Changing AgriStability to more easily trigger farm support payments isn’t the best bang for the buck, says Manitoba Agriculture and Resource Minister Blaine Pedersen, especially when so many other sectors are suffering due to COVID-19.
“If AgriStability isn’t working now, throwing more money into it is not necessarily the answer to it, so what else is there?” he said in an interview Oct. 29, responding to the Keystone Agricultural Producers’ (KAP) ongoing efforts to improve AgriStability.
At KAP’s Oct. 20 advisory council meeting president Bill Campbell said the general farm organization continues to push for AgriStability payouts when farmers’ margins fall below 85 per cent instead of the current 70, and for the elimination of reference margin limits.
Consultations are underway to make short- and long-term changes to AgriStability, KAP general manager Patty Rosher told the meeting,
“There just is no more money for agriculture, so they (Manitoba government) are looking for cost-neutral changes to the program to make it more effective,” she said.
Rearranging the cost sharing of AgriInsurance and AgriInvest, as well as reducing the farmland school tax rebate cap, currently at $5,000 per landowner, are being considered, Rosher said.
Asked about that Pedersen replied: “There are some proposals out there being pushed around.”
Why it matters: Since the AgriStability payout trigger was cut to 70 per cent by the Harper government in 2012, KAP and most other Canadian farm groups have lobbied to change it back, arguing it doesn’t provide the income support farmers need.
In previous interviews Pedersen said AgriStability is flawed, in part because of its unpredictability, and inability to help farmers with cash flow.
His view hasn’t changed. What has, is the downturn in Manitoba’s economy due to COVID-19.
“I can tell you there are a lot of industries that would really like to see an income stabilization program,” he said. “You want to be in the hospitality industry right now? You want to be in the tourism industry right now?
“Yes, we know food is basic to everybody, but let’s look at it as an industry here and how do we move forward on this. And what we keep asking KAP to do is to look at the long term on this.
“There are some real challenges coming here. We can’t have agriculture in isolation here. Agriculture is a big part of our economy, and it’s doing well, but how do we look at it in terms of long-term stability here?
“There is a pool of money here that we use to stabilize farm income. Is it being used to its best advantage right now? Think outside the box here. What else can be done?”
Manitoba isn’t alone in its opposition to reforming AgriStability, Campbell said, pointing to Saskatchewan and Alberta.
“We understand… their financial commitment or liability (is a concern)… but if there is a healthy ag industry we don’t need AgriStability payments,” Campbell said. “It’s only when there are situations in the ag industry where we rely on that.”
Still, governments have to budget for those potential payouts, Pedersen said.
Agriculture is important to Canada’s economy, and will be especially important post-COVID, Campbell said. But there are so many factors outside a farmer’s control that can hurt margins, he added.
“We rely on these exports and trade and I don’t feel it’s agriculture’s fault that these particular trade agreements are not being followed through and adhered to,” he said. “That is the role of the federal and provincial governments. If they’re not doing their job, should they provide compensation through BRM (business risk management) programs? And when we see other jurisdictions (U.S.) look after their ag industry that we have to compete against, how do we remain competitive? How do we stay in business?”
The Trump administration sent American farmers US$7.6 billion in COVID aid in the last four weeks alone, the publication Ag Insider reported Oct. 26.
That brings total COVID relief payments to American farmers to almost US$18 billion.
That’s about half of the record US$37 billion in subsidy payments American farmers are expected to get this year, based on United States Department of Agriculture data. However, Ag Insider says some analysts expect total payouts could hit US$46 billion.
U.S. government subsidies are expected to provide at least 36 per cent of net farm income this year, with some observers expecting it to be 40 per cent.
American subsidies have made U.S. farmers less sensitive to market prices, resulting in them dumping corn in Canada, undercutting Manitoba prices, according to Campbell.
“The feedlots are saying, ‘I can buy American corn cheaper than what you want to sell it for,’” he said.
“It’s coming in from the states and the American producer does not care what he gets for it because 40 per cent of his revenue is coming from farm programs.”
In a March interview Pedersen called AgriStability a “broken wheel” and said ideas to enhance other farm support programs should be explored.
In June Pedersen estimated the changes KAP wants to AgriStability could see Manitoba’s 40 per cent share in the federal-provincial plan double to around $35 million a year from $19 million.
“And those numbers are based on today’s participation rates (in AgriStability),” he said. “If you change this program — we’ve talked before that it doesn’t work for the cattle — there would be much higher participation… we have no idea of how much more participation and therefore higher costs. What you’re doing is moving from a disaster program to a support program. So, yes, we have concerns about that.”
However, before the 2012 changes to AgriStability it was, as its name implies, a farm income stabilization program.
In June federal Agriculture Minister Marie-Claude Bibeau said she’d like to improve farm aid programs, but said getting provinces to agree on a plan is difficult.
“These programs — the budget and rules have been changed significantly by the previous government and now we need to build a new consensus with all the provinces with them contributing at their level as well,” she told reporters June 9. “It’s not easy to get all the provinces at the same level and us as well finding a new consensus.”
On average farm aid programs pay Canadian farmers $1.6 billion a year, she said.
“Discussions are ongoing, but it’s difficult when the federal government takes a position and hands it off to the province and the province responds or doesn’t respond and hands it off to the federal government,” Campbell said. “It seems to be a game of tennis and agriculture is kind of on the sidelines waiting to see the results of the match and that’s what makes it frustrating.”