Canadian livestock producers say existing risk management programs aren’t working for their operations.
In particular, representatives from the Canadian Cattlemen’s Association and the Canadian Pork Council singled out AgriStability during recent meetings of the parliamentary Agriculture and Agri-Food committee.
AgriStability largely operates based on reference margin limits, but many cattle and pork producers have low eligible expenses, meaning their margins must drop further than other commodities before triggering payments from the program.
Producers are continuing to lobby the federal government to make changes specifically to the AgriStability program. The program is meant to provide support for farmers when they experience large declines in farm income, but producers argue the payout trigger remains too low and is not benefiting them.
Before 2013, payments were triggered when a farmer’s reference margin dropped below 85 per cent, but a change by the Harper government that year — made with agreement from the provinces — resulted in payments being triggered when reference margins dropped to 70 per cent.
(The reference margin is a farm’s average over five years, excluding the highest and lowest earning years.)
Both organizations echoed the majority of previous witnesses who have testified before the committee in calling for reference margins to be lifted from the current 70 per cent to the pre-2013 level of 85 per cent.
They also want to see a removal on payment caps being made under the program and the removal of reference margin limits.
“The combination of a $3-million-per-farm cap and the reference margin limit means the program struggles to meet the needs of both larger farms and smaller diversified operations. It neither helps to manage a disaster or stabilize incomes,” read the pork council’s written submission to committee members.
Beyond the immense challenges brought on by COVID-19 to pork producers, they argue the current suite of BRM supports being offered by Ottawa do not have the ability to respond to a potential outbreak of African swine fever in Canada.
While 2020 was expected to bring in positive returns for about six months, the industry has instead experienced consecutive months of losses.
“We plan our farm for positive results, we do everything we can and then there are things that come our way that destroy that positive cash flow and create a loss,” said Rick Bergmann, chair of the Canadian Pork Council, during his June 19 appearance at the digital committee meeting.
He said that when AgriStability payments are triggered for pork producers, it means they are already on life support and “have no time to wait.”
In their written submission, the Canadian Cattlemen’s Association said the industry could still be facing upwards of $500 million in revenue losses by the end of June, and argued current measures to support the industry from Ottawa “are not sufficient.”
Regarding the current suite of BRMs offered, the CCA echoed others in arguing the reference margin limit and payment caps under AgriStability should be eliminated, while the trigger for payments should be raised to 85 per cent.
“These enhancements would help beef producers across Canada manage impacts of COVID-19 by improving coverage of price and production risk and providing more equitable treatment of farms under the program,” read their submission.
Charlie Christie, a CCA director, told MPs the federal government should make the current Western Livestock Price Insurance Program (WLPIP) permanent, rather than be dependent on renewal each time federal and provincial governments renegotiate agricultural funding agreements.
“We know that the cattle industry benefits greatly from the utilization of this program,” he said.
The association argued the government should also consider backstopping some of the costs of that insurance to alleviate some of the risk – specifically during times of volatility when premiums are high.
Christie also took aim at another BRM program: AgriRecovery. About $50 million in funding under that program was earmarked to pay for a set-aside program for cattle producers, allowing them to keep their animals longer before marketing and help mitigate temporary closures of processing plants.
“From a beef industry viewpoint, it falls quite a bit short of what we need to maintain a thriving industry,” Canadian Cattlemen’s Association president Bob Lowe said in early May, after that funding was announced as part of the federal government’s response to the pandemic. “Fifty million for set-aside, it’s definitely needed, it’s there, but unfortunately we used it up a number of weeks ago.”
Christie repeated that sentiment to MPs during his June 23 appearance before the committee.
“In my opinion, that will be a drop in the bucket on a pretty big problem that we have,” he said.
As of mid-June, 130,000 head were still backed up, despite the set-aside funding.