Federal cuts Though some is going to research, more is leaving agriculture for debt recuction
The new Growing Forward 2 framework, announced Sept. 14, is being met with widely differing opinions from Alberta agricultural producer groups.
“It’s a big hit for agriculture. We knew there would be some trimming, but we didn’t expect this large a cut,” said Lynn Jacobson, president of Wild Rose Agricultural Producers.
“There are certainly some negatives in there, but it generally goes in our focused direction,” counters Fred Hays, policy analyst for Alberta Beef Producers. “We want to have government support in certain areas, but we don’t want government in there affecting market signals and giving handouts. That’s why we’re supportive of the strategic initiatives, especially the research and development that in the long run helps the industry.”
Growing Forward 2 will take up where the original Growing Forward ends on March 31, 2013. The policy framework is a joint federal and provincial agreement that provides the basis for the cost sharing of a number of important agricultural programs and funding structures over the next five years.
Compared to the original program, Growing Forward 2 commits $435 million less to business risk management (BRM) tools, including the AgriStability, AgriInsurance, and AgriInvest programs. Of that cost savings, approximately $133 million will be directed towards agricultural strategic priorities including innovation, competitiveness and market development, leaving the federal government with about $302 million in total savings.
In the new program AgriStability will kick in at 70 per cent of historical reference margins compared with 85 per cent now.
“Given the options, we supported the final AgriStability cut compared with the one offered at 50 per cent. It’ll save about $202 million by our calculations. As an industry, agriculture is in a corner but we did expect to have cuts somewhere,” Hays said. “For beef producers, it’s not one that hurts a lot, because AgriStability hasn’t worked well for us anyway. We would, however, like to see some livestock-focused production insurance.”
Irrigators hit hard
However Jacobson said the cut is going to have a large effect on crop producers, especially for those that irrigate. “We’re now looking at the program and wondering is it worth it,” he said.
Under the revised AgriInvest program, government will match one-third fewer investment dollars (on per cent of allowable net sales, down from 1.5 per cent). The maximum government contribution will drop from $22,500 to $15,000.
“Bringing AgriInvest down to one per cent makes it not a very useful program. The return you can get is probably less than what you’ll end up paying the accountant,” Jacobson said.
However, says Hays, the new AgriInvest program addressed this area in part, particularly given that the government considered scrapping it outright.
Even Growing Forward 2’s enhanced commitment to strategic initiatives is controversial. Hays sees these dollars as vital, because investment in research has proven to generate huge returns overall. However, Jacobson said the investment is too little, and directed incorrectly.
“If they were really serious, they would have taken the whole amount that they saved (by decreasing the BRM programs) and invested it all into innovation. Instead, $300 million-plus is going to debt reduction. And, the $100 million plus going to innovation, well, so far a lot of those innovation programs haven’t benefited producers.”
Little help for pork
The new program provides little help to the faltering pork industry, which has been slammed by decreasing consumer demand and low market prices, compounded by high feed costs.
“The pork industry is in crisis. It’s the number one industry that needs help right now, “ said Darcy Fitzgerald, executive director of Alberta Pork. “The innovation and market development programs will help us in the long run, for those who can stay in business that long, but nothing in this program is going to help us for the problems we’re facing today.”
Fitzgerald says the existing BRM tools helped in Growing Forward’s initial years, but do not work for the pork industry now. AgriStability bases payments on five-year historical averages, which is a problem for an industry that has had a string of bad years. Likewise, AgriInvest is of little to no use for an industry that needs to borrow rather than invest. AgriRecovery supports farmers facing disaster, but not the kinds of disaster that the pork industry is being repeatedly hammered by.
“There is lots of help for someone who’s negatively affected by a disaster here in Canada, like a drought. But, there doesn’t seem to be any help for those who get hit by secondary effects, like high feed prices from the U.S. drought. Even if you’re the best farmer on the planet, we have no control over the international market, and there’s no relief from it. Somehow we need to create a program that can help pork producers when everything hits them,” Fitzgerald said.
Some of the producer groups feel frustrated by what they consider a limited consultation process. Jacobson calls the consultation process “Too little, too late. It was at the ninth hour, after all the decisions had already been made.” Added Hays, “We certainly felt rushed.” However, Fitzgerald says that Alberta Pork producers were given good opportunity for input, even if the final framework offers little in the way of immediate support. All in all, Hays says the Growing Forward 2 framework does have some good points. “It’s not ideal, but it does address some of our important concerns.”
Jacobson worries about agriculture’s future under the new framework. “You’re not going to see the effects of this right away because prices are on the high side, and yields, while not spectacular, are not bad. The people who will really see the effects of these changes will be those who are hailed out or flooded out or have some other disaster next year.”
Fitzgerald said he and his industry hope to hang on long enough to enjoy some of the benefits he sees Growing Forward 2 offering in the future.