Delays plague risk management program

Tuesday, November 22, 2011

by SUSAN MANN

It could take two years for farmers to receive payments under the AgriStability program after suffering an income loss, according to the fall 2011 auditor general’s report.

A recent analysis of payment timeliness conducted by Agriculture and Agri-Food Canada shows that 55 per cent of producers were paid within nine months following the year of a loss and 85 per cent are paid within 19 months after the year of an income loss, it says in the report released Nov. 22.

“The department has completed some analysis to identify the causes of program delays,” the report says. “However it has not systemically followed up on the causes of delays and identified remedies to accelerate payment timeliness.”

There is an interim payment option as part of the AgriStability program. This gives farmers earlier access to 50 per cent of their estimated payment. But not many producers take advantage of that program feature.

Lack of timely access to program funding was one of the long-standing concerns with the government’s income support programs that John Wiersema, interim auditor general, identified in his report. The others were unclear program objectives and such complex program design that it affects farmers’ ability to reasonably predict payment amounts.

Ontario Federation of Agriculture president Mark Wales says the concerns in the auditor general’s report are the same ones farm leaders have been raising during the Growing Forward 2 consultations that have been taking place for the past one and a half years.

The current agricultural policy framework called Growing Forward is set to expire on March 31, 2013. Discussions are now ongoing to design a new set of programs for the new agricultural policy framework called Growing Forward 2.

“None of these are new concerns,” Wales says. But it’s great Wiersema is highlighting them because he has a non-partisan point of view. Wales adds that farm leaders have made many recommendations to improve AgriStability to make the program more transparent, accountable and predictable.

The report notes the federal agriculture department is aware and has identified concerns with its income support programs. And federal, provincial and territorial governments have made some efforts to improve the design of programs by, for example, introducing AgriInvest.

AgriInvest is built around savings accounts with producers’ deposits matched by government contributions. AgriStability is a way more complex program designed to protect against larger income drops. Payments under this program are based on specific farm information, such as number and type of crops and livestock plus farm sales and expenses over a number of years.

In 2008, AgriStability and AgriInvest replaced the coverage previously provided under the Canadian Agricultural Income Stabilization program. The costs of the two programs total $1 billion annually and are funded 60 per cent by the federal government and 40 per cent by the provinces. For the 2009/10 fiscal year, the federal agriculture department spent about $15 million administering AgriInvest and $40 million administering AgriStability. The provinces spent $44 million to administer AgriStability in the same year.

To address the long-standing concerns with these income support programs, Wiersema recommended the federal agriculture department work with provinces and territories to help increase producer’ and stakeholders’ understanding of the objectives and tradeoffs of the programs and to clarify governments’ and producers’ responsibilities for managing farm risks.

In the report, Agriculture Canada agreed with that recommendation and said it would implement it as part of the new set of income support programs in Growing Forward 2.

Agriculture Canada officials couldn’t be reached to comment on how the department would be implementing the auditor general’s recommendations. BF