The next topic is business risk management, and in particular, the agri-stability program.
Canadian farmers are experiencing a prolonged income crisis. Federal agriculture policy has consistently promoted increasing agri-food exports, regardless of the impact on Canadian farm families, farms, and food supply.
Federal policy also adheres to market fundamentalism, the belief that markets will solve all problems without recognizing the vast differences in market power between a farm family and the global corporations that supply farm inputs and purchase farm products, and the impossibility of fairness under these conditions. Nor does the market recognize the non-financial values, such as culture, health, community, and ecological integrity, that are important to citizens.
The National Farmers Union advocates for a policy that would bring about food sovereignty, a profoundly different approach to agriculture and food policy that would support the livelihood of farmers, ensure adequate and wholesome food for consumers, work in co-operation with nature, and include citizens in meaningful decision-making regarding the food system.
In the absence of a food sovereignty based federal agri-food policy, we do need safety net programs to help family farms survive the ongoing crisis. The BRM suite needs to be designed in such a way that it actually protects small and medium-sized farms and co-operative farms, and allows them to maintain and build their farms as viable businesses that can be passed on to the next generation of farmers.
While we could make recommendations on many of the BRM programs, we will focus our time on agri-stability. Over the three policy frameworks, there have been substantial changes to the agri-stability program. In the first round, farmers found it relatively effective. Under Growing Forward, it appeared less farmer-friendly, only getting triggered with a drop in income of 15% or more. Under Growing Forward 2, it has become inaccessible.
To make our recommendations more tangible we will share with you the experience that some of our members, who are wild blueberry producers in northeastern New Brunswick, had this year.
Wild blueberry prices have steadily declined in recent years. Some say it is cyclical, while others strongly believe that this current low price, and low price forecast for the upcoming two to three years, is due to an agreement our provincial government made to allow one mega-producer processor to set up in the Acadian peninsula, or northeastern New Brunswick.
This highly contested agreement gave loans and grants to open a processing facility, as well as 15,000 acres of prime crown land, much of which had been requested and denied to other producers in the previous 10 years. This deal will allow one company to essentially double the previous production in the region, creating a market monopoly.
Regardless of the reason, prices were about 30ยข per pound this year. Producers who have been registered in agri-stability for years, but who have not had to draw on it since the previous Growing Forward agreement before 2013, were blindsided as to what the new 30% loss trigger and new margin cap actually meant for their program eligibility. The worst crop price in history was seen in 2016 and it was still not low enough to trigger a payment.
Currently, agri-stability is only triggered with a drop of more than 30% to the producer's reference margin. The reference margin is the average margin over the past five years, leaving out the years with the highest and lowest income or expenses. On top of that, the reference margin is the lower of either the average gross farm income or total expenses. This margin cap means that most farmers will never be eligible for this program, even if they're in huge financial difficulty.
We believe the current example to be representative of the experiences in other sectors in different years. With that in mind, we provide the following recommendations. Agri-stability and all BRM programs must genuinely be made in the interest of family farmers, not in the interest of how much money can be saved for government. To reduce the total payouts by BRM programs, we recommend that the next policy framework include policies that protect farmers from the extreme price volatility of global markets, by focusing on developing our domestic food system rather than prioritizing exports.
We recommend that the government re-evaluate the effectiveness of agri-stability and all BRM programs. Recently, our provincial department of agriculture expressed surprise at how few NB producers were enrolled in the program. Comparing past and current participation rates and payouts may be a helpful indicator to show which versions of the programs were the most beneficial to farmers.
The way agri-stability and other BRM programs are calculated under Growing Forward 2, including the very high payout cap, which is up to $3 million per farm under agri-stability, encourages monocropping and risky business models, and excludes farms that diversify on their own to mitigate risk through mixed farming. This has environmental concerns, and it can lead to increased debt load and inaccessibility of programs to new farmers.
Thank you.