Business risk management programs offered through Agriculture and Agri-Food Canada and provincial/territorial ministries need to change for participation to increase, ag industry leaders say.
by Taryn Milton
Farmers face many risks annually. Market volatility, unpredictable weather, high input costs and crop or animal disease are all factors that can shape yields or production levels.
Together, the federal and provincial/territorial governments aim to help farmers manage these risks through the business risk management (BRM) programs.
Farmers can choose to participate in programs like AgriStability, Agri-Invest and AgriInsurance.
AgriStability provides support when producers experience large margin decline, AgriInvest provides cash flow to help with income declines and AgriInsurance provides cost-shared insurance against natural hazards to reduce the financial impacts of production or asset losses, according to the offical program descriptions offered on the Agriculture and Agri-Food Canada (AAFC) website.
While some programs such as Agri-Invest are no-brainers for most farmers, others like AgriStability have issues that need to be addressed and changed for participation to increase, ag industry leaders say.
This month, we talk to representatives from AAFC and provincial producer organizations, as well as farmers, to learn more about the programs. We discuss how they’re working for producers and what needs to change.
History of BRM programs
“Some form of BRM programs has been in place for years, beginning with the introduction of crop insurance in the 1950s. Since then, many federal and provincial jurisdictions have developed and delivered various BRM programs,” James Watson says to Better Farming in an emailed statement. Watson is an AAFC spokesperson based in Ottawa.
In 2003, AAFC introduced the first Agricultural Policy Framework. Through this five-year policy framework, federal and provincial/territorial governments offered a consistent set of BRM programs across the country, explains Watson. New frameworks have since superseded the Agricultural Policy Framework, including Growing Forward (2008-13) and Growing Forward 2 (2013-18).
Currently, the programs run under the Canadian Agricultural Partnership. This framework started in 2018 and runs until March 31, 2023.
“These policy frameworks guide the overarching policy principles and are agreed upon by federal, provincial, and territorial governments, ensuring that programs are consistent across sectors and regions. The framework also establishes overarching principles, such as respecting trade obligations, maintaining equitable programming nation-wide, and minimizing distortion of production and marketing decisions.”
As they have unveiled new frameworks, the governments have shifted their goals for the BRM programs.
“The focus of the BRM suite of programs has shifted from providing general safety nets for income sta-bilization, to-wards assisting with severe market volatility, severe losses and disasters,” says Watson.
In 2017, approximately three-quarters of all Canadian producers participated in at least one of AgriInvest, Agri-Stability or AgriInsurance, according to the 2017 Statistics Canada Farm Financial Survey.
Nationally, producer participation varies by program and by year. In 2017, AgriInvest covered 97 per cent of mar- ket receipts and AgriStability covered 54 per cent of market receipts. In 2018, farmers insured 69 per cent of all non- forage production under AgriInsurance, says Watson.
Participation in Western Canada also varies by the program, but a trend exists across the three provinces.
In Saskatchewan, AgriInsurance and AgriInvest are well used. AgriStability on the other hand, doesn’t have high participation.
“Less than 40 per cent of farmers are actually signed up for” AgriStability, says Todd Lewis. “There are a lot of issues with understanding if you’re going to get a payout, what triggers a payout, etc.”
Lewis serves as president of the Agricultural Producers Association of Saskatchewan (APAS) and is a grain and oilseeds farmer near Gray, Sask.
In the past, more producers participated in AgriStability. That figure has declined in recent years.
“I believe it was five years ago they changed the reference margin and the percentage of pay out. Those changes really affected the ability of a producer to trigger a payment and lots of producers just pulled out of the program after that,” Lewis tells Better Farming.
A similar narrative exists for Alberta. More farmers participate in AgriInvest and AgriInsurance than in AgriStability.
“Last I heard, the AgriStability participation rate was less than 50 per cent,” says Lynn Jacobson. “For a lot of people, the AgriStability program just doesn’t work. Farmers have dropped out or they are dropping out as they go forward because the coverage level just basically … doesn’t really cover anything here. If you reach that level, you’re probably broke.”
Jacobson is president of the Alberta Federation of Agriculture and a grain farmer near Enchant, Alta.
In Manitoba, producers have high participation in AgriInsurance and AgriInvest. In contrast, AgriStability has around 30 per cent participation, says Bill Campbell. He is the president of the Keystone Agricultural Producers and a grain and cattle farmer near Minto, Man.
While western Canadian producers’ participation in AgriStability isn’t high, some farmers still enrol.
Assar Grinde is a cattle farmer in the Bluffton area of Alberta. He runs a cow-calf operation and backgrounds his calves with help from his mom Virginia and wife Debra. Grinde uses the AgriStability program.
“I see it almost like a disaster insurance. It doesn’t cost very much, and I guess the advantages of being in it are more than the hassle of being part of it,” Grinde tells Better Farming.
Grinde sees some issues with the program but has decided to stay with it, he says. He is involved in AgriInvest and participates in AgriInsurance through Agriculture Financial Services Corp.
Colin Penner is a grain farmer near Elm Creek, Man. He farms with his wife Lori, parents Calvin and Gloria, brother Scott and sister-in-law Andrea. The family are involved in AgriStability, for now.
“We’re not convinced (the program) is one we should be a part of but, every year, our accountant convinces us that we should maybe stick it out one more year,” he tells Better Farming. “I think AgriStability works really well for farms that aren’t diversified and aren’t trying to manage their risk already. We grow nine crops on our farm … and the likelihood of AgriStability ever paying out on our farm is very small unless a disaster occurs.”
Penner is involved in AgriInsurance through crop insurance and is in favour of the program. He is also enrolled in AgriInvest.
“I see AgriInvest as an absolute no-brainer. As a farmer, you should be involved in AgriInvest. You need to do a bit of paperwork but, really, it’s not that difficult,” he says.
What needs to change?
Farmers across Western Canada agree the programs are necessary.
“All the programming is there for a rainy day and the governments (and producers) have clearly seen it’s a worthwhile investment. Agriculture is a cyclical industry. So, we need good programming that can get farmers through tough times,” says Lewis.
“The whole idea is to bring stability so you can get through the tough times, contribute in the good times, pay your taxes and be part of an economic model.”
However, the governments must make some changes to the programs to help farmers in the hard times, some industry representatives say.
Many farmers ask for the AgriStability trigger limit to return to 85 per cent from the current 70 per cent.
The government could make this change in the trigger across the board or perhaps give producers the option to pay “to increase the trigger level to 85 per cent,” says Grinde. This move would help to stabilize income.
Timing is also an issue with AgriStability, says Lewis.
“After an AgriStability payment is triggered, it can take 18 months to see the final payment. We need to see that payment quicker. The old kind of black humour in farm country is that, if you collect AgriStability, you might receive the cheque six months after you receive your cheque from the farm auction sale,” he says.
The AgriStability program is costly – both for farmers to participate in and for the government to administer, Jacobson tells Better Farming.
It costs a producer between $2,000 and $3,000 for their bookkeeper to do all the administrative work, he adds.
Each province’s crop insurance program administers AgriInsurance in their area, so challenges differ by province. In Alberta, timeliness is at the forefront.
“If you have a large area affected by a big hailstorm, it has always been an issue for people to be able to turn around and get crop insurance representatives to decide something right away so farmers can have an opportunity to seed another crop or do something different,” says Jacobson.
While crop insurance in Manitoba is a good program, farmers have highlighted the need for more enhanced coverage, says Campbell.
While many producers say AgriInvest is a strong program, some farmers would like an increase in the limits.
“AgriInvest works well for a medium-sized farm. The program is capped at $10,000, so the small farms aren’t going to max it out.
“The medium-sized farms are going to be closer – they’re going to maximize it. But the large farms that are 5,000, 10,000, or 15,000 acres are too big (for the current program). They’re not really going to be able to maximize that,” says Penner.
“AgriInvest would be great if we could have a higher limit. Instead of $10,000, if we could have a $50,000 limit per year, that would be fantastic.”
Even with the issues surrounding the BRM programs, they remain important.
“You need something that adds some sustainability to the industry,” says Jacobson. Farmers “really don’t have the ability to react to different world conditions. We put in a crop at the first of the year, and we’re not really price-setters. Rather, we’re price-takers. So, we’re looking for programs that add some stability to our industry that people can count on.”
AAFC staff are working with provinces, territories and producer groups to make improvements to the BRM programs with a focus on AgriStability, says Watson.
“As we review the full range of BRM programs, we are focused on ensuring producers have a suite of programs they can rely on when they face extraordinary situations. We want programs that are understandable and bankable, and that respond quickly in times of need,” he says.
Producer groups commend the government for recognizing the issues with the BRM programs, but some industry leaders are getting frustrated with the delays in enacting changes.
Government of Canada representatives “recognized that a problem existed. (APAS reps have) been pointing these problems out and haven’t seen many changes that are really significant, especially on the AgriStability side. So, it’s been disappointing, and farmers are getting pretty frustrated,” says Lewis.
Discussions regarding BRM programs are ongoing among federal, provincial and territorial ag ministers.
“Hopefully we see some movement and see transparency,” says Lewis. “If there are going to be some improvements, (officials should) start making them so producers can make decisions (based) on the business model, as far as which programs they want to continue to participate in.” BF