Question Period Note: BUSINESS RISK MANAGEMENT PROGRAMS

Q1 – Is the AgriRecovery framework responding to the current disasters? Q2 – How will the federal government adequately support the main strawberry producing region of Canada and the second largest in terms of raspberries? Q3 – Will the federal government be providing AgriRecovery support to Quebec by the end of June? Q4 – How is AAFC helping farmers with increased costs? Q5 – How is the government addressing climate change through business risk management?

R. 1 - Our Government was there to support producers during the 2023 drought and wildfires, by working with provinces to provide a Federal contribution of up to $219 million in AgriRecovery support for extraordinary costs farmers and ranchers incurred due to drought conditions and wildfires in British Columbia, Alberta and Saskatchewan.

This funding helped them recover and ensured that they had the tools they needed to continue to be resilient in the face of natural disasters and extreme weather events. R.2 - AgriRecovery is a framework that forms the basis by which federal-provincial-territorial governments work together when natural disasters occur to assess the impacts and determine whether there is a need for further assistance over and above the existing BRM programs.

Each disaster event is reviewed to determine the additional support that producers need to recover and to ensure equity between sectors and provinces.
The Federal Government is working closely with the Government of Quebec to finalize the AgriRecovery process and be in a position to make a formal announcement of the results. R.3 - AAFC remains committed to working with provincial and territorial officials to better understand disaster situations and ensure that disaster-affected producers receive the help they need as quickly as possible under the AgriRecovery Framework agreed to by governments.
The Federal Government continues to work closely with the Government of Quebec to finalize the AgriRecovery process and be in a position to make a formal announcement of the results. R.4 - 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 program year and to $350,000 for the 2023 program year.

As farm operating costs remain uncertain heading into this crop year, the interest-free limit was once again increased from $100,000 to $250,000 for the 2024 program year. This change is expected to provide an additional $4,916 in interest savings to producers for a total savings of up to $58.7 million this program year, and a total interest savings of $171.6 million over three years. R.5 - 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 practices that have environmental benefits and 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 $1.8 billion per year on average 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 market conditions, averaging about $363 million per year.

As part of the Sustainable CAP, Ministers also agreed to implement a new model for AgriStability that is simpler, timely, and more predictable. Working with provinces and territories, a more streamlined approach was developed that allows reference margins to be calculated based on how producers file their taxes (cash or accrual accounting), offer a new coverage notice, and more timely payments to producers. This new model is being offered as an option for producers and has been implemented in the jurisdictions where AAFC administers the program (i.e. Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon Territory, and the Northwest Territories) in the 2024 program year. AAFC officials are working with the remaining provinces to support their efforts to offer some or all of these elements on an optional basis during the Sustainable CAP.

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 $267 million annually to AgriInvest accounts.

Since Sustainable CAP came into effect in April 2023, several changes in the BRM Suite are being implemented. 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, starting in 2025, producers with allowable net sales (ANS) of at least $1 million will require an agri-environmental risk assessment in order to receive an AgriInvest government contribution.

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 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 further assistance over and above the existing BRM programs. When the need is demonstrated, an initiative is put in place to provide targeted assistance to help with the extraordinary costs producers incur to recover.

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 faced wildfires. On October 20, 2023 the Government announced up to $219 million in support to farmers and ranchers in these areas that are dealing with extraordinary costs due to drought conditions and wildfires. On October 10, 2023, Quebec formally requested an AgriRecovery assessment for the impacts of excess moisture on horticulture production in the 2023 growing season.

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, the interest-free portion of APP advances was temporarily increased 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 $19,374 in total interest costs, including $9,670 related to the increased interest-free limits, over these two years. The change represents an additional estimated savings of up to $112.8 million over the two years for the approximately 12,800 producers who took advantage of advances above $100,000.

Additionally, on March 25, 2024, the interest-free limit was again temporarily increased to $250,000. Approximately 11,950 producers are expected to save an additional $4,916 in interest as a result of the change. This represents a total interest savings of up to $58.7 million for the program year 2024, and a total savings of $171.6 million for producers over the three year period.

In 2022, the Advance Payments Program provided $3.5 billion in total advances to 18,800 producers across Canada. A total of 9,543 producers were able to benefit from the increase, and of these, 5,078 were able to maximize the $250,000 interest-free benefit.

For the 2023 program year, a total of 21,420 producers (value of $4.6 billion) received advances. A total of 6,647 producers received interest-free advances above $250,000, and of these, 4,927 received the maximum interest-free benefit of $350,000.

The 2024 program year started on April 1, 2024 and 10,122 producers (value of $1.2 billion) have received advances to date. A total of 3,805 producers have received interest-free advances above $100,000, and of these, 1,327 have been able to maximize the $250,000 interest-free benefit.

• 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 beyond their capacity to manage.
• Under Sustainable Canadian Agricultural Partnership, we continue to work 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.
• Beginning in the 2024 program year, Canada is offering a new AgriStability model that is faster, simpler, and more predictable, in provinces where Canada delivers AgriStability.