For Release: August 22, 2007

ONTARIO'S RISK MANAGEMENT PROGRAM

On June 8, 2007, the McGuinty government committed to the development of a three-year pilot Risk Management Program (RMP) to support the grain and oilseed sector.

The Risk Management Program is a price insurance program designed to offset losses caused by low commodity prices in a given year. This three-year pilot program will provide much-needed income stability to Ontario's 25,000 grain and oilseed farmers. It implements the program proposals developed by the Ontario Federation of Agriculture, representatives of the grain and oilseed sector and other farm groups. The RMP is based on a cost of production formula and funded partly by farmers through premiums. Payments would be made if the average price of a commodity falls below an agreed support price.

The Government of Ontario is committed to providing effective risk management programming for Ontario producers. The province has spent more than $1 billion on farm income support over the past four years.

The provincial and federal governments have pledged to work together to improve the system of food safety nets and secure short and longer-term programs that work for Ontario farmers.

With the recent announcements of the three-year pilot Risk Management Program and the Cost Recognition Top-Up program funding, the McGuinty government is helping Ontario farmers meet current needs and plan for the future. Ontario farmers will have more bankable support and be in a better position to deal with the challenges that nature, global competition, and fuel and input costs present.

Eligibility
All producers who grow one of the grain and oilseed crops previously supported through the Market Revenue Insurance program will be eligible to participate in RMP.

These crops include: Seed, Popping and Grain Corn; Soybeans; Spring and Winter Wheat; Canola; Barley; Oats; White and Coloured Beans; Sunflowers; Rye; Buckwheat;
Field Peas; Flax; Triticale; Faba Beans; Millet; Sorghum; and Spelt. It also includes farm-fed grain crops such as corn silage.

Program Requirements
RMP is designed not as a stand-alone program but as part of a complete risk management package offered to producers. For that reason, producers who want to participate in the new program are required to participate in both the Production Insurance (PI) and Canadian Agricultural Income Stabilization (CAIS) programs.

However, for 2007, participation in the Production Insurance program will be waived as the enrolment deadlines have all passed. As a number of the "minor crops" do not have PI programs available to them, the PI requirement will also be waived for any year in which no PI plan exists for a particular crop.

Producers are required to participate in CAIS for 2007.

Producers are required to enrol all RMP-eligible crops they grow on their farm.

Enrolment
Producers will be required to participate in all three years of the RMP pilot program. Sign-up for the program will begin in September.

Premiums
The province has agreed to waive farmer premiums for 2007.

In subsequent years, as recommended by the grain and oilseed industry, premiums for each commodity will be calculated by taking the provincial share (40 per cent) of 30 per cent of the difference between the support price and the most recent 10-year average market price.

Cost of Production
Support prices will be established individually for each commodity based on the cost of production. The cost of production will be calculated using the last three years of producer data as reported the Canadian Revenue Agency (CRA), with resulting averages indexed forward from the middle year using the Eastern Canada Farm Input Price Index (FIPI).

For example, costs of production for major crops in 2007 have been estimated using 2003, 2004 and 2005 tax data and indexing forward to 2007 using the Eastern Canada FIPI.

Support Prices
In 2007, there will be a single support level available for each commodity. In 2008 and 2009, there will be four support levels available for each commodity, with the estimated cost of production being the highest level. Three lower levels will be created at intervals of 25 cents per bushel between each level. Lower support levels will potentially result in lower payments for a producer but will also mean lower premium costs.

Payment Schedule
Two payments will be issued for most eligible commodities in each crop year. In a few cases, because of data availability, only one payment per crop year may be provided.

The first payment will be based on the average of forward contract prices for six months prior to harvest of each commodity. The second payment will be based on the average of cash or spot prices for six months during and after harvest. The specific months that compose these six-month periods will depend on the harvest dates of each commodity.

The province will pay its 40 per cent share of this program and will continue to encourage our federal partners to assume their traditional 60 per cent share of funding for this program.

Producer payments are expected to commence in December 2007.

Payment Caps
The grain and oilseed industry has recommended that the Risk Management Program include caps on the total payment a producer could receive.

Further Information
Agricorp will communicate directly with producers about the sign-up process, eligibility requirements and additional program details in September.

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Contacts:
Kelly Synnott
Minister's Office
416-326-6439

Brent Ross
Communications Branch
416-326-9342