Good afternoon. My name is Rob Lipsett. I'm a beef producer from Grey County, Ontario, and the president of Beef Farmers of Ontario. I also sit as the co-chair of the Canadian Cattlemen's Association's domestic agriculture policy and regulations committee. Joining me today is BFO's executive director Richard Horne.
Firstly, we believe that the shared objective of both industry and government is to truly modernize our BRM programming and create an optimal suite of programs that support our collective goal of becoming a global agricultural powerhouse. To achieve this, BRM programs must be designed to be timely, responsive, affordable and equitable.
The beef sector in Canada has the potential to be a key driver of our country's economic recovery from the COVID-19 pandemic. However, one thing that COVID has exposed is the significant inadequacies of our business risk management programs and their ability to address market risks and disruptions beyond an individual farmer's control.
Not only are current programs inadequately funded, untimely, but most importantly, they also lack equity. The structure of our current business risk management suite of programs is a significant contributor to the current system of have and have-not sectors in agriculture. Unlike provinces, under our federal system of government, there's no effective system of equalization for agricultural sectors.
The climate of imbalance has become apparent in Ontario, where we have established supply-managed operations and thriving crop farmers rotating corn, wheat and soybeans. Ontario's beef cow herd has dropped by 32.5% over the last decade. At the same time, corn and soybean production has increased more than 30%, while pasture and hay production has also decreased by more than 30%.
A major factor contributing to this imbalance is how our suite of BRM programs treats different farm operations and sectors. Beef farmers must compete for land, labour and financing with other sectors that have far greater support. While we do not fault our neighbours for the security they have access to, we do need action on the commitment governments have made to improve the equity in our BRM programming, to ensure that all farm sectors have the tools needed to remain viable and grow.
The continued inequity in programming, we believe, has gone ignored for far too long and has manifested itself in the beef sector's current climate of uncertainty, risk and continued marginalization. We are keen to work with the governments to quickly address these challenges by implementing program-specific recommendations.
BFO and our counterparts across the country have recommended a number of changes to AgriStability to improve program equity and effectiveness for beef cattle producers. These include the removal of the reference margin limit, addressing payment cap limitations, and returning the trigger back to 85% of the reference margin.
I would like to place additional emphasis on the reference margin limit. Operations that have reference margin limiting applied require an extensive if not devastating drop in their program year revenues to trigger benefits. This significantly decreases the value of AgriStability to many producers, especially those with low-cost structures, such as cow-calf producers, who typically produce their own feed and have minimal eligible labour expenses. The removal of the RML will make the program predictable, bankable, and ultimately more equitable for Canada's cattle producers, especially the cow-calf sector.
I would like to point out that the Ontario government has committed to implementing these important changes to AgriStability. Given the current climate of uncertainty and risk that has been amplified by the COVID-19 crisis, the delay in implementing these enhancements, which have broad support across agriculture, is certainly disappointing. Ontario is standing up for its farmers, and we expect our federal government to do the same.
With respect to production insurance, the insurance products offered to livestock producers for hay and pasture pale in comparison with the coverage traditional crop insurance provides to annual crops. Low participation rates in forage insurance, compared with high enrolment in crop insurance, helps tell the story of two very different product offerings.
Hay and forage producers deserve access to yield-based programs designed to insure individual production, similar to what is currently offered to grains and oilseed producers under the various crop insurance programs administered through AgriInsurance. Pasture and forage insurance programs should also be equipped with a mechanism that helps producers account for increased feed prices during times of shortages.
These program design improvements could alleviate calls for AgriRecovery during times of drought or flooding. The inequity between traditional crop insurance and forage or pasture insurance is significant.
Finally, a number of provinces offer provincial insurance programs to help address some of the gaps left by the federal suite of programs. Ontario's risk management program is one example of a provincial-only program that could benefit from federal participation. More consideration by the federal government to contribute to programs like this would be welcomed.
With the significant volatility in world markets due to COVID-19, along with typical risks ranging from weather to trade and production, access to well-designed and sufficiently funded business risk management tools has never been more critical for cattle producers. With these tools in place, the beef industry is well positioned to keep growing the economy and also to support strong rural communities and conservation outcomes from the agricultural landscape.
This concludes our formal remarks. We welcome any of your questions.