SAFETY NET POLICY COMMITTEE
Notes for OCPA Annual Meeting
Ontario Corn Producers' Association
March 5, 2008

Grains & Oilseeds Update

Much of the recent OCPA Safety Nets work has been performed in collaboration with the other six Ontario Grains and Oilseeds organizations. The last update at the OCPA semi-annual meeting made reference to the recently announced implementation of the Risk Management Program. Since then, Agricorp has successfully administered the program with the first run of pre-harvest payments totaling more than $40 million going out to participating producers prior to Christmas. Most producers are very aware of the program; the following points will outline future program timelines;

* March 2008 - Producers will receive RMP and Production Insurance information from Agricorp
* April 1, 2008 - Deadline for 'dropping out' of RMP
* May 1, 2008 - Deadline to change your RMP coverage level (there are four to choose from)

The Ontario Grains and Oilseeds Working Group worked hard for a number of years to develop and secure the RMP as an important business tool for your grains and oilseeds operation. When the sector is experiencing the opportunities that exist today, there may be producers questioning the value and cost of RMP. Keep in mind, it is only a three year pilot and if producers do not use this valuable tool, it will make it much more difficult to secure beyond the pilot phase. As history has taught us, prices will come down eventually.

For your information, below is the current Grains and Oilseeds provincial position;

Ontario Grains & Oilseeds
Ontario Grains & Oilseeds is grateful for the provincial government's investment in the Risk Management Program (RMP), a three-year pilot program that was designed by and for Ontario grain and oilseed farmers. Moving forward, we ask the provincial government to:

* Address the losses producers experienced in the 2006 crop year, our worst on record;
* Implement a permanent Risk Management Program (RMP) that would help provide a more stable industry business
xxenvironment for producers moving forward after 2010;
* Continue to lobby the federal government for companion programming to fund RMP to ensure its longevity beyond the xxthree pilot phase.

Growing Forward Update

There has been much confusion during the winter season, as farmers receive their AgriInvest paperwork in the mail and wonder what it means; the recent round of January regional meetings and the many questions that accompanied is proof of this. Part of the problem is that many are unaware of the government announcements made late in 2007 which extended the current Agricultural Policy Framework (APF) for another year until the next generation of programming, now called Growing Forward, is ready to move forward in its entirety. During this extension, there will be on-going consultations on some of the non-business risk management policies; the reason growers are hearing about AgriInvest and AgriStability now is because there has been enough support of provinces and territories across Canada to move forward with these parts of Growing Forward. Even so, some AgriInvest and AgriStability details are still in development and are yet to be reported.

In an attempt to continue to be proactive, Ontario Grains and Oilseeds has formed a coalition to work federally, and has created a strategy that will complement Growing Forward through a proposal called AgriFlex. Program details are provided below; a table at the end summarizes how it all fits together.

Ontario-Quebec Grain Farmers' Coalition
Federally, Ontario Grains & Oilseeds is represented through the Ontario-Quebec Grain Farmers' Coalition (OQGFC), which represents more than 41,000 farm families in Ontario and Quebec with the mandate to ensure the sustainability of the grain and oilseed sector.

WHAT: AgriFlex is a proposal produced by farmers, for farmers. Designed by the Ontario-Quebec Grain Farmers' Coalition and adopted by the Canadian Federation of Agriculture. AgriFlex is intended to fit seamlessly with the federal agricultural income-support programs proposed by the Conservative government entitled "Growing Forward". AgriFlex encourages provinces and producers to design "companion programming" that would address regional shortcomings such as cyclical declines in farm income.

HOW: Essentially, AgriFlex would be a federal funding envelope that can be made available to provincial governments to fund regional programs such as income-support programs, including Ontario's Risk Management Program (RMP) or Quebec's ASRA, both of which are aimed at the grain and oilseed sector. AgriFlex would offer flexibility in regional programming by allowing federal funds to partner with these valuable income-support programs, or by giving provinces the flexibility to better utilize those funds in other ways, such as market development companion programs, or research.

WHY: Farming and farm-income cycles are different across Canada. The biggest weakness of the federal government's outgoing Canadian Agricultural Income Support (CAIS) program is that it imposed a one-size-fits-all income-support framework on farmers across the country. It didn't account for regional distinctions, or the effects of devastating world agricultural subsidies on commodity prices. The latter has been the major reason why grain and oilseed incomes in central Canada have dropped so dramatically in the last few years, well below the cost of production.

WHO: The federal government would fund and promote AgriFlex as its contribution to regional companion programming, based on the established federal-provincial agricultural cost-sharing formulas. Farmers would benefit greatly from no longer having to hope for ad-hoc emergency aid in times of crisis, which, when it does come, is always too little and too late.

WHERE: AgriFlex can help bolster regional programs across Canada, and across all commodity groups. Companion programs can be designed to assist any sector in need, such as those sectors which would receive emergency ad-hoc funding under the current structure. Recently, beef and pork producers have had their livelihoods threatened by a combination of high input costs and crashing prices. AgriFlex can help them weather that storm with a tailor-made solution that meets their needs.

WHEN: Now. The federal government needs to stand up for family farmers and support provincial investments in new and existing programs. We want to work co-operatively with the federal government to build a long-term partnership.

After a half-decade of disastrously low commodity prices, grain and oilseed prices have recovered recently, but they are extremely volatile and could slide again at any moment. Whatever price recovery that occurred in 2007, it will not come close to erasing the devastating losses experienced by farmers going back to 2002.

Family farmers would prefer to see less volatility and more predictability. Since markets alone can't ensure this, we want to have a partnership with government to build a foundation of predictability, and protect the viability of the family farm.

For more information contact The Ontario-Quebec Grain Farmers' Coalition (CGFC) through Lisa McLean at (519) 767-4132.

Corn Production Insurance Program

The following update has been provided by Lindsay Barfoot, Account Lead, Agricorp.

In 2007, the production insurance program serviced 8,646 customers and insured 1,440,609 acres. This represented increases from 2006 of about 14% and 32%, respectively. More than 55% of producers insured their corn crop at the 90% coverage level. The average reported yield of insured producers at 132.93 bus/acre was only slightly less than the long term provincial average farm yield of 133.11 bus/acre - despite severe dry conditions in much of the growing area which resulted in some producers salvaging some of their crop by cutting it in August and September prior to normal maturity. Total insurance claims at $20,193,637 were more than 7 times greater than the $2,841,058 paid out in 2006. Nevertheless, the 2007 claim rate at 3.2% (based on claims approved or in process as at Feb 21, 2008) is less than the long-term average of 6.15%.

The plan's loss ratio in 2007 was 0.51 (also based on claims approved or in process as at Feb 21, 2008) and well under the long-term loss ratio of 0.88. The floating claim price of $3.8878 per bushel was greater than forecast and exceeded the fixed claim price of $3.11 per bushel by almost 79 cents. Reseeding benefit claims were $88,998 and significantly less than in 2006 when they were the highest on record and accounted for 66% of total claims paid. Agricorp worked very closely with OCPA and OMAFRA to monitor the impact of dry summer conditions and service customers who suffered damage, including the development of protocols to fairly assess the yield of corn harvested in an immature/early stage.

Looking ahead to 2008, Agricorp expects to again insure about 70% of the province's planted acreage. Despite 2008 corn price forecasts which are 20+% higher than in 2007, the generally healthy position of the corn insurance plan has meant that insurance premiums have only increased about 7-8%. The fixed insurance claim price for 2008 is $3.65 per bushel. The maximum reseeding benefit has increased to $70 per acre and the corn salvage benefit, which reimburses growers for Sample Grade corn, remains at $0.49 per bushel.

Cash Advance Programs

The new federal Advance Payment Program, which is under the Agricultural Marketing Products Act (AMPA), was implemented in 2007 and offered some improvements to Canadian producers as follows:

*The limit on cash advances increased from $250,000 to $400,000.
*The interest-free amount on cash advances doubled from $50,000 to $100,000.
*Coverage was expanded to include livestock and an additional variety of crops
*Producers now have up to 18 months (April to September of the following year) rather than 12 months to get and repay their xxcash advances.

Amendments to AMPA, received Royal Assent on February 28, 2008 after rapid all-party support in both Houses. The changes affect the new federal Advance Payment Program (APP) where cash flow, through repayable loans, will be improved to all commodities; livestock producers in particular.

The proposed amendments to the APP will provide easier access to immediate cash flow by:

*Removing the requirement for livestock producers to use a Business Risk Management program such as AgriStability as security xxfor a cash advance and allowing producers to use inventory as security. This brings the treatment of livestock more in line with xxother commodities.
*Adding "severe economic hardship" as a condition to offer emergency advances, on the recommendation of the Minister of xxAgriculture and Agri-Food and the Minister of Finance.
* Revising the security requirements for emergency advances and increasing the emergency advance available to producers from xxa maximum of $25,000 to $400,000 in conditions of severe economic hardship.

With program improvements made in December and the proposed changes to AMPA, producers will have quicker and easier access to cash advances and if all producers take advantage of the improved program, an estimated $3.3 billion in advance payments will be available.

For more information on APP, contact one of the following:
* Agriculture and Agri-Food Canada's website under Programs and Services www.agr.gc.ca or 1-888-346-2511, or
* ACC Farmers Financial, www.accfarmersfinancial.ca or 1-888-278-8807.

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