Index
Safety Net News
At press time (mid February), not much had happened nationally
- at least publicly - since the ill-fated meeting of Canadian ministers of agriculture in early January. At that
meeting, ministers from Saskatchewan and Manitoba walked out in a prearranged manner, with lots of publicity, though
their deputy ministers remained in the meeting.
However, ministers who remained in the meeting agreed, in principle, upon a federal allocation based on two pools.
Pool one calls for $600 million in federal funds. It would be allocated across provinces, based on annual sales
of non-supply-managed commodities, and would be used to fund most basic safety net programs. These include NISA,
NISA top-ups, Market Revenue Insurance, crop insurance, and interest costs under the advance payments for crops
program. While the allocation would be by province, the money would be used to finance provincial participation
in a number of federal programs - such as NISA and advance payments. Provincial governments would match the federal
contribution by at least a 60:40 federal:provincial ratio, and would provide additional funds if needed to cover
the cost of province-specific programs (such as crop insurance, etc.)
Pool two, for $500 million, would be used to fund disaster relief programs, the newly announced interest-free spring
advance program (see details later in this article) and to provide additional transition money for Saskatchewan
and Manitoba. This would also be matched, supposedly, 60:40 by provinces, though many details are unclear. For
example, it is unlikely that provinces will co-fund the spring advance program, considering it was announced without
consulting the provinces (or producer groups either, for that matter). And it’s unlikely that Saskatchewan and
Manitoba will agree to match the transition money provision.
Finally, details of the disaster program design and funding arrangement are very unclear. For example, will it
be national or provincially specific in design, and how will provisions be introduced to ensure that the disaster
program is not simply a backup for inadequate pool one program design? It’s easy to envision a situation where
inordinate amounts of federal disaster money might be channeled to a province because of failure to provide decent
support using pool one funds. Indeed, this is similar to what occurred in 1999 when more AIDA and ad hoc assistance
went to Saskatchewan and Manitoba because of inadequate crop insurance programs and earlier provincial decisions
to eliminate GRIP.
Despite the fact that the proposed program continues to favour their two provinces, the Saskatchewan and Manitoba
governments have stated vociferously that they will not agree to the funding proposal, and that they want $1.3
billion in special federal funds, with no matching funds from the provincial governments. Rallies have been organized
by prairie farmers to emphasize this point, though those provincial governments have been careful to deflect suggestions
from farmers that provinces are also responsible for helping address special income needs.
A professional publicist representing a group called the Saskatchewan Farm Income Coalition has requested meetings
with Ontario farm groups, apparently to solicit support for a special $1-billion payout for Saskatchewan farmers.
Members of the coalition include the Saskatchewan government, opposition parties, and groups ranging from the left-wing
National Farmers’ Union to the right-wing Western Canadian Wheat Growers Association. It’s unclear who’s funding
this lobbying effort, and the extent to which the coalition is seeking more money from the Saskatchewan government
as well as the Government of Canada.
Of interest are federal statistics showing total provincial net farm incomes in 1999 of $531 million for Saskatchewan,
$278 million for Manitoba, and $281 million for Ontario. While Saskatchewan farm income is expected to be down
in 2000, and Ontario income up, a special payment of $1 billion to the western province would result in 2000 provincial
net income almost double that projected for Ontario. Even without the special payment, total government assistance
is projected to be $694 million for Saskatchewan in 2000 versus $367 million for Ontario.
There are hints coming from Ottawa that the reward for eastern prairie lobbying efforts may come not in the form
of a better deal out of federal safety net funding, but through additional monies to the Western Diversification
Office or the Prairie Farm Rehabilitation Administration. There is no Ontario equivalent to either of these federal
programs. An announcement may come via the federal budget in late February.
Ontario Plans
Although plans are still in their infancy, there seems to be
a strong will among many Ontario farm commodity groups and the Ontario Ministry of Agriculture, Food and Rural
Affairs (OMAFRA) officials to get on with formulating the specifics of an Ontario safety net program package based
on the deal agreed upon by the minister in January. This commitment to proceed could become more formal after members
of the Ontario Agricultural Commodity Council meet with the Honourable Ernie Hardeman, Ontario Minister of Agriculture,
Food and Rural Affairs, likely in late February.
Ontario’s approximate $125-130 million share of pool one funds – and an added $83-87 million in matching provincial
safety net funds – could be used to fund expected NISA, NISA top-ups, and advance payments for crops expenditures.
These monies would allow for growth in crop insurance and Market Revenue Insurance (MRI) expenditures – crop insurance
because of growth inparticipation and permanent Self-Directed Risk Management programs for some horticultural crops;
increases in expenditures for MRI because of expected heavy payouts in the next few years.
Farm groups and OMAFRA staff have also begun discussions on the nature of a permanent disaster program, to be funded
out of pool two funds. It is assumed that pool two funds will also be used to supplement the MRI account to the
extent to which disaster program expenditures are reduced because of the existence of the Ontario MRI program.
Market Revenue Insurance
At press time, there has still been no announcement of an interim
payment under the 1999/2000 Market Revenue Insurance program, or even any word of the official support level. We
understand the delay is being caused by two factors, one being a concern by OMAFRA officials that no payouts should
be made until more than 50 per cent of the 1999 crop has been sold, to minimize the risk of an overpayment in the
event of markedly improved prices later in the marketing year (this occurred in 1993/94). The second problem involves
a continuing insistence by the Government of Canada that Ontario agree to a deal whereby unused federal funds would
be returned to Ottawa after the end of the 2000/2001 program...and also, that the support level would be decreased
to the 80 per cent level (compared to the existing 85 per cent support) in that event that payouts forced the program
to draw on $112 million in earlier federal contributions to the MRI account.
Ontario has wisely chosen not to agree to these unfair conditions for several reasons. Neither the U.S. nor EU
have any intention of ending their grain support programs in 2001. As well, continued U.S. and EU grain subsidies
are expected to continue to depress crop prices. And the $112 million is Ontario’s share of funds which were allocated
to other provinces through their respective former GRIP programs. Ontario should not be penalized for having had
the foresight to maintain its GRIP program and for setting money aside during a brief period of high grain prices
during the mid 1990s, for use during the inevitable period of low prices to follow.
OCPA continues to work to solve this impasse, but can make no predictions on when announcements will be made on
the 1999/2000 MRI program, and when interim payments will be issued.
Disaster Assistance Plan
The most uncertain component of any new package of farm income
support programs for Ontario farmers is the disaster relief program, recognizing all of the complaints which existed
with the programs run for the 1998 and 1999 taxation years. A special committee of the Ontario Agricultural Commodity
Council (OACC) has looked at options for the design of a future program and decided that the present basic program
continues to make sense – especially for hog and beef producers – but that important changes are needed in design
specifics.
One of the changes the identified is the need for a better means of assessing inventory values at the beginning
of the taxation year. While provincial average values might continue to be used - for example, the same price per
bushel or tonne for all corn in storage across Ontario on January 1, 2000 for the 2000-year program - this price
should correspond with actual average prices on that date. The present practice is to assume that prices on the
first day of the taxation year are the same as values on the last day. This has lead to some serious distortions.
For example, potential participants have found inventory to be valued at significantly different prices on the
last day of the 1998 taxation year versus the first day of the 1999 taxation year.
A second issue is the treatment of farm revenues from NISA and crop insurance. The present practice is to deduct
amounts equivalent to one year’s annual government contributions to NISA from calculated program payouts. In addition,
crop insurance benefits are included fully in farm income in calculating benefits, meaning that the existence of
the disaster relief program acts as a deterrent to the purchase of crop insurance. Disaster relief should not serve
as a substitute for the use of more fundamental programs for income stabilization.
One solution being considered is to debit only a percentage of NISA benefits (actual, or deemed in the case of
non participants) from disaster program payouts. The crop insurance situation is more difficult in that deemed
benefits are almost impossible to calculate in an equitable manner, while ignoring crop insurance indemnifications
completely could lead to double compensation - being compensated for the same economic losses both through crop
insurance and disaster relief. (This could actually lead to farmers realizing greater returns with crop losses
than with normal crops.) One compromise solution is to include only a portion of crop insurance revenues (perhaps
25-50 per cent) in farm revenues for the purpose of calculating potential disaster program payouts.
Market Revenue Insurance (MRI) presents special problems in that (1) the existence of MRI reduces total provincial
payouts under disaster relief, and (2) benefits are often received in the taxation year following the year of crop
sales. The former is analogous to the situation in Quebec where the existence of the ASRA stabilization program
means that disaster payouts are not needed. However, the Government of Canada has agreed to pay Quebec about $120
million (details are not very public) to go into the ASRA account as compensation. The same process must be used
to compensate the MRI account in Ontario.
As for problem (2) identified above, one solution would be to include an estimated amount for projected MRI payouts
for a given crop year – say 2000/01 – in calculated farm revenue, for calculating disaster program eligibility
for taxation year 2000. Once the final amount of the MRI payment was known, months later, an adjustment could be
made (i.e., supplementary cheque issued, or debit made from the MRI payout). This sounds more complicated than
desirable, and simpler solutions may be possible. But it is not reasonable to provide double compensation for losses
through both MRI and disaster relief, because of an anomaly in difference in years of payment.
The matter of coverage of negative margins remains divisive among farm groups. Many, including grain and oilseed
groups, believe continued coverage of negative margins is an excessive threat to crop insurance. The solution proposed
earlier by the Ontario Agricultural Commodity Council, and being implemented in Alberta makes sense: eliminate
negative margins in both base- and current-year calculations.
Finally, the proposals being developed by the OACC make most sense for an Ontario-specific disaster relief program.
Province-specific plans already exist in Alberta and British Columbia. However, there are added difficulties in
ensuring fair allocation among provinces in federal funds when there are large differences among provinces in program
design. (This already exists with crop insurance.) But it may take forever for agreement to be reached on the design
of a satisfactory national program, especially if ministers keep walking out of key meetings. The only answer may
be made-in-Ontario solutions, following the lead of other provinces such as Alberta and Quebec.
Agricorp and Crop Insurance
OCPA congratulates Phil Andrewes, Beamsville-area fruit grower,
and former Ontario Minister of Agriculture and Food, on his recent appointment as chair of the Agricorp board of
directors. Appreciation is also expressed to Renie Long, Middlesex county hog and apple producer, who steps down
after leading the Agricorp board through some difficult times.
Tom Schmidt has resigned as CEO of Agricorp, and has been replaced by former OMAFRA assistant deputy minister Norris
Hoag on an interim basis until a permanent appointment can be made. Schmidt introduced a number of important changes
in Agricorp operations during his tenure, the benefits of which should persist.
A review of the Optional Unit Coverage ( OUC) pilot crop insurance program completed in early February shows that
this program ran very smoothly last year. A survey of participants showed that 92 per cent said they would participate
in the program again. If OUC was not offered again, 32 per cent said they would not take crop insurance again,
while 62 per cent said they would. This matches the OCPA view that OUC is consistent with the association’s goal
of increasing participation in crop insurance.
Administrative costs have been identified as an issue. It is more costly to administer an individual OUC account
than a regular one. However, data have not been provided as yet to show whether it is any more expensive to administer
crop insurance for one 1500-acre farm divided, say, into three optional units, than it is for five separate farms
of 300 acres each. In other words, does OUC really affect per-acre administrative costs?
Another issue is the added premium cost for OUC, with participants being charged premium levels equivalent to 90
per cent normal coverage, but only being ensured at the 85 per cent level with OUC. OCPA is intending to continue
to investigate this anomaly.
The OUC pilot project is expected to run again in 2000. Interested participants should contact Agricorp at 1-888-AGRI-999.
Interest-Free Spring Advances
The Honourable Lyle Vanclief, federal Minister of Agriculture
and Agri-Food, has announced a two-year program of interest-free spring time loans for Canadian crop producers.
At press time, the following was known.
The money will come out of pool two monies (see earlier reference) and will be for a maximum of $20,000 per farming
entity (defined as in advance payments for crops program). Loans must be secured by crop insurance. Farm-fed grains
are eligible. The loans must be repaid by December 31 (or perhaps sooner, if the crop is sold before then). The
loans may be rolled over into the advance payments-for-crops program, in the event of storage or for farm-fed grains.
The program will likely be administered in Ontario by the Agricultural Commodity Corporation (ACC) and in cooperation
with the Ontario Ministry of Agriculture, Food and Rural Affairs. Some costs will be covered by Agriculture and
Agri-Food Canada, but probably not all.
Even though spring is only a few weeks away, much remains to be sorted out. This is likely to be a popular program,
assuming that producer-paid administration costs are not too high. Keep watching for government and ACC announcements.
Application forms and program details will be mailed to fall advance program participants. Full details will be
published in the April issue of Ontario Corn Producer.
Biotech Corn - Planting and Marketing
Plans
OCPA directors wish they were in position to provide clearer advice to Ontario corn growers on what to plant this
spring - or, more specifically, what will be marketable in late 2000 or 2001. However, the following seems to be
the best which can be offered.
Casco continues to state that it is not receiving significant demand for products made from non-genetically modified
(GM) corn, and it does not anticipate a change in purchasing requirements. This also applies for the Commercial
Alcohol Inc. (CAI) plant in Chatham, for which corn is purchased by Casco. Casco and CAI represent a market for
more than 60 million bushels (1.5 million tonnes) per year. The smaller Nacan plant at Collingwood will continue
to purchase waxy corn grown under contract (none is GM) and normal corn (which can be GM). All of the above plants
will continue to refuse delivery of corn containing GM genes not approved for sale into Europe - chiefly, Roundup
Ready corn.
Pioneer has announced that it is not marketing seed of its 38B22 hybrid, containing a combination of Liberty-Link
and Bt genes (each of which is individually approved for EU importation, though the combination is not, in Ontario,
though it is in Quebec). The hybrid 38B22 represented about half of the two per cent of Ontario corn grown in 1999
which was not accepted by Casco, Nacan and CAI.
It’s worth noting that GE genes and protein are generally undetectable
in starch, sugar and oil products made from GE corn - whether EU approved or not - and there is no test which will
distinguish 38B22 corn from a mixture of grain from hybrids which contain Bt genes and others which are Liberty-Link.
But wet millers are being cautious. And GE ingredients can be detected in protein feed byproducts - though not
in livestock products made from these feeds - when sold into Europe and Japan.
Dry millers - of which King Grain is the only one in Canada - are more likely to seek purchases of non-GE corn
this fall, because protein can be detected in most dry-milled products. However, this is not certain. King Milling
has stated it will not be claiming its products are GE free, since this is impossible to guarantee. Instead, it
will say purchased corn was grown from non-GE hybrids and that reasonable steps were taken to ensure separation.
The announcement that Frito-Lay will not purchase GE corn was largely a non event, considering milling-grade corn
hybrids are mostly all non GE at the present time. The announcement could affect future plans to provide companies
with Frito-Lay corn guaranteed to be mycotoxin-free which biotechnology is expected to eventually provide.
Seagram has announced that it will not purchase GE corn beginning with the 2000 crop. This does not affect Ontario
farmers because Seagram buys no corn from Ontario (all ethanol used in Seagram’s Amherstburg plant comes from elsewhere).
Manitoba farmers who sell corn to Seagram’s Gimli plant say that the company has refused to put any requirements
in writing. The company has said nothing about other GE ingredients used in whiskey manufacture, such as enzymes.
Cargill has apparently contracted for 5,000 acres of GE free corn (producers are to be paid a premium basis of
50 cents/bu but must grow Cargill hybrids; other quality specifications are not known). Cargill has similar deals
in the U.S. - it gives premiums for GE-free corn, but the crop must be grown using purchased inputs from Cargill.
Feed companies, pork producers and marketers continue to explore options of producing identity-preserved, premium-priced
pork for export sales, especially to Japan. But so far, no significant volumes have been involved. The Japanese
decision to require GE labels only where GE ingredients can be detected (no detection in any livestock products
fed from present GE corn or soybeans) has reduced the incentive, although there still may be smaller, premium-priced,
niche market opportunities for both pork and corn growers.
Greenpeace, the Council of Canadians and other activist groups continue to put pressure on Canadian grocery store
chains to reject foods made from GE ingredients. The letters continue to be sent, often from fictitious addresses,
according to grocery store contacts. But grocery stores and most food manufacturers continue to resist this pressure.
Checks with seed companies and informal polls at corn meetings this winter indicate the percentage of GE corn grown
in Ontario in 2000 is likely to be about the same as in 1999 - around 35 per cent.
If you are growing non-GE corn expecting premium sales this fall, take reasonable precautions to ensure purity.
But sign nothing which implies a guarantee that the resulting crop is GE free. Seed corn companies say that the
best purity they can guarantee in seed production and handling is about 98 per cent. (Growers say, to check this,
watch the number of plants in fields of Liberty-Link corn that die when the herbicide is applied.) With further
mixing via pollen and on-farm handling, this percentage is expected to decrease. It’s different from soybeans,
which are a self-pollinating crop.
As for guarantees that non-GE crops are grown on land not seeded to GE crops in previous years, these should be
treated with skepticism. Unless there are voluntary plant escapes from the year-one crop growing in the second-year
crop, there are no tests to ensure compliance, to our knowledge. Remember that the genes used in making Bt and
Liberty-Link corn and Roundup Ready corn came from common soil organisms. Soil will commonly test positive in DNA
tests for the active gene. In the case of Roundup Ready corn, the active gene actually comes from corn itself.
Only a few nucleotides are changed in the gene, which normally triggers those plant functions which cause death
with Roundup treatment. (In RR corn, the gene doesn’t work, and the corn plants don’t die.)
Biosafety Protocol
Despite the usual amount of misinformation which has been released
by the media as a result of the Biosafety Protocol Protocol agreement developed in Montreal in late January (it
is still to be (ratified by member countries), the agreement provides for no restrictions when the GE crop or product
is non living. So, there are few implications for Ontario corn where exports to developed countries, other than
the U.S., are almost always as processed products such as starch, sugar, oil, manufactured foods, byproduct feeds
and meat.
The protocol will also likely have limited effects on shipments of living GE grains and oilseeds from Canada, considering
many developed countries already have restrictions on these imports. And developing countries normally just want
safe food. The imports must be accompanied by suitable documentation stating that they may contain GE ingredients.
The protocol adds further incentive to Canadian efforts to process or feed grains at home before export.
The biggest complication may be for exports of non-GE grains and oilseeds where some mixing may have occurred -
for example, canola fines in shipments of wheat. The devil will be in the detail in these cases; tolerances have
still to be established.
The protocol allows for countries to limit imports even though there is no scientific proof of expected environmental
damage. This is not consistent with a science-based approach. But, in practice, many countries are beginning to
do this. Countries retain all rights under the World Trade Agreement. But without doubt, there will be a myriad
of international disputes ahead.
The key message from the protocol must be repeated: process Canadian grains and oilseeds at home and export processed
products. This has been the OCPA export market philosophy for many years.
Thanks to AGCare
OCPA again expresses its thanks to AGCare for its continuing
tireless efforts to ensure that the public hears a balanced message concerning benefits and risks with genetically
modified foods. Other strong spokespersons include Dr. Doug Powell at the University of Guelph and Dr. Gord Surgeoner,
president of Ontario Agri-Food Technologies. The AGCare message is also very consistent with statements coming
from the Consumers’ Association of Canada.
Except for the above, and commodity groups associated with AGCare, most other Canadian farm groups continue to
be quite silent on this issue. Greenpeace and the Council of Canadians continue to work to force all genetically
modified (GM) foods to be labelled - a strategy which, in other countries, has led to the elimination of foods
identifiable as being GM. At the national level, only the National Farmers’ Union has spoken out, and it is very
negative to GM technology.
A positive sign is growing interest among Prairie canola growers in developing a communication mechanism which
parallels – and operates in synchrony – with that of AGCare in Ontario.
GM Food Labelling
Debate over the voluntary labelling of GM foods continues to
be divided between Ontario groups and consumer representatives who want all GM foods to be subject to the same
labelling rules, and those who want to mimic European rules which ignore genetic modifications created though mutations
caused by nuclear radiation and chemical mutagens, and other non-traditional means. Chief advocates for this position
are some chemical companies which are cool to biotechnology in general (because of its negative effects on pesticide
sales), seed companies wanting to market new mutagen crops as non-GM, and those associated with Western Canadian
wheat exports whose goal is to continue to insist that their wheat is all bred using traditional means. (Checks
with Western wheat breeders suggest this is not necessarily true.) This is the case even though voluntary labelling
requirements being developed in Canada will only apply to domestically marketed foods. Labelling requirements in
countries of importation will continue to apply.
Some food manufacturers want labelling requirements to apply only to foods where GM ingredients can be measured,
with reasonable tolerances applied. If this approach were accepted, an estimated 90-95 per cent of consumer products
made from GM corn, soybeans and canola in Canada would not be eligible for labelling and could be labelled as GM-free
- a response which is not likely to received favourably by either activists or the public at large.
Those opposed to the broad definition of GM also ignore the reality that current Canadian law requires ‘novel foods’
created using mutagenesis to be subjected to the same rigorous testing and reviews as those created by inter-species
gene transfers - or, in the case of crops like Roundup-Ready corn and Flav’r Sav’r tomatoes, modifications to existing
plant genes.
Those supportive of very narrow definitions of GM for labelling purposes are also very much out of touch with public
and consumer views. See the article on consumer views published elsewhere in this issue.
Other News
- OCPA understands that JBL has reached a final decision to proceed on
the citric acid plant at Port Colborne. This is good news for farmers.
- OCPA, the Innovative Farmers of Ontario, the Ontario Soil and Crop Improvement
Association, the Ontario Field Crop Research Coalition, and researchers at the University of Guelph and Agriculture
and Agri-Food Canada are developing new plans for research on how to reduce greenhouse gas emissions through expanded
production of no-till corn and more efficient usage of nitrogen fertilizers. More information will be provided
in future issues.
CORN
PRICES (February 8, 2000)
| Period: Oct. 1 - Nov. 30 |
Approximate Tonnes Marketed
|
Average Weighted Price
|
| 1999-00 |
1,143,600
|
$109.31/tonne
|
| 1998-99 |
1,237,600
|
$116.95/tonne
|
|
1997-98
|
761.400
|
$154.52/tonne
|
| |
|
|
| The above figures are based on levies received by OCPA for commercial
sales. |
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