With pork producers fighting to stay afloat but government unwilling to step in, industry leaders have come up with a new pitch: Instead of making it easier to get assistance, have AgriStability pay out more when things are really bad.
In a recent letter to the country’s ag ministers, Canadian Pork Council chair Rick Bergmann proposed a single change to AgriStability.
“A simple solution would be to leave the trigger at 70 per cent but increase the compensation rate to 85 per cent,” the Manitoba hog producer said in his letter.
Those two numbers are very familiar to anyone following the debate about reforming AgriStability. The program uses a farm’s profit history and when it falls to 70 per cent of average profit (the reference margin), it pays out 70 cents on the dollar for every dollar below that level. The call in recent years has been to restore the reference margin to 85 per cent (which it was until 2013).
But leaving the reference margin unchanged and upping the payout (from 70 cents on the dollar to 85 cents) would “make a significant difference for those producers who need it most,” Bergmann said in his letter.
“It will increase payments by 20 per cent, but ensure those payments are only received by those facing substantial loss.”
The pork council still wants to see the reference margin increased but something needs to be done for hog farmers now, said Gary Stordy, the council’s director of government and corporate affairs.
“We have a number of producers who either have no markets to sell their animals to or, when they do, they’re selling for an incredibly low price compared to what they would normally receive,” he said.
Few farmers have been hit as hard by the pandemic as hog producers as prices have plummeted during the summer season when they normally make their money for the year, he said. Instead of making $40 to $50 per hog, they are losing upwards of $20 a head this year, said Stordy.
“Producers realize there are highs and lows over their 12-month period from seasonal fluctuations, and they do take steps to try to minimize that,” he said. “They should have been able to have a fair return for their efforts to build those buffers for when times are tough, and that just didn’t happen.”
AgriStability is “just not sufficient” to respond to the crisis, he added.
“For pork producers, we are in a disaster, and the program will respond to some extent,” said Stordy. “But when the program has been dismantled over the past 10 years, it really doesn’t help give confidence to the producer that it’s actually going to work.”
Cutting the reference margin to 70 per cent in 2013 made the program even less responsive when farmers need it most, said Stordy.
“It’s supposed to help out producers when they have a decline in their income, but over the years, it has changed, and governments — both provincially and federally — have decided they wanted to make it more of a disaster program, where it only jumps in when there’s a problem,” he said.
“This is a time when the program should actually be assisting producers, but all indications show that it may not be sufficient on its own to help hog producers manage the impact COVID is having on producers’ prices.”
The new proposal from the pork council is in response to governments’ unwillingness to restore the former reference margin, he said.
“So we’re trying to find a middle ground that allows governments to engage in a real discussion to improve the program that will make a difference and help producers.”
But without reform to AgriStability, hog producers will start to leave the sector, he said.
“We’re not confident that they’re going to listen to producers and understand what the impact is,” said Stordy.
“There’s consequences for that. If governments are turning their backs on producers, we’re going to have less producers raising hogs in Canada.”