Good morning, and thank you for the opportunity to present to you.
In April, MNP provided this committee with a number of recommendations for improvements that can be made to the existing suite of business risk management programs to support Canadian farmers. Our goal then, as it is today, was to suggest to this committee how simple changes to the AgriStability program could support Canadian farmers through COVID-19 and beyond. We are pleased that a number of our initial recommendations have been adopted already by various BRM administrations across the country. Our hope is that many of these constructive changes remain in place and become permanent features of the program.
There is a broad discussion happening across the country related to business risk management programs, with diverse opinions as to the right way forward. This discussion is crucial as we work to improve BRM programs to safeguard both our food supply and the economic contribution of Canadian agriculture.
Today we are going to focus on what we feel are two specific improvements that can be made to ensure that AgriStability meets its stated goals of equitability across all sectors, and to make the program simpler and more predictable, bankable, transparent, responsive, timely and decision- and market-neutral. Our presentation today is not exhaustive, nor does it address all the potential improvements to AgriStability. Rather, today we will focus on issues of fairness and equitability in the program.
Our first recommendation is to temporarily remove the $3-million cap on payments and consider whether a cap is even necessary moving forward. Farm sizes have grown tremendously since the inception of AgriStability. In our experience, a $3-million cap is not reflective of the reality facing contemporary agriculture operations, and it unjustly exposes those operations to additional risk based on an arbitrary threshold.
While unfair to any large producer, the cap is a particular problem for certain grain operations, nurseries and feedlots. While the government may feel that a cap is warranted to address the total cost associated with the program, our preference would be that the program be applied equitably and fairly, regardless of whether someone farms 4,000 acres or 40,000 acres. That risk per acre is the same.
Our second key point is to remove the reference margin limit. To explain the nuance of this, I will ask Steve Funk, MNP’s national leader for farm income programs, to provide his insight.