Safety Nets
Grain Growers of Canada
Reinsurance for Crop Insurance - AGRICORP
CFIA Survey
New Funding for APF Programs
Ontario Implements Phase 2 VW&D Reforms
EU Proposals for New Ag Policy
GM Food Labelling - Impact on Farmers
New Executive Director for AGCare
Bob McKinnon
Corn Prices - July 12, 2002

Safety Nets
Market Revenue Insurance:
On July 17, federal Minister of Agriculture and Agri-Food Lyle Vanclief and Ontario Minister of Agriculture and Food Helen Johns made the long-anticipated announcement of enhancements to the MRI and NISA programs. Under the enhanced program, Market Revenue Insurance (MRI) program for old crop (i.e., the 2001/02 crop harvested last fall) will rise to the 90% level from the current 85% level for both historic yield and support price. Enhancement for new crop (i.e., the 2002/03 crop growing in the field) has not been announced at this time. As anticipated, the announcement also included enhancement of the Net Income Stabilization Account (NISA) from the current 4% of eligible net sales up to 5%. OCPA and other grain and oilseed groups in Ontario welcomed the enhancements, which will help relieve some of the immediate pressure on Ontario’s grain and oilseed farmers while we await decisions on transition funding announced last month.

Table 1, prepared by OCPA and posted on our website (http://www.ontariocorn.org ) late in June, outlines our ‘best guess’ regarding the net benefit of the MRI and NISA enhancements.

Please be advised that this is our ‘best guess’ based on information gathered to date: since many details are still lacking, estimations could change dramatically. In preparation of the table, we made the assumption that the transition payment program announced June 20 would follow the payout mechanism per commodity as detailed in the Trade Injury Compensation program. However, this is not yet clear, and details such as commodities covered, allocations, payment rates, payment methods, etc. have yet to be revealed.

Other things to note regarding the table:
• NISA benefits indicated are government matching contribution only.
• MRI benefits indicated are net of 1/3 holdback in lieu of premium.
• Benefits indicated apply only to ‘old crop’ (i.e., the 2001/02 crop already harvested).
• Benefits would change dramatically for ‘new crop’ (i.e., the 2002/03 crop just planted), because MRI support prices drop sharply if they continue to be calculated using the existing 15-year average price model.
• Benefits indicated are based on full provincial matching of federal funding on a 60:40 ratio.
• The model 500-acre farm uses the approximate ratio of the three major crops in the province: 200 acres corn, 200 acres soybeans, 100 acres winter wheat.

Transition Program Funding:
Two major elements currently under discussion in relation to the new 2-year ‘transition’ funding are of major importance to OCPA and indeed to all of the Ontario grain and oilseed sector:

Allocation of Federal ($1.2 billion over 2 years) ‘transition’ funding across Canada

OCPA is in agreement with the Grain Growers of Canada position that this welcomed support must be allocated based on legitimate and documented ‘hurt’ to those most in ‘need’. It is our long-standing position that the well-documented ‘hurt’ that has been caused by U.S. support programs is concentrated in the Canadian grain and oilseed sector. Grain and oilseed organizations have documented the legitimate hurt and need as well as the remedy ... our Trade Injury Compensation Program. In fact, 28 farm organizations across Canada supported our case and our TICP remedy, including the five national supply-managed commodities as well as general farm organizations such as the Canadian Federation of Agriculture. If federal transition funding is to be allocated on the basis of genuine hurt and need, it must be concentrated on the Canadian grains and oilseed sector. OCPA further suggests that, in the interests of expediency and efficiency, Ontario should receive its traditional 21% of federal monies (i.e., 21% of $600 million in annual federal ‘transition’ funding = $126 million for each of 2001/02 and 2002/03 crop years).

Allocation of ‘transition’ funding within Ontario

OCPA is of the opinion that OMAF must distribute ‘transition’ funding within the province using the same criteria as used for federal allocation .... i.e., allocated based on legitimate and documented ‘hurt’ to those most in ‘need’....with the great majority of funding therefore going to offset injury caused to the Ontario grain and oilseed sector by U.S. subsidy programs. Funds should not be distributed to any sector based on anecdotal or subjective assessment, but must be distributed based on legitimate and documented hurt and need as the Ontario grain and oilseed sector has done. OCPA also believes that shortfalls in production caused by drought, flood, hail, disease or any other production problem should not be used as grounds for distribution. Crop insurance programs, or Self-Directed Risk Management programs, exist to cover those production risks and must not be undermined. To be specific – OCPA believes that ‘transition’ funding should be used to offset the injury caused to the Ontario grain and oilseed sector by U.S. subsidies. Therefore, ‘transition’ funding should be distributed based on that same criteria. The $126 million Ontario portion of federal ‘transition’ funding referenced above would attract an additional $84 million in matching provincial funding for a total to be distributed of $210 million for each of the 2001/02 and 2002/03 crop years.

Grain Growers of Canada
The Grain Growers of Canada (GGC) wrapped up its semi-annual meeting of members on June 25 in Cavendish, Prince Edward Island. Members spent two days discussing issues and setting direction for the association on matters critical to the profitability of grain and oilseed producers across the country. Most prominent among them was the June 20 federal funding announcement, and how it should address a key issue facing growers today – trade injury.

Continuing Effort to Get Trade Injury Compensation
The GGC has spearheaded the development of, and advocacy for, a Trade Injury Compensation Program (TICP) that would offset the damage caused by U.S. and EU agriculture policies. Despite broad-based support that includes federal politicians from all parties, farm groups across the sector, and provinces across the country, the federal government has avoided acting on the TICP proposal to date. Although a number of reasons have been given, the legitimacy of the GGC claim has not been questioned.

While the June 20 announcement didn’t provide funding dedicated to TICP, it did include two year’s worth of money dedicated to a vaguely-defined transition objective. New ‘bridge-funds’ of $600 million per year for two years are being provided federally to help producers meet farm income challenges and make the transition to the risk management programs to be created under the Agriculture Policy Framework. With provincial contributions, the total income support funds would increase to $1 billion per year for the next two years. Federal and provincial negotiations on the fate of ‘bridge-funds’ are still underway at the time of writing.

GGC members at the semi-annual meeting resolved that the $1 billion bridge funds should be targeted specifically to grains and oilseeds producers. This amount of money would cover nearly 80% of the compensation required (i.e., $1.3 billion), which would help knock out a large dent in grain farm income.

Members also agreed that the federal portion of the funds should be allocated to the provinces on the basis of the injury the grain and oilseed producers in the respective provinces have incurred. Direct payments to individual farmers should be made on the basis of grain and oilseed sales. The GGC has already taken steps to communicate this position to federal and provincial ministers.

Meanwhile, GGC members reaffirmed their commitment to continue the pressure for safety net programs to remedy the damage that foreign agriculture policies impose on grain and oilseed farmers beyond the next two years. For justification, one need only recall that preliminary FAPRI analysis shows that crop prices per bushel will be driven down over the life of the 2002-2007 farm bill. In addition, the GGC will also be researching other opportunities and strategies to enhance grain farmers’ profitability.

Maintain Course for Grain Marketing Choice
Members also reaffirmed their commitment to pursue marketing choice for producers of western wheat and barley who are now compelled to market through the Canadian Wheat Board (CWB). Western farmers have been demanding choice in marketing channels, and in response the GGC has developed a proposal that would give western wheat and barley growers the option to market a certain percentage of their production directly. The proposed option is similar to that offered by the Ontario Wheat Producers’ Marketing Board. It has been presented to CWB directors, federal officials and politicians.

The GGC proposal received a boost in an early June 2002 report from the Standing Committee on Agriculture & Agri-Food. In tabling recommendations on the future role of the federal government in agriculture, the Committee recommended that a free market in wheat and barley be created in western Canada on a trial basis. (The same committee also endorsed the proposal on trade injury compensation, and called on the federal government to implement $1.3 billion per year payments until foreign subsidies stop damaging Canadian grower income.) GGC members are of the view that the grain marketing recommendation is wholly consistent with the Committee’s recommendation, and will be attempting to position the proposal as a reasonable option to take.

Road to Trade Reform
The damaging effect of foreign subsidy programs can only be effectively stopped through international agriculture trade liberalization at the World Trade Organization (WTO). Therefore, GGC members resolved to continue advocating aggressive trade liberalization through the elimination of export subsidies, elimination of trade- and production-distorting domestic support, and elimination of barriers to market access for Canada’s grains, oilseeds and related products. The GGC will continue to advocate these objectives both on its own and through its membership on the Canadian Agri-Food Trade Alliance (CAFTA).

Renewed Commitment to the GGC
The GGC is closing in on its second year of operation, and first year being headquartered in Ottawa. Members renewed their commitment to the association, and resolved to continue investing membership in the GGC in order to establish it as a permanent institution representing grain and oilseed farmers nationally. With the strength of membership supporting it, the GGC will be an effective presence on the federal farm policy scene.

CFIA Survey
OCPA has been informed that the Canadian Food Inspection Agency (CFIA) will be conducting on-farm visits in Ontario this summer to talk to growers and gain a better understanding of how well the message has gotten out about the importance of insect resistance management (IRM) in fields where Bt corn is grown.

These farm visits will be conducted during July and August of 2002 and are part of CFIA’s regulatory compliance study of companies that have received approval to market Bt corn in Canada.

The CFIA inspectors will determine how well the companies have informed growers about the importance of IRM for Bt corn. Information obtained from these farm visits will be used only to assess the effectiveness of the companies’ IRM programs.

OCPA encourages corn growers to cooperate with CFIA should one of their study representatives visit your farm. Past surveys show that grower awareness and compliance with Bt insect resistance management procedures is very high. Furthermore, the information CFIA gathers will be utilized only to improve company information/procedures to enhance their IRM programs, and will not be used in any manner negative to growers.

New Funding for APF Programs
Following their June 20 announcement of the Agricultural Policy Framework (APF), and leading up to the Federal – Provincial signing of the APF agreement later in June, the federal government made a series of announcements on several component programs encompassed within the APF. Those dealing with Business Risk management are covered elsewhere in this newsletter. Also of interest and/or potential impact on OCPA members were the announcements on June 24 at Beamsville, Ontario, concerning Environmental Agriculture Measures and on June 26 in French Village, New Brunswick, pertaining to Economic Development Tools for Rural Communities. Some information on these announcements, based on the news releases and backgrounder documents, is provided below. Additional details on the programs are expected over the coming months.

The environmental measures announcement included $100 million over 4 years to help increase implementation of environmental farm plans as well as $54.5 million over 6 years for AAFC (Agriculture and Agri-Food Canada) and the PMRA (Pest Management Regulatory Agency) to increase access to minor use and reduced risk pesticides for Canadian farmers. These funds are part of the $589.5 million earmarked for the four Agricultural Policy Framework pillars, other than risk management.

Minor Use and Reduced Risk Pesticides
The announcement makes it clear that this $54.5 million is new funding, above and beyond the $7.3 million announced in May to increase minor-use and reduced risk pesticide availability (through the development of crop profiles for pest control approaches, identification of major risks, and development of risk-reduction strategies: see July OCP Newsletter for additional details). The new funding will be used by AAFC to generate data in support of minor use and create a program similar to the IR-4 ‘minor use’ program that has been operating in the United States since 1963. A close alliance with the U.S. IR-4 program will maximize efficiencies in field and laboratory studies. The objective is to provide faster registration of a broader range of minor use pesticides, putting “Canadian growers on a level playing field with their American counterparts”, according to Minister of Agriculture and Agri-Food, Lyle Vanclief.

Environmental Farm Planning
The federal government is promoting a “nationally consistent approach to Environmental Farm Plans (EFPs)” and has designated $100 million towards this objective. Their vision includes an initial step of risk assessment or “basic environmental scan” to identify agricultural factors that may pose environmental risks or provide benefits to air, soil, water and biodiversity. A second step would be to develop an action plan to mitigate risks and realize potential benefits. Those familiar with Ontario’s EFP process will recognize that both steps are accomplished by completing the worksheets and the action plan components of our EFP process. The national vision also includes an independent review process (Ontario has a peer-review process) and documentation requirements for demonstrating progress and providing information on implementation measures undertaken.

Alberta, Newfoundland, PEI and New Brunswick have implemented or are planning to initiate EFPs along the same model as Ontario’s, with an initial workshop, a workbook-guided self-assessment for farming operations, and completion of an action plan. In Nova Scotia, farmers are assisted by an EFP coordinator and agricultural engineer to complete their risk assessments and develop action plans. In Quebec, farmers from a given region belong to an advisory club (Club Conseil) where they discuss and receive guidance from an agronomist on improving their environmental management. In the case of Quebec, regional or multi-farm environmental plans may be the expected outcome.

The federal announcement affirms the benefits of EFPs – promoting environmental awareness and mitigation of environmental risks through adoption of environmentally beneficial practices. It also suggests that a nationally consistent approach to EFPs will “lay the foundation for branding Canadian agricultural goods and services as environmentally friendly products, providing farmers with a strong tool to secure world markets”. While OCPA is highly supportive of EFPs and the benefits they provide, we have some trouble buying into the concept that this is going to make people, either here at home or anywhere else in the world, more apt to buy “Canada-branded products”, especially if there is an increased cost involved.

Tools for Rural Economic Development

This announcement, totaling $180 million, encompasses a four-part plan to assist rural communities. The four components include:

• renewal of the Canadian Rural Partnership (CRP)
• a new Community Capacity Building (CCB) program
• a new partnership with the cooperative sector
• an acceleration of rural access to broadband internet services.

Under the CRP, “activities among government departments are coordinated to ensure a comprehensive rural policy approach is pursued,…. to help develop local solutions to local challenges”. Rural Teams now exist in every province to work with other departments, agencies and levels of government. The process is intended to provide local citizens an avenue for input on policy development, and help the “Government of Canada keep in tune with the issues that are important to rural Canadians”.

The CCB is intended to maximize the development potential of rural and remote communities and strengthen leadership capacity within them. The success of the program relies on the skills, talents and abilities of local people in these communities.

The information accompanying the announcement cited numerous benefits of co-operatives in both rural and urban communities, but provided no details on plans to assist or enhance co-operatives.

The federal government has committed to accelerating access to broadband internet services for rural, northern and First Nations communities (i.e., where private sector companies are not providing such service). The intent is to improve opportunities for distance education, enhanced availability of quality health care and improved market access for enterprises in these communities.

Ontario Implements Phase 2 VW&D Reforms
OCPA salutes the Ministry of Transportation for listening to, and adopting, grain and oilseed sector suggestions in its July 2 announcement implementing Phase 2 of Vehicle Weight and Dimension Reforms.

Phase 2 reforms deal specifically with all lift-axle equipped end-dump and open-top hopper dump semi-trailers. Previous proposals had a different reduction in allowable weight after January 2006 for hopper bottom semi-trailers when carrying grain than when carrying aggregate. As implemented, similar configurations are treated the same, regardless of contents.

Phase 2 introduces a 4500 kg gross weight reduction (9000 kg if 2 or more lift-axles) to any new dump semi-trailer built after January 1, 2003 in which existing lift-axles are used. For existing equipment (i.e., built prior to 2003), 4500 kg gross weight reduction (9000 kg if 2 or more lift-axles) applies on January 1, 2011. Existing end-dump semi-trailers that have not reached 15 years of age in 2011 (20 years for open-top hoppers) will be eligible for special annual permits to exempt them from weight reductions until they reach 15 or 20 years of age (respectively).

Consultations on Phase 3, which addresses all remaining lift-axle equipped semi-trailer configurations including double-train dump trailers, will begin in earnest next spring. Lift-axle equipped dump trucks and their trailers, and straight trucks (i.e., feed blower trucks) will be addressed in Phase 4.

EU Proposals for New Ag Policy
On Wednesday, July 10, the European Union (EU) unveiled proposals for reform of the 40-year old Common Agricultural Policy (CAP). As the EU begins expanding into Eastern Europe (especially Poland which has a large agricultural sector dominated by a multitude of small farmers), costs associated with current programs will become prohibitive. Reform was unavoidable because of increasing budgetary pressures.

Measures announced July 10 are to become operational from 2004 and include:
• 5% reduction in the guaranteed price (intervention price) for wheat, corn and barley
• 50% reduction in the guaranteed price for rice
• elimination of intervention purchases (i.e., EU Commission purchases when price drops below intervention level) for rye
• decoupling of subsidies from the level of production, leaving farmers free to produce as they see fit
• introduction of a single income support payment to individual farmers based on the average level of support they would have normally received under the CAP for the period 2000 - 2006
• enhanced cross-compliance requirements such that direct decoupled payments are conditional on compliance with environmental, animal welfare, and food safety regulations
• inspections for farmers receiving more than 5,000 euros (approximately Cdn$6,300) in annual support payments per year
• maximum direct support payments of 300,000 euros/year (approximately Cdn$375,000) perindividual or entity
• reduction of all direct payments by 3% per year until 2010/2011, with the exception of small farming operations receiving less than 5,000 euros annually and employing up to 2 full-time persons (75% of European farmers will be exempted from these annual subsidy reductions).

GM Food Labelling - Impact on Farmers
The Standing Committee on Agriculture and Agri-Food has released its report on recent consultations on the labelling of genetically modified (GM) food and its impacts on farmers, having heard from nearly twenty groups at four public hearings between January and April 2002.

The report is concise, at 6 pages, but provides an excellent overview of the contentious issues pertaining to the definition of GM to be used for the purposes of labelling, the rationale for labelling GM foods, and the pros and cons of mandatory versus voluntary labelling programs. OCPA’s position is highlighted twice in the report (one noting our rationale for supporting the definition of GM as found in Canada’s Food and Drug Act regulations, the other refuting the contention that domestic labelling will disrupt international export markets), as was the Consumers’ Association of Canada. AGCare’s position was cited once.

Four recommendations were put forward in the report, as follows:

1) That the government continue to develop a standard for the voluntary labelling of food derived from biotechnology. That standard should use a narrow definition of GMOs, as proposed in the draft standard produced by the Canadian General Standards Board.

2) That the government intensify research into the benefits and risks to human health and the environment of agricultural products derived from biotechnology, and bring forward a public information program.

3) That the government assess the additional costs, particularly for farmers and consumers, of implementing segregation and tracking systems, which are necessary for the labelling of GM foods, and report to the Committee and the House of Commons.

4) That the government assess the trade implications of mandatory versus voluntary labelling of GM foods, and report the results of this assessment to the Committee and the House of Commons.

Although OCPA does not concur with all of these recommendations (particularly the recommendation for a narrow definition of GMO), we commend the Committee for their efforts to discern a reasonable path forward on a complex and contentious issue. We also commend the Committee for their strong stance of support for a voluntary labelling approach (despite the dissenting votes from the NDP and Bloc Quebecois on this specific issue.) OCPA looks forward to the recommended studies to determine the true costs to farmers and consumers of crop segregation and tracking systems, and of the actual implications of domestic labelling policy on international exports.

Prime Minister Jean Chrétien was presented with a gift basket of corn products by OCPA Director Lloyd Crowe at the June 20th announcement of new federal funding for agriculture. He is accompanied here by federal Agriculture Minister Lyle Vanclief and Murray Calder, Vice-Chair of the Standing Committee on Agriculture and Agri-Food. The gift baskets of corn products were designed to highlight the many ways in which corn is used in a variety of consumer and industrial products, emphasizing the importance of our industry to the Ontario’s and Canada’s economy. Baskets have been delivered to all Ontario MPs and MPPs.

New Executive Director for AGCare
Diana Macdonald, a Brock University science graduate with more than 13 years of experience working in the agriculture industry, has been appointed as Executive Director for AGCare (Agricultural Groups Concerned about Resources and the Environment). She will assume responsibility for the coordination of AGCare’s Public Information and Crop Technology/Food Safety Communications programs in her new role with the coalition, of which OCPA is an active member.

Macdonald replaces Brenda Cassidy, who is now Director of Communications for OCPA.
AGCare is a coalition of farm groups representing more than 45,000 field and horticultural crop growers in Ontario.

Bob McKinnon
Members of Ontario’s farm community were saddened to hear of the sudden passing of Bob McKinnon of Saugeen Shores early in July. Bob’s long involvement with the Innovative Farmers’ Association of Ontario included many proactive efforts on behalf of the farm community, including work with the Ontario Field Crops Research Coalition as well as work in the areas of greenhouse gases and nitrogen management. His effective leadership will be greatly missed.

The above figures are based on levies received by OCPA for commercial sales.

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