Key issue: Safety nets
Section Chair: Mark Wales
The OFVGA provides input towards policy direction that reflects the needs of its membership in securing fair and equitable safety net programs.
Safety Nets report to 2014 OFVGA annual meeting
Safety Nets Committee
Once again the weather continues to remind all of us that we are at its mercy. 2013 for most of Ontario was the exact opposite of 2012. 2012 of course was one of record heat and drought. In 2013, record rainfall events were commonplace with overall cooler temperatures as well.
This of course created challenges with drowning, abnormal disease pressure, difficult field conditions for spraying, cultivating and harvesting, as well timing and maturity issues for most crops. Despite all of this, many fruit and vegetable growers had excellent yields although with variable prices. Frost thankfully was not a major issue this past year.
These conditions highlight the need for a variety of safety net programs and the need to constantly work on maintaining and improving them.
There will be some substantial claims for some processing vegetable growers due to the heavy rainfall events. The Fresh Vegetable acreage loss program had 91 producers insuring more than 9,000 acres, with producer premiums collected of just over $600,000 and claims paid out as of Nov 21 of just over $2.8 million. The program continues to work for growers. After last year’s devastating frost, it is obvious that work still needs to be done on the Apple and Tender Fruit programs. There was a substantial rise in premiums to keep the program viable which is frustrating for growers after suffering a severe loss.
Overall, the Production Insurance program for all crops, including horticulture, will have a much lower than average claims year. With corn and soybeans being the two greatest acreages covered they have a huge bearing on the overall financial health of the program. Despite a challenging season (and some corn still not harvested), yields will be average to slightly above average for many crops. Total program payouts are expected to be less than $80 million across the province, whereas total payouts in 2012 were $131,860,568.00 and in 2011 were $82,239,273.00. This will allow for some general decrease of premium rates in 2014 as the fund balance is healthy.
With 94% of 2012 files processed, Ontario farmers have received just over $50 million in payments with horticulture producers receiving over $22 million of that. In 2011, Ontario farmers received almost $45 million, in 2010 $73 million and in 2009 $174 million from the AgriStability program.
Growers as they begin to file for 2013 growing season will begin to realize the extent of the cuts to the AgriStability program which start taking effect for the 2013 growing season. Tier 2 coverage has been eliminated (shortfall from 70-85% of reference margin) and payments only cover 70% of your loss and not the 85% that they previously covered. On the positive side, if you have a negative production margin your loss coverage will increase from 60-70%.
Review of this and other programs is due in 2015 (half way through Growing Forward 2) but the federal government has led the way in cutting programs and has no intention of correcting the harm they have done.
With over 83% of ANS in Ontario covered for 2012, $69,372,609.00 was available for matching deposits by government. Horticulture producers continue to use the Agri-Invest program. However this program for 2013 has been cut by one third so now growers can only deposit one per cent of their ANS for a matchable deposit instead of the previous 1.5 per cent. Once again, the federal government led the charge to slash a program that was working very well for producers.
In 2012 2,051 edible horticulture producers were able to access $23,701,230.91 from the program. So far for 2013, as of November 18, 719 producers had accessed $9,326,989.43. 2013 is the first year that the RMP/SDRM programs have had to operate within the $100 million cap that was imposed upon the programs by the 2012 Ontario provincial budget. The six participating sectors had agreed on a sharing model for the $100 million which would see the SDRM program receive $23 million and the first $2 million of any underutilized funds from the other sectors. With the dramatic drop in corn prices and other grains, there is no likelihood of any underutilized funds, however we will not know for certain until April 30, 2014. The $23 million includes the administration cost of the program which is about $1.8 million. The SDRM Reference Committee meets regularly and is always looking for ways to reduce the admin cost. Initial payouts for SDRM will be at 80% of your eligible matchable and may be topped up after April 30, 2014. The five RMP programs are looking at paying out only about 33% of eligible so our program is doing much better.
There will be a review in the fall of 2014 of the first two years of the program looking at whether or not to maintain the requirement to participate in AgriStability in order to be eligible to participate in SDRM. Lobbying will continue to maintain the SDRM program and so far there is all-party support for that.
Growing Forward 2 Non-BRM
At the time of writing (early December) there are no statistics available on the uptake for the new programs. Growers are able to access up to $350,000.00 over the five years of Frowing Forward 2 at either 35 or 50% matchable levels depending on how "Innovative" your project is. The process is fairly intensive to apply, but the opportunities are the greatest they have ever been. There are "Capacity Building" funds available at up to 75% matching. There are regular intake periods for project applications and workshops by OSCIA who are managing the producer part of the program. What is unique this time is that a collaboration of growers could have access for up to $3 million of funding over the five years. The quality of your project and how well written your application is will determine whether it is successful or not. This move to "Merit Rating" projects is new for GF 2 and will take time for producers to adjust to.
Alternative Risk Management (ARM)
Private risk management programs are a big focus of the federal government so many organizations are looking at what currently exists in other countries and commodities and what might work here. There will be more info available during 2014.
To conclude, there has been essentially a downloading of the responsibility for risk management from government to producers. Our programs such as AgriStability and Agri-Invest have been essentially gutted and we as growers are now bearing more of the risk. This has been driven by the current federal government, which prefers to listen to organizations like the OECD, rather than the farmers who actually use the programs. The need for well-designed and well-funded programs has never been greater.
Mark Wales, Chair, Safety Nets Committee
Self-Directed Risk Management (SDRM) information
On June 29, 2011, the Ontario government announced a new Self-Directed Risk Management (SDRM)program for the edible horticulture sector.
Farmers have long been asking for a bankable, predictable and stable risk management program as the fruit and vegetable sector has been suffering through a prolonged economic downturn.
OFVGA worked collaboratively with fellow members of the Ontario Agriculture Sustainability Coalition (OASC) to develop a long term, permanent risk management solution for farmers of non-supply managed commodities.
The Self-Directed Risk Management (SDRM) program for edible horticulture is based on financial contributions by both farmers and the provincial government.
For more information, visit the Agricorp website.
Safety net programming
AgriStability protects producers from large declines in their farming income caused by production loss, increased costs or market conditions.
Your allowable income and expenses for all the commodities you produce are used to calculate your margins, protecting the income of your whole farm.
More information: www.agricorp.com/en-ca/Programs/AgriStability/Pages/Overview.aspx
In Ontario, AgriInvest is delivered by Agriculture and Agri-Food Canada.
AgriInvest is a savings account with matching government contributions. You can withdraw funds at any time to alleviate risk or make other investments.
Each year, you can deposit up to 1 per cent of your allowable net sales (ANS) into your AgriInvest account and receive a matching government contribution. ANS are the net sales of most primary agricultural commodities, except those covered by supply management (dairy, poultry and eggs). Production Insurance claims are considered allowable commodities.
More information: www.agr.gc.ca/eng/?id=1291828779399
More information: www.agricorp.com/en-ca/Programs/ProductionInsurance/Pages/Default.aspx
Over the past year, OFVGA and the safety nets chair have been responding to various provincial consultations that have taken place on a variety of topics. Particular to the safety nets section has been climate change. The following discussion paper was written to respond to Ontario's Climate Change Discussion Paper. Click the link below to download a copy of the OFVGA response.