May/June 1999 Editorial - Ontario Corn Producer

Few envy the Hon. Lyle Vanclief, Canada's Minister of Agriculture and Agri-Food - and his dilemmas - as he orchestrates a new national agreement on farm safety net programs.

First there's the national farm income "disaster" program.

The advice given Vanclief during a special November 4, 1998 meeting of national farm leaders and provincial politicians was near unanimous. Almost every speaker called for a new national program patterned after the provincial Farm Income Disaster Program (FIDP) in Alberta. One exception was an Ontario farm representative who voiced apprehension about weaknesses in the FIDP design, but those concerns were dismissed by others.

Vanclief concluded, rightly, that the consensus at the meeting was to "do it." So he did it - in a high-profile exercise with the national media covering every step. The new program was almost identical in design to the Alberta FIDP, praised so strongly by farm leaders on November 4. Vanclief was supported by ministers in some provinces, like Ontario, who quickly implemented their share of the program. Other ministers joined too after a period of whining, causing delays for farmers in their provinces.

So what's been the result? Strong support for Vanclief's action?

Hardly.

In fact, the voices of anger - including that of those leaders who argued so strongly for implementation only a few months earlier - have been strident and numerous:

Forms too complicated, they say, with up to a day needed for completion. (But probably no more complex than forms for NISA or income tax - or the Alberta FIDP - and is it unreasonable to spend a day on forms which can yield cheques in excess of $40,000 per producer?)
Negative margins not covered. (They're not covered with FIDP, either, because of the threat to crop insurance; in fact, this does not affect the number of eligible farmers, but rather, the size of some cheques.)
Current-year government NISA contributions, or deemed contributions, are deducted. (Several years of NISA contributions are commonly deducted with FIDP.)
Inventory adjustments. (The FIDP procedure was also used here.) And more.

The current design could be better, and should be improved in a permanent program. But the tone from many farmers and farm leaders has been simply one of condemnation, rather than appreciation and a commitment to "make it better" next time. With such condemnation, it won't be easy for Vanclief to convince federal Finance Minister Paul Martin, or provincial governments, that this program merits continuous new funding in excess of $500 million per year.

Equity is an equally big headache for Vanclief.

The facts on this are clear. The present formula allocating federal safety net dollars is unfair, and favours the two easternmost Prairie provinces over almost all others. And the oft-repeated Prairie argument that payouts should continue to reflect "relative risk" is phoney, since the present formula does not reflect relative farm financial risk but rather crop insurance premium costs; there's little evidence that the two are much related.

Thanks to strong Ontario government leadership, the equity issue will not be dismissed easily as the last time a national safety net agreement was struck. Ontario has received strong support from most other provinces.

But Saskatchewan and Manitoba have fought valiantly, pleading poverty (though both provinces have balanced or surplus budgets and already finance 10 per cent or more of provincial program expenditures with equalization cheques from Ottawa), relative "importance of agriculture" (but Ontario and Alberta have larger provincial agricultural economies, and Prince Edward Island is the most dependent on agriculture as a percentage of total provincial GDP), existence of supply management (more dairy and poultry production in Ontario means other farmers should get less federal support, they say), and other such "rationale" to support their requests.

Nothing much said about equity and fairness. Or other related inequities.

For OCPA has oft-noted, safety net spending is only one component of the huge imbalance which exists in federal support for agriculture and food across provinces, thanks also to other region-specific programs (examples, the Prairie Farm Rehabilitation Administration and the Western Diversification fund) for which there are no counterparts for southern Ontario. The latest Agriculture and Agri-Food Canada "Data Book" on farm income assistance shows that estimated 1998/99 federal spending on agriculture and food in Ontario was equivalent to 2.8 per cent of provincial agriculture and food output, versus 22.5 per cent for Saskatchewan and 15.8 per cent for Manitoba - and a Canadian average of 6.9%.

If Ontario and other affected provinces hang tough as we hope they will during the continuing negotiations (national agriculture ministers' meetings are scheduled for July and again this autumn) there may be no national consensus. But no agreement is better than a bad deal.

Vanclief may have to make the decisions himself, just as former federal agriculture minister Don Mazankowski did nearly a decade ago. Facing similar dissension, Mazankowski unilaterally set terms of federal participation in shared federal-provincial safety net programs, but wisely allowed provinces significant latitude in design.

(This latitude is a key reason why Ontario was able to design a GRIP program which worked, and why that program still performs very well in Ontario as intended. Interestingly there have been few complaints about 1999 Ontario GRIP payments, even though the interim expenditure exceeds total provincial disaster payouts to date, and an estimated 10 times more farmers are involved with GRIP - with far less administrative costs.)

Vanclief should also remember that Mazankowski's ability to make difficult choices, despite provincial opposition, is one reason why he is considered one of Canada's best agriculture ministers. It's tough at the top for those willing to make tough decisions.