Question Period Note: Sugar Shacks

What is the government doing to help sugar shacks that have been affected by COVID-19?

FIRST RESPONSE

1. 2020 was a challenging year for everyone, especially for those in the agriculture and agri-food sector. The Canadian maple syrup industry was no exception.

2. Sugar shacks and maple syrup are quintessential Canadian symbols. Moreover, the maple syrup industry is one of the fastest growing sectors in Canadian agriculture.

3. Under the Canadian Agricultural Partnership, maple syrup producers have access to a range of business risk management programs to help them manage significant risks that threaten the viability of their business and are beyond their capacity to manage alone.

4. The Advance Payments Program, a loan guarantee program, also provides agricultural producers with access to low-interest cash advances.

RESPONSIVE ON BUSINESS RISK MANAGEMENT PROGRAMS

1. AgriInvest is a savings account with government contributions to deal with declining income and cash-flow issues.
2. AgriStability provides support to producers experiencing a large margin decline for reasons such as lost production, increased costs, and market conditions.

3. AgriInsurance provides insurance protection against production losses caused by natural hazards or disasters.

    

BACKGROUND

Sugar shack situation in Quebec

The closure of public places in March 2020 due to the pandemic severely affected sugar shacks offering meals. As they were forced to close just before their annual openings, these businesses suffered substantial losses in 2020, particularly those that only offer restaurant activities without parallel production of maple syrup. The majority of these businesses had made significant expenditures purchasing inputs needed to serve meals. The 2021 sugar season starts in a few days, meals cannot be served in the red zone and can only be served according to strict rules in the orange zone.

The Association des érablières et salles de réception du Québec (created in the summer of 2020) conducted a survey of its 200 members in December 2020, which indicated that:
a. 22% of sugar shacks had already gone out of business;
b. 8% had been put up for sale;
c. 25% had already decided to change their activities, with most targeting maple production only; and,
d. 20% risk going bankrupt if they cannot provide meals in spring 2021.

The Association suggests that of the 200 sugar shacks offering traditional meals in Quebec, only 50 may remain at the end of the 2021 season, or 25% if nothing is done to help the sector.

Current initiatives aimed at boosting Quebec sugar shack sales

With $50,000 in financial assistance from the Government of Quebec, the Association des érablières et salles de réception du Québec created and launched the “Ma cabane à la maison” online meal-ordering platform, which allows consumers to safely enjoy meals prepared by 70 participating sugar shacks.

Maple syrup production

Regarding maple syrup production, the 7,400 maple syrup businesses have seen little impact from the COVID-19 containment and distancing measures. The 2020 harvest was excellent in Quebec, with a record year of 175 million pounds. Sales of maple products in Quebec have been on the rise since the start of the pandemic, as have international exports.

Sugar shack situation in Ontario and Atlantic Provinces

The situation is similar in Ontario, albeit on a much smaller scale. The closure of public places in early 2020 caused the abrupt cancellation of the Elmira Maple Syrup Festival, Maple Weekend, and sugar shacks offering meals and tours. Businesses made significant expenditures in preparation for the season, resulting in losses. Ecotourism-related activities took a big hit, however many producers were able to shift focus towards maple syrup production and online sales. The development of online sales platforms and increased interest in buying local helped support the industry and provided alternative ways of connecting with consumers. No in person activities are scheduled for 2021, including festivals and Maple Weekend.

As for Atlantic Canada, a very small proportion of the maple producers in New Brunswick and Nova Scotia have dining rooms and the capacity to serve meals. Therefore the impact from COVID-19 has not been as significant as in other jurisdictions.

Business risk management (BRM) programs

Under the Canadian Agricultural Partnership (CAP), producers have access to a range of business risk management (BRM) programs to help them manage significant risks that threaten the viability of their farms and exceed their capacity to manage. Currently, maple syrup producers have access to most BRM programs, namely AgriInvest, AgriStability, and AgriInsurance.

While the suite of BRM programs is intended to protect producers from significant income declines, the different individual needs of producers may be better met by particular combinations of programs.

• AgriInvest is a savings account with government contributions to manage income declines and
cash-flow problems. AgriInvest accounts are self-managed government-producer savings accounts that are accessible to all agricultural producers. Each year, producers can deposit up to 100% of their allowable net sales to their account and receive a matching government contribution on 1% of that amount, up to a maximum of $10,000. AgriInvest balances are always available to provide immediate support in the event of losses and replacement costs.

• AgriStability provides support when farmers experience a large margin decline from their historical average, which is well suited to respond to pressures associated with market conditions. More specifically, the AgriStability margins take into account impacts on both income and the variable costs directly linked to production. However, not all aspects of a sugar shack business can be included in the AgriStability guidelines. Generally, income and expenses reported to the CRA as farm income are eligible, but other services (such as recreation) are not.

• AgriInsurance, commonly referred to as crop insurance, provides quick and predictable assistance to agricultural producers experiencing production losses caused by natural hazards, such as weather events and wildlife. Provincial governments offer and design insurance plans based on industry needs, so coverage for specific products varies and may not be available in all provinces. Insurance products for maple syrup are available in Quebec and Nova Scotia.

• Finally, the Advance Payments Program (APP) is another tool available to producers. The APP is a federal loan guarantee program that provides agricultural producers with access to low-interest cash advances.

Through the APP, producers can access up to $1 million in short-term cash advances based on the expected value of eligible products they will produce or have in inventory, including maple syrup. Producers are required to repay as they sell, with up to 18 months to fully repay advances for most products. The government pays the interest on the first $100,000. APP advances are available through 32 third-party administrators across Canada. For maple syrup, advances are available in Ontario, Quebec, New Brunswick, and Nova Scotia.

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