Business Risk Management Programs under Growing Forward 2

The following brief outlines the National Farmers Union analysis of the suite of Business Risk Management programs, also known as agriculture safety net programs, being negotiated under the Growing Forward 2 federal-provincial policy framework, and makes recommendations to make these programs work better for family farmers.

National Farmers Union recommendations regarding

Business Risk Management Programs under Growing Forward 2

What are the Business Risk Management Programs?

Growing Forward 2 (GF2) is the set of joint federal-provincial-territorial agriculture programs that will be put into place for 2013 to 2018, once Growing Forward 1 ends on March 31, 2013. There are two aspects to Growing Forward 2 – a set of “Strategic Initiatives” to support policy goals agreed upon in July 2011 by provincial, territorial and federal ministers as outlined in the Saint Andrews Statement and the “Business Risk Management” (BRM) programs. The suite of BRM programs will be delivered through a multi-lateral agreement between all the provinces, territories and the federal government. The program will be finalized in September 2012, and is currently being negotiated. The other GF2 programs will be delivered through a series of bi-lateral agreements between the federal government and each province or territory in turn. These programs will be negotiated after the BRM decisions have been made.

BRM programs are also known as “safety net” programs for agriculture. They are AgriStability, AgriInvest, AgriInsurance and AgriRecovery. There has been some discussion of introducing a new program that would provide for price insurance. Each BRM program is assigned a budget, with the exception of AgriRecovery, because it deals with disaster insurance, which is unpredictable. BRM programs are cost-shared 60:40 by the federal and provincial governments.

Why BRM programs are important to family farmers

Canadian farmers are experiencing a prolonged income crisis. Federal agriculture policy has consistently promoted increasing agri-food exports regardless of the impact on Canadian farm families, farms and food supply. Federal policy also adheres to market fundamentalism – the belief that markets will solve all problems – without recognizing the vast differences in market power between a farm family and the global corporations that supply farm inputs and purchase farm products, and the impossibility of fairness under these conditions; nor does the “market” recognize non-financial values such as culture, health, community and ecological integrity that are important to citizens. The National Farmers Union advocates for policy that would bring about food sovereignty, a profoundly different approach to agriculture and food policy which would support the livelihoods of farmers, ensure adequate and wholesome food for consumers, work in cooperation with nature and include citizens in meaningful decision-making regarding the food system.

In the absence of a food sovereignty-based federal agri-food policy, we do need safety net programs to help family farmers survive the on-going crisis. The BRM suite needs to be designed in such a way that it actually protects small and medium-sized family and co-operative farms and allows them to maintain and build their farms as viable businesses that can be passed on to the next generation of farmers.

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Summary of Recommendations:

  • The National Farmers Union recommends that the maximum payment under AgriStability be reduced from the current $3 million per farm to $300,000 per farm
  • The National Farmers Union also recommends that the program cap for AgriInvest be lowered to $1 million of eligible sales, and access to matching grants be provided on a sliding scale based on the total eligible sales per farm up to the maximum of $1 million/farm/year.
  • The National Farmers Union recommends that all subsidiaries of a corporate entity be considered a single farm for BRM program purposes. In other words, an agribusiness corporation could not subdivide its operations into a series of smaller spin-off companies in order to maximize its payout under GF2 BRM programs.
  • The National Farmers Union recommends maintaining the 15% margin loss trigger for AgriStability
  • The NFU recommends that AgriInvest lower the eligible sales cap to $1 million per year. This would still include 95% of Canadian farms in the program.
  • The NFU recommends a sliding scale for the government contributions to AgriInvest accounts. On deposits based on eligible sales up to $250,000 AgriInvest would continue to match 100% of farmers’ deposits. On sales from $250,000 to $500,000, 75% of deposits would be matched, and on sales over $500,000 up to the cap of $1 million, 25% of deposits would be matched.
  • AgriInsurance is a valuable program and the National Farmers Union recommends that it be maintained with the same level of government support.
  • The National Farmers Union recommends that the federal and provincial governments make climate change mitigation and adaptation a top priority.
  • The National Farmers Union recommends that all farmers affected by a disaster be eligible for disaster relief under AgriRecovery regardless of their participation in other BRM programs.
  • The NFU recommends that any price insurance proposal be presented in detail for meaningful farmer consultation and approval, that any proposed price insurance scheme be publicly funded, and that it not be used as a replacement for other risk management programs.

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