Good morning.
I am here today on behalf of the Union des producteurs agricoles. I am a farmer in Lac-Saint-Jean, Quebec, and the association asked me to give a presentation on agriculture programs.
The agristability program is without a doubt the main risk management program available under the current policy framework, Growing Forward. Unfortunately, the program has a number of flaws, so it is not quite the safety net farm producers were hoping for.
To begin with, certain sectors have seen a continuous decline in market prices in recent years. Most of the time, these declines are due to various factors that have nothing to do with structural changes in the affected sectors. For example, these issues can be attributed to the normal price cycle in the sectors or a range of specific events, including the economic crisis and the H1N1 flu pandemic.
Like the former Canadian agricultural income stabilization program, or the CAIS program, the agristability program does not provide an adequate response to a prolonged drop in prices, as my neighbour here just mentioned. What these drops do is shrink reference margins, so the program can no longer respond to the situation. At worst, it may even disqualify farms that are still viable. And the proof is that a number of other ad-hoc programs have been put in place since the CAIS and agristability programs came into effect, and some provinces have augmented margin calculations under the program in order to obtain more support during a crisis, when the basic program stops working.
Furthermore, farm producers complain that agristability does not provide predictable response measures, that it cannot be used as security with a financial institution and that it disadvantages producers with diversified farms.
As a result, we recommend that the agristability program be adjusted as follows:
First, we recommend that, every year, producers be allowed to use the better of the Olympic average or the average of the last three years, for the purpose of reference margin calculations. That way, certain producers who would not be entitled to payments because of the average would receive them.
Second, we recommend that the viability test applied to negative margins be eliminated. Currently, producers with negative reference margins for at least two of the three years used to calculate the preference margin are not eligible for any protection.
Third, we recommend that coverage for negative margins be increased from 60% to 70%. Currently, the government compensates producers for up to 60% of their negative margin. This measure would allow producers to choose between the top 15% of margin reference coverage or agriinvest.