The talk in farming these days asks the question of why doesn’t the federal government do more for the industry in this pandemic?
The same question is being asked by the airline industry and even more pointedly by the oil and gas industry, the economic engine which seems to have been forgotten.
True, the federal government has made lots of assistance available to agriculture: the Agri-Recovery plan for disasters, $5 billion interest-free in extra lending, $252 million for food processing and the cattle industry, and buying surplus food for distribution to food banks.
Naturally, farmers are also included in the wage subsidy and pandemic business programs.
Farm leaders say that isn’t enough, raising the question of how much is ever enough?
Besides the Agri-Recovery program, described as a disaster relief program, agriculture has three significant business risk management programs.
Agri-Insurance, AgrInvest and AgriStability programs form the farm income safety net programs.
Under Agri-Insurance, the federal and provincial governments share the costs and pay 60 per cent of crop insurance premiums. Producers pay 40 per cent of the premiums. Government makes the payouts.
AgriInvest is a savings account plan where a small portion of saved farm revenues is matched by government. Farmers have the option of using the money to offset losses, support cash flow or do investments.
Many farmers have been using this plan to save for retirement, not for the proverbial rainy day.
The foundation of the farm safety net programs is the AgriStability program. This is the closest to an income guarantee that farmers have.
Program payments kick in when the individual farmer’s income falls below the 70 per cent threshold of the operation’s average margin.
Sounds great, but when the program started payments kicked in when income fell below 85 per cent of the margin.
That extra 15 per cent means a lot to farmers. The margin was reduced by the Harper Conservative government to save $525 million annually in payments.
The Conservative-supporting farmers didn’t complain at lot. Times were pretty good then.
Recent years of low commodity prices and volatile international markets have made farmers yearn for better program payouts and a return to the 85 per cent margin.
With this suite of programs in place, the federal mandarins advising the politicians apparently saw no need for fast delivery of new money.
Before the pandemic, the federal government share of these business risk management programs was estimated at $10.8 billion for the 2020-21 fiscal year. That was half of the amount allocated to marketing agricultural products.
And the Liberal government, with no elected members from the agricultural West, went along with the mandarins’ advice; hence the reluctance to put more cash into agriculture.
It took 30 years from the original GRIP farm safety net program to develop a plan government hoped would end the regular call for multi-billion dollar payments every time agriculture faced a crisis. But the plans didn’t foresee a pandemic like this one.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
