August 11, 2003

The Hon. Helen Johns
Ontario Ministry of Agriculture and Food
77 Grenville Street, 11th floor
Toronto, Ontario M5S 1B3

Dear Minister Johns:

Re: Agricultural Policy Framework/Business Risk Management

We express the appreciation of OACC member organizations, supply managed organizations (SM-5) and general farm organizations (GFO) for your willingness to underwrite the comprehensive analysis on the APF/BRM proposals which has been conducted through an interactive process with the George Morris Centre (GMC) over the last three months.
Representatives of OACC, SM-5 and OFA met on August 7th to address the results of the analysis and to consider the specific recommendations in the report. Set out below are the preconditions to our organizations supporting Ontario moving forward to sign the BRM Implementation Agreement. We would solicit your support in attempting to achieve these goals. 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 trade embargo injury resulting from foreign diseases such as the recent BSE crisis in the beef industry.
While there are a host of recommendations in the GMC report, all of which warrant consideration by governments, those priority issues for Ontario agriculture are as follows:
Production Insurance (P.I.) must be made universal – one of the original principles of the APF espoused by Minister Vanclief on various occasions. For Ontario, that means:
• a guarantee to develop suitable P.I. instruments for all of agriculture, including livestock, and specifically addressing a joint federal-provincial-producer funded replacement for both Self Directed Risk Management in the horticulture sector and the Market Revenue Insurance program in the Grains and Oilseeds sector to be in effect until the end of the APF Agreement; and
• establishing an appropriate linkage between P.I. and CAISP (it is the opinion of OACC members that the recent changes to this linkage approved by Ministers will erode participation in P.I.).
Use of Capital/Affordability – the GMC report identifies logical and practical options to tying up cash or drawing on lines of credit for the CAISP coverage deposit. Farmers must be given the flexibility provided by these options.
Supply Management – the three pillars of supply management must be included in the APF Framework Agreement recognizing that supply management sales are excluded from coverage in the stabilization tiers but eligible for coverage in the disaster tier. To preserve the whole farm approach, the calculations must be done as outlined in the supply management document on implementation.

CAISP Design/Administration Issues
• Combining the top two stabilization tiers of CAIS into one tier on a 60:40 cost share would simplify the program with very little change in cost to government and be in line with proposed P.I. coverage also at 60:40. This, we believe, would make the new CAISP more understandable and saleable to producers.
• There must be a provision for interim withdrawals.
• There must be negative margin coverage for extraordinary circumstances.
• Due to the different impact on commodities, the treatment of labour in the definition of production margin must be re-addressed with a view to providing flexibility either to producers on an individual basis or to commodities to choose whether arms length labour is treated as an eligible expense or an ineligible expense.
• The issue of having a cap on payments must be re-addressed in conjunction with the criteria for defining a farm unit for the purposes of the program.

Program Review – the time frame and the process for the review must be re-addressed to:
• take place after the first year of operation; and
• involve formal producer input through a process using representatives named by commodity/farm organizations.

On behalf of Ontario agriculture, we look forward to working with you and Minister Vanclief in addressing these issues and through that process implementing the APF/BRM in Ontario.

Original signed by:

John Gillespie Ron Bonnett John Maaskant
OACC Chairman OFA Chairman SM-5 Chairman