Thank you.
Good morning, Mr. Chair and members of the committee. Thank you for the invitation to address the study on business risk management programs in Canada's agricultural sector. My name is Ben LeFort. I am a senior economist at the Ontario Federation of Agriculture.
OFA proudly represents more than 38,000 farm family members across Ontario. Our members produce over 200 commodities, and OFA advocates for an agri-food sector that drives over $50 billion in provincial GDP and sustains over 750,000 jobs.
The primary message we bring to the committee today is that the risks Canadian farmers face have increased dramatically both in the severity of the risks and in the types of risks, and that these risks are unlikely to go away anytime soon, which means that we need new investments in our risk management programs to help farmers navigate this increased risk.
Historically, agricultural risk was viewed through a more narrow lens of more episodic, isolated events. Today, producers are battling the compounding impacts of climate change, and severe weather events are much more routine rather than rare. Farmers are highly exposed to uncertain trade policies, restricted market access, increased volatility and geopolitical shocks. Because agriculture is a deeply interconnected global industry, any international instability—whether it's the Russian invasion of Ukraine or the conflict in Iran—always hits the agricultural sector.
We are living through this right now and navigating through energy and fertilizer price spikes. When you combine these elevated input costs with elevated interest rates and mounting farm debt loads, the result is a squeeze on producer margins. Farmers are price-takers. They have no ability to pass these costs along to the consumer. Every single external shock is a direct hit to farm profitability.
Our latest farm business confidence survey paints a stark picture of this reality. When we look at the producers who rank “improving risk management programs” as a top policy priority, their economic outlook is overwhelmingly categorized as “not so confident”. The compounding risks they face have frozen investment, with the majority of respondents telling us that their growth plans are simply to maintain the status quo rather than expand their operation. They tell us every day that they are being weighed down by rising input costs, escalating insurance premiums, heavy tax burdens and commodity price volatility.
The modern risk environment and the margin squeeze that farmers face require enhanced public investment. In light of the financial squeeze farmers face, further investments on key risk management programs, such as AgriStability, are necessary for farmers to have the confidence to make further investments in their business and to help the sector and the country reach their full economic potential. While we applaud many of the recent improvements to the AgriStability program—such as the removal of the reference margin limitation provision and increased compensation rates—we hear consistently from our members that their number one priority within that program is to restore the payment trigger of the AgriStability program to 85% of historical reference margins.
Furthermore, we greatly appreciate the government's flexibility in adjusting the interest-free limit under the advance payments program over the past number of years. However, as we all know, the geopolitical risks and the increasing input costs farmers face are likely a permanent new reality. This is why OFA continues to advocate to change the program guidelines to permanently increase the interest-free portion of the advance payments program to $350,000.
To truly help farmers navigate this period of uncertainty and financial pressure requires a whole-of-government approach that links policy tools across the entire Government of Canada, not within just one ministry or department. The Canadian agri-food system, encompassing both primary agriculture and value-added food processing, is an undeniable economic powerhouse for Canada. It contributes over $150 billion to our national GDP, and it helps sustain over 2.3 million jobs. In fact, food processing now stands as Canada's largest manufacturing sector in both GDP and employment.
As we approach the next policy framework, we ask that the government recognize agri-food as a core strategic industry of national importance to our economy. Supplementing increased NPF funding with further infrastructure programming to help get agri-food goods to market, growth-oriented tax policies and a focus on expanding our domestic processing capacity will ensure that we value-add our raw commodities here at home, insulating Canadian farmers from international volatility and securing Canada's food sovereignty.
Thank you. I look forward to your questions.