AgriStability, the whole farm, business risk management program has been in place for Canadian farmers for 16 years.
In that time, it’s been maligned and criticized, and it continues to be subject to an ongoing tug-of-war between federal and provincial politicians. But with a new ag policy framework to be unveiled for 2023, changes to the program are likely just around the corner.
Steve Funk, director of ag risk management resources at MNP, looked at the past, present and future of AgriStability last month during his presentation at Farm Management Canada’s AgExcellence Conference. Over the years, the program has received bipartisan support from politicians at all levels, and it pays out hundreds of millions to farmers, but critics say change is needed.
Overall, Funk thinks AgriStability is a good program and encourages farmers who have soured on it to take another look and reconsider. He believes most of the criticism of the program can be linked back to 2013 when the trigger point for benefits was increased from a 15 per cent loss to 30 percent loss. Another sore point was when AgriStability instituted reference margin limiting, which wasn’t well understood. Further changes were then made to address this issue, without much success.
In this interview with RealAgriculture’s Bernard Tobin, Funk notes that a good portion of the negativity toward the program can be linked to its reliance on accrual accounting methods. “When people don’t have a good understanding of accrual, or base their record keeping on a cash basis, it’s difficult to understand the concepts used for AgriStability.”
He says more training is needed for both farmers who participate in the program as well as service providers such as accountants. (story continues after the interview.)
What changes might program administrators be working on for 2023? Could farmers see a simpler and better-funded program in the future?
Funk says one option would be to replace AgriStability with a margin-based insurance program, but as the calendar turns to 2022 that doesn’t seem like a reasonable option to have ready for 2023. He believes that farmers are more likely to see tweaks to the current program, including different contribution rates that could see benefits increase from 70 cents on the dollar to 80 cents.
One thing Funk would like to see is the ability for service providers to administer the program earlier on behalf of clients. “One of the complaints about AgriStability is it’s not timely,” he says, noting that financial and income statements for the year have to be completed before program claims can be completed.
“The reality is you’re not getting your money until six months at the very least, maybe up to a year or more later,” says Funk. “I would like to see service providers attempting to do this a little earlier for clients who are in a disaster situation.”