Thank you, Mr. Chair, for the opportunity to speak today on behalf of the National Farmers Union.
The National Farmers Union is a direct membership organization made up of Canadian farm families who seek to ensure the dignity and security of income for farm families while enhancing the land and rural communities for future generations.
I'll start by stating what is perhaps obvious: that all farmers want to make a good living by farming. We do not seek government handouts. In fact, when you look up “self-reliance” in the dictionary, you'll probably find a picture of a Canadian farmer.
Business risk management programs are the backstops necessary to enable farmers to continue farming in the face of unexpected bad harvests, low prices or other unexpected events. We note that when we lose farmers to one or two bad seasons, we lose not only their production but the skills and knowledge these farmers hold.
We must have a robust food system that can deliver both production and fair incomes in Canada in the face of such huge shocks to the system as COVID-19 and increasingly erratic weather. A well-functioning BRM program can be part of ensuring this strong food system.
In the past decades, Canadian farmers have lost the majority of their security and income. The chart in your handout entitled “Tackling the Farm Income Crisis” shows incomes, without government support, at the top of the graph. The lower green line is the amount farmers keep after paying for expenses. The dark blue area, the difference between farmers' gross revenues and net incomes, is the money paid out for farm inputs.
Although farm incomes have gone up, farm expenses have gone up faster. The result is that total realized net farm income in Canada is hovering very close to zero. This divergence between the revenue and expense lines has many causes, including deregulation, decreasing farmer market power in relation to both our suppliers and our buyers, cuts to supply management, and leaving important decisions in the hands of corporations without adequate consultation with farmers.
It might be obvious, but I'll state it clearly: This lack of net income leaves the vast majority of Canadian farmers increasingly vulnerable to market fluctuations, weather-related yield reductions, and rising input costs. We are in need of BRMs that work effectively for Canadian farms.
I have a number of brief requests for your consideration.
First, BRM program expenditures were slashed during the transition from Growing Forward 1 to Growing Forward 2 when eligibility criteria were narrowed. An important start for this government, to support farmers and rebuild national unity, would be to reinstate BRM programs to previously supported levels, prior to the 2013 implementation of Growing Forward 2.
The drop in funding for BRM programs post-2012 mostly had to do with capping AgriStability at the lower of the reference margin or eligible expenses and changing the margin drop trigger from 15% to 30%. Therefore, to make an AgriStability claim, you had to have both a precipitous drop in total farm income and high input costs. This would only be available, as a practical matter, to farms that were highly specialized, with high production costs and highly exposed to volatile export markets, such as the hog sector, and it wouldn’t make any sense to enrol if you were a low input farmer with diversified production in a stable market, such as mixed farms selling into domestic markets. Thus, from 2011 to 2015, the participation rate dropped from nearly half of Canadian farmers to less than one-third.
We recommend that AgriStability return to the 15% reference margin trigger and eliminate the eligible expenses cap. We could also continue to ask, as we have in the past, that total payout to an individual farm be capped, we're suggesting in the amount of $750,000; and that all subsidiaries of a large farm enterprise be counted as part of the larger farm for purposes of the payout cap.
Secondly, crop insurance is calculated to address historical risk levels and patterns. The climate crisis is increasing risk and farmers are bearing the brunt of early snows, hailstorms, increasing wind speeds and drought. They will not be able to do so for long with the income fragility shown in the chart I've already referenced.
Given that farmers are the source of what may be the most important national asset of the 21st century, food, BRM programs need to recognize the increasing risk posed by climate change and must enhance farmers’ financial capability to weather these changes.
There is still a high uptake for AgriInsurance, or crop insurance, and there are increasing dollars spent on it. We actually oppose options that would offload that risk management tool onto various private insurance schemes. We would like to have crop insurance expanded so it serves a wider range of farm types and sizes.
It is difficult to assess risk for diversified farms because there are more variables. At the same time, we need to increase on-farm diversity to have the resilience to deal with climate change.
If crop insurance is privatized, it will make it even more difficult for small and diversified farms to get insurance, because they are a less profitable customer for insurance companies. There is a legitimate role for our cost-shared federal-provincial farmer system to help farmers cope with crop production risk.
Third, we hear from many young farmers that they are not signing up for the BRM programs because the paperwork required is overly complicated and onerous, especially during the start-up phase of their business when they may be the most vulnerable.
Please facilitate access to BRM programs as much as possible so that farmers of all levels of experience can reap the rewards during their time of crisis. Because many new entrants focus on domestic markets, we feel that it is worthwhile to recommend that you consider encouraging the development of domestic markets and import substitution so that our farmers will be less exposed to volatile export prices, currency exchange rate fluctuations and unstable export market access. Policies that would support an agriculture economy focused on stability and adequate farm income would help keep the cost of BRM programs down.
Lastly, I must mention the importance of the Canadian Grain Commission in protecting grain farmer interests. The CGC is the watchdog that ensures fairness and prevents more powerful grain and railway companies from taking advantage of farmers by paying less for their grain via weights, grades and dockage. It also ensures that our export products are high quality and can command a high price from export customers.
Keeping the mandate of the CGC to act in the best interests of farmers and ensuring that the CGC has the funds and capacity to enforce the regulations will help keep farmers' incomes to levels where they do not have to call upon BRM programs to survive.
Thank you for your time and consideration today.
I look forward to any questions.