Thank you for the opportunity to speak before the committee. I hope it was worth the wait.
In my remarks, I'd like to focus on AgriStability, which, as the previous witnesses have alluded to, is perhaps the most contentious of the programs in the Canadian agricultural partnership.
As an economist, in theory I find that there is much to like about AgriStability, particularly the fact that it ensures against losses due to changes in input prices, output prices and production. However, in practice, AgriStability has proven to be complex, unpredictable and slow.
A major reason for these issues is that the program relies on a detailed accounting of farms' revenues and expenses, which can only happen at the end of the year. I do note that producers can apply for an interim payment, but few actually do.
Currently, AgriStability offers a payment to farmers when their net margin, calculated as their revenues less their operating expenses, falls below 70% of their historical average. Of course, between 2008 and 2013, the program was more generous, offering farmers a payment when their margins fell below 85% of their average. As we've heard from previous witnesses, many producer groups have argued to reinstate this 85% threshold.
In my remaining time, I would like to speak to three issues. First, I would like to speak a bit about why participation in AgriStability has been declining. Second, I'd like to speak to whether this 85% threshold should be reinstated. Third, I'd like to offer one recommendation for changing AgriStability to allow it to cover revenue as opposed to margins.
While I haven't seen enrolment numbers for recent years, between 2008 and 2017, we saw participation in AgriStability decline precipitously. No doubt one reason for this decline is the fact the threshold was reduced to 70% from 85%. Other reasons include the aforementioned issues of program complexities, timeliness and predictability.
Another potential reason for declining participation rates is relatively strong farm incomes and the ability of producers to otherwise hedge their risks. I'm going to put us in the position of a crop farmer who's deciding whether to enrol in AgriStability around the April 30 application deadline—