sectors that cannot fully benefit from the program because they typically have lower allowable expenses,” he notes.

Farmers that were hoping to see some of these changes only have a few more days to decide whether they’ll participate in AgriStability in 2020, as July 3 is the deadline for enrolling.

In the last year and half, two of the Canadian government’s most significant farm support announcements have involved boosting loan amounts available to farmers, by raising the maximum in the Advanced Payments Program last year and increasing Farm Credit Canada’s lending capacity in response to COVID-19.

Ultimately, Finnigan says many farm groups point out “debt is a serious problem for many farms and that new debt is not a viable long-term solution for the sector.”

“They urged the government to develop risk management programs that do not involve debt,” he tells Bibeau.

“We encourage the Government of Canada to consider new concept BRM programs that will address the complex diversity of agriculture and any new program that will assist in creating local, stable and secure food production for all Canadians,” says Finnigan.

Business risk management reform was to be discussed at the annual federal-provincial-territorial agriculture ministers meeting in Guelph, Ont. in July, but the conference has been postponed to October due to COVID-19.

“We hope this letter will help you better address the concerns of the agriculture and agri-food sector… so that more effective, flexible, timely and equitable programs for farmers can be developed,” says Finnigan in conclusion.

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