It’s
hard to know what taxpayers got in return for $100 million spent on the risk
management programs Ontario introduced for livestock and horticulture producers
last year, according to Bob Seguin, executive director for the George Morris Centre
think tank at Guelph.
Seguin,
who used to be chief policy advisor for the Ontario Ministry of Agriculture,
Food and Rural Affairs and, as such, involved in decades of
federal-provincial-producer negotiations over subsidies, says most of the money
from this new program went to the large-scale producers.
But
they were not asked what they did with the money, so it’s hard to judge the
public benefits, such as whether the farmers invested in improving efficiency,
quality or productivity.
He might have added that the Liberals don't even know whether it bought them any votes. It was, in short, a massive pig in a poke.
Things
are even more uncertain this year because farmers now have to pay premiums to
remain enrolled in the programs and the spring provincial budget announced that
there will be a cap on how much the government is prepared to spend.
What
that means for individual farmers remains an open question.
There
is a cap on how much an individual farm can collect from the program, but it’s
relatively high so last year only three per cent of the province’s livestock
producers got 45 per cent of the money and 18 per cent of the horticulture
producers enrolled in the Self-Directed Risk Management Program got 70 per cent
of the money.
At
the other end of the scale, 56 per cent of the livestock producers got $5,000
or less out of the program, and their take was only 6.2 per cent of the total.
Seguin
says that because the province is capping what it will spend this year, it’s
unlikely that hog and beef cattle producers will get enough to cover their
costs of production. That was an important objective farmers set for the
program in their negotiations with the government.
Nor
is it likely that the federal government will put any money into this program.
The usual split is 60 per cent from the federal government and 40 per cent from
the provinces.
In
2008, they signed on to the national Growing Forward program which brought some
semblance of a level playing field across Canada. That program is now under
negotiation for the next five years; the federal government is talking about
reducing what it will put into farm subsidies.
Last
year was highly profitable for Ontario farmers – net income of $1.32 billion,
which was well above the level for the previous several years.
Seguin
says “with Ontario’s 2011 net farm income above most recent years, it is an
open question whether the program payments by the RMP in 2011 had significant
impact on overall farm sector prosperity and outlook.
“The
price increases for grains and oilseeds in particular would account for some of the
net income gains in 2011.”
He says
“the additional government payments of almost $100 million overall to this 2011
initiative would have been of some assistance but could not have been the major
income boost for the sector-as may have been anticipated in earlier years of
program discussion.”
The
net subsidies for Ontario farmers last year – counting both federal and provincial
contributions – totalled $231 million.
Seguin
says “unless the program design changes considerably to directly or even
indirectly address policy linkages and impacts upon other agri-food policy
priorities - environment, food safety,
innovation,
market development, investment - it will be extremely difficult to determine appropriate
impacts or benefits resulting from the RMP beyond 2012 on these other
priorities.
“Even
if formal cross compliance were suggested, how to best measure, analyze,
oversee, and make
accountable the cross compliance will be a serious challenge to undertake.”
Cross compliance would, however, give taxpayers some comfort in knowing they got something for their money.
He
says “the effectiveness and long term benefit” of linking payouts to the cost
of production “is still to be determined.”
One
of the risks is that the United States may take trade action, applying duties
to Canadian products to offset the benefits of the Risk Management Programs, he
says. That’s the main reason Agriculture Minister Gerry Ritz cites for refusing
to put federal money into the programs.
In his
conclusions, Seguin says “finally, without more detailed analysis of the
impacts of the payments on individual producers and by commodity, and greater
transparency in the program design and payments, it is very difficult to
determine the overall net benefit/cost of the RMP or indeed, any of the
national business risk management programs on the individual participants, the
specific commodity industry, or on the entire agri-food sector.”
