George Morris Centre Report
Impact Of The APF- BRM Programs

Conclusions of interest:
1) “The proposed program would have provided greater support in Ontario than did current programs”. This conclusion is based in part on Table 3.16 “Total Payments by Segment, 1998-2001, Current and Proposed Programs”, and Table 3.17 “Average Payment per Farm by Segment, 1998-2001, Current and Proposed Programs”.

Table 3.16 shows that total payments for all agricultural sectors in the province over the four years would have been 4.2% greater under proposed programs. However, results vary considerably by sector. The Field Crop sector would have received $322.6 million in total under current programs over the four years versus $342.9 million under the proposed programs, 6.3% more. Fruit & Vegetables would have received 8.5% less, Greenhouse Fruit & Vegetables 8.7% less, Swine 16.7% less, and Dairy 27.3% less. Cow-calf operations would have received 17% more, Beef Feedlot 67% more, and Tobacco 17.8% more.

While Table 3.16 suggests Ontario farms in aggregate would have received marginally more payments from government under proposed programs, Table 3.17 supports the notion that this enhancement is not evenly distributed, it is small. Total payments for the four years for the average farm in Ontario would have been $60,730 under the proposed program versus $58,238 under current programs, an increase of just $623/year. The average Field Crop farm would have received $55,696 under proposed programs versus $52,388 under current programs, an increase of $827/year.

2) The enhanced benefits are not evenly distributed across all sectors, nor are the proposed programs equally beneficial to all farmers within any sector. The study concludes “There is a tendency for the greatest benefits to accrue to smaller and larger farms, …” Regardless of farm type, those farms generating less than $50,000 in annual gross sales are universally better off under proposed programs rather than current programs. However, as the table below indicates, results for farms with annual gross sales greater than $50,000 are more varied with much of “commercial-scale” agriculture in Ontario receiving more support under current programs rather than under proposed programs.

3) “The proposed program does a much better job of stabilizing either gross margin or production margin than current programs. This result was robust across farm types and sizes.” This is because the new CAISP employs a production margin to determine both the size of deposits and size of payments whereas the old NISA used eligible net sales to determine contribution size and gross margin to calculate payments. The study determined that production margin (as defined at the time of the study) is a more variable measure than gross margin and therefore is a more sensitive trigger for program payments. Since the trigger is more sensitive, the GMC study concludes it does a better job of stabilizing the farm enterprise.

4) “Nationally, the share of funding to Saskatchewan would increase and other provinces’ funding shares would decrease slightly, …” The GMC study cites Agriculture & Agri-Food Canada’s determination that over the years 1996-2000, had the proposed programs been in place, Saskatchewan producers would have received 38.96% of government payments versus 35.49% under current programs. Ontario’s share would have dropped from 21.21% to 20.53%. Producers in Saskatchewan would have received $305.4 million under proposed programs versus $287.3 million under current programs; while producers in Ontario would have received $160.9 million under proposed programs from both levels of government combined versus $171.7 million under current.

What is very interesting about this data displayed in Table 4.2 of the study is that total government payments in Canada drop from $799.7 million under current programs to $779.2 under proposed programs (all exclusive of Quebec for which data was unreliable). The study concludes, “it would appear that Ontario’s share of total program spending would have declined marginally with the proposed program.” Acknowledging that this assessment of less funding in Ontario is significantly at odds with the earlier conclusion that producers in Ontario would receive increased payments, the GMC study simply says, “this implicitly differs from the analysis in Section 3.0, likely because of the time period …” (i.e., 1996-2000 here versus 1998-2001 in earlier comparisons).

5) The GMC study addressed the issue of systemic injury to the grain and oilseed sector caused by U.S. agricultural policy in only a very cursory manner. Despite acknowledging that, “while there are many other factors that affect prices, subsidies by these two powers are certainly among them”, and that, “it is clearly true that the Market Revenue Insurance addresses prices in the industry directly”, the GMC study quickly concluded that, “the BRM program will be more effective in providing support when revenue is down in the short term.” The inference being, the BRM will not be effective in providing support when revenue is pressured down artificially for long periods of time. The GMC study goes on to state “a stabilization program is, by definition, designed to reduce income instability. It is not designed to provide long-term income support. The two results are two alternative policy objectives.” The GMC study acknowledged “the proposed program does not serve to replace Market Revenue Insurance. We recommend that a successor to MRI should be developed as an insurance product along the general lines of the Alberta product.”

Perhaps the most important observation in the GMC study was highlighted by the Ontario Agricultural Commodity Council in its review of the report and subsequent advice to both Minister Johns and Minister Vanclief. “One important principle identified in the GMC report must be fundamental. The proposed BRM component of the APF is simply not adequate to handle extraordinary circumstances. Alternatives outside the APF/BRM framework need to be developed and jointly funded (by both federal and provincial governments) to address losses resulting from circumstances beyond an individual producer’s ability to control such as injury resulting from foreign subsidies or injury resulting from foreign diseases such as the recent BSE crisis in the beef industry caused by a trade embargo.”

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