Manitoba Agriculture Minister Blaine Pedersen has asked his department for ideas on how to replace AgriStability with an enhanced AgriInvest program.
Some frustrated farmers say it might be better to scrap AgriStability in favour of something else.
Pedersen, who has called AgriStability “a broken wheel,” doesn’t disagree.
“There’s lots of challenges with AgriStability so let’s look at something and try and put something out there,” Pedersen said in an interview March 6. “We can just stand around and kick the dust and say AgriStability doesn’t work, or we can put something out there, and if it’s not accepted, OK, but let’s try.”
AgriStability payments originally were triggered when a farmer’s reference margin fell below 85 per cent, but in 2013 the Harper government, with the backing of the provinces, cut it to 70 per cent. Many farmers had already found the program complex and complained payouts were too slow, but they say the lower trigger makes AgriStability all but useless except under disaster conditions.
The ‘reference margin’ is a farm’s five-year-average program margin, leaving out the lowest and highest program margins a farm reported during that stretch.
The last eight years farm groups have lobbied Canada’s agriculture ministers to restore the 85 per cent trigger, to no avail.
“It’s almost like they’re kicking the can down the road until the end of the funding and they will see who is in government and whether they have to deal with AgriStability,” Keystone Agricultural Producers president Bill Campbell said in an interview March 3.
AgriStability is complex and unpredictable, which means farmers can’t plan and neither can their lenders, Pedersen said. Going back to the 85 per cent payout trigger doesn’t change that, he added.
Pedersen wants his officials to investigate what might be done with AgriInvest if AgriStability funding was transferred to it.
Currently AgriInvest is a self-managed farmer-government savings account designed to help farmers manage small income declines and make investments to manage risk and improve market income.
Each year farmers can deposit up to 100 per cent of their ‘allowable net sales’ to their AgriInvest account and receive a matching government contribution on one per cent of their allowable net sales. The account also earns interest.
Farmers can withdraw from their AgriInvest account any time. But they must first take government contributions and interest, which is taxable.
AgriInvest has a lot of advantages, Pedersen said, including its simplicity and flexibility giving each individual farmer direct control over how and when to use the money.
Pedersen doesn’t know what his staff will come up with, but he hopes it might be possible for farmers to invest some pre-tax earning into a revamped AgriInvest plan.
He gave an example how it could help one cattle producer he knows who normally keeps his calves and sells them as yearlings. But due to drought in 2019, and a shortage of feed, he will have to sell this year’s calves and yearlings, resulting in higher-than-normal revenues and income taxes. It would help if he could put some of that revenue into AgriInvest and then pull it out to bolster his income later while offsetting a tax hit brought on by bad weather.
“I’ve challenged my department to come up with something,” Pedersen said. “It is running some scenarios. I don’t know what the numbers are. We’ll have to look at the numbers and the costs too. I’ll be getting that shortly… It may not even be feasible, I don’t know.”
Manitoba hopes to have some information to share when deputy agriculture ministers meet next month.
“We want to take this proposal forward in some shape or form to there and then in July when the ag ministers meet we can hopefully have something fleshed out better,” Pedersen said. “In the meantime I’ll talk to my counterparts to give them time to look at it.”
One possible shortcoming with AgriInvest is if farmers don’t have money saved up when bad times hit. But Pedersen said funds could be built up faster if AgriStability funding was transferred over.
Another hurdle Pedersen acknowledged is getting farmers to withdraw AgriInvest funds.
“Some, not all, are looking at it as a retirement fund and we need to get away from that,” he said. “Some farmers may have significant money in AgriInvest and yet they are talking about wanting money out of AgriStability. So how do we meld the two? We’re halfway through the five-year (federal-provincial Canadian Agricultural Program) agreement right now. We need to be working right now on proposals for what’s going to be in the next federal-provincial farm agreement.”
KAP’s Campbell says his organization supports improving AgriInvest, but doubts any substantial changes will occur before the current CAP expires in 2022.
“And this (AgriStability) is the program we have to deal with,” he said.
In 2013, there were 7,015 Manitoba farmers enrolled in AgriStability, Manitoba Agriculture said. In 2015 enrolment fell to 5,867 — a decline of 1,147 or almost 16 per cent.
During the same period AgriInvest enrolment in Manitoba dropped just three per cent.
In July 2017 Canada’s agriculture ministers agreed to a comprehensive review of business risk management programs, including AgriStability, with possible changes being implemented April 1, 2019, but with the proviso no more money would be spent. And they are still studying it.