Mr. Chairman and honourable members, thank you for inviting Farm Management Canada to speak before you today.
I am Mathieu Lipari, program manager at Farm Management Canada, leading our risk management initiatives. Our executive director, Heather Watson, is sorry she cannot be here today. She is hosting the first cohort of our new national farm leadership program.
The farm financial crisis of the 1980s caused governments and industry stakeholder groups to contemplate how to best prepare the agricultural industry to better manage against risk and uncertainty. They turned to investing in farm business management. Farm Management Canada was established in 1992 to coordinate farm business management programs and training across Canada to equip farmers with the resources, tools and information to prevent the fallout from the 1980s from happening again and to position Canada’s farmers for sustainable growth and competitiveness. We continue to serve that mandate today.
We are very pleased that the standing committee is opening up discussion on business risk management programs, or BRM programs.
The term “business risk management” has been adopted by government as the term of choice to represent support programs. While this is raising the profile of risk management in agriculture, it has inadvertently led to limiting our understanding of risk management and the tools available to help manage risk. The OECD has cautioned Canada that government policies “should take a holistic approach to risk management, and avoid focusing on a single source of risk", noting that “in many cases, the public farm support programs 'have crowded out other ways to manage risk.'”
Unfortunately, this is exactly what is happening and what we’re trying to correct through our programming.
When first announced, the Canadian agricultural partnership framework identified six priority areas: markets and trade; science, research and innovation; risk management; environmental sustainability and climate change; value-added agriculture and agri-food processing; and public trust.
We expressed concern for the lack of explicit attention to farm business management and capacity building as a priority. Farm business management and skills development fall under markets and trade, and risk management is reserved for the BRM programs, perpetuating the idea that BRM programs are the only risk management option.
As the CAP program has come into effect, we have observed decreasing support for farm business management—and, by extension, risk management—from many of the provinces and territories. This decline is expected to continue.
We started realizing that we have a different understanding of risk management in 2013, when we attended a risk management conference in Ottawa and the only risk management strategy being talked about was insurance. This led us to research the different types of risk faced by farmers and possible risk management strategies.
We produced a publication called the “Comprehensive Guide to Managing Risk in Agriculture” in 2014. Our aim was simple: to show Canada’s agricultural industry the risks we face and how we could start to manage these risks by taking a comprehensive approach.
Risk management is about taking a proactive approach to build the underlying capacity to weather any storm and to seize opportunities, positioning the farm for continued success. It is in this way that farm business management is a fundamental component of risk management. The BRM programs are just one way that farmers can manage certain risks. Farmers should be optimizing their use of these programs while also optimizing the other risk management tools available to them, such as planning, working with advisers, putting standard operating procedures in place, etc.
Top farmers focus their efforts on putting measures in place to manage the risks they can mitigate directly, measures such as having a solid business strategy, knowing how to work with family, finding ways of recruiting and keeping good labour, ensuring good cash flow and liquidity, and the list goes on.
In 2016, with the support of AAFC's AgriRisk initiatives program, the comprehensive guide was turned into an online risk identification, assessment and planning tool called AgriShield, which identifies more than 500 best management practices to help farmers mitigate risk.
Under CAP, we have been able to secure additional funds to launch the Roots to Success project. It’s important to note that it wasn’t easy to secure funds under the risk management funding program, which seems to remain designed for insurance program development.
During the FPT ministers' meeting in July 2018, increasing risk management education was recommended. We worked with AAFC to open the discussion to risk management in general by hosting a national focus group involving key stakeholders. The core messages from this meeting included building confidence and supporting mental health through strategic planning, continuous education, working more collaboratively with others, involvement in industry associations and embracing technology as key steps to improving a producer’s capacity to manage their risk, going beyond the BRM programs.
Our Roots to Success project is aimed at improving risk management through education and training that promotes a comprehensive approach to managing risk under the AgriShield platform. A national round table has been set up to steer the project and achieve a more comprehensive approach to managing risk for Canada's agricultural sector.
The BRM review work of the standing committee, along with Canada's agricultural policy framework, offers an incredible opportunity to promote farm business management as Canada's best risk management strategy. We hope that government and industry will invite us to be part of the BRM review, so that we can encourage farmers to adopt a comprehensive approach to managing risk.
A comprehensive approach provides a systematic means for farmers to manage that which is in their control, use the appropriate tools to manage that which is outside of their control, and invest in what works. Our process for making informed business decisions is now more critical than ever. The time has come to take a comprehensive approach to managing risk in agriculture.
We look forward to reading the committee's report on this topic. We're happy to keep you informed of our progress and report back to the committee as often as you like.
Thank you, Mr. Chairman, members and guests.