CAIS in Point

The Fall of 2006 has delivered us some unanticipated challenges. Most of the corn crop was planted in good time, enjoyed a growing season that with physiological development ahead of normal and with harvest drawing to a conclusion in most parts of the province, is reporting yields that have the potential to set new provincial yield records. May I remind you that last year’s realized provincial yield record of 145 bushels per acre literally shattered the previous record, which was coincidently set only the year previous at roughly 131 bushels per acre.

Another positive scenario which has played out over the past few months is the unprecedented market price increases. There are many reasons to explain this reaction; the drought in Australia perhaps starting the rally and the continuing momentum a direct result of the renewable fuels industry
expansion and speculative monies chasing ownership of commodities. Regardless, for the primary producers, it is welcomed relief from the pounding they have been experiencing from the record lows the market has been delivering for a couple years now. As these opportunities for profit play out, we find that Mother Nature still holds a few cards and wet weather has presented challenges for provincial winter wheat crop planting and crop harvest and quality.

As activities slow and primary producers get some much needed office time to clean up year end paperwork, rummaging through mail yields an unexpected bill for many; an invoice from Agricorp for your 2006 CAIS fee. The amount of the bill is also staggering for some. The calculation contains a fee based on 0.045% of your reference margin plus a $55 administrative cost share. The payment deadline was December 31, 2006, after which time a late penalty applies. The real kicker comes in April 2007, which is when the next CAIS fee deadline comes due.

As these invoices have been discovered, the OCPA office has received many calls from producers looking for advice. Unfortunately, we can’t tell producers whether or not they should enroll in the CAIS program. At this point, all we can offer are the facts and it is an individual’s responsibility to decide if it is a program they require as part of their farm business plan. As for the 2006 CAIS fee, this decision is really irrelevant for this year as producers have received the benefit and now the payment for the program is due.

The most recent Ontario Agriculture Commodity Council (OACC) meeting yielded an interesting debate which stemmed out of a report from the National CAIS Committee. The million dollar question: Is CAIS working? In order to frame the discussion properly, here were a couple more questions: What criteria does one assess to answer the primary question? On the flip side, what is CAIS not doing? It is pretty well known that some general conclusions can be arrived at such as market volatility is a good scenario for triggering CAIS payments and long term sliding margin situations (ie grains & oilseeds scenario) are vulnerable and poorly protected. For many of you reading this article, you are probably saying, ‘you’re not telling
me anything I don’t already know’. However, the reason for its importance; Ontario farm groups have been vocal about the Agriculture Policy Framework (APF) ‘2’ consultation process and the lack of sufficient input into the Business Risk Management (BRM) pillar, a pillar OCPA has been told
consultations have been long completed. The OACC meeting shared with stakeholders that a final BRM consultation (invitation only) would occur mid January 2007.

Another opportunity presents itself. As commodity groups, we need to pull new information together that will support existing arguments. OMAFRA has agreed to work with members of OACC to help provide data where they may. Some possible areas of interest start with the George Morris Study from a few years back that was trying to predict what the new APF was going to do verses the old suite of programs. It is a known fact that all the money allocated to the CAIS program is flowing through, but not all producers are getting payouts. Does that mean the program is not performing the way it is intended? Are producers measuring the success of the CAIS program verses NISA, where most every enrolled producer had access to money on given years? Is there a re-distribution of dollars flowing and if so, where is it flowing? These are just a few of the ideas that will be explored, amongst other things, in order to present the information at the January BRM consultation.

As of today, it appears that the development of APF ‘2’ is chugging along. Timelines for consultations regarding the other five pillars are being planned as we speak. The opportunity to provide input on arguably one of the most important pillars within the APF is something OCPA is taking very seriously and will be well prepared for. Keep in mind, it is only a consultation and it is too early to tell how effective OCPA can be on behalf of its membership. For the time being, it appears that CAIS is here to stay and with the constant threat that any government payouts will be tied to this program, it may leave little alternative for producers.