Question Period Note: BUSINESS RISK MANAGEMENT PROGRAMS

Q1 – Is the AgriRecovery framework responding to the current disasters? Q2 – How is AAFC helping farmers with increased costs?
Q3 – How is the government addressing climate change through business risk management?

R1 - Our Government was there to support producers during the 2021 drought, wildfires and floods, by working with provinces to provide access to over $1 billion through AgriRecovery.

On October 20, 2023, our government announced a contribution of $219 million to support farmers and ranchers in British Columbia, Alberta and Saskatchewan who are dealing with extraordinary costs due to drought conditions and wildfires.

We stand with producers and ranchers. This funding will help them recover and ensure that they have the tools they need to continue to be resilient in the face of natural disasters and extreme weather events. Federal, provincial and territorial governments are committing a total of $365 million to affected areas under the AgriRecovery Framework. R2 - In light of high input costs and increased interest rates, we amended the
Advance Payments Program, a low interest federal loan program.

The interest-free portion of this program was increased from $100,000 to $250,000 for
the 2022 and 2023 program years. Budget 2023 provided an additional $13 million to
further increase the interest-free limit from $250,000 to $350,000 for the 2023 program
year. As a result, participating producers will be able to save on average $8,600 in
interest costs over the next two years.

This change represents additional savings of up to $84 million over these two years
for the approximately 11,000 producers who take advantage of advances above
$100,000. R3 - Integrating climate risk management and climate readiness into business risk management programs is a top priority. We are conducting a BRM Climate review that is looking at how climate change could impact future BRM payments as well as how BRM programs could encourage climate action.

Moreover, starting in 2025 the largest producers will need to have an agri-environmental risk assessment to receive the government contribution in AgriInvest. We are also working with provinces to pilot AgriInsurance premium rebates for producers who adopt environmental practices that also reduce production risks.

Business risk management (BRM) programs are joint Federal-Provincial-Territorial (FPT) programs that are in place to help producers manage risks that threaten the viability of their farms, and provide protection against different types of income and production losses. Producers take responsibility for managing normal risks, while government support is in place to help manage events that exceed producers’ capacity to manage.

The programs are cost-shared 60:40 (Federal:Provincial-Territorial) as outlined in the Sustainable Canadian Agricultural Partnership (Sustainable CAP), and have provided over $1.6 billion per year to producers over the last five years.

The AgriStability program is a whole-farm program designed to support producers who have experienced a net income decline of more than 30 percent for reasons such as production loss, increased costs and market conditions. Government spending for AgriStability has varied based on these market conditions, averaging about $354 million per year. It is anticipated that AgriStability payments for the 2021 program year will exceed $332 million if current program parameters and market conditions continue.

Due to recent disasters, Canada, working with the provinces of British Columbia and Alberta, has authorized late participation so producers in those provinces can still access AgriStability even if they did not enroll by the deadline. Producers in Alberta can sign up for AgriStability until September 29, 2023, and British Columbia producers have until June 30, 2024. This gives affected producers more time to review and manage the business risks associated with these challenging situations. AAFC officials are ready to assess similar late participation requests from other provinces should they submit one.

The AgriInvest program allows producers to save a portion of the proceeds from their annual net sales, with a matching government contribution up to a maximum of $10,000 annually, to help manage smaller income declines. FPT governments contribute approximately $266 million annually to AgriInvest accounts.

As of April 1, 2023, under Sustainable CAP, the following changes were made to programs in the BRM Suite. The AgriStability compensation rate increased from 70 to 80 percent beginning in the 2023 program year, increasing support to farmers up to $72 million per year. In addition, in order to receive an AgriInvest government contribution, producers with allowable net sales (ANS) of at least $1 million will need an agri-environmental risk assessment (for example, an Environmental Farm Plan) by 2025.

The AgriInsurance program helps to stabilize producer income by minimizing the economic effects of production losses caused by severe but uncontrollable natural hazards. It provides support largely to crop producers, averaging over $1 billion per year since 2013, which represents approximately two-thirds of all BRM contributions.

AgriRecovery is not a program but a framework which forms the basis by which federal-provincial-territorial governments can work together when natural disasters occur to assess the impacts and determine whether there is need for assistance. When there is need, an initiative is put in place to provide targeted assistance to help with the extraordinary costs of recovery.

Drought was experienced across Western Canada and was especially severe in certain areas of British Columbia, Alberta and Saskatchewan in the summer of 2023. Additionally, some areas in British Columbia were facing wildfires. On October 20, 2023 the Government announced $219 million in support to farmers and ranchers in these areas that are dealing with extraordinary costs due to drought conditions and wildfires.

Finally, the Advance Payments Program (APP) is a federal loan guarantee program which provides agricultural producers with easy access to low-interest cash advances. Under the program, producers can obtain cash advances of up to $1 million based on the expected market value of their commodities, thus helping them meet their financial needs, including input costs, over their production and marketing cycle. On June 23, 2022, Minister Bibeau announced an increase to the interest-free portion of APP advances from $100,000 to $250,000 for the 2022 and 2023 program years. Budget 2023 proposed to further increase the interest-free limit from $250,000 to $350,000 for the 2023 program year. As a result, recent estimates, which take into consideration interest rate increases, suggest participating producers will save an average of $8,600 in interest costs over these two years. The change represents an additional estimated savings of up to $84 million over the two years for the approximately 11,000 producers who take advantage of advances above $100,000. In 2022, the Advance Payments Program provided $3.5 billion in total advances to 18,721 producers across Canada.

• Producers have access to the full suite of our federal-provincial-territorial business risk management programs that help producers reduce income losses stemming from production losses, severe market volatility, extreme events and disasters that are largely beyond their capacity to manage.
• We remain committed to working with our provincial and territorial counterparts to make business risk management programs more agile, timely, and effective for producers, and to support greater resiliency within the sector, including to climate change.
• Starting in 2023 the compensation rate under AgriStability was increased from 70 to 80 percent to provide more support to farmers in times of need. We are also continuing to work with farmers on a new AgriStability model that will be faster, simpler, and more predictable.