Canada’s current business risk management programs must change if multi-year droughts continue, says the national risk management lead at Farm Management Canada.

Mathieu Lipari said the existing suite of programs was designed as a safety net for shocks — not for prolonged, recurring dry cycles. AgriStability, for example, wasn’t built for multi-year water shortages. A drought of several years causes lower reference margins, which reduces future payments even when losses continue.

“The more your reference margin goes down, the lower your payments are going to be in future years, even if you do have an event that causes you to have a lower margin,” said Lipari.

WHY IT MATTERS: Some Prairie regions have been dry for a number of years —including pockets that are nearly a decade into drought. Canada’s BRM programs are currently under review as part of the regular agriculture policy framework cycle, making this a critical moment to push for structural changes before the next framework is locked in.

Crop insurance during a drought pays out well at first, but then higher premiums follow, and a period of lower yields affects the long-term average and coverage.

AgriRecovery — the framework that allows provinces to request assistance under exceptional circumstances — is not intended to cover an ongoing event.

“So if it becomes more common to have droughts or more severe droughts or more prolonged droughts, then that will decrease the intervention of AgriRecovery,” Lipari said.

A warming climate, a drier Prairie

David Sauchyn, head of the Prairie Adaptation Research Collaborative at the University of Regina, said drought is a natural phenomenon on the Prairies — but it is now occurring in a warmer climate.

“It’s not caused by climate change, but it’s occurring in a warming climate,” Sauchyn said.

The strongest evidence of that warming is showing up in nighttime temperature data. At Red Deer, Alta., temperatures at night have risen by more than four degrees in the past 100 years. In Lloydminster, there have been only two winters since the 1990s when the nighttime temperature average has been greater than -20 C.

“We are losing the advantage of our cold winter in terms of our major water supply, which is snow,” Sauchyn said.

The growing season is getting longer as a result — but the prospect of greater production from that extended window is tempered by the low yield losses that come with drier conditions.

“Drought has and will always limit productivity on the Prairies,” Sauchyn added.

Sauchyn noted that farmers continue to report producing good crops despite both too much and too little moisture — evidence, he said, that they have already adapted their practices significantly.

Lipari said governments have already made some adjustments. AgriStability’s compensation rate has increased from 70 to 90 per cent, at least partly in response to drought concerns. In Alberta, the government updated its ‘normal’ moisture levels for crop insurance to reflect drier conditions, and some provinces increased low-yield allowances so farmers could salvage crops for feed.

The shadow of 2021

That 2021 figure came with payments from other programs on top, adding up to a significant total impact. But Lipari noted it was still essentially a single-year event — exactly the kind of shock the current system was designed to absorb.

“This system is really built on the assumption that we have, once in a while, a severe drought,” Lipari said.

The right approach to risk

Lipari said the programs will fall short because of backward-looking pricing. Using historical data during recurring drought will diminish the ability of the programs to help. Structural drought will result in lower crop insurance coverage, higher premiums and a limited disaster response through AgriRecovey.

He said there has to be a balance between proactive and reactive risk management. A report from Farm Management Canada and the Canadian Agri-Food Policy Institute released last fall explored this concept.

“The first line of defence in our mind in our mind is the farmer when it comes to these types of risks. And as much as the BRM suite is important as a safety net, there’s a need to reduce some of the dependency on these reactive responses,” Lipari said.

Farmers will have to take adaptive measures in a drier pattern, but the programs themselves could also be adapted to reflect the shift.

“The key here is that our main shift should be from paying after there’s been a loss to reducing the vulnerability,” he added.

Lipari said there could be incentives for water-smart practices and support to shift toward more drought-resistant farming. Sharing data to establish benchmarks, he said, will be a necessary part of making any new approach work.

Key takeaways for Prairie Producers

• Canada’s BRM programs — AgriStability, crop insurance, AgriRecovery — were designed for one-time drought shocks, not multi-year dry cycles

• The longer a drought runs, the less effective each program becomes: reference margins fall, premiums rise and AgriRecovery coverage shrinks.

• In 2021, crop insurance alone paid out $6 billion in yield loss claims — mainly in Saskatchewan and Alberta — in a single-year event.

• Experts say the system needs to shift from paying for losses after they happen to reducing vulnerability before they do.

• BRM programs are under review in the current agricultural policy framework cycle — a window to push for structural change.

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It would likely put business risk management spending under the microscope as costs have soared in recent years, and the leaders of both major parties currently campaigning to be prime minister are talking about spending less.

“It is worth noting the cost of the BRM suite effectively doubled between 2019-20 and 2023-24,” said CAPI managing director and co-author of the report Tyler McCann. “The cost to Agriculture Canada alone for their 60 per cent is over $2 billion, most of that because of the increased costs of crop insurance.”

‘Sacred cows’

The report notes, however, that BRM programs are “sacred cows” that both farmers and politicians would like to preserve. It said the question is not just how much is spent but how effective it is spent.

“To the crop insurance cost, I think that the industry itself needs to understand that we’re living in a world today where the impact of the trade war that we’re in could do more harm to farmers than a drought does, but we have a significant substantial BRM program to respond to drought, but we don’t have a substantial program to respond to trade wars,” McCann said.

Federal agriculture spending flows through several channels. For example, the department itself had a budget of about $4.2 billion in 2024-25, but there are other organizations such as the Canadian Food Inspection Agency and Pest Management Regulatory Agency that are funded through other departments.

McCann said the Sustainable Canadian Agricultural Partnership is usually referred to as a $3-billion program, but it’s cost-shared and doesn’t include the BRM suite.

“That ag policy framework is actually a $15-billion initiative, and probably on track to be more than now, because of the significant cost of the BRM suite,” he said. “I think we need to be more transparent and understand that there are significant implications of that spending.”

There are questions about the sustainability of the crop insurance program, although government rarely says that out loud, he said. The report said everything should be on the table for review, including the sacred cows and politically sensitive programs that are often off the table.

“This status quo bias can perpetuate inefficiencies and prevent the reallocation of resources to more effective or innovative initiatives,” the report said. “Audit reports consistently highlight problems and gaps, yet these findings often fail to translate into meaningful changes, instead gathering dust on shelves.”

How effective is the spending?

Despite this substantial support for agriculture stakeholders always call for more. A review would look at how effective the spending is rather than just the funding level.

The report, co-authored with Elisabeta Lika, suggests the review proceed the way it did during the Jean Chretien government of the 1990s when it applied a test across government to assess its role and value for money. This differs from the last review of the across-the-board cuts through Stephen Harper’s Deficit Reduction Action Plan completed in 2012.

The 1995 program review used six-test methodology to make decisions, beginning with the question of whether a program continues to serve a public interest. If the answer was no, it was abandoned or transferred.

If yes, the question became if there was a legitimate role for the government, followed by whether it should be federal or provincial government, if the activities could be transferred to the private sector, how it could be more efficient and finally, if the result is affordable within fiscal restraint.

McCann and Lika applied the six tests to several areas of agricultural spending, noting the challenges of federal-provincial-territorial relations and business risk management programs, along with what they called hidden complexities of the role of the department and public goods, climate change, market volatility and supply chain issues, and program cycles and performance measurement gaps.

McCann said a program review undertaken right away would allow enough time before the next version of the agricultural policy framework is negotiated and launched in 2028.

The authors reviewed AgriInvest specifically and found it probably doesn’t pass the public good test, he said, because it is intended to help producers manage small fluctuations that a typical business should be able to manage.

“Similarly the examination of on-farm programs (On-Farm Climate Action Fund, Agricultural Clean Technology Program) highlights potential duplication with provincial efforts,” the report said. “The lack of clarity between federal and provincial roles has increased as AAFC has shifted to funding more on-farm activities.”

But the historic practice is to let provinces lead, meaning the programs don’t pass the federalism test, McCann said.

Funding innovation

In the area of innovation, McCann said there is a strong case for government to fund it but in a different way.

“The last example we use is trade and market access. Given the climate that we’re in, if anything there’s a greater public role and opportunity to actually spend more in that space than they’re spending today,” he said.

McCann added the context of a trade war with the United States puts extra pressure on the need for review because everyone requires a clear sense of whether programs align with priorities, meet the test of the moment, or if governments are providing them just because they have been for 30 years.

“We don’t often have this conversation in agriculture and we do live in a reality where often the response is always, ‘we need government to invest more.’ I think there is a strong argument to be made for governments to invest more in the ag space, but I think before we do that we need to really look at what they’re spending today already and ask ourselves the questions around is it being spent the right way and are we getting the right result.”

He said typically the reviews happen behind closed doors and CAPI would like more of this discussion out in the open.

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“We hope to see it kind of nationwide as long as the pilot shows benefit to our industry, whether that’s reflecting pasture costs in the eligible expenses or looking at how they do the valuations of hay inventory,” said Manitoba Beef Producers general manager Carson Callum.

“Various things that have kind of been stated to be looked at in that pilot would be deemed beneficial in Manitoba.”

Why it matters: The beef sector has long argued that ineligible expenses and margin realities make AgriStability less useful for them.

The Agriculture Financial Services Corporation (AFSC), which delivers AgriStability in Alberta, estimates that Alberta cow-calf producers would have received 66 per cent more support over the last 11 years had certain feed and pasture costs been fully covered under AgriStability.

Gaps in eligible expenses have led the agency to launch a fact-finding mission using real farm data. It hopes to identify how those gaps could best be filled.

Under the pilot, registered producers will provide AFSC with financial records on their 2023 income, expenses and year-end inventory. That data will then be analyzed, and AFSC staff will sit down with each farmer to run through options on how feed and pasture costs could best be captured into AgriStability, said Stuart Chutter, senior policy advisor with AFSC.

That analysis will include payment calculations under various methodologies to help single out the most responsive and appropriate program changes to suggest.

“It will help identify deficiencies and refine the ideas before substantial resources are potentially committed to full scale implementation,” Chutter said.

An improved AgriStability system would have provided “a more proactive, dependable tool to cow-calf producers” in recent disaster drought years, he noted. Instead, the sector was forced to rely on AgriRecovery, an ad hoc program.

It is Chutter’s hope that farmers with a broad range of feeding styles will sign up so the pilot can properly capture the realities of those management systems. Producers do not need to be enrolled in AgriStability to participate, allowing AFSC to capture the input of cow-calf producers who have left the program.

“I specifically want participation from producers who have left the program or who have not seen adequate support from the program or do not feel they’re receiving adequate support from the program,” said Chutter.

Callum described the project as a “paper pilot,” which will hopefully yield results for this summer’s meeting of federal, provincial and territorial agriculture ministers.

BRM gaps

AgriStability, described as a margin-based, whole-farm tool to protect farmers against declines that threaten a farm’s viability, is one of several joint federal, provincial and territorial BRM programs delivered by provincial providers.

Livestock sectors say it is not suited to their needs. In particular, the beef sector has criticized the program for excluding costs that include winter feed and pasture.

“Commodity purchases like hay or grains are eligible, but rent costs and equipment costs to grow your own feed are not eligible,” Chutter said.

“So indirectly, costs to grow your own feed to feed your livestock are not eligible. That is where the discrepancy lies. If you buy all feed, it is eligible but if you grow or graze your own feed, a lot of that feed cost as a production cost is not eligible.”

In early 2023, AFSC completed a program review focused on options that would improve program responsiveness for the cow-calf sector. It prompted recommendations to modify feed and pasture eligibility as well as policy pertaining to feed inventory price adjustments — changes cow-calf producers have asked for.

Chutter said the pilot, which runs this spring and early summer, is also an opportunity to analyze data from a highly variable year.

“2023 gives us a disaster drought year, but with lots of regional variability, so we can analyze producers who have experienced severe feed shortages and producers who didn’t.”

He said there is need for AFSC to adjust its BRM policies to encourage pasture grazing.

“One of the best program and policy tools available for the environment is policy that supports our cow-calf sector and our prairie grasslands.”

As of Feb. 16, the pilot was about two-thirds full.

“It’s very positive,” Callum said. “To be able to recognize the downfalls that have been associated with AgriStability and try to fix it, particularly for our cow-calf industry here in the province, that’s a real great step.”

Bringing it to Manitoba

The pilot has garnered discussion nationally, Callum noted.

“We’ve had these discussions with our partners to the west, MASC (Manitoba Agricultural Services Corporation) included,” he said.

Although started in Alberta, the hope is that other provincial providers will look at results of the pilot and determine how the ideas it generates could be more broadly implemented.

“There’s a lot of cross collaboration between these various groups such as AFSC and MASC and lots of communication between us and our national partners who are involved more heavily with this pilot project through the Canadian Cattle Association,” he said.

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That and sustainable agriculture dominated discussions during the recent federal, provincial and territorial (FPT) agriculture ministers meeting in Fredericton, N.B. The annual conference was held from July 19-21.

The focus on sustainable agriculture tracks, as this is the first time the ministers have met since the launch of the $3.5-billion Sustainable Canadian Agricultural Partnership (S-CAP) that came into effect April 1.

“My colleagues and I all agree that sustainable agriculture must take climate change into account while also ensuring farmers’ ability to make a good living from their production,” said federal Agriculture and Agri-Food Minister Marie-Claude Bibeau. “We reiterate the importance of working together and listening to producers to ensure the future of our agriculture for generations to come.”

Bibeau discussed Canada’s recent commitment to join 196 countries worldwide to half the risks associated with pesticide use.

“Reducing the risk, not the use,” Bibeau said. “I reiterate that the federal government recognizes that pest control is essential to food security and that banning pesticides used for agricultural purposes is out of the question.”

Business risk management

Recent extreme weather situations impacting producers across the country have raised concerns about risk management.

Ministers noted the need for producers to have access to a full suite of business risk management programs that are timely and reliable. On this topic, ministers committed to improving those programs.

“Close collaboration has enabled us to develop a new approach. And we will soon be able to offer, on an optional basis, a new model that will simplify enrollment and speed up the processing of the Agristability program,” said Bibeau.

International and interprovincial trade

Ministers discussed international trade and market diversification, including ongoing trade negotiations with key partners. Discussions also centred around collective efforts to position Canada as a trusted and sustainable supplier of choice to the Indo-Pacific region by leveraging Canada’s first Indo-Pacific Agriculture and Agri-Food Office, which will be in Manila, Philippines, as well as existing federal, provincial and industry resource investments in the region.

Interprovincial trade also took a prominent position at the meeting. Bibeau pointed to a pilot project to allow slaughterhouses located near a neighbouring province to slaughter and process livestock from farmers on the other side of that provincial border.

“For example, earlier this year, we opened up the trade of food products produced in Lloydminster between the Alberta and Saskatchewan portions of the city, and we are continuing on this path,” said Bibeau.

Labour issues

Farm labour issues, specifically the federal government’s National Farm Labour Strategy, was another topic of conversation.

“The seasonality of the sector and the shortage of housing bring additional challenges,” said Bibeau on the use of temporary foreign workers. “Our discussions will support the development of our National Farm Labour Strategy, which aims to develop short- and long-term solutions to labour shortages across the value chain.”

The ministers also discussed recent disruptions at the Port of Vancouver.

Disease management

Livestock disease management was also a hot topic.

“A priority of ours is to support breeders in preventing animal disease and also better preparing for it,” said Bibeau. “Discussions have included lessons learned from the avian flu, programs to support the sector in the event of an outbreak of African swine fever, and the foot and mouth disease vaccine bank.”

In their 2023 budget, the federal government committed to spending $57.5 million over five years (starting in 2023–24) and $5.6 million in ongoing funding to support and establish a foot and mouth disease vaccine bank for Canada and to develop response plans with provinces and territories on the illness.

Other topics included ongoing supply chain resiliency, establishing a voluntary grocery store code of conduct and combating misinformation.

The next FPT ministers’ meeting will be held in Whitehorse, Yukon, in July 2024.

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The multipartisan committee heard testimony and received submissions from more than 800 groups and individuals. Mostly-virtual meetings took place in December; the resulting consultation report was released Tuesday.

Canadians don’t yet know when the next budget will be released. Generally, this happens in March, but COVID-19 has messed up the parliamentary calendar. The 2020 budget was cancelled and replaced by an economic statement that focused almost entirely on pandemic spending.

For the 2021 budget, members of Parliament recommend the federal government restore AgriStability levels to previous levels, create a national labour strategy for agri-food and develop a new business risk management program focused exclusively on climate change.

The report recommends the 2021 budget “improve the business risk program and AgriStability be reinstated at 85 per cent of reference margins.”

Already the governing Liberals have agreed to do just that, but it can’t be accomplished without more support from Prairie provinces.

Late last year, Bibeau proposed dropping AgriStability’s maximum reference margin and increasing the compensation rate from 70 to 80 per cent retroactively for 2020 as well as for 2021 and 2022.

That would offer producers a better chance of receiving support from the program and more money when they do — but it would come at an added cost to provincial and federal governments that jointly pay for it.

The expected cost increases have made Alberta, Saskatchewan and Manitoba hesitant to agree, despite pressure from producer groups, the federal government and, now, a multipartisan committee report.

Another recommendation from the finance committee is to “work with industry to develop a labour action plan for Canada’s agri-food sector” — a recommendation expected to be welcomed by many in the industry.

Food and Beverage Canada, for one, called for the development of a labour action plan when offering testimony to the committee. The organization represents 1,500 food and beverage manufacturing businesses in Canada, and has long called for developing such a strategy.

It released its own pre-budget consultation in August, which lobbied for a rebalancing of relationships across the supply chain.

Food and Beverage Canada also contends a “Retailer Code of Practice” should be put in place by the end of 2021, and calls for the federal government to launch an investigation into the practices of Canada’s food retailers.

Finance Minister Chrystia Freeland is expected to at least consider the recommendations from the committee as part of her budget deliberations.

Freeland and her Liberal colleagues continue to tout the merits of a green, post-pandemic economic recovery — and U.S. President Joe Biden is also championing environmental stewardship in the early days of his administration, causing further speculation the Liberal budget will have a heavy focus on combating climate change.

To that end, a finance committee recommendation to create and fund a new business risk management (BRM) program focused on climate change is piquing interest.

Called AgriResilience, the program would be designed “to help farmers transition to lower-carbon agriculture practices, thereby reducing the growing climate risk in this sector. An AgriResilience program would reward innovation and the adoption of new, more resilient farming practices, thereby helping to reduce climate risk.”

The idea originated from Equiterre, a Quebec-based environmental organization with ties to the Liberal cabinet via one of its founders, Steven Guilbeault, currently Canada’s heritage minister.

Equiterre also recommended the federal government “adopt and fund a national strategy with nature-based solutions in the agriculture sector to limit growing GHG emissions and protect soil health.”

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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Federal Agriculture Minister Marie-Claude Bibeau and her Ontario counterpart, Ernie Hardeman, “urge all provincial and territorial ministers to support the proposed changes to the AgriStability program,” they said in a joint statement Tuesday.

At a Nov. 27 online meeting with her provincial and territorial counterparts, Bibeau proposed to remove AgriStability’s reference margin limit and to boost the compensation rate for when a payout is triggered to 80 per cent from 70.

“Accepting the proposed changes soon is key to ensuring the enhanced supports can be applied retroactively to 2020, something we know farmers across the country have been asking for,” Bibeau and Hardeman said Tuesday.

“Since the federal government has confirmed its 60 per cent contribution, it rests with the undeclared provinces and territories to come forward with their 40 per cent share. We thank those provinces who have already confirmed their participation and hope to hear from those others soon.”

Manitoba’s Agriculture Minister Blaine Pedersen, who has suggested replacing AgriStability, is still studying Bibeau’s proposal, his office said via email Tuesday.

“Supporting the growth and resiliency of Manitoba’s agricultural sector is a priority” for the province’s ag department and government, the email said.

Bibeau’s plan follows years of complaints from Canadian farm groups that changes to AgriStability in 2013 dramatically cut support after the payout trigger went from an 85 per cent decline in eligible margins to 75 per cent.

Famers want the trigger restored and the reference margin limit removed, but see Bibeau’s plan as a good first step. Most farm groups, including Manitoba’s Keystone Agricultural Producers, endorse Bibeau’s proposal.

“Taken together this (proposal) would result in a 50 per cent increase, around $170 million per year in direct support to farmers who need it the most,” the joint statement said. “In order for these changes to be put in place, we need the support of a large majority of provinces and territories soon.”

While Pedersen is concerned the changes will make AgriStability more expensive for the Manitoba government, he has also said AgriStability has a lot of problems, including its complexity, unpredictability and the delay between when farmers suffer losses and receive payments.

“I think if you get rid of the reference margin limit and bring the coverage up to 80 per cent, yeah, it would certainly help,” KAP president Bill Campbell said in an interview Dec. 1.

“Those two things would make it so it has the potential to make it a feasible program for the ag industry.

“I think if some of the issues were addressed and fixed it wouldn’t necessarily be a broken program.”

After years as the target of farm lobbyists’ wrath, however, Ottawa is now holding the provinces’ feet to the fire on Bibeau’s proposal.

“For many years we have been consulting on improving the suite of business risk management programs and we agree that fixing AgriStability is the priority,” Tuesday’s joint statement said. “It needs to be simpler, fairer, more predictable and more generous.

“While the proposed changes to AgriStability may not be the perfect solution for all farmers or governments, they reflect a good start to achieving a national consensus and allow Canada’s agriculture ministers to continue discussing enhancements to the program while still improving supports for farmers today.”

The ministers “are all committed on more long-term changes to the suite of business risk management (BRM) programs as we begin consultations for the start of the next five-year policy framework, which begins in 2023,” Bibeau and Hardeman said.

“Improving the BRM programs is a top priority for our governments. Farmers have shown their resiliency during COVID-19; however, many could still use the added help that these short-term changes could provide. We have an opportunity to act now, to offer them increased support. It’s time to get it done.”

— Allan Dawson reports for the Manitoba Co-operator from Miami, Man.

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After the meetings ended Friday, federal Agriculture Minister Marie-Claude Bibeau explained Ottawa was willing to maintain the current cost sharing of the programs at a 60-40 split between her government and the provinces.

Bibeau’s proposal also includes an increase in the compensation rate offered under the AgriStability program, from 70 to 80 per cent, and a removal of the reference margin limit.

Removing reference margins will increase funding to farmers by more than 30 per cent, she said, and an increase in the compensation rate would bring funding to farmers up by more than 50 per cent.

“While I believe the compensation rate is the best action to take, I’m prepared to consider other options,” Bibeau said. “But before we have this discussion on additional improvements, we have to agree on removing the reference margin limit.”

Bibeau brushed off a question on why she was taking such a firm position on removing the reference margin limit, and reiterated her proposal.

Ontario’s Agriculture Minister Ernie Hardeman said Friday’s meeting was the first time Bibeau had offered a counterproposal to the one made earlier this year by the provinces, which would have seen funding levels move from a 60-40 split to one where the feds would pay for 90 per cent of BRM costs.

“To put it in perspective, this was the first time we were able to send all the provinces back home with a concrete proposal,” he said.

“We’ve talked about hypotheticals, we’ve talked about changes some may like and some may not, but this is the first opportunity we’ve had where the federal government has laid the cards on the table and said, ‘This is my hand, do you want to play?’

“We need to provide the opportunity for everybody to consider that, to look over that, to find what the impact would be to their producers and to their treasury.”

Other provinces had previously expressed frustration over Ottawa’s lack of a counter-offer on AgriStability prior to the final meeting.

Bibeau, in turn, said she will “give time” to her colleagues to analyze the proposal and get back to her “as soon as possible.”

The Canadian Federation of Agriculture, in a separate release Friday, hailed Bibeau as “the first (agriculture) minister to deliver real action on this issue since 2013 by putting forth this proposal.”

Changes to the programs, particularly AgriStability, have long been sought. At the heart of the issue is the amount of money being made available to farmers applying to AgriStability, and the threshold that triggers the payments to them.

The program was designed as an income stabilization plan for farmers who experience large declines in income. Farm lobby groups have suggested the levels of losses required to trigger payments from the program are too high, and the compensation received is too low.

Making it easier for farmers to access those payments, while also increasing the money received, would be costly. Government estimates from 2019 suggest costs would increase by $400 million, but the federal government did not provide a cost analysis of the proposal made Friday.

Some provinces — particularly Manitoba and Saskatchewan — contend paying their share of the program is difficult given their financial situations.

Manitoba Agriculture Minister Blaine Pedersen this summer cast doubt on the prospect of reforms.

“We are not going there anytime soon just because of the cost implications for the Prairie provinces,” he told the Manitoba Co-operator’s Allan Dawson in June.

Moving AgriStability’s payout trigger to 85 per cent from the current 70, and eliminating the reference margin limit, would cost the Manitoba, Saskatchewan and Alberta governments millions of dollars more, he said.

Asked Friday if she sensed any progress was being made to find a positive outcome on the issue, Bibeau said she was “hopeful that we can reach consensus.

“I understand that some have a fiscal challenge, let’s say, but we are talking about business risk management programs so it’s kind of an insurance for farmers and it would pay out only if they have a bad year, so I’m hoping we can reach this consensus and proceed with the changes as soon as possible.”

Grain Growers of Canada, in a separate release Friday, said it “recognizes the unique fiscal challenges faced by the provinces as they consider the next steps” for the program, but added that “agriculture is more than worth the investment in order to drive an economic recovery — and support the food security of Canadians.”

Canadian Pork Council chair Rick Bergmann, citing Statistics Canada data to show revenue has fallen more for hog producers than for “most other sectors,” said the provinces “will fail most farmers if they choose not to fund fixing AgriStability when they are spending $1 billion on crop insurance.”

No timeline or deadline was provided in Friday’s communique on when the provinces are expected to respond to Ottawa’s offer.

Prospects of a short-term solution now seem unlikely. If the provinces accept Bibeau’s proposal, the changes could be implemented retroactively to cover the 2020 program year.

The ministers’ statement Friday “demonstrates that some progress has been achieved,” the CFA said in its release, but added that “all levels of government need to come together and finalize an agreement over the coming weeks.”

“While these proposals are not exactly what we were seeking, they are a very positive step forward for the business environment of Canadian agriculture,” CFA president Mary Robinson said in the same release.

“AgriStability has not provided a sufficient financial backstop for farmers since the cuts were made in 2013 and these shortcomings have been magnified by the impacts of COVID-19 on the industry,” she said.

Canada’s BRM programs, she said, “no longer reflect the risk profile of Canadian agriculture and must be improved.”

— D.C. Fraser reports for Glacier FarmMedia from Ottawa. Includes files from Glacier FarmMedia Network staff.

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“Not in this way. All the options are on the table for the future, but I’ve never considered asking them to withdraw, to empty their accounts, to face COVID-19,” she said in an interview Friday.

Bibeau had previously expressed disappointment at seeing over $2 billion sitting in accounts which, according to Agriculture and Agri-Food Canada (AAFC), exist to help farmers “manage small income declines and make investments to manage risk and improve market income.”

Billed as a “self-managed producer-government savings account,” an AgriInvest account can accept a farmer’s deposits up to 100 per cent of allowable net sales (ANS) in a given program year, and receive a matching government contribution on one per cent of ANS.

AgriInvest account balances are capped at 400 per cent of a producer’s average ANS from the current and two prior program years.

In 2020, there has been between $2.27 billion and $2.37 billion sitting in 99,673 active AgriInvest accounts — but the majority of those accounts have balances of less than $10,000 each.

After seeing those numbers, Bibeau said they “did not show that farmers had used their accounts very much” and it was “a bit disappointing to see that,” while encouraging producers to spend the money available to them.

Grain Growers of Canada chair Jeff Nielsen responded by saying he understood Bibeau was disappointed, “but unfortunately the federal government has not asked any other Canadian to withdraw all their savings from their savings account.

“Yet, it seems we’re being asked as producers, the few of us who have money in these accounts, to drain those accounts.”

Bibeau on Friday reiterated her longstanding commitment to improving business risk management (BRM) programs, but to do so “on evidence.”

She and AAFC officials have been “going through the programs, trying to analyze each of them in different ways to see how we can do better. If we have more money, how can we use these additional funds?”

While “not telling anything about how we will move forward,” she said, from the federal government’s viewpoint, AgriInvest “should be the first business risk management program they should be using when they face a challenge.

“This should be the easiest way, for them to take money out of these savings accounts — then when the shock becomes more significant, other programs would serve them.”

Bibeau admitted there is debate among stakeholders about the program’s purpose and said it needs to be discussed.

Certain groups of producers see AgriInvest as a way to build resilience against risk, she said, while others view it as a retirement fund.

Asked if she had ever considered closing all AgriInvest accounts or ordering, rather than asking, producers to use the money available to them in their accounts, Bibeau said she had never considered it.

“I want to look forward and improve these programs, and hopefully with the provinces we will be able to add more money as well, so I have to do it step by step, but these are cost-shared programs and the provinces will have to step in as well.”

While closing AgriInvest accounts isn’t on Bibeau’s radar and would be unprecedented in recent times, such a notion isn’t unheard of in Canadian farm programs.

The Saskatchewan government, for example, in 1996 terminated its Gross Revenue Insurance Plan (GRIP) and paid out that program’s surplus funds.

GRIP, an early iteration of AgriStability, used historical commodity prices and yields to offer revenue insurance to producers, but critics have said it distorted farmers’ seeding decisions and discouraged investment in inputs.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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“AgriStability has never been there for cattle producers or grain producers, and definitely not there for the mixed producers,” said Mitch Janssens, who farms near Boissevain.

Earlier this month, Ag Minister Blaine Pedersen said the program, long under fire from farmers and producer groups, will be part of discussions at an annual meeting of provincial ag ministers in October.

He told media that during several days of touring around the province, many people told him AgriStability wasn’t working.

“It’s not bankable; it’s not timely,” said Pedersen.

Tweaks to the program were announced late 2019, but the Canadian Federation of Agriculture wasn’t impressed.

“The fact that ministers were unable to commit to truly meaningful program reforms, while pushing this issue farther down the road through further program reviews, suggests a lack of urgency and a continued disconnect between FPT governments and the realities facing farmers,” CFA president Mary Robinson said last December.

AgriStability seems to penalize farm diversity, said Ben Martens, who farms cattle and crops near Boissevain. A poor crop year might coincide with a good year for beef prices, making the loss seem less than it actually is.

Jill Verwey, whose family runs a mixed crop, beef and dairy operation near Portage la Prairie, agreed. She said the ebbs and flows cancel each other out somewhat, and a large portion of their expenses aren’t eligible even though they put a big dent in their bottom line.

Martens suggested farm diversification should actually be rewarded as it reduces risk to the program. If a farm derives “significant” income from a secondary source, for instance, it could be rewarded with increased coverage.

The program pays out 70 per cent of income decline if it falls more than 30 per cent below the producer’s reference margin. The threshold was dropped from 85 per cent in 2013 as a cost-saving measure by the Harper government.

Martens said higher coverage could be used as a carrot to encourage farmers to diversify income sources — for instance, by raising the coverage threshold to 85 per cent.

“I don’t see why the government should guarantee me 85 per cent of my income just because I’m a farmer,” Martens said.

At the current 70 per cent payout if income drops to 70 per cent of the reference margin (an Olympic average of the producer’s past five years’ income), many producers say the program won’t pay enough to save them in a disaster.

Farms work off a five per cent profit margin, said Janssens. “Even if you collected you’d still be 25 per cent in the hole,” he said. “It’s kind of pointless.”

Janssens said he’d rather scrap AgriStability in favour of better spot-loss crop insurance.

Last year’s freak October snowstorm caught him with 1,600 acres of crops in the field. He got some insurance payout on his soybeans, but he had enough canola in his bins to not get payment on that crop. He lost 800 acres of canola with no insurance.

Janssens said if he could get paid 70 per cent on what he’d lost, he could keep the profits on the rest. As it was, he ended the year slightly in the red. Input costs have gone up, and crop insurance hasn’t kept up, he said.

Neil Galbraith, who farms grain and oilseed north of Minnedosa, said the program should either go back to the 85 per cent threshold or keep it at 70 per cent but up the payment level to 100 per cent so the producer is covered for a true 70 per cent of their income.

Galbraith added that he’d prefer to see the money producers get through AgriInvest put toward making AgriStability better. In that program, producers can get one per cent of their allowable net sales matched with government contributions. Galbraith said he would rather have good help in a terrible year than a little payout every year.

Producers also said the program was too slow to pay out and bogged farmers down in paperwork.

“If we were going to lose enough money to collect on AgriStability, odds are by the time we got the cheque we’d already be out of business,” said Janssens.

Pedersen said one producer told him “the cheque comes after the auction sale.”

Verwey said after her farm faced disastrous flooding in 2011, it took four years to get a payout. She kept on going back and forth with program administrators and being asked to send more information.

“It takes a big toll on your operation,” she said.

The program is complex, said Verwey. She does the day-to-day bookkeeping on the farm but hires an accountant to do her AgriStability paperwork because it’s complicated, and the rules seem to change every year.

The extra paperwork makes for “exorbitant” accounting fees, she said.

Paperwork is also due midsummer, which is “crazy,” said Martens. It should be due at year-end or at the very least in winter when they’re not as busy, he said.

Verwey and Janssens said they stay in the program because they believe that, in the case of a widespread disaster, the government will require them to have it to participate in relief programming. Janssens said he was considering exiting the program.

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That confirmation came during a wide-ranging media availability Bibeau held Tuesday.

In March, Tom Rosser, an assistant deputy minister at Agriculture and Agri-Food Canada (AAFC), said the government is looking at a number of options to improve the programs, which are often the focus of complaints from producer groups.

It was expected at the time Bibeau would have the recommendations in time for a previously planned meeting in July with her provincial and territorial counterparts.

BRM programs are funded by federal and provincial governments, at a cost-share ratio of 60:40. The cost has averaged roughly $1.5 billion in the past five years.

Changes to any BRM programs generally require two-thirds of the provinces representing at least 50 per cent of the market, according to federal officials.

Now, because of the COVID-19 pandemic, that meeting has been delayed until October — and so too have plans to announce any BRM reforms.

Bibeau said her office is attempting to “build a new consensus” with the provinces.

“It’s not easy to get all the provinces at the same level, and us as well, finding a new consensus,” she said.

At the same time, Bibeau defended the current suite of programs and her government’s support for farmers in the midst of the pandemic.

“I understand that these programs are not at the level producers would want them to be, there are gaps, and we are trying to fill these gaps through ad hoc supports as well, and there will be more,” she said.

“We’re still working with the industry to identify the sectors who are most in need but still, these programs are working to a certain level.”

According to Bibeau, $1.6 billion could be available to producers under the current suite of programs and “double if farmers ask for that” and the situation they are facing.

“These programs are responding to the demand, according to the situation of course,” she said, repeating support is there for producers and more ad-hoc supports are coming.

In a Commons standing agriculture committee meeting Wednesday, Bibeau reiterated the available supports.

“One of my messages to farmers continues to be, these are important tools and please make use of them,” she said.

Bibeau said she is speaking with the provinces every week and despite the formal meeting being delayed until October, progress is being made.

“We are moving forward in the sense that we are putting some options on the table, discussing at what level one province would go, another one, us from the federal (side), so trying to find a consensus so how we can better support farmers,” she said.

Despite any imminent reform coming in the next few months, Bibeau said improving the programs is a priority.

“I can’t promise any deadline but this is top priority, this is the subject that is on the agenda each and every week,” she said.

The current agreement between federal and provincial governments was signed in 2017 and carried forward five programs aimed at BRM: AgriStability, AgriInvest, AgriInsurance, AgriRecovery and AgriRisk.

AgriInvest funds currently total $2.3 billion, according to Bibeau. She said the average producer has around $25,000 sitting in AgriInvest, which is a savings account program with matching government contributions. Funds can be withdrawn at any time to alleviate risk or for investment.

“It’s there to help producers in difficult situations when they need funding,” AAFC deputy minister Chris Forbes said at Wednesday’s committee meeting.

Supports offered by the other programs – particularly AgriStability – continue to frustrate producers, who argue it puts them at a competitive disadvantage on global markets because other countries offer more support for producers.

Bibeau was asked about Canada’s level of support during the pandemic for producers compared to that of the United States, where farmers are being given up to US$16 billion (C$21.7 billion) in coronavirus payments on top of additional direct payments and indications more support is coming.

“We can’t compare Canadian agriculture with another one. In Canada, the business risk management programs exist for a reason and it’s to (give) the farmers more predictability and support that they need,” she said, reiterating a recognition the programs could be better.

The current iteration of risk management support began in 2003 when provinces and the federal government agreed to standardize supports in a cost-shared policy framework.

Originally the programs were focused on income stabilization, but provincial and federal governments realized they were offering more coverage than they thought was needed.

Consecutive years of strong commodity prices also followed, resulting in higher levels of profitability and justification for governments to allocate funding away from risk management toward other areas, such as innovation and growth.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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