Budget slashes $100 million from agriculture department

NOT ALL BAD Producer groups disappointed in farm fuel cut, but pleased with focus on market access

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Despite the cut to the farm fuel distribution allowance, producer groups are breathing a sigh of relief Alberta Agriculture’s budget wasn’t slashed more than it was.

“It’s not as bad — the cut to agriculture… as we thought it would have been,” said Lynn Jacobson, president of Wild Rose Agriculture Producers (WRAP).

According to Agriculture Minister Verlyn Olson, about $100 million was cut from his department’s budget.

Jacobson said previously WRAP had written to the government suggesting the farm fuel distribution allowance, which gave farmers a six-cent-a-litre rebate on marked diesel, renewable diesel and heating fuel, could be tweaked by raising the gross income threshold required to qualify for the program. “We weren’t happy to see that cut, basically, like everybody, but we knew there was something coming,” Jacobson said.

Matt Sawyer, chair of the Alberta Barley Commission, said the end of the allowance will affect farmers but pointed out the nine-cent-a-litre tax exemption remains.

Kent Erickson, chair of the Alberta Wheat Commission, said there is some disappointment but they’re happy to see money for things like research and market access. “I think we can manage a little bit higher costs on our fuel sides over taking away from some of these strategic initiatives,” he said. “I think they managed to cut in the best areas possible right now.”

Olson said the choice was either funding the allowance or funding agricultural societies across the province. The farm fuel distribution allowance would have been about $30 million, he said. It is estimated to have cost about $32.5 million for the 2012 fiscal year.

“If I wiped out funding for all 295 ag societies across the province, that would be roughly equivalent to getting rid of the six-cent-a-litre allowance,” he said.

ALMA, irrigation, face cuts

The Alberta Livestock and Meat Agency is getting an $8-million haircut, leaving it with $30 million in funding from the government. Olson said it was felt ALMA has enough momentum to keep doing its work with less money. He said it’s not meant to be a permanent reduction.

“This does not signify any changing or reduced support for ALMA, it’s just that we have put a lot of money into ALMA in recent years,” Olson said.

Rich Smith, the executive director of Alberta Beef Producers, said the money ALMA invests is valuable but said the agency still has a significant budget. “ALMA will need to focus on being a catalyst for the industry right now,” he said.

Smith said he was pleased with the increased funding for promoting market access and value added, as did the ABC’s Sawyer. “Those are huge areas that we need to focus on and it’s great that they’re focusing on it,” he said.

Rural cutbacks

Jacobson raised concerns about cuts outside of the department that could affect farmers – notably, reduced funding for county services and infrastructure. “That has the potential to raise the taxes for rural residences,” Jacobson said.

Thirty jobs were on the block, however, 10 of those were vacant positions. Olson said 17 of the layoffs came from the department while three occurred at the Agriculture Financial Services Corporation. Six were management positions and most of the workers were in the Edmonton area.

“We have to make tough decisions in tough times, and unfortunately some of that is always human resources,” said Erickson, adding perhaps the government will be able to realize efficiencies and if there are any holes, maybe industry can help fill the gaps.

The irrigation infrastructure assistance line item shows a $5-million reduction in the capital budget, but Olson said they’ve found $2 million in surplus funds to help soften the blow. “It means some projects might have to be stretched out a little bit longer,” he said.

AFSC cuts minimal

Olson said not many cuts were made to the AFSC’s budget. The main change was eliminating a program relating to hail insurance agents. Olson said the need for their service is dropping as more producers buy insurance online.

Another change is getting rid of the top-up the government used to provide for AgriStability payments, previously the extra cash had raised the cap to $5 million. In this budget they’re bringing it back down to $3 million, which Olson said is in line with the rest of Canada.

Overall, Olson said this year’s operating budget was brought down to about $937.9 million in expenses. The budget incorporates changes to the Growing Forward agreements that will see reduced funding from the federal government kick in April 1, which Olson said accounts for a “big chunk” of the $100-million reduction over 2012’s budget. “The decisions were tough,” he said.

Opposition concerns

The Liberal’s Agriculture Critic David Swann called the cuts “just another blow” to family farms. “I think it’s so unfortunate that we have a government that doesn’t think long term about our finances and our economy, and our agriculture is an important dimension of that,” he said.

Swann said the lack of forethought would damage everybody, he said including farmers and especially small farms. He raised concerns about cuts to post-secondary funding and environment, noting they’ll impact agriculture in Alberta. The post-secondary cuts mean a lack of innovation and research that can support new technology and research for agriculture, he said, while environmental cuts make him worry about water.

“Food security has to be our major priority for this province,” he said. Meanwhile, Wildrose Rural and Agriculture Critic Ian Donovan is more worried about the overall deficit nature of the provincial budget. “When a government borrows money, they’re not the ones who have to pay it back, it’s the taxpayers,” he said.

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