“It would be a
bilateral agreement between the producer and the national government.”
– BRYAN FERRISS
Aproposed new farm income stabilization program developed for the Manitoba Pork Council is being touted as a solution to chronic problems with existing programs.
The insurance-based program would incorporate production costs in the payment formula to help compensate for significant declines in producers’ financial margins.
Called AgriStability Plus, it would be a voluntary companion program to the present AgriStability program.
The significant difference between the two is that AgriStability is margin based while AgriStability Plus is a cost-of-production model.
AgriStability Plus is intended as a national whole-farm program applied to all commodities. But it would be particularly helpful to Canada’s income-ravaged hog and cattle producers.
“If this program were in place today, we wouldn’t have the short-term crisis that we have right now,” said Bryan Ferriss, a Manitoba Pork Council director.
“If you had a loss, you would be compensated for that.”
The Manitoba Pork Council board of directors has endorsed the plan in principle.
AgriStability Plus is seen as an insurance-based program with producers paying the full cost of the premiums, said Ferriss.
“It would be a bilateral agreement between the producer and the national government. The producer would be responsible for the premiums and we’re proposing that the national government would underwrite it as an insurance program,” he said last week.
Ferriss and the program’s main author Murray Downing, a Reston grain and oilseed producer, were in Regina presenting the idea to the Canadian Federation of Independent Business.
The plan aims to correct farmers’ main problem with AgriStability, which is it does not consider long-term losses.
The problem is especially acute among cattle producers still suffering from BSE fallout and hog farmers caught in a four-year market downturn.
“One of the criticisms of the current program is that as losses mount over the years, support decreases,” says a discussion paper available at www.manitobapork.com.
“The AgriStability Plus program would address the issue. By using the cost of production approach, support levels would not drastically alter in years where income is severely reduced, as long as production is not also reduced.”
The proposed program would calculate a cost-of-production benchmark representing the average return per unit. A reference COP would be based on a previous five-year average COP with the highest and lowest years dropped.
The calculation would omit the year immediately preceding the claim on the grounds that farmers may not have all the information necessary to calculate the COP for that year.
Eligible expenses would represent 60 per cent of producers’ actual costs. To determine a support level for crops, the total acreage for each year is multiplied by the total “crop basket” expense per acre.
A payment is triggered when the program year margin falls 15 per cent or more below the reference year margin to a maximum of 70 per cent of the margin decline.
For livestock operations, the production unit is based on the number of pounds produced on the farm, not the number of head.
Downing and Ferriss say they hope to gain support among farm groups before the next federal-provincial agriculture ministers’ meeting in July when the group will discuss an ongoing review of existing business risk management programs.
The Canadian Federation of Agriculture already has a policy favouring the idea of including COP in reference margins for farm programs.
Ferriss said the concept should appeal to government because payments would be predictable and program money could be budgeted for in advance. [email protected]