Question Period Note: BUSINESS RISK MANAGEMENT PROGRAMS

Q1 – How is the AgriRecovery framework responding to disaster events? Q2 – How is AAFC helping farmers with increased costs? Q3 – How is the government addressing climate change through business risk management? Q4 - How is the BRM Suite supporting producers in British Columbia given multiple events impacting the province? Q5 - How is the government responding to requests for fundamental BRM program improvements?

R.1 - 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.
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
AAFC remains committed to working with provincial and territorial officials to better understand the impacts of natural disasters on affected producers and determine if additional support is necessary to recover from the event. R.2 - 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 $188.2 million over three years. R.3 - 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. R.4 - Canada has agreed to a request from British Columbia (BC) to initiate late participation and enhanced interim payments for the AgriStability program.

As a result, for the 2024 program year, producers can receive up to 75% of their estimated final payment by contacting their AgriStability administrators. In addition, producers that did not enroll in the program before the deadline earlier this year can still access support as long as they apply before April 30, 2025. Beyond AgriStability, producers are encouraged to make full use of their AgriInvest funds, which can be withdrawn at any time and used for any purpose.

We are further aware of the request for a stay of default under the Advance Payments Program (APP) submitted to my Department by the Agricultural Credit Corporation (ACC), which is the program administrator for BC tree fruit producers. APP program officials are working closely with the ACC to obtain all required information in order to process this request as quickly as possible. R.5 - I recently met with my provincial and territorial counterparts, and we all recognize that BRM programs are the first line of defence for producers and that it is critical that they are working for the entire sector. We have agreed to continue to prioritize work to ensure BRM programs are timely, responsive, and predictable to help producers manage business 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.

Other provinces have recently requested joint AgriRecovery assessments. Quebec formally requested an assessment for the impacts of excess moisture on horticulture production in the 2023 growing season. The assessment found that an AgriRecovery response was warranted to support impacted producers. AAFC and Quebec are finalizing their authorities to announce program details in the fall.

New Brunswick also made an AgriRecovery request to examine the impacts of the 2023 excess moisture on potato producers. The assessment found that an AgriRecovery response was warranted, and the parties continue to collaborate to finalize an agreement and plan to communicate program details in the fall.

Finally, Nova Scotia requested an assessment for the impacts of the 2023 excess moisture and flooding on producers. AAFC continues to work with Nova Scotia to complete the assessment and determine if additional support is warranted.

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 $21,794 in total interest costs, including $10,985 related to the increased interest-free limits, over these two years. The change represents an additional estimated savings of up to $129.4 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. About 11,950 producers are expected to save an additional $4,916 in interest due to the change. This represents a total interest savings of up to $58.7 million for the program year 2024, and total savings of $188.2 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 7,484 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 17,013 producers (value of $2.9 billion) have received advances to date. A total of 9,211 producers have received interest-free advances above $100,000, and of these, 4,451 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.