Ontario Risk Management... to counter subsidies?

[TOM4CWB]

Charlie;

Do you understand what the OFA and Ontario gov. is up to?

Thursday, OFA VP Paul Mistele said the Ontario throne speech said what the OFA has been saying to government officials for years. The speech refers to 'massive agricultural subsidies in Europe and the U.S.' hurting Ontario's farmers and making it difficult for them to compete.

"This is a clear indication the (Premier Dalton) McGuinty government understands what's behind our calls for new risk management and production insurance programs for Ontario agriculture," Mistele said.

What is this all about?

Is the Alberta gov. planning to help Alberta farmers?

[charliep]

No idea. Will have to see if anyone from Ontario is monitoring this site.

I note that Ontario government/farmers have liked GRIP program in the past. Don't know if they are bringing a version of it back - i.e. something cost of production based.

What should the Alberta government do? A Canadian version of the US loan rate? Improvements to CAISP?

If the current round of WTO negotiations were successfull/reduced US/EU subsidies, would Canadian farmers problems be over?

[silverback]

Another stupid question I need to ask.

Why do we not just peg our support programs to exactly copy the U.S. or Europe?? Would it not be a hell of a lot easier on everyone? I would also argue that in the long run it might be cheaper than setting up all these new and different problems over the years?

It is so tiring to be the good kid on the block when we have no real power on that block.

[TOM4CWB]

Silverback;

You are way too simple minded.

A Simple solution like doing what the US has for farm programs...

In Canada;


Would give up too much Canadian arrogance and pride... make too many unemployed lawyers, consultants, and accountants... and give Canadian farmers way too much economic power.

Charlie... very good question... hope you don't lose your job for asking it!

Sure hope someone in Ontario can share what the OFA and Ontario Gov. is up to!

[WRAPper]

Tom

Give Rod a call he's away at meetings until next week but he should be able to get the OFA's take on whats going on in Ontario for you, we've actually had this same conversation on mimicing US programs, how could they attack us if we have exact mirror programs. Its something to look at I cetainly agree. Something along the lines of if you can't beat them.
The Alberta government has tried this very poor imitation of the LDP that is the revenue insurance portion of crop insurance( hope you didn't design it Charlie or I'll have to aplogize) I don't believe its up to what it could be, though its better than nothing. This all taking into account I dislike subsidies at all because they don't fit well with my philosophy on the business of farming that is. But it pains me to see other western governments support their primary producers and Canada playing political games with their supports at all times which is why I would suppport a concept like this.

[charliep]

The revenue insurance portion was meant to mimic to some extent US loan programs. I encourage you to look at concept ideas and how delivered. Example, should revenue insurance be tied to the spring price endorsement premium given it is not a full payout (50 % normally, 70 % in the current year).

Not with AFSC but have gotten feedback over time that other provinces have reviewed this program. If a national program, how would this fit with CAISP? Would other ag. sectors want a similar program (livestock, other crops)?

I have to note the US and the EU have for the most part (excepting LDP) decoupled farm subsidies into direct payments. I also note that US programs are not tied to costs of production - US corn farmers will take the hit of higher nitrogen/fuel costs directly with no way of offsetting in the currently system. They are offsetting this to a certain extent by increases in productivity (eg. a 146/bu corn yield in a year that was not weather perfect).

[dalek]

Go to http://www.ofa.on.ca/site/main.asp?pic=../cutting/maintit_news.jpg&line=1000&Inc=../newsevents/one%20voice/farmers%20in%20crisis.asp

Follow the links to Grains and Oilseeds, Livestock etc to get more details on the different plans including the proposed Risk Management Plan for grains and oilseeds. Also at ontariocorn.org there's a lot of information on RMP including a Powerpoint presentation. It isn't OFA's plan, the grains and oilseeds people developed it, particularly Brian Doidge I believe, and the other sectors developed their own plans, but OFA is signed on to help push the whole package through the Unified Voice movement.

[dalek]

Also it's completely a one-sided movement at this time. The various farm groups love it, the government is making great noises about being supportive of agriculture but the chequebook hasn't come out and I don't think it would surprise anybody if it never does.

[TOM4CWB]

CHarlie;

I fail to understand how the CDN/Prov. gov's. call pulling out the check book and paying for the deficiencies as "risk management".

For instance, does the AB gov. or AFSC actually offset revenue protection risk with positions in the futures to protect the program offered by AB Production Insurance...?

Or is there an actual risk management plan I haven't heard about?

[parsley]

tom4cwb,

Don't presume it is the FARMERS' risk management plan. Isn't it more likely to be the Government's pre-election vote-getting risk management plan?

Parsley

[charliep]

I will leave AFSC to address how they cover their risk on the revenue insurance/spring price endorsement. My only comments would be:

1) It is not an ad hoc program but rather has been around for 3 years. WRap had comments about how well working but regardless is part of the governments farm programs to stabalize income.

2) It is not a free program - it has a cost and a farmer decision attached to it.

[TOM4CWB]

Charlie;

I asked the question because Risk management done on our farm have real and identifiable costs that have no contributions from any government programs.

I agree that the premium based programs have a small contribution from the grower, but it would be very interesting to know how much these Revenue P.I. programs cost.

Then I could do analisis to see if what I spend on true risk management is a good investment; or if I need to turn more of my risk management investments over to you folks because the true and real costs are lower through your programs!

On AFSC Revenue protection, is the price offered a basket of October prices? For instance on wheat are the October recent Fixed Price CWB wheat prices key; the CWB PRO that comes out this week?

How do I manage risk to attain the average price that is used as the benchmark this month by the AFSC PI Revenue Protection program?

[charliep]

Tom4cwb

Not sure of the question you are asking. Payments are based on the average October prices as outlined in the following (page 12 and 13).

http://www.afsc.ca/NR/rdonlyres/ezo2e5jbz5hemwihe6ah6fyjstvwlb3wg4uuo5o2royvnjmmka e2lhalkk567er73i5r4wd3mu62uayw43o7jtylgyh/SectionI.pdf

I interpret your questions as to whether the programs are actuarily sound/does not involve government support. The answer this year is likely no. I will leave the other comments to discussion other than to highlight a private sector risk management project funded by the federal government and I think being directed by the Manitoba canola growers (canola options pilot project). There are currently as well as potentially some private industry alternatives to provide a similar risk management tools.

[TOM4CWB]

Thank You Charlie; that was a helpful link!

[TOM4CWB]

I must chuckle Charlie that AFSC says:
"Note: Where no basis adjustment is indicated, it is because it is not required." (Last statement on page 15)

One could really question that statement from numerous perspectives!