Better, but not great. And let’s come up with something that really works.
Those two sentiments characterized most of the comments about the recently agreed-to change to AgriStability.
And most producers would add ‘still really complicated’ as the decision by Ottawa and the provinces to scrap the ‘reference margin limit’ will impact individual farms in different ways.
“I’m going to meet with my accountant when he does some more background into it, to see if I will enrol in it,” said Jason Hale, a cattle and crops producer from Bassano with extensive experience in farm policy matters.
It was his accountant who recommended he quit the business risk management program because of both the way AgriStability calculated coverage levels and the limits on how much it might pay out. At the time, it just didn’t make financial sense, said Hale, who is vice-chair of Alberta Beef Producers.
“It’s been quite a few years ago since I pulled out of it — basically because it wasn’t going to work for me, the way they had it set up,” he said.
Nevertheless, removing the reference margin limit makes for a significantly improved program — and one that’s worth checking out again, said Hale.
Alberta Beef Producers is one of 11 farm groups in the province that welcomed the change, saying it “gives farmers and ranchers an enhanced AgriStability program that will inevitably increase enrolment and increase payouts to producers in the short term.”
It’s a significant improvement, said Bob Lowe, president of the Canadian Cattlemen’s Association.
“This has long been a recommendation at CCA and a key ask that we’ve had of governments,” said the Nanton-area rancher and owner of Bear Trap Feeders. “Removing the reference margin limits will go a long way in making AgriStability more predictable and importantly, more equitable to our industry.”
Getting rid of the reference margin limit means AgriStability will pay out more to farmers enrolled in the program — about $95 million more per year, according to federal Agriculture Minister Marie-Claude Bibeau.
Different impacts on different farms
Moreover, getting rid of the reference margin limit is retroactive to last year. As well, the deadline to enrol in this year’s program is being extended to June 30, offering producers — and their accountants — more time to figure out if it’s worthwhile signing up for.
Lowe also noted it is complicated and there are often very specific individual factors to consider. As an example, he pointed to how feed costs can be calculated.
“Under the previous reference margin limit, a rancher who put up his own feed was not allowed to expense it,” he said. “If you bought your own feed, you could expense it. But if you put it up, there was nothing that could be expensed about it, which made your income artificially high.”
That will change under the revised program and being able to expense their own farm-raised feed will level the playing field for cattle producers, said Lowe.
But one thing that won’t change is the compensation rate — that is, the percentage of losses covered by AgriStability in a bad year.
Farms groups have long been asking that the payout rate revert to the old rate of 85 per cent of losses (instead of 70 per cent). Last year, Bibeau offered to raise it to 80 per cent but the Prairie provinces balked — saying the extra cost was too steep. (The provinces split the cost with Ottawa on a 40-60 basis.)
Hale said he hopes that the country’s ag ministers continue to look at the program and make some more changes, including looking at the compensation rate.
“At least we did get some of the changes we were hoping for, if not all of them,” he said.
But getting rid of the reference margin limit doesn’t help hog producers, said the chair of the Canadian Pork Council.
“We know AgriStability negotiations are not easy, but removing the reference margin limit does very little for pork producers,” said Rick Bergmann. “We expected that, in these difficult times, the Prairie provincial ministers would have considered the challenges faced by pork producers.”
AgriStability is also not frequently used by grain farmers, said Tom Steve, general manager of both Alberta Wheat and the Alberta Barley Commission.
“In the crop sector, it’s not a popular program,” he said. “But again, my two boards that I report to, and the other boards of the other commissions, all came to the same conclusions — let’s take advantage of the program.
“It’s not perfect, but it will be a bridge to something better in the future.”
Attention now turns to next version
The current edition of AgriStability is set to expire in two years and attention is now turning to the next version of the program.
“We look forward to the long-term modernization of the business risk management suite under the next five-year agricultural policy framework in 2023,” Alberta Agriculture Minister Devin Dreeshen tweeted.
His government and its Prairie counterparts are already laying the groundwork for what seems to be their preferred option — something they’re calling the Whole Farm Margin Insurance program.
On March 8, Agriculture Financial Services Corporation (AFSC) issued a call for proposals to assess the “viability” of such a program. The document says the goal is to have a revenue insurance program that would work for all commodities, could be used by both big and small farms, and “be agile and simple.”
It would have a reference margin (called the historical margin) that would take into account a farm’s past revenues, expenses, and commodity prices. It would “allow producers to manage normal risks while governments cover severe loss.”
“A producer will be able to select a level of coverage for their insurable margin from a minimum of 50 per cent coverage to a maximum of 90 per cent,” states the request for proposals document.
The winning bidder would have until Oct. 31 to complete its review and submit its report. That report will also be assessed by AFSC’s counterparts in Saskatchewan and Manitoba, provinces that have also championed a farm revenue insurance program.
“We think that is a much better way of producers being able to insure themselves,” said Manitoba Agriculture Minister Blaine Pedersen, who added any plan will be put out to farm groups for their input.
The Saskatchewan government said it is working to assess the feasibility of such a program, but there is “no decision on this program as we are at the initial exploratory and development stage.”
Bibeau’s office also said alternative business risk management designs are being analyzed.
“The governments are working in close collaboration to develop these alternative designs and the federal government and the Prairie provinces have sought additional analysis through contracts,” the minister’s office said. “It is premature to provide comment on those submissions for longer-term changes.”
Nevertheless, getting rid of the reference margin puts more money on the table and that’s a good thing, said Steve.
“The money will be embedded in the business risk management suite of program, and the policy framework when we go to renegotiate in 2023,” he said.
— With Glacier FarmMedia files