Question Period Note: SUPPORT TO BC TREE FRUIT GROWERS

Q1 – What exactly is the Government doing to support the tree fruit sector? Q2 – Why didn’t the Government step in to prevent the bankruptcy of the BC Tree Fruits Cooperative?

R.1 - AAFC and the BC Government have agreed to the increase of interim payment rates from 50% to 75% as well as the initiation of late participation in the AgriStability program.

This program provides payments to farmers that have experienced significant declines in income, and interim payments can go out quickly.

We are also making sure that producers are aware of other tools available to them such as their AgriInvest accounts. These savings can be accessed at any time and for any reason.

AAFC granted a 6-month stay of default for 2023 advances on apples and provided repayment flexibilities for 2024 advances on cherries, plums, pears, and grapes.

The flexibilities for the Advance Payments Program will alleviate some of the financial pressures BC tree fruit producers are currently facing.

Producers continue to have access to low-cost cash advances under the Advance Payments Program.

Farm Credit Canada is working directly with its customers to support them by reducing interest and re-structuring loans. R.2 - We understand that the closure of this organisation was sudden and unexpected, and we empathize with the BC tree fruit producers that are facing hardships due to this development.

We continue to support this industry through the many programs and services that we have available, such as our suite of business risk management programs, our scientific expertise, and international market development support.

Between 2018 and 2022, farm cash receipts from the tree fruit sector in British Columbia averaged about $160 million. Tree fruit receipts make up about one-third of total fruit receipts in British Columbia and about 8% of total crop receipts. Tree fruit receipts in British Columbia make up about 38% of the national total on average.

British Columbia is Canada’s largest sweet cherry- and pear-producing province, accounting respectively for 96% and 53% of Canada’s production in 2023. The province is also the third largest apple-producing province behind Ontario and Quebec, accounting for 18% of Canada’s apple crop in 2023.

On Friday July 26, 2024, BC Tree Fruits Cooperative (BCTFC), the largest fruit packer in BC, announced that they intend to wind down the cooperative. Over 200 farming families and hundreds of staff will be impacted by the closure. The BCTFC provided controlled atmosphere (CA) storage for 70% of the fruit produced in the Okanagan Valley. CA storage allows for apples to be stored for up to 10 months, so that apples can be available to consumers year-round. The loss of CA storage infrastructure will be a significant loss for the Okanagan Valley tree fruit sector.

The BC tree fruit sector was also seriously impacted by a winter freeze due to a polar vortex in January 2024, resulting in a total crop loss for peaches, nectarines, and apricots, while the cherry crop is expected to be less than 20% of historical average and the apple crop is expected to be around 70%-80% of historical average.

Actions taken to date:

At BC’s request, AAFC agreed to initiate late participation and enhanced interim payments to producers under the AgriStability program, which will allow producers to receive up to 75% of their expected final program payment in advance, helping alleviate current financial pressures.

Farm Credit Canada has pledged its support and is working directly with impacted clients including short-term credit options, deferral of principal payments, and amended loan repayment schedules to help reduce the financial pressure on producers.

With support from the British Columbia government, the Agricultural Credit Corporation , who is an Administrator of the Advance Payments Program, requested a stay of default for fruit producers in British Columbia. A stay of default was granted and will provide additional time and flexibilities for producers to repay their advances.

Minister MacAulay met with representatives from the BC Fruit Growers Association on September 9, 2024, to hear industry’s proposals for potential actions to help producers.

Officials from the AgriMarketing program areworking closely with the BC Fruit Growers’ Association and the BC Cherry Association to determine if amendments are required to their existing contribution agreements. If needed, the program will leverage existing flexibilities in order to maximize support to the sector to market its cherries and Ambrosia apples.

Since 2013, AAFC has provided $9.4M of funding through the AgriScience Program – Projects component to the British Columbia tree fruit industry to support applied research and development with the aim of genetic improvement of cherry and apple tree varieties for Canada’s tree fruit industry. 

The AgriMarketing program is providing funding to the BC Fruit Growers’ Association and the BC Cherry Association to help the sector promote and find new export markets for cherries and Ambrosia apples.

Business Risk Management Programs:

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.

AgriStability

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. The AgriStability compensation rate increased from 70 to 80 percent beginning in the 2023 program year, increasing support to farmers by up to $72 million per year. Under AgriStability, producers can receive a maximum payment of $3 million for a program year.

British Columbia has announced a provincial-only top-up program for producers who receive AgriStability payments in the 2024 program year. This program will pay an additional amount as if the compensation rate was 90% and the payment cap was $6.2 million. While it uses AgriStability data, it is independent from the FPT cost-share framework.

Under the framework, Canada has agreed to a request from British Columbia to initiate late participation and enhanced interim payments for the AgriStability program. For the 2024 program year, producers can receive up to 75% of their expected payment by contacting their AgriStability administrator. 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, however that payment will be reduced by 20% to maintain an incentive for proactive enrolment.

AgriInvest

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. AgriInvest funds can be accessed at any time and for any reason by contacting the financial institution that holds the account.

AgriInsurance

The AgriInsurance program helps to stabilize producer income by minimizing the economic effects of production losses caused by severe but uncontrollable natural hazards. Each province develops and delivers AgriInsurance plans in accordance with the Farm Income Protection Act, the Canada Production Insurance Regulations and Multilateral Framework Agreements to meet the needs of the producers in that province.

Insurance coverage in BC is available for many commodities for yield loss, quality loss and plant loss, with different options for coverage and deductibles, depending on the product. A diverse range of perils are covered, including, but not limited to drought, excess moisture, freeze, fire, and wind.

AgriRecovery

AgriRecovery is a framework that forms the basis by which federal-provincial-territorial governments can work together when natural disasters (e.g., extreme weather, diseases, pests, etc.) occur to assess the impacts and determine whether there is need for further assistance over and above the existing BRM programs. The focus of AgriRecovery is to provide support for the extraordinary costs producers must incur to recover from disasters. AgriRecovery does not cover production or revenue declines, including those resulting from disasters. AgriRecovery is also not intended to assist producers with extraordinary costs related to the cancellation of a contract or market loss that is not related to a disaster, or to situations that are market-driven, such as the closing of a plant.

Requests for assessments under AgriRecovery are typically made by a province or territory to the federal government, as they are usually closer to the disaster event, its impacts, and affected producers. Should British Columbia request a formal assessment to determine if additional assistance is needed to support recovery from extreme weather, federal officials will work with the province to complete it in a timely manner.

Advance Payments Program (APP)

The 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 March 25, 2024, the interest-free limit was temporarily increased to $250,000, continuing the trend from the 2022 and 2023 program years.

With support from the British Columbia government, the Agricultural Credit Corporation , who is an APP Administrator, requested a stay of default for tree fruit producers. A stay of default was granted by the Minister on September 9, 2024, and will provide additional time and flexibilities for producers to repay their advances.

We are actively engaged with the BC government and industry on the difficulties currently faced by tree fruit producers in the province.

We encourage all producers that are experiencing income losses, including tree fruit producers in British Columbia, to make full use of our business risk management programs.

Agriculture and Agri-Food Canada, in collaboration with the BC government, has agreed to increase interim payment rates under AgriStability, to address short-term cash flow issues and allow for late participation. AgriInsurance is also available to provide support for production losses.

On September 9, 2024, at the request of the Agricultural Credit Corporation, the Department granted a 6-month stay of default for 2023 Advance Payments Program advances on apples and provided repayment flexibilities for 2024 advances on cherries, plums, pears, and grapes.

We will continue to work with our federal partners and provincial counterparts to identify other ways in which we can support this important sector.