Ontario Canada Agricultural Policy Framework
Business Risk Management

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Canada and Ontario will cost-share business risk management programs on a 60:40 basis. While these national programs are demand driven, it is estimated that on average Ontario will provide $120 million per year and Canada will provide $180 million per year.

Business Risk Management (BRM) programming (agricultural safety nets) was first implemented in Canada and Ontario during the 1950s and 1960s to provide a level of protection from income volatility. Since this time, the number and design of risk management programs have evolved in response to changes in the domestic and international markets.

More recently, agricultural safety nets have been governed by multilateral framework agreements.

The Agricultural Policy Framework, the most recent agreement, establishes two national BRM programs that will be available in all provinces. The two programs, the Canadian Agricultural Income Stabilization Program and the Production Insurance Program, are intended to be complementary in design with linkages between them.

This two-program set is designed to meet the following key principles:

• Permanent disaster coverage for farmers;
• Equitable treatment of all farmers, across all commodities and in all provinces;
• Better direction of government dollars to need;
• Affordable coverage for beginning farmers;
• More effective assistance in back-to-back disasters; and,
• Streamlined programs that work well together.

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Canadian Agricultural Income Stabilization (CAIS) Program

The CAIS program protects farm operations from income declines. It does this by combining stabilization assistance (Net Income Stabilization Assistance, or NISA) and disaster assistance (Ontario Farm Income Disaster Program, or OFIDP) into one program.

CAIS is built on the philosophy that governments and producers share in the cost of replacing lost income. For smaller losses, producers and governments will share the burden equally. As losses deepen, the share of government funds increases to four times the amount the producer shoulders - or four dollars to every one dollar the producer contributes.

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Production Insurance

Under the APF, Canada-Ontario Crop Insurance, a proven and valuable production risk management program, will expand to become Production Insurance (PI). This expansion provides the opportunity for non-traditional production coverage in Ontario such as: risk management products for livestock; coverage for events like rainfall; and enhanced coverage for higher value crop varieties.

Research is underway to determine recommendations for the future of PI in Ontario including:

Horticultural Plan Review
The APF offers opportunities to develop new options and enhance current solutions to provide better risk management tools for Ontario horticultural producers.
AGRICORP, a Crown agency of the Ontario Ministry of Agriculture and Food, will complete a market needs assessment in cooperation with industry groups. The assessment will provide a foundation for recommendations for future programs that are applicable, effective and efficient for the horticultural producers of Ontario.

National Livestock Feasibility Study
Under the APF in Ontario, the traditional notion of Crop Insurance may expand to include production insurance for livestock.
AGRICORP is participating in a feasibility study to ascertain Ontario's

• potential need
• available options
• related costs
  This study will be completed in 2004.

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Value-added options for grain and oilseed insurance plans
At present, indemnity is calculated using the basic value of a commodity - not recognizing value-added segments within the grains and oilseed sector (i.e. identity preserved, pedigree seed, protein in wheat, etc.). Customer needs assessment and market analysis will be conducted to make recommendations to address the risk management needs (production and quality losses) for value-added products within the grain and oil seed sector over a three- to five-year period.

Expansion plan for rainfall event coverage for forage
Ontario has received worldwide recognition for its efforts to provide a unique form of insurance for forage producers. Forage rainfall event insurance uses rain stations in close proximity to customers to measure rainfall and calculate claims.
Although availability is limited at present a plan is being developed to provide this product to all Ontario forage producers by 2006.
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The APF recognizes that applying insurance for significant impact "events" is an alternative approach to traditional production risk management for some crops.

 

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Provincial Companion Programs

Under the APF, federal and provincial governments have agreed to a transition period during which province-specific programming can be offered in addition to the national risk management programs (Production Insurance and CAIS). The intent is that companion programs be phased out by year four. The annual review of BRM programs will provide a mechanism to evaluate how effectively national programs address risks currently covered by province-specific programs.

Under the previous federal-provincial framework agreement, Ontario producers have had access to several province-specific programs. These programs were developed to provide assistance or cover risks that were not adequately covered by existing national programming. With the exception of the Research and Development Fund, which is federally funded, and Wildlife Damage programs, which are provincially funded, all other programs are jointly cost shared by Ontario and Canada.

The federal and provincial governments have allocated $173 million to fund Ontario specific programming during the three-year transition period. Details regarding the availability and funding of Ontario's companion programs are currently being developed in consultation with Ontario farm groups.

Programs eligible for funding and continuation are outlined below. The government of Ontario is working with stakeholders to determine which combination of programs will most effectively meet the industry's needs.

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Market Revenue Insurance

The Market Revenue Insurance (MRI) program in Ontario provides payments to producers of eligible grain and oilseed commodities when current year weighted average prices fall below support prices. Payments are calculated by applying the price shortfall for a commodity to an individual producer's guaranteed production level. One-third of program payments are deducted in lieu of producer premiums. The MRI program covers 20 eligible crops (corn, soybeans, winter wheat, spring wheat, spring grains, white beans, coloured beans, canola, seed corn, popcorn, sunflowers, field peas, flax, triticale, faba beans, buckwheat, millet, rye, sorghum, spelt).

AGRICORP administers the MRI program and delivered the final payments for the 2002 crop year in December 2003. AGRICORP is still collecting planting (acres) and harvest (yield data) for the 2003 and 2004 crop years.

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Self-Directed Risk Management Program

The Self-Directed Risk Management (SDRM) program has been offered since 1996, as an alternative to Crop Insurance for selected horticulture crops. The program is open to producers of commodities that either have no available Crop Insurance plan or where the plan is inadequate and poorly subscribed to.

The SDRM program has been administered by the federal NISA administration and delivered as an enhancement to the base NISA program. Producers may deposit an additional four per cent of their eligible net sales (ENS) and receive matching deposits from government. In the event of a crop loss or failure, this additional deposit can be accessed through the triggered withdrawal mechanism. With the winding down of NISA, Ontario has asked AGRICORP to investigate possible provincial delivery options.

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NISA Enhancements (General Top Up and Edible Horticulture Top Up)

The general top up allowed all NISA participants to contribute an additional one per-cent of their ENS and two per-cent of their ENS for producers of edible horticulture crops.

Plum Pox Virus Program

The program provides financial assistance to commercial fruit growers and nursery operators affected by Plum Pox Virus control measures. Eligible applicants receive assistance for fruit trees that have been destroyed or nursery stock rendered unsaleable.

Wildlife Damage Programs

Ontario provides financial assistance to farmers whose livestock, poultry and honey bee hives have been killed or damaged by wolves, coyotes or bears. Municipalities provide similar compensation if the loss resulted from a dog attack. These programs are administered by municipalities and will continue under the APF.

Research and Development Fund

The federal government has provided up to $3 million per year as a source of research funds for projects identified as priorities by Ontario farm groups. The Canadian Agricultural Adaptation Council administers the research fund.

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For more information:

Canadian Agricultural Income Stabilization Program
Stephen Duff
Ontario Ministry of Agriculture and Food
(519) 826-3468
stephen.duff@omaf.gov.on.ca

Production Insurance and Market Revenue Insurance
Julie Harlow
Manager of Communications and Public Relations
AGRICORP
(519) 826-3984
julie.harlow@agricorp.com

Provincial Companion Programs
John Fitzgerald
Ontario Ministry of Agriculture and Food
(519) 826-4850
john.fitzgerald@omaf.gov.on.ca

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