It has gone in cycles over the past 50 years, but it appears the battle lines are again being drawn between the federal government and the agriculture industry over farm-support programs.
Various federal officials are claiming the Agri-Stability program is too rich. Essentially, farm support kicks in when a producer’s income falls below 85 per cent of the previous five years’ average income. That level seemed to satisfy the federal and provincial bureaucrats and their ministers in the past, but that was then and this is now.
Now the federal Conservative government is on a deficit-reduction crusade and they have been looking for soft targets that won’t attract a lot of public or media attention. Clearly, the agriculture sector comes to mind when the latter two are a consideration.
After all, city voters and the urban media don’t care much about the fate of a few farmers who have shown a predilection to vote Conservative anyway, no matter how much the government abuses them.
It seems nefarious federal number crunchers determined that if the Agri-Stability support level was reduced to say 50 per cent, the program would likely never pay out and save as much as $2.2 billion. It was finally recommended that the program be reduced to 70 per cent. That would still result in a saving of $1.2 billion.
Clearly, making billion dollar savings at the expense of the agriculture sector is just too tempting for any government. Besides, on the crop-production side, grain and oilseed prices have seen a steady increase and could see new highs if the American drought creates shortages as predicted. That makes growers’ complacent about any changes to the program today, though they might wish they had paid more attention if future prices and markets hit the skids.
What also worries government program administrators is that a few years of consistently high commodity prices raises the overall payout threshold for future years, especially if future market prices really collapse. Payouts could end up being many more billions than the present program levels. What causes one to ponder about that expensive scenario is — why didn’t the geniuses who created the program anticipate that possibility.
Actually, it’s part of a long-established pattern where government program planners in faraway Ottawa office towers are determined to base programs on price averages that will never change. Amazingly, they never plan for prices that might significantly rise or fall on very short notice — which is becoming more commonplace. They do throw out the highest and lowest figures in the average, but that doesn’t work that well in a consistent decreasing market price situation spread over a few years.
The livestock industry was the best example of that over the past few years. Hogs showed a persistent price depression for a number of years in a row — the program could not adjust to that quickly enough and producers received little support, even in the direst of times.
Some payments were triggered, but only after tinkering with the formula. The same happened to cattle producers in past drought situations. Heck, even when the formula kicks in, the feds only seem to get in motion after producer groups hammer on them to activate the program that producers are entitled to. I expect history will repeat itself with livestock producers, as cow/calf market prices are expected to drop considerably as feedlots squeeze them due to very high feed-grain prices.
At the recommended 70 per cent or lower trigger rate, those producers will probably not see much of a payment anytime soon.
What is also worrying bureaucrats is the possible future image of some crop farmers receiving million dollar government cheques if the trigger stayed at 85 per cent and grain prices collapse. Such payments have occurred with past programs and has to do with the reality that there are more mega-farming operations that involve many thousands of acres and millions in bushels and dollars.
As fair as such payments might be, making million-dollar-plus payments to mere farmers is still something the urban public and media can’t comprehend. Such folks have been raised on the image of farming being akin to “Old MacDonald’s Farm,” not large-scale corporate commercial agriculture.
It seems that never in the 50-year history of national farm support has any of the myriad programs ever worked as expected, or been free from political interference. I guess, at least, that has been consistent.
Will Verboven is the editor of Alberta Farmer.