by SUSAN MANN
Ontario’s horticultural industry leaders have developed a risk management program to help growers offset unexpected costs increases and they’re now planning to lobby governments to fund it.
It’s the fourth risk management proposal produced by a provincial commodity group since several groups began working together under the umbrella of the Ontario Agricultural Sustainability Coalition earlier this year. Grain and oilseed growers, hog and cattle producers have all developed proposals for programs and submitted them to the provincial government. The province’s sheep and veal producer organizations have yet to announce finalized plans.
In July, the provincial government backed the grain and oilseed growers’ proposal by extending its share of funding for a pilot program for one more year. To date, no other group’s proposal has received a financial commitment from either the provincial or federal governments.
Mark Wales, chair the safety net section for the Ontario Fruit and Vegetable Growers Association, says the horticultural program, called modified self-directed risk management, is much-needed, particularly since growers have been hit with several recent massive cost increases including labour, energy, fertilizer and fuel. They can’t recover these costs from the market place.
“We need a safety net program that works for everyone and meets the needs of all the different commodities within horticulture,” Wales says. “This is the one that best suits the range of types of producers that we have.”
All edible horticultural producers are eligible. Farmer contributions will be based on matching five per cent allowable net sales of eligible horticultural crops minus the seed costs. Wales says it’s the same calculation that’s used for a farmers’ contributions to their Agri-Invest account.
Farmers will be able to contribute annually and the proposal calls for matching contributions from both the federal and provincial governments as well as permitting program accounts to collect interest.
Farmers would be able to withdraw money from their accounts in years of poor crop results, sudden changes in cost inputs or price declines due to a glut of imports flooding the market. In a year when a farmer triggers a withdrawal, the proposal is for unlimited annual withdrawals up to a farmer’s account balance.
The association’s board endorsed the proposal in October. The next step is to present it to the provincial agriculture minister. Wales says they don’t know yet what the proposed program would cost governments.
Wales says farmers understand the self-directed risk management concept because Ontario used to have this type of program from the late 1990s to 2007. But governments just stopped funding it.
Susan Murray, agriculture ministry spokesperson, says it wasn’t about the provincial government starting or stopping funding for the self-directed risk management program but “what happened in 2007 was the programs changed.” Programs like Agri-Stability and Agri-Invest replaced the Canadian Agricultural Income Stabilization program.
Bette Jean Crews, president of the Ontario Federation of Agriculture, says when provincial Agriculture Minister Carol Mitchell extended the grains and oilseeds risk management program this summer it confirmed her intention to implement these programs one at a time and offered “a little glimmer of hope that she might do something just provincially but that's going to be a tough lobby."
Some people think farm leaders should ask for companion program funding to come entirely from the province, Crews says. But if that happens “never again will the federal government fund companion programs for provinces.”
Asked if the province could afford to foot the risk management programs 100 per cent, Crews says that’s not the point. “It’s about priorities. If agriculture is going to be the solution to the economy then there’s your number one priority.” BF
Comments
When people outside the farm community read comments like:
- "They can't recover these costs from the marketplace", or
- "price declines due to a glut of imports flooding the market",
they could easily conclude that farmers don't believe they have much, if any, responsibility to do anything about these sorts of problems, but that government does.
More importantly, the first thing anyone learns in business school is that if you can't recover your costs from the marketplace, you're either in the wrong business, or you're doing something fundamentally wrong, because the marketplace is NEVER wrong.
Therefore, while insurance is a good thing in any business or industry, and while I've paid into, and collected from, programs like RMP, as an ag economist I'm deeply concerned that any such program, if implemented on a continuing basis, will be immediately capitalized into either land rent, or land prices, or both, thereby leaving the taxpayers of Canada with nothing to show for their troubles except a good reason for resenting the farm community.
Stephen Thompson, Clinton ON
Unfortunately any major world coutries, eg. U.S.A have many more saftey nets and subsidization programs than canda tipping competition in an unfair way. Governments in these situations have every role to play. In addition good farming practices work but there is a weather and disease or pest evironment related risk that cannot be acounted for in a normal business strategy. To ignore agriculture is foolhardy as any good ageconomist should know. There are to many businesses aside from agriculture dependant on it to not protect agriculture. Were not looking for handouts like the auto industry. We are looking for risk stability which is good for the rest of the economy as well.
One of Canada's few young farmers, Rich Feenstra Beamsville, ON.
I don't really disagree, but since farmers know, or should know, all the things you have so-eloquently stated, we should be prepared to assume these risks as part of our normal business strategy, but for some reason, we don't, and insist government must do what we don't want to do ourselves.
Moreover, protecting agriculture, while always popular with farmers, too often results in protectionist measures which do little except ratchet up long-term expectations of continued government support, and get capitalized into asset values - resulting in more wealth for us old-guys to retire on, and increased barriers to entry, and expansion, for younger farmers.
One of the few old-guy farmers concerned about young farmers -
Stephen Thompson, Clinton ON
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