Agriculture Minister Gerry Ritz has defended his government’s move to cut direct farm supports, as farm leaders and even one of his provincial counterparts complained they were blindsided.
Ritz told reporters at the Canadian Farm Writers Federation conference in Winnipeg that the existing design of programs like AgriStability may be in fact destabilizing the sector.
“It was starting to create a situation where we’re seeing the price of land go up and the price of inputs go up and farmers weren’t really as concerned about that as they probably should be,” Ritz said.
“We’re also seeing a lack of attention to any type of new insurance program — no one is going to pay a premium when they get 100 per cent coverage for a very modest administration fee. So you almost have to disincent that in order to incent the other side.”
Ritz said farmers have been complaining for years that AgriStability was unpredictable and unbankable. “What we’ve done is moved money from the top end of AgriStability — the potential to spend it, it’s book money not spent money — into innovation and deficit reduction,” he said. “Farmers are taxpayers too, they want to make sure we’ve got our fiscal house in order.”
Saskatchewan agriculture minister Lyle Stewart said he “reluctantly” signed the new five-year Growing Forward 2 agreement cutting farm income support programs, after being “blindsided,” during the negotiation process.
“We were blindsided and we’re not very happy about it,” Stewart said in an interview from his combine near Pense, Sask.
Saskatchewan opposed cutting matching government contributions to AgriInvest to one per cent of producers’ allowable net sales from 1.5, as well has reducing the annual cap on the amount governments can contribute to $15,000 from $22,500.
“During consultations producers told us they for sure didn’t want us to touch that (AgriInvest) or AgriInsurance unless it was to enhance them,” Stewart said.
If it were up to Saskatchewan there wouldn’t be cuts to AgriStability either, he said.
Cut in half?
The Canadian Federation of Agriculture (CFA) estimates AgriStability funding over the last five years would have been cut in half if the new agreement had been in place. How much less farmers will get in future is hard to predict because payouts are demand-driven. The new AgriStability payout trigger requires a 30 per cent drop in program year margins instead of 15. And payouts will be based on a farmer’s reference margin or allowable expenses, whichever is lower.
When Canada’s agriculture ministers met in Toronto in July, according to Stewart, British Columbia proposed cuts to all three federal-provincial business risk management programs — AgriStability, AgriInsurance and AgriInvest.
“I spoke forcefully against that,” he said. “We went away from there and I thought the thing was dead.”
But two or three weeks later during a telephone conference among deputy ministers it was announced all provinces and territories were onside with program cuts except Saskatchewan, Stewart said.
“We didn’t know any offline discussions were happening between provinces,” he said. “I guess they wanted to see if they could get a deal before they heard my negative viewpoint on it and eventually they did.”
Asked if he thought it odd given federal agriculture minister Gerry Ritz is a Saskatchewan MP a fellow Conservative, Stewart replied: “Well, I thought so to say the least. But I don’t know who the drivers were behind this thing. I haven’t been able to get any information on which provincial ministers were driving this and what involvement that the federal minister had.”
No back-room deals
Ritz’s office referred queries to a transcript of a CBC Saskatchewan interview with Ritz.
“At the end of the day, there were no back-room deals,” Ritz told CBC.
“Certainly if Minister Stewart has a concern that he was somehow left out, he should talk to his provincial colleagues, because he was at every meeting I was at.”
CFA says in general, AgriStability Tier 2, which was cut entirely, represented approximately 30 per cent of total payments over the past five years. Reducing Tier 3 coverage, which accounted for about 60 per cent of total payments, from the 80 per cent compensation rate to 70 per cent would have reduced payments by five to 10 per cent. The new cap on reference margins would have cut payments another 10 per cent.
The NFU is concerned the new agreement pushes private sector insurance programs.
“We think that this is clearly an indication that the feds are withdrawing from the agriculture file and that they are destroying the institutions that protected farmers as well as programs, whether it is BRM’s, PFRA pastures or tree nurseries, the CWB, CGC (Canadian Grain Commission,” National Farmers Union president Terry Boehm said in an email.